2014

Eagle Financial Services, Inc. Announces 2013 First Quarter Financial Results

BERRYVILLE, Va., April 19, 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 first quarter 2013 financial results. The Company's common stock trades on the Over-the-Counter (OTC) Bulletin Board under the ticker symbol EFSI.

 

Financial Highlights:





2013


2012

Three months ended:


Q1


Q4

Q1

Net income (000's)


$1,803


$1,581

$1,714

Diluted EPS


$0.53


$0.47

$0.52

Net Interest Margin


4.29%


4.31%

4.56%

Total equity to assets


11.17%


10.74%

10.64%

Allowance for loan losses to total loans


1.64%


1.57%

2.13%

Provision for loan losses


$383


$10

$300

John R. Milleson, President and CEO, stated, "I feel that the Company has opened 2013 with a favorable beginning. The quarter's net income of $1.8 million is the third highest in the Company's history and was fueled by the gain realized from the sale of the Company's holdings of Fannie Mae and Freddie Mac preferred stock. As we move forward through 2013, we are optimistic that the May 2013 opening of our twelfth retail branch location in Purcellville, Virginia will spur growth in our expansion market of Loudoun County and contribute to the overall performance of our Company.  We have secured key experienced bankers familiar with that market who will help accelerate the awareness of our Company to new customers in that area."

Income Statement Review

Net income for the quarter ended March 31, 2013 was $1.8 million reflecting an increase of 14.0% from the quarter ended December 31, 2012 and an increase of 5.2% from the quarter ended March 31, 2012.  Net income was $1.3 million for the three month period ended December 31, 2012 and $1.7 million for the quarter ended March 31, 2012. These increases resulted mostly from the net gain realized on the sales of investment securities. During March 2013, the Company sold its holdings of Fannie Mae and Freddie Mac preferred stock at a net gain of $313,000.

Net interest income was $5.6 million for the quarter ended March 31, 2013 and $5.7 million for the quarter ended December 31, 2012. Although low earning excess cash balances had been deployed to fund higher yielding assets, overall asset yields declined when compared to those realized in the quarter ended December 31, 2012.  Continued management of interest bearing liabilities helped preserve net interest income levels and the net interest margin.   Net interest income was $5.8 million for the quarter ended March 31, 2012.

Total loan interest income was $5.3 million for the quarter ended March 31, 2013, reflecting a decrease of $201,000 from the quarter ended December 31, 2012. Total loan interest income was $5.7 million for the quarter ended March 31, 2012.  Average loans for the quarter ended March 31, 2013 were $419.0 million compared to $420.2 million at December 31, 2012.  Total average accruing loans were $416.5 million for the quarter ended March 31, 2013 and $416.7 million at December 31, 2012.  For the quarter ended March 31, 2012, total average loans were $413.5 million and average accruing loans were $411.0 million. The tax equivalent yield on average loans for the quarter ended March 31, 2013 was 5.18%, down eight basis points from 5.26% for the quarter ended December 31, 2012 and down 37 basis points from the 5.55% average yield at March 31, 2012.  Interest income from the investment portfolio was $938,000 for the quarter ended March 31, 2013 and $933,000 for the quarter ended December 31, 2012.  Average investments were $111.4 million for the quarter ended March 31, 2013 and $104.6 million for the quarter ended December 31, 2012.  Average investments were $116.1 million for the quarter ended March 31, 2012 and interest income was $1.1 million for that same period.

Total interest expense for the three months ended March 31, 2013 was $703,000, a decrease of $111,000 from the quarter ended December 31, 2012.  Total interest expense decreased $209,000 when comparing the quarter ended March 31, 2013 to the same period in 2012. The average cost of interest bearing liabilities decreased eight basis points when comparing the quarter ended March 31, 2013 to the quarter ended December 31, 2012.  The average balance of interest bearing liabilities decreased $9.7 million from the quarter ended December 31, 2012.  The average cost of interest bearing liabilities decreased 11 basis points when comparing the quarter ended March 31, 2013 to the quarter ended March 31, 2012.  The average balance of interest bearing liabilities decreased $11.6 million from the quarter ended March 31, 2012.  During January 2013, the Company was able to utilize some of its excess cash balances to pay off a maturing $10.0 million block of wholesale repurchase agreements.  In addition, the Company continues to steadfastly manage the cost of its interest bearing deposits.  The combination of these factors has contributed to the decreased balance of interest bearing liabilities and their corresponding cost.   The net interest margin was 4.29% for the quarter ended March 31, 2013 and 4.31% for the quarter December 31, 2012.  For the quarter ended March 31, 2012 the net interest margin was 4.56%.

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 $1.9 million for the quarter ended March 31, 2013 and $1.5 million for the quarter ended December 31, 2012. Income from fiduciary activities increased 51.9% or $123,000 from $237,000 for the quarter ended December 31, 2012 to $360,000 for the quarter ended March 31, 2013.  The amount of income from fiduciary activities is determined by the number of active accounts and total assets under management.  Also, income can fluctuate due to the number of estates settled within any period. Net gains of $390,000 and $30,000 were recognized on the sale of investment securities for the quarters ended March 31, 2013 and December 31, 2012, respectively.  There were no net gains or losses recognized on the sale of investment securities for the three month period ended March 31, 2012.    Noninterest income for the quarter ended March 31, 2012 was $1.5 million.

Noninterest expense was $4.6 million for the quarter ended March 31, 2013.  This represents a decrease of $397,000 or 8.0% from $5.0 million for the quarter ended December 31, 2012 and a decrease of 0.4% from $4.6 million for the quarter ended March 31, 2012.  Much of the decrease compared to the fourth quarter of 2012 is related to the decline in other real estate owned expenses. During the fourth quarter of 2012, the Company established a $283,000 valuation allowance for a piece of property held as other real estate owned in order to recognize the decline in the property's value. Smaller decreases in several other operating expense categories relate to the Company's efforts to improve efficiency by diligently managing and monitoring its operating expenses.

Asset Quality and Provision for Loan Losses

Nonperforming assets consist of nonaccrual loans, loans 90 days or more past due and still accruing, other real estate owned (foreclosed properties), and repossessed assets.  Nonperforming assets increased from $5.6 million or 0.94% of total assets at December 31, 2012 to $6.3 million or 1.1% of total assets at March 31, 2013. This increase resulted from the increases in loans that are 90 days or more past due and nonaccrual loans.  Nonperforming assets were $5.3 million or 0.94% of total assets at March 31, 2012.  At March 31, 2013, the Bank had five loans 90 days or more past due and still accruing that totaled $631,000.  At December 31, 2012 the Bank had three loans 90 days or more past due and still accruing that totaled $208,000 and at March 31, 2012, two loans totaling $449,000 were 90 days or more past due and still accruing.  During the first quarter of 2013, the Bank placed six loans totaling $549,000 on non-accrual status. All but one of the loans is secured by residential 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.  Most of the non accrual loans are secured by real estate and have allocated specific allowances.  There was no activity with the Bank's other real estate owned assets during the first quarter of 2013. 

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 March 31, 2013, the Company had 23 troubled debt restructurings totaling $8.2 million. All but two of the restructured loans are performing loans. 

The Company realized no net charge-offs for the quarter ended March 31, 2013 versus $1.4 million for the three months ended December 31, 2012. 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 focus 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.

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.  Provisions for loan losses were $383,000 for the three months ended March 31, 2013, compared to $10,000 for the quarter ended December 31, 2012. The provisions for loan losses for the quarter ended March 31, 2012 were $300,000.  The ratio of allowance for loan losses to total nonaccrual loans was 256.1% at March 31, 2013 and 272.5% at December 31, 2012.  At March 31, 2013, impaired loans totaled $15.0 million and had related specific allocations of $2.2 million.  At December 31, 2012, impaired loans totaled $15.3 million and had related specific allocations of $2.4 million. At March 31, 2012, total impaired loans were $19.0 million and required specific allocations of $4.4 million.

Total Consolidated Assets

Total consolidated assets of the Company at March 31, 2013 were $580.8 million, which represented a decrease of $12.4 million or 2.1% from total assets of $593.3 million at December 31, 2012. At March 31, 2012, total consolidated assets were $560.2 million. Cash and due from banks decreased $26.9 million from $48.7 million at December 31, 2012.  Much of this decrease resulted from the Company's pay off of a maturing $10.0 million block of wholesale repurchase agreements during January. Additional amounts were used to fund loan growth and investment purchases during the quarter.  Securities available for sale increased $9.5 million from $105.5 million at December 31, 2012.  Total loans increased from $418.1 million at December 31, 2012 to $423.9 million at March 31, 2013.  Considering the current interest rate and competitive market environment, the Company continues to be 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. At March 31, 2012, total investment securities were $110.2 million and total loans were $416.4 million.

Deposits and Other Borrowings

Total deposits, which include brokered deposits, decreased $4.0 million from $477.1 million at December 31, 2012 to $473.1 at March 31, 2013. At March 31, 2012, total deposits were $448.2 million.  The Company held $9.9 million in brokered deposits at March 31, 2013, December 31, 2012 and March 31, 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 and March 31, 2012. Borrowings with the Federal Home Loan Bank of Atlanta remained unchanged at $32.5 million at March 31, 2013, December 31, 2012 and March 31, 2012.

Equity

Shareholders' equity at March 31, 2013 was $64.9 million and $63.7 million at December 31, 2012. Shareholder's equity was $59.6 million at March 31, 2012.  The book value of the Company at March 31, 2013 was $19.36 per common share. Total common shares outstanding were 3,372,080 at March 31, 2013.  On April 17, 2013, the board of directors declared a $0.19 per common share cash dividend for shareholders of record as of April 29, 2013 and payable on May 13, 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, 2012, and other filings with the Securities and Exchange Commission.

EAGLE FINANCIAL SERVICES, INC.










KEY STATISTICS

For the Three Months Ended


1Q13


4Q12


3Q12


2Q12


1Q12











Net Income (dollars in thousands)

$          1,803


$        1,581


$        1,253


$        2,002


$        1,714

Earnings per share, basic

$            0.54


$          0.47


$          0.38


$          0.60


$          0.52

Earnings per share, diluted

$            0.53


$          0.47


$          0.37


$          0.60


$          0.25











Return on average total assets

1.27%


1.08%


0.88%


1.43%


1.23%

Return on average total equity

11.42%


9.95%


8.01%


13.29%


11.74%

Dividend payout ratio

35.19%


40.43%


47.37%


30.00%


34.62%

Fee revenue as a percent of total revenue

20.02%


20.32%


20.40%


20.26%


19.18%











Net interest margin(1)

4.29%


4.31%


4.40%


4.60%


4.56%

Yield on average earning assets

4.81%


4.91%


5.01%


5.23%


5.25%

Yield on average interest-bearing liabilities

0.75%


0.83%


0.85%


0.87%


0.94%

Net interest spread

4.06%


4.08%


4.16%


4.36%


4.31%

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

$             192


$           198


$           200


$           207


$           212











Non-interest income to average assets

1.36%


1.05%


1.07%


1.12%


1.06%

Non-interest expense to average assets

3.23%


3.41%


3.16%


3.12%


3.31%











Efficiency ratio(2)

62.71%


60.91%


61.36%


56.96%


61.43%

(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












1Q13


4Q12


3Q12


2Q12


1Q12

BALANCE SHEET RATIOS











Loans to deposits

89.59%


87.63%


93.51%


94.36%


92.92%


Average interest-earning assets to











    average-interest bearing liabilities

152.08%


139.30%


143.90%


138.63%


136.42%

PER SHARE DATA











Dividends

$            0.19


$            0.19


$            0.18


$            0.18


$            0.18


Book value

$          19.36


$          19.11


$          18.78


$          18.47


$          18.05


Tangible book value

$          19.36


$          19.11


$          18.78


$          18.47


$          18.05

SHARE PRICE DATA











Closing price

$          22.10


$          22.00


$          21.50


$          20.10


$          20.75


Diluted earnings multiple(1)

10.42


11.70


14.53


8.38


9.98


Book value multiple(2)

1.14


1.15


1.15


1.09


1.15

COMMON STOCK DATA











Outstanding shares at end of period

3,372,080


3,352,523


3,344,737


3,337,251


3,320,600


Weighted average shares outstanding

3,367,689


3,348,630


3,341,050


3,326,999


3,316,005


Weighted average shares outstanding, diluted

3,378,369


3,359,611


3,352,337


3,337,114


3,321,687

CAPITAL RATIOS











Total equity to total assets

11.17%


10.74%


10.94%


10.83%


10.64%

CREDIT QUALITY











Net charge-offs to average loans

0.00%


0.33%


0.41%


0.13%


0.04%


Total non-performing loans to total loans

0.79%


0.63%


1.19%


0.43%


0.59%


Total non-performing assets to total assets

1.08%


0.94%


1.30%


0.71%


0.94%


Non-accrual loans to:











      total loans

0.64%


0.58%


1.19%


0.39%


0.48%


      total assets

0.47%


0.41%


0.89%


0.03%


0.36%


Allowance for loan losses to:











      total loans

1.64%


1.57%


1.86%


2.01%


2.13%


     non-performing assets

110.88%


118.38%


106.64%


213.78%


168.99%


     non-accrual loans

256.07%


272.45%


156.37%


509.93%


445.46%

NON-PERFORMING ASSETS:










(dollars in thousands)











    Loans delinquent over 90 days

$             631


$             208


$               10


$             163


$             449


    Non-accrual loans   

2,718


2,414


5,091


1,692


1,995


    Other real estate owned and repossessed assets

2,928


2,934


2,364


2,181


2,815

NET LOAN CHARGE-OFFS (RECOVERIES):










(dollars in thousands)











    Loans charged off

$               42


$          1,516


$          1,801


$             609


$             237


    (Recoveries)

(42)


(122)


(84)


(50)


(81)


Net charge-offs (recoveries)

-


1,394


1,717


559


156

PROVISION FOR LOAN LOSSES (dollars in thousands)

$             383


$               10


$          1,050


$             300


$             300

ALLOWANCE FOR LOAN LOSS SUMMARY










(dollars in thousands)











Balance at the beginning of period

$          6,577


$          7,961


$          8,628


$          8,887


$          8,743


Provision

383


10


1,050


300


300


Net charge-offs (recoveries)

-


1,394


1,717


559


156


Balance at the end of period

$          6,960


$          6,577


$          7,961


$          8,628


$          8,887

(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


Audited


Unaudited


Unaudited


Unaudited


3/31/2013


12/31/2012


9/30/2012


6/30/2012


3/31/2012











Assets










Cash and due from banks

$        21,829


$        48,690


$        21,812


$        12,996


$        11,218

Federal funds sold

-


-


-


-


-

Securities available for sale, at fair value

115,001


105,531


103,963


107,283


110,157

Loans, net of allowance for loan losses

416,890


411,520


419,538


419,877


407,535

Bank premises and equipment, net

16,834


16,545


16,420


16,370


16,316

Other assets

10,292


10,990


12,419


12,391


14,949

              Total assets

$      580,846


$      593,276


$      574,152


$      568,917


$      560,175











Liabilities and Shareholders' Equity










Liabilities










    Deposits:










       Noninterest bearing demand deposits

$      135,650


$      134,871


$      122,093


$      115,478


$      112,735

       Savings and interest bearing demand deposits

227,876


231,249


219,984


220,993


211,494

       Time deposits

109,554


110,981


115,101


117,646


123,930

          Total deposits

$      473,080


$      477,101


$      457,178


$      454,117


$      448,159

    Federal funds purchased and securities










        sold under agreements to repurchase

-


10,000


10,000


10,000


10,000

    Federal Home Loan Bank advances

32,250


32,250


32,250


32,250


32,250

    Trust preferred capital notes

7,217


7,217


7,217


7,217


7,217

    Other liabilities

3,429


3,002


4,709


3,694


2,958

    Commitments and contingent liabilities

-


-


-


-


-

              Total liabilities

$      515,976


$      529,570


$      511,354


$      507,278


$      500,584











Shareholders' Equity










    Preferred stock, $10 par value

$                -


$                -


$                -


$                -


$                -

    Common stock, $2.50 par value

8,376


8,340


8,312


8,293


8,253

    Surplus

10,636


10,424


10,218


9,998


9,733

    Retained earnings

42,657


41,494


40,548


39,896


38,492

    Accumulated other comprehensive income

3,201


3,448


3,720


3,452


3,113

              Total shareholders' equity

$        64,870


$        63,706


$        62,798


$        61,639


$        59,591

              Total liabilities and shareholders' equity

$      580,846


$      593,276


$      574,152


$      568,917


$      560,175

 

EAGLE FINANCIAL SERVICES, INC.










CONSOLIDATED STATEMENTS OF INCOME










(dollars in thousands)










Unaudited











Three Months Ended


3/31/2013


12/31/2012


9/30/2012


6/30/2012


3/31/2012











Interest and Dividend Income










        Interest and fees on loans

$          5,331


$          5,532


$          5,634


$          5,748


$          5,675

        Interest on federal funds sold

-


-


-


-


-

        Interest and dividends on securities available for sale:










              Taxable interest income

547


511


524


554


598

              Interest income exempt from federal income taxes

324


335


337


351


360

              Dividends

67


87


87


107


103

        Interest on deposits in banks

10


14


4


2


3

                    Total interest and dividend income

$          6,279


$          6,479


$          6,586


$          6,762


$          6,739

Interest Expense










        Interest on deposits

$             326


$             368


$             377


$             397


$             444

        Interest on federal funds purchased and securities










            sold under agreements to repurchase

29


90


90


89


91

        Interest on Federal Home Loan Bank advances

270


276


273


273


298

        Interest on trust preferred capital notes

78


80


80


79


79

                   Total interest expense

$             703


$             814


$             820


$             838


$             912

                   Net interest income

$          5,576


$          5,665


$          5,766


$          5,924


$          5,827

Provision For Loan Losses

383


10


1,050


300


300

                   Net interest income after provision for loan losses

$          5,193


$          5,655


$          4,716


$          5,624


$          5,527

Noninterest Income










        Income from fiduciary activities

$             360


$             237


$             205


$             281


$             240

        Service charges on deposit accounts

343


397


390


370


352

        Other service charges and fees

800


828


898


868


810

        Gain on the sale of bank premises and equipment

-


-


-


-


-

        Gain (Loss) on sales of AFS securities

390


30


1


14


-

        Other operating income

39


39


59


40


68

                    Total noninterest income

$          1,932


$          1,531


$          1,553


$          1,573


$          1,470

Noninterest Expenses










        Salaries and employee benefits

$          2,641


$          2,699


$          2,651


$          2,671


$          2,613

        Occupancy expenses

281


289


279


287


292

        Equipment expenses

155


163


162


176


164

        Advertising and marketing expenses

127


123


132


100


115

        Stationery and supplies

78


58


91


69


71

        ATM network fees

157


132


139


135


122

        Other real estate owned expenses

8


304


8


29


21

        FDIC assessment

97


90


96


(77)


183

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

-


2


-


(4)


(11)

        Other operating expenses

1,040


1,121


1,019


994


1,032

                    Total noninterest expenses

$          4,584


$          4,981


$          4,577


$          4,380


$          4,602

                    Income before income taxes

$          2,541


$          2,205


$          1,692


$          2,817


$          2,395

Income Tax Expense

738


624


439


815


681

                    Net income

$          1,803


$          1,581


$          1,253


$          2,002


$          1,714

Earnings Per Share










        Net income per common share, basic

$            0.54


$            0.47


$            0.38


$            0.60


$            0.52

        Net income per common share, diluted

$            0.53


$            0.47


$            0.37


$            0.60


$            0.52

 

EAGLE FINANCIAL SERVICES, INC.










Average Balances, Income and Expenses, Yields and Rates










(dollars in thousands)


























For the Three Months Ended


March 31, 2013


December 31, 2012


March 31, 2012




Interest





Interest





Interest



Average


Income/

Average


Average


Income/

Average


Average


Income/

Average

Assets:

Balance


Expense

Yield


Balance


Expense

Yield


Balance


Expense

Yield

Securities:















        Taxable

$73,925


$2,490

3.37%


$  66,614


$    2,383

3.58%


$   75,179


$  2,819

3.75%

        Tax-Exempt (1)

37,473


1,990

5.31%


37,976


2,015

5.31%


40,884


2,194

5.37%

            Total Securities

$111,398


$4,480

4.02%


$104,590


$    4,398

4.20%


$ 116,063


$  5,013

4.32%

Loans:















        Taxable

$411,822


$21,426

5.20%


$411,944


$  21,807

5.29%


$ 406,120


$22,619

5.57%

         Nonaccrual

2,514


-

0.00%


3,540


-

0.00%


2,469


-

0.00%

        Tax-Exempt (1)

4,651


294

6.32%


4,756


301

6.34%


4,867


313

6.43%

            Total Loans

$418,987


$21,719

5.18%


$420,240


$  22,109

5.26%


$ 413,456


$22,932

5.55%

Federal funds sold

-


-

0.00%


-


-

0.00%


226


-

0.00%

Interest-bearing deposits in other banks

17,156


41

0.24%


19,824


56

0.28%


5,291


12

0.23%

            Total earning assets

$545,027


$26,240

4.81%


$541,114


$  26,563

4.91%


$ 532,567


$27,957

5.25%

Allowance for loan losses

(6,784)





(7,389)





(8,901)




Total non-earning assets

37,769





47,137





36,285




Total assets

$576,012





$580,862





$ 559,945



















Liabilities and Shareholders' Equity:















Interest-bearing deposits:















        NOW accounts

$85,175


$134

0.16%


$  86,445


$       151

0.17%


$   75,651


$     139

0.18%

        Money market accounts

85,589


142

0.17%


84,314


187

0.22%


84,121


249

0.30%

        Savings accounts

55,696


28

0.05%


54,474


32

0.06%


49,382


57

0.12%

Time deposits:















        $100,000 and more

41,255


296

0.72%


44,171


330

0.75%


74,476


455

0.61%

        Less than $100,000

68,359


722

1.06%


69,577


764

1.10%


53,815


887

1.65%

            Total interest-bearing deposits

$336,074


$1,322

0.39%


$338,981


1,464

0.43%


$ 337,444


$  1,787

0.53%

Federal  funds purchased and securities















     sold under agreements to repurchase

3,222


118

3.65%


10,000


360

3.60%


10,606


366

3.45%

Federal Home Loan Bank advances

32,250


1,095

3.40%


32,250


1,096

3.40%


35,107


1,199

3.41%

Trust preferred capital notes

7,217


316

4.38%


7,217


318

4.41%


7,217


318

4.40%

            Total interest-bearing liabilities

$378,763


$2,851

0.75%


$388,448


3,238

0.83%


$ 390,374


$  3,669

0.94%

Noninterest-bearing liabilities:















        Demand deposits

130,333





124,004





108,376




        Other Liabilities

2,882





5,193





2,444




            Total liabilities

$511,978





$517,645





$ 501,194




Shareholders' equity

64,034





63,217





58,751




Total liabilities and shareholders' equity

$576,012





$580,862





$ 559,945



















Net interest income



$23,389





$23,325





$24,288

















Net interest spread




4.06%





4.08%





4.31%

Interest expense as a percent of















     average earning assets




0.52%





0.60%





0.69%

Net interest margin




4.29%





4.31%





4.56%

(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


3/31/2013

12/31/2012

9/30/2012

6/30/2012

3/31/2012







GAAP Financial Measurements:






   Interest Income - Loans

$          5,331

$          5,532

$          5,634

$         5,748

$      5,675

   Interest Income - Securities and Other Interest-Earnings Assets

947

947

952

1,014

1,064

   Interest Expense - Deposits

326

368

377

396

444

   Interest Expense - Other Borrowings

377

446

443

442

468

Total Net Interest Income

$          5,575

$          5,665

$          5,766

$         5,924

$      5,827







Non-GAAP Financial Measurements:






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

$               25

$               26

$               26

$              26

$           26

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

167

172

174

181

186

Total Tax Benefit on Tax-Exempt Interest Income

$             192

$             198

$             200

$            207

$         212

Tax-Equivalent Net Interest Income

$          5,767

$          5,863

$          5,966

$         6,131

$      6,039

SOURCE Eagle Financial Services, Inc.



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