EX-99.1 2 dex991.htm PRESS RELEASE Press Release

 

Exhibit 99.1

EAGLE FINANCIAL SERVICES, INC. ANNOUNCES 2010

THIRD QUARTER FINANCIAL RESULTS

 

Contact:    Kathleen J. Chappell, Vice President and CFO   

540-955-2510

kchappell@bankofclarke.com

BERRYVILLE, VIRGINIA (October 29, 2010) – Eagle Financial Services, Inc. (OTC BULLETIN BOARD: EFSI), the holding company for Bank of Clarke County, whose divisions include Eagle Investment Group, announces third quarter 2010 financial results. The Company’s common stock is listed for trading on the Over-the-Counter (OTC) Bulletin Board under the ticker symbol EFSI.

Third Quarter 2010 Highlights:

 

  •  

Dividend of $0.18 per share, an increase of 5.9%

 

  •  

Net interest margin of 4.31%

 

  •  

Allowance for loan losses at 1.90% of total loans

 

  •  

Retail deposit growth of $18.6 million since December 31, 2009

 

  •  

Total equity to assets of 9.82%

 

  •  

Net Income $81,000

John R. Milleson, President and CEO, stated, “Our third quarter results fell short of expectations and well below the Company’s typical standards. The Bank’s credit quality suffered during the third quarter primarily due to declining real estate values associated with a few large loans and the continuance of the economic malaise. Accordingly, the Bank increased its allowance for loan losses by $2.9 million for the third quarter. Fortunately, strong earnings allowed us to absorb this substantial provision. We will continue to diligently monitor our loan portfolio in an attempt to minimize losses associated with existing and potential credit quality issues.

Because we are confident with our ability to sustain core earnings and have no restrictions associated with government bailout programs, our Board voted to increase the dividend for the quarter to $0.18 per share, marking the 25th consecutive year of a dividend increase.”

Net Interest Income and Net Interest Margin

Net interest income for the quarter ended September 30, 2010 was $5.6 million compared to $5.5 million for the quarter ended June 30, 2010. Average earning assets have increased $5.9 million since June 30, 2010 while their yield has decreased 11 basis points since June 30, 2010.

Total loan interest income was $5.9 million for the quarters ended September and June 30, 2010. Average loans increased $4.8 million since June 30, 2010. Interest income from the investment portfolio was $1.1 million for the quarters ended September and June 30, 2010. Average investments increased $5.8 million since June 30, 2010.

Total interest expense for the three months ended September and June 30, 2010 was $1.4 million. The average cost of interest bearing liabilities decreased four basis points from the quarter ended June 30, 2010 while the average balance of interest bearing liabilities increased $3.0 million from the quarter ended June 30, 2010.

The net interest margin decreased from 4.38% for the quarter ended June 30, 2010 to 4.31% for the quarter ended September 30, 2010. The decrease in the net interest margin was mostly attributable to the 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 $9.5 million or 1.70% of total assets at June 30, 2010 to $12.2 million or 2.18% of total assets at September 30, 2010. This increase was driven mostly from the increase in nonaccrual loans.

During the third quarter of 2010, the Bank placed 12 loans totaling $5.4 million on non accrual status. A large portion of the $5.4 million was attributed to one loan of $2.2 million on a commercial office building located in Winchester, VA. 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. The majority of the loans placed on nonaccrual status during the third quarter are secured by real estate has allocated specific allowances totaling $1.7 million.

Two real estate assets valued at $241,000 were foreclosed upon during the third quarter of 2010 while no sales of foreclosed property were realized during the same period. Loans greater than 90 days past due decreased from $1.4 million at June 30, 2010 to $208,000 at September 30, 2010.

The Company realized $1.6 million in net charge-offs for the quarter ended September 30, 2010 versus $499,000 for the three months ended June 30, 2010. The increased amount of loan charge offs related primarily to two partial charge offs, together totaling $1.2 million, on loans for large residential land development projects. One project is located in Woodstock, VA and the other is in Winchester, VA.

The ratio of allowance for loan losses to total loans was 1.90% at September 30, 2010 and 1.59% at June 30, 2010. The ratio of allowance for loan losses to total nonaccrual loans was 79.35% at September 30, 2010 and 105.45% at June 30, 2010. Provisions for loan losses were $2.9 million for the three months ended September 30, 2010, compared to $750,000 for the quarter ended June 30, 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. The increased provision for the quarter resulted from both the increase in specific allocations related to the quarter’s additional nonaccrual loans and to an adjustment to our method of analysis of the allowance for loan losses with respect to the Bank’s loss history. The period of loss history consider for the analysis was shortened in order to better reflect the level of losses that the Bank is currently realizing.

Asset quality remains a primary concern 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.

Non Interest Income and Non Interest Expense

Noninterest income was $1.5 million for the quarter ended September 30, 2010 and $1.4 million for the same period ended June 30, 2010. Income from fiduciary activities increased $26,000 from the three month period ended June 30, 2010. Most of this increase is attributable to an estate that had been settled during the third quarter. Other service charges and fees increased 6.6% or $49,000 from $745,000 for the quarter ended June 30, 2010. This increase resulted mostly from the increase in service release premiums of $61,000.

Noninterest expense was $4.3 million for the quarter ended September 30, 2010 and $4.1 million for the quarter ended June 30, 2010. The increase is attributable to increases in various items including expenses related to other real estate owned, marketing and audit fees. The Company continues to diligently manage and monitor its other operating expenses.

Total Consolidated Assets

Total consolidated assets of the Company at September 30, 2010 were $559.0 million, and were relatively unchanged from total consolidated assets at June 30, 2010. Total loans increased $2.2 million from $410.7 million at June 30, 2010 to $412.9 million at September 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 $5.2 million to $426.7 million at September 30, 2010 from $421.5 million at June 30, 2010. Most of this growth was realized in the Bank’s lower cost transaction accounts. Brokered deposits were $19.9 million at September 30, 2010 and June 30, 2010.

Securities sold under agreement to repurchase were $14.9 million at September 30, 2010 and $15.0 million at June 30, 2010. Borrowings with the Federal Home Loan Bank of Atlanta were $52.3 million at September, 2010 and $57.3 million at June 30, 2010.

Equity

Shareholders’ equity at September 30, 2010 was $54.9 million and $54.4 million at June 30, 2010. The book value of the Company at September 30, 2010 was $16.86 per common share. Total common shares outstanding were 3,254,204 at September 30, 2010. On October 20, 2010, the board of directors declared a $0.18 per common share cash dividend for shareholders of record as of November 1, 2010 and payable on November 15, 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  
     3Q10     2Q10     1Q10     4Q09     3Q09  

Net Income (dollars in thousands)

    $ 81      $ 1,484      $ 1,578      $ 792      $ 790   

Earnings per share, basic

    $ 0.03      $ 0.46      $ 0.49      $ 0.25      $ 0.25   

Earnings per share, diluted

    $ 0.02      $ 0.46      $ 0.49      $ 0.25      $ 0.25   

Return on average total assets

      0.06 %      1.07 %      1.19 %      0.59 %      0.60 % 

Return on average total equity

      0.59 %      11.13 %      12.17 %      6.15 %      6.33 % 

Dividend payout ratio

      566.67 %      36.96 %      34.69 %      68.00 %      68.00 % 

Fee revenue as a percent of total revenue

      21.01 %      20.88 %      19.93 %      18.06 %      11.35 % 

Net interest margin(1)

      4.31 %      4.38 %      4.48 %      4.52 %      4.51 % 

Yield on average earning assets

      5.34 %      5.45 %      5.61 %      5.67 %      5.73 % 

Yield on average interest-bearing liabilities

      1.35 %      1.39 %      1.44 %      1.49 %      1.56 % 

Net interest spread

      3.99 %      4.06 %      4.17 %      4.18 %      4.17 % 

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

    $ 198      $ 202      $ 204      $ 191      $ 195   

Non-interest income to average assets

      1.04 %      1.00 %      1.02 %      0.96 %      0.67 % 

Non-interest expense to average assets

      3.03 %      2.97 %      3.05 %      3.26 %      3.20 % 

Efficiency ratio(2)

      59.22 %      57.56 %      58.01 %      62.43 %      60.82 % 

 

(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

 

     3Q10     2Q10     1Q10     4Q09     3Q09  

BALANCE SHEET RATIOS

           

Loans to deposits

      96.78 %      97.45 %      97.56 %      101.50 %      104.31 % 

Average interest-earning assets to average-interest bearing liabilities

      130.60 %      130.10 %      128.13 %      129.55 %      136.59 % 

PER SHARE DATA

           

Dividends

    $ 0.18      $ 0.17      $ 0.17      $ 0.17      $ 0.17   

Book value

    $ 16.86      $ 16.85      $ 16.42      $ 16.14      $ 15.88   

Tangible book value

    $ 16.86      $ 16.84      $ 16.40      $ 16.13      $ 15.88   

SHARE PRICE DATA

           

Closing price

    $ 17.00      $ 16.00      $ 18.00      $ 15.75      $ 15.35   

Diluted earnings multiple(1)

      1.01        0.96        1.10        0.98        0.97   

Book value multiple(2)

      1.10        0.95        1.10        0.98        0.97   

COMMON STOCK DATA

           

Outstanding shares at end of period

      3,254,204        3,226,923        3,231,964        3,199,636        3,190,304   

Weighted average shares outstanding

      3,249,236        3,236,763        3,227,129        3,194,970        3,185,806   

Weighted average shares outstanding, diluted

      3,259,231        3,245,229        3,232,700        3,202,595        3,193,758   

CAPITAL RATIOS

           

Total equity to total assets

      9.82 %      9.73 %      9.65 %      9.65 %      9.72 % 

CREDIT QUALITY

           

Net charge-offs to average loans

      1.51 %      0.49 %      0.23 %      0.37 %      0.14 % 

Total non-performing loans to total loans

      2.44 %      1.84 %      1.84 %      1.27 %      0.34 % 

Total non-performing assets to total assets

      2.18 %      1.70 %      1.64 %      1.48 %      0.81 % 

Non-accrual loans to:

           

total loans

      2.39 %      1.51 %      1.84 %      1.26 %      0.27 % 

total assets

      1.77 %      1.11 %      1.35 %      0.95 %      0.20 % 

Allowance for loan losses to:

           

total loans

      1.90 %      1.59 %      1.56 %      1.48 %      1.25 % 

non-performing assets

      64.20 %      69.04 %      69.85 %      75.46 %      116.68 % 

non-accrual loans

      79.35 %      105.45 %      84.62 %      117.08 %      458.66 % 

NON-PERFORMING ASSETS:

           

(dollars in thousands)

           

Loans delinquent over 90 days

    $ 208      $ 1,366      $ 2      $ 13      $ 284   

Non-accrual loans

      9,870        6,204        7,434        5,099        1,067   

Other real estate owned and repossessed assets

      2,122        1,906        1,571        2,799        2,845   

NET LOAN CHARGE-OFFS (RECOVERIES):

           

(dollars in thousands)

           

Loans charged off

    $ 1,618      $ 531      $ 281      $ 448      $ 617   

(Recoveries)

      (58 )      (32 )      (52 )      (72 )      (79 ) 

Net charge-offs (recoveries)

      1,560        499        229        376        537   

PROVISION FOR LOAN LOSSES (dollars in thousands)

    $ 2,850      $ 750      $ 550      $ 1,450      $ 1,050   

ALLOWANCE FOR LOAN LOSS SUMMARY

           

(dollars in thousands)

           

Balance at the beginning of period

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

Provision

      2,850        750        550        1,450        1,050   

Net charge-offs (recoveries)

      1,560        499        229        376        537   

Balance at the end of period

    $ 7,832      $ 6,542      $ 6,291      $ 5,970      $ 4,896   

 

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

Assets

               

Cash and due from banks

    $ 12,439       $ 18,951       $ 24,385       $ 7,354       $ 8,625   

Federal funds sold

      —           —           —           179         —     

Securities available for sale, at fair value

      112,175         107,104         100,148         101,210         97,882   

Loans, net of allowance for loan losses

      405,075         404,177         398,134         398,096         387,418   

Bank premises and equipment, net

      15,881         15,591         14,984         14,778         14,980   

Other assets

      13,402         13,059         11,904         13,768         12,180   
                                            

Total assets

    $ 558,972       $ 558,882       $ 549,555       $ 535,385       $ 521,085   
                                            

Liabilities and Shareholders’ Equity

               

Liabilities

               

Deposits:

               

Noninterest bearing demand deposits

    $ 97,409       $ 94,354       $ 91,477       $ 90,575       $ 87,105   

Savings and interest bearing demand deposits

      177,798         177,999         171,317         170,485         159,928   

Time deposits

      151,456         149,098         151,765         137,047         128,565   
                                            

Total deposits

    $ 426,663       $ 421,451       $ 414,559       $ 398,107       $ 375,598   

Federal funds purchased and securities sold under agreements to repurchase

      14,920         14,987         14,628         14,016         21,807   

Federal Home Loan Bank advances

      52,250         57,250         57,250         62,250         62,250   

Trust preferred capital notes

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

Other liabilities

      3,047         3,616         2,847         2,152         3,548   

Commitments and contingent liabilities

      —           —           —           —           —     
                                            

Total liabilities

    $ 504,097       $ 504,521       $ 496,501       $ 483,742       $ 470,420   
                                            

Shareholders’ Equity

               

Preferred stock, $10 par value

    $ —         $ —         $ —         $ —         $ —     

Common stock, $2.50 par value

      8,090         8,067         8,045         7,999         7,976   

Surplus

      8,930         8,733         8,559         8,504         8,307   

Retained earnings

      35,544         36,014         35,079         34,048         33,804   

Accumulated other comprehensive income

      2,311         1,547         1,371         1,092         578   
                                            

Total shareholders’ equity

    $ 54,875       $ 54,361       $ 53,054       $ 51,643       $ 50,665   
                                            

Total liabilities and shareholders’ equity

    $ 558,972       $ 558,882       $ 549,555       $ 535,385       $ 521,085   
                                            

 

EAGLE FINANCIAL SERVICES, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited, dollars in thousands)

 

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

Interest and Dividend Income

           

Interest and fees on loans

    $ 5,875      $ 5,873      $ 5,807      $ 5,934      $ 5,765   

Interest on federal funds sold

      —          8        3        1        2   

Interest and dividends on securities available for sale:

           

Taxable interest income

      753        621        595        617        666   

Interest income exempt from federal income taxes

      320        324        328        304        307   

Dividends

      —          108        111        113        116   

Interest on deposits in banks

      1        —          —          —          1   
                                        

Total interest and dividend income

    $ 6,949      $ 6,934      $ 6,844      $ 6,969      $ 6,857   
                                        

Interest Expense

           

Interest on deposits

    $ 741      $ 765      $ 784      $ 806      $ 826   

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

      97        96        98        98        102   

Interest on Federal Home Loan Bank advances

      461        460        455        464        484   

Interest on trust preferred capital notes

      80        79        77        80        82   
                                        

Total interest expense

    $ 1,379      $ 1,400      $ 1,414      $ 1,448      $ 1,494   
                                        

Net interest income

    $ 5,570      $ 5,534      $ 5,430      $ 5,521      $ 5,363   

Provision For Loan Losses

      2,850        750        550        1,450        1,050   
                                        

Net interest income after provision for loan losses

    $ 2,720      $ 4,784      $ 4,880      $ 4,071      $ 4,313   
                                        

Noninterest Income

           

Income from fiduciary activities

    $ 248      $ 222      $ 240      $ 174      $ 200   

Service charges on deposit accounts

      438        477        446        522        537   

Other service charges and fees

      794        745        668        534        634   

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

      —          —          —          (5 )      —     

(Loss) on the sale of repossessed assets

      3        (123 )      (126 )      15        (50 ) 

Gain (Loss) on sales of AFS securities

      —          —          98        20        (439 ) 

Other operating income

      (8 )      62        38        29        (4 ) 
                                        

Total noninterest income

    $ 1,475      $ 1,383      $ 1,364      $ 1,289      $ 878   
                                        

Noninterest Expenses

           

Salaries and employee benefits

    $ 2,334      $ 2,344      $ 2,189      $ 2,312      $ 2,493   

Occupancy expenses

      260        281        292        264        291   

Equipment expenses

      172        144        152        153        176   

Advertising and marketing expenses

      138        95        105        85        142   

Stationery and supplies

      69        47        65        94        52   

ATM network fees

      194        265        157        95        20   

FDIC assessment

      179        178        314        216        204   

Other operating expenses

      943        751        785        1,145        803   
                                        

Total noninterest expenses

    $ 4,289      $ 4,105      $ 4,059      $ 4,364      $ 4,181   
                                        

Income before income taxes

    $ (94 )    $ 2,062      $ 2,185      $ 996      $ 1,010   

Income Tax Expense

      (175 )      578        607        204        220   
                                        

Net income

    $ 81      $ 1,484      $ 1,578      $ 792      $ 790   
                                        

Earnings Per Share

           

Net income per common share, basic

    $ 0.03      $ 0.46      $ 0.49      $ 0.25      $ 0.25   
                                        

Net income per common share, diluted

    $ 0.02      $ 0.46      $ 0.49      $ 0.25      $ 0.25   
                                        

 

EAGLE FINANCIAL SERVICES, INC.

Average Balances, Income and Expenses, Yields and Rates

(dollars in thousands)

 

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

Assets:

               

Securities:

               

Taxable

      75,933        2,971         3.91 %      65,095        3,103         4.77 % 

Tax-Exempt (1)

      34,188        1,924         5.63 %      33,144        1,841         5.55 % 
                                      

Total Securities

      110,121        4,895         4.45 %      98,239        4,944         5.03 % 

Loans:

               

Taxable

      405,430        23,056         5.69 %      383,465        22,589         5.89 % 

Tax-Exempt (1)

      5,439        383         7.03 %      6,090        431         7.08 % 
                                      

Total Loans

      410,869        23,439         5.73 %      389,555        23,020         5.91 % 

Federal funds sold

      170        —           0.00 %      496        7         1.41 % 

Interest-bearing deposits in other banks

      9,710        20         0.20 %      185        2         1.08 % 
                                      

Total earning assets

      530,870        28,354         5.34 %      488,475        27,973         5.73 % 
                          

Allowance for loan losses

      (6,736 )           (4,499 )      

Total non-earning assets

      37,020             34,558        
                          

Total assets

      561,154             518,534        
                          

Liabilities and Shareholders’ Equity:

               

Interest-bearing deposits:

               

NOW accounts

      68,847        243         0.35 %      59,995        246         0.41 % 

Money market accounts

      67,903        387         0.57 %      58,952        428         0.73 % 

Savings accounts

      40,467        66         0.16 %      37,347        78         0.21 % 

Time deposits:

               

$100,000 and more

      62,489        758         1.21 %      48,606        813         1.67 % 

Less than $100,000

      88,291        1,485         1.68 %      88,175        1,710         1.94 % 
                                      

Total interest-bearing deposits

      327,997        2,939         0.90 %      293,075        3,275         1.12 % 

Federal funds purchased and securities sold under agreements to repurchase

      14,933        385         2.58 %      17,146        402         2.34 % 

Federal Home Loan Bank advances

      56,326        1,829         3.25 %      62,141        1,922         3.09 % 

Trust preferred capital notes

      7,217        317         4.40 %      7,217        155         2.15 % 
                                      

Total interest-bearing liabilities

      406,473        5,470         1.35 %      379,579        5,754         1.52 % 
                                      

Noninterest-bearing liabilities:

               

Demand deposits

      95,627             86,002        

Other Liabilities

      3,804             3,539        
                          

Total liabilities

      505,904             469,120        

Shareholders’ equity

      55,250             49,414        
                          

Total liabilities and shareholders’ equity

      561,154             518,534        
                                      

Net interest income

        22,884             22,219      
                          

Net interest spread

           3.99 %           4.21 % 

Interest expense as a percent of average earning assets

           1.03 %           1.18 % 

Net interest margin

           4.31 %           4.55 % 

 

(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 June,  
     2010     2009  
     Average
Balance		     Interest
Income/
Expense		      Average
Rate		     Average
Balance		     Interest
Income/
Expense		      Average
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

      60,487        732         1.21 %      53,221        1,109         2.08 % 

Less than $100,000

      88,341        1,501         1.71 %      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             3,230        
                          

Total liabilities

      500,992             481,978        

Shareholders’ equity

      53,459             48,072        
                          

Total liabilities and shareholders’ equity

      554,451             530,049        
                                      

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 %           4.30 % 

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.

Reconciliation of Tax-Equivalent Net Interest Income

(dollars in thousands)

 

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

GAAP Financial Measurements:

               

Interest Income - Loans

    $ 5,875       $ 5,873       $ 5,807       $ 5,934       $ 5,765   

Interest Income - Securities and Other Interest-Earnings Assets

      1,074         1,061         1,037         1,035         1,092   

Interest Expense - Deposits

      741         765         784         806         826   

Interest Expense - Other Borrowings

      638         635         630         642         668   
                                            

Total Net Interest Income

    $ 5,570       $ 5,534       $ 5,430       $ 5,521       $ 5,363   

Non-GAAP Financial Measurements:

               

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

    $ 33       $ 35       $ 35       $ 35       $ 37   

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

      165         167         169         156         158   
                                            

Total Tax Benefit on Tax-Exempt Interest Income

    $ 198       $ 202       $ 204       $ 191       $ 195   
                                            

Tax-Equivalent Net Interest Income

    $ 5,768       $ 5,736       $ 5,634       $ 5,712       $ 5,558