Evans Bancorp, Inc. Announces Agreement to Sell the Insurance Operations of The Evans Agency, LLC to Arthur J. Gallagher & Co.

Evans Bancorp, Inc. (the “Company” or “Evans”) (NYSE American: EVBN), a community financial services company serving Western New York since 1920, announced today that it has entered into a definitive agreement to sell The Evans Agency, LLC (“TEA”) to Arthur J. Gallagher & Co. (NYSE: AJG) (“Gallagher”) for $40 million. The transaction is subject to customary closing conditions and is anticipated to be completed in the fourth quarter of 2023.

Key Highlights:

• Evans’ growth of TEA over the years culminates with the capture of a valuation premium, providing capital to strategically redeploy across the core banking franchise.
• Demonstrates significant value creation and delivers measurable shareholder value
  ~ 3.9x LTM Insurance Agency Revenue and ~ 20.3x 9/30/23 LTM Earnings
• The net gain on sale, on an after-tax basis, is expected to be approximately $15.1 million.
• Eliminates $12 million of goodwill and other intangibles.
• Transaction is financially compelling with approximate pro forma impact to capital, prior to potential deployment of proceeds:
  • TCE / TA: Improves by 112 basis points to 7.47%
  • Tier 1 Leverage: Improves by 119 basis points to 10.58%
  • Total Risk Based Capital: Improves by 151 basis points to 14.80%
  • Tangible Book Value Per Share: Improves by 18.9% to $29.77
• Transaction proceeds provide potential net income and earnings per share enhancements as generated capital is deployed through strategic and franchise growth initiatives over time.

David J. Nasca, President and CEO of Evans Bancorp, Inc., said, “For 23 years, the insurance business has been an integral part of Evans Bank. During that time, the Bank acquired over 15 agencies and successfully built a customer-centric, high-performing operation with strong values and a reputation for outstanding talent and service excellence. After extensive diligence, we believe AJG is the right partner, providing optimal benefit for all stakeholders, including assuring our associates and clients are well taken care of. This transaction realizes a significant valuation premium and is immediately accretive to Evans’ capital, tangible book value, and liquidity. The additional capital provides flexibility to evaluate and pursue various strategic initiatives to redeploy capital in support of our core banking business with a focus on continuing to enhance long-term shareholder value.”