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Eagle Financial Services, Inc. Announces 2013 Fourth Quarter And Record Annual Earnings

Eagle Financial Services, Inc. Announces 2013 Fourth Quarter And Record Annual
                                   Earnings

PR Newswire

BERRYVILLE, Va., Feb. 7, 2014

BERRYVILLE, Va., Feb. 7, 2014 /PRNewswire/ --Eagle Financial Services, Inc.
(OTC BULLETIN BOARD: EFSI), the holding company for Bank of Clarke County,
whose divisions include Eagle Investment Group, announces its 2013 fourth
quarter and record annual profits. The Company's common stock is listed for
trading on the Over-the-Counter (OTC) Bulletin Board under the ticker symbol
EFSI.

Fourth Quarter and Annual 2013 Highlights:
                                          Q4      Annual
 Net income (000's)                       $1,849  $7,158
 Diluted EPS                              $0.54   $2.10
 Net Interest Margin                      4.17%   4.24%
 Net Loan Growth (000's)                  $7,439  $27,265
 Allowance for loan losses to total loans         1.24%
 Total equity to assets                           11.36%

John R. Milleson, President and CEO, stated, "While it is certainly gratifying
to again report record annual earnings, much of our attention, energy and
focus lie on the months ahead with continued efforts to build market share in
Loudoun County. As usual, we will remain committed to strong financial
performance for our shareholders while at the same time enhancing products,
services and delivery channel alternatives to improve our competitiveness and
better serve our customers in our current and expanding market areas."

Income Statement Review

Net income for the quarter ended December 31, 2013 was $1.8 million reflecting
an increase of 17.0% from the quarter ended December 31, 2012. Net income was
$7.2 million for the year ended December 31, 2013 which represented an
increase of 9.3% when compared to net income for the same period in 2012.
These increases resulted mostly from reduced loan loss provisions.

Net interest income for the quarter ended December 31, 2013 was $5.6 million,
which represented a decrease of 0.7% when compared to $5.7 million for the
same period in 2012. Net interest income for the year ended December 31, 2013
was $22.5 million which represented a decrease of 3.2% when compared to $23.2
million in 2012. This decrease in net interest income for the year resulted
mainly from the decline in the yields of the Company's earning assets.

Total loan interest income was $5.4 million for the quarter ended December 31,
2013, reflecting a decrease of $122,000 from the quarter ended December 31,
2012. Total loan interest income was $21.5 million for the year ended
December 31, 2013, reflecting a decrease of $1.1 million from the year ended
December 31, 2012. Average loans for the quarter ended December 31, 2013 were
$441.1 million compared to $420.2 million for the same period in 2012.
Average loans for the year ended December 31, 2013 were $430.0 million
compared to $420.8 million for 2012. The tax equivalent yield on average
loans for the quarter ended December 31, 2013 was 4.89%, down 37 basis points
from the same time period in 2012. The tax equivalent yield on average loans
for the year ended December 31, 2013 was 5.03%, down 36 basis points from
2012. Interest income from the investment portfolio was $826,000 thousand for
the quarter ended December 31, 2013, reflecting a decrease of 11.5% when
compared to $933,000 for the same period in 2012. Interest income from the
investment portfolio was $3.5 million for the year ended December 31, 2013 and
$4.0 million for the same period in 2012.

Total interest expense was $614,000 for the three months ended December 31,
2013 and $814,000 for three months ended December 31, 2012. Total interest
expense for the year ended December 31, 2013 was $2.6 million, representing a
decrease of $799,000 or 23.6% from the year ended December 31, 2012. The
average cost of interest bearing liabilities decreased 18 basis points when
comparing the quarter ended December 31, 2013 to the same time period in
2012. The average cost of interest bearing liabilities decreased 18 basis
points when comparing the year ended December 31, 2013 to the same time period
in 2012. The average balance of interest bearing liabilities decreased $13.4
million from the quarter ended December 31, 2012 to the same period in 2013.
The average balance of interest bearing liabilities decreased $12.2 million
from the year ended December 31, 2012 to the same period in 2013. The decline
in interest bearing liabilities for both periods resulted mostly from the
December 2013 prepayment of a $10.0 million advance with Federal home Loan
Bank of Atlanta.

The net interest margin was 4.17% for the quarter ended December 31, 2013.
When compared to the quarter ended December 31, 2012, the net interest margin
decreased 14 basis points. The net interest margin was 4.24% for the year
ended December 31, 2013. When compared to the year ended December 31, 2012,
the net interest margin decreased 23 basis points. This decrease was
attributable to the decreased yield on interest earning assets as higher
yielding assets had been repriced or replaced at lower current market rates.

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 $1.5 million for the quarters ended December 31, 2013
and 2012. Noninterest income was $7.5 million for the year ended December 31,
2013 and $6.1 million for the same period in 2012. The Company incurred
several one-time events during 2013, including the sale of the Bank's merchant
processing business. The sale of the merchant portfolio resulted in a net
gain of $399,000. Total proceeds from the transaction of $450,000 are
reflected in other service charges and fees while broker, legal and other
related expenses are reflected in non-interest expense. Additionally, in
April of 2013, the Company received a signing bonus of $121,000 from its
current debit card vendor for extending its contract and remaining exclusive
to this provider. This income is also reflected in the other service charges
and fees line item. Also during 2013, the Company recorded $254,000 of income
related to the termination of a bank owned life insurance policy. Net gains
of $465,000 and $45,000 were recognized on the sales investment securities for
the years ended December 31, 2013 and 2012, respectively. 

Noninterest expense was $5.7 million for the quarter ended December 31, 2013
and $5.0 million for the quarter ended December 31, 2012. Noninterest expense
was $20.4 million and $18.5 million for the years ended December 31, 2013 and
2012, respectively. Increases in noninterest expense resulted from the
staffing and occupancy costs related to the addition of the Bank's newest
retail branch in Purcellville, VA. The branch opened in May of 2013. Salaries
and employee benefits for the Purcellville branch for the year ended December
31, 2103 were approximately $300,000 while occupancy expenses were $150,000.
Noninterest expense was also negatively impacted by the Company's election to
prepay a $10.0 million outstanding advance with the Federal Home Loan Bank of
Atlanta. A $612,000 prepayment fee was incurred by the Company in December
2013 in conjunction with the repayment of the advance. Net losses related to
the sales of OREO were $139,000 for the year ended December 31, 2013 while net
gains of $13,000 were realized on the sales of OREO for the same period in
2012. Increases in various other operating expenses relate to the Company's
overall growth and expansion efforts and include increases in telephone,
postage, advertising, FDIC assessment fees, ATM network fees and computer
software expenses.

Asset Quality and Provision for Loan Losses

Loan loss recoveries were $767,000 for the three months ended December 31,
2013, compared loan loss provisions of $10,000 for the quarter ended December
31, 2012. There were no provisions for loan losses made the year ended
December 31, 2013, compared to $1.7 million for the year ended December 31,
2012. The ratio of allowance for loan losses to total loans was 1.24% at
December 31, 2013 and 1.57% at December 31, 2012. The ratio of allowance for
loan losses to total nonaccrual loans was 124.4% at December 31, 2013 and
272.5% at December 31, 2012. The amount of provision for loan losses reflects
the results of the Bank's analysis used to determine the adequacy of the
allowance for loan losses. The decreased provision for the quarter and the
year mostly resulted from the decrease in the amount of specific allocations
required for impaired loans. During the year, several impaired loan balances
were either partially or completely charged off. At December 31, 2013,
impaired loans totaled $13.7 million and had related specific allocations of
$1.5 million. At December 31, 2012, impaired loans totaled $15.3 million and
had related specific allocations of $2.4 million.

Nonperforming assets increased slightly from $5.6 million or 0.94% of total
assets at December 31, 2012 to $6.1 million or 1.04% of total assets at
December 31, 2013. This increase resulted mostly from the increase in
nonaccrual loans. Total nonaccrual loans totaled $4.4 million at December 31,
2013 and $2.4 million at December 31, 2012. During the fourth quarter of
2013, the Bank placed seven loans totaling $1.1million on nonaccrual status.
The majority of the nonaccrual loans are secured by real estate and 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. Loans greater than 90 days past due and still
accruing decreased from $208,000 at December 31, 2012 to $11,000 at December
31, 2013. Other real estate owned decreased from $2.9 million at December 31,
2012 to $1.6 million at December 31, 2013. During 2013, the Company sold six
pieces of other real estate owned totaling $1.3 million.

The Company realized $463,000 in net charge-offs for the quarter ended
December 31, 2013 versus $1.4 million for the same period in 2012. The Company
realized $1.1 million in net charge-offs for the year ended December 31, 2013
versus $3.8 million for 2012. The 2013 loan charge offs were concentrated in
residential real estate loans while the 2012 loan charge offs were
concentrated in larger balance commercial real estate loans. The Company
continues to operate a troubled credit group to monitor past due loans,
identify potential problem credits, and develop action plans to work through
its troubled loans as promptly as possible. Asset quality remains a primary
concern of the Company. Necessary resources continue to be devoted to the
ongoing review of the loan portfolio and the workouts of problem assets to
minimize any losses to the Company. Management will continue to monitor
delinquencies, risk rating changes, charge-offs, market trends and other
indicators of risk in the Company's portfolio, particularly those tied to
residential and commercial real estate, and adjust the allowance for loan
losses accordingly.

Total Consolidated Assets

Total consolidated assets of the Company at December 31, 2013 were $584.4
million, which represented a decrease of $8.9 million or 1.5% from total
assets of $593.3 million at December 31, 2012. Total loans increased $26.2
million from $418.1 million at December 31, 2012 to $444.3 million at December
31, 2013.

Deposits and Other Borrowings

Total deposits, which include brokered deposits, increased $10.5 million to
$487.6 million at December 31, 2013 from $477.1 million at December 31, 2012.
The Company held $9.9 million in brokered deposits at December 31, 2013 and
2012.

Securities sold under agreement to repurchase decreased $10.0 million from
December 31, 2012. Securities sold under agreement to repurchase were $10.0
million at December 31, 2012. Borrowings with the Federal Home Loan Bank of
Atlanta were $22.3 million at December 31, 2013 and $32.3 million at December
31, 2012. In December of 2013, the Company elected to prepay a $10.0 million
outstanding advance with the Federal Home Loan Bank of Atlanta. 

Equity

Shareholders' equity was $66.4 million at December 31, 2013 and $63.7 million
at December 31, 2012. The book value of the Company at December 31, 2013 was
$19.57 per common share. Total common shares outstanding were 3,409,831 at
December 31, 2013. On January 15, 2014, the board of directors declared a
$0.19 per common share cash dividend for shareholders of record as of January
27, 2014 and payable on February 14, 2014.

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
                         4Q13       3Q13       2Q13       1Q13       4Q12
Net Income (dollars in   $      $      $      $      $   
thousands)               1,849     1,505     2,001     1,803     1,581
Earnings per share,      $      $      $      $      $    
basic                     0.54     0.44     0.59     0.54    0.47
Earnings per share,      $      $      $      $      $    
diluted                   0.54     0.44     0.59     0.53    0.47
Return on average total  1.25%      1.03%      1.40%      1.27%      1.08%
assets
Return on average total  11.13%     9.25%      12.51%     11.42%     9.95%
equity
Dividend payout ratio    35.19%     43.18%     32.20%     35.19%     40.43%
Fee revenue as a percent 19.29%     21.34%     25.86%     20.02%     20.32%
of total revenue
Net interest margin^(1)  4.17%      4.28%      4.28%      4.29%      4.31%
Yield on average earning 4.61%      4.73%      4.76%      4.81%      4.91%
assets
Yield on average
interest-bearing         0.65%      0.66%      0.69%      0.75%      0.83%
liabilities
Net interest spread      3.96%      4.07%      4.07%      4.06%      4.08%
Tax equivalent
adjustment to net        $      $      $      $      $    
interest income (dollars   174      180      186      192     198
in thousands)
Non-interest income to   1.00%      1.09%      1.73%      1.36%      1.05%
average assets
Non-interest expense to  3.82%      3.55%      3.48%      3.23%      3.41%
average assets
Efficiency ratio^(2)     77.75%     69.63%     60.18%     62.71%     60.91%



(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
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
                         4Q13       3Q13       2Q13       1Q13       4Q12
BALANCE SHEET RATIOS
 Loans to deposits       91.12%     92.32%     92.19%     89.59%     87.63%
 Average
 interest-earning assets
 to
  average-interest    147.11%    145.62%    145.49%    152.08%    139.30%
 bearing liabilities
PER SHARE DATA
 Dividends               $      $      $      $      $    
                          0.19     0.19     0.19     0.19     0.19
 Book value              $      $      $      $      $    
                         19.57     19.36     19.13     19.36     19.11
 Tangible book value     $      $      $      $      $    
                         19.57     19.36     19.13     19.36     19.11
SHARE PRICE DATA
 Closing price           $      $      $      $      $    
                         22.50     23.75     23.35     22.10     22.00
 Diluted earnings        10.42      13.49      9.89       10.42      11.70
 multiple(1)
 Book value multiple(2)  1.15       1.23       1.22       1.14       1.15
COMMON STOCK DATA
 Outstanding shares at   3,409,831  3,400,711  3,388,005  3,372,080  3,352,523
 end of period
 Weighted average shares 3,405,215  3,393,519  3,373,353  3,367,689  3,348,630
 outstanding
 Weighted average shares 3,416,841  3,405,225  3,383,748  3,378,369  3,359,611
 outstanding, diluted
CAPITAL RATIOS
 Total equity to total   11.36%     11.21%     11.00%     11.17%     10.74%
 assets
CREDIT QUALITY
 Net charge-offs to      0.10%      0.06%      0.09%      0.00%      0.33%
 average loans
 Total non-performing    1.00%      0.98%      0.59%      0.79%      0.63%
 loans to total loans
 Total non-performing    1.04%      1.10%      0.89%      1.08%      0.94%
 assets to total assets
 Non-accrual loans to:
  total loans       0.99%      0.94%      0.55%      0.64%      0.58%
  total assets      0.76%      0.71%      0.41%      0.47%      0.41%
 Allowance for loan
 losses to:
  total loans       1.24%      1.53%      1.60%      1.64%      1.57%
  non-performing     90.41%     104.64%    133.55%    110.88%    118.38%
 assets
  non-accrual loans  124.36%    162.70%    291.48%    256.07%    272.45%
NON-PERFORMING ASSETS:
(dollars in thousands)
  Loans delinquent    $      $      $      $      $    
 over 90 days               11     147      201      631      208
  Non-accrual         4,413      4,129      2,394      2,718      2,414
 loans
  Other real estate
 owned and repossessed   1,646      2,144      2,630      2,928      2,934
 assets
NET LOAN CHARGE-OFFS
(RECOVERIES):
(dollars in thousands)
  Loans charged off   $      $      $      $      $    
                           493      385      403       42   1,516
  (Recoveries)        (30)       (125)      (37)       (42)       (122)
 Net charge-offs         463        260        366        -          1,394
 (recoveries)
PROVISION FOR LOAN       $      $      $      $      $    
LOSSES (dollars in        (767)       -     384      383       10
thousands)
ALLOWANCE FOR LOAN LOSS
SUMMARY
(dollars in thousands)
 Balance at the          $      $      $      $      $    
 beginning of period     6,718     6,978     6,960     6,577     7,961
 Provision               (767)      -          384        383        10
 Net charge-offs         463        260        366        -          1,394
 (recoveries)
 Balance at the end of   $      $      $      $      $    
 period                  5,488     6,718     6,978     6,960     6,577



(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    Unaudited  Unaudited  Unaudited  Audited
                     12/31/2013   9/30/2013  6/30/2013  3/31/2013  12/31/2012
Assets
Cash and due from    $         $       $       $       $   
banks                14,243      17,686    10,632    21,829    48,690
Federal funds sold   -            -          -          -          -
Securities available
for sale, at fair    104,790      104,753    109,145    115,001    105,531
value
Loans, net of
allowance for loan   438,785      431,346    429,379    416,890    411,520
losses
Bank premises and    17,214       17,231     17,287     16,834     16,545
equipment, net
Other assets         9,348        12,489     19,230     10,292     10,990
 Total  $          $        $        $        $  
assets               584,380     583,505   585,673   580,846   593,276
Liabilities and
Shareholders' Equity
Liabilities
 Deposits:
 Noninterest   $          $        $        $        $  
bearing demand       147,698     143,156   135,802   135,650   134,871
deposits
 Savings and
interest bearing     240,749      230,581    234,430    227,876    231,249
demand deposits
 Time deposits 99,140       100,790    103,080    109,554    110,981
 Total      $          $        $        $        $  
deposits             487,587     474,527   473,312   473,080   477,101
 Federal funds
purchased and
securities
 sold under
agreements to        -            -          5,616      -          10,000
repurchase
 Federal Home     22,250       32,250     32,250     32,250     32,250
Loan Bank advances
 Trust preferred  7,217        7,217      7,217      7,217      7,217
capital notes
 Other            920          4,093      2,860      3,429      3,002
liabilities
 Commitments and
contingent           -            -          -          -          -
liabilities
 Total  $          $        $        $        $  
liabilities          517,974     518,087   521,255   515,976   529,570
Shareholders' Equity
 Preferred stock, $       $      $      $      $     
$10 par value          -          -      -      -     -
 Common stock,    8,482        8,449      8,417      8,376      8,340
$2.50 par value
 Surplus          11,537       11,276     10,935     10,636     10,424
 Retained         46,082       44,879     44,018     42,657     41,494
earnings
 Accumulated
other comprehensive  305          814        1,048      3,201      3,448
income
 Total  $         $       $       $       $   
shareholders' equity 66,406      65,418    64,418    64,870    63,706
 Total  $          $        $        $        $  
liabilities and      584,380     583,505   585,673   580,846   593,276
shareholders' equity







EAGLE FINANCIAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands)
Unaudited
                                  Three Months Ended    Year Ended
                                  December 31,          December 31,
                                  2013       2012       2013       2012
Interest and Dividend Income
 Interest and fees on      $       $       $        $  
loans                             5,410      5,532      21,530    22,589
 Interest on federal funds -          -          -          -
sold
 Interest and dividends on
securities available for sale:
 Taxable interest    490        511        2,055      2,187
income
 Interest income     296        335        1,241      1,383
exempt from federal income taxes
 Dividends           40         87         187        384
 Interest on deposits in   5          14         23         23
banks
 Total         $       $       $        $  
interest and dividend income      6,241      6,479      25,036    26,566
Interest Expense
 Interest on deposits      $      $      $       $   
                                  259       368       1,142     1,586
 Interest on federal funds
purchased and securities
 sold under agreements -          90         31         360
to repurchase
 Interest on Federal Home  275        276        1,094      1,120
Loan Bank advances
 Interest on trust         80         80         318        318
preferred capital notes
 Total interest $      $      $       $   
expense                           614       814       2,585     3,384
 Net interest   $       $       $        $  
income                            5,627      5,665      22,451    23,182
Provision For Loan Losses         (767)      10         -          1,660
 Net interest   $       $       $        $  
income after provision for loan   6,394      5,655      22,451    21,522
losses
Noninterest Income
 Income from fiduciary     $      $      $       $     
activities                        257       237       1,186     963
 Service charges on        367        397        1,453      1,509
deposit accounts
 Other service charges and 747        828        3,864      3,404
fees
 (Loss) Gain on the sale   -          -          (1)        -
of bank premises and equipment
 Gain on sales of AFS      65         30         465        45
securities
 Other operating income    44         39         495        206
 Total         $       $       $       $   
noninterest income                1,480      1,531      7,462     6,127
Noninterest Expenses
 Salaries and employee     $       $       $        $  
benefits                          2,974      2,699      11,451    10,634
 Occupancy expenses        355        289        1,291      1,147
 Equipment expenses        169        163        666        665
 Advertising and marketing 127        123        548        470
expenses
 Stationery and supplies   71         58         274        289
 ATM network fees          159        132        616        528
 Other real estate owned   10         305        40         362
expenses
 FDIC assessment           90         90         375        292
 Computer software expense 160        31         664        463
 Professional fees         223        315        1,013      1,072
 Other operating expenses   1,323      776        3,429      2,618
 Total         $       $       $        $  
noninterest expenses              5,661      4,981      20,367    18,540
 Income before $       $       $       $   
income taxes                      2,213      2,205      9,546     9,109
Income Tax Expense                364        624        2,388      2,559
 Net income    $       $       $       $   
                                  1,849      1,581      7,158     6,550
Earnings Per Share
 Net income per common     $      $      $      $    
share, basic                      0.54       0.47       2.11      1.97
 Net income per common     $      $      $      $    
share, diluted                    0.54       0.47       2.10      1.96







EAGLE FINANCIAL SERVICES, INC.
Average Balances, Income and Expenses, Yields and
Rates
(dollars in thousands)
                       For the Three Months Ended
                       December 31, 2013            December 31, 2012
                                 Interest                     Interest
                       Average   Income/   Average  Average   Income/  Average
Assets:                Balance   Expense   Rate     Balance   Expense  Rate
Securities:
 Taxable        $        $       3.01%    $        $      3.58%
                       69,686   2,100             66,614   2,383
 Tax-Exempt     35,577    1,782     5.01%    37,976    2,015    5.31%
^(1)
 Total      $         $       3.69%    $         $      4.20%
Securities             105,263  3,882             104,590  4,398
Loans:
 Taxable        $         $        4.92%    $         $       5.29%
                       432,857  21,300            411,944  21,807
 Non-accrual   3,972     -         0.00%    3,540     -        0.00%
 Tax-Exempt     4,222     249       5.89%    4,756     301      6.34%
^(1)
 Total      $         $        4.89%    $         $       5.26%
Loans                  441,051  21,549            420,240  22,109
Federal funds sold     -         -         0.00%    -         -        0.00%
Interest-bearing
deposits in other      9,393     21        0.23%    19,824    56       0.28%
banks
 Total      $         $        4.61%    $         $       4.91%
earning assets         551,735  25,452            541,114  26,563
Allowance for loan     (6,694)                      (7,389)
losses
Total non-earning      42,670                       47,137
assets
Total assets           $                            $
                       587,711                     580,862
Liabilities and
Shareholders' Equity:
Interest-bearing
deposits:
 NOW accounts   $        $     0.11%    $        $     0.17%
                       82,926    88               86,445    151
 Money market   90,733    115       0.13%    84,314    187      0.22%
accounts
 Savings        61,901    32        0.05%    54,474    32       0.06%
accounts
Time deposits:
 $100,000 and   36,777    206       0.56%    44,171    330      0.75%
more
 Less than      63,363    590       0.96%    69,577    764      1.10%
$100,000
 Total      $         $                $         $  
interest-bearing       335,700  1,031    0.31%    338,981  1,464   0.43%
deposits
Federal funds
purchased and
securities
 sold under
agreements to          1         -         0.00%    10,000    360      3.60%
repurchase
Federal Home Loan Bank 32,141    1,090     0.39%    32,250    1,096    3.40%
advances
Trust preferred        7,217     317       0.44%    7,217     318      4.41%
capital notes
 Total      $         $                $         $  
interest-bearing       375,059  2,438    0.65%    388,448  3,238   0.83%
liabilities
Noninterest-bearing
liabilities:
 Demand         142,203                      124,004
deposits
 Other          4,535                        5,193
Liabilities
 Total      $                            $
liabilities            521,797                     517,645
Shareholders' equity   65,914                       63,217
Total liabilities and  $                            $
shareholders' equity   587,711                     580,862
Net interest income              $                           $23,325
                                 23,015
Net interest spread                        3.96%                       4.08%
Interest expense as a
percent of
 average earning                       0.44%                       0.60%
assets
Net interest margin                        4.17%                       4.31%



(1) Income and yields are reported on a tax equivalent basis using a
federal tax rate of 34%.

EAGLE FINANCIAL SERVICES, INC.
Average Balances, Income and Expenses, Yields and
Rates
(dollars in thousands)
                       For the Year Ended
                       December 31, 2013            December 31, 2012
                                 Interest                     Interest
                       Average   Income/   Average  Average   Income/  Average
Assets:                Balance   Expense   Rate     Balance   Expense  Rate
Securities:
 Taxable        $      $      3.09%    $      $     3.67%
                       72,630   2,242             70,134   2,571
 Tax-Exempt     36,692    1,881     5.13%    39,281    2,095    5.33%
^(1)
 Total      $       $      3.77%    $       $     4.26%
Securities             109,322  4,123             109,415  4,666
Loans:
 Taxable        $       $       5.05%    $       $      5.42%
                       422,692  21,352            413,281  22,387
 Non-accrual   2,921     -         0.00%    2,731     -        0.00%
 Tax-Exempt     4,423     269       6.09%    4,786     306      6.39%
^(1)
 Total      $       $       5.03%    $       $      5.39%
Loans                  430,036  21,621            420,798  22,693
Federal funds sold     -         -         0.00%    92        -        0.00%
Interest-bearing
deposits in other      10,048    23        0.23%    9,420     23       0.24%
banks
 Total      $       $       4.72%    $       $      5.10%
earning assets         546,485  25,767            536,994  27,382
Allowance for loan     (6,957)                      (8,393)
losses
Total non-earning      40,573                       39,698
assets
Total assets           $                          $  
                       580,101                     568,299
Liabilities and
Shareholders' Equity:
Interest-bearing
deposits:
 NOW accounts   $      $     0.12%    $      $     0.17%
                       83,889    103              80,500     140
 Money market   87,809    120       0.14%    84,241    210      0.25%
accounts
 Savings        59,114    30        0.05%    52,635    39       0.07%
accounts
Time deposits:
 $100,000 and   38,232    241       0.63%    48,065    380      0.79%
more
 Less than      65,900    648       0.98%    71,810    817      1.14%
$100,000
 Total      $       $               $       $   
interest-bearing       334,944  1,142    0.34%    337,251  1,586   0.47%
deposits
Federal funds
purchased and
securities
 sold under
agreements to          1,064     31        2.91%    10,174    360      3.54%
repurchase
Federal Home Loan Bank 32,223    1,094     3.40%    32,960    1,120    3.40%
advances
Trust preferred        7,217     317       4.39%    7,217     318      4.41%
capital notes
 Total      $       $               $       $   
interest-bearing       375,448  2,584    0.69%    387,602  3,384   0.87%
liabilities
Noninterest-bearing
liabilities:
 Demand         136,242                      115,667
deposits
 Other          3,581                        3,864
Liabilities
 Total      $                          $  
liabilities            515,271                     507,133
Shareholders' equity   64,830                       61,166
Total liabilities and  $                          $  
shareholders' equity   580,101                     568,299
Net interest income              $                          $23,998
                                 23,183
Net interest spread                        4.03%                       4.23%
Interest expense as a
percent of
 average earning                       0.47%                       0.63%
assets
Net interest margin                        4.24%                       4.47%



(1) Income and yields are reported on a tax equivalent basis using a
federal tax rate of 34%.



EAGLE FINANCIAL
SERVICES, INC.
Reconciliation of
Tax-Equivalent Net
Interest Income
(dollars in thousands)
                         Three Months Ended
                         12/31/2013  9/30/2013 6/30/2013 3/31/2013 12/31/2012
GAAP Financial
Measurements:
 Interest Income -     $       $     $     $     $    
Loans                    5,410      5,445    5,342    5,331    5,532
 Interest Income -
Securities and Other     831         849       880       947       947
Interest-Earnings Assets
 Interest Expense -    259         269       287       326       368
Deposits
 Interest Expense -    355         355       353       377       446
Other Borrowings
Total Net Interest       $       $     $     $     $    
Income                   5,627      5,670    5,582    5,575    5,665
Non-GAAP Financial
Measurements:
 Add: Tax Benefit on  $      $     $     $     $     
Tax-Exempt Interest        21         22     24     25    26
Income - Loans
 Add: Tax Benefit on
Tax-Exempt Interest      153         158       162       167       172
Income - Securities
Total Tax Benefit on     $      $     $     $     $     
Tax-Exempt Interest       174         180     186     192    198
Income
Tax-Equivalent Net       $       $     $     $     $    
Interest Income          5,801      5,850    5,768    5,767    5,863



SOURCE Eagle Financial Services, Inc.

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