EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

EAGLE FINANCIAL SERVICES, INC. ANNOUNCES 2010

SECOND QUARTER FINANCIAL RESULTS

AND QUARTERLY DIVIDEND

 

Contact:    Kathleen J. Chappell, Vice President and CFO   

540-955-2510                             

kchappell@bankofclarke.com

BERRYVILLE, VIRGINIA (July 22, 2010) – Eagle Financial Services, Inc. (OTC BULLETIN BOARD: EFSI), the holding company for Bank of Clarke County, whose divisions include Eagle Investment Group, announces second quarter 2010 financial results and a quarterly dividend. The Company’s common stock is listed for trading on the Over-the-Counter (OTC) Bulletin Board under the ticker symbol EFSI.

Second Quarter 2010 Financial Results:

 

  •  

Net income of $1.5 million

 

  •  

Diluted earnings per share $0.46

 

  •  

Net interest margin of 4.38%

 

  •  

Allowance for loan losses at 1.59% of total loans

 

  •  

Retail deposit growth of $6.9 million since March 31, 2010

 

  •  

Total equity to assets of 9.73%

 

  •  

Dividend of $0.17 per share

John R. Milleson, President and CEO, stated “For the second quarter of 2010, we are pleased to announce continued strong earnings. We have continued to diligently manage the net interest margin and control expenses as well as conservatively fund the allowance for loan losses. Most importantly, however, the Bank remains well capitalized and that has allowed us to focus on geographical growth. We will open our newest branch, located on Pleasant Valley Road in Winchester, VA, at the end of this month and, as announced just last week, we plan to expand our market area by opening a branch in Round Hill, Virginia, in western Loudoun County. We are truly excited about this market expansion. We believe that this is the right time to expand due to the Bank’s financial strength and the opportunities we see in Loudoun County. The Round Hill area residents have been without a bank to call their own for too long; we’ve been their neighbors and now we look forward to becoming part of their community.”

Net Interest Income and Net Interest Margin

Net interest income for the quarter ended June 30, 2010 was $5.5 million which represented an increase of 1.9% when compared to $5.4 million for the quarter ended March 31, 2010. The increase in average earning assets of $15.3 million since March 31, 2010 contributed to the increase in net interest income.

Total loan interest income was $5.9 million for the quarter ended June 30, 2010, reflecting a slight increase from the $5.8 million for the quarter ended March 31, 2010. Average loans increased $3.2 million since March 31, 2010. Interest income from the investment portfolio was $1.1 million for the quarter ended June 30, 2010 and $1.0 million for the quarter ended March 31, 2010. Average investments increased $6.1 million since March 31, 2010.

Total interest expense for the three months ended June 30, 2010 and March 31, 2010 was $1.4 million. The average cost of interest bearing liabilities decreased five basis points from the quarter ended March 31, 2010 while the average balance of interest bearing liabilities increased $5.7 million from the quarter ended March 31, 2010.

The net interest margin decreased from 4.48% for the quarter ended March 31, 2010 to 4.38% for the quarter ended June 30, 2010. The decrease in the net interest margin was mostly attributable to the 16 basis point decline in 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%.

Asset Quality and Provision for Loan Losses

Non performing assets increased from $9.0 million or 1.64% of total assets at March 31, 2010 to $9.5 million or 1.70% of total assets at June 30, 2010. This increase resulted from the increase in loans 90 plus days past due. The balance of 90 plus day past due loans is comprised of three loans, each secured by real estate.

During the second quarter of 2010, the Bank placed approximately five loans totaling $733,000 on non accrual status. Management evaluates the financial condition of these borrowers 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 nonaccrual loans. Most of the non accrual loans are secured by real estate and have allocated specific allowances. Six real estate assets valued at $888,000 had been foreclosed upon during the second quarter of 2010 while the Bank sold two pieces of foreclosed property recorded at a net value of $553,000 million during the same period.

Loans greater than 90 days past due increased from $2,000 at March 31, 2010 to $1.4 million at June 30, 2010. The Company realized $499,000 in net charge-offs for the quarter ended June 30, 2010 versus $229,000 for the three months ended March 31, 2010. Early in 2009, the Company developed a troubled credit group to monitor past due loans, identify potential problem credits, and develop action plans to work through its troubled loans as promptly as possible.

Provisions for loan losses were $750,000 for the three months ended June 30, 2010, compared to $550,000 for the quarter ended March 31, 2010. The ratio of allowance for loan losses to total loans was 1.59% at June 30, 2010 and 1.56% at March 31, 2010. The ratio of allowance for loan losses to total non accrual loans was 105.5% at June 30, 2010 and 84.6% at March 31, 2010. 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. Given the current economic environment, it is anticipated there could be further increases in past due loans, nonperforming loans and other real estate owned. However, the increase is not expected to be as significant as that experienced during 2009. The Company is committed to maintaining an allowance at a level adequate to mitigate any negative impact resulting from such increases and that adequately reflects the risk inherent in the loan portfolio.

Non Interest Income and Non Interest Expense

Noninterest income was $1.4 million for the quarters ended June 30, 2010 and March 31, 2010. Net losses of $123,000 and $126,000 were recognized on the sales of repossessed assets for the quarters ended June 30, 2010 and March 31, 2010, respectively. Other service charges and fees increased 11.5% or $77,000 from $668,000 for the quarter ended March 31, 2010. This increase resulted from several factors including the recognition of $42,000 in safe deposit box fees, an increase in ATM fees of $54,000 and an increase in service release premiums of $30,000. Credit card interchange income, also a component of other service charges and fees, had decrease $49,000 from the quarter ended March 31, 2010.

Noninterest expense was $4.1 million for the quarters ended June 30, 2010 and March 31, 2010. The Company has continued to diligently manage and monitor its other operating expenses.

Total Consolidated Assets

Total consolidated assets of the Company at June 30, 2010 were $558.9 million, which represents an increase of $9.3 million or 1.7% from total assets of $549.6 million at March 31, 2010. Total loans increased $6.3 million

from $404.1 million at March 31, 2010 to $410.7 million at June 30, 2010. 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 permitted in the loan portfolio.

Deposits and Other Borrowings

Total deposits, which include brokered deposits, increased $6.9 million to $421.5 million at June 30, 2010 from $414.6 million at March 31, 2010. Most of this growth was realized in the Bank’s lower cost transaction accounts. Brokered deposits were $19.9 million at June 30, 2010 and March 31, 2010.

Securities sold under agreement to repurchase were $15.0 million at June 30, 2010 and $14.6 million at March 31, 2010. Borrowings with the Federal Home Loan Bank of Atlanta were $57.3 million at June 30, 2010 and March 31, 2010.

Equity

Shareholders’ equity at June 30, 2010 and March 31, 2010 was $54.4 million and $53.1 million, respectively. The book value of the Company at June 30, 2010 was $16.85 per common share. Total common shares outstanding were 3,226,923 at June 30, 2010. On July 21, 2010, the board of directors declared a $0.17 per common share cash dividend for shareholders of record as of August 6, 2010 and payable on August 20, 2010.

 

 

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, 2009, and other filings with the Securities and Exchange Commission.

EAGLE FINANCIAL SERVICES, INC.

KEY STATISTICS

 

      For the Three Months Ended  
     2Q10     1Q10     4Q09     3Q09     2Q09  

Net Income (dollars in thousands)

    $ 1,484      $ 1,578      $ 792      $ 790      $ 904   

Earnings per share, basic

    $ 0.46      $ 0.49      $ 0.25      $ 0.25      $ 0.29   

Earnings per share, diluted

    $ 0.46      $ 0.49      $ 0.25      $ 0.25      $ 0.28   

Return on average total assets

      1.07 %      1.19 %      0.59 %      0.60 %      0.71 % 

Return on average total equity

      11.13 %      12.17 %      6.15 %      6.33 %      7.80 % 

Dividend payout ratio

      36.96 %      34.69 %      68.00 %      68.00 %      58.62 % 

Fee revenue as a percent of total revenue

      20.88 %      19.93 %      18.06 %      11.35 %      15.44 % 

Net interest margin(1)

      4.38 %      4.48 %      4.52 %      4.51 %      4.24 % 

Yield on average earning assets

      5.45 %      5.61 %      5.67 %      5.73 %      5.67 % 

Yield on average interest-bearing liabilities

      1.39 %      1.44 %      1.49 %      1.56 %      1.82 % 

Net interest spread

      4.06 %      4.17 %      4.18 %      4.17 %      3.85 % 

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

    $ 202      $ 204      $ 191      $ 195      $ 187   

Non-interest income to average assets

      1.00 %      1.02 %      0.96 %      0.67 %      0.95 % 

Non-interest expense to average assets

      2.97 %      3.05 %      3.26 %      3.20 %      3.10 % 

Efficiency ratio(2)

      57.56 %      58.01 %      62.43 %      60.82 %      62.88 % 

 

(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 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.

EAGLE FINANCIAL SERVICES, INC.

SELECTED FINANCIAL DATA BY QUARTER

 

     2Q10     1Q10     4Q09     3Q09     2Q09  

BALANCE SHEET RATIOS

           

Loans to deposits

      97.45 %      97.56 %      101.50 %      104.31 %      102.20 % 

Average interest-earning assets to average-interest bearing liabilities

      130.10 %      128.13 %      129.55 %      136.59 %      126.56 % 

PER SHARE DATA

           

Dividends

    $ 0.17      $ 0.17      $ 0.17      $ 0.17      $ 0.17   

Book value

    $ 16.85      $ 16.42      $ 16.14      $ 15.88      $ 15.28   

Tangible book value

    $ 16.84      $ 16.40      $ 16.13      $ 15.88      $ 15.26   

SHARE PRICE DATA

           

Closing price

    $ 16.00      $ 18.00      $ 15.75      $ 15.35      $ 15.00   

Diluted earnings multiple(1)

      0.96        1.10        0.98        0.97        0.98   

Book value multiple(2)

      0.95        1.10        0.98        0.97        0.98   

COMMON STOCK DATA

           

Outstanding shares at end of period

      3,226,923        3,231,964        3,199,636        3,190,304        3,180,899   

Weighted average shares outstanding

      3,236,763        3,227,129        3,194,970        3,185,806        3,169,197   

Weighted average shares outstanding, diluted

      3,245,229        3,232,700        3,202,595        3,193,758        3,172,659   

CAPITAL RATIOS

           

Total equity to total assets

      9.73 %      9.65 %      9.65 %      9.72 %      9.30 % 

CREDIT QUALITY

           

Net charge-offs to average loans

      0.49 %      0.23 %      0.37 %      0.14 %      0.43 % 

Total non-performing loans to total loans

      1.84 %      1.84 %      1.27 %      0.34 %      0.54 % 

Total non-performing assets to total assets

      1.70 %      1.64 %      1.48 %      0.81 %      0.82 % 

Non-accrual loans to:

           

total loans

      1.51 %      1.84 %      1.26 %      0.27 %      0.53 % 

total assets

      1.11 %      1.35 %      0.95 %      0.20 %      0.39 % 

Allowance for loan losses to:

           

total loans

      1.59 %      1.56 %      1.48 %      1.25 %      1.13 % 

non-performing assets

      69.04 %      69.85 %      75.46 %      116.68 %      102.74 % 

non-accrual loans

      105.45 %      84.62 %      117.08 %      458.66 %      213.60 % 

NON-PERFORMING ASSETS:

           

(dollars in thousands)

           

Loans delinquent over 90 days

    $ 1,366      $ 2      $ 13      $ 284      $ 50   

Non-accrual loans

      6,204        7,434        5,099        1,067        2,052   

Other real estate owned and repossessed assets

      1,906        1,571        2,799        2,845        2,164   

NET LOAN CHARGE-OFFS (RECOVERIES):

           

(dollars in thousands)

           

Loans charged off

    $ 531      $ 281      $ 448      $ 617      $ 1,727   

(Recoveries)

      (32 )      (52 )      (72 )      (79 )      (52 ) 

Net charge-offs (recoveries)

      499        229        376        537        1,675   

PROVISION FOR LOAN LOSSES (dollars in thousands)

    $ 750      $ 550      $ 1,450      $ 1,050      $ 1,050   

ALLOWANCE FOR LOAN LOSS SUMMARY

           

(dollars in thousands)

           

Balance at the beginning of period

    $ 6,291      $ 5,970      $ 4,896      $ 4,383      $ 5,008   

Provision

      750        550        1,450        1,050        1,050   

Net charge-offs (recoveries)

      499        229        376        537        1,675   

Balance at the end of period

    $ 6,542      $ 6,291      $ 5,970      $ 4,896      $ 4,383   

 

(1) The diluted earnings multiple (or price earnings ratio) is calculated by dividing the period’s closing market price per share by total equity per weighted average shares outstanding, diluted 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    Unaudited    Audited    Unaudited    Unaudited  
     6/30/2010    3/31/2010    12/31/2009    9/30/2009    6/30/2009  

Assets

               

Cash and due from banks

    $ 18,951    $ 24,385    $ 7,354    $ 8,625    $ 7,841   

Federal funds sold

      —        —        179      —        —     

Securities available for sale, at fair value

      107,104      100,148      101,210      97,882      101,884   

Loans, net of allowance for loan losses

      404,177      398,134      398,096      387,418      385,200   

Bank premises and equipment, net

      15,591      14,984      14,778      14,980      15,006   

Other assets

      13,059      11,904      13,768      12,180      12,679   
                                    

Total assets

    $ 558,882    $ 549,555    $ 535,385    $ 521,085    $ 522,610   
                                    

Liabilities and Shareholders’ Equity

               

Liabilities

               

Deposits:

               

Noninterest bearing demand deposits

    $ 94,354    $ 91,477    $ 90,575    $ 87,105    $ 83,985   

Savings and interest bearing demand deposits

      177,999      171,317      170,485      159,928      154,072   

Time deposits

      149,098      151,765      137,047      128,565      143,129   
                                    

Total deposits

    $ 421,451    $ 414,559    $ 398,107    $ 375,598    $ 381,186   

Federal funds purchased and securities sold under agreements to repurchase

      14,987      14,628      14,016      21,807    $ 19,791   

Federal Home Loan Bank advances

      57,250      57,250      62,250      62,250      62,250   

Trust preferred capital notes

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

Other liabilities

      3,616      2,847      2,152      3,548      3,555   

Commitments and contingent liabilities

      —        —        —        —        —     
                                    

Total liabilities

    $ 504,521    $ 496,501    $ 483,742    $ 470,420    $ 473,999   
                                    

Shareholders’ Equity

               

Preferred stock, $10 par value

    $ —      $ —      $ —      $ —      $ —     

Common stock, $2.50 par value

      8,067      8,045      7,999      7,976      7,952   

Surplus

      8,733      8,559      8,504      8,307      8,085   

Retained earnings

      36,014      35,079      34,048      33,804      33,558   

Accumulated other comprehensive income

      1,547      1,371      1,092      578      (984 ) 
                                    

Total shareholders’ equity

    $ 54,361    $ 53,054    $ 51,643    $ 50,665    $ 48,611   
                                    

Total liabilities and shareholders’ equity

    $ 558,882    $ 549,555    $ 535,385    $ 521,085    $ 522,610   
                                    

EAGLE FINANCIAL SERVICES, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited, dollars in thousands)

 

     For the Three Months Ended,
     6/30/2010     3/31/2010     12/31/2009     9/30/2009     6/30/2009

Interest and Dividend Income

           

Interest and fees on loans

    $ 5,873      $ 5,807      $ 5,934      $ 5,765      $ 5,698

Interest on federal funds sold

      8        3        1        2        3

Interest and dividends on securities available for sale:

           

Taxable interest income

      621        595        617        666        748

Interest income exempt from federal income taxes

      324        328        304        307        298

Dividends

      108        111        113        116        119

Interest on deposits in banks

      —          —          —          1        2
                                      

Total interest and dividend income

    $ 6,934      $ 6,844      $ 6,969      $ 6,857      $ 6,868
                                      

Interest Expense

           

Interest on deposits

    $ 765      $ 784      $ 806      $ 826      $ 1,080

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

      96        98        98        102        95

Interest on Federal Home Loan Bank advances

      460        455        464        484        530

Interest on trust preferred capital notes

      79        77        80        82        79
                                      

Total interest expense

    $ 1,400      $ 1,414      $ 1,448      $ 1,494      $ 1,784
                                      

Net interest income

    $ 5,534      $ 5,430      $ 5,521      $ 5,363      $ 5,084

Provision For Loan Losses

      750        550        1,450        1,050        1,050
                                      

Net interest income after provision for loan losses

    $ 4,784      $ 4,880      $ 4,071      $ 4,313      $ 4,034
                                      

Noninterest Income

           

Income from fiduciary activities

    $ 222      $ 240      $ 174      $ 200      $ 204

Service charges on deposit accounts

      477        446        522        537        517

Other service charges and fees

      745        668        534        634        494

(Loss) Gain on the sale of bank premises and equipment

      —          —          (5 )      —          —  

(Loss) on the sale of repossessed assets

      (123 )      (126 )      15        (50 )      —  

Gain (Loss) on sales of AFS securities

      —          98        20        (439 )      —  

Other operating income

      62        38        29        (4 )      39
                                      

Total noninterest income

    $ 1,383      $ 1,364      $ 1,289      $ 878      $ 1,254
                                      

Noninterest Expenses

           

Salaries and employee benefits

    $ 2,344      $ 2,189      $ 2,312      $ 2,493      $ 2,287

Occupancy expenses

      281        292        264        291        348

Equipment expenses

      144        152        153        176        166

Advertising and marketing expenses

      95        105        85        142        87

Stationery and supplies

      47        65        94        52        80

ATM network fees

      265        157        95        20        33

FDIC assessment

      178        314        216        204        255

Other operating expenses

      751        785        1,145        803        847
                                      

Total noninterest expenses

    $ 4,105      $ 4,059      $ 4,364      $ 4,181      $ 4,103
                                      

Income before income taxes

    $ 2,062      $ 2,185      $ 996      $ 1,010      $ 1,185

Income Tax Expense

      578        607        204        220        281
                                      

Net income

    $ 1,484      $ 1,578      $ 792      $ 790      $ 904
                                      

Earnings Per Share

           

Net income per common share, basic

    $ 0.46      $ 0.49      $ 0.25      $ 0.25      $ 0.29
                                      

Net income per common share, diluted

    $ 0.46      $ 0.49      $ 0.25      $ 0.25      $ 0.28
                                      

EAGLE FINANCIAL SERVICES, INC.

Average Balances, Income and Expenses, Yields and Rates

(dollars in thousands)

 

     For the Three Months Ended June,  
     2010     2009  
           Interest                Interest       
     Average     Income/    Average     Average     Income/    Average  
     Balance     Expense    Rate     Balance     Expense    Rate  

Assets:

               

Securities:

               

Taxable

    70,278      2,924    4.16 %    71,617      3,478    4.86 % 

Tax-Exempt (1)

    34,022      1,969    5.79 %    32,614      1,814    5.56 % 
                          

Total Securities

    104,299      4,893    4.69 %    104,231      5,292    5.08 % 

Loans:

               

Taxable

    400,245      23,287    5.82 %    380,692      22,595    5.94 % 

Tax-Exempt (1)

    5,815      409    7.03 %    6,221      393    6.32 % 
                          

Total Loans

    406,060      23,696    5.84 %    386,913      22,988    5.94 % 

Federal funds sold

    —        —      0.00 %    7,647      12    0.16 % 

Interest-bearing deposits in other banks

    14,588      20    0.14 %    215      8    3.72 % 
                          

Total earning assets

    524,947      28,609    5.45 %    499,006      28,300    5.67 % 
                  

Allowance for loan losses

    (6,037 )         (4,359 )      

Total non-earning assets

    35,541           35,402        
                      

Total assets

    554,451           530,049        
                      

Liabilities and Shareholders’ Equity:

               

Interest-bearing deposits:

               

NOW accounts

    68,958      310    0.45 %    57,173      287    0.50 % 

Money market accounts

    65,287      429    0.66 %    60,352      557    0.92 % 

Savings accounts

    40,964      80    0.20 %    36,734      124    0.34 % 

Time deposits:

               

$100,000 and more

    46,741      623    1.33 %    53,221      1,109    2.08 % 

Less than $100,000

    102,087      1,626    1.59 %    102,638      2,257    2.20 % 
                          

Total interest-bearing deposits

    324,037      3,068    0.95 %    310,118      4,334    1.40 % 

Federal funds purchased and securities sold under agreements to repurchase

    14,981      370    2.47 %    14,685      382    2.60 % 

Federal Home Loan Bank advances

    57,250      1,846    3.22 %    62,250      2,125    3.41 % 

Trust preferred capital notes

    7,217      317    4.39 %    7,217      317    4.39 % 
                          

Total interest-bearing liabilities

    403,485      5,601    1.39 %    394,270      7,158    1.82 % 
                          

Noninterest-bearing liabilities:

               

Demand deposits

    94,304           84,477        

Other Liabilities

    3,203           3,231        
                      

Total liabilities

    500,992           481,978        

Shareholders’ equity

    53,459           48,072        
                      

Total liabilities and shareholders’ equity

    554,451           530,050        
                      

Net interest income

      23,008        21,142   
                  

Net interest spread

         4.06 %         3.85 % 

Interest expense as a percent of average earning assets

         1.07 %         1.43 % 

Net interest margin

         4.38 %         4.24 % 

 

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

EAGLE FINANCIAL SERVICES, INC.

Average Balances, Income and Expenses, Yields and Rates

(dollars in thousands)

 

     For the Three Months Ended March,  
     2010     2009  
           Interest                Interest       
     Average     Income/    Average     Average     Income/    Average  
     Balance     Expense    Rate     Balance     Expense    Rate  

Assets:

               

Securities:

               

Taxable

    63,519      2,860    4.50 %    68,082      3,529    5.18 % 

Tax-Exempt (1)

    34,708      2,016    5.81 %    31,189      1,750    5.61 % 
                          

Total Securities

    98,227      4,876    4.96 %    99,271      5,279    5.32 % 

Loans:

               

Taxable

    396,978      23,277    5.86 %    383,241      22,451    5.86 % 

Tax-Exempt (1)

    5,870      414    7.05 %    5,776      419    7.25 % 
                          

Total Loans

    402,848      23,691    5.88 %    389,017      22,870    5.88 % 

Federal funds sold

    8,363      13    0.16 %    8,641      17    0.20 % 

Interest-bearing deposits in other banks

    177      1    0.56 %    314      1    0.32 % 
                          

Total earning assets

    509,615      28,581    5.61 %    497,243      28,167    5.66 % 
                  

Allowance for loan losses

    (5,980 )         (4,606 )      

Total non-earning assets

    36,259           33,073        
                      

Total assets

    539,894           525,710        
                      

Liabilities and Shareholders’ Equity:

               

Interest-bearing deposits:

               

NOW accounts

    69,161      334    0.48 %    57,565      384    0.67 % 

Money market accounts

    62,795      443    0.71 %    59,458      750    1.26 % 

Savings accounts

    38,852      76    0.20 %    34,286      160    0.47 % 

Time deposits:

               

$100,000 and more

    44,651      594    1.33 %    57,823      1,602    2.77 % 

Less than $100,000

    99,159      1,734    1.75 %    95,706      2,489    2.60 % 
                          

Total interest-bearing deposits

    314,618      3,181    1.01 %    304,838      5,385    1.77 % 

Federal funds purchased and securities sold under agreements to repurchase

    16,551      396    2.39 %    15,673      394    2.51 % 

Federal Home Loan Bank advances

    59,361      1,846    3.11 %    68,278      2,287    3.35 % 

Trust preferred capital notes

    7,217      313    4.34 %    7,217      317    4.39 % 
                          

Total interest-bearing liabilities

    397,747      5,736    1.44 %    396,006      8,383    2.12 % 
                          

Noninterest-bearing liabilities:

               

Demand deposits

    87,059           79,854        

Other Liabilities

    2,500           3,013        
                      

Total liabilities

    487,306           478,873        

Shareholders’ equity

    52,588           46,837        
                      

Total liabilities and shareholders’ equity

    539,894           525,710        
                      

Net interest income

      22,845        19,784   
                  

Net interest spread

         4.17 %         3.54 % 

Interest expense as a percent of average earning assets

         1.13 %         1.69 % 

Net interest margin

         4.48 %         3.98 % 

 

(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
     6/30/2010    3/31/2010    12/31/2009    9/30/2009    6/30/2009

GAAP Financial Measurements:

               

Interest Income - Loans

    $ 5,873    $ 5,807    $ 5,934    $ 5,765    $ 5,698

Interest Income - Securities and Other Interest-Earnings Assets

      1,061      1,037      1,035      1,092      1,170

Interest Expense - Deposits

      765      784      806      826      1,080

Interest Expense - Other Borrowings

      635      630      642      668      704
                                  

Total Net Interest Income

    $ 5,534    $ 5,430    $ 5,521    $ 5,363    $ 5,084

Non-GAAP Financial Measurements:

               

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

    $ 35    $ 35    $ 35    $ 37    $ 33

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

      167      169      156      158      154
                                  

Total Tax Benefit on Tax-Exempt Interest Income

    $ 202    $ 204    $ 191    $ 195    $ 187
                                  

Tax-Equivalent Net Interest Income

    $ 5,736    $ 5,634    $ 5,712    $ 5,558    $ 5,271