Eagle Financial Services, Inc. Announces 2013 Third Quarter Financial Results And Quarterly Dividend

Eagle Financial Services, Inc. Announces 2013 Third Quarter Financial Results
                            And Quarterly Dividend

PR Newswire

BERRYVILLE, Va., Oct. 18, 2013

BERRYVILLE, Va., Oct. 18, 2013 /PRNewswire/ --Eagle Financial Services, Inc.
(OTC BULLETIN BOARD: EFSI), the holding company for Bank of Clarke County,
whose divisions include Eagle Investment Group, today announced earnings of
$1.5 million, or $0.44 per diluted share, for the quarter ended September 30,
2013. This is a 20.1% increase from the $1.3 million in earnings, or $0.37
per diluted share, for the same period in 2012.

Selected Financial Highlights:

                                          2013           2012
Three months ended:                       Q3     Q2      Q3
Net income (000's)                        $1,505 $2,001  $1,253
Diluted EPS                               $0.44  $0.59   $0.37
Net Interest Margin                       4.28%  4.28%   4.40%
Total equity to assets                    11.21% 11.00%  10.94%
Allowance for loan losses to total loans  1.53%  1.60%   1.86%
Provision for loan losses (000's)         $0     $384    $1,050

John R. Milleson, President and CEO, stated "The Company is proud to report
another quarter of solid earnings and continued loan growth. Several credit
quality metrics are stabilizing thereby allowing the Company to better focus
on future growth of the loan portfolio. We are excited about our reception
from the Loudoun County market and look forward to further expansion there.
The $0.76 dividend per share for 2013 is the 27^th consecutive year with a
dividend increase and a testimony to management's and the board of directors'
confidence in the Company's strategic growth plans."

Income Statement Review

Net income for the quarter ended September 30, 2013 decreased 24.8% to $1.5
million when compared to the $2.0 million for the quarter ended June 30, 2013.
Net income in the second quarter of 2013 benefited from several one-time
events totaling approximately $775,000. Net income increased 20.1% for the
quarter ended September 30, 2013 when compared to the $1.3 million for the
quarter ended September 30, 2012.

Net interest income for the quarter ended September 30, 2013 increased 1.5% to
$5.7 million when compared to the $5.6 million for the quarter ended June 30,
2013. Net interest income was $5.8 million for the quarter ended September 30,
2012.

Total loan interest income was $5.4 million for the quarter ended September
30, 2013 and $5.3 million for the quarter ended June 30, 2013. Average loans
for the quarter ended September 30, 2013 were $434.7 million compared to
$425.1 million for the quarter ended June 30, 2013. Total average accruing
loans were $432.2 million for the three months ended September 30, 2013 and
$422.4 million for the quarter ended June 30, 2013. For the third quarter of
2012, total average loans were $428.2 million and average accruing loans were
$425.2 million. The tax equivalent yield on average loans for the quarter
ended September 30, 2013 was 4.99%, down 13 basis points from 5.12% for the
quarter ended June 30, 2013. The reversal of interest income for the loans
placed on nonaccrual status during the quarter contributed to the decrease in
yield. Interest income from the investment portfolio was $845,000 for the
quarter ended September 30, 2013 and $874,000 for the quarter ended June 30,
2013. Average investments were $106.8 million for the quarter ended September
30, 2013 and $113.5 million for the quarter ended June 30, 2013. Interest
income from the investment portfolio was $948,000 while average investments
were $105.8 million for the quarter ended September 30, 2012.

Total interest expense was $627,000 for the three months ended September 30,
2013 and $640,000 for the same period ended June 30, 2013. The average cost of
interest bearing liabilities decreased three basis points when comparing the
quarter ended September 30, 2013 to the quarter ended June 30, 2013. The
average balance of interest bearing liabilities decreased $2.7 million from
the quarter ended June 30, 2013. The net interest margin was 4.28% for the
quarters ended September 30, 2013 and June 30, 2013. For the quarter ended
September 30, 2012, total interest expense was $820,000 and the net interest
margin was 4.40%. 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 decreased $888,000 or 36.0% to $1.6 million for the quarter
ended September 30, 2013 when compared to $2.5 million for the three months
ended June 30, 2013. The Company incurred several one-time events during the
second quarter of 2013, including the sale of its merchant portfolio for a net
gain of $399,000, the receipt of a signing bonus of $121,000 from its current
debit card vendor for extending its contract and remaining exclusive to this
provider and recognition of $254,000 of income related to the termination of a
bank owned life insurance policy. Noninterest income for the quarter ended
September 30, 2012 was $1.6 million.

Noninterest expense was $5.2 million for the quarter ended September 30,
2013. This represents an increase of $220,000 or 4.4% from $5.0 million for
the quarter ended June 30, 2013. Much of this increase related to net losses
resulting from the sales of other real estate owned. During the third quarter
of 2013, the Company sold two pieces of other real estate owned for a total
net loss of $110,000. Net gains of $53,000 were recognized on the sales of
other real estate owned for the quarter ended June 30, 2013. Noninterest
expense increased $595,000 or 13.0% when compared to $4.6 million for the
quartered ended September 30, 2012. In addition to the net loss on sales of
other real estate owned, salaries and employee benefits also contributed to
the increase with the addition of the Company's newest retail branch in May of
2013. Several new employees were hired to staff the new branch, which is
located in Purcellville, VA, during the first and second quarters of 2013. The
Purcellville location has also contributed to increases in the Company's
occupancy expenses. Occupancy expenses increased 5.3% and 20.4%, respectively
when the quarter ended September 30, 2013 is compared to the quarters ended
June 30, 2013 and September 30, 2012, respectively.

Other operating expenses increased $76,000 or 6.8% and $171,000 or 16.8% when
comparing the quarter ended September 30, 2013 to the quarters ended June 30,
2013 and September 30, 2012, respectively. The increases resulted from
increases in various other expense categories including accounting fees,
educational expenses, FDIC deposit insurance, expenses associated with other
real estate owned and loan related expenses.

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 increased from $5.2 million or
0.89% of total assets at June 30, 2013 to $6.4 million or 1.10% of total
assets at September 30, 2013. This increase resulted mostly from the increase
in non-accrual loans. During the third quarter of 2013, the Bank placed four
loans totaling $1.7 million on non-accrual status. Although one of the loans
placed on nonaccrual status during the third quarter was a $1.2 million
commercial loan, 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.
No real estate assets had been foreclosed upon during the third quarter of
2013 while two were sold during that same period. Loans greater than 90 days
past due and still accruing decreased from $201,000 at June 30, 2013 to
$147,000 at September 30, 2013. Nonperforming assets were $7.5 million or
1.30% of total assets at September 30, 2012.

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, 2013, the Company had 29 troubled debt restructurings totaling
$8.5 million. All but three of the loans are performing loans.

The Company realized $260,000 in net charge-offs for the quarter ended
September 30, 2013 versus $366,000 for the three months ended June 30, 2013.
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, 2012 were $1.7 million.

Despite the increase in nonperforming loans, there were no provisions for loan
losses made during the third quarter of 2013. 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. Provisions for loan losses were $384,000 for the three months
ended June 30, 2013 and $1.1 million for the quarter ended September 30, 2012.
The allowance for loan losses was $6.7 million, or 1.53% of total outstanding
loans, at September 30, 2013. At June 30, 2013 and September 30, 2012, the
allowance for loan losses was $7.0 million and $8.0 million, respectively.

Total Consolidated Assets

Total consolidated assets of the Company at September 30, 2013 were $583.5
million, which represented a decrease of $2.2 million or 0.4% from total
assets of $585.7 million at June 30, 2013. This decrease was driven mostly by
the sales and other dispositions of investment securities. At September 30,
2012, total consolidated assets were $574.2 million. Total loans increased
slightly from $436.4 million at June 30, 2013 to $438.1 million at September
30, 2013. Considering the current interest rate and competitive market
environment, the Company remains diligent to both its underwriting standards
and its net interest margin maintenance and accordingly is cautious about the
growth it has accepted in the loan portfolio. Total loans were $427.5 million
at September 30, 2012.

Deposits and Other Borrowings

Total deposits, which include brokered deposits, increased $1.2 million to
$474.5 million at September 30, 2013 from $473.3 million at June 30, 2013. At
September 30, 2012, total deposits were $457.2 million. The Company held $9.9
million in brokered deposits for the quarters ended at September 30, 2013,
June 30, 2013 and September 30, 2012.

There was no balance of fed funds purchased and securities sold under
agreement to repurchase at September 30, 2013. At June 30, 2013 and September
30, 2012, fed funds purchased and securities sold under agreement to
repurchase were $5.6 million and $10.0 million, respectively. Borrowings with
the Federal Home Loan Bank of Atlanta were $32.3 million at September 30,
2013, June 30, 2013 and September 30, 2012.

Equity

Shareholders' equity at September 30, 2013 was $65.4 million, reflecting an
increase of $1.0 million from $64.4 million at June 30, 2013. At September
30, 2012 shareholders' equity was $62.8 million. The book value of the Company
at September 30, 2013 was $19.36 per common share. Total common shares
outstanding were 3,400,711 at September 30, 2013. On October 16, 2013, the
board of directors declared a $0.19 per common share cash dividend for
shareholders of record as of November 1, 2013 and payable on November 15,
2013.

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



EAGLE FINANCIAL SERVICES, INC.
KEY STATISTICS           For the Three Months Ended
                         3Q13       2Q13       1Q13       4Q12       3Q12
Net Income (dollars in   $      $      $      $       $   
thousands)               1,505     2,001     1,803     1,581     1,253
Earnings per share,      $      $      $      $      $    
basic                     0.44     0.59     0.54    0.47      0.38
Earnings per share,      $      $      $      $      $    
diluted                   0.44     0.59     0.53    0.47      0.37
Return on average total  1.03%      1.40%      1.27%      1.08%      0.88%
assets
Return on average total  9.25%      12.51%     11.42%     9.95%      8.01%
equity
Dividend payout ratio    43.18%     32.20%     35.19%     40.43%     47.37%
Fee revenue as a percent 21.36%     25.86%     20.02%     20.32%     20.40%
of total revenue
Net interest margin^(1)  4.28%      4.28%      4.29%      4.31%      4.40%
Yield on average earning 4.73%      4.76%      4.81%      4.91%      5.01%
assets
Yield on average
interest-bearing         0.66%      0.69%      0.75%      0.83%      0.85%
liabilities
Net interest spread      4.07%      4.07%      4.06%      4.08%      4.16%
Tax equivalent
adjustment to net        $      $      $      $      $    
interest income (dollars   180      186      192     198       200
in thousands)
Non-interest income to   1.09%      1.73%      1.36%      1.05%      1.07%
average assets
Non-interest expense to  3.55%      3.48%      3.23%      3.41%      3.16%
average assets
Efficiency ratio^(2)     69.63%     60.18%     62.71%     60.91%     61.36%



    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
(1) 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.
    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
(2) 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
                         3Q13       2Q13       1Q13       4Q12       3Q12
BALANCE SHEET RATIOS
 Loans to deposits       92.32%     92.19%     89.59%     87.63%     93.51%
 Average
 interest-earning assets
 to
  average-interest    145.62%    145.49%    152.08%    139.30%    143.90%
 bearing liabilities
PER SHARE DATA
 Dividends               $      $      $      $      $    
                          0.19     0.19     0.19     0.19     0.18
 Book value              $      $      $      $      $    
                         19.36     19.13     19.36     19.11     18.78
 Tangible book value     $      $      $      $      $    
                         19.36     19.13     19.36     19.11     18.78
SHARE PRICE DATA
 Closing price           $      $      $      $      $    
                         23.75     23.35     22.10     22.00     21.50
 Diluted earnings        13.49      9.89       10.42      11.70      14.53
 multiple(1)
 Book value multiple(2)  1.23       1.22       1.14       1.15       1.15
COMMON STOCK DATA
 Outstanding shares at   3,400,711  3,388,005  3,372,080  3,352,523  3,344,737
 end of period
 Weighted average shares 3,393,519  3,373,353  3,367,689  3,348,630  3,341,050
 outstanding
 Weighted average shares 3,405,225  3,383,748  3,378,369  3,359,611  3,352,337
 outstanding, diluted
CAPITAL RATIOS
 Total equity to total   11.21%     11.00%     11.17%     10.74%     10.94%
 assets
CREDIT QUALITY
 Net charge-offs to      0.06%      0.09%      0.00%      0.33%      0.41%
 average loans
 Total non-performing    0.98%      0.59%      0.79%      0.63%      1.19%
 loans to total loans
 Total non-performing    1.10%      0.89%      1.08%      0.94%      1.30%
 assets to total assets
 Non-accrual loans to:
  total loans       0.94%      0.55%      0.64%      0.58%      1.19%
  total assets      0.71%      0.41%      0.47%      0.41%      0.89%
 Allowance for loan
 losses to:
  total loans       1.53%      1.60%      1.64%      1.57%      1.86%
  non-performing     104.64%    133.55%    110.88%    118.38%    106.64%
 assets
  non-accrual loans  162.70%    291.48%    256.07%    272.45%    156.37%
NON-PERFORMING ASSETS:
(dollars in thousands)
  Loans delinquent    $      $      $      $      $    
 over 90 days              147      201      631      208       10
  Non-accrual         4,129      2,394      2,718      2,414      5,091
 loans
  Other real estate
 owned and repossessed   2,144      2,630      2,928      2,934      2,364
 assets
NET LOAN CHARGE-OFFS
(RECOVERIES):
(dollars in thousands)
  Loans charged off   $      $      $      $      $    
                           385      403       42   1,516     1,801
  (Recoveries)        (125)      (37)       (42)       (122)      (84)
 Net charge-offs         260        366        -          1,394      1,717
 (recoveries)
PROVISION FOR LOAN       $      $      $      $      $    
LOSSES (dollars in          -     384      383       10   1,050
thousands)
ALLOWANCE FOR LOAN LOSS
SUMMARY
(dollars in thousands)
 Balance at the          $      $      $      $      $    
 beginning of period     6,978     6,960     6,577     7,961     8,628
 Provision               -          384        383        10         1,050
 Net charge-offs         260        366        -          1,394      1,717
 (recoveries)
 Balance at the end of   $      $      $      $      $    
 period                  6,718     6,978     6,960     6,577     7,961



    The diluted earnings multiple is calculated by dividing the period's
    closing market price per share by the annualized diluted earnings per
(1) 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.
    The book value multiple (or price to book ratio) is calculated by dividing
(2) 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
                   9/30/2013    6/30/2013    3/31/2013  12/31/2012   9/30/2012
Assets
Cash and due from  $         $         $       $         $   
banks              17,686      10,632      21,829    48,690      21,812
Federal funds sold -            -            -          -            -
Securities
available for      104,753      109,145      115,001    105,531      103,963
sale, at fair
value
Loans, net of
allowance for loan 431,346      429,379      416,890    411,520      419,538
losses
Bank premises and  17,231       17,287       16,834     16,545       16,420
equipment, net
Other assets       12,489       19,230       10,292     10,990       12,419
      $          $          $        $          $  
Total assets       583,505     585,673     580,846   593,276     574,152
Liabilities and
Shareholders'
Equity
Liabilities
 Deposits:
 Noninterest $          $          $        $          $  
bearing demand     143,156     135,802     135,650   134,871     122,093
deposits
 Savings and
interest bearing   230,581      234,430      227,876    231,249      219,984
demand deposits
 Time        100,790      103,080      109,554    110,981      115,101
deposits
 Total    $          $          $        $          $  
deposits           474,527     473,312     473,080   477,101     457,178
 Federal funds
purchased and
securities
 sold under
agreements to      -            5,616        -          10,000       10,000
repurchase
 Federal Home   32,250       32,250       32,250     32,250       32,250
Loan Bank advances
 Trust
preferred capital  7,217        7,217        7,217      7,217        7,217
notes
 Other          4,093        2,860        3,429      3,002        4,709
liabilities
 Commitments
and contingent     -            -            -          -            -
liabilities
      $          $          $        $          $  
Total liabilities  518,087     521,255     515,976   529,570     511,354
Shareholders'
Equity
 Preferred      $       $       $      $       $    
stock, $10 par       -         -          -     -          -
value
 Common stock,  8,449        8,417        8,376      8,340        8,312
$2.50 par value
 Surplus        11,276       10,935       10,636     10,424       10,218
 Retained       44,879       44,018       42,657     41,494       40,548
earnings
 Accumulated
other              814          1,048        3,201      3,448        3,720
comprehensive
income

Total              $         $         $       $         $   
shareholders'      65,418      64,418      64,870    63,706      62,798
equity

Total liabilities  $          $          $        $          $  
and shareholders'  583,505     585,673     580,846   593,276     574,152
equity





EAGLE FINANCIAL
SERVICES, INC.
CONSOLIDATED STATEMENTS
OF INCOME
(dollars in thousands)
Unaudited
                        Three Months Ended
                        9/30/2013  6/30/2013  3/31/2013  12/31/2012  9/30/2012
Interest and Dividend
Income
 Interest and    $      $      $      $       $    
fees on loans           5,446     5,343     5,331     5,532      5,634
 Interest on     -          -          -          -           -
federal funds sold
 Interest and
dividends on securities
available for sale:
 Taxable   500        518        547        511         524
interest income
 Interest
income exempt from      307        314        324        335         337
federal income taxes
 Dividends 38         42         67         87          87
 Interest on     3          6          10         14          4
deposits in banks
     $      $      $      $       $    
Total interest and      6,294     6,223     6,279     6,479      6,586
dividend income
Interest Expense
 Interest on     $      $      $      $       $    
deposits                  269      288      326      368       377
 Interest on
federal funds purchased
and securities
 sold under
agreements to           2          1          29         90          90
repurchase
 Interest on
Federal Home Loan Bank  276        273        270        276         273
advances
 Interest on
trust preferred capital 80         78         78         80          80
notes
      $      $      $      $       $    
Total interest expense    627      640      703      814       820
 Net  $      $      $      $       $    
interest income         5,667     5,583     5,576     5,665      5,766
Provision For Loan      -          384        383        10          1,050
Losses
 Net
interest income after   $      $      $      $       $    
provision for loan      5,667     5,199     5,193     5,655      4,716
losses
Noninterest Income
 Income from     $      $      $      $       $    
fiduciary activities      296      273      360      237       205
 Service charges 377        366        343        397         390
on deposit accounts
 Other service   874        1,443      800        828         898
charges and fees
 Gain on the
sale of bank premises   -          -          -          -           -
and equipment
 Gain (Loss) on  -          10         390        30          1
sales of AFS securities
 Other operating 34         377        39         39          59
income
     $      $      $      $       $    
Total noninterest       1,581     2,469     1,932     1,531      1,553
income
Noninterest Expenses
 Salaries and    $      $      $      $       $    
employee benefits       2,926     2,910     2,641     2,699      2,651
 Occupancy       336        319        281        289         279
expenses
 Equipment       151        191        155        163         162
expenses
 Advertising and 150        144        127        123         132
marketing expenses
 Stationery and  57         68         78         58          91
supplies
 ATM network     157        143        157        132         139
fees
 Other real      2          20         8          304         8
estate owned expenses
 FDIC assessment 93         96         97         90          96
 (Gain) loss on
the sale of other real  110        (53)       -          2           -
estate owned
 Other operating 1,190      1,114      1,040      1,121       1,019
expenses
     $      $      $      $       $    
Total noninterest       5,172     4,952     4,584     4,981      4,577
expenses
     $      $      $      $       $    
Income before income    2,076     2,716     2,541     2,205      1,692
taxes
Income Tax Expense      571        715        738        624         439
 Net $      $      $      $       $    
income                  1,505     2,001     1,803     1,581      1,253
Earnings Per Share
 Net income per  $      $      $      $       $    
common share, basic      0.44     0.59     0.54     0.47      0.38
 Net income per  $      $      $      $       $    
common share, diluted    0.44     0.59     0.53     0.47      0.37







EAGLE FINANCIAL SERVICES, INC.
Average Balances, Income and Expenses, Yields and
Rates
(dollars in thousands)
                    For the Three Months Ended
                    September 30, 2013            June 30, 2013                 September 30, 2012
                               Interest                      Interest                     Interest
                    Average    Income/  Average   Average    Income/  Average   Average   Income/  Average
Assets:             Balance    Expense  Yield     Balance    Expense  Yield     Balance   Expense  Yield
Securities:
 Taxable     $70,559    $2,142   3.04%     $          $       2.98%     $        $ 2,431 3.62%
                                                  76,102    2,267             67,170
 Tax-Exempt  36,280     1,842    5.08%     37,437     1,933    5.16%     38,655    2,035    5.26%
^(1)
 Total   $106,839   $3,984   3.73%     $113,539   $       3.70%     $         $ 4,466 4.22%
Securities                                                   4,200             105,825
Loans:
 Taxable     $427,895   $21,436  5.01%     $417,906   $        5.14%     $         $22,214  5.28%
                                                             21,478            420,495
 Nonaccrual 2,494      -        0.00%     2,692      -        0.00%     2,943     -        0.00%
 Tax-Exempt  4,296      252      5.88%     4,531      285      6.29%     4,747     302      6.37%
^(1)
 Total   $434,685   $21,688  4.99%     $425,129   $        5.12%     $         $22,516  5.26%
Loans                                                        21,763            428,185
Federal funds sold  -          -        0.00%     -          -        0.00%     -         -        0.00%
Interest-bearing
deposits in other   3,610      12       0.33%     10,190     24       0.23%     7,815     16       0.20%
banks
 Total   $542,640   $25,684  4.73%     $546,166   $        4.76%     $         $26,997  5.01%
earning assets                                               25,987            538,882
Allowance for loan  (7,213)                       (7,137)                       (8,395)
losses
Total non-earning   39,801                        38,813                        35,570
assets
Total assets        $577,722                      $577,842                      $
                                                                                569,000
Liabilities and
Shareholders'
Equity:
Interest-bearing
deposits:
 NOW         $83,995    $95      0.11%     $          $     0.12%     $        $      0.17%
accounts                                          83,485    101                81,272    138
 Money       87,209     111      0.13%     87,654     110      0.12%     84,304    198      0.24%
market accounts
 Savings     59,788     28       0.05%     58,997     28       0.05%     53,796    32       0.06%
accounts
Time deposits:
 $100,000    36,486     218      0.60%     38,478     247      0.64%     46,015    349      0.76%
and more
 Less than   64,802     611      0.94%     67,143     677      1.01%     70,488    784      1.11%
$100,000
 Total                                                               $
interest-bearing    $332,280   $1,063   0.32%     $335,757   1,164    0.35%     335,875   $ 1,502 0.45%
deposits
Federal funds
purchased and
securities
 sold under
agreements to       902        8        0.88%     169        0        0.00%     10,008    356      3.56%
repurchase
Federal Home Loan   32,250     1,091    3.38%     32,250     1,107    3.43%     32,250    1,085    3.37%
Bank advances
Trust preferred     7,217      313      4.34%     7,217      324      4.50%     7,217     318      4.41%
capital notes
 Total                                                               $
interest-bearing    $372,649   $2,476   0.66%     $375,393   2,596    0.69%     385,350   $ 3,262 0.85%
liabilities
Noninterest-bearing
liabilities:
 Demand      137,136                       134,867                       117,144
deposits
 Other       3,389                         2,703                         4,267
Liabilities
 Total   $513,174                      $512,963                      $
liabilities                                                                     506,761
Shareholders'       64,548                        64,879                        62,239
equity
Total liabilities                                                               $
and shareholders'   $577,722                      $577,842                      569,000
equity
Net interest income            $23,209                       $23,392                      $23,736
Net interest spread                     4.07%                         4.07%                        4.16%
Interest expense as
a percent of
 average                            0.46%                         0.48%                        0.61%
earning assets
Net interest margin                     4.28%                         4.28%                        4.40%

(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
                         9/30/2013   6/30/2013 3/31/2013 12/31/2012  9/30/2012
GAAP Financial
Measurements:
 Interest Income -     $       $     $     $       $    
Loans                    5,445      5,342    5,331    5,532      5,634
 Interest Income -
Securities and Other     849         880       947       947         952
Interest-Earnings Assets
 Interest Expense -    269         287       326       368         377
Deposits
 Interest Expense -    355         353       377       446         443
Other Borrowings
Total Net Interest       $       $     $     $       $    
Income                   5,670      5,582    5,575    5,665      5,766
Non-GAAP Financial
Measurements:
 Add: Tax Benefit on  $      $     $     $      $    
Tax-Exempt Interest        22         24     25    26         26
Income - Loans
 Add: Tax Benefit on
Tax-Exempt Interest      158         162       167       172         174
Income - Securities
Total Tax Benefit on     $      $     $     $      $    
Tax-Exempt Interest       180         186     192    198         200
Income
Tax-Equivalent Net       $       $     $     $       $    
Interest Income          5,850      5,768    5,767    5,863      5,966







SOURCE Eagle Financial Services, Inc.

Contact: Kathleen J. Chappell, Vice President and CFO, 540-955-2510,
kchappell@bankofclarke.com
 
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