Third Quarter 2005 Net Income up 16.9 Percent at Evans Bancorp; Solid Loan and Insurance Revenue Growth over Prior Year

Tuesday, November 01, 2005

ANGOLA, N.Y.--(BUSINESS WIRE)--Nov. 1, 2005--Evans Bancorp, Inc. (Nasdaq: EVBN) today reported strong net income and loan growth for the quarter ended September 30, 2005. Evans Bancorp, Inc. is the holding company for Evans National Bank, a commercial bank with 10 Western New York branches, and approximately $459.5 million in assets. It is also the holding company for Evans National Financial Services, Inc., whose subsidiary, ENB Insurance Agency, Inc., has 12 office locations in Erie, Niagara, Cattaraugus and Chautauqua counties.

Third Quarter Performance Highlights:

-- Net income grew by 16.9 percent, or $182 thousand, over the third quarter 2004

-- Average earning assets grew by 15.9 percent, or $57.6 million, in comparison to the third quarter 2004

-- Net loans grew by $8.3 million, or an annualized 13.7 percent in the third quarter 2005

-- Insurance service and fees increased by 31.9 percent, or $0.4 million, in comparison to the third quarter 2004

-- Net interest income grew by 15.7 percent, or $0.5 million, in comparison to the third quarter 2004

'We are pleased with the strong results in our third quarter that are driven from a number of strategic initiatives,' said President & Chief Executive Officer James Tilley. 'The Bank continues to experience strong loan demand which has caused a redeployment of assets into higher-yielding loans. We believe this quarter reflects the continued successful execution of our strategic initiatives.'

Net Income

Net income was $1.3 million or $0.48 per basic and diluted share for the quarter ended September 30, 2005 as compared to $1.1 million or $0.41 per basic and diluted share for the quarter ended September 30, 2004. On a year-to-date basis, net income was $3.7 million or $1.42 per basic and diluted share for the nine months ended September 30, 2005, as compared to $3.3 million or $1.28 per basic and diluted share for the nine months ended September 30, 2004.

All September 30, 2004 share and per share data included in this press release have been adjusted for the five percent stock dividend paid in December 2004, but not for the recently announced five percent stock dividend payable in December 2005.

Financial Position

Total assets at September 30, 2005 were $459.5 million, a decrease of $3.0 million or 0.7 percent in comparison to June 30, 2005.

Total deposits for the quarter decreased 2.0 percent to $354.9 million at September 30, 2005 from $362.0 million at June 30, 2005, due to the seasonally anticipated outflow of municipal deposits. Muni-Vest deposits decreased 14.7 percent or $8.1 million during the quarter, due to the normal outflow of municipal funds which occurs during the second and third quarters of the calendar year, prior to school tax collections in the fourth quarter. The decrease in Muni-Vest deposits was partially offset by growth in demand deposits, which increased 4.0 percent or $2.5 million, from the quarter ended June 30, 2005.

Non-performing loans as a percentage of total loans outstanding were 0.84 percent at September 30, 2005 as compared to 0.73 percent at June 30, 2005. Net charge-offs totaled $55 thousand in the third quarter 2005, as compared to net charge-offs of $202 thousand in the second quarter 2005. The allowance for loan losses totaled $3.3 million, or 1.32 percent of gross loans outstanding, at September 30, 2005, as compared to $3.2 million or 1.30 percent of gross loans outstanding at June 30, 2005.

Loan growth in the third quarter was funded partially with maturities and sales of securities of $7.8 million. At September 30, 2005, total net loans outstanding were $248.7 million, or 54.1 percent of total assets, as compared to $240.5 million or 52.0 percent of total assets at June 30, 2005. Commercial loan growth was bolstered by solid core lending to the Bank's target market, as well as continued success in equipment leasing by the Bank's wholly-owned subsidiary, Evans National Leasing, which was acquired in December 2004 and now accounts for 5.2% of total loans outstanding."

Commercial loan growth was bolstered by solid core lending to the Bank's target market, as well as continued success in equipment leasing by the Bank's wholly-owned subsidiary, Evans National Leasing, which was acquired in December 2004 and now accounts for 5.2% of total loans outstanding.

Operational Results

Net interest income for the three month period ended September 30, 2005 was $3.8 million, an increase of $0.5 million over the same period in 2004, and is primarily a result of growth in interest-earning assets and the Company's entry into the small ticket leasing business through Evans National Leasing.