Exhibit 99.1
EAGLE FINANCIAL SERVICES, INC. ANNOUNCES
2011 FINANCIAL RESULTS
| | | | |
| Contact: | | Kathleen J. Chappell, Vice President and CFO | | 540-955-2510 |
| | | | kchappell@bankofclarke.com |
BERRYVILLE, VIRGINIA(January 24, 2012) – Eagle Financial Services, Inc. (OTC BULLETIN BOARD: EFSI), the holding company for Bank of Clarke County, whose divisions include Eagle Investment Group, announces annual and fourth quarter 2011 financial results. 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 2011 Highlights:
| | | | | | | | |
| | | Q4 | | | Annual | |
Net income (000’s) | | $ | 693 | | | $ | 4,322 | |
Diluted EPS | | $ | 0.21 | | | $ | 1.31 | |
Net Interest Margin | | | 4.47 | % | | | 4.40 | % |
Allowance for loan losses to total loans | | | | | | | 2.13 | % |
Total equity to assets | | | | | | | 10.23 | % |
John R. Milleson, President and CEO, stated, “Commitment to solid banking practices has again resulted in a profitable year for Eagle Financial Services, Inc. We are proud to announce a 51.3% decrease in non-performing assets, a nearly 20.0% increase in net income and an 18.0% increase in earnings per basic share. The Company’s capital strength permitted us to fulfill our first market expansion in 19 years. In April 2011 the Company opened a retail bank branch in Round Hill, VA. This expansion established a presence for EFSI in Loudoun County, VA, an area we have identified as a growth market for the Company. We believe our solid banking practices will continue to serve us well in 2012 as we develop in this new market and explore additional growth opportunities that may present themselves.”
Net Income
Net income for the quarter ended December 31, 2011 was $693,000, reflecting an increase of 50.0% from the quarter ended December 31, 2010. Net income was $4.3 million for the year ended December 31, 2011 which represented an increase of 19.9% when compared to net income for the same period in 2010. These increases resulted mostly from reduced interest costs and loan loss provisions.
Net Interest Income and Net Interest Margin
Net interest income for the quarter ended December 31, 2011 was $5.9 million, which represented an increase of 2.3% when compared to $5.7 million for the same period in 2010. Net interest income for the year ended December 31, 2011 was $22.8 million which represented an increase of 2.3% when compared to $22.3 million in 2010. This increase in net interest income resulted mostly from the decline in the Company’s funding costs.
Total loan interest income was $5.8 million for the quarter ended December 31, 2011, reflecting a decrease of $137,000 from the quarter ended December 31, 2010. Total loan interest income was $23.0 million for the year ended December 31, 2011, reflecting a decrease of $500,000 from the year ended December 31, 2010. Average loans for the quarter ended December 31, 2011 were $409.1 million compared to $411.1 million for the same period in 2010. Average loans for the year ended December 31, 2011 were $405.8 million compared to $407.7 million for the same period in 2010. The tax equivalent yield on average loans for the quarter ended December 31, 2011 was 5.69%, down 11 basis points from the same time period in 2010. The tax equivalent yield on average loans for the year ended December 31, 2011 was 5.70%, down 10 basis points from the same time period in 2010. Interest income from the investment portfolio was $1.1 million for the quarters ended December 31, 2011 and 2010. Interest income from the investment portfolio was $4.5 million for the year ended December 31, 2011 and $4.2 million for the same period in 2010.
Total interest expense was $1.1 million for the three months ended December 31, 2011 and $1.3 million for three months ended December 31, 2010. Total interest expense for the year ended December 31, 2011 was $4.8 million, representing a decrease of $725,000 or 13.1% from the year ended December 31, 2010. The average cost of interest bearing liabilities decreased 24 basis points when comparing the quarter ended December 31, 2011 to the same time period in 2010. The average cost of interest bearing liabilities decreased 19 basis points when comparing the year ended December 31, 2011 to the same time period in 2010. The average balance of interest bearing liabilities remained relatively unchanged from the quarter ended December 31, 2010 to the same period in 2011. The average balance of interest bearing liabilities increased $4.1 million from the year ended December 31, 2010 to the same period in 2011.
The net interest margin was 4.47% for the quarter ended December 31, 2011. When compared to the quarter ended December 31, 2010, the net interest margin increased six basis points. The net interest margin was 4.40% for the year ended December 31, 2011. When compared to the year ended December 31, 2010, the net interest margin increased two basis points. This increase was attributable to the decreased cost of interest bearing liabilities.
The Company’s net interest margin is not a measurement under accounting principles generally accepted in the United States, but it is a common measure used by the financial services industry to determine how profitably earning assets are funded. The Company’s net interest margin is calculated by dividing tax equivalent net interest income by total average earning assets. Tax equivalent net interest income is calculated by grossing up interest income for the amounts that are non-taxable (i.e., municipal income) then subtracting interest expense. The tax rate utilized is 34%.
Asset Quality and Provision for Loan Losses
Provisions for loan losses were $900,000 for the three months ended December 31, 2011, compared to $2.2 million for the quarter ended December 31, 2010. Provisions for loan losses were $3.8 million for the year ended December 31, 2011, compared to $6.3 million for the year ended December 31, 2010. The ratio of allowance for loan losses to total loans was 2.13% at December 31, 2011 and 1.74% at December 31, 2010. The ratio of allowance for loan losses to total nonaccrual loans was 357.00% at December 31, 2011 and 84.89% at December 31, 2010. 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 resulted from the overall improvement in credit quality including lesser amounts of loan charge offs and levels of past due and nonperforming loans. The increase in the ratio of the allowance for loan losses to total loans was driven mostly by the increase in required specific allocations related to impaired loans. At December 31, 2011, impaired loans totaled $19.9 million and had related specific allocations of $4.2 million. At December 31, 2010, impaired loans totaled $20.2 million and had related specific allocations of $2.7 million.
Nonperforming assets decreased from $10.2 million or 1.83% of total assets at December 31, 2010 to $5.0 million or 0.87% of total assets at December 31, 2011. This decrease resulted mostly from the decline in nonaccrual loans. Several of the nonaccrual loans had been charged off, moved to other real estate owned and subsequently sold during 2011 while some others returned to an accruing status. During the fourth quarter of 2011, the Bank placed five loans totaling $421,000 on nonaccrual status. Four of these loans are secured by real estate. Management evaluates the financial condition of these borrowers and the value of any collateral on these loans. The results of these evaluations are used to estimate the amount of losses which may be realized on the disposition of these nonaccrual loans.
Three real estate assets valued at $355,000 were foreclosed upon during the fourth quarter of 2011 while four sales of foreclosed property valued at $1.4 million were realized during the same period. Loans greater than 90 days past due and still accruing increased from $10,000 at December 31, 2010 to $94,000 at December 31, 2011.
The Company realized $48,000 in net charge-offs for the quarter ended December 31, 2011 versus $2.9 million for the same period in 2010. The Company realized $2.1 million in net charge-offs for the year ended December 31, 2011 versus $5.2 for the same period in 2010. The majority of the 2011 net charge offs related to one large construction-development loan and several residential 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.
Non-Interest Income and Non-Interest Expense
Noninterest income was $1.3 million for the quarters ended December 31, 2011 and 2010. Noninterest income was $5.6 million for the year ended December 31, 2011 and $5.5 million for the same period in 2010. Noninterest expense was $5.4 million for the quarter ended December 31, 2011 and $4.4 million for the quarter ended December 31, 2010. Noninterest expense was $18.9 million and $16.8 million for the years ended December 31, 2011 and 2010, respectively. Much of the increase in noninterest expense related to the termination of the Company’s defined benefit plan. During the fourth quarter of 2011, a net loss of $589,000 was realized on the distribution of the plan’s assets. An additional $140,000 in expense was incurred for the purchase of employee retirement annuities. Further increases in the noninterest expense components of salaries and employee benefits, other real estate owned expense and other outside service fees were also experienced. Along with annual salary increases, additional staff had been hired during the latter part of 2010 and early 2011 for the April 2011 opening of the Company’s newest branch in Loudoun County, VA which increased the Company’s salary and benefit expenses by approximately $230,000. Higher levels of other real estate owned held during the year
negatively impacted the level of other real estate owned expenses incurred by $140,000. Other outside service fees were affected by the increased review frequency of the Company’s loan portfolio by an outside firm and the expense of placement fees related to brokered certificates of deposits that were called during the first and fourth quarters of 2011. Together, those two matters increased other outside service fees by $221,000 in 2011. Other increases related to the general growth of the Company were experienced in the software, stationary and supplies, ATM network fees, telephone and bank franchise tax expense categories. In efforts to improve efficiency, the Company continues to diligently manage and monitor its operating expenses.
Total Consolidated Assets
Total consolidated assets of the Company at December 31, 2011 were $568.0 million, which represented an increase of $9.2 million or 1.6% from total assets of $558.8 million at December 31, 2010. Total loans increased $2.0 million from $408.4 million at December 31, 2010 to $410.4 million at December 31, 2011. Considering the current interest rate and competitive market environment, the Company has been conscientious about maintaining both its underwriting standards and its net interest margin and thereby cautious about the growth it has accepted in the loan portfolio.
Deposits and Other Borrowings
Total deposits, which include brokered deposits, increased $19.2 million to $448.5 million at December 31, 2011 from $429.3 million at December 31, 2010. The Company held $9.9 million in brokered deposits at December 31, 2011. At December 31, 2010 brokered deposits were $19.9 million.
Securities sold under agreement to repurchase were $10.0 million at December 31, 2011 and $14.4 million at December 31, 2010. Borrowings with the Federal Home Loan Bank of Atlanta were $42.3 million at December 31, 2011 and $52.3 million at December 31, 2010.
Equity
Shareholders’ equity was $58.1 million at December 31, 2011 and $53.8 million at December 31, 2010. The book value of the Company at December 31, 2011 was $17.67 per common share. Total common shares outstanding were 3,300,692 at December 31, 2011. During the fourth quarter of 2011, the Company purchased 15,663 shares of its Common Stock under its stock repurchase program at an average price of $17.28. On January 18, 2012, the board of directors declared a $0.18 per common share cash dividend for shareholders of record as of January 27, 2012 and payable on February 14, 2012.
Certain information contained in this discussion may include “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements relate to the Company’s future operations and are generally identified by phrases such as “the Company expects,” “the Company believes” or words of similar import. Although the Company believes that its expectations with respect to the forward-looking statements are based upon reliable assumptions within the bounds of its knowledge of its business and operations, there can be no assurance that actual results, performance or achievements of the Company will not differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. For details on factors that could affect expectations, see the risk factors and other cautionary language included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010, and other filings with the Securities and Exchange Commission.
EAGLE FINANCIAL SERVICES, INC.
KEY STATISTICS
| | | | | | | | | | | | | | | | | | | | |
| | | For the Three Months Ended | |
| | | 4Q11 | | | 3Q11 | | | 2Q11 | | | 1Q11 | | | 4Q10 | |
| | | | | |
Net Income(dollars in thousands) | | $ | 693 | | | $ | 1,139 | | | $ | 1,323 | | | $ | 1,167 | | | $ | 462 | |
Earnings per share, basic | | $ | 0.21 | | | $ | 0.34 | | | $ | 0.40 | | | $ | 0.36 | | | $ | 0.14 | |
Earnings per share, diluted | | $ | 0.21 | | | $ | 0.34 | | | $ | 0.40 | | | $ | 0.36 | | | $ | 0.14 | |
| | | | | |
Return on average total assets | | | 0.48 | % | | | 0.78 | % | | | 0.92 | % | | | 0.84 | % | | | 0.33 | % |
Return on average total equity | | | 4.76 | % | | | 7.91 | % | | | 9.58 | % | | | 8.79 | % | | | 3.36 | % |
Dividend payout ratio | | | 85.71 | % | | | 52.94 | % | | | 45.00 | % | | | 50.00 | % | | | 128.57 | % |
Fee revenue as a percent of total revenue | | | 18.53 | % | | | 20.43 | % | | | 20.65 | % | | | 20.48 | % | | | 20.22 | % |
| | | | | |
Net interest margin(1) | | | 4.47 | % | | | 4.34 | % | | | 4.32 | % | | | 4.39 | % | | | 4.41 | % |
Yield on average earning assets | | | 5.28 | % | | | 5.21 | % | | | 5.26 | % | | | 5.35 | % | | | 5.41 | % |
Yield on average interest-bearing liabilities | | | 1.07 | % | | | 1.15 | % | | | 1.22 | % | | | 1.26 | % | | | 1.31 | % |
Net interest spread | | | 4.2 | % | | | 4.06 | % | | | 4.03 | % | | | 4.09 | % | | | 4.10 | % |
Tax equivalent adjustment to net interest income (dollars in thousands) | | $ | 214 | | | $ | 214 | | | $ | 202 | | | $ | 193 | | | $ | 202 | |
| | | | | |
Non-interest income to average assets | | | 0.88 | % | | | 0.96 | % | | | 1.08 | % | | | 1.01 | % | | | 0.90 | % |
Non-interest expense to average assets | | | 3.73 | % | | | 3.13 | % | | | 3.10 | % | | | 3.25 | % | | | 3.07 | % |
| | | | | |
Efficiency ratio(2) | | | 72.60 | % | | | 61.33 | % | | | 60.70 | % | | | 62.40 | % | | | 59.10 | % |
| (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
| | | | | | | | | | | | | | | | | | | | |
| | | 4Q11 | | | 3Q11 | | | 2Q11 | | | 1Q11 | | | 4Q10 | |
BALANCE SHEET RATIOS | | | | | | | | | | | | | | | | | | | | |
Loans to deposits | | | 91.52 | % | | | 90.34 | % | | | 89.44 | % | | | 91.67 | % | | | 95.26 | % |
Average interest-earning assets to average-interest bearing liabilities | | | 132.72 | % | | | 132.26 | % | | | 130.75 | % | | | 130.62 | % | | | 131.31 | % |
PER SHARE DATA | | | | | | | | | | | | | | | | | | | | |
Dividends | | $ | 0.18 | | | $ | 0.18 | | | $ | 0.18 | | | $ | 0.18 | | | $ | 0.18 | |
Book value | | $ | 17.67 | | | $ | 17.61 | | | $ | 17.23 | | | $ | 16.76 | | | $ | 16.50 | |
Tangible book value | | $ | 17.67 | | | $ | 17.61 | | | $ | 17.23 | | | $ | 16.76 | | | $ | 16.50 | |
SHARE PRICE DATA | | | | | | | | | | | | | | | | | | | | |
Closing price | | $ | 16.81 | | | $ | 16.10 | | | $ | 17.95 | | | $ | 16.22 | | | $ | 16.50 | |
Diluted earnings multiple(1) | | | 20.01 | | | | 11.84 | | | | 11.22 | | | | 11.26 | | | | 29.46 | |
Book value multiple(2) | | | 0.95 | | | | 0.91 | | | | 1.04 | | | | 0.97 | | | | 1.00 | |
COMMON STOCK DATA | | | | | | | | | | | | | | | | | | | | |
Outstanding shares at end of period | | | 3,300,692 | | | | 3,306,853 | | | | 3,297,098 | | | | 3,279,940 | | | | 3,262,249 | |
Weighted average shares outstanding | | | 3,305,189 | | | | 3,302,082 | | | | 3,286,551 | | | | 3,274,898 | | | | 3,243,292 | |
Weighted average shares outstanding, diluted | | | 3,312,290 | | | | 3,311,472 | | | | 3,294,331 | | | | 3,281,586 | | | | 3,250,868 | |
CAPITAL RATIOS | | | | | | | | | | | | | | | | | | | | |
Total equity to total assets | | | 10.23 | % | | | 10.14 | % | | | 9.70 | % | | | 9.57 | % | | | 9.64 | % |
CREDIT QUALITY | | | | | | | | | | | | | | | | | | | | |
Net charge-offs to average loans | | | 0.01 | % | | | 0.25 | % | | | 0.09 | % | | | 0.18 | % | | | 0.70 | % |
Total non-performing loans to total loans | | | 0.62 | % | | | 0.69 | % | | | 1.21 | % | | | 1.48 | % | | | 2.05 | % |
Total non-performing assets to total assets | | | 0.87 | % | | | 1.10 | % | | | 1.47 | % | | | 1.52 | % | | | 1.83 | % |
Non-accrual loans to: | | | | | | | | | | | | | | | | | | | | |
total loans | | | 0.60 | % | | | 0.65 | % | | | 1.09 | % | | | 1.48 | % | | | 2.05 | % |
total assets | | | 0.43 | % | | | 0.46 | % | | | 0.75 | % | | | 1.04 | % | | | 1.50 | % |
Allowance for loan losses to: | | | | | | | | | | | | | | | | | | | | |
total loans | | | 2.13 | % | | | 1.94 | % | | | 1.95 | % | | | 1.80 | % | | | 1.74 | % |
non-performing assets | | | 176.06 | % | | | 125.47 | % | | | 91.58 | % | | | 83.96 | % | | | 69.77 | % |
non-accrual loans | | | 357.00 | % | | | 299.47 | % | | | 178.57 | % | | | 121.97 | % | | | 84.89 | % |
NON-PERFORMING ASSETS: | | | | | | | | | | | | | | | | | | | | |
(dollars in thousands) | | | | | | | | | | | | | | | | | | | | |
Loans delinquent over 90 days | | $ | 94 | | | $ | 165 | | | $ | 492 | | | $ | 4 | | | $ | 10 | |
Non-accrual loans | | | 2,449 | | | | 2,635 | | | | 4,387 | | | | 5,966 | | | | 8,377 | |
Other real estate owned and repossessed assets | | | 2,423 | | | | 3,489 | | | | 3,675 | | | | 2,697 | | | | 1,805 | |
NET LOAN CHARGE-OFFS (RECOVERIES): | | | | | | | | | | | | | | | | | | | | |
(dollars in thousands) | | | | | | | | | | | | | | | | | | | | |
Loans charged off | | $ | 327 | | | $ | 1,110 | | | $ | 684 | | | $ | 834 | | | $ | 3,045 | |
(Recoveries) | | | (279 | ) | | | (117 | ) | | | (341 | ) | | | (100 | ) | | | (149 | ) |
Net charge-offs (recoveries) | | | 48 | | | | 993 | | | | 343 | | | | 734 | | | | 2,896 | |
PROVISION FOR LOAN LOSSES (dollars in thousands) | | $ | 900 | | | $ | 1,050 | | | $ | 900 | | | $ | 900 | | | $ | 2,175 | |
ALLOWANCE FOR LOAN LOSS SUMMARY | | | | | | | | | | | | | | | | | | | | |
(dollars in thousands) | | | | | | | | | | | | | | | | | | | | |
Balance at the beginning of period | | $ | 7,891 | | | $ | 7,834 | | | $ | 7,277 | | | $ | 7,111 | | | $ | 7,832 | |
Provision | | | 900 | | | | 1,050 | | | | 900 | | | | 900 | | | | 2,175 | |
Net charge-offs (recoveries) | | | 48 | | | | 993 | | | | 343 | | | | 734 | | | | 2,896 | |
Balance at the end of period | | $ | 8,743 | | | $ | 7,891 | | | $ | 7,834 | | | $ | 7,277 | | | $ | 7,111 | |
| (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
12/31/2011 | | | Unaudited
9/30/2011 | | | Unaudited
6/30/2011 | | | Unaudited
3/31/2011 | | | Audited
12/31/2010 | |
| | | | | |
Assets | | | | | | | | | | | | | | | | | | | | |
Cash and due from banks | | $ | 21,941 | | | $ | 18,839 | | | $ | 39,769 | | | $ | 30,769 | | | $ | 13,970 | |
Federal funds sold | | | — | | | | — | | | | — | | | | — | | | | — | |
Securities available for sale, at fair value | | | 117,655 | | | | 123,699 | | | | 116,783 | | | | 113,360 | | | | 113,776 | |
Loans, net of allowance for loan losses | | | 401,681 | | | | 398,649 | | | | 394,640 | | | | 396,631 | | | | 401,338 | |
Bank premises and equipment, net | | | 15,200 | | | | 15,728 | | | | 15,772 | | | | 15,826 | | | | 15,712 | |
Other assets | | | 11,546 | | | | 14,421 | | | | 15,407 | | | | 14,752 | | | | 14,044 | |
| | | | | | | | | | | | | | | | | | | | |
Total assets | | $ | 568,023 | | | $ | 571,336 | | | $ | 582,371 | | | $ | 571,338 | | | $ | 558,840 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
Liabilities and Shareholders’ Equity | | | | | | | | | | | | | | | | | | | | |
Liabilities | | | | | | | | | | | | | | | | | | | | |
Deposits: | | | | | | | | | | | | | | | | | | | | |
Noninterest bearing demand deposits | | $ | 107,238 | | | $ | 104,153 | | | $ | 104,786 | | | $ | 103,568 | | | $ | 98,256 | |
Savings and interest bearing demand deposits | | | 210,158 | | | | 194,035 | | | | 193,729 | | | | 183,660 | | | | 184,548 | |
Time deposits | | | 131,070 | | | | 151,819 | | | | 151,459 | | | | 153,390 | | | | 146,492 | |
| | | | | | | | | | | | | | | | | | | | |
Total deposits | | $ | 448,466 | | | $ | 450,007 | | | $ | 449,974 | | | $ | 440,618 | | | $ | 429,296 | |
Federal funds purchased and securities sold under agreements to repurchase | | | 10,000 | | | | 10,000 | | | | 13,240 | | | | 14,050 | | | | 14,395 | |
Federal Home Loan Bank advances | | | 42,250 | | | | 42,250 | | | | 52,250 | | | | 52,250 | | | | 52,250 | |
Trust preferred capital notes | | | 7,217 | | | | 7,217 | | | | 7,217 | | | | 7,217 | | | | 7,217 | |
Other liabilities | | | 2,000 | | | | 3,939 | | | | 3,201 | | | | 2,507 | | | | 1,853 | |
Commitments and contingent liabilities | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | |
Total liabilities | | $ | 509,933 | | | $ | 513,413 | | | $ | 525,882 | | | $ | 516,642 | | | $ | 505,011 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
Shareholders’ Equity | | | | | | | | | | | | | | | | | | | | |
Preferred stock, $10 par value | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
Common stock, $2.50 par value | | | 8,217 | | | | 8,224 | | | | 8,199 | | | | 8,159 | | | | 8,124 | |
Surplus | | | 9,568 | | | | 9,628 | | | | 9,434 | | | | 9,208 | | | | 9,076 | |
Retained earnings | | | 37,374 | | | | 37,276 | | | | 36,730 | | | | 35,997 | | | | 35,419 | |
Accumulated other comprehensive income | | | 2,931 | | | | 2,795 | | | | 2,126 | | | | 1,332 | | | | 1,210 | |
| | | | | | | | | | | | | | | | | | | | |
Total shareholders’ equity | | $ | 58,090 | | | $ | 57,923 | | | $ | 56,489 | | | $ | 54,696 | | | $ | 53,829 | |
| | | | | | | | | | | | | | | | | | | | |
Total liabilities and shareholders’ equity | | $ | 568,023 | | | $ | 571,336 | | | $ | 582,371 | | | $ | 571,338 | | | $ | 558,840 | |
| | | | | | | | | | | | | | | | | | | | |
EAGLE FINANCIAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands)
Unaudited
| | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | Year Ended | |
| | | December 31, | | | December 31, | |
| | | 2011 | | | 2010 | | | 2011 | | | 2010 | |
Interest and Dividend Income | | | | | | | | | | | | | | | | |
Interest and fees on loans | | $ | 5,837 | | | $ | 5,974 | | | $ | 23,029 | | | $ | 23,529 | |
Interest on federal funds sold | | | — | | | | — | | | | — | | | | 2 | |
Interest and dividends on securities available for sale: | | | | | | | | | | | | | | | | |
Taxable interest income | | | 640 | | | | 520 | | | | 2,695 | | | | 2,489 | |
Interest income exempt from federal income taxes | | | 367 | | | | 330 | | | | 1,397 | | | | 1,302 | |
Dividends | | | 99 | | | | 227 | | | | 413 | | | | 446 | |
Interest on deposits in banks | | | 6 | | | | 11 | | | | 37 | | | | 21 | |
| | | | | | | | | | | | | | | | |
Total interest and dividend income | | $ | 6,949 | | | $ | 7,062 | | | $ | 27,571 | | | $ | 27,789 | |
| | | | | | | | | | | | | | | | |
Interest Expense | | | | | | | | | | | | | | | | |
Interest on deposits | | $ | 548 | | | $ | 693 | | | $ | 2,439 | | | $ | 2,983 | |
Interest on federal funds purchased and securities sold under agreements to repurchase | | | 89 | | | | 96 | | | | 364 | | | | 387 | |
Interest on Federal Home Loan Bank advances | | | 374 | | | | 468 | | | | 1,685 | | | | 1,844 | |
Interest on trust preferred capital notes | | | 80 | | | | 80 | | | | 317 | | | | 316 | |
| | | | | | | | | | | | | | | | |
Total interest expense | | $ | 1,091 | | | $ | 1,337 | | | $ | 4,805 | | | $ | 5,530 | |
| | | | | | | | | | | | | | | | |
Net interest income | | $ | 5,858 | | | $ | 5,725 | | | $ | 22,766 | | | $ | 22,259 | |
Provision For Loan Losses | | | 900 | | | | 2,175 | | | | 3,750 | | | | 6,325 | |
| | | | | | | | | | | | | | | | |
Net interest income after provision for loan losses | | $ | 4,958 | | | $ | 3,550 | | | $ | 19,016 | | | $ | 15,934 | |
| | | | | | | | | | | | | | | | |
Noninterest Income | | | | | | | | | | | | | | | | |
Income from fiduciary activities | | $ | 209 | | | $ | 207 | | | $ | 907 | | | $ | 917 | |
Service charges on deposit accounts | | | 395 | | | | 423 | | | | 1,586 | | | | 1,784 | |
Other service charges and fees | | | 717 | | | | 786 | | | | 3,190 | | | | 2,993 | |
(Loss) Gain on the sale of bank premises and equipment | | | 77 | | | | (83 | ) | | | 76 | | | | (83 | ) |
(Loss) on the sale of repossessed assets | | | (105 | ) | | | (92 | ) | | | (360 | ) | | | (338 | ) |
(Loss) on sales of AFS securities | | | (88 | ) | | | — | | | | 67 | | | | 98 | |
Other operating income | | | 39 | | | | 36 | | | | 119 | | | | 128 | |
| | | | | | | | | | | | | | | | |
Total noninterest income | | $ | 1,244 | | | $ | 1,277 | | | $ | 5,585 | | | $ | 5,499 | |
| | | | | | | | | | | | | | | | |
Noninterest Expenses | | | | | | | | | | | | | | | | |
Salaries and employee benefits | | $ | 3,021 | | | $ | 2,396 | | | $ | 10,609 | | | $ | 9,263 | |
Occupancy expenses | | | 278 | | | | 309 | | | | 1,155 | | | | 1,142 | |
Equipment expenses | | | 169 | | | | 156 | | | | 676 | | | | 625 | |
Advertising and marketing expenses | | | 92 | | | | 97 | | | | 500 | | | | 435 | |
Stationery and supplies | | | 71 | | | | 65 | | | | 292 | | | | 246 | |
ATM network fees | | | 169 | | | | 145 | | | | 546 | | | | 442 | |
FDIC assessment | | | 166 | | | | 181 | | | | 712 | | | | 852 | |
Other operating expenses | | | 1,430 | | | | 1,007 | | | | 4,418 | | | | 3,804 | |
| | | | | | | | | | | | | | | | |
Total noninterest expenses | | $ | 5,396 | | | $ | 4,356 | | | $ | 18,908 | | | $ | 16,809 | |
| | | | | | | | | | | | | | | | |
Income before income taxes | | $ | 806 | | | $ | 471 | | | $ | 5,693 | | | $ | 4,624 | |
Income Tax Expense | | | 113 | | | | 9 | | | | 1,371 | | | | 1,019 | |
| | | | | | | | | | | | | | | | |
Net income | | $ | 693 | | | $ | 462 | | | $ | 4,322 | | | $ | 3,605 | |
| | | | | | | | | | | | | | | | |
Earnings Per Share | | | | | | | | | | | | | | | | |
Net income per common share, basic | | $ | 0.21 | | | $ | 0.14 | | | $ | 1.31 | | | $ | 1.11 | |
| | | | | | | | | | | | | | | | |
Net income per common share, diluted | | $ | 0.21 | | | $ | 0.14 | | | $ | 1.31 | | | $ | 1.11 | |
| | | | | | | | | | | | | | | | |
EAGLE FINANCIAL SERVICES, INC.
Average Balances, Income and Expenses, Yields and Rates
(dollars in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | For the Three Months Ended | |
| | | December 31, 2011 | | | December 31, 2010 | |
| | | Average
Balance | | | Interest
Income/
Expense | | | Average
Rate | | | Average
Balance | | | Interest
Income/
Expense | | | Average
Rate | |
Assets: | | | | | | | | | | | | | | | | | | | | | | | | |
Securities: | | | | | | | | | | | | | | | | | | | | | | | | |
Taxable | | $ | 79,430 | | | $ | 2,928 | | | | 3.69 | % | | $ | 78,233 | | | $ | 2,964 | | | | 3.79 | % |
Tax-Exempt(1) | | | 41,151 | | | | 2,209 | | | | 5.37 | % | | | 35,502 | | | | 1,984 | | | | 5.59 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total Securities | | $ | 120,581 | | | $ | 5,137 | | | | 4.26 | % | | $ | 113,735 | | | $ | 4,948 | | | | 4.35 | % |
Loans: | | | | | | | | | | | | | | | | | | | | | | | | |
Taxable | | $ | 401,992 | | | $ | 22,964 | | | | 5.71 | % | | $ | 394,409 | | | $ | 23,455 | | | | 5.95 | % |
Non-accrual | | | 2,721 | | | | — | | | | 0.00 | % | | | 11,375 | | | | — | | | | 0.00 | % |
Tax-Exempt(1) | | | 4,375 | | | | 295 | | | | 6.74 | % | | | 5,286 | | | | 373 | | | | 7.05 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total Loans | | $ | 409,088 | | | $ | 23,259 | | | | 5.69 | % | | $ | 411,070 | | | $ | 23,828 | | | | 5.80 | % |
Federal funds sold | | | 21 | | | | — | | | | 0.00 | % | | | 64 | | | | — | | | | 0.00 | % |
Interest-bearing deposits in other banks | | | 11,613 | | | | 24 | | | | 0.21 | % | | | 7,933 | | | | 44 | | | | 0.55 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total earning assets | | $ | 538,582 | | | $ | 28,420 | | | | 5.28 | % | | $ | 532,802 | | | $ | 28,820 | | | | 5.41 | % |
Allowance for loan losses | | | (8,238 | ) | | | | | | | | | | | (7,777 | ) | | | | | | | | |
Total non-earning assets | | | 43,721 | | | | | | | | | | | | 37,050 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total assets | | $ | 574,065 | | | | | | | | | | | $ | 562,075 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Liabilities and Shareholders’ Equity: | | | | | | | | | | | | | | | | | | | | | | | | |
Interest-bearing deposits: | | | | | | | | | | | | | | | | | | | | | | | | |
NOW accounts | | $ | 73,681 | | | $ | 136 | | | | 0.18 | % | | $ | 69,649 | | | $ | 210 | | | | 0.30 | % |
Money market accounts | | | 82,925 | | | | 297 | | | | 0.36 | % | | | 71,187 | | | | 372 | | | | 0.52 | % |
Savings accounts | | | 47,604 | | | | 55 | | | | 0.12 | % | | | 41,962 | | | | 53 | | | | 0.13 | % |
Time deposits: | | | | | | | | | | | | | | | | | | | | | | | | |
$100,000 and more | | | 57,746 | | | | 531 | | | | 0.92 | % | | | 61,433 | | | | 697 | | | | 1.13 | % |
Less than $100,000 | | | 85,367 | | | | 1,157 | | | | 1.36 | % | | | 86,607 | | | | 1,418 | | | | 1.64 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total interest-bearing deposits | | $ | 346,323 | | | $ | 2,176 | | | | 0.63 | % | | $ | 330,838 | | | $ | 2,750 | | | | 0.83 | % |
Federal funds purchased and securities sold under agreements to repurchase | | | 10,010 | | | | 355 | | | | 3.55 | % | | | 15,447 | | | | 385 | | | | 2.49 | % |
Federal Home Loan Bank advances | | | 42,250 | | | | 1,486 | | | | 3.52 | % | | | 52,250 | | | | 1,856 | | | | 3.55 | % |
Trust preferred capital notes | | | 7,217 | | | | 317 | | | | 4.40 | % | | | 7,217 | | | | 317 | | | | 4.40 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total interest-bearing liabilities | | $ | 405,800 | | | $ | 4,334 | | | | 1.07 | % | | $ | 405,752 | | | $ | 5,308 | | | | 1.31 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Noninterest-bearing liabilities: | | | | | | | | | | | | | | | | | | | | | | | | |
Demand deposits | | | 106,369 | | | | | | | | | | | | 98,720 | | | | | | | | | |
Other Liabilities | | | 4,163 | | | | | | | | | | | | 3,430 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total liabilities | | $ | 516,332 | | | | | | | | | | | $ | 507,451 | | | | | | | | | |
Shareholders’ equity | | | 57,733 | | | | | | | | | | | | 54,624 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total liabilities and shareholders’ equity | | $ | 574,065 | | | | | | | | | | | $ | 562,075 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net interest income | | | | | | $ | 24,086 | | | | | | | | | | | $ | 23,512 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net interest spread | | | | | | | | | | | 4.21 | % | | | | | | | | | | | 4.10 | % |
Interest expense as a percent of average earning assets | | | | | | | | | | | 0.80 | % | | | | | | | | | | | 1.00 | % |
Net interest margin | | | | | | | | | | | 4.47 | % | | | | | | | | | | | 4.41 | % |
| (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, | |
| | | 2011 | | | 2010 | |
| | | Average
Balance | | | Interest
Income/
Expense | | | Average
Rate | | | Average
Balance | | | Interest
Income/
Expense | | | Average
Rate | |
Assets: | | | | | | | | | | | | | | | | | | | | | | | | |
Securities: | | | | | | | | | | | | | | | | | | | | | | | | |
Taxable | | $ | 80,146 | | | $ | 3,108 | | | | 3.88 | % | | $ | 72,029 | | | $ | 2,935 | | | | 4.07 | % |
Tax-Exempt(1) | | | 38,285 | | | | 2,117 | | | | 5.53 | % | | | 34,612 | | | | 1,973 | | | | 5.70 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total Securities | | $ | 118,431 | | | $ | 5,225 | | | | 4.41 | % | | $ | 106,641 | | | $ | 4,908 | | | | 4.60 | % |
Loans: | | | | | | | | | | | | | | | | | | | | | | | | |
Taxable | | | 396,430 | | | | 22,826 | | | | 5.76 | % | | | 393,791 | | | | 23,269 | | | | 5.91 | % |
Non-accrual | | | 4,735 | | | | — | | | | 0.00 | % | | | 8,352 | | | | 0 | | | | 0.00 | % |
Tax-Exempt(1) | | | 4,657 | | | | 307 | | | | 6.59 | % | | | 5,600 | | | | 394 | | | | 7.04 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total Loans | | $ | 405,822 | | | $ | 23,133 | | | | 5.70 | % | | $ | 407,743 | | | $ | 23,663 | | | | 5.80 | % |
Federal funds sold | | | 5 | | | | — | | | | 0.00 | % | | | 1,326 | | | | 2 | | | | 0.00 | % |
Interest-bearing deposits in other banks | | | 17,219 | | | | 38 | | | | 2.20 | % | | | 11,054 | | | | 21 | | | | 0.19 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total earning assets | | $ | 536,742 | | | $ | 28,396 | | | | 5.29 | % | | $ | 526,764 | | | $ | 28,594 | | | | 5.43 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Allowance for loan losses | | | (7,687 | ) | | | | | | | | | | | (6,638 | ) | | | | | | | | |
Total non-earning assets | | | 42,488 | | | | | | | | | | | | 33,673 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total assets | | $ | 541,543 | | | | | | | | | | | $ | 553,799 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Liabilities and Shareholders’ Equity: | | | | | | | | | | | | | | | | | | | | | | | | |
Interest-bearing deposits: | | | | | | | | | | | | | | | | | | | | | | | | |
NOW accounts | | $ | 65,410 | | | $ | 168 | | | | 0.26 | % | | $ | 69,154 | | | $ | 274 | | | | 0.40 | % |
Money market accounts | | | 73,879 | | | | 336 | | | | 0.45 | % | | | 66,819 | | | | 407 | | | | 0.61 | % |
Savings accounts | | | 47,852 | | | | 56 | | | | 0.12 | % | | | 40,570 | | | | 69 | | | | 0.17 | % |
Time deposits: | | | | | | | | | | | | | | | | | | | | | | | | |
$100,000 and more | | | 63,215 | | | | 618 | | | | 0.98 | % | | | 59,944 | | | | 740 | | | | 1.18 | % |
Less than $100,000 | | | 89,987 | | | | 1,261 | | | | 1.40 | % | | | 87,940 | | | | 1,523 | | | | 1.73 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total interest-bearing deposits | | $ | 340,343 | | | $ | 2,439 | | | | 0.72 | % | | $ | 324,427 | | | $ | 2,983 | | | | 0.92 | % |
Federal funds purchased and securities sold under agreements to repurchase | | | 15,742 | | | | 364 | | | | 2.31 | % | | | 15,473 | | | | 387 | | | | 2.50 | % |
Federal Home Loan Bank advances | | | 44,214 | | | | 1,685 | | | | 3.81 | % | | | 56,277 | | | | 1,844 | | | | 3.28 | % |
Trust preferred capital notes | | | 7,217 | | | | 317 | | | | 4.40 | % | | | 7,217 | | | | 316 | | | | 4.38 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total interest-bearing liabilities | | $ | 407,516 | | | $ | 4,805 | | | | 1.18 | % | | $ | 403,394 | | | $ | 5,530 | | | | 1.37 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Noninterest-bearing liabilities: | | | | | | | | | | | | | | | | | | | | | | | | |
Demand deposits | | | 104,041 | | | | | | | | | | | | 93,583 | | | | | | | | | |
Other Liabilities | | | 4,048 | | | | | | | | | | | | 3,114 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total liabilities | | $ | 515,605 | | | | | | | | | | | $ | 500,091 | | | | | | | | | |
Shareholders’ equity | | | 55,938 | | | | | | | | | | | | 53,708 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total liabilities and shareholders’ equity | | $ | 571,543 | | | | | | | | | | | $ | 553,799 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net interest income | | | | | | $ | 23,590 | | | | | | | | | | | $ | 23,064 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net interest spread | | | | | | | | | | | 4.11 | % | | | | | | | | | | | 4.06 | % |
Interest expense as a percent of average earning assets | | | | | | | | | | | 0.90 | % | | | | | | | | | | | 1.05 | % |
Net interest margin | | | | | | | | | | | 4.40 | % | | | | | | | | | | | 4.38 | % |
| (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 | |
| | | 12/31/2011 | | | 9/30/2011 | | | 6/30/2011 | | | 3/31/2011 | | | 12/31/2010 | |
| | | | | |
GAAP Financial Measurements: | | | | | | | | | | | | | | | | | | | | |
Interest Income - Loans | | $ | 5,837 | | | $ | 5,750 | | | $ | 5,711 | | | $ | 5,731 | | | $ | 5,974 | |
Interest Income - Securities and Other Interest-Earnings Assets | | | 1,112 | | | | 1,170 | | | | 1,153 | | | | 1,108 | | | | 1,088 | |
Interest Expense - Deposits | | | 548 | | | | 595 | | | | 635 | | | | 661 | | | | 693 | |
Interest Expense - Other Borrowings | | | 544 | | | | 593 | | | | 623 | | | | 606 | | | | 644 | |
| | | | | | | | | | | | | | | | | | | | |
Total Net Interest Income | | $ | 5,857 | | | $ | 5,732 | | | $ | 5,606 | | | $ | 5,572 | | | $ | 5,725 | |
| | | | | |
Non-GAAP Financial Measurements: | | | | | | | | | | | | | | | | | | | | |
Add: Tax Benefit on Tax-Exempt Interest Income - Loans | | $ | 25 | | | $ | 25 | | | $ | 29 | | | $ | 25 | | | $ | 32 | |
Add: Tax Benefit on Tax-Exempt Interest Income - Securities | | | 189 | | | | 189 | | | | 173 | | | | 168 | | | | 170 | |
| | | | | | | | | | | | | | | | | | | | |
Total Tax Benefit on Tax-Exempt Interest Income | | $ | 214 | | | $ | 214 | | | $ | 202 | | | $ | 193 | | | $ | 202 | |
| | | | | | | | | | | | | | | | | | | | |
Tax-Equivalent Net Interest Income | | $ | 6,071 | | | $ | 5,946 | | | $ | 5,808 | | | $ | 5,765 | | | $ | 5,927 | |
| | | | | | | | | | | | | | | | | | | | |
