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Edited Transcript of EVBN.A earnings conference call or presentation 29-Oct-20 8:45pm GMT

·27 min read

Q3 2020 Evans Bancorp Inc Earnings Call HAMBURG Nov 4, 2020 (Thomson StreetEvents) -- Edited Transcript of Evans Bancorp Inc earnings conference call or presentation Thursday, October 29, 2020 at 8:45:00pm GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * David John Nasca Evans Bancorp, Inc. - CEO, President & Director * John B. Connerton Evans Bancorp, Inc. - CFO, Principal Accounting Officer & Treasurer ================================================================================ Conference Call Participants ================================================================================ * Alexander Roberts Huxley Twerdahl Piper Sandler & Co., Research Division - MD & Senior Analyst * Kevin William Swanson Hovde Group, LLC, Research Division - Director * Deborah K. Pawlowski Kei Advisors LLC - Chairman, CEO and Founder ================================================================================ Presentation -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- Good day and welcome to the Evans Bancorp Third Quarter Fiscal Year 2020 Financial Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Deborah Pawlowski, Investor Relations for Evans Bancorp. Please begin, ma'am. -------------------------------------------------------------------------------- Deborah K. Pawlowski, Kei Advisors LLC - Chairman, CEO and Founder [2] -------------------------------------------------------------------------------- Thank you, Mary. And good afternoon, everyone. We certainly appreciate you taking the time today to join us, and your interest in Evans Bancorp. On the call, we have with me here David Nasca, our President and Chief Executive Officer; and John Connerton, our Chief Financial Officer. David and John will review our results for third quarter of 2020 and then we will open the call for questions. You should have a copy of the financial results that were released today after the markets closed. And if not, you can access them on our website at www.evansbank.com. On the website, you'll also find slides that accompany today's discussion. If you are reviewing those slides, please turn to Page 2 for the safe harbor statement. As you are aware, we may make some forward-looking statement 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 release as well as with other documents filed by the company with the Securities and Exchange Commission. You can find those documents on our website or at sec.gov. And with that, let me turn it over to David to begin. David? -------------------------------------------------------------------------------- David John Nasca, Evans Bancorp, Inc. - CEO, President & Director [3] -------------------------------------------------------------------------------- Thank you, Debbie. Good afternoon, everyone. We appreciate your joining us for the call today. I hope everyone is staying healthy and safe and getting through the increased challenges posed by the pandemic. Before we get started, I'd like to take this opportunity to thank the entire Evans team for its ongoing effort and tireless commitment to continue to respond to the challenges of this singularly unique and uncertain operating environment in our centennial year. This comprises all the projects which Evans has undertaken, including an acquisition closed in May with computer conversion and product transition in the third quarter, administrative office move, PPP, and mortgage operation integration and systems conversions during the height of a robust mortgage origination and refinance boom. Our clients' needs are being met with consistent communication, support and execution, as we seek to aid them through compound business challenges. I'm excited to announce that we officially opened and moved to our new corporate administrative offices, as marked by yesterday's ribbon-cutting. While the current environment certainly complicated this transition, we were able to successfully consolidate all non-branch associates from 3 offices into 1. During construction, we needed to reengineer certain aspects of the building to meet new safety protocols required to deal with the pandemic and assure the safety of our associates. Currently, about 1/3 of our workforce has returned to on-site work at the new building, while the remaining 2/3 continue to operate remotely until at least January. Continual assessment is being done on our hybrid model to determine changes to our operating posture while assuring the safety of our associates and clients is paramount. Remote operations have been executed successfully since the outset of the pandemic in March and can effectively be continued indefinitely. We do believe that the new offices will position our organization to operate more efficiently and effectively into the future, while assisting in growth and the attraction and retention of talent. Today, we reported third quarter 2020 results with net income of $4.5 million. In light of the current challenges all banks are facing and absent some remaining onetime merger costs, our third quarter results were solid and reflected our agile response to the pandemic, incremental business from Fairport Savings Bank and successful participation in the Paycheck Protection Program, or PPP. Our acquisition of Fairport Savings Bank, or FSB, positions us strongly in a strategically prioritized contiguous market, and we are encouraged with the progress we are making integrating the bank and new clients. System and computer conversion and integration were completed during the quarter with high satisfaction and retention rates. While overall growth in the expanded Rochester market has been somewhat muted, given the ongoing challenges of in-person meetings and the virtual environment in which we are operating, we are working to advance our combined market strategy. Our commercial team in the Rochester market is now fully staffed and operational, and significant inroads are being made with new relationship opportunities. We've also been leveraging FSB's strong retail presence and consumer lending team, and when combined with our existing Evans capabilities, has successfully managed the substantial mortgage loan purchase and refinancing volumes. The combined mortgage business provides another profit center to diversify earnings. Additionally, expense management efforts related to the merger are on track. Evans was a major participant in helping our community recover and remain resilient with its performance in the SBA's PPP program, resulting in the near doubling of our commercial lending client base. We continue to utilize PPP as a platform to build and add relationships and offer other products and services, and we have focused on cultivating those relationships. To date, we have successfully converted over half of those customers to more permanent status where they are now utilizing 3 or more of the bank services. Please see Slide 4 in the third quarter 2020 financial results deck, which was included with the financials for additional details. Looking ahead, the Western New York market area continues to recover from the COVID-19 pandemic. And while we are certainly not back to normal, we are encouraged with the significant drop of deferrals, which now makes up approximately 0.5% of our total loan portfolio, which is a decrease of 98% in deferrals originated. We believe we are appropriately reserved for the continuing economic events of the pandemic, and given our strong capital and liquidity position, are well-positioned looking forward. With that, I'll hand it over to John Connerton to run through the results in more detail, and then we'll be happy to take questions. John? -------------------------------------------------------------------------------- John B. Connerton, Evans Bancorp, Inc. - CFO, Principal Accounting Officer & Treasurer [4] -------------------------------------------------------------------------------- Thank you, David, and good afternoon, everyone. As reported today, third quarter net income was $4.5 million or $0.84 per diluted share compared with $5.2 million or $1.04 per diluted share in last year's period and $500,000 or $0.09 per diluted share in the linked second quarter. Included in the current results was an elevated loan loss provision of $1.9 million to reserve for a well-defined weakness in the hotel portfolio and $524,000 of remaining merger-related costs. Net interest income increased 15% year-over-year and 5% sequentially as we recognized a full quarter impact of FSB as well as higher interest income from recognized fees as a result of PPP lending. The total amount of amortized PPP loan fees was approximately $900,000 in the quarter. This amortization may be lengthened or shortened, depending if these PPP loans are extended to 60 months or forgiven as allowed by legislation. The net interest margin of 3.19% was down 17 and 75 basis points from the linked second quarter in 2019 and third quarter, respectively. The current margin reflects the significant lowering of the Fed funds rate by 150 basis points in early 2020, a lower margin on residential mortgages from FSB as well as PPP loans; and finally, the significant increase of interest-earning cash balances due to deposit growth. In total, the yield on loans decreased 21 and 115 basis points from the linked second quarter and 2019 third quarter, respectively. We believe our net interest margin should remain at around this level in the fourth quarter. So keep in mind, there could be some unforeseen moves by the Fed and the impact from the PPP portfolio is still variable given the potential amounts that may or may not be forgiven by the federal government. Given our strong liquidity base, we do have some pricing power on the liability side of the balance sheet. We are letting time deposits roll off and are continually looking at areas where we have the ability to reprice, while limiting any loss to core relationships. The increased level of provision this quarter reflects the elevated risk associated with the Hotel portfolio, resulting from the continued impact of the COVID-19 pandemic on these clients. Our Hotel portfolio consists of 15 relationships for $81 million or 6.5% of the total commercial loan portfolio. The majority of the portfolio received 2 deferrals of 90 days each, which have expired. As these individual credits adjust their business models in response to the pandemic challenges, they are requiring additional assistance from the bank. We are in close communication with these customers in order to determine progress or additional challenges as circumstances warrant. The portfolio consists of limited service hotels that rely mostly on consumer rather than business customers, and there is a level of seasonality associated with their revenue stream. Therefore, progress will be better evidenced after a full cycle, which will include summer 2021. As a result, we have risk-rated these loans as criticized assets, which increased the commensurate level of reserve we need to hold on this portfolio. Given the downgrade of the Hotel portfolio, our total criticized assets at quarter end increased to $133.1 million compared with $71.5 million at the end of second quarter of 2020. Our commercial bankers and credit risk management teams have and will continue to extensively review the bank's portfolio as we evaluate repayment risk. It is important to note that these credits have strong borrowers with full guarantees and their properties are in our footprint and market, which allows the bank continued line of sight into conditions of the assets and the market and progress on performance. Additionally, the portfolio is well-collateralized at an average loan-to-value ratio of 53%. Currently, the majority of the hotel loans are paying either interest-only or full principal and interest. As expected, the vast majority of second quarter deferrals have moved back to normal paying status. Since the initial deferral period, the bank allowed customers to take a second 90-day deferral period, of which the majority have expired. As of October 20, the bank had $8 million in deferrals, which includes $4 million in consumer and $4 million in commercial loans. The majority represents the remaining second deferrals that are expected to expire in the fourth quarter and begin payment status. For further details on our commercial loan deferrals and Hotel portfolio, please refer to Slide 5 and 7. Noninterest income increased primarily due to a $667,000 gain on the sale of investment securities. Deposit service charges were up from the linked quarter as a result of higher consumer spending and the reinstatement of certain fees that had been temporarily suspended during the second quarter of 2020 to assist customers affected by COVID-19. Seasonally higher commercial lines insurance commissions and profit sharing revenue are the lead drivers behind the increase in the insurance service and fee revenue when compared with the linked second quarter. Noninterest expenses were up over the prior period due to the addition of FSB and the remaining $524,000 of merger costs, which were largely due to the system conversion and integration being completed in August. When compared with the linked quarter, salaries would have been up to a larger degree as the third quarter included a full 3 months of acquired salaries. Helping to partially offset this was lower incentive compensation accruals of approximately $700,000. Additionally, I will note, we are attaining the cost saves from FSB as anticipated. The effective tax rate for the quarter was 11.8%, which reflects the historic tax credit transaction completed in the 2020 first quarter. Absent the tax credit, the rate was 25.6%. At this time, we do not anticipate additional historic tax transactions this year. Turning to the balance sheet, the loan portfolio increased $483 million or 40% compared with last year's third quarter, including $271 million from FSB and $203 million from PPP. Absent FSB and PPP lending, we experienced muted loan growth as a result of the current economic environment. Our pipeline, however, is solid, and we expect to achieve moderate growth in the fourth quarter. Total deposits were up 41% or $522 million since the end of last year's third quarter. FSB added $239 million to this total. We also experienced significant growth from our commercial customers as they accumulated liquidity due to the proceeds from PPP loans, while government stimulus payments and lower consumer spending drove an increase on the consumer deposit side. In the quarter, deposits were down slightly, largely reflecting seasonally lower municipal deposit balances. As a reminder, in the light of the heightened uncertainty surrounding COVID-19 pandemic, we completed a private placement of $20 million in 6% fixed-to-floating rate subordinated notes at the beginning of the third quarter. Of that total, $15 million has been moved to the bank as tier 1 capital. Looking forward, we will continue to adapt to changing market conditions, and we are confident that we have taken the appropriate actions to remain in a very solid financial position to successfully operate during this challenging environment. That concludes my comments, so we now would like to open the line for questions. ================================================================================ Questions and Answers -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- (Operator Instructions) We can take our first question from Alex Twerdahl of Piper Sandler. -------------------------------------------------------------------------------- Alexander Roberts Huxley Twerdahl, Piper Sandler & Co., Research Division - MD & Senior Analyst [2] -------------------------------------------------------------------------------- I just first off wanted to circle back to the hotel downgrades during the quarter. Obviously you gave a lot of detail here, the LTVs, et cetera. But is there -- do you have line of sight to some of these loans stopping paying? Or maybe you can give us a little bit of color on sort of what the debt service coverage ratio looks like, or if there's like a real specific reason why they're being downgraded, or if it's just overall stresses in the industry. -------------------------------------------------------------------------------- John B. Connerton, Evans Bancorp, Inc. - CFO, Principal Accounting Officer & Treasurer [3] -------------------------------------------------------------------------------- I think it's a combination of a couple of those things, Alex, or both of those things. I mean for a period of time there in the second quarter, you know, their debt-to-income ratios were infinitesimal, just because there was no revenue coming in, like a lot of industries. I think really the move to the downgrade was the impact and the longevity that we see COVID-19 impacting through the third quarter. And we made that assessment that it's going to take a while, especially with some of the seasonality that this industry has, especially up in our footprint, such that they're not going to get back to a decent cash flow until probably there's more opening from COVID-19 next year, as well as the impact from the seasonality. So we're looking for their revenue to come back next season, which would start in the spring and summer, and that will give us a better indication of their health. -------------------------------------------------------------------------------- David John Nasca, Evans Bancorp, Inc. - CEO, President & Director [4] -------------------------------------------------------------------------------- We also thought it was better to continue receiving some payments, Alex, in terms of the interest that we're getting paid. They may be paying interest only, but they are paying -- some people are paying principal and interest. But it was more a reflection of what's going on in the industry. Because we did not want to continue to defer if we didn't need to. -------------------------------------------------------------------------------- Alexander Roberts Huxley Twerdahl, Piper Sandler & Co., Research Division - MD & Senior Analyst [5] -------------------------------------------------------------------------------- Understood. And how much of the provision in the third quarter would be attributed to those downgrades specifically? -------------------------------------------------------------------------------- John B. Connerton, Evans Bancorp, Inc. - CFO, Principal Accounting Officer & Treasurer [6] -------------------------------------------------------------------------------- Almost all of it really. -------------------------------------------------------------------------------- Alexander Roberts Huxley Twerdahl, Piper Sandler & Co., Research Division - MD & Senior Analyst [7] -------------------------------------------------------------------------------- Okay. And then I guess it would be pretty fair to assume that if there was -- if you saw similar stresses in some of the other kind of at-risk industries like restaurants or whatnot that would have done similar actions. And so based on where you sit today, it's the hotel book that's a concern, everything else seems to be -- at least has a line of sight back to normalcy? -------------------------------------------------------------------------------- John B. Connerton, Evans Bancorp, Inc. - CFO, Principal Accounting Officer & Treasurer [8] -------------------------------------------------------------------------------- At this point, yes, that's what we're seeing. And most of our other industries and clients have gone back to not business as normal, but certainly a point where they have some predictability. -------------------------------------------------------------------------------- David John Nasca, Evans Bancorp, Inc. - CEO, President & Director [9] -------------------------------------------------------------------------------- I'd say one other thing, Alex, with regard to the hotels too. We have clear line of sight into those businesses. We're talking to them probably once a week. This is a -- I'll call it a "life preserver" for them to continue paying us, but get to a situation where they can improve their occupancy and begin resuming full principal and interest payments. -------------------------------------------------------------------------------- Alexander Roberts Huxley Twerdahl, Piper Sandler & Co., Research Division - MD & Senior Analyst [10] -------------------------------------------------------------------------------- Okay, understood. And then just switching gears to talk about the margin for a couple minutes. John, you mentioned that you think the margin should remain around this level in the fourth quarter. Is that -- there's obviously a lot of moving parts in the margin, and liquidity, and additional stimulus money, and PPP and all that kind of stuff. So maybe we can sort of push the margin aside and talk about NII. And maybe you can kind of walk through some of the moving parts in NII going into the fourth quarter and into next year, and whether or not you foresee NII continue to trudge higher or if PPP, for example, is going to be enough of a headwind to kind of push it down for a couple of quarters. -------------------------------------------------------------------------------- John B. Connerton, Evans Bancorp, Inc. - CFO, Principal Accounting Officer & Treasurer [11] -------------------------------------------------------------------------------- I think NII from a growth level perspective, because we expect growth on our loans, and the third quarter had a full hit of PPP and FSB with those lower-earning assets that we put on. So we think that's a good indication of our run rate from just a managed income perspective. And we feel that there is growth ahead of us due to probably our expected growth in fourth quarter and beyond. -------------------------------------------------------------------------------- Alexander Roberts Huxley Twerdahl, Piper Sandler & Co., Research Division - MD & Senior Analyst [12] -------------------------------------------------------------------------------- Okay, and then loan pipes going to the fourth quarter, is that kind of across the footprint, or is that specific to the new Rochester market? And then in terms of the categories, I presume that most of it's commercial, kind of your sort of core product, correct? -------------------------------------------------------------------------------- David John Nasca, Evans Bancorp, Inc. - CEO, President & Director [13] -------------------------------------------------------------------------------- Yes, so it's across the footprint. We're having some good success in Rochester, but it's across the footprint. And we also have a pretty robust residential mortgage market going on right now too. But it's generally our commercial business that we're talking about when we're talking about the pipeline here. -------------------------------------------------------------------------------- Alexander Roberts Huxley Twerdahl, Piper Sandler & Co., Research Division - MD & Senior Analyst [14] -------------------------------------------------------------------------------- Okay. And then the residential, does a lot of that go to the secondary market, or are you going to be putting some of that in your balance sheet? -------------------------------------------------------------------------------- John B. Connerton, Evans Bancorp, Inc. - CFO, Principal Accounting Officer & Treasurer [15] -------------------------------------------------------------------------------- We're putting it on our balance sheet. Just as I mentioned, we have a significant amount of cash. And looking forward, I think utilizing some of that space on our balance sheet, as we're already spending the dollars to originate it, we're going to put some of that asset on. But there is some robust refinancing or payoffs out of our own current portfolio. So there will be a little muted growth, but we expect there will be growth on the residential portfolio as we take an opportunity to put some of those assets on our books also. -------------------------------------------------------------------------------- David John Nasca, Evans Bancorp, Inc. - CEO, President & Director [16] -------------------------------------------------------------------------------- There was also a bit of a commitment for sale from the FSB portfolio. So not all of it's going to go on our books. But what we can put on, we will. And some will still go to the secondary market that was pre-committed. -------------------------------------------------------------------------------- Alexander Roberts Huxley Twerdahl, Piper Sandler & Co., Research Division - MD & Senior Analyst [17] -------------------------------------------------------------------------------- Okay, and then just I think into the fourth quarter on fee income, usually you see a little bit of a tick-down in insurance revenue which is pretty consistent every single year. But then when I look at some of the other lines, like deposit service charges, it looks like you're not back to a full run rate yet compared to last year, and of course with the additional operations. Do you foresee that getting back to a normalized level by the fourth quarter, or do you think there's going to continue to be some stress on some of these categories just due to customer behavior? -------------------------------------------------------------------------------- John B. Connerton, Evans Bancorp, Inc. - CFO, Principal Accounting Officer & Treasurer [18] -------------------------------------------------------------------------------- I think third quarter's probably a good proxy for going forward. But I think customer behavior right now, if COVID starts to lock things up a little more, we might pull back on that. But our expectation is, is this run rate is probably good for the foreseeable future, in the next few quarters. -------------------------------------------------------------------------------- Alexander Roberts Huxley Twerdahl, Piper Sandler & Co., Research Division - MD & Senior Analyst [19] -------------------------------------------------------------------------------- Okay, and then is that the same for expenses in terms of the integration and everything like that, now that's done? How should we think about expenses from here? -------------------------------------------------------------------------------- John B. Connerton, Evans Bancorp, Inc. - CFO, Principal Accounting Officer & Treasurer [20] -------------------------------------------------------------------------------- Well I think, again, the expense level that we had in third quarter is pretty emblematic of our run rate and our base excluding (inaudible). -------------------------------------------------------------------------------- Alexander Roberts Huxley Twerdahl, Piper Sandler & Co., Research Division - MD & Senior Analyst [21] -------------------------------------------------------------------------------- Yes, of course. And then just finally from me, on the tax rate I know you said you weren't going to do anymore tax credits in the near term. But should that 11.8% that we saw as the stated tax rate, should that carry through into the final quarter of the year, or are we going to get to that normalized 25.5-ish level for the final quarter? -------------------------------------------------------------------------------- John B. Connerton, Evans Bancorp, Inc. - CFO, Principal Accounting Officer & Treasurer [22] -------------------------------------------------------------------------------- No, the current rate should fall through to the fourth quarter, because we take the benefit in each quarter, even though we took the actual -- we recognized the credit in the first quarter. The benefit runs through the whole year. Obviously next year and going forward, not expecting to take a lot of tax credits. That run rate tax rate should be more emblematic to what we're doing going forward. -------------------------------------------------------------------------------- Operator [23] -------------------------------------------------------------------------------- [Operator Instruction] And we can now take our next question from Kevin Swanson of Hovde. -------------------------------------------------------------------------------- Kevin William Swanson, Hovde Group, LLC, Research Division - Director [24] -------------------------------------------------------------------------------- Hey, just starting off, in your view did the stimulus plans and any future I guess stimulus, do you think it changes the outcome of credit losses this cycle, or do you think it simply just delays the realization of the losses? -------------------------------------------------------------------------------- David John Nasca, Evans Bancorp, Inc. - CEO, President & Director [25] -------------------------------------------------------------------------------- If you want to talk about the consumer, I think that they've done a pretty good job. There's more needed. If you want to talk about the commercial side of the house, I think PPP is a lifeline that might help them. It depends on the duration of this event and whether there's additional PPP coming. That's kind of an attempt at the answer. I think it's uncertain at this point. We're thinking if you come out of this at the beginning of the year, the first or second quarter is going to tell how some companies are doing, because you know, it will be a year since this has transpired. But again, there's talk of additional stimulus on the docket, depending on the elections and things like that. So I guess I'd say there's a little bit of uncertainty. I think the government did a pretty good job with the consumer early on. They need more, I think, right now, unfortunately. And with regard to the businesses, I think there's some people thinking there's some industries that need it, whether it's airlines, whether -- you know, there's been talk about hospitality needing it. But you also have a situation where municipalities need it, because of what's going on. And whether that gets sent to the municipalities or not, that will be a challenge. There's pretty big deficits out there. So there's some economic impacts that could also impact this thing. So I'm sorry to be a little bit obtuse on that, Kevin, but there's still some uncertainty, I think. -------------------------------------------------------------------------------- Kevin William Swanson, Hovde Group, LLC, Research Division - Director [26] -------------------------------------------------------------------------------- No, that's helpful. It's quite the question to figure out what happens in the future. I guess maybe just piggybacking off that a little bit, does the second round of stimulus, if we get it or not get it, does it change an expectation of when NPAs might peak? -------------------------------------------------------------------------------- David John Nasca, Evans Bancorp, Inc. - CEO, President & Director [27] -------------------------------------------------------------------------------- For us, I would say -- -------------------------------------------------------------------------------- John B. Connerton, Evans Bancorp, Inc. - CFO, Principal Accounting Officer & Treasurer [28] -------------------------------------------------------------------------------- Well, yes. I'd say, Kevin, our line of sight into our businesses, I think at the level of activity in the economy up here in our -- what's in front of our clients, is sufficient enough, excluding the hotels, to maintain a good business atmosphere. And I think the hotels is where if a stimulus does come in, can help them weather the storm through until COVID-19, whether it's a vaccine or some other resolution comes through, I think that is where we would look for some assistance to help that industry through to the point where consumers feel more comfortable to go back to normal to visiting those clients. -------------------------------------------------------------------------------- Kevin William Swanson, Hovde Group, LLC, Research Division - Director [29] -------------------------------------------------------------------------------- Okay, great. And then maybe just thinking back about the hotels, has there been any market data or changes, sales, et cetera that you could look to as far as updating LTVs, assuming the ones that you gave in the presentation are at origination? -------------------------------------------------------------------------------- David John Nasca, Evans Bancorp, Inc. - CEO, President & Director [30] -------------------------------------------------------------------------------- I think the question you're asking is has there been price discovery yet in terms of if hotels are going to move. -------------------------------------------------------------------------------- Kevin William Swanson, Hovde Group, LLC, Research Division - Director [31] -------------------------------------------------------------------------------- Yes. -------------------------------------------------------------------------------- David John Nasca, Evans Bancorp, Inc. - CEO, President & Director [32] -------------------------------------------------------------------------------- And the answer is, in this market, no. There's not been good price discovery yet. There is one hotel which was a Marriott here in town that is getting sold. It closed. It is right near the University of Buffalo. It went up for sale at an amount that was less than the mortgage amount. It's a national owner. And the bids came in lower than even that amount, and they pulled it off the market, because they're not going to sell it at that level. But other than that, there has not been good price discovery in terms of if these things start changing hands. -------------------------------------------------------------------------------- Kevin William Swanson, Hovde Group, LLC, Research Division - Director [33] -------------------------------------------------------------------------------- Okay. That's helpful. And then I guess with so much excess liquidity and some of your balance sheet changing with the acquisition, is there any change in how you think about the interest rate sensitivity on the balance sheet? -------------------------------------------------------------------------------- John B. Connerton, Evans Bancorp, Inc. - CFO, Principal Accounting Officer & Treasurer [34] -------------------------------------------------------------------------------- This is John, Kevin. No. I think we're -- we'll have another disclose in our Q. I think our margin going forward, if the environment, the interest rate environment stays constant, we'll probably be at this level. But up or down, we don't have a significant amount of interest rate sensitivity. Well down is probably -- there's no down. But in an up-rate scenario, I think we're -- we don't have a significant amount of risk if rates do start to pick up. -------------------------------------------------------------------------------- Kevin William Swanson, Hovde Group, LLC, Research Division - Director [35] -------------------------------------------------------------------------------- Yes, we won't talk about down from here. And then maybe just 2 housekeeping questions if I can. Did you have an end-of-period PPP loans outstanding number? -------------------------------------------------------------------------------- John B. Connerton, Evans Bancorp, Inc. - CFO, Principal Accounting Officer & Treasurer [36] -------------------------------------------------------------------------------- I think we may have disclosed that somewhere. $203 million is what we have at the end of the quarter. -------------------------------------------------------------------------------- Kevin William Swanson, Hovde Group, LLC, Research Division - Director [37] -------------------------------------------------------------------------------- Okay, got it. And then-- -------------------------------------------------------------------------------- David John Nasca, Evans Bancorp, Inc. - CEO, President & Director [38] -------------------------------------------------------------------------------- I think we put that out last quarter, and I'm not sure we put it out this quarter. But that's the right number. -------------------------------------------------------------------------------- Kevin William Swanson, Hovde Group, LLC, Research Division - Director [39] -------------------------------------------------------------------------------- Okay, great. And then do you have a guess on what the allowance might be with the credit marks included, and without PPP? -------------------------------------------------------------------------------- John B. Connerton, Evans Bancorp, Inc. - CFO, Principal Accounting Officer & Treasurer [40] -------------------------------------------------------------------------------- Yes, our credit mark was small, insignificant from the allowance perspective. -------------------------------------------------------------------------------- Operator [41] -------------------------------------------------------------------------------- (Operator Instructions) We have no further questions over the phone. I would now like to hand the call back to David Nasca for any additional or closing remarks. -------------------------------------------------------------------------------- David John Nasca, Evans Bancorp, Inc. - CEO, President & Director [42] -------------------------------------------------------------------------------- All right, well thank you very much, Mary. Thank you all for joining us today and participating in the teleconference. We appreciate your continued interest and support. Please feel free to reach out to us at any time, and we look forward to seeing and speaking with all -- we certainly look forward to seeing all of you at some point here. But we look forward to speaking with all of you again in the New Year, when we report our fourth quarter 2020 results. We hope you have a great day and a great weekend. Thank you. -------------------------------------------------------------------------------- Operator [43] -------------------------------------------------------------------------------- This concludes today's call. Thank you for your participation. You may now disconnect.