2014

Eagle Financial Services, Inc. Announces 2012 Fourth Quarter And Record Annual Earnings

BERRYVILLE, Va., Jan. 25, 2013 /PRNewswire/ -- Eagle Financial Services, Inc. (OTC BULLETIN BOARD: EFSI), the holding company for Bank of Clarke County, whose divisions include Eagle Investment Group, announces its 2012 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 2012 Highlights:


Q4


Annual

Net income (000's)

$1,581


$6,550

Diluted EPS

$0.47


$1.96

Net Interest Margin

4.31%


4.47%

Allowance for loan losses to total loans



1.57%

Total equity to assets



10.74%

John R. Milleson, President and CEO, stated, "We are pleased to report two exciting accomplishments during 2012: the Company produced record profits for the year and continued its streak of consecutive dividend increases, a streak unmatched by most financial institutions.  The 2012 dividend of $0.73 per share was the 26th consecutive year of a dividend increase for the Company.  The year's record earnings were primarily a result of a very steady and strong net interest margin of 4.47% and lower loan loss provisions.  That level of core earnings afforded the Company the ability to aggressively manage its non-performing assets as well as begin an expansion east into Loudoun County.  The Bank's twelfth retail branch is currently under construction at 203 Hirst Road in Purcellville, Virginia and will open in April 2013. To branch at a time when many banks are contracting is a strategic initiative of which we want to take full advantage."

Income Statement Review

Net income for the quarter ended December 31, 2012 was $1.6 million reflecting an increase of 128.1% from the quarter ended December 31, 2011.  Net income was $6.5 million for the year ended December 31, 2012 which represented an increase of 51.5% when compared to net income for the same period in 2011. These increases resulted mostly from reduced interest costs and loan loss provisions.

Net interest income for the quarter ended December 31, 2012 was $5.7 million, which represented a decrease of 3.3% when compared to $5.9 million for the same period in 2011.  Net interest income for the year ended December 31, 2012 was $23.2 million which represented an increase of 1.8% when compared to $22.8 million in 2011.  This increase in net interest income for the year resulted mostly from the decline in the Company's funding costs.  

Total loan interest income was $5.5 million for the quarter ended December 31, 2012, reflecting a decrease of $305,000 from the quarter ended December 31, 2011.  Total loan interest income was $22.6 million for the year ended December 31, 2012, reflecting a decrease of $440,000 from the year ended December 31, 2011.  Average loans for the quarter ended December 31, 2012 were $420.2 million compared to $409.1 million for the same period in 2011.  Average loans for the year ended December 31, 2012 were $420.8 million compared to $405.8 million for 2011.  The tax equivalent yield on average loans for the quarter ended December 31, 2012 was 5.26%, down 43 basis points from the same time period in 2011.  The tax equivalent yield on average loans for the year ended December 31, 2012 was 5.39%, down 31 basis points from 2011.  Interest income from the investment portfolio was $933,000 thousand for the quarter ended December 31, 2012, reflecting a decrease of 15.6% when compared to $1.1 million for the same period in 2011. Interest income from the investment portfolio was $4.0 million for the year ended December 31, 2012 and $4.5 million for  2011. 

Total interest expense was $814,000 for the three months ended December 31, 2012 and $1.1 million for three months ended December 31, 2011. Total interest expense for the year ended December 31, 2012 was $3.4 million, representing a decrease of $1.4 million or 29.6% from the year ended December 31, 2011. The average cost of interest bearing liabilities decreased 23 basis points when comparing the quarter ended December 31, 2012 to the same time period in 2011.  The average cost of interest bearing liabilities decreased 31 basis points when comparing the year ended December 31, 2012 to the same time period in 2011.  The average balance of interest bearing liabilities decreased $17.4 million from the quarter ended December 31, 2011 to the same period in 2012.  The average balance of interest bearing liabilities decreased $19.9 million from the year ended December 31, 2011 to the same period in 2012. The decline in interest bearing liabilities for both periods resulted from maturities of wholesale borrowings and time deposits.

The net interest margin was 4.31% for the quarter ended December 31, 2012.  When compared to the quarter ended December 31, 2011, the net interest margin decreased 16 basis points. The net interest margin was 4.47% for the year ended December 31, 2012.  When compared to the year ended December 31, 2011, the net interest margin increased seven basis points. This increase was attributable to the decreased cost of interest bearing liabilities.

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 quarter ended December 31, 2012 and $1.3 million for the same period in 2011.  Noninterest income was $6.1 million for the year ended December 31, 2012 and $5.9 million for the same period in 2011. Increases in service release premiums received from secondary market mortgage activity were the largest contributor to the year's increase in noninterest income. Noninterest expense was $5.0 million for the quarter ended December 31, 2012 and $5.5 million for the quarter ended December 31, 2011. Noninterest expense was $18.5 million and $19.3 million for the years ended December 31, 2012 and 2011, respectively.  The majority of the decrease in noninterest expense resulted from a one-time adjustment to FDIC assessment expense.  The Company determined that the balance of the Company's prepaid FDIC insurance was too low and as a result made a $199,000 adjustment to increase the prepaid balance and decrease the corresponding expense in the quarter ended June 30, 2012.  Decreases in other operating expenses relate to the Company's efforts to improve efficiency by diligently managing and monitoring its operating expenses.

Asset Quality and Provision for Loan Losses

Provisions for loan losses were $10,000 for the three months ended December 31, 2012, compared to $900,000 for the quarter ended December 31, 2011. Provisions for loan losses were $1.7 million for the year ended December 31, 2012, compared to $3.8 million for the year ended December 31, 2011. The ratio of allowance for loan losses to total loans was 1.57% at December 31, 2012 and 2.13% at December 31, 2011.  The ratio of allowance for loan losses to total nonaccrual loans was 272.5% at December 31, 2012 and 357.0% at December 31, 2011.  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 partially charged off while others had been completely charged off and moved to other real estate owned.  At December 31, 2012, impaired loans totaled $15.3 million and had related specific allocations of $2.4 million.  At December 31, 2011, impaired loans totaled $19.9 million and had related specific allocations of $4.2 million.

Nonperforming assets increased slightly from $5.0 million or 0.87% of total assets at December 31, 2011 to $5.6 million or 0.94% of total assets at December 31, 2011. This increase resulted mostly from the increase in other real estate owned. Several loans had been charged off and moved to other real estate owned during the year, including two large commercial real estate loans whose collateral was valued at $853,000 at December 31, 2012.

Total nonaccrual loans totaled $2.4 million at December 31, 2012 and 2011.  During the fourth quarter of 2012, the Bank placed one loan totaling $230,000 on nonaccrual status. Although this loan is unsecured, the majority of the Bank's other nonaccrual loans are secured by real estate.  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 increased from $94,000 at December 31, 2011 to $208,000 at December 31, 2012.

The Company realized $1.4 million in net charge-offs for the quarter ended December 31, 2012 versus $48,000 for the same period in 2011. The Company realized $3.8 million in net charge-offs for the year ended December 31, 2012 versus $2.1 for 2011. The 2012 loan charge offs were concentrated in larger balance commercial real estate loans while the 2011 loan charge offs were concentrated in residential real estate.  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, 2012 were $593.3 million, which represented an increase of $25.3 million or 4.5% from total assets of $568.0 million at December 31, 2011.  Total loans increased $7.7 million from $410.4 million at December 31, 2011 to $418.1 million at December 31, 2012.  Considering the continued low interest rate and competitive market environment, the Company has been conscientious about maintaining both its underwriting standards and its net interest margin and thereby cautious about the growth it has accepted in the loan portfolio.

Deposits and Other Borrowings

Total deposits, which include brokered deposits, increased $28.6 million to $477.1 million at December 31, 2012 from $448.5 million at December 31, 2011. The Company held $9.9 million in brokered deposits at December 31, 2012 and 2011. 

Securities sold under agreement to repurchase were $10.0 million at December 31, 2012 and 2011. Borrowings with the Federal Home Loan Bank of Atlanta were $32.3 million at December 31, 2012 and $42.3 million at December 31, 2011.

Equity

Shareholders' equity was $63.7 million at December 31, 2012 and $58.1 million at December 31, 2011. The book value of the Company at December 31, 2012 was $19.11 per common share. Total common shares outstanding were 3,352,523 at December 31, 2012.  On January 16, 2013, the board of directors declared a $0.19 per common share cash dividend for shareholders of record as of January 28, 2013 and payable on February 15, 2013.

Certain information contained in this discussion may include "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements relate to the Company's future operations and are generally identified by phrases such as "the Company expects," "the Company believes" or words of similar import. Although the Company believes that its expectations with respect to the forward-looking statements are based upon reliable assumptions within the bounds of its knowledge of its business and operations, there can be no assurance that actual results, performance or achievements of the Company will not differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. For details on factors that could affect expectations, see the risk factors and other cautionary language included in the Company's Annual Report on Form 10-K for the year ended December 31, 2011, and other filings with the Securities and Exchange Commission.

EAGLE FINANCIAL SERVICES, INC.










KEY STATISTICS

For the Three Months Ended


4Q12


3Q12


2Q12


1Q12


4Q11











Net Income (dollars in thousands)

$          1,581


$          1,253


$          2,002


$          1,714


$             693

Earnings per share, basic

$            0.47


$            0.38


$            0.60


$            0.52


$            0.21

Earnings per share, diluted

$            0.47


$            0.37


$            0.60


$            0.25


$            0.21











Return on average total assets

1.08%


0.88%


1.43%


1.23%


0.48%

Return on average total equity

9.95%


8.01%


13.29%


11.74%


4.76%

Dividend payout ratio

40.43%


47.37%


30.00%


34.62%


85.71%

Fee revenue as a percent of total revenue

20.32%


20.40%


20.26%


19.18%


18.53%











Net interest margin(1)

4.31%


4.40%


4.60%


4.56%


4.47%

Yield on average earning assets

4.91%


5.01%


5.23%


5.25%


5.28%

Yield on average interest-bearing liabilities

0.83%


0.85%


0.87%


0.94%


1.07%

Net interest spread

4.08%


4.16%


4.36%


4.31%


4.21%

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

$             198


$             200


$             207


$             212


$             214











Non-interest income to average assets

1.05%


1.09%


1.12%


1.06%


0.88%

Non-interest expense to average assets

3.41%


3.20%


3.12%


3.31%


3.73%











Efficiency ratio(2)

60.91%


61.36%


56.96%


61.43%


72.60%











(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












4Q12


3Q12


2Q12


1Q12


4Q11

BALANCE SHEET RATIOS











Loans to deposits

87.63%


93.51%


94.36%


92.92%


91.52%


Average interest-earning assets to











    average-interest bearing liabilities

139.30%


139.84%


138.63%


136.42%


132.72%

PER SHARE DATA











Dividends

$            0.19


$            0.18


$            0.18


$            0.18


$           0.18


Book value

$          19.11


$          18.78


$          18.47


$          18.05


$         17.67


Tangible book value

$          19.11


$          18.78


$          18.47


$          18.05


$         17.67

SHARE PRICE DATA











Closing price

$          22.00


$          21.50


$          20.10


$          20.75


$         16.81


Diluted earnings multiple(1)

11.70


14.53


8.38


9.98


20.01


Book value multiple(2)

1.15


1.15


1.09


1.15


0.95

COMMON STOCK DATA











Outstanding shares at end of period

3,352,523


3,344,737


3,337,251


3,320,600


3,300,692


Weighted average shares outstanding

3,348,630


3,341,050


3,326,999


3,316,005


3,305,189


Weighted average shares outstanding, diluted

3,359,611


3,352,337


3,337,114


3,321,687


3,312,290

CAPITAL RATIOS











Total equity to total assets

10.74%


10.94%


10.83%


10.64%


10.23%

CREDIT QUALITY











Net charge-offs to average loans

0.33%


0.40%


0.13%


0.04%


0.01%


Total non-performing loans to total loans

0.63%


1.19%


0.43%


0.59%


0.62%


Total non-performing assets to total assets

0.94%


1.30%


0.71%


0.94%


0.87%


Non-accrual loans to:











      total loans

0.58%


1.19%


0.39%


0.48%


0.60%


      total assets

0.41%


0.89%


0.30%


0.36%


0.43%


Allowance for loan losses to:











      total loans

1.57%


1.86%


2.01%


2.13%


2.13%


     non-performing assets

118.38%


16.64%


213.78%


168.99%


176.06%


     non-accrual loans

272.45%


156.37%


509.93%


445.46%


357.00%

NON-PERFORMING ASSETS:










(dollars in thousands)











    Loans delinquent over 90 days

$             208


$               10


$             163


$             449


$              94


    Non-accrual loans   

2,414


5,091


1,692


1,995


2,449


    Other real estate owned and repossessed assets

2,934


2,364


2,181


2,815


2,423

NET LOAN CHARGE-OFFS (RECOVERIES):










(dollars in thousands)











    Loans charged off

$          1,516


$          1,801


$             609


$             237


$            327


    (Recoveries)

(122)


(84)


(50)


(81)


(279)


Net charge-offs (recoveries)

1,394


1,717


559


156


48

PROVISION FOR LOAN LOSSES (dollars in thousands)

$               10


$          1,050


$             300


$             300


$            900

ALLOWANCE FOR LOAN LOSS SUMMARY










(dollars in thousands)











Balance at the beginning of period

$          7,961


$          8,628


$          8,887


$          8,743


$         7,891


Provision

10


1,050


300


300


900


Net charge-offs (recoveries)

1,394


1,717


559


156


48


Balance at the end of period

$          6,577


$          7,961


$          8,628


$          8,887


$         8,743












(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


Unaudited


Unaudited


Audited


12/31/2012


9/30/2012


6/30/2012


3/31/2012


12/31/2011











Assets










Cash and due from banks

$        48,690


$        21,812


$        21,941


$        11,218


$        21,941

Federal funds sold

-


-


-


-


-

Securities available for sale, at fair value

105,531


103,963


117,654


110,157


117,655

Loans, net of allowance for loan losses

411,520


419,538


401,681


407,535


401,681

Bank premises and equipment, net

16,545


16,420


15,200


16,316


15,200

Other assets

10,990


12,419


11,546


14,949


11,546

              Total assets

$      593,276


$      574,152


$      568,022


$      560,175


$      568,023











Liabilities and Shareholders' Equity










Liabilities










    Deposits:










       Noninterest bearing demand deposits

$      134,871


$      122,093


$      107,237


$      112,735


$      107,238

       Savings and interest bearing demand deposits

231,249


219,984


210,158


211,494


210,158

       Time deposits

110,981


115,101


131,070


123,930


131,070

          Total deposits

$      477,101


$      457,178


$      448,465


$      448,159


$      448,466

    Federal funds purchased and securities










        sold under agreements to repurchase

10,000


10,000


10,000


10,000


10,000

    Federal Home Loan Bank advances

32,250


32,250


42,250


32,250


42,250

    Trust preferred capital notes

7,217


7,217


7,217


7,217


7,217

    Other liabilities

3,002


4,709


2,000


2,958


2,000

    Commitments and contingent liabilities

-


-


-


-


-

              Total liabilities

$      529,570


$      511,354


$      509,932


$      500,584


$      509,933











Shareholders' Equity










    Preferred stock, $10 par value

$                -


$                -


$                -


$                -


$                -

    Common stock, $2.50 par value

8,340


8,312


8,217


8,253


8,217

    Surplus

10,424


10,218


9,568


9,733


9,568

    Retained earnings

41,494


40,548


37,374


38,492


37,374

    Accumulated other comprehensive income

3,448


3,720


2,931


3,113


2,931

              Total shareholders' equity

$        63,706


$        62,798


$        58,090


$        59,591


$        58,090

              Total liabilities and shareholders' equity

$      593,276


$      574,152


$      568,022


$      560,175


$      568,023











 

EAGLE FINANCIAL SERVICES, INC.








CONSOLIDATED STATEMENTS OF INCOME








(dollars in thousands)








Unaudited









Three Months Ended


Year Ended


December 31,


December 31,


2012


2011


2012


2011

Interest and Dividend Income








        Interest and fees on loans

$      5,532


$      5,837


$    22,589


$    23,029

        Interest on federal funds sold

-


-


-


-

        Interest and dividends on securities available for sale:








              Taxable interest income

511


640


2,187


2,695

              Interest income exempt from federal income taxes

335


367


1,383


1,397

              Dividends

87


99


384


413

        Interest on deposits in banks

14


6


23


37

                    Total interest and dividend income

$      6,479


$      6,949


$    26,566


$    27,571

Interest Expense








        Interest on deposits

$         368


$         548


$      1,586


$      2,439

        Interest on federal funds purchased and securities








            sold under agreements to repurchase

90


89


360


364

        Interest on Federal Home Loan Bank advances

276


374


1,120


1,685

        Interest on trust preferred capital notes

80


80


318


317

                   Total interest expense

$         814


$      1,091


$      3,384


$      4,805

                   Net interest income

$      5,665


$      5,858


$    23,182


$    22,766

Provision For Loan Losses

10


900


1,660


3,750

                   Net interest income after provision for loan losses

$      5,655


$      4,958


$    21,522


$    19,016

Noninterest Income








        Income from fiduciary activities

$         237


$         209


$         963


$         907

        Service charges on deposit accounts

397


395


1,509


1,586

        Other service charges and fees

828


717


3,404


3,190

        Gain on the sale of bank premises and equipment

-


77


-


76

        Gain (Loss) on sales of AFS securities

30


(88)


45


67

        Other operating income

39


39


206


120

                    Total noninterest income

$      1,531


$      1,349


$      6,127


$      5,946

Noninterest Expenses








        Salaries and employee benefits

$      2,699


$      3,021


$    10,634


$    10,609

        Occupancy expenses

289


278


1,147


1,155

        Equipment expenses

163


169


665


676

        Advertising and marketing expenses

123


92


470


500

        Stationery and supplies

58


71


289


292

        ATM network fees

132


169


528


546

        Other real estate owned expenses

305


13


362


159

        FDIC assessment

90


166


292


712

        Computer software expense

31


49


463


507

        Professional fees

315


477


1,072


1,111

       Other operating expenses

776


996


2,618


3,002

                    Total noninterest expenses

$      4,981


$      5,501


$    18,540


$    19,269

                    Income before income taxes

$      2,205


$         806


$      9,109


$      5,693

Income Tax Expense

624


113


2,559


1,371

                    Net income

$      1,581


$         693


$      6,550


$      4,322

Earnings Per Share








        Net income per common share, basic

$        0.47


$        0.21


$        1.97


$        1.31

        Net income per common share, diluted

$        0.47


$        0.21


$        1.96


$        1.31

 

 

EAGLE FINANCIAL SERVICES, INC.






Average Balances, Income and Expenses, Yields and Rates






(dollars in thousands)

















For the Three Months Ended


December 31, 2012


December 31, 2011




Interest





Interest



Average


Income/

Average


Average


Income/

Average

Assets:

Balance


Expense

Rate


Balance


Expense

Rate

Securities:










        Taxable

$66,614


$2,383

3.58%


$    79,430


$      2,928

3.69%

        Tax-Exempt (1)

37,976


2,015

5.31%


41,151


2,209

5.37%

            Total Securities

$104,590


$4,398

4.20%


$  120,581


$      5,137

4.26%

Loans:










        Taxable

$411,944


$21,807

5.29%


$  401,992


$    22,964

5.71%

         Non-accrual

3,540


-

0.00%


2,721


-

0.00%

        Tax-Exempt (1)

4,756


301

6.34%


4,375


295

6.73%

            Total Loans

$420,240


$22,109

5.26%


$  409,088


$    23,259

5.69%

Federal funds sold

-


-

0.00%


22


-

0.00%

Interest-bearing deposits in other banks

19,824


56

0.28%


11,613


24

0.21%

            Total earning assets

$541,114


$26,563

4.91%


$  538,582


$    28,420

5.28%

Allowance for loan losses

(7,389)





(8,238)




Total non-earning assets

47,137





43,721




Total assets

$580,862





$  574,065














Liabilities and Shareholders' Equity:










Interest-bearing deposits:










        NOW accounts

$86,445


$151

0.17%


$    73,681


$         136

0.18%

        Money market accounts

84,314


187

0.22%


81,925


297

0.36%

        Savings accounts

54,474


32

0.06%


47,604


55

0.12%

Time deposits:










        $100,000 and more

44,171


330

0.75%


57,746


531

0.92%

        Less than $100,000

69,577


764

1.10%


85,367


1,157

1.36%

            Total interest-bearing deposits

$338,981


$1,464

0.43%


346,323


2,176

0.63%

Federal  funds purchased and securities










     sold under agreements to repurchase

10,000


360

3.60%


10,010


355

3.55%

Federal Home Loan Bank advances

32,250


1,096

3.40%


42,250


1,486

3.52%

Trust preferred capital notes

7,217


318

4.41%


7,217


317

4.40%

            Total interest-bearing liabilities

$388,448


$3,238

0.83%


$  405,800


4,334

1.07%

Noninterest-bearing liabilities:










        Demand deposits

124,004





106,369




        Other Liabilities

5,193





4,164




            Total liabilities

$517,645





$  516,332




Shareholders' equity

63,217





57,733




Total liabilities and shareholders' equity

$580,862





$  574,065














Net interest income



$23,325





$24,086












Net interest spread




4.08%





4.21%

Interest expense as a percent of










     average earning assets




0.60%





0.80%

Net interest margin




4.31%





4.47%











(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 Twelve Months Ended


December 31, 2012


December 31, 2011




Interest





Interest



Average


Income/

Average


Average


Income/

Average

Assets:

Balance


Expense

Rate


Balance


Expense

Rate

Securities:










        Taxable

$70,134


$2,571

3.67%


$    80,146


$      3,108

3.88%

        Tax-Exempt (1)

39,281


2,095

5.33%


38,285


2,117

5.53%

            Total Securities

$109,415


$4,666

4.26%


$  118,431


$      5,225

4.41%

Loans:










        Taxable

$413,281


$22,387

5.42%


$  396,430


$    22,826

5.76%

         Non-accrual

2,731


-

0.00%


4,735


-

0.00%

        Tax-Exempt (1)

4,786


306

6.39%


4,657


307

6.59%

            Total Loans

$420,798


$22,693

5.39%


$  405,822


$    23,133

5.70%

Federal funds sold

92


-

0.00%


5


-

0.00%

Interest-bearing deposits in other banks

9,420


23

0.24%


17,219


37

0.21%

            Total earning assets

$536,994


$27,382

5.10%


$  536,742


$    28,395

5.29%

Allowance for loan losses

(8,393)





(7,687)




Total non-earning assets

39,698





42,051




Total assets

$568,299





$  571,106














Liabilities and Shareholders' Equity:










Interest-bearing deposits:










        NOW accounts

$80,500


$140

0.17%


$    65,410


$         168

0.26%

        Money market accounts

84,241


210

0.25%


73,879


336

0.45%

        Savings accounts

52,635


39

0.07%


47,852


56

0.12%

Time deposits:










        $100,000 and more

48,065


380

0.79%


63,215


618

0.98%

        Less than $100,000

71,810


817

1.14%


89,987


1,261

1.40%

            Total interest-bearing deposits

$337,251


$1,586

0.47%


340,343


2,439

0.72%

Federal  funds purchased and securities










     sold under agreements to repurchase

10,174


360

3.54%


15,742


364

2.31%

Federal Home Loan Bank advances

32,960


1,120

3.40%


44,214


1,685

3.81%

Trust preferred capital notes

7,217


318

4.41%


7,217


317

4.39%

            Total interest-bearing liabilities

$387,602


$3,384

0.87%


$  407,516


4,805

1.18%

Noninterest-bearing liabilities:










        Demand deposits

115,667





104,041




        Other Liabilities

3,864





4,048




            Total liabilities

$507,133





$  515,605




Shareholders' equity

61,166





55,501




Total liabilities and shareholders' equity

$568,299





$  571,106














Net interest income



$23,998





$23,590












Net interest spread




4.23%





4.11%

Interest expense as a percent of










     average earning assets




0.63%





0.90%

Net interest margin




4.47%





4.40%











(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


12/31/2012

9/30/2012

6/30/2012

3/31/2012

12/31/2011







GAAP Financial Measurements:






   Interest Income - Loans

$      5,532

$      5,634

$      5,748

$      5,675

$      5,837

   Interest Income - Securities and Other Interest-Earnings Assets

947

952

1,014

1,064

1,112

   Interest Expense - Deposits

368

377

396

444

548

   Interest Expense - Other Borrowings

446

443

442

468

544

Total Net Interest Income

$      5,665

$      5,766

$      5,924

$      5,827

$      5,857







Non-GAAP Financial Measurements:






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

$        26.0

$           26

$           26

$           26

$           25

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

172

174

181

186

189

Total Tax Benefit on Tax-Exempt Interest Income

$         198

$         200

$         207

$         212

$         214

Tax-Equivalent Net Interest Income

$      5,863

$      5,966

$      6,131

$      6,039

$      6,071

 

SOURCE Eagle Financial Services, Inc.



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