Exhibit 99.1
EAGLE FINANCIAL SERVICES, INC. ANNOUNCES
2015 THIRD QUARTER FINANCIAL RESULTS
AND QUARTERLY DIVIDEND
| Contact: | Kathleen J. Chappell, Vice President and CFO | 540-955-2510 | ||
| kchappell@bankofclarke.com |
BERRYVILLE, VIRGINIA(October 23, 2015) – Eagle Financial Services, Inc. (OTCQX:EFSI), the holding company for Bank of Clarke County, whose divisions include Eagle Investment Group, reported record quarterly earnings and continued strong financial performance. The Board of Directors announced a quarterly common stock cash dividend of $0.20 per common share, payable on November 18, 2015, to shareholders of record on November 4, 2015. Select highlights for the third quarter include:
| • | Net income of $3.3 million |
| • | Net interest margin of 4.07% |
| • | ALLL 1.05% of total loans |
| • | Nonperforming assets down 17.40% |
John R. Milleson, President and CEO, stated “Although the quarter’s earnings greatly benefited from some large one-time transactions, core earnings remain a very solid contributor to the Company’s overall profits. We are pleased with the steady balance sheet growth that we have experienced thus far for 2015 and are confident that we will continue with similar progress as we settle into our new markets in Loudoun County.”
Income Statement Review
Net income was $3.3 million for the third quarter of 2015, up $1.9 million from the same period one year ago and up $2.5 million from the previous quarter ended June 30, 2015. These increases were primarily the result of the $2.4 million net gain realized on the redemption of outstanding trust preferred capital notes. On July 29, 2015, the pool to which the Company’s $7.0 million in outstanding trust preferred capital notes belonged was liquidated by means of auction. The Company was successful in purchasing the outstanding notes at a price of 65.375% of par or $4.6 million in cash. The quarterly annualized return on average equity (ROE) was 17.26%, and the quarterly return on average assets (ROA) was 2.20%. Quarterly diluted earnings per share increased to $0.94, compared to $0.23 in the previous quarter and $0.40 for the same quarter in 2014.
Net interest income for the quarter ended September 30, 2015 increased 2.59% to $5.9 million when compared to the $5.8 million for the quarter ended June 30, 2015. Net interest income was $5.8 million for the quarter ended September 30, 2014.
Total loan interest income was $5.5 million for the quarter ended September 30, 2015 and $5.4 million for the quarter ended June 30, 2015. Average loans for the quarter ended September 30, 2015 were $488.5 million compared to $470.6 million for the quarter ended June 30, 2015. Total average accruing loans were $482.5 million for the three months ended September 30, 2015 and $463.8 million for the quarter ended June 30, 2015. For the third quarter of 2014, total average loans were $464.8 million and average accruing loans were $457.6 million. The tax equivalent yield on average loans for the quarter ended September 30, 2015 was 4.52%, down eight basis points from 4.60% for the quarter ended June 30, 2015 and down 11basis points from 4.63% for the same quarter in 2014. Interest income from the investment portfolio was $723,000 for the quarter ended September 30, 2015 and $678,000 for the quarter ended June 30, 2015. Average investments were $107.4 million for the quarter ended September 30, 2015 and $103.0 million for the quarter ended June 30, 2015. Interest income from the investment portfolio was $854,000 while average investments were $102.1 million for the quarter ended September 30, 2014.
Total interest expense was $321,000 for the three months ended September 30, 2015 and $327,000 for the same period ended June 30, 2015. The average cost of interest bearing liabilities decreased two basis points when comparing the quarter ended September 30, 2015 to the quarter ended June 30, 2015. The average balance of interest bearing liabilities increased $10.3 million from the quarter ended June 30, 2015. The net interest margin was 4.07% for the quarter ended September 30, 2015 and 4.08% for the quarter ended June 30, 2015. For the quarter ended September 30, 2014, total interest expense was $480,000 and the net interest margin was 4.18%. Declining asset yields have continued to pressure the Company’s net interest margin.
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 increased $2.2 million to $3.8 million for the quarter ended September 30, 2015 when compared to $1.6 million for the three months ended June 30, 2015. This increase resulted mostly from the $2.4 million net gain realized on the redemption of outstanding trust preferred capital notes. On July 29, 2015, the pool to which the Company’s $7.0 million in outstanding trust preferred capital notes belonged was liquidated by means of auction. The Company was successful in purchasing the outstanding notes at a price of 65.375% of par or $4.6 million in cash. Noninterest income for the quarter ended September 30, 2014 was $1.5 million.
Noninterest expense was $5.5 million for the quarter ended September 30, 2015. This represents a decrease of $614,000 or 10.01% from $6.1 million for the quarter ended June 30, 2015. On June 10, 2015, the Company purchased the land on which one of its retail branches resided. The land was purchased subject to an existing lease and subsequently recorded at market value, resulting in a $520,000 write down of the total purchase price. Noninterest expense increased $183,000 or 3.43% when compared to $5.3 million for the quartered ended September 30, 2014. Much of this increase relates to increased salary, occupancy and equipment expense resulting from two additional retail branches.
Asset Quality and Provision for Loan Losses
Nonperforming assets consist of loans 90 days past due and still accruing interest, nonaccrual loans, other real estate owned (foreclosed properties), and repossessed assets. Nonperforming assets decreased from $9.1 million or 1.44% of total assets at June 30, 2015 to $7.5 million or 1.18% of total assets at September 30, 2015. This decrease resulted mostly from the decrease in non-accrual loans. During the third quarter of 2015, three nonaccrual loans totaling $730,000 were returned to accruing status, two nonaccrual loans totaling $320,000 were paid off and one nonaccrual loan in the amount of $46,000 was charged off. Additionally, during the quarter ended September 30, 2015, two loans totaling $195,000 were placed on nonaccrual status. The majority of the non-accrual loans are secured by real estate. Management regularly evaluates the financial condition of borrowers with loans on non-accrual status 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 non-accrual loans. One real estate asset had been foreclosed upon during the third quarter of 2015 while two were sold during that same period. Loans greater than 90 days past due and still accruing decreased from $68,000 at June 30, 2015 to $1,000 at September 30, 2015. Nonperforming assets were $10.3 million or 1.70% of total assets at September 30, 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 September 30, 2015, the Company had 23 troubled debt restructurings totaling $7.8 million. Approximately $7.2 million or 22 loans are performing loans, while the remaining loan is on non-accrual status.
The Company realized $38,000 in net recoveries for the quarter ended September 30, 2015 versus net recoveries of $64,000 for the three months ended June 30, 2015. The Company’s troubled credit group continues to monitor past due loans, identify potential problem credits, and develop action plans to work through its troubled loans as promptly as possible. Net charge offs for the quarter ended September 30, 2014 were $284,000.
The Company recognized a negative provision for loan losses of $410,000 for the quarter ended September 30, 2015. The quarter’s negative provision primarily resulted from the decrease in required specific allocations for impaired loans. The amount of provision for loan losses during each quarter reflects the results of the Bank’s analysis used to determine the adequacy of the allowance for loan losses. Management’s judgment in determining the level of the allowance is based on evaluations of the collectability of loans while taking into consideration such factors as trends in delinquencies and charge-offs, changes in the nature and volume of the loan portfolio, current economic conditions that may affect a borrower’s ability to repay and the value of collateral, overall portfolio quality and review of specific potential losses. The Company is committed to maintaining an allowance at a level that adequately reflects the risk inherent in the loan portfolio. A provision for loan losses of $300,000 was recorded for the three months ended June 30, 2015 and there were no loan loss provisions for the quarter ended September 30, 2014. The allowance for loan losses was $5.1 million, or 1.05% of total outstanding loans, at September 30, 2015. At June 30, 2015 and September 30, 2014, the allowance for loan losses was $5.5 million and $5.6 million, respectively.
Total Consolidated Assets
Total consolidated assets of the Company at September 30, 2015 were $638.1 million, which represented an increase of $3.8 million or 0.6% from total assets of $634.3 million at June 30, 2015. This increase was driven by increased cash balances resulting from the increase in deposits levels and net loan growth. At September 30, 2014, total consolidated assets were $606.2 million. Total loans increased from $486.0 million at June 30, 2015 to $491.2 million at September 30, 2015. Total loans were $465.1 million at September 30, 2014.
Deposits and Other Borrowings
Total deposits, which include brokered deposits, increased $5.1 million to $527.9 million at September 30, 2015 from $522.8 million at June 30, 2015. At September 30, 2014, total deposits were $495.1 million. The Company held $11.0 million in brokered deposits for the quarters ended September 30 and June 30, 2015. The Company held $9.9 million in brokered deposits at September 30, 2014.
There were no federal funds purchased and securities sold under agreement to repurchase at September 30, 2015 and September 30, 2014. At June 30, 2015, federal funds purchased and securities sold under agreement to repurchase totaled $8.3 million. Borrowings with the Federal Home Loan Bank of Atlanta were $30.0 million at September 30, 2015, up $10.0 million from the $20.0 million at June 30, 2015. At September 30, 2014 borrowings with the Federal Home Loan Bank of Atlanta were $30.0 million.
There were no outstanding trust preferred capital notes at September 30, 2015. On July 29, 2015, the pool to which the Company’s $7.0 million in outstanding trust preferred capital notes belonged was liquidated by means of auction. The Company was successful in purchasing the outstanding notes at a price of 65.375% of par or $4.6 million in cash. Additionally, dissolution of Eagle Financial Statutory Trust II (the Trust), a wholly-owned subsidiary of the Company formed to issue the redeemable capital securities, occurred upon the purchase of the trust preferred securities. At June 30, 2015 and September 30, 2014, total trust preferred capital notes were $7.2 million.
Equity
Shareholders’ equity at September 30, 2015 was $77.6 million, reflecting an increase of $3.7 million from $73.9 million at June 30, 2015. At September 30, 2014 shareholders’ equity was $71.3 million. The book value of the Company at September 30, 2015 was $22.25 per common share. Total common shares outstanding were 3,508,831 at September 30, 2015. On October 21, 2015, the board of directors declared a $0.20 per common share cash dividend for shareholders of record as of November 4, 2015 and payable on November 18, 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 | ||||||||||||||||||||
| 3Q15 | 2Q15 | 1Q15 | 4Q14 | 3Q14 | ||||||||||||||||
Net Income(dollars in thousands) | $ | 3,324 | $ | 798 | $ | 1,455 | $ | 2,434 | $ | 1,386 | ||||||||||
Earnings per share, basic | $ | 0.94 | $ | 0.23 | $ | 0.42 | $ | 0.71 | $ | 0.40 | ||||||||||
Earnings per share, diluted | $ | 0.94 | $ | 0.23 | $ | 0.42 | $ | 0.70 | $ | 0.40 | ||||||||||
Return on average total assets | 2.20 | % | 0.51 | % | 0.96 | % | 1.57 | % | 0.91 | % | ||||||||||
Return on average total equity | 17.26 | % | 4.31 | % | 8.03 | % | 13.43 | % | 7.77 | % | ||||||||||
Dividend payout ratio | 21.28 | % | 86.96 | % | 47.80 | % | 28.17 | % | 50.00 | % | ||||||||||
Fee revenue as a percent of total revenue | 16.01 | % | 21.42 | % | 20.56 | % | 15.90 | % | 18.92 | % | ||||||||||
Net interest margin(1) | 4.07 | % | 4.13 | % | 4.02 | % | 4.00 | % | 4.18 | % | ||||||||||
Yield on average earning assets | 4.29 | % | 4.35 | % | 4.30 | % | 4.31 | % | 4.51 | % | ||||||||||
Yield on average interest-bearing liabilities | 0.33 | % | 0.35 | % | 0.42 | % | 0.46 | % | 0.50 | % | ||||||||||
Net interest spread | 3.96 | % | 4.00 | % | 3.88 | % | 3.85 | % | 4.01 | % | ||||||||||
Tax equivalent adjustment to net interest income (dollars in thousands) | $ | 155 | $ | 152 | $ | 161 | $ | 173 | $ | 171 | ||||||||||
Non-interest income to average assets | 2.39 | % | 1.06 | % | 1.07 | % | 1.43 | % | 0.97 | % | ||||||||||
Non-interest expense to average assets | 3.44 | % | 3.95 | % | 3.32 | % | 3.12 | % | 3.27 | % | ||||||||||
Efficiency ratio(2) | 55.56 | % | 80.78 | % | 68.98 | % | 60.57 | % | 71.91 | % | ||||||||||
| (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 nontaxable (i.e., municipal income) then subtracting interest expense. The rate utilized is 34%. See the table below for the quarterly tax equivalent net interest income and the reconciliation of net interest income to tax equivalent net interest income. The Company’s net interest margin is a common measure used by the financial service industry to determine how profitable earning assets are funded. Because the Company earns a fair amount of nontaxable interest income due to the mix of securities in its investment security portfolio, net interest income for the ratio is calculated on a tax equivalent basis as described above. |
| (2) | The efficiency ratio is not a measurement under accounting principles generally accepted in the United States. It is calculated by dividing non-interest expense by the sum of tax equivalent net interest income and non-interest income excluding gains and losses on the investment portfolio and sales of repossessed assets. The tax rate utilized is 34%. See the table below for the quarterly tax equivalent net interest income and a reconciliation of net interest income to tax equivalent net interest income. The Company calculates this ratio in order to evaluate its overhead structure or how effectively it is operating. An increase in the ratio from period to period indicates the Company is losing a larger percentage of its income to expenses. The Company believes that the efficiency ratio is a reasonable measure of profitability. |
EAGLE FINANCIAL SERVICES, INC.
SELECTED FINANCIAL DATA BY QUARTER
| 3Q15 | 2Q15 | 1Q15 | 4Q14 | 3Q14 | ||||||||||||||||
BALANCE SHEET RATIOS | ||||||||||||||||||||
Loans to deposits | 93.05 | % | 92.97 | % | 90.52 | % | 93.25 | % | 93.93 | % | ||||||||||
Average interest-earning assets to average-interest bearing liabilities | 154.19 | % | 154.14 | % | 151.49 | % | 166.86 | % | 148.74 | % | ||||||||||
PER SHARE DATA | ||||||||||||||||||||
Dividends | $ | 0.20 | $ | 0.20 | $ | 0.20 | $ | 0.20 | $ | 0.20 | ||||||||||
Book value | $ | 22.25 | $ | 21.30 | $ | 21.49 | $ | 21.01 | $ | 20.74 | ||||||||||
Tangible book value | $ | 22.25 | $ | 21.30 | $ | 21.49 | $ | 21.01 | $ | 20.74 | ||||||||||
SHARE PRICE DATA | ||||||||||||||||||||
Closing price | $ | 23.00 | $ | 23.50 | $ | 24.50 | $ | 23.30 | $ | 23.65 | ||||||||||
Diluted earnings multiple(1) | 6.12 | 25.54 | 14.58 | 8.32 | 14.78 | |||||||||||||||
Book value multiple(2) | 1.03 | 1.10 | 1.14 | 1.11 | 1.14 | |||||||||||||||
COMMON STOCK DATA | ||||||||||||||||||||
Outstanding shares at end of period | 3,508,831 | 3,495,800 | 3,481,774 | 3,463,665 | 3,454,336 | |||||||||||||||
Weighted average shares outstanding | 3,503,412 | 2,487,215 | 3,477,249 | 3,459,096 | 3,451,041 | |||||||||||||||
Weighted average shares outstanding, diluted | 3,503,412 | 3,497,065 | 3,485,450 | 3,468,904 | 3,460,186 | |||||||||||||||
CAPITAL RATIOS | ||||||||||||||||||||
Total equity to total assets | 12.16 | % | 11.66 | % | 12.15 | % | 11.67 | % | 11.76 | % | ||||||||||
CREDIT QUALITY | ||||||||||||||||||||
Net charge-offs to average loans | -0.03 | % | -0.05 | % | 0.04 | % | 0.72 | % | 0.24 | % | ||||||||||
Total non-performing loans to total loans | 1.16 | % | 1.41 | % | 1.44 | % | 2.28 | % | 1.86 | % | ||||||||||
Total non-performing assets to total assets | 1.18 | % | 1.44 | % | 1.47 | % | 2.04 | % | 1.70 | % | ||||||||||
Non-accrual loans to: | ||||||||||||||||||||
total loans | 1.15 | % | 1.39 | % | 1.43 | % | 2.28 | % | 1.86 | % | ||||||||||
total assets | 0.89 | % | 1.07 | % | 1.07 | % | 1.71 | % | 1.42 | % | ||||||||||
Allowance for loan losses to: | ||||||||||||||||||||
total loans | 1.05 | % | 1.14 | % | 1.12 | % | 1.08 | % | 1.20 | % | ||||||||||
non-performing assets | 68.65 | % | 60.79 | % | 57.17 | % | 39.64 | % | 54.31 | % | ||||||||||
non-accrual loans | 91.03 | % | 81.68 | % | 78.45 | % | 47.45 | % | 64.75 | % | ||||||||||
NON-PERFORMING ASSETS: | ||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Loans delinquent over 90 days | $ | 1 | $ | 68 | $ | 63 | $ | 6 | $ | 16 | ||||||||||
Non-accrual loans | 5,673 | 6,778 | 6,593 | 10,706 | 8,628 | |||||||||||||||
Other real estate owned and repossessed assets | 1,848 | 2,261 | 2,391 | 2,102 | 1,644 | |||||||||||||||
NET LOAN CHARGE-OFFS (RECOVERIES): | ||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Loans charged off | $ | 118 | $ | 190 | $ | 131 | $ | 967 | $ | 310 | ||||||||||
(Recoveries) | (156 | ) | (254 | ) | (90 | ) | (110 | ) | (26 | ) | ||||||||||
Net charge-offs (recoveries) | (38 | ) | (64 | ) | 41 | 857 | 284 | |||||||||||||
PROVISION FOR LOAN LOSSES (dollars in thousands) | $ | (410 | ) | $ | 300 | $ | 133 | $ | 350 | $ | — | |||||||||
ALLOWANCE FOR LOAN LOSS SUMMARY | ||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Balance at the beginning of period | $ | 5,536 | $ | 5,172 | $ | 5,080 | $ | 5,587 | $ | 5,871 | ||||||||||
Provision | (410 | ) | 300 | 133 | 350 | — | ||||||||||||||
Net charge-offs (recoveries) | (38 | ) | (64 | ) | 41 | 857 | 284 | |||||||||||||
Balance at the end of period | $ | 5,164 | $ | 5,536 | $ | 5,172 | $ | 5,080 | $ | 5,587 | ||||||||||
| (1) | The diluted earnings multiple is calculated by dividing the period’s closing market price per share by the annualized diluted earnings per share 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 | Audited | Unaudited | ||||||||||||||||
| 9/30/2015 | 6/30/2015 | 3/31/2015 | 12/31/2014 | 9/30/2014 | ||||||||||||||||
Assets | ||||||||||||||||||||
Cash and due from banks | $ | 16,941 | $ | 12,145 | $ | 26,374 | $ | 34,564 | $ | 15,338 | ||||||||||
Federal funds sold | — | — | — | — | — | |||||||||||||||
Securities available for sale, at fair value | 103,503 | 107,682 | 99,092 | 96,973 | 101,380 | |||||||||||||||
Loans, net of allowance for loan losses | 486,052 | 480,492 | 456,221 | 464,740 | 459,481 | |||||||||||||||
Bank premises and equipment, net | 20,924 | 20,805 | 20,071 | 19,015 | 18,529 | |||||||||||||||
Other assets | 10,649 | 13,191 | 11,983 | 11,538 | 11,488 | |||||||||||||||
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Total assets | $ | 638,069 | $ | 634,315 | $ | 613,741 | $ | 626,830 | $ | 606,216 | ||||||||||
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Liabilities and Shareholders’ Equity | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||
Deposits: | ||||||||||||||||||||
Noninterest bearing demand deposits | $ | 177,005 | $ | 171,368 | $ | 166,085 | $ | 159,352 | $ | 151,961 | ||||||||||
Savings and interest bearing demand deposits | 255,135 | 257,575 | 249,783 | 249,305 | 248,736 | |||||||||||||||
Time deposits | 95,731 | 93,844 | 93,836 | 95,159 | 94,439 | |||||||||||||||
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Total deposits | $ | 527,871 | $ | 522,787 | $ | 509,704 | $ | 503,816 | $ | 495,136 | ||||||||||
Federal funds purchased and securities sold under agreements to repurchase | — | 8,329 | — | — | — | |||||||||||||||
Federal Home Loan Bank advances | 30,000 | 20,000 | 20,000 | 40,000 | 30,000 | |||||||||||||||
Trust preferred capital notes | — | 7,217 | 7,217 | 7,217 | 7,217 | |||||||||||||||
Other liabilities | 2,589 | 2,039 | 2,273 | 2,665 | 2,602 | |||||||||||||||
Commitments and contingent liabilities | — | — | — | — | — | |||||||||||||||
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Total liabilities | $ | 560,460 | $ | 560,372 | $ | 539,194 | $ | 553,698 | $ | 534,955 | ||||||||||
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Shareholders’ Equity | ||||||||||||||||||||
Preferred stock, $10 par value | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
Common stock, $2.50 par value | 8,723 | 8,681 | 8,658 | 8,621 | 8,588 | |||||||||||||||
Surplus | 13,464 | 13,089 | 12,828 | 12,618 | 12,312 | |||||||||||||||
Retained earnings | 54,029 | 51,439 | 51,338 | 50,578 | 48,834 | |||||||||||||||
Accumulated other comprehensive income | 1,393 | 734 | 1,723 | 1,315 | 1,527 | |||||||||||||||
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Total shareholders’ equity | $ | 77,609 | $ | 73,943 | $ | 74,547 | $ | 73,132 | $ | 71,261 | ||||||||||
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Total liabilities and shareholders’ equity | $ | 638,069 | $ | 634,315 | $ | 613,741 | $ | 626,830 | $ | 606,216 | ||||||||||
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EAGLE FINANCIAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands)
Unaudited
| Three Months Ended | ||||||||||||||||||||
| 9/30/2015 | 6/30/2015 | 3/31/2015 | 12/31/2014 | 9/30/2014 | ||||||||||||||||
Interest and Dividend Income | ||||||||||||||||||||
Interest and fees on loans | $ | 5,540 | $ | 5,437 | $ | 5,301 | $ | 5,377 | $ | 5,397 | ||||||||||
Interest on federal funds sold | — | — | — | — | — | |||||||||||||||
Interest and dividends on securities available for sale: | ||||||||||||||||||||
Taxable interest income | 437 | 406 | 376 | 378 | 458 | |||||||||||||||
Interest income exempt from federal income taxes | 245 | 246 | 243 | 261 | 270 | |||||||||||||||
Dividends | 41 | 26 | 7 | 26 | 126 | |||||||||||||||
Interest on deposits in banks | 2 | 6 | 11 | 8 | 3 | |||||||||||||||
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Total interest and dividend income | $ | 6,265 | $ | 6,121 | $ | 5,938 | $ | 6,050 | $ | 6,254 | ||||||||||
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Interest Expense | ||||||||||||||||||||
Interest on deposits | $ | 185 | $ | 182 | $ | 185 | $ | 194 | $ | 241 | ||||||||||
Interest on federal funds purchased and securities sold under agreements to repurchase | 9 | 1 | — | — | — | |||||||||||||||
Interest on Federal Home Loan Bank advances | 69 | 66 | 135 | 174 | 159 | |||||||||||||||
Interest on trust preferred capital notes | 58 | 78 | 78 | 80 | 80 | |||||||||||||||
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Total interest expense | $ | 321 | $ | 327 | $ | 398 | $ | 448 | $ | 480 | ||||||||||
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Net interest income | 5,944 | 5,794 | 5,540 | 5,602 | 5,774 | |||||||||||||||
Provision For Loan Losses | (410 | ) | 300 | 133 | 350 | — | ||||||||||||||
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Net interest income after provision for loan losses | $ | 6,354 | $ | 5,494 | $ | 5,407 | $ | 5,252 | $ | 5,774 | ||||||||||
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Noninterest Income | ||||||||||||||||||||
Income from fiduciary activities | $ | 318 | $ | 356 | $ | 428 | $ | 290 | $ | 211 | ||||||||||
Service charges on deposit accounts | 328 | 307 | 290 | 338 | 332 | |||||||||||||||
Other service charges and fees | 919 | 930 | 756 | 687 | 828 | |||||||||||||||
Gain on the sale of bank premises and equipment | — | 5 | — | (14 | ) | — | ||||||||||||||
Gain (Loss) on sales of AFS securities | 19 | 22 | 74 | 897 | 88 | |||||||||||||||
Gain on redemption of trust preferred debt | 2,424 | |||||||||||||||||||
Other operating income | (179 | ) | 24 | 81 | 23 | 15 | ||||||||||||||
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Total noninterest income | $ | 3,829 | $ | 1,644 | $ | 1,629 | $ | 2,221 | $ | 1,474 | ||||||||||
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Noninterest Expenses | ||||||||||||||||||||
Salaries and employee benefits | $ | 3,090 | $ | 3,112 | $ | 2,995 | $ | 2,660 | $ | 3,016 | ||||||||||
Occupancy expenses | 394 | 436 | 346 | 317 | 319 | |||||||||||||||
Equipment expenses | 312 | 260 | 146 | 174 | 197 | |||||||||||||||
Advertising and marketing expenses | 155 | 184 | 119 | 155 | 159 | |||||||||||||||
Stationery and supplies | 67 | 61 | 51 | 69 | 73 | |||||||||||||||
ATM network fees | 246 | 191 | 158 | 180 | 175 | |||||||||||||||
Other real estate owned expenses | 64 | 14 | 6 | 12 | 4 | |||||||||||||||
Loss (gain) on sale of other real estate | (11 | ) | 73 | 19 | (78 | ) | 13 | |||||||||||||
FDIC assessment | 108 | 103 | 108 | 95 | 95 | |||||||||||||||
Computer software expense | 134 | 192 | 221 | 208 | 252 | |||||||||||||||
Bank franchise tax | 131 | 126 | 117 | 123 | 124 | |||||||||||||||
Professional fees | 211 | 261 | 242 | 226 | 290 | |||||||||||||||
Other operating expenses | 616 | 1,118 | 529 | 702 | 617 | |||||||||||||||
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Total noninterest expenses | $ | 5,517 | $ | 6,131 | $ | 5,057 | $ | 4,843 | $ | 5,334 | ||||||||||
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Income before income taxes | 4,666 | 1,007 | 1,979 | 2,630 | 1,914 | |||||||||||||||
Income Tax Expense | 1,377 | 209 | 524 | 196 | 528 | |||||||||||||||
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Net income | $ | 3,289 | $ | 798 | $ | 1,455 | $ | 2,434 | $ | 1,386 | ||||||||||
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Earnings Per Share | ||||||||||||||||||||
Net income per common share, basic | $ | 0.94 | $ | 0.23 | $ | 0.42 | $ | 0.71 | $ | 0.40 | ||||||||||
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Net income per common share, diluted | $ | 0.94 | $ | 0.23 | $ | 0.42 | $ | 0.70 | $ | 0.40 | ||||||||||
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EAGLE FINANCIAL SERVICES, INC.
Average Balances, Income and Expenses, Yields and Rates
(dollars in thousands)
| For the Three Months Ended | ||||||||||||||||||||||||||||||||||||
| September 30, 2015 | June 30, 2015 | September 30, 2014 | ||||||||||||||||||||||||||||||||||
| Interest | Interest | Interest | ||||||||||||||||||||||||||||||||||
| Average | Income/ | Average | Average | Income/ | Average | Average | Income/ | Average | ||||||||||||||||||||||||||||
| Balance | Expense | Yield | Balance | Expense | Yield | Balance | Expense | Yield | ||||||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||||||
Securities: | ||||||||||||||||||||||||||||||||||||
Taxable | $ | 75,636 | $ | 1,896 | 2.51 | % | $ | 71,250 | $ | 1,718 | 2.41 | % | $ | 68,674 | $ | 2,317 | 3.37 | % | ||||||||||||||||||
Tax-Exempt(1) | 31,731 | 1,473 | 4.64 | % | 31,787 | 1,479 | 4.65 | % | 33,474 | 1,625 | 4.85 | % | ||||||||||||||||||||||||
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Total Securities | $ | 107,367 | $ | 3,369 | 3.14 | % | $ | 103,037 | $ | 3,197 | 3.10 | % | $ | 102,148 | $ | 3,942 | 3.86 | % | ||||||||||||||||||
Loans: | ||||||||||||||||||||||||||||||||||||
Taxable | $ | 475,993 | $ | 21,761 | 4.57 | % | $ | 455,696 | $ | 21,380 | 4.69 | % | $ | 450,867 | $ | 21,166 | 4.69 | % | ||||||||||||||||||
Nonaccrual | 5,953 | — | 0.00 | % | 6,806 | — | 0.00 | % | 7,167 | — | 0.00 | % | ||||||||||||||||||||||||
Tax-Exempt(1) | 6,553 | 336 | 5.12 | % | 8,140 | 286 | 3.51 | % | 6,764 | 373 | 5.51 | % | ||||||||||||||||||||||||
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Total Loans | $ | 488,499 | $ | 22,097 | 4.52 | % | $ | 470,642 | $ | 21,666 | 4.60 | % | $ | 464,798 | $ | 21,539 | 4.63 | % | ||||||||||||||||||
Federal funds sold | — | — | 0.00 | % | — | — | 0.00 | % | — | — | 0.00 | % | ||||||||||||||||||||||||
Interest-bearing deposits in other banks | 4,329 | 8 | 0.18 | % | 11,243 | 24 | 0.21 | % | 4,792 | 10 | 0.20 | % | ||||||||||||||||||||||||
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Total earning assets | $ | 594,242 | $ | 25,474 | 4.29 | % | $ | 578,116 | $ | 24,887 | 4.30 | % | $ | 564,571 | $ | 25,490 | 4.51 | % | ||||||||||||||||||
Allowance for loan losses | (5,763 | ) | (5,378 | ) | (5,928 | ) | ||||||||||||||||||||||||||||||
Total non-earning assets | 48,321 | 49,064 | 43,423 | |||||||||||||||||||||||||||||||||
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Total assets | $ | 636,800 | $ | 621,802 | $ | 602,066 | ||||||||||||||||||||||||||||||
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Liabilities and Shareholders’ Equity: | ||||||||||||||||||||||||||||||||||||
Interest-bearing deposits: | ||||||||||||||||||||||||||||||||||||
NOW accounts | $ | 81,908 | $ | 87 | 0.11 | % | $ | 80,266 | $ | 83 | 0.10 | % | $ | 81,685 | $ | 85 | 0.10 | % | ||||||||||||||||||
Money market accounts | 98,193 | 111 | 0.11 | % | 97,515 | 111 | 0.11 | % | 96,771 | 111 | 0.11 | % | ||||||||||||||||||||||||
Savings accounts | 76,627 | 44 | 0.06 | % | 75,412 | 40 | 0.05 | % | 68,728 | 36 | 0.05 | % | ||||||||||||||||||||||||
Time deposits: | ||||||||||||||||||||||||||||||||||||
$100,000 and more | 36,797 | 167 | 0.45 | % | 35,135 | 155 | 0.44 | % | 34,677 | 179 | 0.51 | % | ||||||||||||||||||||||||
Less than $100,000 | 57,591 | 325 | 0.56 | % | 58,769 | 333 | 0.57 | % | 60,390 | 548 | 0.91 | % | ||||||||||||||||||||||||
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Total interest-bearing deposits | $ | 351,116 | $ | 734 | 0.21 | % | $ | 347,097 | 722 | 0.21 | % | $ | 342,251 | $ | 960 | 0.28 | % | |||||||||||||||||||
Federal funds purchased and securities sold under agreements to repurchase | 3,830 | 36 | 0.93 | % | 756 | 4 | 0.52 | % | 103 | 1 | 0.50 | % | ||||||||||||||||||||||||
Federal Home Loan Bank advances | 26,848 | 274 | 1.02 | % | 20,000 | 258 | 1.29 | % | 30,000 | 631 | 2.10 | % | ||||||||||||||||||||||||
Trust preferred capital notes | 3,609 | 230 | 6.36 | % | 7,217 | 313 | 4.34 | % | 7,217 | 317 | 4.40 | % | ||||||||||||||||||||||||
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Total interest-bearing liabilities | $ | 385,403 | $ | 1,273 | 0.33 | % | $ | 375,070 | 1,297 | 0.35 | % | $ | 379,581 | $ | 1,908 | 0.50 | % | |||||||||||||||||||
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Noninterest-bearing liabilities: | ||||||||||||||||||||||||||||||||||||
Demand deposits | 173,431 | 170,128 | 149,776 | |||||||||||||||||||||||||||||||||
Other Liabilities | 2,364 | 2,366 | 2,031 | |||||||||||||||||||||||||||||||||
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Total liabilities | $ | 561,198 | $ | 547,564 | $ | 531,378 | ||||||||||||||||||||||||||||||
Shareholders’ equity | 75,602 | 74,238 | 70,688 | |||||||||||||||||||||||||||||||||
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Total liabilities and shareholders’ equity | $ | 636,800 | $ | 621,802 | $ | 602,066 | ||||||||||||||||||||||||||||||
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Net interest income | $ | 24,201 | $ | 23,589 | $ | 23,582 | ||||||||||||||||||||||||||||||
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Net interest spread | 3.96 | % | 3.96 | % | 4.01 | % | ||||||||||||||||||||||||||||||
Interest expense as a percent of average earning assets | 0.21 | % | 0.22 | % | 0.34 | % | ||||||||||||||||||||||||||||||
Net interest margin | 4.07 | % | 4.08 | % | 4.18 | % | ||||||||||||||||||||||||||||||
| (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 | ||||||||||||||||||||
| 9/30/2015 | 6/30/2015 | 3/31/2015 | 12/31/2014 | 9/30/2014 | ||||||||||||||||
GAAP Financial Measurements: | ||||||||||||||||||||
Interest Income - Loans | $ | 5,541 | $ | 5,437 | $ | 5,301 | $ | 5,377 | $ | 5,397 | ||||||||||
Interest Income - Securities and Other Interest-Earnings Assets | 725 | 684 | 637 | 673 | 857 | |||||||||||||||
Interest Expense - Deposits | 185 | 182 | 184 | 194 | 242 | |||||||||||||||
Interest Expense - Other Borrowings | 136 | 145 | 213 | 254 | 239 | |||||||||||||||
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Total Net Interest Income | $ | 5,945 | $ | 5,794 | $ | 5,541 | $ | 5,602 | $ | 5,773 | ||||||||||
Non-GAAP Financial Measurements: | ||||||||||||||||||||
Add: Tax Benefit on Tax-Exempt Interest Income - Loans | $ | 29 | $ | 25 | $ | 36 | $ | 38 | $ | 32 | ||||||||||
Add: Tax Benefit on Tax-Exempt Interest Income - Securities | 126 | 127 | 125 | 135 | 139 | |||||||||||||||
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Total Tax Benefit on Tax-Exempt Interest Income | $ | 155 | $ | 152 | $ | 161 | $ | 173 | $ | 171 | ||||||||||
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Tax-Equivalent Net Interest Income | $ | 6,100 | $ | 5,946 | $ | 5,702 | $ | 5,775 | $ | 5,944 | ||||||||||
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