Eagle Financial Services, Inc. Announces 2012 Third Quarter Financial Results and Quarterly Dividend

BERRYVILLE, Va., Oct. 19, 2012 /PRNewswire/ -- Eagle Financial Services, Inc. (OTC BULLETIN BOARD:EFSI), the holding company for Bank of Clarke County, whose divisions include Eagle Investment Group, today announced earnings of $1.3 million, or $0.37 per diluted share, for the quarter ended September 30, 2012.  This is an 8.6% increase from the $1.1 million in earnings, or $0.34 per diluted share, for the same period in 2011.

Selected Financial Highlights:







2012


2011

Three months ended:


Q3

Q2


Q3

Net income (000's)


$1,253

$2,002


$1,139

Diluted EPS


$0.37

$0.60


$0.34

Net Interest Margin


4.40%

4.60%


4.34%

Total equity to assets


10.94%

10.83%


10.14%

Allowance for loan losses to total loans


1.86%

2.01%


1.94%

Provision for loan losses (000's)


$1,050

$300


$1,050

John R. Milleson, President and CEO, stated "Our near record second quarter net income of $2.0 million was followed by third quarter net income of $1.3 million.  The third quarter was negatively impacted as the Bank continues to face asset quality challenges.  However, we are committed to addressing them quickly and conservatively and have recorded needed loan loss provisions.  We remain vigilant yet hopeful that the Company is on pace for a record year.  Additionally, the Company is pleased to announce a $0.01 increase in our quarterly dividend, raising it to $0.19 per common share.  We are proud to be one of the few financial institutions in the country to increase its dividend for 26 consecutive years."

Income Statement Review

Net income for the quarter ended September 30, 2012 decreased 37.4% to $1.3 million when compared to the $2.0 million for the quarter ended June 30, 2012. Increased provision for loan losses contributed to the decline in net income.  Additional details regarding the increased provision are discussed below.  Net income increased 8.6% for the quarter ended September 30, 2012 when compared to the $1.1 million for the quarter ended September 30, 2011.

Net interest income for the quarter ended September 30, 2012 decreased 2.7% to $5.8 million when compared to the $5.9 million for the quarter ended September 30, 2012. Net interest income was $5.7 million for the quarter ended September 30, 2011.

Total loan interest income was $5.6 million for the quarter ended September 30, 2012 and $5.7 million for the quarter ended June 30, 2012.  Average loans for the quarter ended September 30, 2012 were $428.2 million compared to $421.2 million for the quarter ended June 30, 2012.  Total average accruing loans were $425.2 million for the three months ended September 30, 2012 and $419.3 million for the quarter ended June 30, 2012.  For the third quarter of 2011, total average loans were $402.9 million and average accruing loans were $399.2 million. The tax equivalent yield on average loans for the quarter ended September 30, 2012 was 5.26%, down 25 basis points from 5.51% for the quarter ended June 30, 2012.  The reversal of interest income for the loans placed on nonaccrual status during the quarter was the driver of this decrease. Interest income from the investment portfolio was $948,000 for the quarter ended September 30, 2012 and $1.0 million for the quarter ended June 30, 2012.  Average investments were $105.8 million for the quarter ended September 30, 2012 and $111.4 million for the quarter ended June 30, 2012.  Interest income from the investment portfolio was $1.1 million for the quarter ended September 30, 2011.

Total interest expense was $820,000 for the three months ended September 30, 2012 and $838,000 for the same period ended June 30, 2012. The average cost of interest bearing liabilities decreased two basis points when comparing the quarter ended September 30, 2012 to the quarter ended June 30, 2012.  The average balance of interest bearing liabilities decreased $902,000 from the quarter ended June 30, 2012.  The net interest margin was 4.40% for the quarter ended September 30, 2012 and 4.60% for the quarter ended June 30, 2012.  For the quarter ended September 30, 2011, total interest expense was $1.2 million and the net interest margin was 4.34%. An increase in nonaccrual loans as well as continued declines in asset yields has negatively impacted the Company's net interest margin for the quarter ended September 30, 2012.  

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

Non-interest income was $1.6 million for the quarters ended September 30 and June 30, 2012.  Primarily as a result of certain one-time fees during the quarter ended June 30, 2012, income from fiduciary activities decreased $76,000 or 27.1% for the quarter ended September 30, 2012 when compared to the prior quarter.  Both income from service charges on deposit accounts and other service charges and fees reflected moderate increases for the third quarter when compared to the second quarter.  These increases resulted primarily from increases in deposit overdraft fees, service release premiums and safe deposit box fees.  Noninterest income for the three months ended September 30, 2011 was $1.5 million.

Noninterest expense was $4.6 million for the quarter ended September 30, 2012.  This represents an increase of $197,000 or 4.5% from $4.4 million for the quarter ended June 30, 2012. The majority of this increase resulted from a one-time decrease in the Company's FDIC assessment expense recorded in the second quarter.  Specifically, the Company determined in the second quarter 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. 

No gains or losses on the sales of other real estate were realized during the quarter ended September 30, 2012. Net gains of $4,000 were recognized on the sales of other real estate owned for the quarter ended June 30, 2012 and net losses of $78,000 were realized on the sales of other real estate owned for the three months ended September 30, 2011. The Company continues to diligently manage and monitor its other operating expenses Total noninterest expense for the quarter ended September 30, 2011 was $4.6 million.

Asset Quality and Provision for Loan Losses

Nonperforming assets consist of loans 90 days past due and still accruing interest, nonaccrual loans, other real estate owned (foreclosed properties), and repossessed assets.  Nonperforming assets increased from $4.0 million or 0.71% of total assets at June 30, 2012 to $7.5 million or 1.30% of total assets at September 30, 2012. This increase resulted mostly from the increase in non-accrual loans. During the third quarter of 2012, the Bank placed 11 loans totaling $3.7 million on non-accrual status. The majority of the non-accrual loans are secured by real estate.  Management regularly evaluates the financial condition of borrowers with loans on non-accrual status and the value of any collateral on these loans.  The results of these evaluations are used to estimate the amount of losses which may be realized on the disposition of these non-accrual loans.  One real estate asset had been foreclosed upon during the third quarter of 2012 while none were sold during that same period.  Loans greater than 90 days past due and still accruing decreased from $163,000 at June 30, 2012 to $10,000 at September 30, 2012.  Nonperforming assets were $6.3 million or 1.10% of total assets at September 30, 2011.

The Company may, under certain circumstances, restructure loans in troubled debt restructurings as a concession to a borrower when the borrower is experiencing financial distress.  Formal, standardized loan restructuring programs are not utilized by the Company.  Each loan considered for restructuring is evaluated based on customer circumstances and may include modifications to one or more loan provision.  Such restructured loans are included in impaired loans but may not necessarily be nonperforming loans.  At September 30, 2012, the Company had 24 troubled debt restructurings totaling $8.4 million. All but three of the loans are performing loans. 

The Company realized $1.7 million in net charge-offs for the quarter ended September 30, 2012 versus $559,000 for the three months ended June 30, 2012. The increase in net charge offs result mostly from the adjustment of two impaired loans to their fair values during the quarter.  Each loan is collateralized by real estate and the collateral for one of the loans has since gone to foreclosure and was purchased by the Bank.   The Company's troubled credit group continues to monitor past due loans, identify potential problem credits, and develop action plans to work through its troubled loans as promptly as possible. Net charge-offs for the quarter ended September 30, 2011 were $993,000.

Provisions for loan losses were $1.0 million for the three months ended September 30, 2012 and $300,000 for the quarter ended June 30, 2012. The provisions for loan losses for the quarter ended September 30, 2011 were $1.0 million.  The allowance for loan losses was $8.0 million, or 1.86% of total outstanding loans, at September 30, 2012. At June 30, 2012 and September 30, 2011, the allowance for loan losses was $8.6 million and $7.9 million, respectively.  The amount of provision for loan losses during each quarter reflects the results of the Bank's analysis used to determine the adequacy of the allowance for loan losses.  The Company is committed to maintaining an allowance at a level that adequately reflects the risk inherent in the loan portfolio. 

Total Consolidated Assets

Total consolidated assets of the Company at September 30, 2012 were $574.2 million, which represented an increase of $5.2 million or 0.9% from total assets of $568.9 million at June 30, 2012. This increase was driven by the increase in cash balances which was fueled by the quarter's deposit growth.  At September 30, 2011, total consolidated assets were $571.3 million. Total loans remained relatively flat from $419.9 million at June 30, 2012.  Considering the current interest rate and competitive market environment, the Company has been conscientious about maintaining both its underwriting standards and its net interest margin and thereby cautious about the growth it has accepted in the loan portfolio. Total loans were $398.6 million at September 30, 2011.

Deposits and Other Borrowings

Total deposits, which include brokered deposits, increased $3.1 million to $457.2 million at September 30, 2012 from $454.1 million at June 30, 2012. At September 30, 2011, total deposits were $450.0 million.  The Company held $9.9 million in brokered deposits at September 30, 2012 and June 30, 2012.  At September 30, 2011 brokered deposits were $18.9 million.

Fed funds purchased and securities sold under agreement to repurchase were $10.0 million at September 30, 2012 and June 30, 2012.  Fed funds purchased and securities sold under agreement to repurchase were $10.0 million at September 30, 2011.  Borrowings with the Federal Home Loan Bank of Atlanta were unchanged from June 30, 2012 at $32.3 million at September 30, 2012. Borrowings with the Federal home Loan Bank of Atlanta were $42.3 million at September 30, 2011. 

Equity

Shareholders' equity at September 30, 2012 was $62.8 million, reflecting an increase of $1.2 million from $61.6 million at June 30, 2012.  At September 30, 2011 shareholders' equity was $57.9 million. The book value of the Company at September 30, 2012 was $18.78 per common share. Total common shares outstanding were 3,344,737 at September 30, 2012.  On October 17, 2012, the board of directors declared a $0.19 per common share cash dividend for shareholders of record as of November 2, 2012 and payable on November 16, 2012.

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


3Q12


2Q12


1Q12


4Q11


3Q11











Net Income (dollars in thousands)

$          1,253


$          2,002


$          1,714


$             693


$          1,139

Earnings per share, basic

$            0.38


$            0.60


$            0.52


$            0.21


$            0.34

Earnings per share, diluted

$            0.37


$            0.60


$            0.25


$            0.21


$            0.34











Return on average total assets

0.88%


1.43%


1.23%


0.48%


0.78%

Return on average total equity

8.01%


13.29%


11.74%


4.76%


7.91%

Dividend payout ratio

47.37%


30.00%


34.62%


85.71%


52.94%

Fee revenue as a percent of total revenue

20.40%


20.26%


19.18%


18.53%


20.43%











Net interest margin(1)

4.40%


4.60%


4.56%


4.47%


4.34%

Yield on average earning assets

5.01%


5.23%


5.25%


5.28%


5.21%

Yield on average interest-bearing liabilities

0.85%


0.87%


0.94%


1.07%


1.15%

Net interest spread

4.16%


4.36%


4.31%


4.21%


4.06%

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

$             200


$             207


$             212


$             214


$             214











Non-interest income to average assets

1.09%


1.12%


1.06%


0.88%


0.96%

Non-interest expense to average assets

3.20%


3.12%


3.31%


3.73%


3.13%











Efficiency ratio(2)

61.36%


56.96%


61.43%


72.60%


61.33%

(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 nontaxable (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 nontaxable 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












3Q12


2Q12


1Q12


4Q11


3Q11

BALANCE SHEET RATIOS











Loans to deposits

93.51%


94.36%


92.92%


91.52%


90.34%


Average interest-earning assets to











    average-interest bearing liabilities

139.84%


138.63%


136.42%


132.72%


132.26%

PER SHARE DATA











Dividends

$            0.18


$            0.18


$            0.18


$           0.18


$           0.18


Book value

$          18.78


$          18.47


$          18.05


$         17.67


$         17.61


Tangible book value

$          18.78


$          18.47


$          18.05


$         17.67


$         17.61

SHARE PRICE DATA











Closing price

$          21.50


$          20.10


$          20.75


$         16.81


$         16.10


Diluted earnings multiple(1)

14.53


8.38


9.98


20.01


11.84


Book value multiple(2)

1.15


1.09


1.15


0.95


0.91

COMMON STOCK DATA











Outstanding shares at end of period

3,344,737


3,337,251


3,320,600


3,300,692


3,306,853


Weighted average shares outstanding

3,341,050


3,326,999


3,316,005


3,305,189


3,302,082


Weighted average shares outstanding, diluted

3,352,337


3,337,114


3,321,687


3,312,290


3,311,472

CAPITAL RATIOS











Total equity to total assets

10.94%


10.83%


10.64%


10.23%


10.14%

CREDIT QUALITY











Net charge-offs to average loans

0.40%


0.13%


0.04%


0.01%


0.25%


Total non-performing loans to total loans

1.19%


0.43%


0.59%


0.62%


0.69%


Total non-performing assets to total assets

1.30%


0.71%


0.94%


0.87%


1.10%


Non-accrual loans to:











      total loans

1.19%


0.39%


0.48%


0.60%


0.65%


      total assets

0.89%


0.03%


0.36%


0.43%


0.46%


Allowance for loan losses to:











      total loans

1.86%


2.01%


2.13%


2.13%


1.94%


     non-performing assets

106.64%


213.78%


168.99%


176.06%


125.47%


     non-accrual loans

156.37%


509.93%


445.46%


357.00%


299.47%

NON-PERFORMING ASSETS:










(dollars in thousands)











    Loans delinquent over 90 days

$               10


$             163


$             449


$              94


$            165


    Non-accrual loans   

5,091


1,692


1,995


2,449


2,635


    Other real estate owned and repossessed assets

2,364


2,181


2,815


2,423


3,489

NET LOAN CHARGE-OFFS (RECOVERIES):










(dollars in thousands)











    Loans charged off

$          1,801


$             609


$             237


$            327


$         1,110


    (Recoveries)

(84)


(50)


(81)


(279)


(117)


Net charge-offs (recoveries)

1,717


559


156


48


993

PROVISION FOR LOAN LOSSES (dollars in thousands)

$          1,050


$             300


$             300


$            900


$         1,050

ALLOWANCE FOR LOAN LOSS SUMMARY










(dollars in thousands)











Balance at the beginning of period

$          8,628


$          8,887


$          8,743


$         7,891


$         7,834


Provision

1,050


300


300


900


1,050


Net charge-offs (recoveries)

1,717


559


156


48


993


Balance at the end of period

$          7,961


$          8,628


$          8,887


$         8,743


$         7,891

(1)     The diluted earnings multiple is calculated by dividing the period's closing market price per share by the annualized diluted earnings per share for the period. The diluted earnings multiple is a measure of how much an investor may be willing to pay for $1.00 of the Company's earnings.

(2)     The book value multiple (or price to book ratio) is calculated by dividing the period's closing market price per share by the period's book value per share. The book value multiple is a measure used to compare the Company's market value per share to its book value per share.

 

EAGLE FINANCIAL SERVICES, INC.










CONSOLIDATED BALANCE SHEETS










(dollars in thousands)











Unaudited


Unaudited


Unaudited


Audited


Unaudited


9/30/2012


6/30/2012


3/31/2012


12/31/2011


9/30/2011











Assets










Cash and due from banks

$        21,812


$        12,996


$        11,218


$        21,941


$        18,839

Federal funds sold

-


-


-


-


-

Securities available for sale, at fair value

103,963


107,283


110,157


117,654


123,699

Loans, net of allowance for loan losses

419,538


419,877


407,535


401,681


398,649

Bank premises and equipment, net

16,420


16,370


16,316


15,200


15,728

Other assets

12,419


12,391


14,949


11,546


14,421

              Total assets

$      574,152


$      568,917


$      560,175


$      568,022


$      571,336











Liabilities and Shareholders' Equity










Liabilities










    Deposits:










       Noninterest bearing demand deposits

$      122,093


$      115,478


$      112,735


$      107,237


$      104,153

       Savings and interest bearing demand deposits

219,984


220,993


211,494


210,158


194,035

       Time deposits

115,101


117,646


123,930


131,070


151,819

          Total deposits

$      457,178


$      454,117


$      448,159


$      448,465


$      450,007

    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


32,250


42,250


42,250

    Trust preferred capital notes

7,217


7,217


7,217


7,217


7,217

    Other liabilities

4,709


3,694


2,958


2,000


3,939

    Commitments and contingent liabilities

-


-


-


-


-

              Total liabilities

$      511,354


$      507,278


$      500,584


$      509,932


$      513,413











Shareholders' Equity










    Preferred stock, $10 par value

$                -


$                -


$                -


$                -


$                -

    Common stock, $2.50 par value

8,312


8,293


8,253


8,217


8,224

    Surplus

10,218


9,998


9,733


9,568


9,628

    Retained earnings

40,548


39,896


38,492


37,374


37,276

    Accumulated other comprehensive income

3,720


3,452


3,113


2,931


2,795

              Total shareholders' equity

$        62,798


$        61,639


$        59,591


$        58,090


$        57,923

              Total liabilities and shareholders' equity

$      574,152


$      568,917


$      560,175


$      568,022


$      571,336

 

 

 

EAGLE FINANCIAL SERVICES, INC.










CONSOLIDATED STATEMENTS OF INCOME










(dollars in thousands)










Unaudited











Three Months Ended


9/30/2012


6/30/2012


3/31/2012


12/31/2011


9/30/2011











Interest and Dividend Income










        Interest and fees on loans

$          5,634


$          5,748


$          5,675


$          5,837


$          5,750

        Interest on federal funds sold

-


-


-


-


-

        Interest and dividends on securities available for sale:










              Taxable interest income

524


554


598


640


603

              Interest income exempt from federal income taxes

337


351


360


367


367

              Dividends

87


107


103


99


189

        Interest on deposits in banks

4


2


3


6


11

                    Total interest and dividend income

$          6,586


$          6,762


$          6,739


$          6,949


$          6,920

Interest Expense










        Interest on deposits

$             377


$             397


$             444


$             548


$             595

        Interest on federal funds purchased and securities










            sold under agreements to repurchase

90


89


91


89


93

        Interest on Federal Home Loan Bank advances

273


273


298


374


420

        Interest on trust preferred capital notes

80


79


79


80


80

                   Total interest expense

$             820


$             838


$             912


$          1,091


$          1,188

                   Net interest income

$          5,766


$          5,924


$          5,827


$          5,858


$          5,732

Provision For Loan Losses

1,050


300


300


900


1,050

                   Net interest income after provision for loan losses

$          4,716


$          5,624


$          5,527


$          4,958


$          4,682

Noninterest Income










        Income from fiduciary activities

$             205


$             281


$             240


$             209


$             189

        Service charges on deposit accounts

390


370


352


395


406

        Other service charges and fees

898


868


810


717


861

        Gain on the sale of bank premises and equipment

-


-


-


77


-

        Gain (Loss) on sales of AFS securities

1


14


-


(88)


(8)

        Other operating income

59


40


68


39


24

                    Total noninterest income

$          1,553


$          1,573


$          1,470


$          1,349


$          1,472

Noninterest Expenses










        Salaries and employee benefits

$          2,651


$          2,671


$          2,613


$          3,021


$          2,688

        Occupancy expenses

279


287


292


278


286

        Equipment expenses

162


176


164


169


164

        Advertising and marketing expenses

132


100


115


92


157

        Stationery and supplies

91


69


71


71


53

        ATM network fees

139


135


122


169


131

        FDIC assessment

96


(77)


183


166


170

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

-


(4)


(11)


122


78

        Other operating expenses

1,027


1,023


1,053


1,413


918

                    Total noninterest expenses

$          4,577


$          4,380


$          4,602


$          5,501


$          4,645

                    Income before income taxes

$          1,692


$          2,817


$          2,395


$             806


$          1,509

Income Tax Expense

439


815


681


113


370

                    Net income

$          1,253


$          2,002


$          1,714


$             693


$          1,139

Earnings Per Share










        Net income per common share, basic

$            0.38


$            0.60


$            0.52


$            0.21


$            0.34

        Net income per common share, diluted

$            0.37


$            0.60


$            0.52


$            0.21


$            0.34

 

 

EAGLE FINANCIAL SERVICES, INC.










Average Balances, Income and Expenses, Yields and Rates










(dollars in thousands)


























For the Three Months Ended


September 30, 2012


June 30, 2012


September 30, 2011




Interest





Interest





Interest



Average


Income/

Average


Average


Income/

Average


Average


Income/

Average

Assets:

Balance


Expense

Rate


Balance


Expense

Rate


Balance


Expense

Rate

Securities:















        Taxable

$67,170


$2,431

3.62%


$  71,755


$    2,658

3.70%


$   82,404


$  3,142

3.81%

        Tax-Exempt (1)

38,655


2,035

5.26%


39,638


2,136

5.39%


40,608


2,206

5.43%

            Total Securities

$105,825


$4,466

4.22%


$111,393


$    4,794

4.30%


$ 123,011


$  5,348

4.35%

Loans:















        Taxable

$420,495


$22,214

5.28%


$414,499


$  22,916

5.53%


$ 394,869


$22,616

5.73%

         Nonaccrual

2,943


-

0.00%


1,962


-

0.00%


3,709


-

0.00%

        Tax-Exempt (1)

4,747


302

6.37%


4,777


307

6.42%


4,297


296

6.89%

            Total Loans

$428,185


$22,516

5.26%


$421,238


$  23,223

5.51%


$ 402,875


$22,912

5.69%

Federal funds sold

-


-

0.00%


145


-

0.00%


-


-

0.00%

Interest-bearing deposits in other banks

7,815


16

0.20%


4,652


9

0.20%


21,204


44

0.21%

            Total earning assets

$538,882


$26,997

5.01%


$535,466


$  28,027

5.23%


$ 543,381


$28,304

5.21%

Allowance for loan losses

(8,395)





(8,893)





(7,609)




Total non-earning assets

35,570





37,390





42,551




Total assets

$569,000





$563,963





$ 578,323



















Liabilities and Shareholders' Equity:















Interest-bearing deposits:















        NOW accounts

$81,272


$138

0.17%


$  78,555


$       132

0.17%


$   71,334


$     141

0.20%

        Money market accounts

84,304


198

0.24%


84,224


204

0.24%


77,176


309

0.40%

        Savings accounts

53,796


32

0.06%


52,854


37

0.07%


46,211


54

0.12%

Time deposits:















        $100,000 and more

46,015


349

0.76%


72,740


385

0.53%


63,169


622

0.98%

        Less than $100,000

70,488


784

1.11%


48,326


836

1.73%


87,477


1,234

1.41%

            Total interest-bearing deposits

$335,875


$1,502

0.45%


$336,699


1,593

0.47%


$ 345,367


$  2,360

0.68%

Federal  funds purchased and securities















     sold under agreements to repurchase

10,008


356

3.56%


10,086


360

3.57%


11,655


371

3.18%

Federal Home Loan Bank advances

32,250


1,085

3.37%


32,250


1,097

3.40%


46,598


1,665

3.57%

Trust preferred capital notes

7,217


318

4.41%


7,217


318

4.41%


7,217


317

4.39%

            Total interest-bearing liabilities

$385,350


$3,262

0.85%


$386,252


3,369

0.87%


$ 410,837


$  4,713

1.15%

Noninterest-bearing liabilities:















        Demand deposits

117,144





114,206





107,041




        Other Liabilities

4,267





2,914





3,313




            Total liabilities

$506,761





$503,372





$ 521,191




Shareholders' equity

62,239





60,591





57,132




Total liabilities and shareholders' equity

$569,000





$563,963





$ 578,323



















Net interest income



$23,736





$24,657





$23,591

















Net interest spread




4.16%





4.36%





4.06%

Interest expense as a percent of















     average earning assets




0.61%





0.63%





0.87%

Net interest margin




4.40%





4.60%





4.34%

(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


9/30/2012

6/30/2012

3/31/2012

12/31/2011

9/30/2011







GAAP Financial Measurements:






   Interest Income - Loans

$          5,634

$         5,748

$      5,675

$         5,837

$       5,750

   Interest Income - Securities and Other Interest-Earnings Assets

952

1,014

1,064

1,112

1,170

   Interest Expense - Deposits

377

396

444

548

595

   Interest Expense - Other Borrowings

443

442

468

544

593

Total Net Interest Income

$          5,766

$         5,924

$      5,827

$         5,857

$       5,732







Non-GAAP Financial Measurements:






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

$               26

$              26

$           26

$              25

$            25

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

174

181

186

189

189

Total Tax Benefit on Tax-Exempt Interest Income

$             200

$            207

$         212

$            214

$          214

Tax-Equivalent Net Interest Income

$          5,966

$         6,131

$      6,039

$         6,071

$       5,946

 

SOURCE Eagle Financial Services, Inc.



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