1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (mark one) [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For quarterly period ended June 30, 1999 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 0-18539 EVANS BANCORP, INC. (Exact name of registrant as specified in its charter) New York 16-1332767 (State of other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 14-16 North Main Street, Angola, New York 14006 (Address of principal executive offices) (Zip Code) (716) 549-1000 (Issuer's telephone number) Not applicable (Former name, former address and former fiscal year, if changed since last report.) Indicate by check (x) whether the issuer (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: Common Stock, $.50 Par Value--1,698,950 shares as of July 31, 1999
2 INDEX EVANS BANCORP, INC. AND SUBSIDIARY PAGE PART 1. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Consolidated balance sheets--June 30, 1999 and December 31, 1998 1 Consolidated statements of income--Three months ended June 30, 1999 and 1998 2 Consolidated statements of income--Six months 3 ended June 30, 1999 and 1998 Consolidated statements of cash flows--Six months 4 ended June 30, 1999 and 1998 Notes to consolidated financial statements-- June 30, 1999 and 1998 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 Item 3. Quantative and Qualitative Disclosures About Market Risks 9 PART II. OTHER INFORMATION 10 Item 1. Legal Proceedings Item 2. Changes In Securities Item 3. Defaults upon Senior Securities Item 4. Submission of Matters to a Vote of Security Holders Item 5. Other Information Item 6. Exhibits and Reports on Form 8-K SIGNATURES 11
3 PART I - FINANCIAL INFORMATION PAGE 1 ITEM I - FINANCIAL STATEMENTS EVANS BANCORP, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS June 30, 1999 and December 31, 1998 (Unaudited) <TABLE> <CAPTION> June 30, December 31, ASSETS 1999 1998 ------------- ------------- <S> <C> <C> Cash and due from banks $ 6,887,579 $ 7,300,780 Federal Funds sold 3,075,000 0 Securities: Classified as available-for-sale, at fair value 53,035,121 45,969,587 Classified as held-to-maturity, at amortized cost 4,668,303 4,090,385 Loans, net 109,042,649 110,526,449 Properties and equipment, net 3,709,777 3,696,658 Other assets 3,328,710 2,536,371 ------------- ------------- TOTAL ASSETS $ 183,747,139 $ 174,120,230 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES Deposits: Demand $ 29,113,344 $ 25,857,037 NOW and money market accounts 7,735,656 7,554,104 Regular savings 56,888,707 47,676,615 Time Deposits, $100,000 and over 21,560,332 24,208,290 Other time accounts 40,937,929 38,787,590 ------------- ------------- 156,235,968 144,083,636 Federal Funds Purchased 0 2,225,000 Other Borrowed Funds 5,000,000 7,000,000 Other liabilities 4,180,937 2,188,181 ------------- ------------- TOTAL LIABILITIES 165,416,905 155,496,817 ============= ============= STOCKHOLDERS' EQUITY Common Stock, $.50 par value; 10,000,000 shares authorized; 1,698,950 shares issued 849,475 849,475 Capital surplus 10,990,720 10,990,720 Retained earnings 6,962,950 6,400,764 Unrealized gains on available for sale securities (472,911) 443,308 ------------- ------------- 18,330,234 18,684,267 Less: Treasury Stock, at cost (2,419 shares) 0 (60,854) ------------- ------------- Total Stockholders' equity 18,330,234 18,623,413 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 183,747,139 $ 174,120,230 ============= ============= </TABLE> See Notes to Consolidated Financial Statements.
4 PART I - FINANCIAL INFORMATION PAGE 2 ITEM I - FINANCIAL STATEMENTS EVANS BANCORP, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME For the Three Months ended June 30, 1999 and 1998 (Unaudited) <TABLE> <CAPTION> Three Months Ended June 30, 1999 1998 ----------- ---------- <S> <C> <C> INTEREST INCOME Loans $ 2,332,930 $ 2,387,228 Federal funds sold 54,107 9,293 Securities: Taxable 423,054 321,998 Non-taxable 311,934 264,618 ----------- ----------- Total Interest Income 3,122,025 2,983,137 INTEREST EXPENSE Interest on Deposits 1,151,710 1,176,624 Short Term Borrowing 74,361 37,345 ----------- ----------- NET INTEREST INCOME 1,895,954 1,769,168 PROVISION FOR LOAN LOSSES 45,000 29,999 ----------- ----------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 1,850,954 1,739,169 ----------- ----------- NON-INTEREST INCOME: Service charges 169,710 176,832 Other 102,667 64,790 Securities Gain(Loss) 0 (1,284) ----------- ----------- Total Non-interest Income 272,377 240,338 ----------- ----------- NON-INTEREST EXPENSE: Salaries and employee benefits 773,501 663,217 Occupancy 219,120 188,995 Supplies 34,797 28,399 Repairs and maintenance 59,062 47,307 Advertising and public relations 49,171 34,802 Professional services 62,969 63,897 FDIC assessments 4,087 4,169 Other 291,195 228,215 ----------- ----------- Total Non-interest Expense 1,493,902 1,259,001 ----------- ----------- Income before income taxes 629,429 720,506 ----------- ----------- INCOME TAXES 171,250 209,000 ----------- ----------- NET INCOME $ 458,179 $ 511,506 =========== =========== NET INCOME PER COMMON SHARE-BASIC $ 0.27 $ 0.30 =========== =========== WEIGHTED AVERAGE NUMBER OF COMMON SHARES 1,698,950 1,698,950 =========== =========== </TABLE> See Notes to Consolidated Financial Statements.
5 PART I - FINANCIAL INFORMATION PAGE 3 ITEM I - FINANCIAL STATEMENTS EVANS BANCORP, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME For the Six Months ended June 30, 1999 and 1998 (Unaudited) <TABLE> <CAPTION> Six Months Ended June 30, 1999 1998 ----------- ---------- <S> <C> <C> INTEREST INCOME Loans $4,661,556 $4,697,627 Federal Funds Sold 93,318 40,257 Securities Taxable 777,535 646,627 Non-taxable 607,338 525,542 ---------- ---------- Total Interest Income 6,139,747 5,910,053 INTEREST EXPENSE Interest on Deposits 2,271,794 2,388,026 Short Term Borrowing 158,236 48,497 ---------- ---------- NET INTEREST INCOME 3,709,717 3,473,530 PROVISION FOR LOAN LOSSES 80,000 60,000 ---------- ---------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 3,629,717 3,413,530 ---------- ---------- NON-INTEREST INCOME: Service charges 347,031 348,030 Other 239,688 137,349 Securities Gains 1,064 3,308 ---------- ---------- Total Non-interest Income 587,783 488,687 ---------- ---------- NON-INTEREST EXPENSE: Salaries and employee benefits 1,513,121 1,326,052 Occupancy 434,902 380,493 Supplies 67,905 59,513 Repairs and maintenance 113,031 92,635 Advertising and public relations 95,838 61,802 Professional services 126,111 132,386 FDIC Assessment 8,299 8,294 Other 553,209 444,499 ---------- ---------- Total Non-interest Expense 2,912,416 2,505,674 ---------- ---------- Income before income taxes 1,305,084 1,396,543 ---------- ---------- INCOME TAXES 352,450 394,700 ---------- ---------- NET INCOME $ 952,634 $1,001,843 ========== ========== NET INCOME PER COMMON SHARE-BASIC $ 0.56 $ 0.59 ========== ========== WEIGHTED AVERAGE NUMBER OF COMMON SHARES 1,698,950 1,698,950 ========== ========== </TABLE> See Notes to Consolidated Financial Statements.
6 PART I - FINANCIAL INFORMATION PAGE 4 ITEM I - FINANCIAL STATEMENTS EVANS BANCORP, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS For the Six Months Ended June 30, 1999 and 1998 (Unaudited) <TABLE> <CAPTION> Six Months Ended June 30, 1999 1998 ------------- ------------- <S> <C> <C> OPERATING ACTIVITIES Interest received $ 6,101,106 $ 5,547,030 Fees and commissions received 559,856 536,503 Interest paid (2,449,218) (2,367,240) Cash paid to suppliers and employees (2,791,423) (2,163,468) Income taxes paid (347,000) (417,973) Net cash provided by operating activities 1,073,321 1,134,852 ------------ ------------ INVESTING ACTIVITIES Available for sale securities Purchases (18,272,730) (13,347,284) Proceeds from sales 2,842,567 6,219,849 Proceeds from maturities 6,904,242 4,895,965 Held to maturity securities Purchases (1,592,571) (1,052,390) Proceeds from maturities 1,014,678 1,181,519 Additions to properties and equipment (97,593) (157,988) Decrease in loans, net of repayments (2,379,120) (5,453,499) Proceeds from sales of loans 3,204,950 1,829,235 ------------ ------------ Net cash used in investing activities (8,375,577) (5,884,593) ------------ ------------ FINANCING ACTIVITIES Increase in deposits 12,152,332 1,086,075 (Repayment)Purchase of Short Term Borrowing (1,858,669) 2,345,244 Treasury Stock 60,840 Cash Dividends Paid (390,448) (288,822) ------------ ------------ Net cash provided by financing activities 9,964,055 3,142,497 ------------ ------------ Net increase(decrease) in cash and cash equivalents 2,661,799 (1,607,244) Cash and cash equivalents, January 1 7,300,780 10,336,532 ------------ ------------ Cash and cash equivalents, June 30 $ 9,962,579 $ 8,729,288 ============ ============ </TABLE> See Notes to Consolidated Financial Statements.
7 PART I - FINANCIAL INFORMATION PAGE 5 ITEM I - FINANCIAL STATEMENTS EVANS BANCORP, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS For the Six Months Ended June 30, 1999 and 1998 (Unaudited) <TABLE> <CAPTION> Six Months Ended June 30, 1999 1998 <S> <C> <C> ----------- ------------- RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Net income $ 952,634 $ 1,001,843 ----------- ----------- Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 309,199 (21,149) Provision for credit losses 80,000 60,001 Gain on sale of assets (11,137) (10,890) (Decrease)Increase in accrued interest payable (19,188) 53,157 Increase in accrued interest receivable (84,938) (208,137) (Decrease)Increase in other liabilities (2,775) 228,884 (Increase)Decrease in other assets (150,474) 31,143 ----------- ----------- Total adjustments 120,687 133,009 ----------- ----------- NET CASH PROVIDED BY OPERATING ACTIVITIES $ 1,073,321 $ 1,134,852 =========== =========== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Net unrealized (loss)gain on available for sale securities ($ 695,457) $ 258,772 =========== =========== </TABLE> See Notes to Consolidated Financial Statements.
8 PART I - FINANCIAL INFORMATION PAGE 6 ITEM 1 - FINANCIAL STATEMENTS EVANS BANCORP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 1999 AND 1998 (UNAUDITED) 1. GENERAL The accounting and reporting policies followed by Evans Bancorp, Inc., a bank holding company, and its subsidiary, Evans National Bank, in the preparation of the accompanying interim financial statements conform with generally accepted accounting principles and with general practice within the banking industry. The accompanying financial statements are unaudited. In the opinion of management, all adjustments necessary for a fair presentation of financial position and results of operations for the interim periods have been made. Such adjustments are of a normal recurring nature. The results of operations for the six month period ended June 30, 1999 are not necessarily indicative of the results to be expected for the full year. 2. SECURITIES Securities which the Bank has the ability and intent to hold to maturity are stated at cost, plus discounts accrued and less premiums amortized. Securities which the Bank has identified as available for sale are stated at fair value. 3. ALLOWANCE FOR CREDIT LOSSES The provision for credit losses is based on management's evaluation of the relative risks inherent in the loan portfolio and, on an annual basis, generally exceeds the amount of net loan losses charged against the allowance. 4. INCOME TAXES Provision for deferred income taxes are made as a result of timing differences between financial and taxable income. These differences relate principally to directors deferred compensation, pension premiums payable, allowance for loan losses and deferred loan origination expenses. 5. PER SHARE DATA The per share of common stock information is based upon the weighted average number of shares outstanding during each period, retroactively adjusted for stock dividends and stock splits. The Company adopted Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings per Share," during the fourth quarter of 1997. Only basic earnings per share is disclosed because the Company does not have any dilutive securities or other contracts to issue common stock or convert to common stock. 6. NEW ACCOUNTING STANDARDS PRONOUNCEMENTS SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information was issued in 1997 by the Financial Accounting Standards Board. This Statement establishes standards for the way that public business enterprises report information about operating segments in annual financial statements. Management has determined that the Bank is the Company's only operating segment. As such additional disclosures are not considered necessary. SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, was issued in June 1998. The Company adopted the provisions of SFAS No. 133 effective October 1, 1998. Because the Company does not use derivatives, the adoption of SFAS No. 133 did not impact the Company's earnings or financial position. As allowed by SFAS No. 133 the Company transferred approximately $2,900,000 of certain securities from held to maturity to the available for sale classification. The realized and unrealized gains on the securities transferred were not material to the Company.
9 PART I - FINANCIAL INFORMATION PAGE 7 ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS MATERIAL CHANGES IN FINANCIAL CONDITION Total deposits increased 8.4% over the first six months of 1999 versus an increase of .8% over the first six months of 1998. Demand deposits increased 12.6%, Regular savings increased 19.3% and Other time accounts increased 5.5% over the first six months of 1999. Deposit increases primarily are attributable to the expansion of the Bank's trade area to include West Seneca, NY since opening a new branch in February 1999. Time Deposits over $100,000 decreased 10.9% in the first six months of 1999 versus a decrease of 3.8% in the first six months 1998. Total net loans outstanding of $109 million have decreased 1.3% since December 31, 1998, which compares to an increase of 3.5% from December 1997 to June 1998. Total consumer loans decreased $1.4 million, which reflects the current trend towards residential mortgage and home equity mortgage refinancing. The decrease also reflects the sale of $2.8 million in residential mortgages to the Federal National Mortgage Association ("FNMA") and $400 thousand in student loans sold to Sallie Mae ("SLMA") in the first half of 1999. The securities portfolio increased 15.3% between December 31, 1998 and June 30, 1999 versus an increase of 5.4% over the same time period last year. Available funds continue to be invested in US government and agency securities and tax-advantaged bonds issued by New York State municipalities and school districts. The annualized return on average assets ("ROAA") at June 30, 1999 was 1.08%. The ROAA at December 31, 1998 was 1.24%. The return on average equity at June 30, 1999 was 10.35% versus 11.63% at December 31, 1998. The capital to assets ratio of 10.63% at June 30,1999 compares to 10.81% at December 31, 1998. Total assets have increased approximately $9.6 million or 5.5% since December 31, 1998. MATERIAL CHANGES IN THE RESULTS OF OPERATIONS Net interest income for the semi-annual period ending June 30, 1999 increased 6.8% over the same six month period in 1998. Interest paid on deposits decreased 4.9%. The decrease reflects the impact of Federal Reserve dropping short term interest rates three times, twenty five basis points each, in the last months of 1998. The cost of short term borrowing was substantially higher due to the increased use of the Bank's funding options as a member of the Federal Home Loan Bank. The Bank's year-to-date net interest margin at June 30, 1999 was 4.54% as compared to 4.69% at June 30, 1998. The year-to-date yield on average earning assets has declined from 8.26% at June 30, 1998 to 7.73% at June 30, 1999. The yield on loans has declined to 8.50% from 9.01% over that time period and the tax-equivalent yield on federal funds and investments has decreased from 6.52% to 6.24%. Comparatively, the year-to-date cost of funds on interest bearing balances decreased from 4.15% at June 30, 1998 to 3.75% at June 30, 1999. The year-to-date provision for credit losses was $80,000 through June 30, 1999 versus $60,000 through the second quarter of 1998. Management has increased the amount set aside for potential loan losses due to the substantial increase in the volume of the portfolio experienced over the past two years. Management believes that the credit quality of the portfolio remains high as supported by the fact that the charge-offs for the six month period ending June 1999 were $5,000 versus $20,000 for the same period in June 1998. Non-interest expenses increased 16.2% in the first six months of 1999. This compares to an increase of only 5.6% in the first six months of 1998. All expense categories were impacted by the branch expansion into West Seneca. Annual salary adjustments and an increase in the number of full-time equivalent employees from 82 at June 30, 1998 to 90 at June 30, 1999 contributed to the 14.1% increase in salary and benefit expense. Occupancy expense is up 14.3% over the same time period in 1998, along with Advertising and Public Relations, up 55.1% relating to the branch expansion cost. Repairs and Maintenance are also up 22%. Net income through June 30, 1999 of $952,634 reflects a decrease of 4.9% over the first six months of 1998. The effective combined tax rate for the first six months of 1999 was 27% compared to 28% for the first six months of 1998. The relatively low tax rates experienced in 1999 and 1998 demonstrate the impact of increasing the Bank's investment in tax-advantaged municipal bonds and the benefit realized from a favorable deferred tax position.
10 PAGE 8 YEAR 2000 Company has long been aware of the complexity and significance of the issues associated with the arrival of the Millennium (Year 2000). The "Year 2000" problem centers around the world's computer systems and a common programming practice that condenses a century date to just two digits, i.e. "98" to represent 1998, to conserve storage space. As a result, these systems may interpret "00" as 1900 rather than 2000, causing potential data corruption, misinterpretation, or system failure. The Company, with the support and direction of its Board of Directors and Senior Management, has dedicated financial and human resources to formally adapt strategies and work towards resolving all potential Year 2000 issues. In the third quarter of 1997, the Company began formalizing its strategy to address the data processing and business impacts we anticipated to be associated with Year 2000 issues. Our ultimate approach was to adopt the five-phase format recommended by the Federal Financial Institutions Examination Council, and follow guidance provided to us by our regulatory authorities who periodically monitor and evaluate our progress. These phases, and our activities, are described as follows: Awareness Phase While this can be considered an ongoing phase relating to education of employees, customers, and vendors, our primary activities defined the Year 2000 problem; obtained Board of Director and Executive level support; established a project team to include the Senior Vice President of Administration, the Bank Auditor; Manager of Data Processing, Manager of Systems Development, representatives form each functional area of the Bank, legal counsel, and the principal of our main-frame software vendor. This committee was responsible for development and implementation of an overall strategy to identify and resolve issues associated with year 2000. Assessment Phase Implementing this phase provided an assessment of the size and complexity, identifying affected areas of our business, identified the required resources, and enabled us to develop a comprehensive plan. An inventory of all hardware and software was completed to establish a specific Year 2000 status, i.e. "already deemed compliant", "requiring replacement or renovation", or "becoming obsolete". Priorities were then determined. Certain systems were identified as mission critical. Non-information technology systems were also addressed. Key vendors, such as providers of power, heating, and telephone services, among others, were contacted regarding their Year 2000 readiness. The Bank has received letters certifying Year 2000 compliance from those suppliers whose services are deemed critical to bank operations. However, in the event of an infra-structure failure, i.e. lack of power, etc., a Bank committee has developed a contingency plan so that business can continue with minimal interruption. The Bank also performed a customer risk assessment in the last quarter of 1998. Renovation Phase The Company does not write or create computer code or perform programming activities. We are reliant on vendors and software suppliers to furnish enhancements in a timely manner. Renovation of our core processing system was completed in early 1998 in conjunction with a plan developed by the vendor, other user financial institutions, and our Company. These renovations were successfully tested in collaboration with all user institutions at our back-up site. The renovated system was successfully installed in June 1998. Additional in-house testing was conducted throughout the remainder of the year. Validation Phase This is probably the most critical and intensive phase of the entire project. It is this phase that we validate, through a variety of testing methods, that each system can process after the turn of the century, with particular emphasis on those identified as "mission critical". As stated above, renovation to our core processing systems was successfully tested, and all testing of mission critical systems was successfully completed by year end 1998. In each case, we followed a comprehensive written test plan involving user representation to validate test results. All systems, including those designated mission critical, have been renovated and successfully tested as of December 31, 1998. During the second quarter of 1999 the Company performed another integrated test of our processing system to validate "Year 2000 readiness". The test was completed successfully and controls are in place to ensure a "clean" system that remains Year 2000 ready.
11 PAGE 9 Implementation Phase The Company's Year 2000 ready systems are in place and presently functioning. As a part of implementation, we plan continued testing in 1999, along with fully integrated tests. Quality reviews will be conducted throughout 1999 and the year 2000 to ensure proper functioning of our systems. The implementation phase involves contingency planning. The Company maintains a formal Business Resumption plan and has developed a supplemental Year 2000 specific contingency plan. In accordance with regulatory guidance we have tested and validated our Business Resumption Contingency Plan. This process was completed in June 1999. The Company believes, however, that due to the widespread nature of potential Year 2000 issues, the contingency planning process is an ongoing one which will require further modifications as the Company obtains additional information, specifically regarding third party Year 2000 readiness. The Company has identified significant (large) commercial depositors and performed an assessment of their efforts towards Year 2000 readiness. Should these depositors be unable to function financially as a result of their own Year 2000 issues, or significantly reduce their deposit levels, there could be an impact on the Bank's own cash flow. Our initial assessment evaluates this risk as minimal, and all customers identified in this risk assessment are aware of the Year 2000 issues and are planning Year 2000 readiness efforts. The Company will periodically monitor these depositors throughout 1999. A risk assessment of large commercial borrowers was also completed representing approximately 70 commercial customers, or 74% of commercial loan outstandings. Based on survey results, all are rated as moderate to low risk. We plan to selectively monitor the progress of certain moderate risk borrowers throughout 1999. New commercial loans exceeding our borrowing threshold for risk ratings will be measured to assure information technology utilized by the borrower will be Year 2000 ready. The Company has a comprehensive Customer Awareness program that includes training and education of employees regarding Year 2000 issues and financial industry efforts toward readiness. Our awareness program provides periodic communication to customers and the community describing our preparation efforts. Management continues to quantify expenses related to Year 2000 readiness. The Company has not been required to provide additional staff for the express purpose of Year 2000 readiness, but rather has utilized existing internal staff. Our budgeted expenses approximate $45,000, of which $15,000 will be allocated for renovation of core processing software. Expenses associated with Year 2000 preparedness are not expected to have a material impact on the financial condition of the Company. The Company's objective is to migrate to the Year 2000 with minimal impact on customers, and be prepared for January 1, 2000. We believe that the manner in which we have addressed this issue underscores our strengths. The Company has the resources and the technological expertise to address such new issues, but is small enough to enable us to make adjustments to internal programs and systems without affecting the ability to service our customers. The Company cannot provide assurance that failure of third parties to adequately address the Year 2000 issue will not have an adverse impact. The Company intends to continue to assess critical suppliers and customers to determine their readiness. The Company is confident that with the implementation of the Year 2000 initiatives as scheduled, the possibility of significant interruptions to normal operations should be reduced. The preceding "Year 2000" discussion contains various statements which represent the Company's beliefs or expectations regarding future events. All forward-looking statements involve a number of risks and uncertainties that could cause the actual results to differ materially from the projected results. Factors that cause the differences include, but are not limited to, the actions of governmental agencies or other third parties with respect to Year 2000 problems. ITEM 3 - QUANTATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS The Company does not hold investments in instruments (i.e. such as derivative financial or commodity instruments) that are considered to be subject of any significant market risk.
12 PAGE 10 PART II - OTHER INFORMATION ITEM 1. Legal Proceedings - None to report. ITEM 2. Changes in Securities - None to report ITEM 3. Defaults upon Senior Securities - None to report. ITEM 4. Submission of Matters To a Vote of Security Holders--None to report except for the annual shareholders meeting held on April 27, 1999 reported in the Form 10-Q filed for the quarter ended March 31, 1999. ITEM 5. Other Information - None to Report. ITEM 6. Exhibits and Reports on Form 8-K - None to Report. The following Exhibits are filed as part of this Report: Exhibit No. Description Page 27 Financial Data Schedule 12
13 PAGE 11 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed by the undersigned thereunto duly authorized. Evans Bancorp, Inc. DATE August 11, 1999 /s/Richard M. Craig ----------------------------------- Richard M. Craig President and Chief Executive Officer DATE August 11, 1999 /s/James Tilley ----------------------------------- James Tilley Senior Vice President