Exhibit 99.1
EAGLE FINANCIAL SERVICES, INC. ANNOUNCES
2015 FIRST QUARTER FINANCIAL RESULTS
| | | | |
| Contact: | | Kathleen J. Chappell, Vice President and CFO | | 540-955-2510 |
| | | | kchappell@bankofclarke.com |
BERRYVILLE, VIRGINIA(April 22, 2015) – Eagle Financial Services, Inc. (OTCQX: EFSI), the holding company for Bank of Clarke County, whose divisions include Eagle Investment Group, announces first quarter 2015 financial results. The Company’s common stock trades on the OTC Markets Group’s OTCQX Market under the symbol EFSI.
Financial Highlights:
| | | | | | | | | | | | |
| | | 2015 | | | 2014 | |
Three months ended: | | Q1 | | | Q4 | | | Q1 | |
Net income (000’s) | | $ | 1,455 | | | $ | 2,433 | | | $ | 1,363 | |
Diluted EPS | | $ | 0.42 | | | $ | 0.70 | | | $ | 0.40 | |
Net Interest Margin | | | 4.02 | % | | | 4.00 | % | | | 4.29 | % |
Allowance for loan losses to total loans | | | 1.12 | % | | | 1.08 | % | | | 1.25 | % |
Provision for loan losses | | $ | 133 | | | $ | 350 | | | $ | 283 | |
John R. Milleson, President and CEO, stated“We continue to experience solid growth in our mature markets of Clarke County, Frederick County and the City of Winchester. Our planned growth strategy in Loudoun County has seen the development of three branches in Round Hill, Purcellville and One Loudoun. This most recent branch, located at 44801 Saranac Street in Ashburn, opened in April 2015 and plans are underway for the opening of a branch at 504 East Market Street in Leesburg, Virginia in summer 2015. The execution of this strategy may challenge profits in the near term, not unlike our 1992 expansion into the ‘then’ growth market of Winchester and Frederick County. Growth, however, remains essential to the Company’s sustained profits and shareholder return.”
Income Statement Review
Net income for the quarter ended March 31, 2015 was $1.5 million reflecting a decrease of 40.2% from the quarter ended December 31, 2014 and an increase of 6.8% from the quarter ended March 31, 2014. Net income was $2.4 million for the three month period ended December 31, 2014 and $1.4 million for the quarter ended March 31, 2014. For the quarter ended December 31, 2014, the Company had net gains from the sales of securities of $896,000.
Net interest income was $5.5 million for the quarter ended March 31, 2015 and $5.6 million for the quarter ended December 31, 2014. Net interest income was $5.7 million for the quarter ended March 31, 2014. When comparing the quarter ended March 31, 2015 to the same period in 2014, net interest income was negatively impacted by the deferral of approximately $114,000 in loan fees related to the July 1, 2014 adoption of Accounting Standards Codification 310-20 (Formerly Statement of Financial Accounting Standard 91, Accounting for Nonrefundable Fees and Costs Associated with Originating or Acquiring Loans and Initial Direct Costs of Leases).
Total loan interest income was $5.3 million for the quarter ended March 31, 2015, reflecting a decrease of $76,000 from the quarter ended December 31, 2014. Total loan interest income was $5.3 million for the quarter ended March 31, 2014. Average loans for the quarter ended March 31, 2015 were $466.1 million compared to $470.6 million at December 31, 2014. Total average accruing loans were $458.5 million for the quarter ended March 31, 2015 and $461.6 million at December 31, 2014. For the quarter ended March 31, 2014, total average loans were $447.9 million and average accruing loans were $443.3 million. The tax equivalent yield on average loans for the quarter ended March 31, 2015 was 4.64%, an increase of seven basis points from 4.57% for the quarter ended December 31, 2014 and a decrease of 21 basis points from the 4.85% average yield at March 31, 2014. Interest income from the investment portfolio was $626,000 for the quarter ended March 31, 2015 and $665,000 for the quarter ended December 31, 2014. Average investments were $96.3 million for the quarter ended March 31, 2015 and $95.7 million for the quarter ended December 31, 2014. Average investments were $105.7 million for the quarter ended March 31, 2014 and interest income was $818,000 for that same period.
Total interest expense for the three months ended March 31, 2015 was $398,000, a decrease of $51,000 from the quarter ended December 31, 2014. Total interest expense decreased $97,000 when comparing the quarter ended March 31, 2015 to the same period in 2014. The average cost of interest bearing liabilities decreased four basis points when comparing the quarter ended March 31, 2015 to the quarter ended December 31, 2014. The average balance of interest bearing liabilities decreased $2.4 million from the quarter
ended December 31, 2014. The average cost of interest bearing liabilities decreased 12 basis points when comparing the quarter ended March 31, 2015 to the quarter ended March 31, 2014. The average balance of interest bearing liabilities increased $7.6 million from the quarter ended March 31, 2014. Much of this increase results from the increase in non-maturity deposits as the Bank continues to acquire more deposits in its Loudoun County branches. The Company continues to steadfastly manage the cost of its interest bearing deposits. The combination of these factors has contributed to the decreased balance of interest bearing liabilities and their corresponding cost. The net interest margin was 4.02% for the quarter ended March 31, 2015 and 4.00% for the quarter December 31, 2014. For the quarter ended March 31, 2014 the net interest margin was 4.29%.
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 $1.6 million for the quarter ended March 31, 2015 and $2.2 million for the quarter ended December 31, 2014. Much of the decrease for the quarter results from the decline in net gains from sales of investment securities. There were net gains of $74,000 and $896,000 recognized on the sale of investment securities for the three month periods ended March 31, 2015 and December 31, 2014, respectively. There were no net gains or losses recognized on the sale of investment securities for the quarter ended March 31, 2014. Income from fiduciary activities increased $138,000 or 47.6% from the quarter ended December 31, 2014 and $129,000 or 43.1% from March 31, 2014. This increase mostly results from some one time fees collected during the quarter ended March 31, 2015. Noninterest income for the quarter ended March 31, 2014 was $1.4 million.
Noninterest expense was $5.1 million for the quarter ended March 31, 2015. This represents an increase of $214,000 or 4.4% from $4.8 million for the quarters ended December 31, 2014 and March 31, 2014. The majority of this increase results from the hiring of new employees. The Company has 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. This branch opened in April 2015. The second new branch, located in Leesburg, Virginia, is anticipated to open during the 2015 summer timeframe. To date, three fulltime employees have 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 the first quarter of 2015 to address infrastructure and growth needs.
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 $9.0 million or 1.47% of total assets at March 31, 2015. This decrease resulted mostly from the decreases in nonaccrual loans. Non-performing assets were $8.7 million or 1.45% of total assets at March 31, 2014. During the first quarter of 2015, the Bank returned 11 loans, totaling $1.8 million, to accruing status and placed eight loans totaling $1.6 million on non-accrual status. Other changes to non-accrual loan balances include loan payments and loan charge offs. 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. At March 31, 2015, $1.2 million or 17.8% of total nonaccrual loans had allocated specific allowances totaling $288,000. At March 31, 2015, the Bank had four loans 90 days or more past due and still accruing that totaled $63,000. At December 31, 2014 the Bank had three loans 90 days or more past due and still accruing that totaled $6,000 and at March 31, 2014, one loan totaling $18,000 was 90 days or more past due and still accruing. Other real estate owned increased from $2.1 million at December 31, 2014 to $2.4 million at March 31, 2015. The Company foreclosed on two properties totaling $325,000 during the first quarter of 2015. There was one sale of other real estate owned totally $36,000 during the first quarter of 2015. Other real estate owned totaled $1.8 million at March 31, 2014.
The Company may, under certain circumstances, restructure loans in troubled debt restructurings as a concession to a borrower when the borrower is experiencing financial distress. Formal, standardized loan restructuring programs are not utilized by the Company. Each loan considered for restructuring is evaluated based on customer circumstances and may include modifications to one or more loan provision. Such restructured loans are included in impaired loans but may not necessarily be nonperforming loans. At March 31, 2015, the Company had 25 troubled debt restructurings totaling $7.7 million. All but four of the restructured loans are performing loans.
The Company realized $41,000 in net charge-offs for the quarter ended March 31, 2015 versus $857,000 for the three months ended December 31, 2014. The Company continues to operate a troubled credit group to monitor past due loans, identify potential problem credits, and develop action plans to work through its troubled loans as promptly as possible. Asset quality remains a primary focus of the Company. Necessary resources continue to be devoted to the ongoing review of the loan portfolio and the workouts of problem assets to minimize any losses to the Company. Management will continue to monitor delinquencies, risk rating changes, charge-offs, market trends and other indicators of risk in the Company’s portfolio, particularly those tied to residential and commercial real estate, and adjust the allowance for loan losses accordingly.
The amount of provision for loan losses reflects the results of the Bank’s analysis used to determine the adequacy of the allowance for loan losses. Provisions for loan losses were $133,000 for the three months ended March 31, 2015, compared to $350,000 for the quarter ended December 31, 2014. The provisions for loan losses for the quarter ended March 31, 2014 were $283,000. The ratio of allowance for loan losses to total nonaccrual loans was 78.5% at March 31, 2015 and 47.5% at December 31, 2014. At March 31, 2015, impaired loans totaled $16.8 million and had related specific allocations of $791,000. At December 31, 2014, impaired loans totaled $17.0 million and had related specific allocations of $643,000. At March 31, 2014, total impaired loans were $12.7 million and required specific allocations of $1.5 million.
Total Consolidated Assets
Total consolidated assets of the Company at March 31, 2015 were $613.7 million, which represented a decrease of $13.1 million or 2.1% from total assets of $626.8 million at December 31, 2014. At March 31, 2014, total consolidated assets were $595.6 million. Securities available for sale increased $2.1 million from $97.0 million at December 31, 2014. Total loans decreased from $469.8 million at December 31, 2014 to $461.4 million at March 31, 2015. Although loan demand has remained relatively steady, the Company experienced some large unscheduled loan payoffs during the first quarter of 2015. At March 31, 2014, total investment securities were $106.3 million and total loans were $456.3 million.
Deposits and Other Borrowings
Total deposits, which include brokered deposits, increased $5.9 million from $503.8 million at December 31, 2014 to $509.7 million at March 31, 2015. At March 31, 2014, total deposits were $483.1 million. The Company held $11.0 million in brokered deposits at March 31, 2015 and December 31, 2014. At March 31, 2014, the Company held $9.9 million in brokered deposits.
There were no Federal funds purchased balances at March 31, 2015 and December 31, 2014. At March 31, 2014, Federal funds purchased were $4.6 million. Borrowings with the Federal Home Loan Bank of Atlanta decreased $20.0 million from December 31, 2014 with the maturity of two $10.0 million advances in January and March 2015. Borrowings with the Federal Home Loan Bank of Atlanta decreased $10.0 million from March 31, 2014.
Equity
Shareholders’ equity at March 31, 2015 was $74.5 million and $73.1 million at December 31, 2014. Shareholder’s equity was $68.0 million at March 31, 2014. The book value of the Company at March 31, 2015 was $21.49 per common share. Total common shares outstanding were 3,481,774 at March 31, 2015. On April 15, 2014, the board of directors declared a $0.20 per common share cash dividend for shareholders of record as of April 29, 2015 and payable on May 15, 2015.
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 | |
| | | 1Q15 | | | 4Q14 | | | 3Q14 | | | 2Q14 | | | 1Q14 | |
| | | | | |
Net Income(dollars in thousands) | | $ | 1,455 | | | $ | 2,434 | | | $ | 1,386 | | | $ | 1,958 | | | $ | 1,363 | |
Earnings per share, basic | | $ | 0.42 | | | $ | 0.71 | | | $ | 0.40 | | | $ | 0.57 | | | $ | 0.40 | |
Earnings per share, diluted | | $ | 0.42 | | | $ | 0.70 | | | $ | 0.40 | | | $ | 0.57 | | | $ | 0.40 | |
| | | | | |
Return on average total assets | | | 0.96 | % | | | 1.57 | % | | | 0.91 | % | | | 1.31 | % | | | 0.95 | % |
Return on average total equity | | | 8.03 | % | | | 13.43 | % | | | 7.77 | % | | | 11.37 | % | | | 8.22 | % |
Dividend payout ratio | | | 47.80 | % | | | 28.17 | % | | | 50.00 | % | | | 33.33 | % | | | 47.50 | % |
Fee revenue as a percent of total revenue | | | 20.56 | % | | | 15.90 | % | | | 18.92 | % | | | 20.19 | % | | | 18.34 | % |
| | | | | |
Net interest margin(1) | | | 4.02 | % | | | 4.00 | % | | | 4.18 | % | | | 4.32 | % | | | 4.29 | % |
Yield on average earning assets | | | 4.30 | % | | | 4.31 | % | | | 4.51 | % | | | 4.67 | % | | | 4.65 | % |
Yield on average interest-bearing liabilities | | | 0.42 | % | | | 0.46 | % | | | 0.50 | % | | | 0.51 | % | | | 0.54 | % |
Net interest spread | | | 3.88 | % | | | 3.85 | % | | | 4.01 | % | | | 4.16 | % | | | 4.11 | % |
Tax equivalent adjustment to net interest income (dollars in thousands) | | $ | 161 | | | $ | 173 | | | $ | 171 | | | $ | 164 | | | $ | 169 | |
| | | | | |
Non-interest income to average assets | | | 1.07 | % | | | 1.43 | % | | | 0.97 | % | | | 1.04 | % | | | 0.94 | % |
Non-interest expense to average assets | | | 3.32 | % | | | 3.12 | % | | | 3.27 | % | | | 3.32 | % | | | 3.37 | % |
| | | | | |
Efficiency ratio(2) | | | 68.98 | % | | | 60.57 | % | | | 71.91 | % | | | 65.09 | % | | | 67.50 | % |
| (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
| | | | | | | | | | | | | | | | | | | | |
| | | 1Q15 | | | 4Q14 | | | 3Q14 | | | 2Q14 | | | 1Q14 | |
BALANCE SHEET RATIOS | | | | | | | | | | | | | | | | | | | | |
Loans to deposits | | | 90.52 | % | | | 93.25 | % | | | 93.93 | % | | | 94.36 | % | | | 94.49 | % |
Average interest-earning assets to average-interest bearing liabilities | | | 151.49 | % | | | 166.86 | % | | | 148.74 | % | | | 147.29 | % | | | 147.83 | % |
PER SHARE DATA | | | | | | | | | | | | | | | | | | | | |
Dividends | | $ | 0.20 | | | $ | 0.20 | | | $ | 0.20 | | | $ | 0.19 | | | $ | 0.19 | |
Book value | | $ | 21.49 | | | $ | 21.01 | | | $ | 20.74 | | | $ | 20.51 | | | $ | 19.97 | |
Tangible book value | | $ | 21.49 | | | $ | 21.01 | | | $ | 20.74 | | | $ | 20.51 | | | $ | 19.97 | |
SHARE PRICE DATA | | | | | | | | | | | | | | | | | | | | |
Closing price | | $ | 24.50 | | | $ | 23.30 | | | $ | 23.65 | | | $ | 23.60 | | | $ | 23.00 | |
Diluted earnings multiple(1) | | | 14.58 | | | | 8.32 | | | | 14.78 | | | | 10.35 | | | | 14.38 | |
Book value multiple(2) | | | 1.14 | | | | 1.11 | | | | 1.14 | | | | 1.15 | | | | 1.15 | |
COMMON STOCK DATA | | | | | | | | | | | | | | | | | | | | |
Outstanding shares at end of period | | | 3,481,774 | | | | 3,463,665 | | | | 3,454,336 | | | | 3,445,727 | | | | 3,417,832 | |
Weighted average shares outstanding | | | 3,477,249 | | | | 3,459,096 | | | | 3,451,041 | | | | 3,428,699 | | | | 3,413,920 | |
Weighted average shares outstanding, diluted | | | 3,485,450 | | | | 3,468,904 | | | | 3,460,186 | | | | 3,436,903 | | | | 3,420,933 | |
CAPITAL RATIOS | | | | | | | | | | | | | | | | | | | | |
Total equity to total assets | | | 12.15 | % | | | 11.67 | % | | | 11.76 | % | | | 11.67 | % | | | 11.42 | % |
CREDIT QUALITY | | | | | | | | | | | | | | | | | | | | |
Net charge-offs to average loans | | | 0.04 | % | | | 0.72 | % | | | 0.24 | % | | | -0.38 | % | | | 0.05 | % |
Total non-performing loans to total loans | | | 1.44 | % | | | 2.28 | % | | | 1.86 | % | | | 1.37 | % | | | 1.50 | % |
Total non-performing assets to total assets | | | 1.47 | % | | | 2.04 | % | | | 1.70 | % | | | 1.38 | % | | | 1.45 | % |
Non-accrual loans to: | | | | | | | | | | | | | | | | | | | | |
total loans | | | 1.43 | % | | | 2.28 | % | | | 1.86 | % | | | 1.37 | % | | | 1.50 | % |
total assets | | | 1.07 | % | | | 1.71 | % | | | 1.42 | % | | | 1.06 | % | | | 1.15 | % |
Allowance for loan losses to: | | | | | | | | | | | | | | | | | | | | |
total loans | | | 1.12 | % | | | 1.08 | % | | | 1.20 | % | | | 1.26 | % | | | 1.25 | % |
non-performing assets | | | 57.17 | % | | | 39.64 | % | | | 54.31 | % | | | 70.56 | % | | | 66.08 | % |
non-accrual loans | | | 78.45 | % | | | 47.45 | % | | | 64.75 | % | | | 92.40 | % | | | 83.77 | % |
NON-PERFORMING ASSETS: | | | | | | | | | | | | | | | | | | | | |
(dollars in thousands) | | | | | | | | | | | | | | | | | | | | |
Loans delinquent over 90 days | | $ | 63 | | | $ | 6 | | | $ | 16 | | | $ | — | | | $ | 18 | |
Non-accrual loans | | | 6,593 | | | | 10,706 | | | | 8,628 | | | | 6,354 | | | | 6,825 | |
Other real estate owned and repossessed assets | | | 2,391 | | | | 2,102 | | | | 1,644 | | | | 1,967 | | | | 1,809 | |
NET LOAN CHARGE-OFFS (RECOVERIES): | | | | | | | | | | | | | | | | | | | | |
(dollars in thousands) | | | | | | | | | | | | | | | | | | | | |
Loans charged off | | $ | 131 | | | $ | 967 | | | $ | 310 | | | $ | 114 | | | $ | 91 | |
(Recoveries) | | | (90 | ) | | | (110 | ) | | | (26 | ) | | | (551 | ) | | | (37 | ) |
Net charge-offs (recoveries) | | | 41 | | | | 857 | | | | 284 | | | | (437 | ) | | | 54 | |
PROVISION FOR LOAN LOSSES (dollars in thousands) | | $ | 133 | | | $ | 350 | | | $ | — | | | $ | (283 | ) | | $ | 283 | |
ALLOWANCE FOR LOAN LOSS SUMMARY | | | | | | | | | | | | | | | | | | | | |
(dollars in thousands) | | | | | | | | | | | | | | | | | | | | |
Balance at the beginning of period | | $ | 5,080 | | | $ | 5,587 | | | $ | 5,871 | | | $ | 5,717 | | | $ | 5,488 | |
Provision | | | 133 | | | | 350 | | | | — | | | | (283 | ) | | | 283 | |
Net charge-offs (recoveries) | | | 41 | | | | 857 | | | | 284 | | | | (437 | ) | | | 54 | |
Balance at the end of period | | $ | 5,172 | | | $ | 5,080 | | | $ | 5,587 | | | $ | 5,871 | | | $ | 5,717 | |
| (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
3/31/2015 | | | Audited
12/31/2014 | | | Unaudited
9/30/2014 | | | Unaudited
6/30/2014 | | | Unaudited
3/31/2014 | |
| | | | | |
Assets | | | | | | | | | | | | | | | | | | | | |
Cash and due from banks | | $ | 26,374 | | | $ | 34,564 | | | $ | 15,338 | | | $ | 12,405 | | | $ | 10,440 | |
Federal funds sold | | | — | | | | — | | | | — | | | | — | | | | — | |
Securities available for sale, at fair value | | | 99,092 | | | | 96,973 | | | | 101,380 | | | | 102,644 | | | | 106,308 | |
Loans, net of allowance for loan losses | | | 456,221 | | | | 464,740 | | | | 459,481 | | | | 458,447 | | | | 450,755 | |
Bank premises and equipment, net | | | 20,071 | | | | 19,015 | | | | 18,529 | | | | 17,115 | | | | 17,132 | |
Other assets | | | 11,983 | | | | 11,538 | | | | 11,488 | | | | 11,129 | | | | 11,003 | |
| | | | | | | | | | | | | | | | | | | | |
Total assets | | $ | 613,741 | | | $ | 626,830 | | | $ | 606,216 | | | $ | 601,740 | | | $ | 595,638 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
Liabilities and Shareholders’ Equity | | | | | | | | | | | | | | | | | | | | |
Liabilities | | | | | | | | | | | | | | | | | | | | |
Deposits: | | | | | | | | | | | | | | | | | | | | |
Noninterest bearing demand deposits | | $ | 166,085 | | | $ | 159,352 | | | $ | 151,961 | | | $ | 147,992 | | | $ | 146,517 | |
Savings and interest bearing demand deposits | | | 249,783 | | | | 249,305 | | | | 248,736 | | | | 248,123 | | | | 239,285 | |
Time deposits | | | 93,836 | | | | 95,159 | | | | 94,439 | | | | 95,931 | | | | 97,302 | |
| | | | | | | | | | | | | | | | | | | | |
Total deposits | | $ | 509,704 | | | $ | 503,816 | | | $ | 495,136 | | | $ | 492,046 | | | $ | 483,104 | |
Federal funds purchased and securities sold under agreements to repurchase | | | — | | | | — | | | | — | | | | — | | | | 4,589 | |
Federal Home Loan Bank advances | | | 20,000 | | | | 40,000 | | | | 30,000 | | | | 30,000 | | | | 30,000 | |
Trust preferred capital notes | | | 7,217 | | | | 7,217 | | | | 7,217 | | | | 7,217 | | | | 7,217 | |
Other liabilities | | | 2,273 | | | | 2,665 | | | | 2,602 | | | | 2,255 | | | | 2,706 | |
Commitments and contingent liabilities | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | |
Total liabilities | | $ | 539,194 | | | $ | 553,698 | | | $ | 534,955 | | | $ | 531,518 | | | $ | 527,616 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
Shareholders’ Equity | | | | | | | | | | | | | | | | | | | | |
Preferred stock, $10 par value | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
Common stock, $2.50 par value | | | 8,658 | | | | 8,621 | | | | 8,588 | | | | 8,561 | | | | 8,517 | |
Surplus | | | 12,828 | | | | 12,618 | | | | 12,312 | | | | 11,995 | | | | 11,693 | |
Retained earnings | | | 51,338 | | | | 50,578 | | | | 48,834 | | | | 48,104 | | | | 46,797 | |
Accumulated other comprehensive income | | | 1,723 | | | | 1,315 | | | | 1,527 | | | | 1,562 | | | | 1,015 | |
| | | | | | | | | | | | | | | | | | | | |
Total shareholders’ equity | | $ | 74,547 | | | $ | 73,132 | | | $ | 71,261 | | | $ | 70,222 | | | $ | 68,022 | |
| | | | | | | | | | | | | | | | | | | | |
Total liabilities and shareholders’ equity | | $ | 613,741 | | | $ | 626,830 | | | $ | 606,216 | | | $ | 601,740 | | | $ | 595,638 | |
| | | | | | | | | | | | | | | | | | | | |
EAGLE FINANCIAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands)
Unaudited
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | Three Months Ended | | | | |
| | | 3/31/2015 | | | 12/31/2014 | | | 9/30/2014 | | | 6/30/2014 | | | 3/31/2014 | |
| | | | | |
Interest and Dividend Income | | | | | | | | | | | | | | | | | | | | |
Interest and fees on loans | | $ | 5,301 | | | $ | 5,377 | | | $ | 5,397 | | | $ | 5,589 | | | $ | 5,331 | |
Interest on federal funds sold | | | — | | | | — | | | | — | | | | — | | | | — | |
Interest and dividends on securities available for sale: | | | | | | | | | | | | | | | | | | | | |
Taxable interest income | | | 376 | | | | 378 | | | | 458 | | | | 482 | | | | 507 | |
Interest income exempt from federal income taxes | | | 243 | | | | 261 | | | | 270 | | | | 278 | | | | 286 | |
Dividends | | | 7 | | | | 26 | | | | 126 | | | | 46 | | | | 25 | |
Interest on deposits in banks | | | 11 | | | | 8 | | | | 3 | | | | 1 | | | | 1 | |
| | | | | | | | | | | | | | | | | | | | |
Total interest and dividend income | | $ | 5,938 | | | $ | 6,050 | | | $ | 6,254 | | | $ | 6,396 | | | $ | 6,150 | |
| | | | | | | | | | | | | | | | | | | | |
Interest Expense | | | | | | | | | | | | | | | | | | | | |
Interest on deposits | | $ | 185 | | | $ | 194 | | | $ | 241 | | | $ | 245 | | | $ | 244 | |
Interest on federal funds purchased and securities sold under agreements to repurchase | | | — | | | | — | | | | — | | | | 7 | | | | 13 | |
Interest on Federal Home Loan Bank advances | | | 135 | | | | 175 | | | | 159 | | | | 158 | | | | 159 | |
Interest on trust preferred capital notes | | | 78 | | | | 80 | | | | 80 | | | | 78 | | | | 79 | |
| | | | | | | | | | | | | | | | | | | | |
Total interest expense | | $ | 398 | | | $ | 449 | | | $ | 480 | | | $ | 488 | | | $ | 495 | |
| | | | | | | | | | | | | | | | | | | | |
Net interest income | | $ | 5,540 | | | $ | 5,601 | | | $ | 5,774 | | | $ | 5,908 | | | $ | 5,655 | |
Provision For Loan Losses | | | 133 | | | | 350 | | | | — | | | | (283 | ) | | | 283 | |
| | | | | | | | | | | | | | | | | | | | |
Net interest income after provision for loan losses | | $ | 5,407 | | | $ | 5,251 | | | $ | 5,774 | | | $ | 6,191 | | | $ | 5,372 | |
| | | | | | | | | | | | | | | | | | | | |
Noninterest Income | | | | | | | | | | | | | | | | | | | | |
Income from fiduciary activities | | $ | 428 | | | $ | 290 | | | $ | 211 | | | $ | 362 | | | $ | 299 | |
Service charges on deposit accounts | | | 290 | | | | 339 | | | | 332 | | | | 319 | | | | 333 | |
Other service charges and fees | | | 756 | | | | 687 | | | | 828 | | | | 827 | | | | 653 | |
Gain on the sale of bank premises and equipment | | | — | | | | (14 | ) | | | — | | | | — | | | | — | |
Gain (Loss) on sales of AFS securities | | | 74 | | | | 896 | | | | 88 | | | | 6 | | | | — | |
Other operating income | | | 81 | | | | 23 | | | | 15 | | | | 46 | | | | 66 | |
| | | | | | | | | | | | | | | | | | | | |
Total noninterest income | | $ | 1,629 | | | $ | 2,221 | | | $ | 1,474 | | | $ | 1,560 | | | $ | 1,351 | |
| | | | | | | | | | | | | | | | | | | | |
Noninterest Expenses | | | | | | | | | | | | | | | | | | | | |
Salaries and employee benefits | | $ | 2,995 | | | $ | 2,660 | | | $ | 3,016 | | | $ | 2,926 | | | $ | 2,825 | |
Occupancy expenses | | | 346 | | | | 317 | | | | 319 | | | | 307 | | | | 337 | |
Equipment expenses | | | 146 | | | | 174 | | | | 197 | | | | 167 | | | | 182 | |
Advertising and marketing expenses | | | 119 | | | | 155 | | | | 159 | | | | 126 | | | | 132 | |
Stationery and supplies | | | 51 | | | | 69 | | | | 73 | | | | 74 | | | | 90 | |
ATM network fees | | | 158 | | | | 180 | | | | 175 | | | | 201 | | | | 157 | |
Other real estate owned expenses | | | 6 | | | | 12 | | | | 4 | | | | 6 | | | | 4 | |
(Gain) loss on sale of other real estate | | | 19 | | | | (77 | ) | | | 13 | | | | (17 | ) | | | — | |
FDIC assessment | | | 108 | | | | 95 | | | | 95 | | | | 86 | | | | 81 | |
Computer software expense | | | 221 | | | | 208 | | | | 252 | | | | 213 | | | | 199 | |
Bank franchise tax | | | 117 | | | | 123 | | | | 124 | | | | 117 | | | | 102 | |
Professional fees | | | 242 | | | | 226 | | | | 290 | | | | 254 | | | | 217 | |
Other operating expenses | | | 529 | | | | 701 | | | | 617 | | | | 506 | | | | 517 | |
| | | | | | | | | | | | | | | | | | | | |
Total noninterest expenses | | $ | 5,057 | | | $ | 4,843 | | | $ | 5,334 | | | $ | 4,966 | | | $ | 4,843 | |
| | | | | | | | | | | | | | | | | | | | |
Income before income taxes | | | 1,979 | | | | 2,629 | | | | 1,914 | | | | 2,785 | | | $ | 1,880 | |
Income Tax Expense | | | 524 | | | | 196 | | | | 528 | | | | 827 | | | | 517 | |
| | | | | | | | | | | | | | | | | | | | |
Net income | | $ | 1,455 | | | $ | 2,433 | | | $ | 1,386 | | | $ | 1,958 | | | $ | 1,363 | |
| | | | | | | | | | | | | | | | | | | | |
Earnings Per Share | | | | | | | | | | | | | | | | | | | | |
Net income per common share, basic | | $ | 0.42 | | | $ | 0.71 | | | $ | 0.40 | | | $ | 0.57 | | | $ | 0.40 | |
| | | | | | | | | | | | | | | | | | | | |
Net income per common share, diluted | | $ | 0.42 | | | $ | 0.70 | | | $ | 0.40 | | | $ | 0.57 | | | $ | 0.40 | |
| | | | | | | | | | | | | | | | | | | | |
EAGLE FINANCIAL SERVICES, INC.
Average Balances, Income and Expenses, Yields and Rates
(dollars in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | For the Three Months Ended | |
| | | March 31, 2015 | | | December 31, 2014 | | | March 31, 2014 | |
| | | Average
Balance | | | Interest
Income/
Expense | | | Average
Yield | | | Average
Balance | | | Interest
Income/
Expense | | | Average
Yield | | | Average
Balance | | | Interest
Income/
Expense | | | Average
Yield | |
Assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Securities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Taxable | | $ | 64,715 | | | $ | 1,553 | | | | 2.40 | % | | $ | 62,502 | | | $ | 1,599 | | | | 2.56 | % | | $ | 70,873 | | | $ | 2,154 | | | | 3.04 | % |
Tax-Exempt(1) | | | 31,608 | | | | 1,493 | | | | 4.72 | % | | | 33,170 | | | | 1,572 | | | | 4.74 | % | | | 34,855 | | | | 1,759 | | | | 5.05 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Securities | | $ | 96,323 | | | $ | 3,046 | | | | 3.16 | % | | $ | 95,672 | | | $ | 3,171 | | | | 3.31 | % | | $ | 105,728 | | | $ | 3,913 | | | | 3.70 | % |
Loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Taxable | | $ | 450,701 | | | $ | 21,211 | | | | 4.71 | % | | $ | 453,699 | | | $ | 21,039 | | | | 4.64 | % | | $ | 439,069 | | | $ | 21,454 | | | | 4.89 | % |
Nonaccrual | | | 7,605 | | | | — | | | | 0.00 | % | | | 8,982 | | | | — | | | | 0.00 | % | | | 4,591 | | | | — | | | | 0.00 | % |
Tax-Exempt(1) | | | 7,765 | | | | 436 | | | | 5.62 | % | | | 7,918 | | | | 447 | | | | 5.64 | % | | | 4,263 | | | | 253 | | | | 5.94 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Loans | | $ | 466,071 | | | $ | 21,647 | | | | 4.64 | % | | $ | 470,599 | | | $ | 21,486 | | | | 4.57 | % | | $ | 447,923 | | | $ | 21,707 | | | | 4.85 | % |
Federal funds sold | | | — | | | | — | | | | 0.00 | % | | | — | | | | — | | | | 0.00 | % | | | — | | | | — | | | | 0.00 | % |
Interest-bearing deposits in other banks | | | 21,140 | | | | 45 | | | | 0.21 | % | | | 15,400 | | | | 32 | | | | 0.21 | % | | | 1,655 | | | | 4 | | | | 0.25 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total earning assets | | $ | 575,929 | | | $ | 24,738 | | | | 4.30 | % | | $ | 572,689 | | | $ | 24,688 | | | | 4.31 | % | | $ | 550,715 | | | $ | 25,624 | | | | 4.65 | % |
Allowance for loan losses | | | (5,194 | ) | | | | | | | | | | | (5,564 | ) | | | | | | | | | | | (5,724 | ) | | | | | | | | |
Total non-earning assets | | | 47,150 | | | | | | | | | | | | 48,061 | | | | | | | | | | | | 38,320 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total assets | | $ | 617,885 | | | | | | | | | | | $ | 615,186 | | | | | | | | | | | $ | 583,311 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
Liabilities and Shareholders’ Equity: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest-bearing deposits: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
NOW accounts | | $ | 79,846 | | | $ | 85 | | | | 0.11 | % | | $ | 79,159 | | | $ | 79 | | | | 0.10 | % | | $ | 83,606 | | | $ | 93 | | | | 0.11 | % |
Money market accounts | | | 96,200 | | | | 110 | | | | 0.11 | % | | | 98,633 | | | | 111 | | | | 0.11 | % | | | 91,587 | | | | 105 | | | | 0.12 | % |
Savings accounts | | | 72,723 | | | | 37 | | | | 0.05 | % | | | 70,036 | | | | 40 | | | | 0.06 | % | | | 64,392 | | | | 32 | | | | 0.05 | % |
Time deposits: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
$100,000 and more | | | 35,303 | | | | 170 | | | | 0.48 | % | | | 35,548 | | | | 171 | | | | 0.48 | % | | | 35,973 | | | | 187 | | | | 0.52 | % |
Less than $100,000 | | | 59,440 | | | | 345 | | | | 0.58 | % | | | 59,846 | | | | 369 | | | | 0.62 | % | | | 62,538 | | | | 572 | | | | 0.91 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total interest-bearing deposits | | $ | 343,512 | | | $ | 746 | | | | 0.22 | % | | $ | 343,222 | | | | 770 | | | | 0.22 | % | | $ | 338,096 | | | $ | 990 | | | | 0.29 | % |
Federal funds purchased and securities sold under agreements to repurchase | | | 0 | | | | 0 | | | | 0.00 | % | | | 0 | | | | 0 | | | | 0.00 | % | | | 4,238 | | | | 53 | | | | 1.24 | % |
Federal Home Loan Bank advances | | | 29,444 | | | | 548 | | | | 1.86 | % | | | 32,174 | | | | 690 | | | | 2.15 | % | | | 22,986 | | | | 645 | | | | 2.81 | % |
Trust preferred capital notes | | | 7,217 | | | | 316 | | | | 4.38 | % | | | 7,217 | | | | 317 | | | | 4.40 | % | | | 7,217 | | | | 316 | | | | 4.38 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total interest-bearing liabilities | | $ | 380,173 | | | $ | 1,610 | | | | 0.42 | % | | $ | 382,613 | | | | 1,777 | | | | 0.46 | % | | $ | 372,537 | | | $ | 2,003 | | | | 0.54 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Noninterest-bearing liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Demand deposits | | | 161,381 | | | | | | | | | | | | 157,652 | | | | | | | | | | | | 142,267 | | | | | | | | | |
Other Liabilities | | | 2,823 | | | | | | | | | | | | 3,032 | | | | | | | | | | | | 1,280 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total liabilities | | $ | 544,377 | | | | | | | | | | | $ | 543,297 | | | | | | | | | | | $ | 516,084 | | | | | | | | | |
Shareholders’ equity | | | 73,508 | | | | | | | | | | | | 71,889 | | | | | | | | | | | | 67,227 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total liabilities and shareholders’ equity | | $ | 617,885 | | | | | | | | | | | $ | 615,186 | | | | | | | | | | | $ | 583,311 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net interest income | | | | | | $ | 23,128 | | | | | | | | | | | $ | 22,911 | | | | | | | | | | | $ | 23,620 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
Net interest spread | | | | | | | | | | | 3.88 | % | | | | | | | | | | | 3.85 | % | | | | | | | | | | | 4.12 | % |
Interest expense as a percent of average earning assets | | | | | | | | | | | 0.28 | % | | | | | | | | | | | 0.31 | % | | | | | | | | | | | 0.36 | % |
Net interest margin | | | | | | | | | | | 4.02 | % | | | | | | | | | | | 4.00 | % | | | | | | | | | | | 4.29 | % |
| (1) | Income and yields are reported on a tax equivalent basis using a federal tax rate of 34%. |
EAGLE FINANCIAL SERVICES, INC.
Reconciliation of Tax-Equivalent Net Interest Income
(dollars in thousands)
| | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended | |
| | | 3/31/2015 | | | 12/31/2014 | | | 9/30/2014 | | | 6/30/2014 | | | 3/31/2014 | |
| | | | | |
GAAP Financial Measurements: | | | | | | | | | | | | | | | | | | | | |
Interest Income - Loans | | $ | 5,301 | | | $ | 5,377 | | | $ | 5,397 | | | $ | 5,589 | | | $ | 5,331 | |
Interest Income - Securities and Other Interest-Earnings Assets | | | 637 | | | | 673 | | | | 857 | | | | 806 | | | | 819 | |
Interest Expense - Deposits | | | 184 | | | | 194 | | | | 242 | | | | 244 | | | | 244 | |
Interest Expense - Other Borrowings | | | 213 | | | | 254 | | | | 239 | | | | 245 | | | | 251 | |
| | | | | | | | | | | | | | | | | | | | |
Total Net Interest Income | | $ | 5,541 | | | $ | 5,602 | | | $ | 5,773 | | | $ | 5,906 | | | $ | 5,655 | |
| | | | | |
Non-GAAP Financial Measurements: | | | | | | | | | | | | | | | | | | | | |
Add: Tax Benefit on Tax-Exempt Interest Income - Loans | | $ | 36 | | | $ | 38 | | | $ | 32 | | | $ | 21 | | | $ | 21 | |
Add: Tax Benefit on Tax-Exempt Interest Income - Securities | | | 125 | | | | 135 | | | | 139 | | | | 143 | | | | 148 | |
| | | | | | | | | | | | | | | | | | | | |
Total Tax Benefit on Tax-Exempt Interest Income | | $ | 161 | | | $ | 173 | | | $ | 171 | | | $ | 164 | | | $ | 169 | |
| | | | | | | | | | | | | | | | | | | | |
Tax-Equivalent Net Interest Income | | $ | 5,702 | | | $ | 5,775 | | | $ | 5,944 | | | $ | 6,070 | | | $ | 5,824 | |
| | | | | | | | | | | | | | | | | | | | |
