Business Wire | Feb 4, 2021 04:15PM EST

Evans Bancorp Reports Net Income of $6.0 Million in Fourth Quarter 2020

Feb. 04, 2021

WILLIAMSVILLE, N.Y.--(BUSINESS WIRE)--Feb. 04, 2021--Evans Bancorp, Inc. (the "Company" or "Evans") (NYSE American: EVBN), a community financial services company serving Western New York since 1920, today reported its results of operations for the fourth quarter and full year ended December 31, 2020. Results include the acquisition of Fairport Savings Bank, effective May 1, 2020.

FOURTH QUARTER 2020 HIGHLIGHTS(compared with prior-year period unless otherwise noted)

* Net interest income increased 28% to $16.4 million reflecting the Fairport Savings Bank ("FSB") acquisition and fees earned in connection with Paycheck Protection Program ("PPP") * Results included a $0.1 million provision for loan loss release and $0.7 million gain on the sale of the previous administrative headquarters building * Significant loan and deposit growth quarter-over-quarter, reflecting solid execution of long-term strategy

"I am proud of what the team achieved in 2020. It was a year of monumental upheaval that tested the fortitude and resiliency of all. We responded rapidly to support the people and businesses in our region and help them navigate the many challenges presented by the pandemic. This was accomplished while adjusting quickly to a new work environment and the many changes that presented. Importantly, we continued to demonstrate one of Evan's Core Values of Valuing Others," said David J. Nasca, President and CEO of Evans Bancorp, Inc.

He continued, "The execution of our strategy occurred where we were able, and flexibility was demonstrated where execution was hampered by the environment. This supported a focused effort to position our company for long-term growth and success. This was evidenced by significant participation in the PPP program, which added almost 1,000 new commercial customers and more than $200 million of loans. Of equal importance was the expansion of our franchise in the Western New York market with the Benefits Brokers of WNY and Fairport Savings Bank acquisitions. Systems and customer accounts were successfully integrated from these combinations during a most unprecedented operating environment. Additionally, there are positive signs of recovery in our markets. We released $126 thousand of loan loss provision in the quarter based on improving economic indicators, successfully closed on the sale of our former administration building and saw net interest income increase 28% over the prior-year fourth quarter."

He added, "Looking toward the new year, even as our world continues to operate in a drastically altered environment, we are enthused about the opportunities ahead. We are optimistic that the pockets of recovery within our markets will continue to strengthen and the building developments with vaccinations can return the country to a more normal state. Regardless of the challenges, our commitment to community engagement will not waver, from community development lending, direct investments to drive progress in underserved areas, social justice and equity or partnering with local schools to improve educational opportunity. These actions are engrained in our culture, set us apart and serve as a compass to drive our efforts."

Net income was $6.0 million, or $1.11 per diluted share, in the fourth quarter of 2020, compared with $4.5 million, or $0.84 per diluted share, in the third quarter of 2020 and $3.7 million, or $0.75 per diluted share, in last year's fourth quarter. The Company's fourth quarter 2020 results included a $0.1 million release of provision for loan loss primarily reflecting adjustment for improvement in macroeconomic indicators such as decreases in unemployment from the beginning of the pandemic. The fourth quarter of 2020 also included higher net interest income, in part, due to fees earned in connection with PPP and the recognition of a $0.7 million gain on the sale of the Company's previous administrative headquarters building. Return on average equity was 14.51% for the fourth quarter of 2020, compared with 11.09% in the third quarter of 2020 and 10.16% in the fourth quarter of 2019.

For the full year 2020, net income was $11.2 million, or $2.13 per diluted share, down from $17.0 million, or $3.42 per diluted share, in 2019. The decrease reflected higher loan loss provision as the Company responded to the economic uncertainty from the COVID-19 pandemic and incurred $6 million of one-time merger related expenses reflecting the acquisition of FSB. The return on average equity was 7.06% for 2020 compared with 12.08% in 2019.

Net Interest Income

($ in thousands)



4Q 2020 3Q 2020 4Q 2019



Interest income $ 18,175 $ 17,766 $ 16,028

Interest expense 1,744 2,124 3,236

Net interest income 16,431 15,642 12,792

Provision for loan losses (credit) (126) 1,881 (122)

Net interest income after provision $ 16,557 $ 13,761 $ 12,914

Net interest income increased $0.8 million, or 5%, from the third quarter of 2020, and $3.6 million, or 28%, from the prior-year fourth quarter. The increase from the sequential third quarter reflects the acceleration of the amortization of PPP loan fees, as the Company recognized the first of its PPP loans to be forgiven by the Federal Government. As the loans are forgiven the Company is accelerating the recognition of the fees that were being amortized over the original life of the loan. As a result, Evans recognized an additional $0.4 million in interest income due to this acceleration. The increase over last year's fourth quarter was primarily driven by higher average interest-earning assets as the Company recognized the impact of the FSB acquisition and PPP lending.

Fourth quarter net interest margin of 3.38% increased 19 basis points from the third quarter of 2020, reflecting the accelerated PPP fee amortization and reduced interest expense as the Company continues to align rates on deposits. Net interest margin was down 29 basis points from the fourth quarter of 2019, largely due to the Federal Reserve's decrease of the fed funds rate by 150 basis points early in 2020, and changes in the mix of interest-earning assets, including greater interest earning cash balances, PPP loans and residential mortgages from FSB. The yield on loans increased 8 basis points when compared with the third quarter of 2020 and decreased 83 basis points when compared with the fourth quarter of 2019. The cost of interest-bearing liabilities decreased to 0.49% compared with 0.59% in the third quarter of 2020 and 1.24% in the fourth quarter of 2019.

The Company continues to evaluate its loan portfolio in response to the economic impact of the COVID-19 pandemic. As part of the Company's evaluation, provision for loan losses can be adjusted for the impact that economic trends, such as unemployment, will have on our clients. The $0.1 million release of provision for loan losses in the fourth quarter of 2020 reflects the response to current positive macroeconomic trends. The Company has deferred the adoption of the Current Expected Credit Loss Impairment Model (CECL), as permitted by its classification as a Smaller Reporting Company by the Securities and Exchange Commission.

Asset Quality

($ in thousands)



4Q 2020 3Q 2020 4Q 2019



Total non-performing loans $ 28,118 $ 21,466 $ 14,396

Total net loan charge-offs 60 34 85

Non-performing loans / Total loans 1.66 % 1.26 % 1.17 %

Net loan charge-offs / Average loans 0.01 % 0.01 % 0.03 %

Allowance for loan losses / Total loans 1.21 % 1.21 % 1.24 %

During the third quarter of 2020, the Company classified the loans to clients within the hotel industry as criticized, where further assistance is required given their level of seasonality and ongoing challenges during the COVID-19 pandemic. At year-end, criticized assets totaled $139.6 million, with the hotel portfolio comprising 58% of that amount. The Company continues to monitor each client in that industry including on-going conversations with the borrowers. The $6.7 million increase in non-performing assets during the fourth quarter reflects two hotel borrowers that have longer-term implications beyond typical seasonality performance.

"As expected, during the fourth quarter the remaining $8.0 million of loan deferrals moved back to normal status. Our focus has been on the hotel portfolio, and while the majority continue to pay either interest only or full principal and interest, as part of our ongoing reviews we did identify two credits that will have longer-term stresses, and as a result moved them to non-performing status," stated John Connerton, Chief Financial Officer of Evans Bank. "The hotel portfolio continues to be well-collateralized with an average loan to value of 67%, and we believe that we are appropriately reserved for any near-term economic uncertainty."

Non-Interest Income

($ in thousands)

4Q 2020 3Q 2020 4Q 2019



Deposit service charges $ 619 $ 598 $ 747

Insurance service and fee revenue 2,301 3,217 2,120

Bank-owned life insurance 172 170 164

Loss on tax credit investment - - (158)

Refundable NY state historic tax credit - - 115

Gain on sale of securities - 667 -

Other income 1,711 1,205 1,005

Total non-interest income $ 4,803 $ 5,857 $ 3,993

The decrease in insurance service and fee revenue from the third quarter of 2020 reflects typical seasonally lower commercial lines insurance commissions.

The third quarter of 2020 included approximately $0.7 million of gain on sale of investment securities, while there were no comparable gains in the current quarter of 2020 and fourth quarter of 2019.

The increase in other income was largely due to a gain of $0.7 million recognized on the sale of the Company's former administrative headquarters in the fourth quarter 2020.

Non-Interest Expense

($ in thousands)

4Q 2020 3Q 2020 4Q 2019



Salaries and employee benefits $ 9,087 $ 8,101 $ 7,355

Occupancy 1,169 1,204 868

Advertising and public relations 233 503 421

Professional services 893 865 827

Technology and communications 1,306 1,365 1,075

Amortization of intangibles 133 136 112

FDIC insurance 339 290 74

Merger-related expenses - 524 232

Other expenses 1,350 1,480 1,207

Total non-interest expenses $ 14,510 $ 14,468 $ 12,171

Salaries and benefits costs increased from the third quarter of 2020 due to adjustments for incentive accruals, as the Company adjusted calculated incentives to recognize the contributions of associates during this historically challenged year. The increase from the prior-year period was largely due to the addition of personnel related to the FSB acquisition.

Advertising expenses decreased as the Company had increased spending in the previous quarters to highlight new promotional campaigns, particularly those in the Company's expanded Rochester market.

The increase in technology and communications from the prior-year period was due to higher online banking activity, ATM card fees, and software costs primarily as a result of the FSB acquisition.

The higher level of FDIC insurance expense reflects the benefit of the FDIC's small bank assessment credit, which was taken in the 2019 fourth quarter.

There were no merger-related expenses in the fourth quarter of 2020 compared with costs relating to the FSB core system conversion during the third quarter of 2020, and legal and other professional services related to the initiation of the merger in the fourth quarter of 2019.

The Company's GAAP efficiency ratio, or noninterest expenses divided by the sum of net interest income and noninterest income, was 68.3% in the fourth quarter of 2020, 67.3% in the third quarter of 2020, and 72.5% in the fourth quarter of 2019. The Company's non-GAAP efficiency ratio, excluding amortization expense, gains and losses from investment securities, and merger-related expenses, was 67.7% compared with 66.3% in the third quarter of 2020 and 70.3% in last year's fourth quarter.

Income tax expense was $0.8 million, or an effective tax rate of 12.0%, for the fourth quarter of 2020 compared with 11.8% in the third quarter of 2020 and 20.9% in last year's fourth quarter. Excluding the impact of the first quarter 2020 historic tax credit transaction, the effective tax rate was 22.1% and 25.6% in the fourth and third quarters of 2020, respectively.

Balance Sheet Highlights

Total assets were down slightly at $2.04 billion as of December 31, 2020, compared with $2.06 billion at September 30, 2020, but increased 40% from $1.46 billion at December 31, 2019. The year-over-year increase reflects the addition of $323 million of assets, including $271 million of loans, from the FSB acquisition and the Company's loan growth over the last year, including the origination $203 million of PPP loans.

Investment securities were $167 million at December 31, 2020, $6 million higher than the end of the third quarter of 2020, and $36 million higher than at the end of last year's fourth quarter. The Company added $21 million of securities from FSB during the second quarter of 2020, and subsequently sold $23 million of securities during the third quarter of 2020. The primary objectives of the Company's investment portfolio are to provide liquidity, secure municipal deposits, and maximize income while preserving the safety of principal.

Total deposits of $1.77 billion declined $10 million, or 1%, from September 30, 2020, but were up $504 million, or 40%, from the end of last year's fourth quarter. The increase from the prior year reflects $239 million of deposits from FSB and an accumulation of liquidity by commercial customers in response to the pandemic, including deposits related to PPP loans, and increases in consumer deposits from government stimulus payments and lower consumer spending. The slight decrease from the sequential third quarter largely reflects seasonally lower municipal deposits.

Capital Management

The Company has consistently maintained regulatory capital ratios measurably above the Federal "well capitalized" standard, including a Tier 1 leverage ratio of 8.21% at December 31, 2020 compared with 7.82% at September 30, 2020 and 10.33% at December 31, 2019. Book value per share was $31.21 at December 31, 2020 compared with $30.29 at September 30, 2020 and $30.11 at December 31, 2019.

For the full year of 2020, cash dividends totaled $1.16, up 12% over 2019.

2020 Year in Review(compared with prior-year period)

Net interest income was $59.8 million, up 15%, primarily due to the growth of interest earning assets from the loans acquired in the FSB acquisition and the origination of PPP loans. However, the increase was muted by both low commercial loan growth and net interest margin compression. Net interest margin was 3.37%, a decrease of 45 basis points, which largely reflects the Federal Reserve's decrease of the fed funds rate by 150 basis points early in 2020, and changes in the mix of interest-earning assets, including greater interest earning cash balances, PPP loans and residential mortgages from FSB.

The Company's provision for loan losses of $5.4 million was up significantly from $75 thousand due to the impacts on the economy from the COVID-19 pandemic. A decrease in asset quality resulted from the elevated risk associated with the hotel portfolio, which increased the Company's criticized loans. The ratio of non-performing loans to total loans was 1.66% compared with 1.17%.

Non-interest income was up $0.2 million at $18.2 million. The Company had a net loss of $0.6 million as a result of the recognition of a historic tax credit transaction. Additionally, deposit service charges were down $0.3 million due to certain fees that had been temporarily suspended during the second quarter of 2020 to assist customers affected by COVID-19. These decreases were offset by gains on sale of investment securities and the sale of the previous administrative headquarters.

Non-interest expense increased $12 million, or 25%, to $59.9 million. The Company had merger-related expense in connection with the acquisition of FSB of $6.0 million. Additionally, higher salaries and employee benefits of $3.4 million, or 11%, due to the addition of new employees from FSB and merit increases. Occupancy expense was up $0.9 million also reflecting the addition of FSB. Technology expenses were up 27%, or $1.1 million, to $5.2 million largely due to increased software costs, volume related ATM card fees and online banking activity, primarily as a result of the FSB acquisition and COVID-19 impact. FDIC insurance expense increased $0.7 million, as a result of growth in assets and the reduction of prior year expenses due to the application of the FDIC's small bank assessment credit, which was not applicable in 2020.

The Company's GAAP efficiency ratio was 76.7% in 2020 compared with 68.2% in 2019, and the non-GAAP efficiency ratio, as previously defined, was 68.5% compared with 67.2%.

Income tax expense for the year was $1.6 million, representing an effective tax rate of 12.2% compared with an effective tax rate of 23.5% in 2019. Excluding the impact of the historic tax credit transactions, the effective tax rate was 23.9% in 2020.

Webcast and Conference Call

The Company will host a conference call and webcast on Thursday, February 4, 2021 at 4:45 p.m. ET. Management will review the financial and operating results for the fourth quarter of 2020, as well as the Company's strategy and outlook. A question and answer session will follow the formal presentation.

The conference call can be accessed by calling (201) 689-8471. Alternatively, the webcast can be monitored at www.evansbancorp.com.

A telephonic replay will be available from 7:45 p.m. ET on the day of the teleconference until Thursday, February 11, 2021. To listen to the archived call, dial (412) 317-6671 and enter conference ID number 13714792, or access the webcast replay at www.evansbancorp.com, where a transcript will be posted once available.

About Evans Bancorp, Inc.

Evans Bancorp, Inc. is a financial holding company and the parent company of Evans Bank, N.A., a commercial bank with $2.0 billion in assets and $1.8 billion in deposits at December 31, 2020. Evans is a full-service community bank with 20 financial centers providing comprehensive financial services to consumer, business and municipal customers throughout Western New York. Evans Insurance Agency, a wholly owned subsidiary, provides life insurance, employee benefits, and property and casualty insurance through ten offices in the Western New York region. Evans Investment Services provides non-deposit investment products, such as annuities and mutual funds.

Evans Bancorp, Inc. and Evans Bank routinely post news and other important information on their websites, at www.evansbancorp.com and www.evansbank.com.

Safe Harbor Statement: This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, but are not limited to, statements concerning future business, revenue and earnings. These statements are not historical facts or guarantees of future performance, events or results. There are risks, uncertainties and other factors that could cause the actual results of Evans Bancorp to differ materially from the results expressed or implied by such statements. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include the impacts from COVID-19, competitive pressures among financial services companies, interest rate trends, general economic conditions, changes in legislation or regulatory requirements, effectiveness at achieving stated goals and strategies, and difficulties in achieving operating efficiencies. These risks and uncertainties are more fully described in Evans Bancorp's Annual and Quarterly Reports filed with the Securities and Exchange Commission. Forward-looking statements speak only as of the date they are made. Evans Bancorp undertakes no obligation to publicly update or revise forward-looking information, whether as a result of new, updated information, future events or otherwise.

EVANS BANCORP, INC. AND SUBSIDIARIES

SELECTED FINANCIAL DATA (UNAUDITED)

(in thousands, except shares and per share data)



12/31/2020 9/30/2020 6/30/2020 3/31/2020 12/31/2019

ASSETS

Interest-bearingdeposits at $ 83,902 $ 88,249 $ 109,943 $ 40,706 $ 28,280 banks

Investment 166,600 160,757 169,975 162,038 130,308 Securities

Loans 1,693,794 1,703,076 1,685,761 1,246,206 1,226,531

Allowance for (20,415) (20,601) (18,754) (18,157) (15,175) loan losses

Goodwill andintangible 14,951 15,085 15,222 13,421 12,545 assets

All other assets 105,283 110,427 103,793 80,597 77,741

Total assets $ 2,044,115 $ 2,056,993 $ 2,065,940 $ 1,524,811 $ 1,460,230



LIABILITIES AND STOCKHOLDERS'

EQUITY

Demand deposits 436,157 442,536 428,655 273,623 263,717

NOW deposits 230,751 215,492 229,788 159,223 140,654

Savings deposits 825,947 799,739 794,513 625,773 587,142

Time deposits 278,554 323,211 356,147 268,978 275,927

Total deposits 1,771,409 1,780,978 1,809,103 1,327,597 1,267,440

Borrowings 79,663 82,909 67,715 23,902 23,755

Other 24,138 30,218 27,124 25,216 20,582 liabilities

Totalstockholders' 168,905 162,888 161,998 148,096 148,453 equity



SHARES AND CAPITAL RATIOS

Common shares 5,411,384 5,376,742 5,376,872 4,942,802 4,929,593 outstanding

Book value per $ 31.21 $ 30.29 $ 30.13 $ 29.96 $ 30.11 share

Tier 1 leverage 8.21 % 7.82 % 8.44 % 9.92 % 10.33 %ratio

Tier 1risk-based 11.62 % 11.28 % 11.14 % 11.84 % 12.32 %capital ratio

Total risk-based 12.88 % 12.53 % 12.39 % 13.09 % 13.56 %capital ratio



ASSET QUALITY DATA

Totalnon-performing $ 28,118 $ 21,466 $ 19,718 $ 16,717 $ 14,396 loans

Total net loan 60 34 - 17 85 charge-offs



Non-performingloans/Total 1.66 % 1.26 % 1.17 % 1.34 % 1.17 %loans

Net loancharge-offs / 0.01 % 0.01 % - % 0.01 % 0.03 %Average loans

Allowance forloans losses/ 1.21 % 1.21 % 1.11 % 1.46 % 1.24 %Total loans

EVANS BANCORP, INC AND SUBSIDIARIES

SELECTED OPERATIONS DATA (UNAUDITED)

(in thousands, except share and per share data)

2020

2020

2020

2020

2019

Fourth Quarter

Third Quarter

Second Quarter

First Quarter

Fourth Quarter

Interest income

$

18,175

$

17,766

$

17,069

$

15,823

$

16,028

Interest expense

1,744

2,124

2,136

3,047

3,236

Net interest income

16,431

15,642

14,933

12,776

12,792

Provision (credit) for loan losses

(126)

1,881

597

2,999

(122)

Net interest income after provision

16,557

13,761

14,336

9,777

12,914

Deposit service charges

619

598

397

628

747

Insurance service and fee revenue

2,301

3,217

2,667

2,425

2,120

Bank-owned life insurance

172

170

178

160

164

Loss on tax credit investment

-

-

-

(2,475)

(158)

Refundable NY state historic tax credit

-

-

-

1,857

115

Gain on sale of securities

-

667

-

-

-

Other income

1,711

1,205

997

743

1,005

Total non-interest income

4,803

5,857

4,239

3,338

3,993

Salaries and employee benefits

9,087

8,101

8,005

7,797

7,355

Occupancy

1,169

1,204

1,062

861

868

Advertising and public relations

233

503

123

269

421

Professional services

893

865

872

914

827

Technology and communications

1,306

1,365

1,467

1,096

1,075

Amortization of intangibles

133

136

134

130

112

FDIC insurance

339

290

282

179

74

Merger-related expenses

-

524

4,974

460

232

Other expenses

1,350

1,480

1,093

1,164

1,207

Total non-interest expenses

14,510

14,468

18,012

12,870

12,171

Income before income taxes

6,850

5,150

563

245

4,736

Income tax provision

821

606

94

41

988

Net income

6,029

4,544

469

204

3,748

PER SHARE DATA

Net income per common share-diluted

$

1.11

$

0.84

$

0.09

$

0.04

$

0.75

Cash dividends per common share

$

-

$

0.58

$

-

$

0.58

$

-

Weighted average number of diluted shares

5,416,198

5,395,806

5,243,581

4,992,214

4,990,863

PERFORMANCE RATIOS

Return on average total assets

1.18

%

0.88

%

0.10

%

0.05

%

1.02

%

Return on average stockholders' equity

14.51

%

11.09

%

1.19

%

0.55

%

10.16

%

Efficiency ratio

68.33

%

67.30

%

93.95

%

79.87

%

72.51

%

Efficiency ratio (Non-GAAP)*

67.71

%

66.28

%

67.30

%

73.39

%

70.28

%

* The calculation of the non-GAAP efficiency ratio excludes amortization of intangibles, gains and losses from investment securities, merger-related expenses and the impact of historic tax credit transactions.

EVANS BANCORP, INC AND SUBSIDIARIES

SELECTED OPERATIONS DATA (UNAUDITED)

(in thousands, except share and per share data)



2020 2020 2020 2020 2019

Fourth Third Quarter Second First Quarter Fourth Quarter Quarter Quarter

Interest $ 18,175 $ 17,766 $ 17,069 $ 15,823 $ 16,028 income

Interest 1,744 2,124 2,136 3,047 3,236 expense

Net interest 16,431 15,642 14,933 12,776 12,792 income

Provision(credit) for (126) 1,881 597 2,999 (122) loan losses

Net interestincome after 16,557 13,761 14,336 9,777 12,914 provision



Depositservice 619 598 397 628 747 charges

Insuranceservice and 2,301 3,217 2,667 2,425 2,120 fee revenue

Bank-owned 172 170 178 160 164 life insurance

Loss on taxcredit - - - (2,475) (158) investment

Refundable NYstate historic - - - 1,857 115 tax credit

Gain on sale - 667 - - - of securities

Other income 1,711 1,205 997 743 1,005

Totalnon-interest 4,803 5,857 4,239 3,338 3,993 income



Salaries andemployee 9,087 8,101 8,005 7,797 7,355 benefits

Occupancy 1,169 1,204 1,062 861 868

Advertisingand public 233 503 123 269 421 relations

Professional 893 865 872 914 827 services

Technology and 1,306 1,365 1,467 1,096 1,075 communications

Amortization 133 136 134 130 112 of intangibles

FDIC insurance 339 290 282 179 74

Merger-related - 524 4,974 460 232 expenses

Other expenses 1,350 1,480 1,093 1,164 1,207

Totalnon-interest 14,510 14,468 18,012 12,870 12,171 expenses



Income before 6,850 5,150 563 245 4,736 income taxes

Income tax 821 606 94 41 988 provision

Net income 6,029 4,544 469 204 3,748



PER SHARE DATA

Net income percommon $ 1.11 $ 0.84 $ 0.09 $ 0.04 $ 0.75 share-diluted

Cash dividendsper common $ - $ 0.58 $ - $ 0.58 $ - share

Weightedaverage number 5,416,198 5,395,806 5,243,581 4,992,214 4,990,863 of dilutedshares



PERFORMANCE RATIOS

Return onaverage total 1.18 % 0.88 % 0.10 % 0.05 % 1.02 %assets

Return onaverage 14.51 % 11.09 % 1.19 % 0.55 % 10.16 %stockholders'equity

Efficiency 68.33 % 67.30 % 93.95 % 79.87 % 72.51 %ratio

Efficiencyratio 67.71 % 66.28 % 67.30 % 73.39 % 70.28 %(Non-GAAP)*



* The calculation of the non-GAAP efficiency ratio excludes amortization ofintangibles, gains and losses from investment securities, merger-relatedexpenses and the impact of historic tax credit transactions.

EVANS BANCORP, INC AND SUBSIDIARIES

SELECTED AVERAGE BALANCES AND YIELDS/RATES (UNAUDITED)

(in thousands)

2020

2020

2020

2020

2019

Fourth Quarter

Third Quarter

Second Quarter

First Quarter

Fourth Quarter

AVERAGE BALANCES

Loans, net

$

1,677,502

$

1,671,338

$

1,535,206

$

1,219,230

$

1,213,837

Investment securities

162,941

172,712

179,677

136,029

137,354

Interest-bearing deposits at banks

92,974

106,154

73,973

57,319

32,061

Total interest-earning assets

1,933,417

1,950,204

1,788,856

1,412,578

1,383,252

Non interest-earning assets

117,458

117,244

107,738

89,804

89,415

Total Assets

$

2,050,875

$

2,067,448

$

1,896,594

$

1,502,382

$

1,472,667

NOW

218,587

221,343

203,458

144,564

136,077

Savings

818,878

799,082

721,578

605,103

593,694

Time deposits

300,605

337,967

337,187

274,576

274,856

Total interest-bearing deposits

1,338,070

1,358,392

1,262,223

1,024,243

1,004,627

Borrowings

80,814

84,926

51,493

24,708

27,241

Total interest-bearing liabilities

1,418,884

1,443,318

1,313,716

1,048,951

1,031,868

Demand deposits

439,953

430,658

399,807

281,624

272,834

Other non-interest bearing liabilities

25,882

29,644

25,540

22,127

20,375

Stockholders' equity

166,156

163,828

157,531

149,680

147,590

Total Liabilities and Equity

$

2,050,875

$

2,067,448

$

1,896,594

$

1,502,382

$

1,472,667

YIELD/RATE

Loans, net

4.09

%

4.01

%

4.22

%

4.80

%

4.92

%

Investment securities

2.18

%

2.06

%

2.12

%

3.24

%

2.46

%

Interest-bearing deposits at banks

0.10

%

0.10

%

0.08

%

1.27

%

1.65

%

Total interest-earning assets

3.74

%

3.62

%

3.84

%

4.51

%

4.61

%

NOW

0.15

%

0.19

%

0.24

%

0.50

%

0.57

%

Savings

0.24

%

0.33

%

0.37

%

0.87

%

0.94

%

Time deposits

0.90

%

1.04

%

1.40

%

2.02

%

2.09

%

Total interest-bearing deposits

0.37

%

0.48

%

0.62

%

1.13

%

1.21

%

Borrowings

2.43

%

2.26

%

1.41

%

2.78

%

2.64

%

Total interest-bearing liabilities

0.49

%

0.59

%

0.65

%

1.17

%

1.24

%

Interest rate spread

3.25

%

3.03

%

3.19

%

3.34

%

3.36

%

Contribution of interest-free funds

0.13

%

0.16

%

0.17

%

0.30

%

0.31

%

Net interest margin

3.38

%

3.19

%

3.36

%

3.64

%

3.67

%

EVANS BANCORP, INC AND SUBSIDIARIES

SELECTED AVERAGE BALANCES AND YIELDS/RATES (UNAUDITED)

(in thousands)

2020 2020 2020 2020 2019

Fourth Third Quarter Second First Quarter Fourth Quarter Quarter Quarter

AVERAGE BALANCES



Loans, net $ 1,677,502 $ 1,671,338 $ 1,535,206 $ 1,219,230 $ 1,213,837

Investment 162,941 172,712 179,677 136,029 137,354 securities

Interest-bearingdeposits at 92,974 106,154 73,973 57,319 32,061 banks

Totalinterest-earning 1,933,417 1,950,204 1,788,856 1,412,578 1,383,252 assets

Noninterest-earning 117,458 117,244 107,738 89,804 89,415 assets

Total Assets $ 2,050,875 $ 2,067,448 $ 1,896,594 $ 1,502,382 $ 1,472,667



NOW 218,587 221,343 203,458 144,564 136,077

Savings 818,878 799,082 721,578 605,103 593,694

Time deposits 300,605 337,967 337,187 274,576 274,856

Totalinterest-bearing 1,338,070 1,358,392 1,262,223 1,024,243 1,004,627 deposits

Borrowings 80,814 84,926 51,493 24,708 27,241

Totalinterest-bearing 1,418,884 1,443,318 1,313,716 1,048,951 1,031,868 liabilities



Demand deposits 439,953 430,658 399,807 281,624 272,834

Othernon-interest 25,882 29,644 25,540 22,127 20,375 bearingliabilities

Stockholders' 166,156 163,828 157,531 149,680 147,590 equity



TotalLiabilities and $ 2,050,875 $ 2,067,448 $ 1,896,594 $ 1,502,382 $ 1,472,667 Equity



YIELD/RATE



Loans, net 4.09 % 4.01 % 4.22 % 4.80 % 4.92 %

Investment 2.18 % 2.06 % 2.12 % 3.24 % 2.46 %securities

Interest-bearingdeposits at 0.10 % 0.10 % 0.08 % 1.27 % 1.65 %banks

Totalinterest-earning 3.74 % 3.62 % 3.84 % 4.51 % 4.61 %assets



NOW 0.15 % 0.19 % 0.24 % 0.50 % 0.57 %

Savings 0.24 % 0.33 % 0.37 % 0.87 % 0.94 %

Time deposits 0.90 % 1.04 % 1.40 % 2.02 % 2.09 %

Totalinterest-bearing 0.37 % 0.48 % 0.62 % 1.13 % 1.21 %deposits

Borrowings 2.43 % 2.26 % 1.41 % 2.78 % 2.64 %

Totalinterest-bearing 0.49 % 0.59 % 0.65 % 1.17 % 1.24 %liabilities



Interest rate 3.25 % 3.03 % 3.19 % 3.34 % 3.36 %spread

Contribution ofinterest-free 0.13 % 0.16 % 0.17 % 0.30 % 0.31 %funds

Net interest 3.38 % 3.19 % 3.36 % 3.64 % 3.67 %margin



EVANS BANCORP, INC AND SUBSIDIARIES

SELECTED OPERATIONS DATA (UNAUDITED)

(in thousands, except share and per share data)

2020

2019

Year to Date

Year to Date

% Change

Interest income

$

68,833

$

64,740

6

%

Interest expense

9,051

12,685

(29)

%

Net interest income

59,782

52,055

15

%

Provision for loan losses

5,351

75

7,035

%

Net interest income after provision

54,431

51,980

5

%

Deposit service charges

2,242

2,569

(13)

%

Insurance service and fee revenue

10,610

10,688

(1)

%

Bank-owned life insurance

680

656

4

%

Loss on tax credit investment

(2,475)

(158)

1,466

%

Refundable NY state historic tax credit

1,857

115

1,515

%

Gain on sale of securities

667

-

-

%

Other income

4,656

4,212

11

%

Total non-interest income

18,237

18,082

1

%

Salaries and employee benefits

32,990

29,628

11

%

Occupancy

4,296

3,429

25

%

Advertising and public relations

1,128

1,033

9

%

Professional services

3,544

3,510

1

%

Technology and communications

5,234

4,124

27

%

FDIC insurance

1,090

431

153

%

Amortization of intangibles

533

448

19

%

Merger-related expenses

5,958

232

2,468

%

Other expenses

5,087

4,985

2

%

Total non-interest expenses

59,860

47,820

25

%

Income before income taxes

12,808

22,242

(42)

%

Income tax provision

1,562

5,228

(70)

%

Net income

11,246

17,014

(34)

%

PER SHARE DATA

Net income per common share-diluted

$

2.13

$

3.42

(38)

%

Cash dividends per common share

$

1.16

$

1.04

12

%

Weighted average number of diluted shares

5,268,560

4,968,172

PERFORMANCE RATIOS

Return on average total assets

0.60

%

1.17

%

Return on average stockholders' equity

7.06

%

12.08

%

Efficiency ratio

76.72

%

68.18

%

Efficiency ratio (Non-GAAP)*

68.45

%

67.21

%

Net interest margin

3.37

%

3.82

%

Net loan charge-offs (recoveries)/Average loans

0.01

%

(0.03)

%

* The calculation of the non-GAAP efficiency ratio excludes amortization of intangibles, gains and losses from investment securities, merger-related expenses and the impact of historic tax credit transactions.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210204006063/en/

CONTACT: John B. Connerton Executive Vice President and Chief Financial Officer (716) 926-2000 jconnerton@evansbank.com -OR- Deborah K. Pawlowski Kei Advisors LLC (716) 843-3908 dpawlowski@keiadvisors.com

CONTACT: Media Contact: Kathleen Rizzo Young Public & Community Relations Manager 716-343-5562 krizzoyoung@evansbank.com