Evans Bancorp, Inc.

Greetings. Welcome to Evans Bank Corp. First Quarter 2023 Financial Results. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. If anyone today should require operator assistance during the conference, please press star zero from your telephone keypad. Please note this conference is being recorded. At this time, I'll turn the conference over to Deborah Pulaski, Investor Relations for Evans Bank Corp. Ms. Pulaski, you may now begin.

Good afternoon, everyone, and thank you very much for joining us today. We appreciate your interest in Evans Bank Corp. And anyway, on the call with me, I have with me here David Naska, our president and CEO, and John Connerton, our chief financial officer. David and John are going to review the results of the first quarter of 2023 and provide an update on the company's strategic progress and outlook. After that, we will open the call for questions. You should have a copy of the financial results that were released today after markets closed. 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 a Q&A. These statements apply to future events that are subject to risks and uncertainty 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. So with that, let me turn it over to David to begin. David?

Thank you, Debra. Good afternoon, everyone. We appreciate you joining us today. I will start with a review of the past quarter and will then hand it off to John to discuss our results in detail. In light of the recent turmoil in the banking industry and range of negative headlines nationwide about banks and financial institutions, we believe our team has managed to headwinds well and delivered solid results during the quarter. It's important to note that we are a strong community bank that has been operating for more than 100 years in a consistent and resilient way in a slow and steady market. We work in a range-bound market which does not see high peaks or the resulting deep troughs. With a diversified client base and focus on quality commercial and consumer customers, we have weathered uncertain environments before and continue to do so. Despite being buffeted by macro factors, including the most rapid ascent of Fed rates in history, bank failures driven by risky activities, and negative sentiment on financial industry performance, we have continued to drive our strategy forward and focus on initiatives that we can control. Our focus remains on cultivating core relationships, managing expenses in delivery of our business, maintaining credit risk discipline, making strategic investments to optimize operations, reduce operational risk, and improve our customer interactions. It is the blocking and tackling of traditional community banking with appropriate risk management and making sure we are in a position of strength to capitalize on opportunities as they present themselves. With that said, during the past quarter, we realigned our leadership teams to provide intense focus on our strategic pillars, growth, operational effectiveness and digital migration, talent, culture, and community, financial stewardship, and appropriate risk and controls guardrails. We believe these internal changes better align corporate responsibilities with our strategic plan while fostering collaboration and accountability. Highlighting some of the results for the quarter, we delivered $5.8 million in net income, which was up 22% over last year. This result does reflect a provision release, but absent that, we were still pleased with the performance given the margin pressure caused by rising interest rates and price and competition. Given inflationary pressures and historic Fed increases in rates, the cost of interest-bearing liabilities rapidly accelerated during the quarter, as competition for deposits intensified and customers looked for options with greater returns. Evans does not have a material concentration of uninsured deposits and has maintained funding balances with the use of competitive and relationship pricing within our products, as average deposit balances decreased only 1% in the quarter, and in fact, when looking at spot balances at the end of the period, Total deposits were up 4% from the previous quarter. On the asset side of the balance sheet, loan production during the first quarter was solid as we continued to build a diverse portfolio of high quality loans with average balances up 5% year over year and up 1% from last quarter. Equally important, credit trends in the first quarter continue to be favorable. The yield on loans improved both sequentially and year-over-year, but the increases are now being outpaced by deposit costs as reflected in NIM contraction. We expect these market conditions and pricing challenges to persist and pressure our margin, as John will discuss in more detail. While focused on expense management, we have committed to strategic investments in people and technology to better scale the organization, drive future efficiencies, and improve customer-facing solutions for better experiences. Some examples include a new digital platform with live customer chat functionality, enhanced capabilities within the commercial loan servicing and processing system, and enhancements in credit and portfolio management to reduce risk and create opportunities for efficiencies. During the quarter, we completed the sale of the two properties in the southern tier market, that were part of our branch rationalization initiative, completed toward the end of last year. CECL, or Current Expected Credit Losses methodology, was implemented during the quarter, which John will also cover. As we look ahead, we expect to continue to confront headwinds and are doing all that we can to support our clients and the community in a thoughtful, profitable way while addressing volatility and risk, as we have been able to do through many cycles. With that, I'll turn it over to John to run through our results in detail, and then we'll be happy to take any questions. John?