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Eagle Financial Services, Inc. Announces 2013 Fourth Quarter And Record Annual Earnings

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

Fourth Quarter and Annual 2013 Highlights:








Q4


Annual


Net income (000's)

$1,849


$7,158


Diluted EPS

$0.54


$2.10


Net Interest Margin

4.17%


4.24%


Net Loan Growth (000's)

$7,439


$27,265


Allowance for loan losses to total loans



1.24%


Total equity to assets



11.36%

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

Income Statement Review

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

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

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

Total interest expense was $614,000 for the three months ended December 31, 2013 and $814,000 for three months ended December 31, 2012. Total interest expense for the year ended December 31, 2013 was $2.6 million, representing a decrease of $799,000 or 23.6% from the year ended December 31, 2012. The average cost of interest bearing liabilities decreased 18 basis points when comparing the quarter ended December 31, 2013 to the same time period in 2012.  The average cost of interest bearing liabilities decreased 18 basis points when comparing the year ended December 31, 2013 to the same time period in 2012.  The average balance of interest bearing liabilities decreased $13.4 million from the quarter ended December 31, 2012 to the same period in 2013.  The average balance of interest bearing liabilities decreased $12.2 million from the year ended December 31, 2012 to the same period in 2013. The decline in interest bearing liabilities for both periods resulted mostly from the December 2013 prepayment of a $10.0 million advance with Federal home Loan Bank of Atlanta.

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

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

Noninterest income was $1.5 million for the quarters ended December 31, 2013 and 2012.  Noninterest income was $7.5 million for the year ended December 31, 2013 and $6.1 million for the same period in 2012. The Company incurred several one-time events during 2013, including the sale of the Bank's merchant processing business.  The sale of the merchant portfolio resulted in a net gain of $399,000.  Total proceeds from the transaction of $450,000 are reflected in other service charges and fees while broker, legal and other related expenses are reflected in non-interest expense.  Additionally, in April of 2013, the Company received a signing bonus of $121,000 from its current debit card vendor for extending its contract and remaining exclusive to this provider.  This income is also reflected in the other service charges and fees line item.  Also during 2013, the Company recorded $254,000 of income related to the termination of a bank owned life insurance policy.  Net gains of $465,000 and $45,000 were recognized on the sales investment securities for the years ended December 31, 2013 and 2012, respectively.  

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

Asset Quality and Provision for Loan Losses

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

Nonperforming assets increased slightly from $5.6 million or 0.94% of total assets at December 31, 2012 to $6.1 million or 1.04% of total assets at December 31, 2013. This increase resulted mostly from the increase in nonaccrual loans. Total nonaccrual loans totaled $4.4 million at December 31, 2013 and $2.4 million at December 31, 2012.  During the fourth quarter of 2013, the Bank placed seven loans totaling $1.1million on nonaccrual status. The majority of the nonaccrual loans are secured by real estate and management evaluates the financial condition of these borrowers and the value of any collateral on these loans.  The results of these evaluations are used to estimate the amount of losses which may be realized on the disposition of these nonaccrual loans.  Loans greater than 90 days past due and still accruing decreased from $208,000 at December 31, 2012 to $11,000 at December 31, 2013.  Other real estate owned decreased from $2.9 million at December 31, 2012 to $1.6 million at December 31, 2013.  During 2013, the Company sold six pieces of other real estate owned totaling $1.3 million.

The Company realized $463,000 in net charge-offs for the quarter ended December 31, 2013 versus $1.4 million for the same period in 2012. The Company realized $1.1 million in net charge-offs for the year ended December 31, 2013 versus $3.8 million for 2012. The 2013 loan charge offs were concentrated in residential real estate loans while the 2012 loan charge offs were concentrated in larger balance commercial real estate loans.  The Company continues to operate a troubled credit group to monitor past due loans, identify potential problem credits, and develop action plans to work through its troubled loans as promptly as possible.  Asset quality remains a primary concern of the Company. Necessary resources continue to be devoted to the ongoing review of the loan portfolio and the workouts of problem assets to minimize any losses to the Company. Management will continue to monitor delinquencies, risk rating changes, charge-offs, market trends and other indicators of risk in the Company's portfolio, particularly those tied to residential and commercial real estate, and adjust the allowance for loan losses accordingly.

Total Consolidated Assets

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

Deposits and Other Borrowings

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

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

Equity

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

Certain information contained in this discussion may include "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements relate to the Company's future operations and are generally identified by phrases such as "the Company expects," "the Company believes" or words of similar import. Although the Company believes that its expectations with respect to the forward-looking statements are based upon reliable assumptions within the bounds of its knowledge of its business and operations, there can be no assurance that actual results, performance or achievements of the Company will not differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. For details on factors that could affect expectations, see the risk factors and other cautionary language included in the Company's Annual Report on Form 10-K for the year ended December 31, 2012, and other filings with the Securities and Exchange Commission.

 

EAGLE FINANCIAL SERVICES, INC.










KEY STATISTICS

For the Three Months Ended


4Q13


3Q13


2Q13


1Q13


4Q12











Net Income (dollars in thousands)

$          1,849


$          1,505


$          2,001


$          1,803


$        1,581

Earnings per share, basic

$            0.54


$            0.44


$            0.59


$            0.54


$          0.47

Earnings per share, diluted

$            0.54


$            0.44


$            0.59


$            0.53


$          0.47











Return on average total assets

1.25%


1.03%


1.40%


1.27%


1.08%

Return on average total equity

11.13%


9.25%


12.51%


11.42%


9.95%

Dividend payout ratio

35.19%


43.18%


32.20%


35.19%


40.43%

Fee revenue as a percent of total revenue

19.29%


21.34%


25.86%


20.02%


20.32%











Net interest margin(1)

4.17%


4.28%


4.28%


4.29%


4.31%

Yield on average earning assets

4.61%


4.73%


4.76%


4.81%


4.91%

Yield on average interest-bearing liabilities

0.65%


0.66%


0.69%


0.75%


0.83%

Net interest spread

3.96%


4.07%


4.07%


4.06%


4.08%

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

$             174


$             180


$             186


$             192


$           198











Non-interest income to average assets

1.00%


1.09%


1.73%


1.36%


1.05%

Non-interest expense to average assets

3.82%


3.55%


3.48%


3.23%


3.41%











Efficiency ratio(2)

77.75%


69.63%


60.18%


62.71%


60.91%

 

(1)     The net interest margin is calculated by dividing tax equivalent net interest income by total average earning assets.  Tax equivalent interest income is calculated by grossing up interest income for the amounts that are non taxable (i.e., municipal income) then subtracting interest expense.  The rate utilized is 34%.  See the table below for the quarterly tax equivalent net interest income and the reconciliation of net interest income to tax equivalent net interest income.  The Company's net interest margin is a common measure used by the financial service industry to determine how profitable earning assets are funded.  Because the Company earns a fair amount of non taxable interest income due to the mix of securities in its investment security portfolio, net interest income for the ratio is calculated on a tax equivalent basis as described above. 

(2)     The efficiency ratio is not a measurement under accounting principles generally accepted in the United States. It is calculated by dividing non-interest expense by the sum of tax equivalent net interest income and non-interest income excluding gains and losses on the investment portfolio and sales of repossessed assets. The tax rate utilized is 34%. See the table below for the quarterly tax equivalent net interest income and a reconciliation of net interest income to tax equivalent net interest income. The Company calculates this ratio in order to evaluate its overhead structure or how effectively it is operating. An increase in the ratio from period to period indicates the Company is losing a larger percentage of its income to expenses. The Company believes that the efficiency ratio is a reasonable measure of profitability.

 

EAGLE FINANCIAL SERVICES, INC.










SELECTED FINANCIAL DATA BY QUARTER












4Q13


3Q13


2Q13


1Q13


4Q12

BALANCE SHEET RATIOS











Loans to deposits

91.12%


92.32%


92.19%


89.59%


87.63%


Average interest-earning assets to











    average-interest bearing liabilities

147.11%


145.62%


145.49%


152.08%


139.30%

PER SHARE DATA











Dividends

$            0.19


$            0.19


$            0.19


$            0.19


$            0.19


Book value

$          19.57


$          19.36


$          19.13


$          19.36


$          19.11


Tangible book value

$          19.57


$          19.36


$          19.13


$          19.36


$          19.11

SHARE PRICE DATA











Closing price

$          22.50


$          23.75


$          23.35


$          22.10


$          22.00


Diluted earnings multiple(1)

10.42


13.49


9.89


10.42


11.70


Book value multiple(2)

1.15


1.23


1.22


1.14


1.15

COMMON STOCK DATA











Outstanding shares at end of period

3,409,831


3,400,711


3,388,005


3,372,080


3,352,523


Weighted average shares outstanding

3,405,215


3,393,519


3,373,353


3,367,689


3,348,630


Weighted average shares outstanding, diluted

3,416,841


3,405,225


3,383,748


3,378,369


3,359,611

CAPITAL RATIOS











Total equity to total assets

11.36%


11.21%


11.00%


11.17%


10.74%

CREDIT QUALITY











Net charge-offs to average loans

0.10%


0.06%


0.09%


0.00%


0.33%


Total non-performing loans to total loans

1.00%


0.98%


0.59%


0.79%


0.63%


Total non-performing assets to total assets

1.04%


1.10%


0.89%


1.08%


0.94%


Non-accrual loans to:











      total loans

0.99%


0.94%


0.55%


0.64%


0.58%


      total assets

0.76%


0.71%


0.41%


0.47%


0.41%


Allowance for loan losses to:











      total loans

1.24%


1.53%


1.60%


1.64%


1.57%


     non-performing assets

90.41%


104.64%


133.55%


110.88%


118.38%


     non-accrual loans

124.36%


162.70%


291.48%


256.07%


272.45%

NON-PERFORMING ASSETS:










(dollars in thousands)











    Loans delinquent over 90 days

$               11


$             147


$             201


$             631


$             208


    Non-accrual loans   

4,413


4,129


2,394


2,718


2,414


    Other real estate owned and repossessed assets

1,646


2,144


2,630


2,928


2,934

NET LOAN CHARGE-OFFS (RECOVERIES):










(dollars in thousands)











    Loans charged off

$             493


$             385


$             403


$               42


$          1,516


    (Recoveries)

(30)


(125)


(37)


(42)


(122)


Net charge-offs (recoveries)

463


260


366


-


1,394

PROVISION FOR LOAN LOSSES (dollars in thousands)

$           (767)


$                -


$             384


$             383


$               10

ALLOWANCE FOR LOAN LOSS SUMMARY










(dollars in thousands)











Balance at the beginning of period

$          6,718


$          6,978


$          6,960


$          6,577


$          7,961


Provision

(767)


-


384


383


10


Net charge-offs (recoveries)

463


260


366


-


1,394


Balance at the end of period

$          5,488


$          6,718


$          6,978


$          6,960


$          6,577

 

(1)     The diluted earnings multiple (or price earnings ratio) is calculated by dividing the period's closing market price per share by total equity per weighted average shares outstanding, diluted for the period. The diluted earnings multiple is a measure of how much an investor may be willing to pay for $1.00 of the Company's earnings.

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

EAGLE FINANCIAL SERVICES, INC.










CONSOLIDATED BALANCE SHEETS










(dollars in thousands)











Unaudited


Unaudited


Unaudited


Unaudited


Audited


12/31/2013


9/30/2013


6/30/2013


3/31/2013


12/31/2012











Assets










Cash and due from banks

$        14,243


$        17,686


$        10,632


$        21,829


$        48,690

Federal funds sold

-


-


-


-


-

Securities available for sale, at fair value

104,790


104,753


109,145


115,001


105,531

Loans, net of allowance for loan losses

438,785


431,346


429,379


416,890


411,520

Bank premises and equipment, net

17,214


17,231


17,287


16,834


16,545

Other assets

9,348


12,489


19,230


10,292


10,990

              Total assets

$      584,380


$      583,505


$      585,673


$      580,846


$      593,276











Liabilities and Shareholders' Equity










Liabilities










    Deposits:










       Noninterest bearing demand deposits

$      147,698


$      143,156


$      135,802


$      135,650


$      134,871

       Savings and interest bearing demand deposits

240,749


230,581


234,430


227,876


231,249

       Time deposits

99,140


100,790


103,080


109,554


110,981

          Total deposits

$      487,587


$      474,527


$      473,312


$      473,080


$      477,101

    Federal funds purchased and securities










        sold under agreements to repurchase

-


-


5,616


-


10,000

    Federal Home Loan Bank advances

22,250


32,250


32,250


32,250


32,250

    Trust preferred capital notes

7,217


7,217


7,217


7,217


7,217

    Other liabilities

920


4,093


2,860


3,429


3,002

    Commitments and contingent liabilities

-


-


-


-


-

              Total liabilities

$      517,974


$      518,087


$      521,255


$      515,976


$      529,570











Shareholders' Equity










    Preferred stock, $10 par value

$                -


$                -


$                -


$                -


$                -

    Common stock, $2.50 par value

8,482


8,449


8,417


8,376


8,340

    Surplus

11,537


11,276


10,935


10,636


10,424

    Retained earnings

46,082


44,879


44,018


42,657


41,494

    Accumulated other comprehensive income

305


814


1,048


3,201


3,448

              Total shareholders' equity

$        66,406


$        65,418


$        64,418


$        64,870


$        63,706

              Total liabilities and shareholders' equity

$      584,380


$      583,505


$      585,673


$      580,846


$      593,276











 

 

 

EAGLE FINANCIAL SERVICES, INC.








CONSOLIDATED STATEMENTS OF INCOME








(dollars in thousands)








Unaudited









Three Months Ended


Year Ended


December 31,


December 31,


2013


2012


2013


2012

Interest and Dividend Income








        Interest and fees on loans

$       5,410


$       5,532


$      21,530


$      22,589

        Interest on federal funds sold

-


-


-


-

        Interest and dividends on securities available for sale:








              Taxable interest income

490


511


2,055


2,187

              Interest income exempt from federal income taxes

296


335


1,241


1,383

              Dividends

40


87


187


384

        Interest on deposits in banks

5


14


23


23

                    Total interest and dividend income

$       6,241


$       6,479


$      25,036


$      26,566

Interest Expense








        Interest on deposits

$          259


$          368


$        1,142


$        1,586

        Interest on federal funds purchased and securities








            sold under agreements to repurchase

-


90


31


360

        Interest on Federal Home Loan Bank advances

275


276


1,094


1,120

        Interest on trust preferred capital notes

80


80


318


318

                   Total interest expense

$          614


$          814


$        2,585


$        3,384

                   Net interest income

$       5,627


$       5,665


$      22,451


$      23,182

Provision For Loan Losses

(767)


10


-


1,660

                   Net interest income after provision for loan losses

$       6,394


$       5,655


$      22,451


$      21,522

Noninterest Income








        Income from fiduciary activities

$          257


$          237


$        1,186


$           963

        Service charges on deposit accounts

367


397


1,453


1,509

        Other service charges and fees

747


828


3,864


3,404

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

-


-


(1)


-

        Gain on sales of AFS securities

65


30


465


45

        Other operating income

44


39


495


206

                    Total noninterest income

$       1,480


$       1,531


$        7,462


$        6,127

Noninterest Expenses








        Salaries and employee benefits

$       2,974


$       2,699


$      11,451


$      10,634

        Occupancy expenses

355


289


1,291


1,147

        Equipment expenses

169


163


666


665

        Advertising and marketing expenses

127


123


548


470

        Stationery and supplies

71


58


274


289

        ATM network fees

159


132


616


528

        Other real estate owned expenses

10


305


40


362

        FDIC assessment

90


90


375


292

        Computer software expense

160


31


664


463

        Professional fees

223


315


1,013


1,072

       Other operating expenses

1,323


776


3,429


2,618

                    Total noninterest expenses

$       5,661


$       4,981


$      20,367


$      18,540

                    Income before income taxes

$       2,213


$       2,205


$        9,546


$        9,109

Income Tax Expense

364


624


2,388


2,559

                    Net income

$       1,849


$       1,581


$        7,158


$        6,550

Earnings Per Share








        Net income per common share, basic

$         0.54


$         0.47


$          2.11


$          1.97

        Net income per common share, diluted

$         0.54


$         0.47


$          2.10


$          1.96

 

 

 

EAGLE FINANCIAL SERVICES, INC.






Average Balances, Income and Expenses, Yields and Rates






(dollars in thousands)

















For the Three Months Ended


December 31, 2013


December 31, 2012




Interest





Interest



Average


Income/

Average


Average


Income/

Average

Assets:

Balance


Expense

Rate


Balance


Expense

Rate

Securities:










        Taxable

$    69,686


$      2,100

3.01%


$    66,614


$      2,383

3.58%

        Tax-Exempt (1)

35,577


1,782

5.01%


37,976


2,015

5.31%

            Total Securities

$  105,263


$      3,882

3.69%


$  104,590


$      4,398

4.20%

Loans:










        Taxable

$  432,857


$    21,300

4.92%


$  411,944


$    21,807

5.29%

         Non-accrual

3,972


-

0.00%


3,540


-

0.00%

        Tax-Exempt (1)

4,222


249

5.89%


4,756


301

6.34%

            Total Loans

$  441,051


$    21,549

4.89%


$  420,240


$    22,109

5.26%

Federal funds sold

-


-

0.00%


-


-

0.00%

Interest-bearing deposits in other banks

9,393


21

0.23%


19,824


56

0.28%

            Total earning assets

$  551,735


$    25,452

4.61%


$  541,114


$    26,563

4.91%

Allowance for loan losses

(6,694)





(7,389)




Total non-earning assets

42,670





47,137




Total assets

$  587,711





$  580,862














Liabilities and Shareholders' Equity:










Interest-bearing deposits:










        NOW accounts

$    82,926


$           88

0.11%


$    86,445


$         151

0.17%

        Money market accounts

90,733


115

0.13%


84,314


187

0.22%

        Savings accounts

61,901


32

0.05%


54,474


32

0.06%

Time deposits:










        $100,000 and more

36,777


206

0.56%


44,171


330

0.75%

        Less than $100,000

63,363


590

0.96%


69,577


764

1.10%

            Total interest-bearing deposits

$  335,700


$      1,031

0.31%


$  338,981


$      1,464

0.43%

Federal  funds purchased and securities










     sold under agreements to repurchase

1


-

0.00%


10,000


360

3.60%

Federal Home Loan Bank advances

32,141


1,090

0.39%


32,250


1,096

3.40%

Trust preferred capital notes

7,217


317

0.44%


7,217


318

4.41%

            Total interest-bearing liabilities

$  375,059


$      2,438

0.65%


$  388,448


$      3,238

0.83%

Noninterest-bearing liabilities:










        Demand deposits

142,203





124,004




        Other Liabilities

4,535





5,193




            Total liabilities

$  521,797





$  517,645




Shareholders' equity

65,914





63,217




Total liabilities and shareholders' equity

$  587,711





$  580,862














Net interest income



$    23,015





$23,325












Net interest spread




3.96%





4.08%

Interest expense as a percent of










     average earning assets




0.44%





0.60%

Net interest margin




4.17%





4.31%

 

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

EAGLE FINANCIAL SERVICES, INC.






Average Balances, Income and Expenses, Yields and Rates






(dollars in thousands)

















For the Year Ended


December 31, 2013


December 31, 2012




Interest





Interest



Average


Income/

Average


Average


Income/

Average

Assets:

Balance


Expense

Rate


Balance


Expense

Rate

Securities:










        Taxable

$        72,630


$        2,242

3.09%


$        70,134


$        2,571

3.67%

        Tax-Exempt (1)

36,692


1,881

5.13%


39,281


2,095

5.33%

            Total Securities

$      109,322


$        4,123

3.77%


$      109,415


$        4,666

4.26%

Loans:










        Taxable

$      422,692


$      21,352

5.05%


$      413,281


$      22,387

5.42%

         Non-accrual

2,921


-

0.00%


2,731


-

0.00%

        Tax-Exempt (1)

4,423


269

6.09%


4,786


306

6.39%

            Total Loans

$      430,036


$      21,621

5.03%


$      420,798


$      22,693

5.39%

Federal funds sold

-


-

0.00%


92


-

0.00%

Interest-bearing deposits in other banks

10,048


23

0.23%


9,420


23

0.24%

            Total earning assets

$      546,485


$      25,767

4.72%


$      536,994


$      27,382

5.10%

Allowance for loan losses

(6,957)





(8,393)




Total non-earning assets

40,573





39,698




Total assets

$      580,101





$      568,299














Liabilities and Shareholders' Equity:










Interest-bearing deposits:










        NOW accounts

$        83,889


$           103

0.12%


$        80,500


$           140

0.17%

        Money market accounts

87,809


120

0.14%


84,241


210

0.25%

        Savings accounts

59,114


30

0.05%


52,635


39

0.07%

Time deposits:










        $100,000 and more

38,232


241

0.63%


48,065


380

0.79%

        Less than $100,000

65,900


648

0.98%


71,810


817

1.14%

            Total interest-bearing deposits

$      334,944


$        1,142

0.34%


$      337,251


$        1,586

0.47%

Federal  funds purchased and securities










     sold under agreements to repurchase

1,064


31

2.91%


10,174


360

3.54%

Federal Home Loan Bank advances

32,223


1,094

3.40%


32,960


1,120

3.40%

Trust preferred capital notes

7,217


317

4.39%


7,217


318

4.41%

            Total interest-bearing liabilities

$      375,448


$        2,584

0.69%


$      387,602


$        3,384

0.87%

Noninterest-bearing liabilities:










        Demand deposits

136,242





115,667




        Other Liabilities

3,581





3,864




            Total liabilities

$      515,271





$      507,133




Shareholders' equity

64,830





61,166




Total liabilities and shareholders' equity

$      580,101





$      568,299














Net interest income



$      23,183





$23,998












Net interest spread




4.03%





4.23%

Interest expense as a percent of










     average earning assets




0.47%





0.63%

Net interest margin




4.24%





4.47%

 

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

 

EAGLE FINANCIAL SERVICES, INC.






Reconciliation of Tax-Equivalent Net Interest Income






(dollars in thousands)













Three Months Ended


12/31/2013

9/30/2013

6/30/2013

3/31/2013

12/31/2012







GAAP Financial Measurements:






   Interest Income - Loans

$          5,410

$          5,445

$          5,342

$          5,331

$          5,532

   Interest Income - Securities and Other Interest-Earnings Assets

831

849

880

947

947

   Interest Expense - Deposits

259

269

287

326

368

   Interest Expense - Other Borrowings

355

355

353

377

446

Total Net Interest Income

$          5,627

$          5,670

$          5,582

$          5,575

$          5,665







Non-GAAP Financial Measurements:






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

$               21

$               22

$               24

$               25

$               26

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

153

158

162

167

172

Total Tax Benefit on Tax-Exempt Interest Income

$             174

$             180

$             186

$             192

$             198

Tax-Equivalent Net Interest Income

$          5,801

$          5,850

$          5,768

$          5,767

$          5,863

 

SOURCE Eagle Financial Services, Inc.

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