EX-99.1 2 d681564dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

EAGLE FINANCIAL SERVICES, INC.

ANNOUNCES 2013 FOURTH QUARTER

AND RECORD ANNUAL EARNINGS

 

Contact:    Kathleen J. Chappell, Vice President and CFO    540-955-2510
      kchappell@bankofclarke.com

BERRYVILLE, VIRGINIA (February 7, 2014) – Eagle Financial Services, Inc. (OTC BULLETIN BOARD: EFSI), the holding company for Bank of Clarke County, whose divisions include Eagle Investment Group, announces its 2013 fourth quarter and record annual profits. The Company’s common stock is listed for trading on the Over-the-Counter (OTC) Bulletin Board under the ticker symbol EFSI.

Fourth Quarter and Annual 2013 Highlights:

 

     Q4     Annual  

Net income (000’s)

    $ 1,849      $ 7,158   

Diluted EPS

    $ 0.54      $ 2.10   

Net Interest Margin

      4.17 %      4.24 % 

Net Loan Growth (000’s)

    $ 7,439      $ 27,265   

Allowance for loan losses to total loans

        1.24 % 

Total equity to assets

        11.36 % 

John R. Milleson, President and CEO, stated, “While it is certainly gratifying to again report record annual earnings, much of our attention, energy and focus lie on the months ahead with continued efforts to build market share in Loudoun County. As usual, we will remain committed to strong financial performance for our shareholders while at the same time enhancing products, services and delivery channel alternatives to improve our competitiveness and better serve our customers in our current and expanding market areas.”

Income Statement Review

Net income for the quarter ended December 31, 2013 was $1.8 million reflecting an increase of 17.0% from the quarter ended December 31, 2012. Net income was $7.2 million for the year ended December 31, 2013 which represented an increase of 9.3% when compared to net income for the same period in 2012. These increases resulted mostly from reduced loan loss provisions.

Net interest income for the quarter ended December 31, 2013 was $5.6 million, which represented a decrease of 0.7% when compared to $5.7 million for the same period in 2012. Net interest income for the year ended December 31, 2013 was $22.5 million which represented a decrease of 3.2% when compared to $23.2 million in 2012. This decrease in net interest income for the year resulted mainly from the decline in the yields of the Company’s earning assets.

Total loan interest income was $5.4 million for the quarter ended December 31, 2013, reflecting a decrease of $122,000 from the quarter ended December 31, 2012. Total loan interest income was $21.5 million for the year ended December 31, 2013, reflecting a decrease of $1.1 million from the year ended December 31, 2012. Average loans for the quarter ended December 31, 2013 were $441.1 million compared to $420.2 million for the same period in 2012. Average loans for the year ended December 31, 2013 were $430.0 million compared to $420.8 million for 2012. The tax equivalent yield on average loans for the quarter ended December 31, 2013 was 4.89%, down 37 basis points from the same time period in 2012. The tax equivalent yield on average loans for the year ended December 31, 2013 was 5.03%, down 36 basis points from 2012. Interest income from the investment portfolio was $826,000 thousand for the quarter ended December 31, 2013, reflecting a decrease of 11.5% when compared to $933,000 for the same period in 2012. Interest income from the investment portfolio was $3.5 million for the year ended December 31, 2013 and $4.0 million for the same period in 2012.

Total interest expense was $614,000 for the three months ended December 31, 2013 and $814,000 for three months ended December 31, 2012. Total interest expense for the year ended December 31, 2013 was $2.6 million, representing a decrease of $799,000 or 23.6% from the year ended December 31, 2012. The average cost of interest bearing liabilities decreased 18 basis points when comparing the quarter ended December 31, 2013 to the same time period in 2012. The average cost of interest bearing liabilities decreased 18 basis points when comparing the year ended December 31, 2013 to the same time period in 2012. The average balance of interest bearing liabilities decreased $13.4 million from the quarter ended December 31, 2012 to the same period in 2013. The

average balance of interest bearing liabilities decreased $12.2 million from the year ended December 31, 2012 to the same period in 2013. The decline in interest bearing liabilities for both periods resulted mostly from the December 2013 prepayment of a $10.0 million advance with Federal home Loan Bank of Atlanta.

The net interest margin was 4.17% for the quarter ended December 31, 2013. When compared to the quarter ended December 31, 2012, the net interest margin decreased 14 basis points. The net interest margin was 4.24% for the year ended December 31, 2013. When compared to the year ended December 31, 2012, the net interest margin decreased 23 basis points. This decrease was attributable to the decreased yield on interest earning assets as higher yielding assets had been repriced or replaced at lower current market rates.

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%.

Noninterest income was $1.5 million for the quarters ended December 31, 2013 and 2012. Noninterest income was $7.5 million for the year ended December 31, 2013 and $6.1 million for the same period in 2012. The Company incurred several one-time events during 2013, including the sale of 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. Additionally, 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. Also during 2013, the Company recorded $254,000 of income related to the termination of a bank owned life insurance policy. Net gains of $465,000 and $45,000 were recognized on the sales investment securities for the years ended December 31, 2013 and 2012, respectively.

Noninterest expense was $5.7 million for the quarter ended December 31, 2013 and $5.0 million for the quarter ended December 31, 2012. Noninterest expense was $20.4 million and $18.5 million for the years ended December 31, 2013 and 2012, respectively. Increases in noninterest expense resulted from the staffing and occupancy costs related to the addition of the Bank’s newest retail branch in Purcellville, VA. The branch opened in May of 2013. Salaries and employee benefits for the Purcellville branch for the year ended December 31, 2103 were approximately $300,000 while occupancy expenses were $150,000. Noninterest expense was also negatively impacted by the Company’s election to prepay a $10.0 million outstanding advance with the Federal Home Loan Bank of Atlanta. A $612,000 prepayment fee was incurred by the Company in December 2013 in conjunction with the repayment of the advance. Net losses related to the sales of OREO were $139,000 for the year ended December 31, 2013 while net gains of $13,000 were realized on the sales of OREO for the same period in 2012. Increases in various other operating expenses relate to the Company’s overall growth and expansion efforts and include increases in telephone, postage, advertising, FDIC assessment fees, ATM network fees and computer software expenses.

Asset Quality and Provision for Loan Losses

Loan loss recoveries were $767,000 for the three months ended December 31, 2013, compared loan loss provisions of $10,000 for the quarter ended December 31, 2012. There were no provisions for loan losses made the year ended December 31, 2013, compared to $1.7 million for the year ended December 31, 2012. The ratio of allowance for loan losses to total loans was 1.24% at December 31, 2013 and 1.57% at December 31, 2012. The ratio of allowance for loan losses to total nonaccrual loans was 124.4% at December 31, 2013 and 272.5% at December 31, 2012. The amount of provision for loan losses reflects the results of the Bank’s analysis used to determine the adequacy of the allowance for loan losses. The decreased provision for the quarter and the year mostly resulted from the decrease in the amount of specific allocations required for impaired loans. During the year, several impaired loan balances were either partially or completely charged off. At December 31, 2013, impaired loans totaled $13.7 million and had related specific allocations of $1.5 million. At December 31, 2012, impaired loans totaled $15.3 million and had related specific allocations of $2.4 million.

Nonperforming assets increased slightly from $5.6 million or 0.94% of total assets at December 31, 2012 to $6.1 million or 1.04% of total assets at December 31, 2013. This increase resulted mostly from the increase in nonaccrual loans. Total nonaccrual loans totaled $4.4 million at December 31, 2013 and $2.4 million at December 31, 2012. During the fourth quarter of 2013, the Bank placed seven loans totaling $1.1million on nonaccrual status. The majority of the nonaccrual loans are secured by real estate and 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. Loans greater than 90 days past due and still accruing decreased from $208,000 at December 31, 2012 to $11,000 at December 31, 2013. Other real estate owned decreased from $2.9 million at December 31, 2012 to $1.6 million at December 31, 2013. During 2013, the Company sold six pieces of other real estate owned totaling $1.3 million.

The Company realized $463,000 in net charge-offs for the quarter ended December 31, 2013 versus $1.4 million for the same period in 2012. The Company realized $1.1 million in net charge-offs for the year ended December 31, 2013 versus $3.8 million for 2012. The 2013 loan charge offs were concentrated in residential real estate loans while the 2012 loan charge offs were concentrated in larger balance commercial real estate loans. The Company continues to operate 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. 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.

Total Consolidated Assets

Total consolidated assets of the Company at December 31, 2013 were $584.4 million, which represented a decrease of $8.9 million or 1.5% from total assets of $593.3 million at December 31, 2012. Total loans increased $26.2 million from $418.1 million at December 31, 2012 to $444.3 million at December 31, 2013.

Deposits and Other Borrowings

Total deposits, which include brokered deposits, increased $10.5 million to $487.6 million at December 31, 2013 from $477.1 million at December 31, 2012. The Company held $9.9 million in brokered deposits at December 31, 2013 and 2012.

Securities sold under agreement to repurchase decreased $10.0 million from December 31, 2012. Securities sold under agreement to repurchase were $10.0 million at December 31, 2012. Borrowings with the Federal Home Loan Bank of Atlanta were $22.3 million at December 31, 2013 and $32.3 million at December 31, 2012. In December of 2013, the Company elected to prepay a $10.0 million outstanding advance with the Federal Home Loan Bank of Atlanta.

Equity

Shareholders’ equity was $66.4 million at December 31, 2013 and $63.7 million at December 31, 2012. The book value of the Company at December 31, 2013 was $19.57 per common share. Total common shares outstanding were 3,409,831 at December 31, 2013. On January 15, 2014, the board of directors declared a $0.19 per common share cash dividend for shareholders of record as of January 27, 2014 and payable on February 14, 2014.

 

 

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  
     4Q13     3Q13     2Q13     1Q13     4Q12  

Net Income (dollars in thousands)

    $ 1,849      $ 1,505      $ 2,001      $ 1,803      $ 1,581   

Earnings per share, basic

    $ 0.54      $ 0.44      $ 0.59      $ 0.54      $ 0.47   

Earnings per share, diluted

    $ 0.54      $ 0.44      $ 0.59      $ 0.53      $ 0.47   

Return on average total assets

      1.25 %      1.03 %      1.40 %      1.27 %      1.08 % 

Return on average total equity

      11.13 %      9.25 %      12.51 %      11.42 %      9.95 % 

Dividend payout ratio

      35.19 %      43.18 %      32.20 %      35.19 %      40.43 % 

Fee revenue as a percent of total revenue

      19.29 %      21.34 %      25.86 %      20.02 %      20.32 % 

Net interest margin(1)

      4.17 %      4.28 %      4.28 %      4.29 %      4.31 % 

Yield on average earning assets

      4.61 %      4.73 %      4.76 %      4.81 %      4.91 % 

Yield on average interest-bearing liabilities

      0.65 %      0.66 %      0.69 %      0.75 %      0.83 % 

Net interest spread

      3.96 %      4.07 %      4.07 %      4.06 %      4.08 % 

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

    $ 174      $ 180      $ 186      $ 192      $ 198   

Non-interest income to average assets

      1.00 %      1.09 %      1.73 %      1.36 %      1.05 % 

Non-interest expense to average assets

      3.82 %      3.55 %      3.48 %      3.23 %      3.41 % 

Efficiency ratio(2)

      77.75 %      69.63 %      60.18 %      62.71 %      60.91 % 

 

(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

 

     4Q13     3Q13     2Q13     1Q13     4Q12  

BALANCE SHEET RATIOS

           

Loans to deposits

      91.12 %      92.32 %      92.19 %      89.59 %      87.63 % 

Average interest-earning assets to average-interest bearing liabilities

      147.11 %      145.62 %      145.49 %      152.08 %      139.30 % 

PER SHARE DATA

           

Dividends

    $ 0.19      $ 0.19      $ 0.19      $ 0.19      $ 0.19   

Book value

    $ 19.57      $ 19.36      $ 19.13      $ 19.36      $ 19.11   

Tangible book value

    $ 19.57      $ 19.36      $ 19.13      $ 19.36      $ 19.11   

SHARE PRICE DATA

           

Closing price

    $ 22.50      $ 23.75      $ 23.35      $ 22.10      $ 22.00   

Diluted earnings multiple(1)

      10.42        13.49        9.89        10.42        11.70   

Book value multiple(2)

      1.15        1.23        1.22        1.14        1.15   

COMMON STOCK DATA

           

Outstanding shares at end of period

      3,409,831        3,400,711        3,388,005        3,372,080        3,352,523   

Weighted average shares outstanding

      3,405,215        3,393,519        3,373,353        3,367,689        3,348,630   

Weighted average shares outstanding, diluted

      3,416,841        3,405,225        3,383,748        3,378,369        3,359,611   

CAPITAL RATIOS

           

Total equity to total assets

      11.36 %      11.21 %      11.00 %      11.17 %      10.74 % 

CREDIT QUALITY

           

Net charge-offs to average loans

      0.10 %      0.06 %      0.09 %      0.00 %      0.33 % 

Total non-performing loans to total loans

      1.00 %      0.98 %      0.59 %      0.79 %      0.63 % 

Total non-performing assets to total assets

      1.04 %      1.10 %      0.89 %      1.08 %      0.94 % 

Non-accrual loans to:

           

total loans

      0.99 %      0.94 %      0.55 %      0.64 %      0.58 % 

total assets

      0.76 %      0.71 %      0.41 %      0.47 %      0.41 % 

Allowance for loan losses to:

           

total loans

      1.24 %      1.53 %      1.60 %      1.64 %      1.57 % 

non-performing assets

      90.41 %      104.64 %      133.55 %      110.88 %      118.38 % 

non-accrual loans

      124.36 %      162.70 %      291.48 %      256.07 %      272.45 % 

NON-PERFORMING ASSETS:

           

(dollars in thousands)

           

Loans delinquent over 90 days

    $ 11      $ 147      $ 201      $ 631      $ 208   

Non-accrual loans

      4,413        4,129        2,394        2,718        2,414   

Other real estate owned and repossessed assets

      1,646        2,144        2,630        2,928        2,934   

NET LOAN CHARGE-OFFS (RECOVERIES):

           

(dollars in thousands)

           

Loans charged off

    $ 493      $ 385      $ 403      $ 42      $ 1,516   

(Recoveries)

      (30 )      (125 )      (37 )      (42 )      (122 ) 

Net charge-offs (recoveries)

      463        260        366        —          1,394   

PROVISION FOR LOAN LOSSES (dollars in thousands)

    $ (767 )    $ —        $ 384      $ 383      $ 10   

ALLOWANCE FOR LOAN LOSS SUMMARY

           

(dollars in thousands)

           

Balance at the beginning of period

    $ 6,718      $ 6,978      $ 6,960      $ 6,577      $ 7,961   

Provision

      (767 )      —          384        383        10   

Net charge-offs (recoveries)

      463        260        366        —          1,394   

Balance at the end of period

    $ 5,488      $ 6,718      $ 6,978      $ 6,960      $ 6,577   

 

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

Assets

               

Cash and due from banks

    $ 14,243       $ 17,686       $ 10,632       $ 21,829       $ 48,690   

Federal funds sold

      —           —           —           —           —     

Securities available for sale, at fair value

      104,790         104,753         109,145         115,001         105,531   

Loans, net of allowance for loan losses

      438,785         431,346         429,379         416,890         411,520   

Bank premises and equipment, net

      17,214         17,231         17,287         16,834         16,545   

Other assets

      9,348         12,489         19,230         10,292         10,990   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total assets

    $ 584,380       $ 583,505       $ 585,673       $ 580,846       $ 593,276   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Liabilities and Shareholders’ Equity

               

Liabilities

               

Deposits:

               

Noninterest bearing demand deposits

    $ 147,698       $ 143,156       $ 135,802       $ 135,650       $ 134,871   

Savings and interest bearing demand deposits

      240,749         230,581         234,430         227,876         231,249   

Time deposits

      99,140         100,790         103,080         109,554         110,981   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total deposits

    $ 487,587       $ 474,527       $ 473,312       $ 473,080       $ 477,101   

Federal funds purchased and securities sold under agreements to repurchase

      —           —           5,616         —           10,000   

Federal Home Loan Bank advances

      22,250         32,250         32,250         32,250         32,250   

Trust preferred capital notes

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

Other liabilities

      920         4,093         2,860         3,429         3,002   

Commitments and contingent liabilities

      —           —           —           —           —     
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total liabilities

    $ 517,974       $ 518,087       $ 521,255       $ 515,976       $ 529,570   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Shareholders’ Equity

               

Preferred stock, $10 par value

    $ —         $ —         $ —         $ —         $ —     

Common stock, $2.50 par value

      8,482         8,449         8,417         8,376         8,340   

Surplus

      11,537         11,276         10,935         10,636         10,424   

Retained earnings

      46,082         44,879         44,018         42,657         41,494   

Accumulated other comprehensive income

      305         814         1,048         3,201         3,448   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total shareholders’ equity

    $ 66,406       $ 65,418       $ 64,418       $ 64,870       $ 63,706   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total liabilities and shareholders’ equity

    $ 584,380       $ 583,505       $ 585,673       $ 580,846       $ 593,276   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

EAGLE FINANCIAL SERVICES, INC.

CONSOLIDATED STATEMENTS OF INCOME

(dollars in thousands)

Unaudited

 

     Three Months Ended      Year Ended  
     December 31,      December 31,  
     2013     2012      2013     2012  

Interest and Dividend Income

          

Interest and fees on loans

    $ 5,410      $ 5,532       $ 21,530      $ 22,589   

Interest on federal funds sold

      —          —           —          —     

Interest and dividends on securities available for sale:

          

Taxable interest income

      490        511         2,055        2,187   

Interest income exempt from federal income taxes

      296        335         1,241        1,383   

Dividends

      40        87         187        384   

Interest on deposits in banks

      5        14         23        23   
  

 

 

    

 

 

     

 

 

    

 

 

  

Total interest and dividend income

    $ 6,241      $ 6,479       $ 25,036      $ 26,566   
  

 

 

    

 

 

     

 

 

    

 

 

  

Interest Expense

          

Interest on deposits

    $ 259      $ 368       $ 1,142      $ 1,586   

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

      —          90         31        360   

Interest on Federal Home Loan Bank advances

      275        276         1,094        1,120   

Interest on trust preferred capital notes

      80        80         318        318   
  

 

 

    

 

 

     

 

 

    

 

 

  

Total interest expense

    $ 614      $ 814       $ 2,585      $ 3,384   
  

 

 

    

 

 

     

 

 

    

 

 

  

Net interest income

    $ 5,627      $ 5,665       $ 22,451      $ 23,182   

Provision For Loan Losses

      (767 )      10         —          1,660   
  

 

 

    

 

 

     

 

 

    

 

 

  

Net interest income after provision for loan losses

    $ 6,394      $ 5,655       $ 22,451      $ 21,522   
  

 

 

    

 

 

     

 

 

    

 

 

  

Noninterest Income

          

Income from fiduciary activities

    $ 257      $ 237       $ 1,186      $ 963   

Service charges on deposit accounts

      367        397         1,453        1,509   

Other service charges and fees

      747        828         3,864        3,404   

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

      —          —           (1 )      —     

Gain on sales of AFS securities

      65        30         465        45   

Other operating income

      44        39         495        206   
  

 

 

    

 

 

     

 

 

    

 

 

  

Total noninterest income

    $ 1,480      $ 1,531       $ 7,462      $ 6,127   
  

 

 

    

 

 

     

 

 

    

 

 

  

Noninterest Expenses

          

Salaries and employee benefits

    $ 2,974      $ 2,699       $ 11,451      $ 10,634   

Occupancy expenses

      355        289         1,291        1,147   

Equipment expenses

      169        163         666        665   

Advertising and marketing expenses

      127        123         548        470   

Stationery and supplies

      71        58         274        289   

ATM network fees

      159        132         616        528   

Other real estate owned expenses

      10        305         40        362   

FDIC assessment

      90        90         375        292   

Computer software expense

      160        31         664        463   

Professional fees

      223        315         1,013        1,072   

Other operating expenses

      1,323        776         3,429        2,618   
  

 

 

    

 

 

     

 

 

    

 

 

  

Total noninterest expenses

    $ 5,661      $ 4,981       $ 20,367      $ 18,540   
  

 

 

    

 

 

     

 

 

    

 

 

  

Income before income taxes

    $ 2,213      $ 2,205       $ 9,546      $ 9,109   

Income Tax Expense

      364        624         2,388        2,559   
  

 

 

    

 

 

     

 

 

    

 

 

  

Net income

    $ 1,849      $ 1,581       $ 7,158      $ 6,550   
  

 

 

    

 

 

     

 

 

    

 

 

  

Earnings Per Share

          

Net income per common share, basic

    $ 0.54      $ 0.47       $ 2.11      $ 1.97   
  

 

 

    

 

 

     

 

 

    

 

 

  

Net income per common share, diluted

    $ 0.54      $ 0.47       $ 2.10      $ 1.96   
  

 

 

    

 

 

     

 

 

    

 

 

  

EAGLE FINANCIAL SERVICES, INC.

Average Balances, Income and Expenses, Yields and Rates

(dollars in thousands)

 

     For the Three Months Ended  
     December 31, 2013     December 31, 2012  
     Average
Balance		     Interest
Income/
Expense		      Average
Rate		     Average
Balance		     Interest
Income/
Expense		      Average
Rate		  

Assets:

               

Securities:

               

Taxable

    $ 69,686      $ 2,100         3.01 %    $ 66,614      $ 2,383         3.58 % 

Tax-Exempt (1)

      35,577        1,782         5.01 %      37,976        2,015         5.31 % 
  

 

 

    

 

 

       

 

 

    

 

 

     

Total Securities

    $ 105,263      $ 3,882         3.69 %    $ 104,590      $ 4,398         4.20 % 

Loans:

               

Taxable

    $ 432,857      $ 21,300         4.92 %    $ 411,944      $ 21,807         5.29 % 

Non-accrual

      3,972        —           0.00 %      3,540        —           0.00 % 

Tax-Exempt (1)

      4,222        249         5.89 %      4,756        301         6.34 % 
  

 

 

    

 

 

       

 

 

    

 

 

     

Total Loans

    $ 441,051      $ 21,549         4.89 %    $ 420,240      $ 22,109         5.26 % 

Federal funds sold

      —          —           0.00 %      —          —           0.00 % 

Interest-bearing deposits in other banks

      9,393        21         0.23 %      19,824        56         0.28 % 
  

 

 

    

 

 

       

 

 

    

 

 

     

Total earning assets

    $ 551,735      $ 25,452         4.61 %    $ 541,114      $ 26,563         4.91 % 

Allowance for loan losses

      (6,694 )           (7,389 )      

Total non-earning assets

      42,670             47,137        
  

 

 

         

 

 

       

Total assets

    $ 587,711           $ 580,862        
  

 

 

         

 

 

       

Liabilities and Shareholders’ Equity:

               

Interest-bearing deposits:

               

NOW accounts

    $ 82,926      $ 88         0.11 %    $ 86,445      $ 151         0.17 % 

Money market accounts

      90,733        115         0.13 %      84,314        187         0.22 % 

Savings accounts

      61,901        32         0.05 %      54,474        32         0.06 % 

Time deposits:

               

$100,000 and more

      36,777        206         0.56 %      44,171        330         0.75 % 

Less than $100,000

      63,363        590         0.96 %      69,577        764         1.10 % 
  

 

 

    

 

 

       

 

 

    

 

 

     

Total interest-bearing deposits

    $ 335,700      $ 1,031         0.31 %    $ 338,981      $ 1,464         0.43 % 

Federal funds purchased and securities sold under agreements to repurchase

      1        —           0.00 %      10,000        360         3.60 % 

Federal Home Loan Bank advances

      32,141        1,090         0.39 %      32,250        1,096         3.40 % 

Trust preferred capital notes

      7,217        317         0.44 %      7,217        318         4.41 % 
  

 

 

    

 

 

       

 

 

    

 

 

     

Total interest-bearing liabilities

    $ 375,059      $ 2,438         0.65 %    $ 388,448      $ 3,238         0.83 % 
  

 

 

    

 

 

       

 

 

    

 

 

     

Noninterest-bearing liabilities:

               

Demand deposits

      142,203             124,004        

Other Liabilities

      4,535             5,193        
  

 

 

         

 

 

       

Total liabilities

    $ 521,797           $ 517,645        

Shareholders’ equity

      65,914             63,217        
  

 

 

         

 

 

       

Total liabilities and shareholders’ equity

    $ 587,711           $ 580,862        
  

 

 

         

 

 

       
              
    

 

 

         

 

 

     

Net interest income

      $ 23,015           $ 23,325      
    

 

 

         

 

 

     

Net interest spread

           3.96 %           4.08 % 

Interest expense as a percent of average earning assets

           0.44 %           0.60 % 

Net interest margin

           4.17 %           4.31 % 

 

(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 Year Ended  
     December 31, 2013     December 31, 2012  
     Average
Balance		     Interest
Income/
Expense		      Average
Rate		     Average
Balance		     Interest
Income/
Expense		      Average
Rate		  

Assets:

               

Securities:

               

Taxable

    $ 72,630      $ 2,242         3.09 %    $ 70,134      $ 2,571         3.67 % 

Tax-Exempt (1)

      36,692        1,881         5.13 %      39,281        2,095         5.33 % 
  

 

 

    

 

 

       

 

 

    

 

 

     

Total Securities

    $ 109,322      $ 4,123         3.77 %    $ 109,415      $ 4,666         4.26 % 

Loans:

               

Taxable

    $ 422,692      $ 21,352         5.05 %    $ 413,281      $ 22,387         5.42 % 

Non-accrual

      2,921        —           0.00 %      2,731        —           0.00 % 

Tax-Exempt (1)

      4,423        269         6.09 %      4,786        306         6.39 % 
  

 

 

    

 

 

       

 

 

    

 

 

     

Total Loans

    $ 430,036      $ 21,621         5.03 %    $ 420,798      $ 22,693         5.39 % 

Federal funds sold

      —          —           0.00 %      92        —           0.00 % 

Interest-bearing deposits in other banks

      10,048        23         0.23 %      9,420        23         0.24 % 
  

 

 

    

 

 

       

 

 

    

 

 

     

Total earning assets

    $ 546,485      $ 25,767         4.72 %    $ 536,994      $ 27,382         5.10 % 

Allowance for loan losses

      (6,957 )           (8,393 )      

Total non-earning assets

      40,573             39,698        
  

 

 

         

 

 

       

Total assets

    $ 580,101           $ 568,299        
  

 

 

         

 

 

       

Liabilities and Shareholders’ Equity:

               

Interest-bearing deposits:

               

NOW accounts

    $ 83,889      $ 103         0.12 %    $ 80,500      $ 140         0.17 % 

Money market accounts

      87,809        120         0.14 %      84,241        210         0.25 % 

Savings accounts

      59,114        30         0.05 %      52,635        39         0.07 % 

Time deposits:

               

$100,000 and more

      38,232        241         0.63 %      48,065        380         0.79 % 

Less than $100,000

      65,900        648         0.98 %      71,810        817         1.14 % 
  

 

 

    

 

 

       

 

 

    

 

 

     

Total interest-bearing deposits

    $ 334,944      $ 1,142         0.34 %    $ 337,251      $ 1,586         0.47 % 

Federal funds purchased and securities sold under agreements to repurchase

      1,064        31         2.91 %      10,174        360         3.54 % 

Federal Home Loan Bank advances

      32,223        1,094         3.40 %      32,960        1,120         3.40 % 

Trust preferred capital notes

      7,217        317         4.39 %      7,217        318         4.41 % 
  

 

 

    

 

 

       

 

 

    

 

 

     

Total interest-bearing liabilities

    $ 375,448      $ 2,584         0.69 %    $ 387,602      $ 3,384         0.87 % 
  

 

 

    

 

 

       

 

 

    

 

 

     

Noninterest-bearing liabilities:

               

Demand deposits

      136,242             115,667        

Other Liabilities

      3,581             3,864        
  

 

 

         

 

 

       

Total liabilities

    $ 515,271           $ 507,133        

Shareholders’ equity

      64,830             61,166        
  

 

 

         

 

 

       

Total liabilities and shareholders’ equity

    $ 580,101           $ 568,299        
  

 

 

         

 

 

       
              
    

 

 

         

 

 

     

Net interest income

      $ 23,183           $ 23,998      
    

 

 

         

 

 

     

Net interest spread

           4.03 %           4.23 % 

Interest expense as a percent of average earning assets

           0.47 %           0.63 % 

Net interest margin

           4.24 %           4.47 % 

 

(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  
     12/31/2013      9/30/2013      6/30/2013      3/31/2013      12/31/2012  

GAAP Financial Measurements:

               

Interest Income - Loans

    $ 5,410       $ 5,445       $ 5,342       $ 5,331       $ 5,532   

Interest Income - Securities and Other Interest-Earnings Assets

      831         849         880         947         947   

Interest Expense - Deposits

      259         269         287         326         368   

Interest Expense - Other Borrowings

      355         355         353         377         446   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total Net Interest Income

    $ 5,627       $ 5,670       $ 5,582       $ 5,575       $ 5,665   

Non-GAAP Financial Measurements:

               

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

    $ 21       $ 22       $ 24       $ 25       $ 26   

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

      153         158         162         167         172   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total Tax Benefit on Tax-Exempt Interest Income

    $ 174       $ 180       $ 186       $ 192       $ 198   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Tax-Equivalent Net Interest Income

    $ 5,801       $ 5,850       $ 5,768       $ 5,767       $ 5,863