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Evans’ earnings fall 4.2 percent in third quarter

Evans Bancorp recorded net income of $2.3 million in the third quarter, down 4.2 percent from $2.4 million a year ago, but says its results are holding up well compared to last year’s.

In the third quarter of 2013, Evans reaped a $300,000 tax benefit, which stemmed from a historic tax credit the bank had invested in to help fund an unidentified project. Without that factor, the results for the Hamburg-based parent company of Evans Bank were similar to last year’s.

Through nine months, the bank’s net income – $5.9 million – was behind last year’s $6.2 million, which was Evans’ second-best year on record, said David J. Nasca, Evans’ president and chief executive officer. “I think it was another quarter of significant growth.” Evans’ net interest income from making loans and taking deposits was $7.7 million in the third quarter, up 7 percent from a year ago. Nasca said the growth was fueled by loan growth of 9.6 percent from a year ago, which resulted in total loans of $685.3 million as of Sept. 30.

Evans’ noninterest income, from sources such as fees, was $3.5 million, up 34 percent from a year ago.

The bank’s noninterest expenses increased 1.9 percent from a year ago, to $7.5 million. Gary Kajtoch, the chief financial officer, said the bank has managed to keep expenses largely in check. “If you look at the expense lines that increased, it’s really investments in people, which is really where we’re anxious to make investments, especially in sales people and so on.” The bank has consolidated its number of administrative locations to help reduce costs.

In September, state Attorney General Eric T. Schneiderman put Evans Bancorp in the crosshairs, accusing the bank of “redlining” on Buffalo’s East Side. His lawsuit, in the U.S. District Court of Western New York, claims Evans denied mortgage loans to predominantly African-American neighborhoods in the city because of their racial composition.

Evans has denied allegations of discrimination and says its track record shows the bank has invested on the East Side. Nasca said the bank is due to file its formal response to the complaint by early next month. Meanwhile, Evans has set aside $1 million for the case and is being represented by Dennis C. Vacco, a former state attorney general.

Through nine months of 2014, “we’re still very comparable to last year, despite our ability to absorb that $1 million litigation expense in the second quarter,” Nasca said. “That shows you this was a pretty successful quarter, in terms of our production and profitability.”

Looking ahead, the bank will make a greater push to increase its deposit market share, Nasca said. The FDIC’s most recent rankings placed Evans No. 6 in the region, with 1.81 percent of deposits.

The bank wants to bolster revenues in fee-income businesses such as cash management, insurance, employee benefits and financial services, Kajtoch said. “It’s really those four fee businesses that will drive our noninterest income.”