Eagle Financial Services, Inc. Announces 2014 First Quarter Financial Results

Eagle Financial Services, Inc. Announces 2014 First Quarter Financial Results  PR Newswire  BERRYVILLE, Va., April 22, 2014  BERRYVILLE, Va., April 22, 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 first quarter 2014 financial results. The Company's common stock trades on the Over-the-Counter (OTC) Bulletin Board under the ticker symbol EFSI.  Financial Highlights:                                           2014     2013 Three months ended:                      Q1       Q4     Q1 Net income (000's)                       $1,363   $1,850 $1,803 Diluted EPS                              $0.40    $0.54  $0.53 Net Interest Margin                      4.29%    4.17%  4.29% Allowance for loan losses to total loans 1.25%    1.24%  1.64% Provision for loan losses                $283     ($767) $383 Loan Growth                              $12,199  $6,209 $5,753  John R. Milleson, President and CEO, stated "With the quarter's $12.2 million in loan growth and a 4.29% net interest margin, I am pleased to announce an admirable beginning to 2014. Our expansion into Loudoun County continues to provide great opportunities for growth in both loans and deposits. The work completed in 2013 with respect to updating products and services has enhanced the Company's ability to serve and communicate with its customers and potential clients in all the markets in which we serve. I am excited about the Company's continued expansion plans as we seek additional branch locations in and around Leesburg, Virginia. As always, the support the Company receives from its customers and shareholders is greatly appreciated."  Income Statement Review  Net income for the quarter ended March 31, 2014 was $1.4 million reflecting a decrease of 26.3% from the quarter ended December 31, 2013 and a decrease of 24.4% from the quarter ended March 31, 2013. Net income was $1.9 million for the three month period ended December 31, 2013 and $1.8 million for the quarter ended March 31, 2013. For the quarter ended December 31, 2013, the Company had loan loss recoveries of $767,000 while the Company had sold its holdings of Fannie Mae and Freddie Mac preferred stock at a net gain of $313,000 during March 2013.  Net interest income was $5.7 million for the quarter ended March 31, 2014 and $5.6 million for the quarter ended December 31, 2013. Although low earning excess cash balances had been deployed to fund higher yielding assets, overall asset yields remained relatively flat when compared to those realized in the quarter ended December 31, 2013. Continued management of interest bearing liabilities and the Company's election to prepay a $10.0 million outstanding advance with the Federal Home Loan Bank of Atlanta in December 2013 helped preserve net interest income levels and the net interest margin. Net interest income was $5.6 million for the quarter ended March 31, 2013.  Total loan interest income was $5.3 million for the quarter ended March 31, 2014, reflecting a decrease of $79,000 from the quarter ended December 31, 2013. Total loan interest income was $5.3 million for the quarter ended March 31, 2013. Average loans for the quarter ended March 31, 2014 were $447.9 million compared to $441.1 million at December 31, 2013. Total average accruing loans were $443.3 million for the quarter ended March 31, 2014 and $437.1 million at December 31, 2013. For the quarter ended March 31, 2013, total average loans were $419.0 million and average accruing loans were $416.5 million. The tax equivalent yield on average loans for the quarter ended March 31, 2014 was 4.85%, down four basis points from 4.89% for the quarter ended December 31, 2013 and down 33 basis points from the 5.18% average yield at March 31, 2013. Interest income from the investment portfolio was $818,000 for the quarter ended March 31, 2014 and $826,000 for the quarter ended December 31, 2013. Average investments were $105.7 million for the quarter ended March 31, 2014 and $105.3 million for the quarter ended December 31, 2013. Average investments were $111.4 million for the quarter ended March 31, 2013 and interest income was $938,000 for that same period.  Total interest expense for the three months ended March 31, 2014 was $495,000, a decrease of $119,000 from the quarter ended December 31, 2013. Total interest expense decreased $208,000 when comparing the quarter ended March 31, 2014 to the same period in 2013. The average cost of interest bearing liabilities decreased 11 basis points when comparing the quarter ended March 31, 2014 to the quarter ended December 31, 2013. The average balance of interest bearing liabilities decreased $2.5 million from the quarter ended December 31, 2013. The average cost of interest bearing liabilities decreased 10 basis points when comparing the quarter ended March 31, 2014 to the quarter ended March 31, 2013. The average balance of interest bearing liabilities decreased $6.2 million from the quarter ended March 31, 2013. During December 2013, the Company elected to prepay a $10.0 million 4.07% outstanding advance with the Federal Home Loan Bank of Atlanta. In addition, the Company continues to steadfastly manage the cost of its interest bearing deposits. The combination of these factors has contributed to the decreased balance of interest bearing liabilities and their corresponding cost. The net interest margin was 4.29% for the quarter ended March 31, 2014 and 4.17% for the quarter December 31, 2013. For the quarter ended March 31, 2013 the net interest margin was 4.29%.  The Company's net interest margin is not a measurement under accounting principles generally accepted in the United States, but it is a common measure used by the financial services industry to determine how profitably earning assets are funded. The Company's net interest margin is calculated by dividing tax equivalent net interest income by total average earning assets. Tax equivalent net interest income is calculated by grossing up interest income for the amounts that are non-taxable (i.e., municipal income) then subtracting interest expense. The tax rate utilized is 34%.  Noninterest income was $1.4 million for the quarter ended March 31, 2014 and $1.5 million for the quarter ended December 31, 2013. Much of the decrease for the quarter results from the decline in credit card merchant fees. The Company sold its merchant portfolio during the second quarter of 2013 and no longer receives these fees. There were no net gains or losses recognized on the sale of investment securities for the three month period ended March 31, 2013. Net gains of $65,000 and $390,000 were recognized on the sale of investment securities for the quarters ended December 31, 2013 and March 31, 2013, respectively. Noninterest income for the quarter ended March 31, 2013 was $1.9 million.  Noninterest expense was $4.8 million for the quarter ended March 31, 2014. This represents a decrease of $817,000 or 14.4% from $5.7 million for the quarter ended December 31, 2013 and an increase of 5.7% from $4.6 million for the quarter ended March 31, 2013. Much of the decrease compared to the fourth quarter of 2013 is related to the decline in other operating expenses. For the quarter ended December 31, 2013, a $612,000 prepayment fee was incurred by the Company in conjunction with the repayment of the Federal Home Loan Bank advance. Additionally, a net loss of $82,000 on the sale of other real estate owned was realized during the quarter ended December 31, 2013. Much of the increase compared to the quarter ended March 31, 2013 relates to costs associated with the opening of the Company's newest retail branch in Purcellville, VA. This branch opened in May 2013. Noninterest expense for the Purcellville branch during the first quarter of 2014 approximated $150,000.  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 increased from $6.1 million or 1.04% of total assets at December 31, 2013 to $8.7 million or 1.45% of total assets at March 31, 2014. This increase resulted mostly from the increases in nonaccrual loans. Non-performing assets were $6.3 million or 1.08% of total assets at March 31, 2013. During the first quarter of 2014, the Bank placed 15 loans totaling $2.7 million on non-accrual status. All but three of the loans are secured by real estate. 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, 2014, $4.1 million or 59.9% of total nonaccrual loans had allocated specific allowances totaling $1.5 million. At March 31, 2014, the Bank had one loan 90 days or more past due and still accruing that totaled $18,000. At December 31, 2013 the Bank had one loan 90 days or more past due and still accruing that totaled $11,000 and at March 31, 2013, five loans totaling $631,000 were 90 days or more past due and still accruing. Other real estate owned increased from $1.6 million at December 31, 2013 to $1.8 million at March 31, 2014. The Company foreclosed on one property totaling $163,000 during the first quarter of 2014. There were no sales of other real estate owned during the first quarter of 2014. Other real estate owned totaled $2.9 million at March 31, 2013.  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, 2014, the Company had 15 troubled debt restructurings totaling $5.2 million. All but five of the restructured loans are performing loans.  The Company realized $54,000 in net charge-offs for the quarter ended March 31, 2014 versus $463,000 for the three months ended December 31, 2013. The Company continues to operate a troubled credit group to monitor past due loans, identify potential problem credits, and develop action plans to work through its troubled loans as promptly as possible. Asset quality remains a primary focus of the Company. Necessary resources continue to be devoted to the ongoing review of the loan portfolio and the workouts of problem assets to minimize any losses to the Company. Management will continue to monitor delinquencies, risk rating changes, charge-offs, market trends and other indicators of risk in the Company's portfolio, particularly those tied to residential and commercial real estate, and adjust the allowance for loan losses accordingly.  The amount of provision for loan losses reflects the results of the Bank's analysis used to determine the adequacy of the allowance for loan losses. Provisions for loan losses were $283,000 for the three months ended March 31, 2014, compared to net recoveries of $767,000 for the quarter ended December 31, 2013. The provisions for loan losses for the quarter ended March 31, 2013 were $383,000. The ratio of allowance for loan losses to total nonaccrual loans was 83.8% at March 31, 2014 and 124.4% at December 31, 2013. At March 31, 2014, impaired loans totaled $12.7 million and had related specific allocations of $1.5 million. At December 31, 2013, impaired loans totaled $13.7 million and had related specific allocations of $1.5 million. At March 31, 2013, total impaired loans were $15.0 million and required specific allocations of $2.2 million.  Total Consolidated Assets  Total consolidated assets of the Company at March 31, 2014 were $595.6 million, which represented an increase of $9.2 million or 1.6% from total assets of $586.4 million at December 31, 2013. At March 31, 2013, total consolidated assets were $580.8 million. Securities available for sale increased $1.5 million from $104.8 million at December 31, 2013. Total loans increased from $444.3 million at December 31, 2013 to $456.5 million at March 31, 2014. As loan growth rises, the Company remains conscientious about maintaining both its underwriting standards and its net interest margin. At March 31, 2013, total investment securities were $115.0 million and total loans were $423.9 million.  Deposits and Other Borrowings  Total deposits, which include brokered deposits, decreased $4.5 million from $487.6 million at December 31, 2013 to $483.1 million at March 31, 2014. At March 31, 2013, total deposits were $473.1 million. The Company held $9.9 million in brokered deposits at March 31, 2014, December 31, 2013 and March 31, 2013.  Federal funds purchased increased $4.6 million from December 31, 2013. Federal funds purchased balances were zero at December 31 and March 31, 2013. Borrowings with the Federal Home Loan Bank of Atlanta increased $7.8 million from December 31, 2013 with the acquisition of a $10.0 million short term advance in March 2014 and maturity of a $2.5 million advance in February 2014. Borrowings with the Federal Home Loan Bank of Atlanta decreased $2.3 million from March 31, 2013.  Equity  Shareholders' equity at March 31, 2014 was $68.0 million and $66.4 million at December 31, 2013. Shareholder's equity was $64.9 million at March 31, 2013. The book value of the Company at March 31, 2014 was $19.97 per common share. Total common shares outstanding were 3,417,832 at March 31, 2014. On April 16, 2013, the board of directors declared a $0.19 per common share cash dividend for shareholders of record as of April 30, 2014 and payable on May 16, 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, 2013, and other filings with the Securities and Exchange Commission.  EAGLE FINANCIAL SERVICES, INC. KEY STATISTICS                     For the Three Months Ended                                    1Q14     4Q13     3Q13     2Q13     1Q13 Net Income (dollars in thousands)  $       $       $       $       $                                     1,363   1,849   1,505   2,001   1,803 Earnings per share, basic          $      $      $      $      $                                      0.40    0.54    0.44    0.59    0.54 Earnings per share, diluted        $      $      $      $      $                                      0.40    0.54    0.44    0.59    0.53 Return on average total assets     0.95%    1.25%    1.30%    1.40%    1.27% Return on average total equity     8.22%    11.13%   9.25%    12.51%   11.42% Dividend payout ratio              47.50%   35.19%   43.18%   32.20%   35.19% Fee revenue as a percent of total  18.34%   19.29%   21.34%   25.86%   20.02% revenue Net interest margin^(1)            4.29%    4.17%    4.28%    4.28%    4.29% Yield on average earning assets    4.65%    4.61%    4.73%    4.76%    4.81% Yield on average interest-bearing  0.54%    0.65%    0.66%    0.69%    0.75% liabilities Net interest spread                4.12%    3.96%    4.07%    4.07%    4.06% Tax equivalent adjustment to net   $     $     $     $     $    interest income (dollars in        169      174      180      186      192 thousands) Non-interest income to average     0.94%    1.00%    1.09%    1.73%    1.36% assets Non-interest expense to average    3.37%    3.82%    3.55%    3.47%    3.23% assets Efficiency ratio^(2)               67.50%   77.75%   69.63%   60.18%   62.71%  (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                          1Q14       4Q13       3Q13       2Q13       1Q13 BALANCE SHEET RATIOS  Loans to deposits       94.49%     91.12%     92.32%     92.19%     89.59%  Average  interest-earning assets  to   average-interest    147.83%    147.11%    145.62%    145.49%    152.08%  bearing liabilities PER SHARE DATA  Dividends               $      $      $      $      $                               0.19     0.19     0.19     0.19     0.19  Book value              $      $      $      $      $                              19.97     19.57     19.36     19.13     19.36  Tangible book value     $      $      $      $      $                              19.97     19.57     19.36     19.13     19.36 SHARE PRICE DATA  Closing price           $      $      $      $      $                              23.00     22.50     23.75     23.35     22.10  Diluted earnings        14.38      10.42      13.49      9.89       10.42  multiple(1)  Book value multiple(2)  1.15       1.15       1.23       1.22       1.15 COMMON STOCK DATA  Outstanding shares at   3,417,832  3,409,831  3,400,711  3,388,005  3,372,080  end of period  Weighted average shares 3,413,920  3,405,215  393,519    3,373,353  3,367,689  outstanding  Weighted average shares 3,420,933  3,416,841  3,405,225  3,383,748  3,378,369  outstanding, diluted CAPITAL RATIOS  Total equity to total   11.42%     11.36%     11.21%     11.00%     11.17%  assets CREDIT QUALITY  Net charge-offs to                 0.10%      0.06%      0.09%      0.00%  average loans  Total non-performing    1.50%      1.00%      0.98%      0.59%      0.79%  loans to total loans  Total non-performing    1.45%      1.04%      1.10%      0.89%      1.08%  assets to total assets  Non-accrual loans to:   total loans       1.50%      0.99%      0.94%      0.55%      0.64%   total assets      1.15%      0.76%      0.71%      0.41%      0.47%  Allowance for loan  losses to:   total loans       1.25%      1.24%      1.53%      1.60%      1.64%   non-performing     66.08%     90.41%     104.64%    133.53%    110.88%  assets   non-accrual loans  83.77%     124.36%    162.70%    291.44%    256.07% NON-PERFORMING ASSETS: (dollars in thousands)   Loans delinquent    $      $      $      $      $      over 90 days               18      11     147      201      631   Non-accrual         6,825      4,413      4,129      2,394      2,718  loans   Other real estate  owned and repossessed   1,809      1,646      2,144      2,630      2,928  assets NET LOAN CHARGE-OFFS (RECOVERIES): (dollars in thousands)   Loans charged off   $      $      $      $      $                                 91     493      385      403       42   (Recoveries)        (37)       (30)       (125)      (37)       (42)  Net charge-offs         54         463        260        366        -  (recoveries) PROVISION FOR LOAN       $      $      $      $      $     LOSSES (dollars in         283     (767)       -     384      383 thousands) ALLOWANCE FOR LOAN LOSS SUMMARY (dollars in thousands)  Balance at the          $      $      $      $      $      beginning of period     5,488     6,718     6,978     6,960     6,577  Provision               283        (767)      -          384        383  Net charge-offs         54         463        260        366        -  (recoveries)  Balance at the end of   $      $      $      $      $      period                  5,717     5,488     6,718     6,978     6,960  (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                      3/31/2014    12/31/2013   9/30/2013  6/30/2013  3/31/2013 Assets Cash and due from    $         $         $       $       $    banks                10,440      14,243      17,686    10,632    21,829 Federal funds sold   -            -            -          -          - Securities available for sale, at fair    106,308      104,790      104,753    109,145    115,001 value Loans, net of allowance for loan   450,755      438,785      431,346    429,379    416,890 losses Bank premises and    17,132       17,214       17,231     17,287     16,834 equipment, net Other assets         11,003       11,412       12,489     19,230     10,292  Total  $          $          $        $        $   assets               595,638     586,444     583,505   585,673   580,846 Liabilities and Shareholders' Equity Liabilities  Deposits:  Noninterest   $          $          $        $        $   bearing demand       146,517     147,698     143,156   135,802   135,650 deposits  Savings and interest bearing     239,285      240,749      230,581    234,430    227,876 demand deposits  Time deposits 97,302       99,140       100,790    103,080    109,554  Total      $          $          $        $        $   deposits             483,104     487,587     474,527   473,312   473,080  Federal funds purchased and securities  sold under agreements to        4,589        -            -          5,616      - repurchase  Federal Home     30,000       22,250       32,250     32,250     32,250 Loan Bank advances  Trust preferred  7,217        7,217        7,217      7,217      7,217 capital notes  Other            2,706        2,984        4,093      2,860      3,429 liabilities  Commitments and contingent           -            -            -          -          - liabilities  Total  $          $          $        $        $   liabilities          527,616     520,038     518,087   521,255   515,976 Shareholders' Equity  Preferred stock, $       $       $      $      $     $10 par value          -         -          -      -      -  Common stock,    8,517        8,482        8,449      8,417      8,376 $2.50 par value  Surplus          11,693       11,537       11,276     10,935     10,636  Retained         46,797       46,082       44,879     44,018     42,657 earnings  Accumulated other comprehensive  1,015        305          814        1,048      3,201 income  Total  $         $         $       $       $    shareholders' equity 68,022      66,406      65,418    64,418    64,870  Total  $          $          $        $        $   liabilities and      595,638     586,444     583,505   585,673   580,846 shareholders' equity        EAGLE FINANCIAL SERVICES, INC. CONSOLIDATED STATEMENTS OF INCOME (dollars in thousands) Unaudited                        Three Months Ended                        3/31/2014  12/31/2013   9/30/2013  6/30/2013  3/31/2013 Interest and Dividend Income  Interest and   $      $        $      $      $     fees on loans          5,331     5,410       5,446     5,343     5,331  Interest on    -          -            -          -          - federal funds sold  Interest and dividends on securities available for sale:  Taxable  507        490          500        518        547 interest income  Interest income exempt from     286        296          307        314        324 federal income taxes           25         40           38         42         67 Dividends  Interest on    1          5            3          6          9 deposits in banks     $      $        $      $      $     Total interest and     6,150     6,241       6,294     6,223     6,278 dividend income Interest Expense  Interest on    $      $       $      $      $     deposits                 244     259          269      288      326  Interest on federal funds purchased and securities  sold under agreements to          13         -            2          1          28 repurchase  Interest on Federal Home Loan Bank 159        275          276        273        270 advances  Interest on trust preferred        79         80           80         78         79 capital notes      $      $       $      $      $     Total interest expense   495     614          627      640      703  Net $      $        $      $      $     interest income        5,655     5,627       5,667     5,583     5,575 Provision For Loan     283        (767)        -          384        383 Losses  Net interest income after  $      $        $      $      $     provision for loan     5,372     6,394       5,667     5,199     5,192 losses Noninterest Income  Income from    $      $       $      $      $     fiduciary activities     299     257          296      273      360  Service charges on deposit     333        367          377        366        343 accounts  Other service  653        747          874        1,443      800 charges and fees  Gain on the sale of bank premises  -          -            -          -          - and equipment  Gain (Loss) on sales of AFS           -          65           -          10         390 securities  Other          66         44           34         377        39 operating income     $      $        $      $      $     Total noninterest      1,351     1,480       1,581     2,469     1,932 income Noninterest Expenses  Salaries and   $      $        $      $      $     employee benefits      2,825     2,974       2,926     2,910     2,641  Occupancy      337        355          336        319        281 expenses  Equipment      182        169          151        191        155 expenses  Advertising    132        127          150        144        127 and marketing expenses  Stationery and 90         71           57         68         78 supplies  ATM network    157        159          157        143        157 fees  Other real     4          10           2          20         8 estate owned expenses  Loss (gain) on sale of other real     -          82           111        (53)       - estate  FDIC           81         90           92         96         97 assessment  Computer        199        160          185        164        155 software expense  Bank franchise  102        102          103        101        101 tax  Professional    217        223          265        284        241 fees  Other          517        1,138        637        565        542 operating expenses     $      $        $      $      $     Total noninterest      4,843     5,660       5,172     4,952     4,583 expenses     $      $        $      $      $     Income before income   1,880     2,214       2,076     2,716     2,541 taxes Income Tax Expense     517        364          571        715        738     $      $        $      $      $     Net income             1,363     1,850       1,505     2,001     1,803 Earnings Per Share  Net income per $      $       $      $      $     common share, basic     0.40    0.54         0.44     0.59     0.54  Net income per $      $       $      $      $     common share, diluted   0.40    0.54         0.44     0.59     0.53          EAGLE FINANCIAL SERVICES, INC. Average Balances, Income and Expenses, Yields and Rates (dollars in thousands)                     For the Three Months Ended                     March 31, 2014              December 31, 2013           March 31, 2013                               Interest                    Interest                   Interest                     Average   Income/  Average  Average   Income/  Average  Average  Income/  Average Assets:             Balance   Expense  Yield    Balance   Expense  Yield    Balance  Expense  Yield Securities:  Taxable     $70,873   $2,154   3.04%    $         $       3.01%    $       $ 2,490 3.37%                                                 69,686   2,100            73,925  Tax-Exempt  34,855    1,759    5.05%    35,577    1,782    5.01%    37,473   1,990    5.31% ^(1)  Total   $105,728  $3,913   3.70%    $105,263  $       3.69%    $        $ 4,480 4.02% Securities                                                3,882            111,398 Loans:  Taxable     $439,069  $21,454  4.89%    $432,857  $        4.92%    $        $21,426  5.20%                                                           21,300           411,822  Nonaccrual 4,591     -        0.00%    3,972     -        0.00%    2,514    -        0.00%  Tax-Exempt  4,263     253      5.94%    4,222     249      5.89%    4,651    294      6.32% ^(1)  Total   $447,923  $21,707  4.85%    $441,051  $        4.89%    $        $21,719  5.18% Loans                                                     21,549           418,987 Federal funds sold  -         -        0.00%    -         -        0.00%    -        -        0.00% Interest-bearing deposits in other   1,655     4        0.25%    9,393     21       0.23%    17,156   41       0.24% banks  Total   $550,715  $25,624  4.65%    $551,735  $        4.61%    $        $26,240  4.81% earning assets                                            25,452           545,027 Allowance for loan  (5,724)                     (6,694)                     (6,784) losses Total non-earning   38,320                      42,670                      37,769 assets Total assets        $583,311                    $587,711                    $                                                                             576,012 Liabilities and Shareholders' Equity: Interest-bearing deposits:  NOW         $83,606   $93      0.11%    $         $     0.11%    $       $      0.16% accounts                                        82,926    88              85,175   134  Money       91,587    105      0.12%    90,733    115      0.13%    85,589   142      0.17% market accounts  Savings     64,392    32       0.05%    61,901    32       0.05%    55,696   28       0.05% accounts Time deposits:  $100,000    35,973    187      0.52%    36,777    206      0.56%    41,255   296      0.72% and more  Less than   62,538    572      0.91%    63,363    590      0.93%    68,359   722      1.06% $100,000  Total                                                           $ interest-bearing    $338,096  $990     0.29%    $335,699  1,030    0.31%    336,074  $ 1,322 0.39% deposits Federal funds purchased and securities  sold under agreements to       4,238     53       1.24%    1         0        0.83%    3,222    118      3.65% repurchase Federal Home Loan   22,986    645      2.81%    32,141    1,090    3.39%    32,250   1,095    3.40% Bank advances Trust preferred     7,217     316      4.38%    7,217     317      4.40%    7,217    316      4.38% capital notes  Total                                                           $ interest-bearing    $372,537  $2,003   0.54%    $375,059  2,438    0.65%    378,763  $ 2,851 0.75% liabilities Noninterest-bearing liabilities:  Demand      142,267                     142,203                     130,333 deposits  Other       1,280                       4,536                       2,882 Liabilities  Total   $516,084                    $521,797                    $ liabilities                                                                 511,978 Shareholders'       67,227                      65,914                      64,034 equity Total liabilities                                                           $ and shareholders'   $583,311                    $587,711                    576,012 equity Net interest income           $23,620                     $23,015                    $23,389 Net interest spread                    4.12%                       3.96%                      4.06% Interest expense as a percent of  average                           0.36%                       0.44%                      0.52% earning assets Net interest margin                    4.29%                       4.17%                      4.29%  (1) Income and yields are reported on a tax equivalent basis using a federal tax rate of 34%.    EAGLE FINANCIAL SERVICES, INC. Reconciliation of Tax-Equivalent Net Interest Income (dollars in thousands)                          Three Months Ended                          3/31/2014   12/31/2013  9/30/2013 6/30/2013 3/31/2013 GAAP Financial Measurements:  Interest Income -     $       $       $     $     $     Loans                    5,331      5,410      5,445    5,342    5,331  Interest Income - Securities and Other     819         831         849       880       947 Interest-Earnings Assets  Interest Expense -    244         259         269       287       326 Deposits  Interest Expense -    251         355         355       353       377 Other Borrowings Total Net Interest       $       $       $     $     $     Income                   5,655      5,627      5,670    5,582    5,575 Non-GAAP Financial Measurements:  Add: Tax Benefit on              $      $     $     $     Tax-Exempt Interest      21            21         22     24     25 Income - Loans  Add: Tax Benefit on Tax-Exempt Interest      148         153         158       162       167 Income - Securities Total Tax Benefit on     $      $      $     $     $     Tax-Exempt Interest       169        174         180     186     192 Income Tax-Equivalent Net       $       $       $     $     $     Interest Income          5,824      5,801      5,850    5,768    5,767    SOURCE Eagle Financial Services, Inc.  Contact: Kathleen J. Chappell, Vice President and CFO, 540-955-2510, kchappell@bankofclarke.com  
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