Toggle SGML Header (+)


Section 1: 10-Q (10-Q)

evbn 20180630 Q2



United States

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



For quarterly period ended June 30, 2018



TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



For the transition period from             to ______



Commission file number    001-35021



                   EVANS BANCORP, INC.                  

(Exact name of registrant as specified in its charter)



          New York                            16-1332767

(State or other jurisdiction of         (I.R.S. Employer

incorporation or organization)       Identification No.)



One Grimsby Drive, Hamburg, NY        14075

(Address of principal executive offices)  (Zip Code)



       (716) 926-2000    

(Registrant's telephone number, including area code)



            Not Applicable         

 (Former name, former address and former fiscal year, if changed

 since last report)



Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  No



Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes No



Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,”  and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):





 

 

Large accelerated filer

 

Accelerated filer

Non-accelerated filer (Do not check if smaller reporting company)

 

Smaller reporting company

Emerging growth company

 

 



If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 



Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes   No 



Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: Common Stock, $.50 par value, 4,821,381 shares as of August 1, 2018.



 

 

 


 

Table of Contents



INDEX





EVANS BANCORP, INC. AND SUBSIDIARIES







 

 



 

 

PART 1.  FINANCIAL INFORMATION

PAGE



 

 

Item 1.

Financial Statements

 



 

 



Unaudited Consolidated Balance Sheets – June 30, 2018 and December 31, 2017



 

 



Unaudited Consolidated Statements of Income – Three months ended June 30, 2018 and 2017



 

 



Unaudited Consolidated Statements of Income – Six months ended June 30, 2018 and 2017



 

 



Unaudited Consolidated Statements of Comprehensive Income – Three months ended June 30, 2018 and 2017



 

 



Unaudited Consolidated Statements of Comprehensive Income – Six months ended June 30, 2018 and 2017



 

 



Unaudited Consolidated Statements of Changes in Stockholders’ Equity – Six months ended June 30, 2018 and 2017



 

 



Unaudited Consolidated Statements of Cash Flows - Six months ended June 30, 2018 and 2017



 

 



Notes to Unaudited Consolidated Financial Statements



 

 

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

39 



 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

48 



 

 

Item 4.

Controls and Procedures

49 



 

 

PART II.  OTHER INFORMATION

 



 

 

Item 1.

Legal Proceedings

49 



 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

49 



 

 

Item 6.

Exhibits

50 



 

 



Signatures

51 



 

 







 

 

 


 

Table of Contents















 

 

 

 

 

 

PART I - FINANCIAL INFORMATION

 

 

 

 

 

 

ITEM 1 - FINANCIAL STATEMENTS

 

 

 

 

 

 

EVANS BANCORP, INC. AND SUBSIDIARIES

 

 

 

 

 

 

UNAUDITED CONSOLIDATED BALANCE SHEETS

 

 

 

 

 

 

JUNE 30, 2018 AND DECEMBER 31, 2017

 

 

 

 

 

 

(in thousands, except share and per share amounts)

 

 

 

 

 

 



 

June 30,

 

December 31,



 

2018

 

2017

ASSETS

 

 

 

 

 

 

Cash and due from banks

 

$

13,324 

 

$

13,751 

Interest-bearing deposits at banks

 

 

3,441 

 

 

7,579 

Securities:

 

 

 

 

 

 

Available for sale, at fair value (amortized cost: $146,106 at June 30, 2018;

 

 

141,933 

 

 

143,818 

$145,232 at December 31, 2017)

 

 

 

 

 

 

Held to maturity, at amortized cost (fair value: $4,609 at June 30, 2018;

 

 

4,637 

 

 

5,334 

$5,261 at December 31, 2017)

 

 

 

 

 

 

Equity securities, at fair value at June 30, 2018; at cost at December 31, 2017

 

 

2,058 

 

 

580 

Federal Home Loan Bank common stock, at cost

 

 

1,475 

 

 

4,863 

Federal Reserve Bank common stock, at cost

 

 

1,924 

 

 

1,916 

Loans, net of allowance for loan losses of $15,235 at June 30, 2018

 

 

 

 

 

 

and $14,019 at December 31, 2017

 

 

1,110,660 

 

 

1,051,296 

Properties and equipment, net of accumulated depreciation of $18,800 at June 30, 2018

 

 

 

 

 

 

and $18,255 at December 31, 2017

 

 

10,331 

 

 

10,564 

Goodwill and intangible assets

 

 

8,496 

 

 

8,553 

Bank-owned life insurance

 

 

28,072 

 

 

27,729 

Other assets

 

 

19,740 

 

 

19,650 



 

 

 

 

 

 

TOTAL ASSETS

 

$

1,346,091 

 

$

1,295,633 



 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

Demand

 

$

224,373 

 

$

219,664 

NOW

 

 

121,170 

 

 

109,378 

Savings

 

 

595,500 

 

 

535,730 

Time

 

 

241,425 

 

 

186,457 

Total deposits

 

 

1,182,468 

 

 

1,051,229 



 

 

 

 

 

 

Securities sold under agreement to repurchase

 

 

4,018 

 

 

9,289 

Other borrowings

 

 

10,000 

 

 

88,250 

Other liabilities

 

 

14,700 

 

 

17,193 

Junior subordinated debentures

 

 

11,330 

 

 

11,330 

Total liabilities

 

 

1,222,516 

 

 

1,177,291 



 

 

 

 

 

 

CONTINGENT LIABILITIES AND COMMITMENTS

 

 

 

 

 

 



 

 

 

 

 

 

STOCKHOLDERS' EQUITY:

 

 

 

 

 

 

Common stock, $.50 par value, 10,000,000 shares authorized; 4,821,381

 

 

 

 

 

 

and 4,783,562 shares issued at June 30, 2018 and December 31, 2017,

 

 

 

 

 

 

respectively, and 4,821,381 and 4,782,505 outstanding at June 30, 2018

 

 

 

 

 

 

and December 31, 2017, respectively

 

 

2,413 

 

 

2,394 

Capital surplus

 

 

60,220 

 

 

59,444 

Treasury stock, at cost, 0 and 1,057 shares at June 30, 2018 and

 

 

 

 

 

 

December 31, 2017, respectively

 

 

-    

 

 

-    

Retained earnings

 

 

66,325 

 

 

59,921 

Accumulated other comprehensive loss, net of tax

 

 

(5,383)

 

 

(3,417)

Total stockholders' equity

 

 

123,575 

 

 

118,342 



 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

 

$

1,346,091 

 

$

1,295,633 



 

 

 

 

 

 

See Notes to Unaudited Consolidated Financial Statements

 

 

 

 

 

 









1

 


 

Table of Contents







 

 

 

 

 

 

PART I - FINANCIAL INFORMATION

 

 

 

 

 

 

ITEM 1 - FINANCIAL STATEMENTS

 

 

 

 

 

 

EVANS BANCORP, INC. AND SUBSIDIARIES

 

 

 

 

 

 

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

 

 

 

 

 

 

THREE MONTHS ENDED JUNE 30, 2018 AND 2017

 

 

 

 

 

 

(in thousands, except share and per share amounts)

 

 

 

 

 

 



 

Three Months Ended June 30,



 

2018

 

2017

INTEREST INCOME

 

 

 

 

 

 

Loans

 

$

13,199 

 

$

10,646 

Interest-bearing deposits at banks

 

 

15 

 

 

43 

Securities:

 

 

 

 

 

 

Taxable

 

 

863 

 

 

563 

Non-taxable

 

 

170 

 

 

210 

Total interest income

 

 

14,247 

 

 

11,462 

INTEREST EXPENSE

 

 

 

 

 

 

Deposits

 

 

1,759 

 

 

1,190 

Other borrowings

 

 

160 

 

 

50 

Junior subordinated debentures

 

 

132 

 

 

104 

Total interest expense

 

 

2,051 

 

 

1,344 

NET INTEREST INCOME  

 

 

12,196 

 

 

10,118 

PROVISION FOR LOAN LOSSES

 

 

659 

 

 

410 

NET INTEREST INCOME AFTER

 

 

 

 

 

 

PROVISION FOR LOAN LOSSES

 

 

11,537 

 

 

9,708 

NON-INTEREST INCOME

 

 

 

 

 

 

Deposit service charges

 

 

525 

 

 

428 

Insurance service and fees

 

 

1,952 

 

 

1,912 

Gain on loans sold

 

 

-    

 

 

52 

Bank-owned life insurance

 

 

178 

 

 

142 

Loss on tax credit investment

 

 

-    

 

 

(919)

Refundable state historic tax credit

 

 

-    

 

 

647 

Interchange fee income

 

 

420 

 

 

379 

Other

 

 

564 

 

 

448 

Total non-interest income

 

 

3,639 

 

 

3,089 

NON-INTEREST EXPENSE

 

 

 

 

 

 

Salaries and employee benefits

 

 

6,475 

 

 

5,959 

Occupancy

 

 

727 

 

 

775 

Advertising and public relations

 

 

326 

 

 

216 

Professional services

 

 

626 

 

 

550 

Technology and communications

 

 

847 

 

 

804 

Amortization of intangibles

 

 

28 

 

 

28 

FDIC insurance

 

 

246 

 

 

129 

Other

 

 

958 

 

 

856 

Total non-interest expense

 

 

10,233 

 

 

9,317 

INCOME BEFORE INCOME TAXES

 

 

4,943 

 

 

3,480 

INCOME TAX PROVISION

 

 

1,152 

 

 

862 

NET INCOME

 

$

3,791 

 

$

2,618 



 

 

 

 

 

 

Net income per common share-basic

 

$

0.79 

 

$

0.55 

Net income per common share-diluted

 

$

0.77 

 

$

0.54 

Cash dividends per common share

 

$

 -

 

$

 -

Weighted average number of common shares outstanding

 

 

4,810,487 

 

 

4,764,080 

Weighted average number of diluted shares outstanding

 

 

4,933,522 

 

 

4,880,454 



 

 

 

 

 

 

See Notes to Unaudited Consolidated Financial Statements

 

 

 

 

 

 



2

 


 

Table of Contents







 

 

 

 

 

PART I - FINANCIAL INFORMATION

 

 

 

 

 

ITEM 1 - FINANCIAL STATEMENTS

 

 

 

 

 

EVANS BANCORP, INC. AND SUBSIDIARIES

 

 

 

 

 

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

 

 

 

 

 

SIX MONTHS ENDED JUNE 30, 2018 AND 2017

 

 

 

 

 

(in thousands, except share and per share amounts)

 

 

 

 

 



Six Months Ended June 30,



2018

 

2017

INTEREST INCOME

 

 

 

 

 

Loans

$

25,562 

 

$

20,892 

Interest-bearing deposits at banks

 

25 

 

 

55 

Securities:

 

 

 

 

 

Taxable

 

1,660 

 

 

999 

Non-taxable

 

366 

 

 

434 

Total interest income

 

27,613 

 

 

22,380 

INTEREST EXPENSE

 

 

 

 

 

Deposits

 

3,257 

 

 

2,306 

Other borrowings

 

458 

 

 

108 

Junior subordinated debentures

 

250 

 

 

204 

Total interest expense

 

3,965 

 

 

2,618 

NET INTEREST INCOME  

 

23,648 

 

 

19,762 

PROVISION (CREDIT) FOR LOAN LOSSES

 

1,426 

 

 

(25)

NET INTEREST INCOME AFTER

 

 

 

 

 

PROVISION FOR LOAN LOSSES

 

22,222 

 

 

19,787 

NON-INTEREST INCOME

 

 

 

 

 

Deposit service charges

 

1,034 

 

 

818 

Insurance service and fees

 

3,917 

 

 

4,080 

Gain on loans sold

 

-    

 

 

70 

Bank-owned life insurance

 

349 

 

 

272 

Loss on tax credit investment

 

-    

 

 

(919)

Refundable state historic tax credit

 

-    

 

 

647 

Interchange fee income

 

912 

 

 

723 

Other

 

1,213 

 

 

920 

Total non-interest income

 

7,425 

 

 

6,611 

NON-INTEREST EXPENSE

 

 

 

 

 

Salaries and employee benefits

 

13,102 

 

 

11,605 

Occupancy

 

1,485 

 

 

1,550 

Advertising and public relations

 

450 

 

 

406 

Professional services

 

1,279 

 

 

1,152 

Technology and communications

 

1,611 

 

 

1,411 

Amortization of intangibles

 

56 

 

 

56 

FDIC insurance

 

478 

 

 

356 

Other

 

1,943 

 

 

1,836 

Total non-interest expense

 

20,404 

 

 

18,372 

INCOME BEFORE INCOME TAXES

 

9,243 

 

 

8,026 

INCOME TAX PROVISION

 

2,133 

 

 

2,262 

NET INCOME

$

7,110 

 

$

5,764 



 

 

 

 

 

Net income per common share-basic

$

1.48 

 

$

1.23 

Net income per common share-diluted

$

1.44 

 

$

1.20 

Cash dividends per common share

$

0.46 

 

$

0.40 

Weighted average number of common shares outstanding

 

4,799,229 

 

 

4,699,447 

Weighted average number of diluted shares outstanding

 

4,926,385 

 

 

4,819,375 



 

 

 

 

 

See Notes to Unaudited Consolidated Financial Statements

 

 

 

 

 









3

 


 

Table of Contents







 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

PART I - FINANCIAL INFORMATION

 

 

 

 

 

 

 

 

 

 

 

ITEM 1 - FINANCIAL STATEMENTS

 

 

 

 

 

 

 

 

 

 

 

EVANS BANCORP, INC. AND SUBSIDIARIES

UNAUDITED STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME

THREE MONTHS ENDED JUNE 30, 2018 AND 2017

(in thousands)

 

 

 

 

 

 

 

 

 

 

 



 

Three Months Ended June 30,



 

2018

 

 

2017



 

 

 

 

 

 

 

 

 

 

 

NET INCOME

 

 

 

$

3,791 

 

 

 

 

$

2,618 



 

 

 

 

 

 

 

 

 

 

 

OTHER COMPREHENSIVE (LOSS) INCOME, NET OF TAX:

 

 

 

 

 

 

Unrealized (loss) gain on available-for-sale securities

 

 

 

 

(684)

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

Defined benefit pension plans:

 

 

 

 

 

 

 

 

 

 

 

Amortization of prior service cost

 

 

 

 

 

 

 

 

 

Amortization of actuarial loss

 

31 

 

 

 

 

 

26 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

36 

 

 

 

 

 

31 



 

 

 

 

 

 

 

 

 

 

 

OTHER COMPREHENSIVE (LOSS) INCOME, NET OF TAX

 

 

(648)

 

 

 

 

 

34 



 

 

 

 

 

 

 

 

 

 

 

COMPREHENSIVE INCOME

 

 

 

$

3,143 

 

 

 

 

$

2,652 



 

 

 

 

 

 

 

 

 

 

 

See Notes to Unaudited Consolidated Financial Statements

 

 

 

 

 

 

 

 

 

 

 









 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

PART I - FINANCIAL INFORMATION

 

 

 

 

 

 

 

 

 

 

 

ITEM 1 - FINANCIAL STATEMENTS

 

 

 

 

 

 

 

 

 

 

 

EVANS BANCORP, INC. AND SUBSIDIARIES

UNAUDITED STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME

SIX MONTHS ENDED JUNE 30, 2018 AND 2017

(in thousands)

 

 

 

 

 

 

 

 

 

 

 



 

Six Months Ended June 30,



 

2018

 

 

2017



 

 

 

 

 

 

 

 

 

 

 

NET INCOME

 

 

 

$

7,110 

 

 

 

 

$

5,764 



 

 

 

 

 

 

 

 

 

 

 

OTHER COMPREHENSIVE (LOSS) INCOME, NET OF TAX:

 

 

 

 

 

 

Unrealized (loss) gain on available-for-sale securities

 

 

 

 

(2,044)

 

 

 

 

 

190 



 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

Defined benefit pension plans:

 

 

 

 

 

 

 

 

 

 

 

Amortization of prior service cost

 

11 

 

 

 

 

 

15 

 

 

 

Amortization of actuarial loss

 

67 

 

 

 

 

 

79 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

78 

 

 

 

 

 

94 



 

 

 

 

 

 

 

 

 

 

 

OTHER COMPREHENSIVE (LOSS) INCOME, NET OF TAX

 

 

(1,966)

 

 

 

 

 

284 



 

 

 

 

 

 

 

 

 

 

 

COMPREHENSIVE INCOME

 

 

 

$

5,144 

 

 

 

 

$

6,048 



 

 

 

 

 

 

 

 

 

 

 

See Notes to Unaudited Consolidated Financial Statements

 

 

 

 

 

 

 

 

 

 

 









4

 


 

Table of Contents







 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

PART I - FINANCIAL INFORMATION

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ITEM 1 - FINANCIAL STATEMENTS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EVANS BANCORP, INC. AND SUBSIDIARIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

SIX MONTHS ENDED JUNE 30, 2018 AND 2017

 

 

 

 

 

 

 

 

(in thousands, except share and per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 



 

Common

 

Capital

 

Retained

 

Comprehensive

 

Treasury

 

 

 



 

Stock

 

Surplus

 

Earnings

 

Loss

 

Stock

 

Total

Balance, December 31, 2016

 

$

2,153 

 

$

44,389 

 

$

52,630 

 

$

(2,424)

 

$

-    

 

$

96,748 

Net Income

 

 

 

 

 

 

 

 

5,764 

 

 

 

 

 

 

 

 

5,764 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

284 

 

 

 

 

 

284 

Cash dividends ($0.40 per common share)

 

 

 

 

 

 

 

 

(1,902)

 

 

 

 

 

 

 

 

(1,902)

Stock compensation expense

 

 

 

 

 

295 

 

 

 

 

 

 

 

 

 

 

 

295 

Issued 440,000 shares in stock offering

 

 

220 

 

 

13,922 

 

 

 

 

 

 

 

 

 

 

 

14,142 

Issued 16,283 restricted shares

 

 

 

 

(8)

 

 

 

 

 

 

 

 

 

 

 

-    

Issued 3,253 shares under Dividend Reinvestment Plan

 

 

 

 

124 

 

 

 

 

 

 

 

 

 

 

 

126 

Issued 3,713 shares in Employee Stock Purchase Plan

 

 

 

 

124 

 

 

 

 

 

 

 

 

 

 

 

126 

Issued 7,743 shares in stock option exercises

 

 

 

 

111 

 

 

 

 

 

 

 

 

 

 

 

115 

Repurchased 9,218 shares in treasury stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(342)

 

 

(342)

Reissued 10,597 shares in stock option exercises, net of forfeitures

 

 

 

 

 

(135)

 

 

 

 

 

 

 

 

342 

 

 

207 

Balance, June 30, 2017

 

$

2,389 

 

$

58,822 

 

$

56,492 

 

$

(2,140)

 

$

-    

 

$

115,563 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2017

 

$

2,394 

 

$

59,444 

 

$

59,921 

 

$

(3,417)

 

$

-    

 

$

118,342 

Cumulative-effect adjustment due to change in accounting principle (See Note 1)

 

 

 

 

 

 

 

 

1,496 

 

 

 

 

 

 

 

 

1,496 

Net Income

 

 

 

 

 

 

 

 

7,110 

 

 

 

 

 

 

 

 

7,110 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

(1,966)

 

 

 

 

 

(1,966)

Cash dividends ($0.46 per common share)

 

 

 

 

 

 

 

 

(2,202)

 

 

 

 

 

 

 

 

(2,202)

Stock compensation expense

 

 

 

 

 

399 

 

 

 

 

 

 

 

 

 

 

 

399 

Reissued 1,057 restricted shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-    

Issued 16,816 restricted shares

 

 

 

 

(8)

 

 

 

 

 

 

 

 

 

 

 

-    

Issued 3,205 shares under Dividend Reinvestment Plan

 

 

 

 

142 

 

 

 

 

 

 

 

 

 

 

 

144 

Issued 3,898 shares in Employee Stock Purchase Plan

 

 

 

 

151 

 

 

 

 

 

 

 

 

 

 

 

153 

Issued 13,900 shares in stock option exercises

 

 

 

 

92 

 

 

 

 

 

 

 

 

 

 

 

99 

Balance, June 30, 2018

 

$

2,413 

 

$

60,220 

 

$

66,325 

 

$

(5,383)

 

$

-    

 

$

123,575 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See Notes to Unaudited Consolidated Financial Statements

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 













5

 


 

Table of Contents





 

 

 

 

 

 



 

 

 

 

 

 

PART I - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS

EVANS BANCORP, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

SIX MONTHS ENDED JUNE 30, 2018 AND 2017

(in thousands)



 

Six Months Ended June 30,



 

 

2018

 

 

2017

OPERATING ACTIVITIES:

 

 

 

 

 

 

Interest received

 

$

27,645 

 

$

22,329 

Fees received

 

 

6,931 

 

 

6,538 

Interest paid

 

 

(3,828)

 

 

(2,587)

Cash paid to employees and vendors

 

 

(21,009)

 

 

(18,748)

Cash contributed to pension plan

 

 

-    

 

 

(1,000)

Income taxes paid

 

 

(576)

 

 

(1,635)

Proceeds from sale of loans held for resale

 

 

-    

 

 

5,376 

Originations of loans held for resale

 

 

-    

 

 

(5,532)



 

 

 

 

 

 

Net cash provided by operating activities

 

 

9,163 

 

 

4,741 



 

 

 

 

 

 

INVESTING ACTIVITIES:

 

 

 

 

 

 

Available for sales securities:

 

 

 

 

 

 

Purchases

 

 

(47,863)

 

 

(52,697)

Proceeds from maturities, calls, and payments

 

 

50,169 

 

 

6,905 

Held to maturity securities:

 

 

 

 

 

 

Purchases

 

 

-    

 

 

(35)

Proceeds from maturities, calls, and payments

 

 

697 

 

 

646 

Proceeds from bank owned life insurance claims

 

 

675 

 

 

-    

Additions to properties and equipment

 

 

(367)

 

 

(264)

Purchase of tax credit investment

 

 

(676)

 

 

(811)

  Insurance agency acquisitions

 

 

-    

 

 

(275)

Net increase in loans

 

 

(62,275)

 

 

(32,925)



 

 

 

 

 

 

Net cash used in investing activities

 

 

(59,640)

 

 

(79,456)



 

 

 

 

 

 

FINANCING ACTIVITIES:

 

 

 

 

 

 

Repayments of short-term borrowings, net

 

 

(83,521)

 

 

(14,278)

Net increase in deposits

 

 

131,239 

 

 

79,082 

Dividends paid

 

 

(2,202)

 

 

(1,902)

Repurchase of treasury stock

 

 

-    

 

 

(342)

Issuance of common stock

 

 

396 

 

 

14,509 

Reissuance of treasury stock

 

 

-    

 

 

207 



 

 

 

 

 

 

Net cash provided by financing activities

 

 

45,912 

 

 

77,276 



 

 

 

 

 

 

Net (decrease) increase in cash and cash equivalents

 

 

(4,565)

 

 

2,561 



 

 

 

 

 

 

CASH AND CASH EQUIVALENTS:

 

 

 

 

 

 

Beginning of period

 

 

21,330 

 

 

13,084 



 

 

 

 

 

 

End of period

 

$

16,765 

 

$

15,645 



 

 

 

 

 

 

See Notes to Unaudited Consolidated Financial Statements

 

 

 

 

 

 



(continued)

6

 


 

Table of Contents





 

 

 

 

 

 



 

 

 

 

 

 

PART I - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS

EVANS BANCORP, INC. AND SUBSIDIARIES

 

 

 

 

 

 

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

 

 

 

 

SIX MONTHS ENDED JUNE 30, 2018 AND 2017

 

 

 

 

 

 

(in thousands)

 

 

 

 

 

 



 

Six Months Ended June 30,



 

 

2018

 

 

2017



 

 

 

 

 

 

RECONCILIATION OF NET INCOME TO NET CASH

 

 

 

 

 

 

PROVIDED BY OPERATING ACTIVITIES:

 

 

 

 

 

 



 

 

 

 

 

 

Net income

 

$

7,110 

 

$

5,764 



 

 

 

 

 

 

Adjustments to reconcile net income to net cash

 

 

 

 

 

 

provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

857 

 

 

875 

Deferred tax expense

 

 

280 

 

 

589 

Provision (credit) for loan losses

 

 

1,426 

 

 

(25)

Loss on tax credit investment

 

 

-    

 

 

919 

Refundable state historic tax credit

 

 

-    

 

 

(647)

Gain on loans sold

 

 

-    

 

 

(70)

Change in fair value of equity securities

 

 

(245)

 

 

-    

Stock compensation expense

 

 

399 

 

 

295 

Proceeds from sale of loans held for resale

 

 

-    

 

 

5,376 

Originations of loans held for resale

 

 

-    

 

 

(5,532)

Changes in assets and liabilities affecting cash flow:

 

 

 

 

 

 

Other assets

 

 

(1,442)

 

 

(1,145)

Other liabilities

 

 

778 

 

 

(1,658)



 

 

 

 

 

 

NET CASH PROVIDED BY OPERATING ACTIVITIES

 

$

9,163 

 

$

4,741 



 

 

 

 

 

 

See Notes to Unaudited Consolidated Financial Statements

 

 

 

 

 

 











7

 


 

Table of Contents



PART 1 – FINANCIAL INFORMATION

ITEM 1 – FINANCIAL STATEMENTS



EVANS BANCORP, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2018 AND 2017



1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



The accounting and reporting policies followed by Evans Bancorp, Inc. (the “Company”), a financial holding company, and its two direct, wholly-owned subsidiaries: (i) Evans Bank, National Association (the “Bank”), and the Bank’s subsidiaries, Evans National Leasing, Inc. (“ENL”), Evans National Holding Corp. (“ENHC”) and Suchak Data Systems, LLC (“SDS”); and (ii) Evans National Financial Services, LLC (“ENFS”), and ENFS’s subsidiary, The Evans Agency, LLC (“TEA”), and TEA’s subsidiaries, Frontier Claims Services, Inc. (“FCS”) and ENB Associates Inc. (“ENBA”), in the preparation of the accompanying interim unaudited consolidated financial statements conform with U.S. generally accepted accounting principles (“GAAP”) and with general practice within the industries in which it operates.  Except as the context otherwise requires, the Company and its direct and indirect subsidiaries are collectively referred to in this report as the “Company.”



The results of operations for the three and six month periods ended June 30, 2018 are not necessarily indicative of the results to be expected for the full year.  The accompanying unaudited consolidated financial statements should be read in conjunction with the Audited Consolidated Financial Statements and the Notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2017.  The Company’s significant accounting policies are disclosed in Note 1 to the Form 10-K.



The Company adopted multiple accounting standards as of January 1, 2018 that impacted its consolidated financial statements. The impact on the Company’s equity as depicted in the Statement of Changes in Stockholders’ Equity is as follows:







 

 



 

 



 

As of January 1, 2018



 

 

Impact of adoption of ASU 2014-09: