Evans Bancorp, Inc.

Bancorp first quarter fiscal year 2022 financial results conference call. 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. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Debra Pawlowski, Investor Relations for Evans Bancorp. Please go ahead.

Thank you, Peter, and good afternoon, everyone. We certainly appreciate your taking the time to join us today and in your interest in Evans Bancorp. On the call with me, I have David Naska, our President and Chief Executive Officer, and John Connerton, our Chief Financial Officer. David and John will review our results for the first quarter of 2022 and provide an update on the company's strategic progress and outlook, after which we will open it up for Q&A. You should have a copy of the financial results that were released today after markets closed, and if not, you can access them on our website at www.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 that are 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. You can find those documents on our website or at sec.gov. With that, let me turn it over to David to begin. David?

Thank you, Debbie. Good afternoon, everyone. We appreciate your joining us for the call today. I will start with a review of the past quarter and then hand off to John to discuss the results in detail. The company continues to perform towards its focused strategy of driving commercial loan growth, amplifying revenue streams such as residential mortgage and insurance, while emphasizing talent, customer experience, and operational efficiency to further scale the organization. During the first quarter, the total loan portfolio, excluding PPP, grew 47 million, or 12% annualized. Over the last year, excluding PPP, total loans were up 84 million, or 6%, of which the commercial production was almost evenly split between CNI and Cree. Overall, our commercial business has been performing well as we leverage recently added talent across our footprint, and our Rochester market efforts are gaining traction, in part because of reduced pandemic restrictions allowing our associates to get out in that market and meet clients and prospects. This resulted in record commercial loan closings of $109 million during the first quarter and further a solid pipeline to drive future results. This production will be more fully realized in our reported results as the muting effect of PPP is nearing its end, with just 10 million of balances left at quarter end. Credit quality has been stable, especially with respect to our efforts and assistance related to the hotel portfolio. We are still actively monitoring and effect evaluating this portfolio in response to the economic impact of the pandemic. As a reminder, 2020, we classified $81 million of loans to clients within the hospitality industry as criticized. Since that time, approximately one-third of the portfolio was upgraded or paid off, leaving $55 million in criticized status at the end of the 2022 first quarter. The upgrading for performance on the remaining criticized hotel credits is dependent on continued positive payment history. While Evans has a primary focus of meeting the needs of business and commercial clients, the retail side of our business continues to grow and supplement our efforts with solid consumer and small business lending, cultivation, and deposit gathering initiatives. Residential mortgages increased $42 million since the first quarter of 2021, and we are acquiring new core checking balances at a stronger rate than accomplished last year. Evans prides itself on listening and responding to the needs of our clients and communities. The evolution of technology and shifting preferences over the past several years towards online, mobile, and ATM channels has led to a change in how clients interact with us. And while we grew in new accounts and customer base, in-person transactions declined. These trends have been amplified over the past two years, with the COVID pandemic and show no signs of rebounding to pre-pandemic levels. Due to these continuing trends, Evans performed an in-depth analysis of how to best meet clients' desired way of doing business. Throughout this review, keeping the customer experience at the forefront has been priority one. To that extent, we have made significant investments in our digital capabilities, including online account opening and an upgraded online banking platform. We've also continued to make improvements to our branch network, which included the opening of a new branch at Westminster Commons on Buffalo's east side, as well as a number of remodels and updates to existing facilities. Ultimately, as a result of this analysis and shifting customer preferences, we have embarked on a branch network efficiency initiative that will result in changes to three of our 21 locations. At the end of March, we converted our downtown Buffalo branch, which was conceived as a business relationship center, back to a loan production office for both commercial and consumer lending, as well as other by appointment business needs. Over the upcoming summer, we will also be closing two branch locations, one in the Rochester market that has sufficient overlap with other existing locations, and consolidating one of our southern Erie County branches where usage patterns have changed into a location that is literally down the road. Once fully executed and branches are sold, subleased, or leases non-renewed, the expected run rate of annual cost savings is expected to be approximately $750,000. It is important to note that this is being accomplished with no employees losing their job and no expectation of any material loss of business. To date, the transition has been smooth with positive feedback. We are also proud to announce this quarter a 3.39% annual increase in our cash dividend to shareholders to $0.62 per share, representing a trailing 12-month yield of about 2.95%. Lastly, a critical strategic area of focus for any business, and what we believe is a differentiator for Evans, is talent. We, like all businesses, have been challenged by the environment, associate desires, and competition for top performers. We have had success in recruitment and retention of these key performers overall. We believe this success is a reflection of our culture, commitment to our associates and their development, and indicative of our organization's reputation as being a community of talented, collaborative, caring people supported in their career and client goals. With that, I'll turn it over to John to run through our results, and then we'll be happy to field any questions. John?