Evans Bancorp said Thursday that fourth-quarter profits soared 58.6 percent while full-year profits hit a record level, as total loan and fee revenues grew and the bank released money from its reserve for losses on loans and leases.
The Hamburg-based parent of Evans Bank reported net income of $2.12 million, or 51 cents per share, up from $1.34 million, or 33 cents per share, a year ago.
The bank attributed the gain to higher net interest income from taking deposits and making loans, higher non-interest revenues and better credit quality.
For the full year, the bank earned $8.1 million, or $1.95, up 33 percent from $6.1 million, or $1.49 per share, in 2011.
“These were outstanding results for the second consecutive year, so we’re very happy with that,” said David J. Nasca, Evans’ president and CEO.
Still, Nasca said, the bank faces challenging conditions, with intense competition, historically low interest rates that traditionally hurt banks, an uneven economy and burdensome regulations.
“The community banking model is being shown to be valued by the customer base,” Nasca said. “It has been very successful for us. It shows that the community values having a community bank in it.”
Net interest income rose 3 percent to $7.1 million, as the profit margin on lending stabilized because of a higher yield on loans, a better mix of lower-cost deposits and repricing of deposits and debt.
Rather than setting aside money to cover potential losses on loans, Evans released $129,000 in the fourth quarter, compared to taking a provision of $800,000 a year ago. Specifically, the bank released $187,000 from its reserve for equipment leases, but set aside $58,000 for problem loans. The ratio of bad debts to total loans fell, and bad debts dropped by $1.2 million in the last three months of the year.
“We want to grow in a prudent and profitable manner by fostering relationships with our customers and taking market share from our competitors,” said Evans CFO Gary J. Kajtoch.
Fee and other income rose 14.7 percent to $3.3 million, representing 31.6 percent of total revenues. Insurance agency revenues, a big area of focus for the bank, rose 17.7 percent to $1.6 million because of higher profit-sharing and commercial lines revenues. Deposit service fees rose 3.3 percent to $498,000, while other income rose by $166,000 because of premiums on mortgages that were sold to Fannie Mae.
Operating costs also rose 1.9 percent to $7.2 million, led by a 3.9 percent increase in salaries and benefits because of bonuses, higher health care costs and increased staff.
At year-end, total assets had grown 9.3 percent to $809.7 million. Core loans rose 0.7 percent to $581.3 million, but were down by 2.5 percent from Sept. 30 because of the prepayment of several large commercial loans. Total deposits rose 10.2 percent to $679 million from core deposit increases in both commercial and consumer accounts.