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8-K - FORM 8-K - EAGLE FINANCIAL SERVICES INCd572813d8k.htm

Exhibit 99.1

EAGLE FINANCIAL SERVICES, INC. ANNOUNCES

2013 SECOND QUARTER FINANCIAL RESULTS

 

Contact:   

Kathleen J. Chappell, Vice President and CFO

  

540-955-2510

     

kchappell@bankofclarke.com

BERRYVILLE, VIRGINIA (July 23, 2013) – Eagle Financial Services, Inc. (OTC BULLETIN BOARD: EFSI), the holding company for Bank of Clarke County, whose divisions include Eagle Investment Group, today announced earnings of $2.0 million, or $0.59 per diluted share, for the quarter ended June 30, 2013.

Selected Financial Highlights:

 

     2013     2012  

Three months ended:

   Q2     Q1     Q2  

Net income (000’s)

   $ 2,001      $ 1,803      $ 2,002   

Diluted EPS

   $ 0.59      $ 0.53      $ 0.60   

Net Interest Margin

     4.28     4.29     4.60

Total equity to assets

     11.00     11.17     10.83

Allowance for loan losses to total loans

     1.60     1.64     2.01

Provision for loan losses

   $ 384      $ 383      $ 300   

John R. Milleson, President and CEO, stated, “We are pleased to report another solid quarter of financial performance for the Bank of Clarke County and Eagle Financial Services, Inc. With the impact of some one-time events and conscientious net interest margin management, year to date net income of $3.8 million is up 2.4% over last year’s level. The Bank’s expansion into Loudoun County has helped generate loan volume that has contributed to the strong balance sheet of the Bank. Additionally, with the continued improvement in the Company’s levels of past due loans and non-performing assets, we remain hopeful that the economic environment will improve in areas that are critical to the Bank’s successes. The Bank continues to actively seek a branch site in the Leesburg area in order to add to its branch network and expansion into Loudoun County.”

Income Statement Review

Net income for the quarter ended June 30, 2013 increased 10.98% to $2.0 million when compared to the $1.8 million for the quarter ended March 31, 2013. Net income was relatively unchanged for the quarter ended June 30, 2013 when compared to the same period in 2012.

Net interest income was $5.6 million for the quarters ended June 30 and March 31, 2013. Net interest income decreased 5.77% or $342,000 from $5.9 million for the quarter ended June 30, 2012 to $5.6 million for the quarter ended June 30, 2013.

Total loan interest income was $5.3 million for the quarters ended June 30 and March 31, 2013. For the quarter ended June 30, 2012, total loan interest income was $5.7 million. Average loans for the quarter ended June 30, 2013 were $425.1 million compared to $419.0 million for the quarter ended March 31, 2013. Total average accruing loans were $422.4 million for the three months ended June 30, 2013 and $416.5 million for the quarter ended March 31, 2013. For the second quarter of 2012, total average loans were $421.2 million and average accruing loans were $419.3 million. The tax equivalent yield on average loans for the quarter ended June 30, 2013 was 5.12%, down six basis points from 5.18% for the quarter ended March 31, 2013. The tax equivalent yield on loans for the quarter ended June 30, 2012 was 5.51%. Interest income from the investment portfolio was $874,000 for the quarter ended June 30, 2013 and $938,000 for the same period ended March 31, 2013. Average investments were $113.5 million for the quarter ended June 30, 2013 and $111.4 million for the quarter ended March 31, 2013. Interest income from the investment portfolio was $1.0 million for the quarter ended June 30, 2012 while average investments were $111.4 million for the same time period.

Total interest expense was $640,000 for the three months ended June 30, 2013 and $703,000 for the same period ended March 31, 2013. The average cost of interest bearing liabilities decreased six basis points when comparing the quarter ended June 30, 2013 to the quarter ended March 31, 2013. The average balance of interest bearing liabilities decreased $3.4 million from the quarter ended


March 31, 2013. The net interest margin was 4.28% for the quarter ended June 30, 2013 and 4.29% for the quarter March 31, 2013. For the quarter ended June 30, 2012, total interest expense was $838,000 and the net interest margin was 4.60%. Utilizing excess cash balances to fund increased loan demand, time deposits repricing to lower levels and continued management of other funding costs has helped mitigate the decline in the Company’s net interest margin in the face of declining asset yields.

The Company’s net interest margin is not a measurement under accounting principles generally accepted in the United States, but it is a common measure used by the financial services industry to determine how profitably earning assets are funded. The Company’s net interest margin is calculated by dividing tax equivalent net interest income by total average earning assets. Tax equivalent net interest income is calculated by grossing up interest income for the amounts that are non-taxable (i.e., municipal income) then subtracting interest expense. The tax rate utilized is 34%.

Non-interest income was $2.5 million for the quarter ended June 30, 2013 and $1.9 million for the quarter ended March 31, 2013. During the second quarter of 2013, the Company sold the Bank’s merchant processing business. The sale of the merchant portfolio resulted in a net gain of $399,000. Total proceeds from the transaction of $450,000 are reflected in other service charges and fees while broker, legal and other related expenses are reflected in non-interest expense. In April of 2013, the Company received a signing bonus of $121,000 from its current debit card vendor for extending its contract and remaining exclusive to this provider. This income is also reflected in the other service charges and fees line item. Additionally during the second quarter of 2013, the Company recorded $254,000 of income related to the termination of a bank owned life insurance policy. Net gains of $10,000 were realized on the sales of investment securities for the quarter ended June 30, 2013. Noninterest income for the three months ended June 30, 2012 was $1.6 million.

Noninterest expense was $5.0 million for the quarter ended June 30, 2013. This represents an increase of $367,000 or 8.01% from $4.6 million for the quarter ended March 31, 2013. The majority of the increase resulted from increased salary and benefit expense driven mostly by the additional personnel hired to operate the Company’s newest retail branch in Purcellville, VA. This branch opened in May 2013. The increase in other operating expenses from the quarter ended March 31, 2013 to the quarter ended June 30, 2013 were mostly related to broker and legal fees associated with the sale of the Company’s merchant processing business. Net gains of $53,000 were recognized on the sales of other real estate owned for the quarter ended June 30, 2013 while no gains were realized for the quarter ended March 31, 2013. Total noninterest expense for the quarter ended June 30, 2012 was $4.4 million. During that quarter, a one-time adjustment to FDIC assessment expense had been made. The Company determined that the balance of the Company’s prepaid FDIC insurance was too low and as a result made a $199,000 adjustment to increase the prepaid balance and decrease the corresponding expense in the quarter ended June 30, 2012. Salary and employee benefits expense is also higher when comparing the quarter ended June 30, 2013 to the same period in 2012 due to the additional personnel hired to operate the Company’s newest retail branch in Purcellville, VA.

Asset Quality and Provision for Loan Losses

Nonperforming assets consist of loans 90 days past due and still accruing interest, nonaccrual loans, other real estate owned (foreclosed properties), and repossessed assets. Nonperforming assets decreased from $6.3 million or 1.08% of total assets at March 31, 2013 to $5.2 million or 0.89% of total assets at June 30, 2013. This decrease resulted from the partial charge off of a non-accrual loan and sales of other real estate owned. During the second quarter of 2013, the Bank placed one loan on non-accrual status. Management regularly evaluates the financial condition of borrowers with loans on non-accrual status and the value of any collateral on these loans. The results of these evaluations are used to estimate the amount of losses which may be realized on the disposition of these non-accrual loans. The majority of the non-accrual loans are secured by real estate. No real estate assets had been foreclosed upon during the second quarter of 2013 and the Bank sold two pieces of other real estate owned recorded at a net value of $298,000 during the same period. Loans greater than 90 days past due and still accruing decreased from $631,000 at March 31, 2013 to $201,000 at June 30, 2013. Nonperforming assets were $4.0 million or 0.71% of total assets at June 30, 2012.

The Company may, under certain circumstances, restructure loans in troubled debt restructurings as a concession to a borrower when the borrower is experiencing financial distress. Formal, standardized loan restructuring programs are not utilized by the Company. Each loan considered for restructuring is evaluated based on customer circumstances and may include modifications to one or more loan provision. Such restructured loans are included in impaired loans but may not necessarily be nonperforming loans. At June 30, 2013, the Company had 23 troubled debt restructurings totaling $8.1 million. All but three of the loans are currently performing loans.

The Company realized $366,000 in net charge-offs for the quarter ended June 30, 2013 compared to none for the three months ended March 31, 2013. Net charge-offs for the quarter ended June 30, 2012 were $559,000. The Company has a troubled credit group that continues to monitor past due loans, identify potential problem credits, and develop action plans to work through its troubled loans as promptly as possible. Asset quality remains a primary focus of the Company. Necessary resources continue to be devoted to the ongoing review of the loan portfolio and the workouts of problem assets to minimize any losses to the Company. Management will continue to monitor delinquencies, risk rating changes, charge-offs, market trends and other indicators of risk in the Company’s portfolio, particularly those tied to residential and commercial real estate, and adjust the allowance for loan losses accordingly.

Provisions for loan losses were $384,000 for the three months ended June 30, 2013 and March 31, 2013. The provisions for loan losses for the quarter ended June 30, 2012 were $300,000. The allowance for loan losses was $7.0 million, or 1.60% of total


outstanding loans, at June 30, 2013. At March 31, 2013 and June 30, 2012, the allowance for loan losses was $7.0 million and $8.6 million, respectively. The amount of provision for loan losses during each quarter reflects the results of the Bank’s analysis used to determine the adequacy of the allowance for loan losses. The Company is committed to maintaining an allowance at a level that adequately reflects the risk inherent in the loan portfolio.

Total Consolidated Assets

Total consolidated assets of the Company at June 30, 2013 were $585.6 million, which represented an increase of $4.8 million or 0.83% from total assets of $580.8 million at March 31, 2013. This increase was driven by the increased volume of the loan portfolio. At June 30, 2012, total consolidated assets were $568.9 million. Total loans increased from $423.9 million at March 31, 2013 to $436.4 at June 30, 2013. Considering the current interest rate and competitive market environment, the Company has been conscientious about maintaining both its underwriting standards and its net interest margin and thereby cautious about the growth it has accepted in the loan portfolio. Total loans were $428.5 million at June 30, 2012.

Deposits and Other Borrowings

Total deposits, which include brokered deposits, remained relatively unchanged at $473.0 million for the quarters ended March 31 and June 30, 2013. At June 30, 2012, total deposits were $454.1 million. The Company held $9.9 million in brokered deposits at June 30, 2013 and 2012 as well as at March 31, 2013.

Fed funds purchased and securities sold under agreement to repurchase were $5.6 million at June 30, 2013 and $0 at March 31, 2013. Fed funds purchased and securities sold under agreement to repurchase were $10.0 million at June 30, 2012. Borrowings with the Federal Home Loan Bank of Atlanta have remained unchanged at $32.3 million since June 30, 2012.

Equity

Shareholders’ equity at June 30, 2013 was $64.4 million, reflecting a decrease of $452,000 from $64.9 million at March 31, 2013. This decrease is the result of the decline in the unrealized gain on the Company’s available for sale investment securities. At June 30, 2012 shareholders’ equity was $61.6 million. The book value of the Company at June 30, 2013 was $19.13 per common share. Total common shares outstanding were 3,388,005 at June 30, 2013. On July 17, 2013, the board of directors declared a $0.19 per common share cash dividend for shareholders of record as of July 31, 2013 and payable on August 14, 2013.

 

 

Certain information contained in this discussion may include “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements relate to the Company’s future operations and are generally identified by phrases such as “the Company expects,” “the Company believes” or words of similar import. Although the Company believes that its expectations with respect to the forward-looking statements are based upon reliable assumptions within the bounds of its knowledge of its business and operations, there can be no assurance that actual results, performance or achievements of the Company will not differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. For details on factors that could affect expectations, see the risk factors and other cautionary language included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012, and other filings with the Securities and Exchange Commission.


EAGLE FINANCIAL SERVICES, INC.

KEY STATISTICS

 

      For the Three Months Ended  
     2Q13     1Q13     4Q12     3Q12     2Q12  

Net Income (dollars in thousands)

   $ 2,001      $ 1,803      $ 1,581      $ 1,253      $ 2,002   

Earnings per share, basic

   $ 0.59      $ 0.54      $ 0.47      $ 0.38      $ 0.60   

Earnings per share, diluted

   $ 0.59      $ 0.53      $ 0.47      $ 0.37      $ 0.60   

Return on average total assets

     1.40     1.27     1.08     0.88     1.43

Return on average total equity

     12.51     11.42     9.95     8.01     13.29

Dividend payout ratio

     32.20     35.19     40.43     47.37     30.00

Fee revenue as a percent of total revenue

     25.86     20.02     20.32     20.40     20.26

Net interest margin(1)

     4.28     4.29     4.31     4.40     4.60

Yield on average earning assets

     4.76     4.81     4.91     5.01     5.23

Yield on average interest-bearing liabilities

     0.69     0.75     0.83     0.85     0.87

Net interest spread

     4.07     4.06     4.08     4.16     4.36

Tax equivalent adjustment to net interest income (dollars in thousands)

   $ 186      $ 192      $ 198      $ 200      $ 207   

Non-interest income to average assets

     1.73     1.36     1.05     1.09     1.12

Non-interest expense to average assets

     3.47     3.23     3.41     3.20     3.12

Efficiency ratio(2)

     60.18     62.71     60.91     61.36     56.96

 

(1) The net interest margin is calculated by dividing tax equivalent net interest income by total average earning assets. Tax equivalent interest income is calculated by grossing up interest income for the amounts that are non-taxable (i.e., municipal income) then subtracting interest expense. The rate utilized is 34%. See the table below for the quarterly tax equivalent net interest income and the reconciliation of net interest income to tax equivalent net interest income. The Company’s net interest margin is a common measure used by the financial service industry to determine how profitable earning assets are funded. Because the Company earns a fair amount of non-taxable interest income due to the mix of securities in its investment security portfolio, net interest income for the ratio is calculated on a tax equivalent basis as described above.
(2) The efficiency ratio is not a measurement under accounting principles generally accepted in the United States. It is calculated by dividing non-interest expense by the sum of tax equivalent net interest income and non-interest income excluding gains and losses on the investment portfolio and sales of repossessed assets. The tax rate utilized is 34%. See the table below for the quarterly tax equivalent net interest income and a reconciliation of net interest income to tax equivalent net interest income. The Company calculates this ratio in order to evaluate its overhead structure or how effectively it is operating. An increase in the ratio from period to period indicates the Company is losing a larger percentage of its income to expenses. The Company believes that the efficiency ratio is a reasonable measure of profitability.


EAGLE FINANCIAL SERVICES, INC.

SELECTED FINANCIAL DATA BY QUARTER

 

    2Q13     1Q13     4Q12     3Q12     2Q12  

BALANCE SHEET RATIOS

         

Loans to deposits

    92.19     89.59     87.63     93.51     94.36

Average interest-earning assets to average-interest bearing liabilities

    145.49     152.08     139.30     139.84     138.63

PER SHARE DATA

         

Dividends

  $ 0.19      $ 0.19      $ 0.19      $ 0.18      $ 0.18   

Book value

  $ 19.13      $ 19.36      $ 19.11      $ 18.78      $ 18.47   

Tangible book value

  $ 19.13      $ 19.36      $ 19.11      $ 18.78      $ 18.47   

SHARE PRICE DATA

         

Closing price

  $ 23.35      $ 22.10      $ 22.00      $ 21.50      $ 20.10   

Diluted earnings multiple(1)

    9.89        10.42        11.70        14.53        8.38   

Book value multiple(2)

    1.22        1.15        1.15        1.15        1.09   

COMMON STOCK DATA

         

Outstanding shares at end of period

    3,388,005        3,372,080        3,352,523        3,344,737        3,337,251   

Weighted average shares outstanding

    3,373,353        3,367,689        3,348,630        3,341,050        3,326,999   

Weighted average shares outstanding, diluted

    3,383,748        3,378,369        3,359,611        3,352,337        3,337,114   

CAPITAL RATIOS

         

Total equity to total assets

    11.00     11.17     10.74     10.94     10.83

CREDIT QUALITY

         

Net charge-offs to average loans

    0.09     0.00     0.33     0.40     0.13

Total non-performing loans to total loans

    0.59     0.79     0.63     1.19     0.43

Total non-performing assets to total assets

    0.89     1.08     0.94     1.30     0.71

Non-accrual loans to:

         

total loans

    0.55     0.64     0.58     1.19     0.39

total assets

    0.41     0.47     0.41     0.89     0.30

Allowance for loan losses to:

         

total loans

    1.60     1.64     1.57     1.86     2.01

non-performing assets

    133.53     110.88     118.38     16.64     213.78

non-accrual loans

    291.44     256.07     272.45     156.37     509.93

NON-PERFORMING ASSETS:

         

(dollars in thousands)

         

Loans delinquent over 90 days

  $ 201      $ 631      $ 208      $ 10      $ 163   

Non-accrual loans

    2,394        2,718        2,414        5,091        1,692   

Other real estate owned and repossessed assets

    2,630        2,928        2,934        2,364        2,181   

NET LOAN CHARGE-OFFS (RECOVERIES):

         

(dollars in thousands)

         

Loans charged off

  $ 403      $ 42      $ 1,516      $ 1,801      $ 609   

(Recoveries)

    (37     (42     (122     (84     (50

Net charge-offs (recoveries)

    366        —          1,394        1,717        559   

PROVISION FOR LOAN LOSSES (dollars in thousands)

  $ 384      $ 383      $ 10      $ 1,050      $ 300   

ALLOWANCE FOR LOAN LOSS SUMMARY

         
(dollars in thousands)          

Balance at the beginning of period

  $ 6,960      $ 6,577      $ 7,961      $ 8,628      $ 8,887   

Provision

    384        383        10        1,050        300   

Net charge-offs (recoveries)

    366        —          1,394        1,717        559   

Balance at the end of period

  $ 6,978      $ 6,960      $ 6,577      $ 7,961      $ 8,628   

 

(1) The diluted earnings multiple is calculated by dividing the period’s closing market price per share by the annualized diluted earnings per share for the period. The diluted earnings multiple is a measure of how much an investor may be willing to pay for $1.00 of the Company’s earnings.
(2) The book value multiple (or price to book ratio) is calculated by dividing the period’s closing market price per share by the period’s book value per share. The book value multiple is a measure used to compare the Company’s market value per share to its book value per share.


EAGLE FINANCIAL SERVICES, INC.

CONSOLIDATED BALANCE SHEETS

(dollars in thousands)

 

     Unaudited
6/30/2013
     Unaudited
3/31/2013
     Audited
12/31/2012
     Unaudited
9/30/2012
     Unaudited
6/30/2012
 

Assets

              

Cash and due from banks

   $ 10,632       $ 21,829       $ 48,690       $ 21,812       $ 21,941   

Federal funds sold

     —           —           —           —           —     

Securities available for sale, at fair value

     109,145         115,001         105,531         103,963         117,654   

Loans, net of allowance for loan losses

     429,379         416,890         411,520         419,538         401,681   

Bank premises and equipment, net

     17,287         16,834         16,545         16,420         15,200   

Other assets

     19,230         10,292         10,990         12,419         11,546   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total assets

   $ 585,673       $ 580,846       $ 593,276       $ 574,152       $ 568,022   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Liabilities and Shareholders’ Equity

              

Liabilities

              

Deposits:

              

Noninterest bearing demand deposits

   $ 135,802       $ 135,650       $ 134,871       $ 122,093       $ 107,237   

Savings and interest bearing demand deposits

     234,430         227,876         231,249         219,984         210,158   

Time deposits

     103,080         109,554         110,981         115,101         131,070   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total deposits

   $ 473,312       $ 473,080       $ 477,101       $ 457,178       $ 448,465   

Federal funds purchased and securities sold under agreements to repurchase

     5,616         —           10,000         10,000         10,000   

Federal Home Loan Bank advances

     32,250         32,250         32,250         32,250         42,250   

Trust preferred capital notes

     7,217         7,217         7,217         7,217         7,217   

Other liabilities

     2,860         3,429         3,002         4,709         2,000   

Commitments and contingent liabilities

     —           —           —           —           —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total liabilities

   $ 521,255       $ 515,976       $ 529,570       $ 511,354       $ 509,932   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Shareholders’ Equity

              

Preferred stock, $10 par value

   $ —         $ —         $ —         $ —         $ —     

Common stock, $2.50 par value

     8,417         8,376         8,340         8,312         8,217   

Surplus

     10,935         10,636         10,424         10,218         9,568   

Retained earnings

     44,018         42,657         41,494         40,548         37,374   

Accumulated other comprehensive income

     1,048         3,201         3,448         3,720         2,931   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total shareholders’ equity

   $ 64,418       $ 64,870       $ 63,706       $ 62,798       $ 58,090   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total liabilities and shareholders’ equity

   $ 585,673       $ 580,846       $ 593,276       $ 574,152       $ 568,022   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 


EAGLE FINANCIAL SERVICES, INC.

CONSOLIDATED STATEMENTS OF INCOME

(dollars in thousands)

Unaudited

 

     Three Months Ended  
     6/30/2013     3/31/2013      12/31/2012      9/30/2012      6/30/2012  

Interest and Dividend Income

             

Interest and fees on loans

   $ 5,343      $ 5,331       $ 5,532       $ 5,634       $ 5,748   

Interest on federal funds sold

     —          —           —           —           —     

Interest and dividends on securities available for sale:

             

Taxable interest income

     518        547         511         524         554   

Interest income exempt from federal income taxes

     314        324         335         337         351   

Dividends

     42        67         87         87         107   

Interest on deposits in banks

     6        10         14         4         2   
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Total interest and dividend income

   $ 6,223      $ 6,279       $ 6,479       $ 6,586       $ 6,762   
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Interest Expense

             

Interest on deposits

   $ 288      $ 326       $ 368       $ 377       $ 397   

Interest on federal funds purchased and securities sold under agreements to repurchase

     1        29         90         90         89   

Interest on Federal Home Loan Bank advances

     273        270         276         273         273   

Interest on trust preferred capital notes

     78        78         80         80         79   
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Total interest expense

   $ 640      $ 703       $ 814       $ 820       $ 838   
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Net interest income

   $ 5,583      $ 5,576       $ 5,665       $ 5,766       $ 5,924   

Provision For Loan Losses

     384        383         10         1,050         300   
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Net interest income after provision for loan losses

   $ 5,199      $ 5,193       $ 5,655       $ 4,716       $ 5,624   
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Noninterest Income

             

Income from fiduciary activities

   $ 273      $ 360       $ 237       $ 205       $ 281   

Service charges on deposit accounts

     366        343         397         390         370   

Other service charges and fees

     1,443        800         828         898         868   

Gain on the sale of bank premises and equipment

     —          —           —           —           —     

Gain (Loss) on sales of AFS securities

     10        390         30         1         14   

Other operating income

     377        39         39         59         40   
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Total noninterest income

   $ 2,469      $ 1,932       $ 1,531       $ 1,553       $ 1,573   
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Noninterest Expenses

             

Salaries and employee benefits

   $ 2,910      $ 2,641       $ 2,699       $ 2,651       $ 2,671   

Occupancy expenses

     319        281         289         279         287   

Equipment expenses

     191        155         163         162         176   

Advertising and marketing expenses

     144        127         123         132         100   

Stationery and supplies

     68        78         58         91         69   

ATM network fees

     143        157         132         139         135   

Other real estate owned expenses

     20        8         305         8         29   

FDIC assessment

     96        97         90         96         (77

(Gain) loss on the sale of other real estate owned

     (53     —           2         —           (4

Other operating expenses

     1,114        1,040         1,120         1,019         994   
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Total noninterest expenses

   $ 4,952      $ 4,584       $ 4,981       $ 4,577       $ 4,380   
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Income before income taxes

   $ 2,716      $ 2,541       $ 2,205       $ 1,692       $ 2,817   

Income Tax Expense

     715        738         624         439         815   
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Net income

   $ 2,001      $ 1,803       $ 1,581       $ 1,253       $ 2,002   
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Earnings Per Share

             

Net income per common share, basic

   $ 0.59      $ 0.54       $ 0.47       $ 0.38       $ 0.60   
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Net income per common share, diluted

   $ 0.59      $ 0.53       $ 0.47       $ 0.37       $ 0.60   
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 


EAGLE FINANCIAL SERVICES, INC.

Average Balances, Income and Expenses, Yields and Rates

(dollars in thousands)

 

    For the Three Months Ended  
    June 30, 2013     March 31, 2013     June 30, 2012  
    Average
Balance
    Interest
Income/
Expense
    Average
Yield
    Average
Balance
    Interest
Income/
Expense
    Average
Yield
    Average
Balance
    Interest
Income/
Expense
    Average
Yield
 

Assets:

                 

Securities:

                 

Taxable

  $ 76,102      $ 2,267        2.98   $ 73,925      $ 2,490        3.37   $ 71,755      $ 2,658        3.70

Tax-Exempt (1)

    37,437        1,933        5.16     37,473        1,990        5.31     39,638        2,136        5.39
 

 

 

   

 

 

     

 

 

   

 

 

     

 

 

   

 

 

   

Total Securities

  $ 113,539      $ 4,200        3.70   $ 111,398      $ 4,480        4.02   $ 111,393      $ 4,794        4.30

Loans:

                 

Taxable

  $ 417,906      $ 21,478        5.14   $ 411,822      $ 21,426        5.20   $ 414,499      $ 22,916        5.53

Nonaccrual

    2,692        —          0.00     2,514        —          0.00     1,962        —          0.00

Tax-Exempt (1)

    4,531        285        6.29     4,651        294        6.32     4,777        307        6.42
 

 

 

   

 

 

     

 

 

   

 

 

     

 

 

   

 

 

   

Total Loans

  $ 425,129      $ 21,763        5.12   $ 418,987      $ 21,719        5.18   $ 421,238      $ 23,223        5.51

Federal funds sold

    —          —          0.00     —          —          0.00     145        —          0.00

Interest-bearing deposits in other banks

    10,190        24        0.23     17,156        41        0.24     4,652        9        0.20
 

 

 

   

 

 

     

 

 

   

 

 

     

 

 

   

 

 

   

Total earning assets

  $ 546,166      $ 25,987        4.76   $ 545,027      $ 26,240        4.81   $ 535,466      $ 28,027        5.23

Allowance for loan losses

    (7,137         (6,784         (8,893    

Total non-earning assets

    38,813            37,769            37,390       
 

 

 

       

 

 

       

 

 

     

Total assets

  $ 577,842          $ 576,012          $ 563,963       
 

 

 

       

 

 

       

 

 

     

Liabilities and Shareholders’ Equity:

                 

Interest-bearing deposits:

                 

NOW accounts

  $ 83,485      $ 101        0.12   $ 85,175      $ 134        0.16   $ 78,555      $ 132        0.17

Money market accounts

    87,654        110        0.12     85,589        142        0.17     84,224        204        0.24

Savings accounts

    58,997        28        0.05     55,696        28        0.05     52,854        37        0.07

Time deposits:

                 

$100,000 and more

    38,478        247        0.64     41,255        296        0.72     72,740        385        0.53

Less than $100,000

    67,143        677        1.01     68,359        722        1.06     48,326        836        1.73
 

 

 

   

 

 

     

 

 

   

 

 

     

 

 

   

 

 

   

Total interest-bearing deposits

  $ 335,757      $ 1,164        0.35   $ 336,074        1,322        0.39   $ 336,699      $ 1,593        0.47

Federal funds purchased and securities sold under agreements to repurchase

    169        —          0.00     3,222        118        3.65     10,086        360        3.57

Federal Home Loan Bank advances

    32,250        1,107        3.43     32,250        1,095        3.40     32,250        1,097        3.40

Trust preferred capital notes

    7,217        324        4.50     7,217        316        4.38     7,217        318        4.41
 

 

 

   

 

 

     

 

 

   

 

 

     

 

 

   

 

 

   

Total interest-bearing liabilities

  $ 375,393      $ 2,596        0.69   $ 378,763        2,851        0.75   $ 386,252      $ 3,369        0.87
 

 

 

   

 

 

     

 

 

   

 

 

     

 

 

   

 

 

   

Noninterest-bearing liabilities:

                 

Demand deposits

    134,867            130,333            114,206       

Other Liabilities

    2,703            2,882            2,914       
 

 

 

       

 

 

       

 

 

     

Total liabilities

  $ 512,963          $ 511,978          $ 503,372       

Shareholders’ equity

    64,879            64,034            60,591       
 

 

 

       

 

 

       

 

 

     

Total liabilities and shareholders’ equity

  $ 577,842          $ 576,012          $ 563,963       
 

 

 

       

 

 

       

 

 

     
                 
   

 

 

       

 

 

       

 

 

   

Net interest income

    $ 23,392          $ 23,389          $ 24,657     
   

 

 

       

 

 

       

 

 

   

Net interest spread

        4.07         4.06         4.36

Interest expense as a percent of average earning assets

        0.48         0.52         0.63

Net interest margin

        4.28         4.29         4.60

 

(1) Income and yields are reported on a tax equivalent basis using a federal tax rate of 34%.


EAGLE FINANCIAL SERVICES, INC.

Reconciliation of Tax-Equivalent Net Interest Income

(dollars in thousands)

 

     Three Months Ended  
     6/30/2013      3/31/2013      12/31/2012      9/30/2012      6/30/2012  

GAAP Financial Measurements:

              

Interest Income - Loans

   $ 5,342       $ 5,331       $ 5,532       $ 5,634       $ 5,748   

Interest Income - Securities and Other Interest-Earnings Assets

     880         947         947         952         1,014   

Interest Expense - Deposits

     287         326         368         377         396   

Interest Expense - Other Borrowings

     353         377         446         443         442   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total Net Interest Income

   $ 5,582       $ 5,575       $ 5,665       $ 5,766       $ 5,924   

Non-GAAP Financial Measurements:

              

Add: Tax Benefit on Tax-Exempt Interest Income - Loans

   $ 24       $ 25       $ 26       $ 26       $ 26   

Add: Tax Benefit on Tax-Exempt Interest Income - Securities

     162         167         172         174         181   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total Tax Benefit on Tax-Exempt Interest Income

   $ 186       $ 192       $ 198       $ 200       $ 207   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Tax-Equivalent Net Interest Income

   $ 5,768       $ 5,767       $ 5,863       $ 5,966       $ 6,131