Evans Bancorp, Inc.

Greetings. Welcome to the Evans Bancorp Third Quarter Fiscal Year 2021 Financial Results. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note, this conference is being recorded. I will now turn the conference over to your host, Deborah Paul-Pilowski, Investor Relations for EVBN. You may now begin.

Thank you and good afternoon everyone. We appreciate your time today and joining us for the second, third quarter, this 2021 earnings call for Evans Bank Corp. On the call today I have David Naska, President and Chief Executive Officer, and John Connerton, Chief Financial Officer, joining me here. David and John will review our results for the third quarter of 21 and then we will open the call for questions. We released our financial results just after the market closed today, and you can find that release on our website at evansbank.com. As you are aware, we may make some forward-looking statements during the formal discussion as well as during the Q&A session. These statements apply to future events subject to risks and uncertainties, as well as other factors that could cause actual results to differ from what is stated on today's call. These risks and uncertainties and other factors are provided in the earnings release as well as with other documents filed by the company with Securities and Exchange Commission. All of this can be found on our website or at SEC.gov. So with that, let me turn it over to David to begin.

Thank you, Debbie. Good afternoon, everyone. We appreciate your joining us for the call today. The third quarter produced record results for Evans, highlighted by earnings of $7 million, or 1.27 cents per diluted share. This compared with 4.5 million or 84 cents per diluted share in last year's period and up 11% from 6.3 million in the second quarter of this year. Results were supported by what has been strong loan production throughout the year. Paycheck protection program PPP fee realization and credit quality improvements reflecting underwriting strength and proactive measures with our hotel portfolio, resulting in upgrades in credit risk ratings of several relationships. As a reminder, due to the impacts of the pandemic, the bank in the third quarter of last year worked with its hotel operators to assist in providing relief until conditions improved and classified the entire hotel portfolio as criticized in recognition of the increased risk. As a great majority of these properties are seasonal in nature, the bank provided an interest-only period from last year's third quarter through this summer, coinciding with the high point of demand in those in the hotel's season. At the end of the recent quarter, all but one of those relationships have begun paying principal and interest and have paid all deferred interest. As a result of the payment performance and current operational results, we determined that $20 million of the $80 million portfolio would be upgraded out of the criticized loan category and only one relationship for $2.2 million that was unable to resume scheduled payments would be downgraded to non-performing. Although the remaining portfolio has shown improvement in occupancy rates and all amounts due have been paid, the bank is looking to establish sustained performance on these credits before upgrading. Approximately half of the $1.5 million provision recapture during the period was related to the decrease in criticized loans. I want to briefly touch on commercial loan growth. which is one of the drivers of our performance and John will provide more specific detail. We are generating strong loan production this year but PPP forgiveness and higher than typical payoffs in this historically low rate environment continue to provide headwinds to our overall loan portfolio growth. The third quarter continued to be very active for PPP loan forgiveness and through the end Through the quarter end, about 75% of total PPP loans have been forgiven, and we expect a majority of the remaining round two payoffs to occur during the next two quarters. We have continued to capture consumer lending demand and regain momentum with commercial real estate. With tremendous liquidity in client businesses, commercial and industrial lending has lagged, including lower line usage. though there are encouraging signs by the return of more CNI loan opportunities, which today make up approximately 30% of our pipeline. Our priority continues to be utilization of excess liquidity. We are strategically adding talent to supplement loan efforts both within our legacy market and new market area in Rochester, and early indications have been positive. As part of our strategy, we have spent a good deal of effort focused on refining initiatives for next year as we build out more client and operating solutions centered on speed, flexibility, and efficiency. While early in the process, distribution channel enhancements and operating efficiency pilot scenarios are encouraging. Ultimately, we believe greater operational efficiency can be had, and with an overall improvement around client engagement, we can enhance and scale returns over the long term. Lastly, as anticipated a few weeks ago, we held the grand opening of our new branch on the east side of Buffalo, a majority minority neighborhood, marking our 16th branch in the Buffalo, Niagara region and 21st branch overall. This was part of a larger development known as the Westminster Commons, a low-income senior housing project financed by the bank. We look forward to supporting the renaissance of neighborhoods on the east side of Buffalo. With that, I'll turn it over to John to run through our results, and then we'll be happy to take any questions. John?