Exhibit 99.1
EAGLE FINANCIAL SERVICES, INC. ANNOUNCES
2016 FIRST QUARTER DIVIDEND AND
FINANCIAL RESULTS
| | | | |
| Contact: | | Kathleen J. Chappell, Vice President and CFO | | 540-955-2510 |
| | | | kchappell@bankofclarke.com |
BERRYVILLE, VIRGINIA(April 20, 2016) – Eagle Financial Services, Inc. (OTCQX: EFSI), the holding company for Bank of Clarke County, whose divisions include Eagle Investment Group, reported quarterly earnings, asset quality improvement and continued strong performance for the first quarter of 2016. On April 20, 2016, the Board of Directors announced a quarterly common stock cash dividend of $0.20 per common share, payable on May 16, 2016, to shareholders of record on May 2, 2016. Select highlights for the first quarter include:
| | • | | Net income of $1.5 million |
| | • | | Loan growth of $15.5 million |
| | • | | Deposit growth of $8.7 million |
| | • | | Basic and diluted earnings per share of $0.43 |
| | • | | Net interest margin of 4.09% |
| | • | | Allowance for loan losses to total loans of 0.98% |
| | • | | Provision for loan losses of $79,000 |
John R. Milleson, President and CEO, stated,“Assisted by the solid loan growth realized during the quarter, as well as the increased levels of no and low cost deposits, the contribution of core earnings to the overall profitability of the Company has increased. Additionally, the improvement in the quality of our loan portfolio has allowed us to maintain lower required provisions to the allowance for loan losses. We are hopeful that this a positive sign that borrowers are in a healthier, improving economic climate, for themselves and for their businesses. We continue to experience success with branch growth in both our existing and newer markets and consistently gauge the consumer and business needs in each. From a shareholder perspective, earnings per basic common share has increased and our dividend yield remains one of the highest among community banks in Virginia.”
Income Statement Review
Net income for the quarter ended March 31, 2016 was $1.5 million reflecting an increase of 12.5% from the quarter ended December 31, 2015 and no change from the quarter ended March 31, 2015. Net income was $1.4 million for the three month period ended December 31, 2015 and $1.5 million for the quarter ended March 31, 2015.
Net interest income was $6.1 million for the quarter ended March 31, 2016 and $5.9 million for the quarter ended December 31, 2015. Net interest income was $5.5 million for the quarter ended March 31, 2015. The volume of loan growth experienced during the quarter was the biggest contributor to the increase in net interest income.
Total loan interest income was $5.7 million for the quarter ended March 31, 2016, reflecting an increase of $236,000 from the quarter ended December 31, 2015. Total loan interest income was $5.3 million for the quarter ended March 31, 2015. Average loans for the quarter ended March 31, 2016 were $501.3 million compared to $491.2 million at December 31, 2015. Total average accruing loans were $496.1 million for the quarter ended March 31, 2016 and $485.7 million at December 31, 2015. For the quarter ended March 31, 2015, total average loans were $466.1 million and average accruing loans were $458.5 million. The tax equivalent yield on average loans for the quarter ended March 31, 2016 was 4.60%, an increase of 16 basis points from 4.44% for the quarter ended December 31, 2015 and a decrease of four basis points from the 4.64% average yield at March 31, 2015. Interest income from the investment portfolio was $696,000 for the quarter ended March 31, 2016 and $689,000 for the quarter ended December 31, 2015. Average investments were $104.7 million for the quarter ended March 31, 2016 and $104.0 million for the quarter ended December 31, 2015. Average investments were $96.3 million for the quarter ended March 31, 2015 and interest income was $626,000 for that same period.
Total interest expense for the three months ended March 31, 2016 was $307,000, an increase of $5,000 from the quarter ended December 31, 2015. Total interest expense decreased $91,000 when comparing the quarter ended March 31, 2016 to the same period in 2015. The average cost of interest bearing liabilities increased one basis point when comparing the quarter ended March 31, 2015 to the quarter ended December 31, 2015. The average balance of interest bearing liabilities increased $7.7 million from the quarter ended December 31, 2015. The average cost of interest bearing liabilities decreased ten basis points when comparing the quarter ended March 31, 2016 to the quarter ended March 31, 2015. The average balance of interest bearing liabilities increased $8.9 million
from the quarter ended March 31, 2015. 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 net interest margin was 4.09% for the quarter ended March 31, 2016 and 3.97% for the quarter December 31, 2015. For the quarter ended March 31, 2015 the net interest margin was 4.02%.
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, 2016 and $1.3 million for the quarter ended December 31, 2015. The increase for the quarter results mostly from the increase in net gains from sales of investment securities, increased service release premiums and also increased ATM fees. Income from fiduciary activities increased $92,000 or 39.0% from the quarter ended December 31, 2015 and decreased $100,000 or 23.4% from March 31, 2015. The amount of income from fiduciary activities is determined by the number of active accounts and total assets under management. Also, income can fluctuate due to the number of estates settled within any period. Noninterest income for the quarter ended March 31, 2015 was $1.6 million.
Noninterest expense was $5.6 million for the quarter ended March 31, 2016. This represents a decrease of $220,000 or 3.8% from $5.8 million for the quarter ended December 31, 2015. The majority of this decrease results from decrease in Other Real Estate Owned expenses. During the quarter ended December 31, 2015, the Company recorded a $235,000 valuation allowance for other real estate owned. Noninterest expense increased $496,000 or 9.8% when comparing the quarter ended March 31, 2016 to the same time period in 2015. There were several contributors to this increase, the largest of them being the $269,000 increase in salaries and employee benefits expense. This increase related to the opening of two new retail branches in April and November of 2015. The Company’s One Loudoun branch in Ashburn, Virginia opened in April of 2015 while the Market Street branch in Leesburg, Virginia opened in November of 2015. Salaries and employee benefits related to the two new branches for the quarter ended March 31, 2016 totaled $206,000. Equipment expenses increased $164,000 or 112.3% when comparing the quarter ended March 31, 2016 to the same time period in 2015. This increase also related to the opening of the two new retail branches during 2015.
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 $6.2 million or 0.95% of total assets at December 31, 2015 to $5.1 million or 0.76% of total assets at March 31, 2016. This decrease resulted mostly from the decreases in nonaccrual loans. Non-performing assets were $9.0 million or 1.47% of total assets at March 31, 2015. During the first quarter of 2016, the Bank returned two loans, totaling $638,000, to accruing status and placed four loans totaling $194,000 on non-accrual status. Other changes to non-accrual loan balances resulted from loan payments. 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, 2016, $782,000 or 17.6% of total nonaccrual loans had allocated specific allowances totaling $140,000. At March 31, 2016, the Bank had one loan 90 days or more past due and still accruing that totaled $24,000. At December 31, 2015 the Bank had three loans 90 days or more past due and still accruing that totaled $307,000 and at March 31, 2015, four loans totaling $63,000 were 90 days or more past due and still accruing. Other real estate owned remained at $571,000 at March 31, 2016, unchanged from December 31, 2015. Other real estate owned totaled $2.4 million at March 31, 2015.
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, 2016, the Company had 26 troubled debt restructurings totaling $8.1 million. All but three of the restructured loans are performing loans.
The Company realized $34,000 in net charge-offs for the quarter ended March 31, 2016 versus $44,000 in net recoveries for the three months ended December 31, 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 totaled $41,000 for the quarter ended March 31, 2015.
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 $79,000 for the three months ended March 31, 2016, compared to negative provisions of $250,000 for the quarter ended December 31, 2015. The provisions for loan losses for the quarter ended March 31, 2015 were $133,000. The ratio of allowance for loan losses to total nonaccrual loans was 112.3% at March 31, 2016. The ratio of allowance for loan losses to total nonaccrual loans was 93.8% and 78.5% at December 31, 2015 and March 31, 2015, respectively. At March 31,
2016, impaired loans totaled $12.7 million and had related specific allocations of $546,000. At December 31, 2015, impaired loans totaled $14.0 million and had related specific allocations of $576,000. At March 31, 2015, total impaired loans were $16.8 million and required specific allocations of $791,000.
Total Consolidated Assets
Total consolidated assets of the Company at March 31, 2016 were $664.3 million, which represented an increase of $12.6 million or 1.9% from total assets of $651.7 million at December 31, 2015. At March 31, 2015, total consolidated assets were $613.7 million. Securities available for sale decreased $5.5 million from $107.7 million at December 31, 2015. Total loans increased from $495.6 million at December 31, 2015 to $511.0 million at March 31, 2016. At March 31, 2015, total investment securities were $99.1 million and total loans were $461.4 million.
Deposits and Other Borrowings
Total deposits, which include brokered deposits, increased $8.7 million from $550.7 million at December 31, 2015 to $559.4 million at March 31, 2016. At March 31, 2015, total deposits were $509.7 million. At March 31, 2016, the Company held no brokered deposits. The Company held $11.0 million in brokered deposits at December 31, 2015 and March 31, 2015.
Borrowings with the Federal Home Loan Bank of Atlanta remained unchanged at $20.0 million at March 31, 2016, December 31, 2015 and March 31, 2015.
Equity
Shareholders’ equity at March 31, 2016 was $79.8 million and $78.2 million at December 31, 2015. Shareholder’s equity was $74.5 million at March 31, 2015. The book value of the Company at March 31, 2016 was $22.70 per common share. Total common shares outstanding were 3,535,684 at March 31, 2016. On April 20, 2016, the board of directors declared a $0.20 per common share cash dividend for shareholders of record as of May 2, 2016 and payable on May 16, 2016.
Certain information contained in this discussion may include “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements relate to the Company’s future operations and are generally identified by phrases such as “the Company expects,” “the Company believes” or words of similar import. Although the Company believes that its expectations with respect to the forward-looking statements are based upon reliable assumptions within the bounds of its knowledge of its business and operations, there can be no assurance that actual results, performance or achievements of the Company will not differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. For details on factors that could affect expectations, see the risk factors and other cautionary language included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, and other filings with the Securities and Exchange Commission.
EAGLE FINANCIAL SERVICES, INC.
KEY STATISTICS
| | | | | | | | | | | | | | | | | | | | |
| | | For the Three Months Ended | |
| | | 1Q16 | | | 4Q15 | | | 3Q15 | | | 2Q15 | | | 1Q15 | |
Net Income(dollars in thousands) | | $ | 1,525 | | | $ | 1,355 | | | $ | 3,289 | | | $ | 798 | | | $ | 1,455 | |
Earnings per share, basic | | $ | 0.43 | | | $ | 0.38 | | | $ | 0.94 | | | $ | 0.23 | | | $ | 0.42 | |
Earnings per share, diluted | | $ | 0.43 | | | $ | 0.38 | | | $ | 0.94 | | | $ | 0.23 | | | $ | 0.42 | |
Return on average total assets | | | 0.89 | % | | | 0.84 | % | | | 2.20 | % | | | 0.51 | % | | | 0.96 | % |
Return on average total equity | | | 7.42 | % | | | 6.92 | % | | | 17.26 | % | | | 4.31 | % | | | 8.03 | % |
Dividend payout ratio | | | 46.51 | % | | | 52.63 | % | | | 21.28 | % | | | 86.96 | % | | | 47.80 | % |
Fee revenue as a percent of total revenue | | | 18.68 | % | | | 17.64 | % | | | 16.01 | % | | | 21.42 | % | | | 20.56 | % |
Net interest margin(1) | | | 4.09 | % | | | 3.97 | % | | | 4.07 | % | | | 4.13 | % | | | 4.02 | % |
Yield on average earning assets | | | 43.00 | % | | | 4.17 | % | | | 4.29 | % | | | 4.35 | % | | | 4.30 | % |
Yield on average interest-bearing liabilities | | | 0.32 | % | | | 0.31 | % | | | 0.33 | % | | | 0.35 | % | | | 0.42 | % |
Net interest spread | | | 3.98 | % | | | 3.85 | % | | | 3.96 | % | | | 4.00 | % | | | 3.88 | % |
Tax equivalent adjustment to net interest income (dollars in thousands) | | $ | 148 | | | $ | 151 | | | $ | 155 | | | $ | 152 | | | $ | 161 | |
Non-interest income to average assets | | | 1.00 | % | | | 0.83 | % | | | 2.39 | % | | | 1.06 | % | | | 1.07 | % |
Non-interest expense to average assets | | | 3.40 | % | | | 3.58 | % | | | 3.44 | % | | | 3.95 | % | | | 3.32 | % |
Efficiency ratio(2) | | | 70.33 | % | | | 78.51 | % | | | 55.56 | % | | | 80.78 | % | | | 68.98 | % |
| (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
| | | | | | | | | | | | | | | | | | | | |
| | | 1Q16 | | | 4Q15 | | | 3Q15 | | | 2Q15 | | | 1Q15 | |
BALANCE SHEET RATIOS | | | | | | | | | | | | | | | | | | | | |
Loans to deposits | | �� | 91.35 | % | | | 89.99 | % | | | 93.06 | % | | | 92.97 | % | | | 90.52 | % |
Average interest-earning assets to average-interest bearing liabilities | | | 158.08 | % | | | 157.81 | % | | | 154.19 | % | | | 154.14 | % | | | 151.49 | % |
PER SHARE DATA | | | | | | | | | | | | | | | | | | | | |
Dividends | | $ | 0.20 | | | $ | 0.20 | | | $ | 0.20 | | | $ | 0.20 | | | $ | 0.20 | |
Book value | | $ | 22.70 | | | $ | 22.25 | | | $ | 22.25 | | | $ | 21.30 | | | $ | 21.49 | |
Tangible book value | | $ | 22.70 | | | $ | 22.25 | | | $ | 22.25 | | | $ | 21.30 | | | $ | 21.49 | |
SHARE PRICE DATA | | | | | | | | | | | | | | | | | | | | |
Closing price | | $ | 22.96 | | | $ | 23.00 | | | $ | 23.00 | | | $ | 23.50 | | | $ | 24.50 | |
Diluted earnings multiple(1) | | | 13.35 | | | | 15.13 | | | | 6.12 | | | | 25.54 | | | | 14.58 | |
Book value multiple(2) | | | 1.01 | | | | 1.03 | | | | 1.03 | | | | 1.10 | | | | 1.14 | |
COMMON STOCK DATA | | | | | | | | | | | | | | | | | | | | |
Outstanding shares at end of period | | | 3,535,684 | | | | 3,517,648 | | | | 3,508,831 | | | | 3,495,800 | | | | 3,481,774 | |
Weighted average shares outstanding | | | 3,531,134 | | | | 3,512,978 | | | | 3,503,412 | | | | 2,487,215 | | | | 3,477,249 | |
Weighted average shares outstanding, diluted | | | 3,531,134 | | | | 3,512,978 | | | | 3,503,412 | | | | 3,497,065 | | | | 3,485,450 | |
CAPITAL RATIOS | | | | | | | | | | | | | | | | | | | | |
Total equity to total assets | | | 12.02 | % | | | 12.00 | % | | | 12.16 | % | | | 11.66 | % | | | 12.15 | % |
CREDIT QUALITY | | | | | | | | | | | | | | | | | | | | |
Net charge-offs to average loans | | | 0.03 | % | | | -0.04 | % | | | -0.03 | % | | | -0.05 | % | | | 0.04 | % |
Total non-performing loans to total loans | | | 0.88 | % | | | 1.13 | % | | | 1.16 | % | | | 1.41 | % | | | 1.44 | % |
Total non-performing assets to total assets | | | 0.76 | % | | | 0.95 | % | | | 1.18 | % | | | 1.44 | % | | | 1.47 | % |
Non-accrual loans to: | | | | | | | | | | | | | | | | | | | | |
total loans | | | 0.87 | % | | | 1.07 | % | | | 1.15 | % | | | 1.39 | % | | | 1.43 | % |
total assets | | | 0.67 | % | | | 0.81 | % | | | 0.89 | % | | | 1.07 | % | | | 1.07 | % |
Allowance for loan losses to: | | | | | | | | | | | | | | | | | | | | |
total loans | | | 0.98 | % | | | 1.00 | % | | | 1.05 | % | | | 1.14 | % | | | 1.12 | % |
non-performing assets | | | 99.05 | % | | | 80.45 | % | | | 68.65 | % | | | 60.79 | % | | | 57.17 | % |
non-accrual loans | | | 112.28 | % | | | 93.81 | % | | | 91.03 | % | | | 81.68 | % | | | 78.45 | % |
NON-PERFORMING ASSETS: | | | | | | | | | | | | | | | | | | | | |
(dollars in thousands) | | | | | | | | | | | | | | | | | | | | |
Loans delinquent over 90 days | | $ | 24 | | | $ | 307 | | | $ | 1 | | | $ | 68 | | | $ | 63 | |
Non-accrual loans | | | 4,456 | | | | 5,285 | | | | 5,673 | | | | 6,778 | | | | 6,593 | |
Other real estate owned and repossessed assets | | | 571 | | | | 571 | | | | 1,848 | | | | 2,261 | | | | 2,391 | |
NET LOAN CHARGE-OFFS (RECOVERIES): | | | | | | | | | | | | | | | | | | | | |
(dollars in thousands) | | | | | | | | | | | | | | | | | | | | |
Loans charged off | | $ | 72 | | | $ | 17 | | | $ | 118 | | | $ | 190 | | | $ | 131 | |
(Recoveries) | | | (38 | ) | | | (61 | ) | | | (156 | ) | | | (254 | ) | | | (90 | ) |
Net charge-offs (recoveries) | | | 34 | | | | (44 | ) | | | (38 | ) | | | (64 | ) | | | 41 | |
PROVISION FOR LOAN LOSSES | | $ | 79 | | | $ | (250 | ) | | $ | (410 | ) | | $ | 300 | | | $ | 133 | |
(dollars in thousands) | | | | | | | | | | | | | | | | | | | | |
ALLOWANCE FOR LOAN LOSS SUMMARY | | | | | | | | | | | | | | | | | | | | |
(dollars in thousands) | | | | | | | | | | | | | | | | | | | | |
Balance at the beginning of period | | $ | 4,958 | | | $ | 5,164 | | | $ | 5,536 | | | $ | 5,172 | | | $ | 5,080 | |
Provision | | | 79 | | | | (250 | ) | | | (410 | ) | | | 300 | | | | 133 | |
Net charge-offs (recoveries) | | | 34 | | | | (44 | ) | | | (38 | ) | | | (64 | ) | | | 41 | |
Balance at the end of period | | $ | 5,003 | | | $ | 4,958 | | | $ | 5,164 | | | $ | 5,536 | | | $ | 5,172 | |
| (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 | | | Audited | | | Unaudited | | | Unaudited | | | Unaudited | |
| | | 3/31/2016 | | | 12/31/2015 | | | 9/30/2015 | | | 6/30/2015 | | | 3/31/2015 | |
Assets | | | | | | | | | | | | | | | | | | | | |
Cash and due from banks | | $ | 25,451 | | | $ | 23,221 | | | $ | 16,941 | | | $ | 12,145 | | | $ | 26,374 | |
Federal funds sold | | | — | | | | — | | | | — | | | | — | | | | — | |
Securities available for sale, at fair value | | | 102,251 | | | | 107,718 | | | | 103,503 | | | | 107,682 | | | | 99,092 | |
Loans, net of allowance for loan losses | | | 506,030 | | | | 490,615 | | | | 486,052 | | | | 480,492 | | | | 456,221 | |
Bank premises and equipment, net | | | 20,756 | | | | 20,964 | | | | 20,924 | | | | 20,805 | | | | 20,071 | |
Other assets | | | 9,783 | | | | 9,136 | | | | 10,649 | | | | 13,191 | | | | 11,983 | |
| | | | | | | | | | | | | | | | | | | | |
Total assets | | $ | 664,271 | | | $ | 651,654 | | | $ | 638,069 | | | $ | 634,315 | | | $ | 613,741 | |
| | | | | | | | | | | | | | | | | | | | |
Liabilities and Shareholders’ Equity | | | | | | | | | | | | | | | | | | | | |
Liabilities | | | | | | | | | | | | | | | | | | | | |
Deposits: | | | | | | | | | | | | | | | | | | | | |
Noninterest bearing demand deposits | | $ | 193,276 | | | $ | 186,133 | | | $ | 177,005 | | | $ | 171,368 | | | $ | 166,085 | |
Savings and interest bearing demand deposits | | | 279,033 | | | | 272,214 | | | | 255,135 | | | | 257,575 | | | | 249,783 | |
Time deposits | | | 87,130 | | | | 92,371 | | | | 95,731 | | | | 93,844 | | | | 93,836 | |
| | | | | | | | | | | | | | | | | | | | |
Total deposits | | $ | 559,439 | | | $ | 550,718 | | | $ | 527,871 | | | $ | 522,787 | | | $ | 509,704 | |
Federal funds purchased and securities sold under agreements to repurchase | | | — | | | | — | | | | — | | | | 8,329 | | | | — | |
Federal Home Loan Bank advances | | | 20,000 | | | | 20,000 | | | | 30,000 | | | | 20,000 | | | | 20,000 | |
Trust preferred capital notes | | | — | | | | — | | | | — | | | | 7,217 | | | | 7,217 | |
Other liabilities | | | 4,990 | | | | 2,715 | | | | 2,589 | | | | 2,039 | | | | 2,273 | |
Commitments and contingent liabilities | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | |
Total liabilities | | $ | 584,429 | | | $ | 573,433 | | | $ | 560,460 | | | $ | 560,372 | | | $ | 539,194 | |
| | | | | | | | | | | | | | | | | | | | |
Shareholders’ Equity | | | | | | | | | | | | | | | | | | | | |
Preferred stock, $10 par value | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
Common stock, $2.50 par value | | | 8,791 | | | | 8,758 | | | | 8,723 | | | | 8,681 | | | | 8,658 | |
Surplus | | | 13,936 | | | | 13,730 | | | | 13,464 | | | | 13,089 | | | | 12,828 | |
Retained earnings | | | 55,501 | | | | 54,682 | | | | 54,029 | | | | 51,439 | | | | 51,338 | |
Accumulated other comprehensive income | | | 1,614 | | | | 1,051 | | | | 1,393 | | | | 734 | | | | 1,723 | |
| | | | | | | | | | | | | | | | | | | | |
Total shareholders’ equity | | $ | 79,842 | | | $ | 78,221 | | | $ | 77,609 | | | $ | 73,943 | | | $ | 74,547 | |
| | | | | | | | | | | | | | | | | | | | |
Total liabilities and shareholders’ equity | | $ | 664,271 | | | $ | 651,654 | | | $ | 638,069 | | | $ | 634,315 | | | $ | 613,741 | |
| | | | | | | | | | | | | | | | | | | | |
EAGLE FINANCIAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands)
Unaudited
| | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended | |
| | | 3/31/2015 | | | 12/31/2015 | | | 9/30/2015 | | | 6/30/2015 | | | 3/31/2015 | |
Interest and Dividend Income | | | | | | | | | | | | | | | | | | | | |
Interest and fees on loans | | $ | 5,709 | | | $ | 5,473 | | | $ | 5,540 | | | $ | 5,437 | | | $ | 5,301 | |
Interest on federal funds sold | | | — | | | | — | | | | — | | | | — | | | | — | |
Interest and dividends on securities available for sale: | | | | | | | | | | | | | | | | | | | | |
Taxable interest income | | | 440 | | | | 426 | | | | 437 | | | | 406 | | | | 376 | |
Interest income exempt from federal income taxes | | | 233 | | | | 238 | | | | 245 | | | | 246 | | | | 243 | |
Dividends | | | 23 | | | | 25 | | | | 41 | | | | 26 | | | | 7 | |
Interest on deposits in banks | | | 16 | | | | 7 | | | | 2 | | | | 6 | | | | 11 | |
| | | | | | | | | | | | | | | | | | | | |
Total interest and dividend income | | $ | 6,421 | | | $ | 6,169 | | | $ | 6,265 | | | $ | 6,121 | | | $ | 5,938 | |
| | | | | | | | | | | | | | | | | | | | |
Interest Expense | | | | | | | | | | | | | | | | | | | | |
Interest on deposits | | $ | 201 | | | $ | 190 | | | $ | 185 | | | $ | 182 | | | $ | 185 | |
Interest on federal funds purchased and securities sold under agreements to repurchase | | | — | | | | — | | | | 9 | | | | 1 | | | | — | |
Interest on Federal Home Loan Bank advances | | | 65 | | | | 67 | | | | 69 | | | | 66 | | | | 135 | |
Interest on trust preferred capital notes | | | 41 | | | | 45 | | | | 58 | | | | 78 | | | | 78 | |
| | | | | | | | | | | | | | | | | | | | |
Total interest expense | | $ | 307 | | | $ | 302 | | | $ | 321 | | | $ | 327 | | | $ | 398 | |
| | | | | | | | | | | | | | | | | | | | |
Net interest income | | $ | 6,114 | | | $ | 5,867 | | | $ | 5,944 | | | $ | 5,794 | | | $ | 5,540 | |
Provision For Loan Losses | | | 79 | | | | (250 | ) | | | (410 | ) | | | 300 | | | | 133 | |
| | | | | | | | | | | | | | | | | | | | |
Net interest income after provision for loan losses | | $ | 6,035 | | | $ | 6,117 | | | $ | 6,354 | | | $ | 5,494 | | | $ | 5,407 | |
| | | | | | | | | | | | | | | | | | | | |
Noninterest Income | | | | | | | | | | | | | | | | | | | | |
Income from fiduciary activities | | $ | 328 | | | $ | 236 | | | $ | 318 | | | $ | 356 | | | $ | 428 | |
Service charges on deposit accounts | | | 290 | | | | 319 | | | | 328 | | | | 307 | | | | 290 | |
Other service charges and fees | | | 829 | | | | 769 | | | | 919 | | | | 930 | | | | 756 | |
Gain on the sale of bank premises and equipment | | | — | | | | (81 | ) | | | — | | | | 5 | | | | — | |
Gain (Loss) on sales of AFS securities | | | 85 | | | | 8 | | | | 19 | | | | 22 | | | | 74 | |
Gain on redemption of trust preferred debt | | | — | | | | — | | | | 2,424 | | | | — | | | | — | |
Other operating income | | | 102 | | | | 84 | | | | (179 | ) | | | 24 | | | | 81 | |
| | | | | | | | | | | | | | | | | | | | |
Total noninterest income | | $ | 1,634 | | | $ | 1,335 | | | $ | 3,829 | | | $ | 1,644 | | | $ | 1,629 | |
| | | | | | | | | | | | | | | | | | | | |
Noninterest Expenses | | | | | | | | | | | | | | | | | | | | |
Salaries and employee benefits | | $ | 3,264 | | | $ | 3,121 | | | $ | 3,090 | | | $ | 3,112 | | | $ | 2,995 | |
Occupancy expenses | | | 408 | | | | 387 | | | | 394 | | | | 436 | | | | 346 | |
Equipment expenses | | | 310 | | | | 383 | | | | 312 | | | | 260 | | | | 146 | |
Advertising and marketing expenses | | | 162 | | | | 154 | | | | 155 | | | | 184 | | | | 119 | |
Stationery and supplies | | | 50 | | | | 63 | | | | 67 | | | | 61 | | | | 51 | |
ATM network fees | | | 177 | | | | 210 | | | | 246 | | | | 191 | | | | 158 | |
Other real estate owned expenses | | | — | | | | 252 | | | | 64 | | | | 14 | | | | 6 | |
Loss (gain) on sale of other real estate | | | — | | | | (127 | ) | | | (11 | ) | | | 73 | | | | 19 | |
FDIC assessment | | | 104 | | | | 120 | | | | 108 | | | | 103 | | | | 108 | |
Computer software expense | | | 136 | | | | 149 | | | | 134 | | | | 192 | | | | 221 | |
Bank franchise tax | | | 126 | | | | 131 | | | | 131 | | | | 126 | | | | 117 | |
Professional fees | | | 228 | | | | 311 | | | | 211 | | | | 261 | | | | 242 | |
Other operating expenses | | | 588 | | | | 619 | | | | 616 | | | | 1,118 | | | | 529 | |
| | | | | | | | | | | | | | | | | | | | |
Total noninterest expenses | | $ | 5,553 | | | $ | 5,773 | | | $ | 5,517 | | | $ | 6,131 | | | $ | 5,057 | |
| | | | | | | | | | | | | | | | | | | | |
Income before income taxes | | | 2,116 | | | | 1,679 | | | | 4,666 | | | | 1,007 | | | | 1,979 | |
Income Tax Expense | | | 591 | | | | 324 | | | | 1,377 | | | | 209 | | | | 524 | |
| | | | | | | | | | | | | | | | | | | | |
Net income | | $ | 1,525 | | | $ | 1,355 | | | $ | 3,289 | | | $ | 798 | | | $ | 1,455 | |
| | | | | | | | | | | | | | | | | | | | |
Earnings Per Share | | | | | | | | | | | | | | | | | | | | |
Net income per common share, basic | | $ | 0.43 | | | $ | 0.38 | | | $ | 0.94 | | | $ | 0.23 | | | $ | 0.42 | |
| | | | | | | | | | | | | | | | | | | | |
Net income per common share, diluted | | $ | 0.43 | | | $ | 0.38 | | | $ | 0.94 | | | $ | 0.23 | | | $ | 0.42 | |
| | | | | | | | | | | | | | | | | | | | |
EAGLE FINANCIAL SERVICES, INC.
Average Balances, Income and Expenses, Yields and Rates
(dollars in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | For the Three Months Ended | |
| | | March 31, 2016 | | | December 31, 2015 | | | March 31, 2015 | |
| | | Average
Balance | | | Interest
Income/
Expense | | | Average
Yield | | | Average
Balance | | | Interest
Income/
Expense | | | Average
Yield | | | Average
Balance | | | Interest
Income/
Expense | | | Average
Yield | |
Assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Securities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Taxable | | $ | 73,313 | | | $ | 1,862 | | | | 2.54 | % | | $ | 31,234 | | | $ | 1,789 | | | | 5.73 | % | | $ | 64,715 | | | $ | 1,553 | | | | 2.40 | % |
Tax-Exempt(1) | | | 31,424 | | | | 1,421 | | | | 45.20 | % | | | 72,804 | | | | 1,432 | | | | 1.97 | % | | | 31,608 | | | | 1,493 | | | | 4.72 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Securities | | $ | 104,737 | | | $ | 3,283 | | | | 3.13 | % | | $ | 104,038 | | | $ | 3,221 | | | | 3.10 | % | | $ | 96,323 | | | $ | 3,046 | | | | 3.16 | % |
Loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Taxable | | $ | 489,657 | | | $ | 22,740 | | | | 4.64 | % | | $ | 479,294 | | | $ | 21,498 | | | | 4.49 | % | | $ | 450,701 | | | $ | 21,211 | | | | 4.71 | % |
Nonaccrual | | | 5,122 | | | | — | | | | 0.00 | % | | | 5,451 | | | | — | | | | 0.00 | % | | | 7,605 | | | | — | | | | 0.00 | % |
Tax-Exempt(1) | | | 6,479 | | | | 333 | | | | 5.14 | % | | | 6,406 | | | | 326 | | | | 5.09 | % | | | 7,765 | | | | 436 | | | | 5.62 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Loans | | $ | 501,258 | | | $ | 23,073 | | | | 4.60 | % | | $ | 491,151 | | | $ | 21,824 | | | | 4.44 | % | | $ | 466,071 | | | $ | 21,647 | | | | 4.64 | % |
Federal funds sold | | | — | | | | — | | | | 0.00 | % | | | — | | | | — | | | | 0.00 | % | | | — | | | | — | | | | 0.00 | % |
Interest-bearing deposits in other banks | | | 14,254 | | | | 64 | | | | 0.45 | % | | | 12,170 | | | | 28 | | | | 0.23 | % | | | 21,140 | | | | 45 | | | | 0.21 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total earning assets | | $ | 615,127 | | | $ | 26,420 | | | | 4.30 | % | | $ | 601,908 | | | $ | 25,072 | | | | 4.17 | % | | $ | 575,929 | | | $ | 24,738 | | | | 4.30 | % |
Allowance for loan losses | | | (5,026 | ) | | | | | | | | | | | (5,160 | ) | | | | | | | | | | | (5,194 | ) | | | | | | | | |
Total non-earning assets | | | 46,035 | | | | | | | | | | | | 43,494 | | | | | | | | | | | | 47,150 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total assets | | $ | 656,136 | | | | | | | | | | | $ | 640,242 | | | | | | | | | | | $ | 617,885 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Liabilities and Shareholders’ Equity: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest-bearing deposits: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
NOW accounts | | $ | 82,710 | | | $ | 97 | | | | 0.12 | % | | $ | 81,189 | | | $ | 83 | | | | 0.10 | % | | $ | 79,846 | | | $ | 85 | | | | 0.11 | % |
Money market accounts | | | 112,140 | | | | 189 | | | | 0.17 | % | | | 104,364 | | | | 119 | | | | 0.11 | % | | | 96,200 | | | | 110 | | | | 0.11 | % |
Savings accounts | | | 82,436 | | | | 44 | | | | 0.05 | % | | | 79,376 | | | | 43 | | | | 0.05 | % | | | 72,723 | | | | 37 | | | | 0.05 | % |
Time deposits: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
$100,000 and more | | | 39,540 | | | | 205 | | | | 0.52 | % | | | 37,126 | | | | 190 | | | | 0.51 | % | | | 35,303 | | | | 170 | | | | 0.48 | % |
Less than $100,000 | | | 52,261 | | | | 273 | | | | 0.52 | % | | | 56,207 | | | | 317 | | | | 0.56 | % | | | 59,440 | | | | 345 | | | | 0.58 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total interest-bearing deposits | | $ | 369,087 | | | $ | 808 | | | | 0.22 | % | | $ | 358,262 | | | | 754 | | | | 0.21 | % | | $ | 343,512 | | | $ | 746 | | | | 0.22 | % |
Federal funds purchased and securities sold under agreements to repurchase | | | 32 | | | | — | | | | 0.00 | % | | | 2 | | | | 0 | | | | 0.00 | % | | | — | | | | — | | | | 0.00 | % |
Federal Home Loan Bank advances | | | 20,000 | | | | 426 | | | | 2.13 | % | | | 23,152 | | | | 266 | | | | 1.15 | % | | | 29,444 | | | | 548 | | | | 1.86 | % |
Trust preferred capital notes | | | — | | | | — | | | | 0.00 | % | | | — | | | | 177 | | | | NM | (2) | | | 7,217 | | | | 316 | | | | 4.38 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total interest-bearing liabilities | | $ | 389,119 | | | $ | 1,234 | | | | 0.32 | % | | $ | 381,416 | | | | 1,196 | | | | 0.31 | % | | $ | 380,173 | | | $ | 1,610 | | | | 0.42 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Noninterest-bearing liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Demand deposits | | | 183,242 | | | | | | | | | | | | 181,147 | | | | | | | | | | | | 161,381 | | | | | | | | | |
Other Liabilities | | | 4,850 | | | | | | | | | | | | 0 | | | | | | | | | | | | 2,823 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total liabilities | | $ | 577,211 | | | | | | | | | | | $ | 562,563 | | | | | | | | | | | $ | 544,377 | | | | | | | | | |
Shareholders’ equity | | | 78,925 | | | | | | | | | | | | 77,679 | | | | | | | | | | | | 73,508 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total liabilities and shareholders’ equity | | $ | 656,136 | | | | | | | | | | | $ | 640,242 | | | | | | | | | | | $ | 617,885 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net interest income | | | | | | $ | 25,186 | | | | | | | | | | | $ | 23,876 | | | | | | | | | | | $ | 23,128 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net interest spread | | | | | | | | | | | 3.98 | % | | | | | | | | | | | 3.85 | % | | | | | | | | | | | 3.88 | % |
Interest expense as a percent of average earning assets | | | | | | | | | | | 0.20 | % | | | | | | | | | | | 0.20 | % | | | | | | | | | | | 0.28 | % |
Net interest margin | | | | | | | | | | | 4.09 | % | | | | | | | | | | | 3.97 | % | | | | | | | | | | | 4.02 | % |
| (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 | |
| | | 3/31/2016 | | | 12/31/2015 | | | 9/30/2015 | | | 6/30/2015 | | | 3/31/2015 | |
GAAP Financial Measurements: | | | | | | | | | | | | | | | | | | | | |
Interest Income - Loans | | $ | 5,709 | | | $ | 5,473 | | | $ | 5,541 | | | $ | 5,437 | | | $ | 5,301 | |
Interest Income - Securities and Other Interest-Earnings Assets | | | 712 | | | | 696 | | | | 725 | | | | 684 | | | | 637 | |
Interest Expense - Deposits | | | 201 | | | | 190 | | | | 185 | | | | 182 | | | | 184 | |
Interest Expense - Other Borrowings | | | 106 | | | | 112 | | | | 136 | | | | 145 | | | | 213 | |
| | | | | | | | | | | | | | | | | | | | |
Total Net Interest Income | | $ | 6,114 | | | $ | 5,867 | | | $ | 5,945 | | | $ | 5,794 | | | $ | 5,541 | |
Non-GAAP Financial Measurements: | | | | | | | | | | | | | | | | | | | | |
Add: Tax Benefit on Tax-Exempt Interest Income - Loans | | $ | 28 | | | $ | 28 | | | $ | 29 | | | $ | 25 | | | $ | 36 | |
Add: Tax Benefit on Tax-Exempt Interest Income - Securities | | | 120 | | | | 123 | | | | 126 | | | | 127 | | | | 125 | |
| | | | | | | | | | | | | | | | | | | | |
Total Tax Benefit on Tax-Exempt Interest Income | | $ | 148 | | | $ | 151 | | | $ | 155 | | | $ | 152 | | | $ | 161 | |
| | | | | | | | | | | | | | | | | | | | |
Tax-Equivalent Net Interest Income | | $ | 6,262 | | | $ | 6,018 | | | $ | 6,100 | | | $ | 6,946 | | | $ | 5,702 | |
| | | | | | | | | | | | | | | | | | | | |
