Eagle Financial Services, Inc. Announces 2015 Fourth Quarter And Annual Earnings

03 Feb, 2016, 08:00 ET from Eagle Financial Services, Inc.

BERRYVILLE, Va., Feb. 3, 2016 /PRNewswire/ -- Eagle Financial Services, Inc. (OTCQX: EFSI), the holding company for Bank of Clarke County, whose divisions include Eagle Investment Group, announces its 2015 fourth quarter and annual profits. 

Fourth Quarter and Annual 2015 Highlights:


Q4


Annual


Net income (000's)

$1,355


$6,897


Diluted EPS

$0.38


$1.97


Dividend, per common share

$0.20


$0.80


Net Interest Margin

3.97%


4.04%


Net Loan Growth (000's)

$4,357


$25,753


Decrease in Nonperforming Assets

$1,359


$6,651


Allowance for loan losses to total loans



1.00%







John R. Milleson, President and CEO, stated, "I am very proud to announce continued strong earnings for the quarter and year ended December 31, 2015.  During 2015, the Company had made substantial investments in customer product and service initiatives not only in our existing markets of Clarke and Frederick Counties, the City of Winchester and Town of Berryville, but also in our growth market of Eastern Loudoun County. It is gratifying to see the public's support of the two retail branches that were opened in Ashburn at One Loudoun and Leesburg, Virginia during 2015. Their growth, coupled with that of our existing branches and business lines, allow us to make the investments needed to stay competitive and attentive to our customers and their financial needs.  Additionally, I'm encouraged by the improvement in asset quality during 2015. The Company continues to keep asset quality as a primary focus and works diligently to address its level of nonperforming assets.  And finally, as I have stated for many, many years, I am extremely pleased with the Company's ability to increase its annual dividend to shareholders for the 29th consecutive year."

Income Statement Review

Net income was $6.9 million for the year ended December 31, 2015 which represented a decrease of 3.4% when compared to net income in 2014. Net income for the quarter ended December 31, 2015 was $1.4 million reflecting a decrease of 44.3% from the quarter ended December 31, 2014.  This decrease resulted mostly from fewer gains realized on the sales of investment securities. Approximately $897,000 in net gains had been realized on the sales of investment securities during the fourth quarter of 2014. 

Net interest income for the quarter ended December 31, 2015 was $5.9 million and $5.6 million for the same period in 2014. Net interest income for the year ended December 31, 2015 was $23.1 million which represented an increase of 0.9% when compared to $22.9 million in 2014.  This increase in net interest income for the year resulted mainly from the decreased costs of the Company's interest bearing liabilities.

Total loan interest income was $5.5 million for the quarter ended December 31, 2015 and $5.4 million for the quarter ended December 31, 2014.  Total loan interest income was $21.8 million for the year ended December 31, 2015, reflecting an increase of $56,000 from the year ended December 31, 2014.  Average loans for the quarter ended December 31, 2015 were $491.1 million compared to $470.6 million for the same period in 2014.  Average loans for the year ended December 31, 2015 were $479.1 million compared to $461.8 million for 2014.  The tax equivalent yield on average loans for the quarter ended December 31, 2015 was 4.4%, down 13 basis points from the same time period in 2014.  The tax equivalent yield on average loans for the year ended December 31, 2015 was 4.56%, down 16 basis points from 2014.  Interest income from the investment portfolio was $689,000 thousand for the quarter ended December 31, 2015, reflecting an increase of 3.6% when compared to $665,000 for the same period in 2014. Interest income from the investment portfolio was $2.7 million for the year ended December 31, 2015 and $3.1 million for the same period in 2014.  Average investments for the quarter ended December 31, 2015 were $104.0 million compared to $95.7 million for the same period in 2014.  Average investments for the year ended December 31, 2015 were $102.8 million compared to $101.8 million for 2014.  The tax equivalent yield on average investments for the quarter ended December 31, 2015 was 3.1%, down 21 basis points from the same time period in 2014.  The tax equivalent yield on average investments for the year ended December 31, 2015 was 3.13%, down 52 basis points from 2014.

Total interest expense was $302,000 for the three months ended December 31, 2015 and $448,000 for three months ended December 31, 2014. Total interest expense for the year ended December 31, 2015 was $1.3 million, representing a decrease of $564,000 or 29.5% from the year ended December 31, 2014. The average cost of interest bearing liabilities decreased 15 basis points when comparing the quarter ended December 31, 2015 to the same time period in 2014.  The average cost of interest bearing liabilities decreased 15 basis points when comparing the year ended December 31, 2015 to the same time period in 2014.  The average balance of interest bearing liabilities decreased $1.2 million from the quarter ended December 31, 2014 to the same period in 2015.  Although average balances of interest bearing deposits had increased by nearly $15.0 million when comparing the quarter ended December 31, 2015 to the same period in 2014, the combined decrease in Federal Home Loan Bank advances and trust preferred capital notes resulted in a net decrease in total interest bearing liabilities. On July 29, 2015, the pool to which the Company's $7.0 million in outstanding trust preferred capital notes belonged was liquidated by means of auction. The Company was successful in purchasing the outstanding notes at a price of 65.375% of par or $4.6 million in cash.   The average balance of interest bearing liabilities increased $1.1 million from the year ended December 31, 2014 to the same period in 2015. This increase resulted from the growth in interest bearing non-maturity deposits. 

The net interest margin was 3.97% for the quarter ended December 31, 2015.  When compared to the quarter ended December 31, 2014, the net interest margin decreased three basis points. The net interest margin was 4.04% for the year ended December 31, 2015.  When compared to the year ended December 31, 2014, the net interest margin decreased 16 basis points. This decrease was attributable to the decreased yield on interest earning assets as higher yielding assets had been repriced or replaced at lower current market rates.

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

Noninterest income was $1.3 million for the quarter ended December 31, 2015 and $2.2 million for the same period in 2014.  During the fourth quarter of 2014, the Company realized $897,000 in net gains on the sales of investment securities. Noninterest income was $8.4 million for the year ended December 31, 2015 and $6.6 million for the same period in 2014. This increase resulted mostly from the $2.4 million net gain realized on the redemption of outstanding trust preferred capital notes. On July 29, 2015, the pool to which the Company's $7.0 million in outstanding trust preferred capital notes belonged was liquidated by means of auction. The Company was successful in purchasing the outstanding notes at a price of 65.375% of par or $4.6 million in cash.  Other contributions to the year over year increase in noninterest income resulted from the increases in income from fiduciary activities and other service charges and fees.  Income from fiduciary activities increased $176,000 or 15.2% when comparing the year ended December 31, 2015 to the same period in 2014.  This increase results mostly from one time fees that were collected during the year.  Other service charges and fees increased $380,000 or 12.7% from the year ended December 31, 2105 to the same period in 2014. This increase was driven mostly by the increase in commissions from non-deposit investment sales. 

Noninterest expense increased $930,000, or 19.2%, to $5.8 million for the quarter ended December 31, 2015 from $4.8 million for the quarter ended December 31, 2014. Several items contributed to this increase including the recording of a $235,000 valuation allowance for other real estate owned, increased salary and occupancy expenses related to the opening of two new retail branches in April and November of 2015. The Company's One Loudoun branch in Ashburn, Virginia opened in April of 2015 while the Market Street branch in Leesburg, Virginia opened in November of 2015.  Salaries and employee benefits related to the two new branches for the quarter ended December 31, 2015 totaled $320,000. Occupancy expenses related to the One Loudoun and Market Street branches totaled $122,000 for the quarter ended December 31, 2015. Additionally, during the quarter ended December 31, 2015, increases related to various computer and technology expenses were incurred, including those related to online and mobile banking as well as EMV chip card technology. 

Noninterest expense increased $2.5 million to $22.5 million for the year ended December 31, 2015 when compared to $20.0 million for the same period in 2014. Much of this increase resulted from the increase in salary and employee benefit expense. Salary and employee benefit expense increased $891,000 when comparing the year ended December 31, 2015 to the same period in 2014.  The majority of this increase results from the hiring of new employees.  The Company had hired additional retail staff for the opening of two new retail branches.  Five new employees were hired for the One Loudoun branch, located in Ashburn, Virginia.   The second new branch, located in Leesburg, Virginia, opened during November 2015.  Beginning in February 2015, seven fulltime employees had been hired for that facility.  Additionally, in February 2015, with the decision to no longer outsource its internal audit function, the Company hired a Director of Internal Auditor.  Additional hires of middle management positions were also made during 2015 to address infrastructure and growth needs. Occupancy and equipment expenses increased $283,000 and $382,000, respectively, when comparing the year ended December 31, 2015 to the same period in 2014.  The majority of the increase in Occupancy expense results from the opening of the additional two retail branches during 2015.  The Occupancy expense related to those branches for the year ended December 31, 2015 totaled $327,000. Equipment expense for the new branches for the year ended December 31, 2015, totaled $102,000.  The remainder of the increase in Equipment expense results from various investments in technology to address the Company's growth. Other real estate owned expense increased $309,000 when comparing the year ended December 31, 2015 to the same period in 2014.  The majority of this increase relates to a valuation allowance of $235,000 that was established for real estate that was foreclosed upon in November of 2015.   Other operating expenses increased $578,000 when comparing the year ended December 31, 2015 to the same period in 2014.   On June 10, 2015, the Company purchased the land on which one of its retail branches resided.  The land was purchased subject to an existing lease and subsequently recorded at market value, resulting in a $520,000 write down of the total purchase price. Increases in the aforementioned categories also contributed to the year over year increase in noninterest expense.

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 decreased from $12.8 million or 2.04% of total assets at December 31, 2014 to $6.2 million or 0.95% of total assets at December 31, 2015. This decrease resulted mostly from the decrease in nonaccrual loans. Total nonaccrual loans totaled $5.3 million at December 31, 2015 and $10.7 million at December 31, 2014. This decreased in nonaccrual loans resulted from the combination of returning qualifying loans to accruing status, loan payments and loan charge offs. The majority of the nonaccrual loans are secured by real estate and management evaluates the financial condition of these borrowers and the value of any collateral on these loans.  The results of these evaluations are used to estimate the amount of losses which may be realized on the disposition of these nonaccrual loans.  Loans greater than 90 days past due and still accruing increased from $6,000 at December 31, 2014 to $307,000 at December 31, 2015.  Other real estate owned decreased from $2.1 million at December 31, 2014 to $571,000 at December 31, 2015.  During 2015, the Company foreclosed on five pieces of real estate totaling $910,000.00 and sold 11 pieces of other real estate owned totaling $2.2 million.

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 December 31, 2015, the Company had 23 troubled debt restructurings totaling $7.2 million. Approximately $6.7 million or 21 loans are performing loans, while the remaining loans are on non-accrual status. At December 31, 2014, the Company had 25 troubled debt restructurings totaling $7.8 million. Approximately $6.3 million or 17 loans were performing loans, while the remaining loans are on non-accrual status.

The Company realized $44,000 in net recoveries for the quarter ended December 31, 2015 versus net charge offs of $857,000 for the three months ended December 31, 2014. The Company recognized a negative provision for loan losses totaling $250,000 and $227,000 for the quarter and year ended December 31, 2015, respectively.  A $350,000 provision for loan losses was recorded for the three months and year ended December 31, 2014. The ratio of allowance for loan losses to total loans was 1.00% at December 31, 2015 and 1.08% at December 31, 2014.  The ratio of allowance for loan losses to total nonaccrual loans was 93.81% at December 31, 2015 and 47.45% at December 31, 2014.  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. Management's judgment in determining the level of the allowance is based on evaluations of the collectability of loans while taking into consideration such factors as trends in delinquencies and charge-offs, changes in the nature and volume of the loan portfolio, current economic conditions that may affect a borrower's ability to repay and the value of collateral, overall portfolio quality and review of specific potential 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 December 31, 2015 were $651.7 million, which represented an increase of $24.8 million or 4.0% from total assets of $626.8 million at December 31, 2014.  Total loans increased $25.8 million from $469.8 million at December 31, 2014 to $495.6 million at December 31, 2015.  Total securities increased $10.7 million from $97.0 million at December 31 2014, to $107.7 million at December 31, 2015. 

Deposits and Other Borrowings               

Total deposits, which include brokered deposits, increased $46.9 million to $550.7 million at December 31, 2015 from $503.8 million at December 31, 2014. The Company held $11.0 million in brokered deposits at December 31, 2015 and 2014.  Borrowings with the Federal Home Loan Bank of Atlanta were $20.0 million at December 31, 2015 and $40.0 million at December 31, 2014.

Equity

Shareholders' equity was $78.2 million at December 31, 2015 and $73.1 million at December 31, 2014. The book value of the Company at December 31, 2015 was $22.25 per common share. Total common shares outstanding were 3,517,648 at December 31, 2015.  On January 20, 2016, the board of directors declared a $0.20 per common share cash dividend for shareholders of record as of February 3, 2016 and payable on February 17, 2016.

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, 2014, and other filings with the Securities and Exchange Commission.

 

 

EAGLE FINANCIAL SERVICES, INC.










KEY STATISTICS

For the Three Months Ended



4Q15


3Q15


2Q15


1Q15


4Q14











Net Income (dollars in thousands)

$          1,355


$          3,289


$             798


$          1,455


$          2,434

Earnings per share, basic

$            0.38


$            0.94


$            0.23


$            0.42


$            0.71

Earnings per share, diluted

$            0.38


$            0.94


$            0.23


$            0.42


$            0.70











Return on average total assets

0.84%


2.20%


0.51%


0.96%


1.57%

Return on average total equity

6.92%


17.26%


4.31%


8.03%


13.43%

Dividend payout ratio

52.63%


21.28%


86.96%


47.80%


28.17%

Fee revenue as a percent of total revenue

17.64%


16.01%


21.42%


20.56%


15.90%











Net interest margin(1)

3.97%


4.07%


4.13%


4.02%


4.00%

Yield on average earning assets

4.17%


4.29%


4.35%


4.30%


4.31%

Yield on average interest-bearing liabilities

0.31%


0.33%


0.35%


0.42%


0.46%

Net interest spread

3.85%


3.96%


4.00%


3.88%


3.85%

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

$             151


$             155


$             152


$             161


$             173











Non-interest income to average assets

0.83%


2.39%


1.06%


1.07%


1.43%

Non-interest expense to average assets

3.58%


3.44%


3.95%


3.32%


3.12%











Efficiency ratio(2)

78.51%


55.56%


80.78%


68.98%


60.57%














(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 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












4Q15


3Q15


2Q15


1Q15


4Q14

BALANCE SHEET RATIOS











Loans to deposits

89.99%


93.06%


92.97%


90.52%


93.25%


Average interest-earning assets to











    average-interest bearing liabilities

157.81%


154.19%


154.14%


151.49%


166.86%

PER SHARE DATA











Dividends

$            0.20


$            0.20


$            0.20


$            0.20


$            0.20


Book value

$          22.25


$          22.25


$          21.30


$          21.49


$          21.01


Tangible book value

$          22.25


$          22.25


$          21.30


$          21.49


$          21.01

SHARE PRICE DATA











Closing price

$          23.00


$          23.00


$          23.50


$          24.50


$          23.30


Diluted earnings multiple(1)

15.13


6.12


25.54


14.58


8.32


Book value multiple(2)

1.03


1.03


1.10


1.14


1.11

COMMON STOCK DATA











Outstanding shares at end of period

3,517,648


3,508,831


3,495,800


3,481,774


3,463,665


Weighted average shares outstanding

3,512,978


3,503,412


2,487,215


3,477,249


3,459,096


Weighted average shares outstanding, diluted

3,512,978


3,503,412


3,497,065


3,485,450


3,468,904

CAPITAL RATIOS











Total equity to total assets

12.00%


12.16%


11.66%


12.15%


11.67%

CREDIT QUALITY











Net charge-offs to average loans

-0.04%


-0.03%


-0.05%


0.04%


0.72%


Total non-performing loans to total loans

1.13%


1.16%


1.41%


1.44%


2.28%


Total non-performing assets to total assets

0.95%


1.18%


1.44%


1.47%


2.04%


Non-accrual loans to:











      total loans

1.07%


1.15%


1.39%


1.43%


2.28%


      total assets

0.81%


0.89%


1.07%


1.07%


1.71%


Allowance for loan losses to:











      total loans

1.00%


1.05%


1.14%


1.12%


1.08%


     non-performing assets

80.45%


68.65%


60.79%


57.17%


39.64%


     non-accrual loans

93.81%


91.03%


81.68%


78.45%


47.45%

NON-PERFORMING ASSETS:










(dollars in thousands)











    Loans delinquent over 90 days

$             307


$                 1


$               68


$               63


$                 6


    Non-accrual loans   

5,285


5,673


6,778


6,593


10,706


    Other real estate owned and repossessed assets

571


1,848


2,261


2,391


2,102

NET LOAN CHARGE-OFFS (RECOVERIES):










(dollars in thousands)











    Loans charged off

$               17


$             118


$             190


$             131


$             967


    (Recoveries)

(61)


(156)


(254)


(90)


(110)


Net charge-offs (recoveries)

(44)


(38)


(64)


41


857

PROVISION FOR LOAN LOSSES (dollars in thousands)

(250)


$           (410)


$             300


$             133


$             350

ALLOWANCE FOR LOAN LOSS SUMMARY










(dollars in thousands)











Balance at the beginning of period

$          5,164


$          5,536


$          5,172


$          5,080


$          5,587


Provision

(250)


(410)


300


133


350


Net charge-offs (recoveries)

(44)


(38)


(64)


41


857


Balance at the end of period

$          4,958


$          5,164


$          5,536


$          5,172


$          5,080



(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


12/31/2015


9/30/2015


6/30/2015


3/31/2015


12/31/2014











Assets










Cash and due from banks

$        23,221


$        16,941


$        12,145


$        26,374


$        34,564

Federal funds sold

-


-


-


-


-

Securities available for sale, at fair value

107,718


103,503


107,682


99,092


96,973

Loans, net of allowance for loan losses

490,615


486,052


480,492


456,221


464,740

Bank premises and equipment, net

20,964


20,924


20,805


20,071


19,015

Other assets

9,136


10,649


13,191


11,983


11,538

              Total assets

$      651,654


$      638,069


$      634,315


$      613,741


$      626,830











Liabilities and Shareholders' Equity










Liabilities










    Deposits:










       Noninterest bearing demand deposits

$      186,133


$      177,005


$      171,368


$      166,085


$      159,352

       Savings and interest bearing demand deposits

272,214


255,135


257,575


249,783


249,305

       Time deposits

92,371


95,731


93,844


93,836


95,159

          Total deposits

$      550,718


$      527,871


$      522,787


$      509,704


$      503,816

    Federal funds purchased and securities










        sold under agreements to repurchase

-


-


8,329


-


-

    Federal Home Loan Bank advances

20,000


30,000


20,000


20,000


40,000

    Trust preferred capital notes

-


-


7,217


7,217


7,217

    Other liabilities

2,715


2,589


2,039


2,273


2,665

    Commitments and contingent liabilities

-


-


-


-


-

              Total liabilities

$      573,433


$      560,460


$      560,372


$      539,194


$      553,698











Shareholders' Equity










    Preferred stock, $10 par value

$                -


$                -


$                -


$                -


$                -

    Common stock, $2.50 par value

8,758


8,723


8,681


8,658


8,621

    Surplus

13,730


13,464


13,089


12,828


12,618

    Retained earnings

54,682


54,029


51,439


51,338


50,578

    Accumulated other comprehensive income

1,051


1,393


734


1,723


1,315

              Total shareholders' equity

$        78,221


$        77,609


$        73,943


$        74,547


$        73,132

              Total liabilities and shareholders' equity

$      651,654


$      638,069


$      634,315


$      613,741


$      626,830

 

 

 

EAGLE FINANCIAL SERVICES, INC.








CONSOLIDATED STATEMENTS OF INCOME








(dollars in thousands)








Unaudited









Three Months Ended


Year Ended


December 31,


December 31,


2015


2014


2015


2014

Interest and Dividend Income








        Interest and fees on loans

$        5,473


$        5,377


$      21,751


$      21,695

        Interest on federal funds sold

-


-


-


-

        Interest and dividends on securities available for sale:








              Taxable interest income

426


378


1,645


1,824

              Interest income exempt from federal income taxes

238


261


972


1,096

              Dividends

25


26


99


222

        Interest on deposits in banks

7


8


26


12

                    Total interest and dividend income

$        6,169


$        6,050


$      24,493


$      24,849

Interest Expense








        Interest on deposits

$           190


$           194


$           741


$           924

        Interest on federal funds purchased and securities








            sold under agreements to repurchase

-


-


10


20

        Interest on Federal Home Loan Bank advances

67


174


336


650

        Interest on trust preferred capital notes

45


80


260


317

                   Total interest expense

$           302


$           448


$        1,347


$        1,911

                   Net interest income

$        5,867


$        5,602


$      23,146


$      22,938

Provision For Loan Losses

(250)


350


(227)


350

                   Net interest income after provision for loan losses

$        6,117


$        5,252


$      23,373


$      22,588

Noninterest Income








        Income from fiduciary activities

$           236


$           290


$        1,338


$        1,162

        Service charges on deposit accounts

319


338


1,244


1,323

        Other service charges and fees

769


687


3,375


2,995

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

(81)


(14)


(76)


(14)

        Gain on sales of AFS securities

8


897


124


990

        Gain on redemption of trust preferred debt

-


-


2,424


-

        Other operating income

84


23


9


150

                    Total noninterest income

$        1,335


$        2,221


$        8,438


$        6,606

Noninterest Expenses








        Salaries and employee benefits

$        3,121


$        2,660


$      12,318


$      11,427

        Occupancy expenses

387


317


1,563


1,280

        Equipment expenses

383


174


1,102


720

        Advertising and marketing expenses

154


155


612


571

        Stationery and supplies

63


69


242


306

        ATM network fees

210


180


805


712

        Other real estate owned expenses

252


12


336


27

        FDIC assessment

120


95


439


357

        Computer software expense

149


208


696


872

        Bank franchise tax

131


123


505


466

        Professional fees

311


226


1,025


988

       Other operating expenses

492


624


2,838


2,260

                    Total noninterest expenses

$        5,773


$        4,843


$      22,481


$      19,986

                    Income before income taxes

$        1,679


$        2,630


$        9,330


$        9,208

Income Tax Expense

324


196


2,433


2,068

                    Net income

$        1,355


$        2,434


$        6,897


$        7,140

Earnings Per Share








        Net income per common share, basic

$          0.38


$          0.71


$          1.97


$          2.08

        Net income per common share, diluted

$          0.38


$          0.70


$          1.97


$          2.07

 

 

 

EAGLE FINANCIAL SERVICES, INC.






Average Balances, Income and Expenses, Yields and Rates






(dollars in thousands)

















For the Three Months Ended


December 31, 2015


December 31, 2014




Interest





Interest



Average


Income/

Average


Average


Income/

Average

Assets:

Balance


Expense

Rate


Balance


Expense

Rate

Securities:










        Taxable

$    31,234


$      1,789

5.73%


$    62,502


$      1,599

2.56%

        Tax-Exempt (1)

72,804


1,432

1.97%


33,170


1,572

4.74%

            Total Securities

$  104,038


$      3,221

3.10%


$    95,672


$      3,171

3.31%

Loans:










        Taxable

$  479,294


$    21,498

4.49%


$  453,699


$    21,039

4.64%

         Non-accrual

5,451


-

0.00%


8,982


-

0.00%

        Tax-Exempt (1)

6,406


326

5.09%


7,918


447

5.64%

            Total Loans

$  491,151


$    21,824

4.44%


$  470,599


$    21,486

4.57%

Federal funds sold

-


-

0.00%


-


-

0.00%

Interest-bearing deposits in other banks

12,170


28

0.23%


15,400


32

0.21%

            Total earning assets

$  601,908


$    25,072

4.17%


$  572,689


$    24,688

4.31%

Allowance for loan losses

(5,160)





(5,564)




Total non-earning assets

43,494





48,061




Total assets

$  640,242





$  615,186














Liabilities and Shareholders' Equity:










Interest-bearing deposits:










        NOW accounts

$    81,189


$           83

0.10%


$    79,159


$           79

0.10%

        Money market accounts

104,365


119

0.11%


98,633


111

0.11%

        Savings accounts

79,376


43

0.05%


70,036


40

0.06%

Time deposits:










        $100,000 and more

37,126


190

0.51%


35,548


171

0.48%

        Less than $100,000

56,207


317

0.56%


59,846


369

0.62%

            Total interest-bearing deposits

$  358,262


$         754

0.21%


$  343,222


$         770

0.22%

Federal  funds purchased and securities










     sold under agreements to repurchase

2


-

0.00%


-


-

0.00%

Federal Home Loan Bank advances

23,152


266

1.15%


32,174


690

2.15%

Trust preferred capital notes

-


177

0.00%


7,217


317

4.44%

            Total interest-bearing liabilities

$  381,416


$      1,196

0.31%


$  382,613


$      1,777

0.46%

Noninterest-bearing liabilities:










        Demand deposits

181,147





157,652




        Other Liabilities

-





3,032




            Total liabilities

$  562,563





$  543,297




Shareholders' equity

77,679





71,889




Total liabilities and shareholders' equity

$  640,242





$  615,186














Net interest income



$    23,876





$    22,911












Net interest spread




3.85%





3.85%

Interest expense as a percent of










     average earning assets




0.20%





0.31%

Net interest margin




3.97%





4.00%



(1)

Income and yields are reported on a tax equivalent basis using a federal tax rate of 34%.

 

 

 

EAGLE FINANCIAL SERVICES, INC.






Average Balances, Income and Expenses, Yields and Rates






(dollars in thousands)

















For the Year Ended


December 31, 2015


December 31, 2014




Interest





Interest



Average


Income/

Average


Average


Income/

Average

Assets:

Balance


Expense

Rate


Balance


Expense

Rate

Securities:










        Taxable

$        71,159


$        1,745

2.45%


$        68,119


$        2,060

3.02%

        Tax-Exempt (1)

31,592


1,472

4.66%


33,652


1,659

4.93%

            Total Securities

$      102,751


$        3,217

3.13%


$      101,711


$        3,719

3.65%

Loans:










        Taxable

$      465,444


$      21,523

4.62%


$      449,247


$      21,465

4.78%

         Non-accrual

6,446


-

0.00%


6,811


-

0.00%

        Tax-Exempt (1)

7,210


346

4.80%


5,789


330

5.71%

            Total Loans

$      479,100


$      21,869

4.56%


$      461,847


$      21,795

4.72%

Federal funds sold

-


-

0.00%


-


-

0.00%

Interest-bearing deposits in other banks

12,174


26

0.21%


6,075


12

0.20%

            Total earning assets

$      587,579


$      25,112

4.27%


$      562,882


$      25,526

4.53%

Allowance for loan losses

(5,374)





(5,839)




Total non-earning assets

45,027





43,008




Total assets

$      627,232





$      600,051














Liabilities and Shareholders' Equity:










Interest-bearing deposits:










        NOW accounts

$        80,809


$             85

0.11%


$        82,821


$             88

0.11%

        Money market accounts

99,088


113

0.11%


94,650


108

0.11%

        Savings accounts

76,054


41

0.05%


67,515


35

0.05%

Time deposits:










        $100,000 and more

36,098


170

0.47%


35,341


181

0.51%

        Less than $100,000

57,992


332

0.57%


61,136


512

0.84%

            Total interest-bearing deposits

$      350,041


$           741

0.21%


$      341,463


$           924

0.27%

Federal  funds purchased and securities










     sold under agreements to repurchase

1,154


10

0.87%


1,865


20

1.07%

Federal Home Loan Bank advances

24,849


336

1.35%


28,818


650

2.26%

Trust preferred capital notes

4,441


260

5.85%


7,217


317

4.39%

            Total interest-bearing liabilities

$      380,485


$        1,347

0.35%


$      379,363


$        1,911

0.50%

Noninterest-bearing liabilities:










        Demand deposits

171,508





149,026




        Other Liabilities

-





1,981




            Total liabilities

$      551,993





$      530,370




Shareholders' equity

75,239





69,681




Total liabilities and shareholders' equity

$      627,232





$      600,051














Net interest income



$23,765





$23,615












Net interest spread




3.92%





4.03%

Interest expense as a percent of










     average earning assets




0.23%





0.34%

Net interest margin




4.04%





4.20%



(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


12/31/2015

9/30/2015

6/30/2015

3/31/2015

12/31/2014







GAAP Financial Measurements:






   Interest Income - Loans

$          5,473

$          5,541

$          5,437

$          5,301

$          5,377

   Interest Income - Securities and Other Interest-Earnings Assets

696

725

684

637

673

   Interest Expense - Deposits

190

185

182

184

194

   Interest Expense - Other Borrowings

112

136

145

213

254

Total Net Interest Income

$          5,867

$          5,945

$          5,794

$          5,541

$          5,602







Non-GAAP Financial Measurements:






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

$               28

$               29

$               25

$               36

$               38

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

123

126

127

125

135

Total Tax Benefit on Tax-Exempt Interest Income

$             151

$             155

$             152

$             161

$             173

Tax-Equivalent Net Interest Income

$          6,018

$          6,100

$          6,946

$          5,702

$          5,775

 

 

SOURCE Eagle Financial Services, Inc.