Evans Bancorp’s fourth quarter net income fell 19 percent from a year ago, while its full-year net income fell shy of a record.
The Hamburg-based parent company of Evans Bank recorded fourth-quarter net income of $1.7 million, down from $2.1 million the year before.
Net interest income from taking deposits and making loans was up 3.4 percent from the year before, to $7.3 million. Its non-interest income was down 8 percent from a year ago to $3 million.
A key factor was Evans’ provision for loan and lease losses, said David J. Nasca, Evans Bancorp’s president and chief executive officer. A year ago, Evans released $129,000 from its reserve for losses on loans and leases, an unusual occurrence that bolstered its results. This year, as Evans’ loans have grown, the bank increased its provision by $400,000 from a year ago.
“This was a normal provision, (in the fourth) quarter,” Nasca said. “Last year was abnormal because we pulled reserves back, because the leasing portfolio was paying down and going away and the credit quality on that portfolio got better.”
For the full year, Evans’ net income was $7.9 million, down 2.5 percent from a record-high $8.1 million in 2012. Despite the drop, Nasca said he was encouraged by the results. “2013 was an outstanding year for the bank, near to our all-time earnings of (2012).
“We had good top-line growth, along with strong margin and expense management. We grew loans and deposits for the year.”
The bank made some “strategic investments” in personnel that added to its expenses for 2013, reflecting spending that the bank made to support its continued growth, Nasca said.
“We’ve had very strong loan demand, so we will need lenders to continue to answer that loan demand,” he said. “Now, we’ll manage the expenses in other places.”
For instance, he said, Evans recently went through an office consolidation expected to reduce its facilities expenses in the long run.
“You’ve got to operate on both ends,” he said. “You’ve got to bring in more income and you’ve got to make sure that you’re as efficient and reduce expenses as much as you can. And when I say reduce expenses, efficiency is what we’re about.”