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EVANS BANK EYES ACQUISITIONS, MORE OFFICES IN FIRST-RING SUBURBS

Evans National Bank has its eyes on Buffalo's northern and eastern suburbs.

The Hamburg-based banking company, coming off an 8 percent jump in its first-quarter profits, is looking to expand its branch network further in Buffalo's first-ring suburbs, said James Tilley, Evans' president and chief executive officer, during the firm's annual shareholder's meeting on Tuesday.

While the company opened a branch in North Buffalo earlier this year, Evans hopes to open one other suburban Buffalo location later this year and the bank continues to be interested in further pushing into new markets through acquisitions, Tilley said.

"We're looking at acquisitions of other community banks that would allow us to move into new markets," as well as continuing with Evans' plan to generate its own growth by opening one new branch each year, Tilley said.

Tilley said he has been pleased with Evans' ability to open new branches from scratch, noting that its new North Buffalo branch already has attracted nearly $7 million in deposits. Still, he said the competition for deposits is intense in a stagnant market where other community banks and thrifts, such as Jamestown Savings Bank, Wyoming County Bank and Greater Buffalo Savings Bank, also are expanding their own branch networks.

"We're just dividing the pie a little smaller," Tilley said in an interview after the meeting. "It's hard to find a place where they ain't. We have to focus more and more on knowing our customers and building a broader banking and financial services relationship with them."

The bank, now with 10 branches, has increased its deposits by an average annual rate of about 12 percent over the last five years, more than double the average deposit growth rate in the Buffalo Niagara region, said William R. Glass, Evans' senior vice president. At the same time, its loan portfolio has grown at a 13.5 percent annual rate.

Beyond expanding its branch network, Evans also has been steadily pushing into the insurance and investment services businesses to reduce its dependence on the interest-rate sensitive banking business and find other sources of growth.

The company late last year acquired Ulrich & Co., the largest independent insurance agency in Niagara County, its ninth insurance-related acquisition since 2000.

"We still believe good opportunities exist to expand our footprint in this business," Tilley said.

Evans' first-quarter profits grew to $1.26 million, or 49 cents per share, from $1.17 million, or 45 cents per share, as both its banking and insurance operations expanded, while loan quality weakened slightly, although it remains strong.

"We're off to a strong start in 2005," Tilley said.

At the same time, the bank's interest rate margin -- the difference between the interest Evans takes in on loans and it pays out on deposits -- narrowed to 3.42 percent during the quarter, down from 3.74 percent a year ago.

Mark DeBacker, Evans' senior vice president and chief financial officer, said he expects the bank's interest rate margins to "remain challenged in the near future" because of heightened competition for deposits and the "challenging interest rate environment."

e-mail: drobinson@buffnews.com