Evans Bancorp Reports 2009 First Quarter Results

Business Wire, April 22, 2009

Excluding the goodwill impairment charge, total non-interest expenses were $5.70 million for the first quarter of 2009, an increase of 12.0% from first quarter 2008. The largest component of the increase in total non-interest expenses was salaries and employee benefits, which increased $0.43 million, or 15.0%, to $3.30 million for the quarter. Salaries and benefits were higher because of the addition of 18 new employees working in the Company’s new branch office in the Elmwood Village in Buffalo, and from the acquisitions of SDS and the Fitzgerald Agency.

As a result of the strong growth in net interest income and non-interest income, the efficiency ratio for the first quarter of 2009 improved to 60.3% from 62.4% in last year’s first quarter and 66.2% in the fourth quarter of 2008. Goodwill impairment and amortization are excluded from the efficiency ratio calculation.

Income tax benefit totaled ($0.64) million for the three month period ended March 31, 2009 reflecting an effective tax benefit rate of (34.0%). The effective tax rate for the first quarter of last year was 29.0%. Excluding the tax benefit from the impairment charge, the Company records an effective tax rate based on the expected rate for the entire year. The Company recognized a $0.11 million reduction in its deferred tax asset related to its leasing business as management estimates that the Company will be unable to utilize all of its deferred tax assets.

Capital Management

The Company consistently maintains regulatory capital ratios measurably above the federal “well capitalized” standard of 6.00% with a Tier 1 leverage ratio of 8.47%. Average equity as a percentage of average assets was 8.58% in the three months ended March 31, 2009, compared with 9.06% in the three months ended December 31, 2008, and 9.96% in the three months ended March 31, 2008. The decrease was a result of the strong growth in core earning assets over the last year. The dividend and loss in the first quarter of 2009 resulted in a lower book value per share of $15.80 at March 31, 2009, compared with $16.57 at December 31, 2008, and $16.07 at March 31, 2008.

Because of its strong capital position, the Company maintained its dividend of $0.41 per common share, which it paid to shareholders on April 1, 2009.

Conclusion

Mr. Nasca concluded, “Our strategy to acquire a larger share of the Western New York market by optimizing our core businesses of banking, insurance and investment advisory services was successful in the first quarter of this year. Reallocating capital from the national leasing business into our core community banking franchise will allow aggressive pursuit of our business model to expand Evans’ market position. While disappointed by the first quarter loss, we are confident that our strong capital base will allow us to regain the positive momentum exhibited in recent quarters once we have completed the exit of the national leasing business.”