Evans Bancorp, Inc.

Greetings. Welcome to the Evans Bancorp Second Quarter 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. Please note, this conference is being recorded. I'll now turn the conference over to your host, Deborah Pawlowski, Investor Relations for Evans Bancorp. You may begin.

Thank you, Shamali, and good afternoon, everyone. We certainly appreciate your taking the time today to join us and your interest in Evans Bank Corp. Here with me on the call today, I have David Naska, our President and Chief Executive Officer, and John Connerton, our Chief Financial Officer. David and John are going to review our results for the second quarter of 2022 and provide an update on the company's strategic progress and outlook, after which we will then 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. 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 relief, 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. So with that, let me turn it over to David to begin.

Thank you, Debbie. Good afternoon, everyone. We appreciate you joining us for the call today, and I'm going to start with a review of the past quarter and then hand it off to John to discuss the results in detail. Results for the second quarter were very solid, driven by continued growth in commercial business lending, core deposit attraction, especially checking and savings, strengthening margins, and a diligent focus on expense management, despite the rapidly changing market dynamics all financial institutions operate in currently. The team continues to execute our strategy, resulting in the attraction of new business and market share growth with a consistent community and relationship-driven focus that centers on the customer. It is our expectation that a rising interest rate environment will drive higher net interest income and margins going forward. During the second quarter, net income was particularly encouraging as we were up 9% from the first quarter and comparatively, although down slightly the last year's second quarter, we effectively covered $2.5 million in PPP fees received in last year's period. We experienced another quarter of significant production performance by hitting $105 million in loan closings, which was led by robust commercial real estate demand and strong progress in commercial and industrial loans. And while net loan growth was not substantial during the quarter, we are pleased with the positive trend we see in the number of new commitments and loan closings as our teams across the footprint have been performing well in this current market. We also continue to focus on deposit growth, and while there was a slight dip in this past quarter due to seasonality of municipal deposits, our core deposit balances continue to trend positively. We have exceeded our expectations with core consumer checking balances, and commercial deposit acquisition continues to be strong. An area of highlight during the quarter was continued performance in managing expenses while simultaneously maintaining targeted technology investments to enhance the customer experience and engagement with digital offerings, as well as drive operational efficiency and effectiveness. Notable achievements included an upgrade to our core operating system to provide new security features and processing efficiencies, including a new teller system that was implemented throughout the branch, and the kickoff of a commercial efficiency project which will touch all areas of commercial lending from data collection to underwriting, booking, and portfolio management. Our expectation is that we can facilitate commercial production and documentation in an integrated, digital, accountable, and streamlined workflow with better controls and an enhanced customer experience. We expect components of the new project to be in rollout in the late third or early fourth quarter. We discussed on our last earnings call embarking on a branch network efficiency initiative, which resulted in the closure or repurposing of three locations. To date, the transition of these branches has been smooth with positive feedback. The expected run rate of annual non-interest cost savings from these changes is approximately $750,000, and we are already starting to see the initial benefits in this past quarter. Another critical pillar of our strategy, which we believe is a differentiator for Evans, is talent and culture. We, like all businesses, continue to be challenged by the market for associates, competition for top performers, and rapid labor cost inflation. We've had success in recruitment and key associate retention and believe this is a reflection of our culture and commitment to our associates. We are aware that employee attitudes and perspectives are evolving and we are continuously working to drive a culture that is inviting and a place where top talent wants to work. A culture pulse survey was recently completed focusing on fairness, collaboration, and communication to determine recommendations and suggestions that we can apply to continue to enhance the employee experience. We are also excited about a recent promotion during the quarter that will help us continue our cultural momentum toward inclusion, diversity, equity, and awareness. Bryce Woods, who previously served as Vice President of Community Development in Commercial Banking, was promoted to the newly created position of Chief Diversity, Inclusion, and Community Development Officer. He is responsible for collaborating and influencing the overall development, implementation, and communication of the organization's inclusive strategic plan. Royce has deep ties throughout the market, coming from work with the City of Buffalo and a WMBE advisory and development organization, as well as interfacing with several local nonprofit boards. His passion for community development work, diversity, and cultural evolution will be an asset as he takes on this all-important role at Evans. There are two other areas we are taking a focused approach to. the intersection of associates' career desires and the company's needs. First, our insurance account executive development program was recently enhanced with a formalized sales process for new and existing account executives, focusing on sourcing leads, building centers of influence, winning at cold calling, and utilization of existing technologies to assist with sales processes and data. We also completed the initial phase of our commercial banking talent development program, which consisted of detailed multi-month onboarding courses and training built within our online learning management system. Phase two of the project will utilize development toolkits to prepare internal candidates for promotion, thus building an internal commercial banking talent pipeline. Lastly, as a community financial institution, the organization and our associates try to be positioned to play a part and assist in the community in a multitude of ways. As you may know, on May 14th, our community was rocked to its core as a racially motivated mass shooting occurred in East Buffalo within the most prominent and important grocery store in the area, taking 10 lives and injuring three others. The Buffalo community showed its resolve and resilience by coming together in response to this unspeakable tragedy as the true city of good neighbors that it is. As a community steward, Evans is, along with many other community institutions, actively assisting to help make a difference and be a positive influence for equity and justice. Whether it be providing platforms for our associates to assist, expanding already significant associate community involvement, working in a public-private partnership with the city to develop infill housing, or donating money to the recovery fund to support systemic change aligning with our values, and commitment to assure that everyone in our community is treated equitably and able to assess every opportunity and fully realize their potential. 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? Thank you, David, and good afternoon, everyone.