(BUSINESS WIRE)– 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 year ended December 31, 2017.
FOURTH QUARTER AND FULL YEAR 2017 HIGHLIGHTS (compared with prior-year periods unless otherwise noted)
- Record annual net income of $10.5 million, up 27%. Impressive results despite $2.1 million writedown of deferred tax asset due to the Tax Cuts and Jobs Act (“TCJA”). Excluding TCJA impact, 2017 net income was $12.6 million (non-GAAP), or 52% higher than 2016.
- Fourth quarter net income of $1.0 million, or $0.20 per diluted share, was 58% below last year’s fourth quarter net income of $2.3 million, or $0.53 per diluted share, due primarily to TCJA impact.
- Excluding the TCJA impact, fourth quarter net income of $3.1 million (non-GAAP), or $0.62 per diluted share, was 31% higher than prior year’s fourth quarter.
- Fourth quarter results included a $300,000 contribution to the Evans Bank Foundation.
- Net interest income in fourth quarter increased 19% to $11.2 million driven by higher average loans and investments along with expanded net interest margin.
- Total assets grew 18% to $1.3 billion, driven by robust loan growth of 13%, or $123 million.
- Strong growth across multiple categories drove total deposits to $1.1 billion, up 12%.
For the full year 2017, net income was $10.5 million, up 27% from $8.3 million in 2016 despite a one-time $2.1 million deferred income tax expense related to the signing of the TCJA late in 2017. Earnings per diluted share increased 14%, or $0.26, to $2.16. The return on average equity was 9.11% for 2017 compared with 8.74% in 2016.
The TCJA was signed into law in December 2017 and lowered the Company’s federal tax rate from 35% to 21%, effective January 1, 2018. While the Company expects to benefit in 2018 and beyond from a lower federal tax expense, the Company’s deferred tax asset was remeasured as of December 31, 2017 and a $2.1 million charge was taken in the fourth quarter. The impact from the TCJA may differ from this estimate, due to, among other things, further refinement of Evans’ calculations, changes in interpretations and assumptions Evans has made, guidance that may be issued and actions Evans may take as a result of tax reform.
Excluding the impact of the TCJA, net income for the full year of 2017 (non-GAAP) was up 52% to $12.6 million, or $2.59 per diluted share. A reconciliation of net income excluding the impact of the deferred tax asset writedown (non-GAAP) to GAAP net income is set forth in a supplemental schedule at the conclusion of this release.
Net income was $1.0 million, or $0.20 per diluted share, in the fourth quarter of 2017 compared with $3.7 million, or $0.76 per diluted share, in the trailing third quarter of 2017 and $2.3 million, or $0.53 per diluted share, in last year’s fourth quarter. The decrease in net income was primarily attributable to the TCJA impact. Excluding the impact of the TCJA, net income for the fourth quarter (non-GAAP) increased 31% to $3.1 million, or $0.62 per diluted share.
Return on average equity was 3.32% for the fourth quarter of 2017 compared with 12.71% in the trailing third quarter and 9.70% in the prior-year period.
“2017 was another year of outstanding performance and record results as Evans leveraged its community banking model along with strategic investments in people, the community, and enhanced products and services to deliver 27% annual net income growth. Excluding the impact of federal tax reform, net income results for 2017 were 52% higher than the prior year. We are continuing to see market share gains as a result of execution of our strategic priorities,” said David J. Nasca, President and CEO of Evans Bancorp. “Overall, our robust performance demonstrates our commitment to driving profitability, shareholder returns, and building the business for long-term success. The balance sheet continued to show impressive growth while maintaining strong asset quality metrics, deposits were up across all product lines, and core earnings were measurably higher over the prior year. Tax reform is expected to be helpful to the Company into the future.”
Mr. Nasca added, “Supporting our associates and being deeply rooted in the community is at the heart of what we do and who we are. The recent tax legislation enhances our ability to show support for those who make our success possible: employees and the community. Evans contributed $300 thousand to the Evans Bank Foundation Fund, which will go to community organizations that invest in and enrich our region. Additionally, all non-senior level associates, or about 86% of our employee base, will receive a one-time bonus of $1,000.”
This is a preview of the full press release. To view the full earnings release and tables, click here to visit evansbancorp.com.