EFSI Eagle Financial Services Inc (QX)

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 27, 2023

 

 

EAGLE FINANCIAL SERVICES, INC.

(Exact name of Registrant as Specified in Its Charter)

 

 

Virginia			0-20146	54-1601306
(State or Other Jurisdiction of Incorporation)			(Commission File Number)	(IRS Employer Identification No.)
2 East Main Street
Berryville, Virginia				22611
(Address of Principal Executive Offices)				(Zip Code)

 

Registrant’s Telephone Number, Including Area Code: (540) 955-2510

 

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
None		N/A		N/A

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

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Item 2.02 Results of Operations and Financial Condition

On October 27, 2023, the Registrant issued a press release announcing the results for the quarter ended September 30, 2023.

A copy of the Company’s press release with respect to the results for the quarter ended September 30, 2023 is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference herein.

 

Item 9.01 Financial Statements and Exhibits

(d) Exhibits.

 

Exhibit No.		Description
99.1   104		Press release, dated October 27, 2023   Cover Page Interactive Data File – the cover page XBRL tags are embedded within the Inline XBRL document

 

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: October 30, 2023

 

Eagle Financial Services, Inc.
By:		/s/ KATHLEEN J. CHAPPELL
		Kathleen J. Chappell
		Executive Vice President and CFO

 

 

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Exhibit 99.1

 

EAGLE FINANCIAL SERVICES, INC. ANNOUNCES

2023 THIRD QUARTER FINANCIAL RESULTS AND QUARTERLY DIVIDEND

 

 

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

 

BERRYVILLE, VIRGINIA (October 27, 2023) – Eagle Financial Services, Inc. (OTCQX: EFSI), the holding company for Bank of Clarke, whose divisions include Bank of Clarke Wealth Management, announced its third quarter 2023 results. On October 25, 2023, the Board of Directors announced a quarterly common stock cash dividend of $0.30 per common share, payable on November 17, 2023, to shareholders of record on November 6, 2023. Select highlights for the second quarter include:

 

Brandon Lorey, President and CEO, stated, "I am happy to report another strong quarter for EFSI with the Bank of Clarke continuing to deliver consistent loan and fee income. With the sale of our niche marine finance arm (La Victoire Finance), the Bank was able shed over 8% of its non-interest expense while retaining a good portion of higher yielding marine assets that is expected to deliver over $12 million in interest income in 2024. By monetizing the marine program, the bank further improved capital and liquidity ratios and will see significant improvements in efficiencies in the coming quarters. We remain very well positioned for sustained and measured growth in 2024 as we take advantage of market opportunities as they arise. I would like to thank the Bank of Clarke’s many employees who always put our customers and communities first as we move through these periods of economic uncertainty."

Income Statement Review

Total loan interest income was $20.2 million and $18.8 million for the quarters ended September 30, 2023 and June 30, 2023, respectively. Total loan interest income was $13.3 million for the quarter ended September 30, 2022. Total loan interest income increased $6.9 million or 51.9% from the quarter ended September 30, 2022 to the quarter ended September 30, 2023. Average loans for the quarter ended September 30, 2023 were $1.47 billion compared to $1.17 billion for the quarter ended September 30, 2022. The tax equivalent yield on average loans for the quarter ended September 30, 2023 was 5.44%, an increase of 93 basis points from the 4.51% average yield for the same time period in 2022. The majority of this increase in yield can be attributed to the current rising interest rate environment.

Interest and dividend income from the investment portfolio was $931 thousand for the quarter ended September 30, 2023 compared to $926 thousand for the quarter ended June 30, 2023. Interest income and dividend income from the investment portfolio was $932 thousand for the quarter ended September 30, 2022. no The tax equivalent yield on average investments for the quarter ended September 30, 2023 was 2.48%, up nine basis points from 2.39% for the quarter ended June 30, 2023 and up 41 basis points from 2.07% for the quarter ended September 30, 2022.

 

 

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Total interest expense was $9.3 million for the three months ended September 30, 2023 and $7.9 million and $1.5 million for three months ended June 30, 2023 and September 30, 2022, respectively. The increase in interest expense resulted from increases on rates paid on deposit accounts and Federal Home Loan Bank advances entered into during the third and fourth quarters of 2022 and the first quarter of 2023. The average cost of interest-bearing liabilities increased 27 and 230 basis points when comparing the quarter ended September 30, 2023 to the quarters ended June 30, 2023 and September 30, 2022, respectively. The average balance of interest-bearing liabilities increased $60.6 million from the quarter ended June 30, 2023 to the quarter ended September 30, 2023. The average balance of interest-bearing liabilities increased $379.2 million from the quarter ended September 30, 2022 to the same period in 2023. In addition to the growth in interest-bearing liabilities, there has been a shift in the mix of interest-bearing deposits. Time deposits as a percentage of total interest-bearing deposits have increased from 17.2% and 37.0% at September 30, 2022 and June 30, 2023, respectively, to 38.5% at September 30, 2023.

Net interest income for the quarter ended September 30, 2023 was $12.9 million reflecting an increase of 3.8% from the quarter ended June 30, 2023 and an increase of 0.1% from the quarter ended September 30, 2022. Net interest income was $12.4 million and $12.9 million for the quarters ended June 30, 2023 and September 30, 2022, respectively. The increase in net interest income from the quarters ended June 30, 2023 and September 30, 2022 resulted primarily from growth in the Company’s loan portfolio along with the rising interest rate environment.

Net income for the quarter ended September 30, 2023 was $2.3 million reflecting an increase of 12.6% from the quarter ended June 30, 2023 and a decrease of 43.2% from the quarter ended September 30, 2022. The increase from the quarter ended June 30, 2023 was due to several factors including the sale of the marine finance line of business along with an increase in derivative fee income of $225 thousand. The decrease in net income from the quarter ended September 30, 2022 was mainly driven by the increased funding costs for deposits and increased salaries and employee benefits expenses to hire and retain employees. The number of full-time equivalent employees (FTEs) has increased from 235 and 275 at September 30, 2022 and June 30, 2023, respectively, to 245 at September 30, 2023. The decrease in FTEs from June 30, 2023 to September 30, 2023 was related to the sale of the marine finance line of business. These employees were employed through August 23, 2023. See below for further discussion regarding the sale of the marine finance line of business. Net income was $2.1 million for the three-month period ended June 30, 2023 and $4.1 million for the quarter ended September 30, 2022.

The net interest margin was 2.93% for the quarter ended September 30, 2023. For the quarters ended June 30, 2023 and September 30, 2022, the net interest margin was 2.99% and 3.46%, respectively. 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 21%.

Noninterest income was $4.7 million for the quarter ended September 30, 2023, which represented an increase of $1.3 million or 38.8% from the $3.4 million for the three months ended June 30, 2023. Noninterest income for the quarter ended September 30, 2022 was $3.2 million. The increase from quarters ended June 30, 2023 and September 30, 2022 was mainly due to the sale of the marine finance line of business, which resulted in a net gain of $913 thousand.

 

 

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Noninterest expense increased $1.6 million, or 12.6%, to $14.6 million for the quarter ended September 30, 2023 from $13.0 million for the quarter ended June 30, 2023. Noninterest expense was $11.1 million for the quarter ended September 30, 2022, representing an increase of $3.5 million or 31.9% when comparing the quarter ended September 30, 2023 to the quarter ended September 30, 2022. An increase in salaries and benefits expenses was noted between September 30, 2023 and September 30, 2022. Annual pay increases, newly hired employees, incentive plan accruals and increased insurance costs have attributed to these increases. The number of FTEs has increased from 235 and 275 at September 30, 2022 and June 30, 2023, respectively, to 245 at September 30, 2023. The decrease in FTEs from June 30, 2023 to September 30, 2023 was related to the sale of the marine finance line of business. These employees were employed through August 23, 2023. While there was some reduction in overhead costs by having the marine finance line of business in operation only through August 2023, there was approximately $1.5 million in additional expense recognized during the quarter due to its sale. These costs included a change in control agreement, accelerated deferred compensation expenses, legal costs and advisory firm expenses. The efficiency ratio of 87.41% for the quarter ended September 30, 2023 was impacted negatively by these one-time expenses and would have been 78.71% had they not been incurred during the quarter. See below for further discussion regarding the sale of the marine finance line of business. An increase in FDIC assessment was also noted between both periods. This increase is due to the growth in the Company, along with a two basis point increase in the assessment rate charged by the FDIC. This increase in assessment rate applies to all financial institutions.

 

Asset Quality and Provision for Credit 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 $3.3 million or 0.17% of total assets at June 30, 2023 to $6.1 million or 0.32% of total assets at September 30, 2023. Nonperforming assets were $2.4 million at September 30, 2022. Total nonaccrual loans were $5.7 million at September 30, 2023 and $3.1 million at June 30, 2023. Nonaccrual loans were $2.4 million at September 30, 2022. Nonaccrual loans, and in turn nonperforming assets, increased during the second quarter due mainly to one residential real estate relationship totaling $1.1 million and increased during the third quarter due mainly to one non-owner occupied commercial real estate loan in the amount of $2.4 million. The majority of all 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. Other real estate owned was $304 thousand at September 30, 2023 and zero at June 30, 2023 and September 30, 2022.

The Company realized $156 thousand in net charge-offs for the quarter ended September 30, 2023 versus $150 thousand in net recoveries for the three months ended June 30, 2023. During the three months ended September 30, 2022, $895 thousand in net recoveries were recognized.

Beginning January 1, 2023, the Company adopted Accounting Standards Update No. 2016-13, Financial Instruments – Credit Losses (Topic 326), which replaced the former “incurred loss” model for recognizing credit losses with an “expected loss” model referred to as the CECL model. The adoption of the CECL model resulted in a $2.1 million increase in the allowance for loan losses and a $406 thousand increase in other liabilities due to the allowance for credit losses on unfunded commitments. At adoption, we also recorded a corresponding $2.0 million after-tax decrease in retained earnings. Utilizing CECL may have an impact on our allowance for credit losses going forward and may result in a lack of comparability between 2023 and 2022 quarterly periods. The amount of provision for credit losses reflects the results of the Bank’s analysis used to determine the adequacy of the allowance for credit losses. The Company recorded $216 thousand in provision for credit loss for the quarter ended September 30, 2023 due mainly to the growth of the loan portfolio during the quarter. The Company recognized provision for credit losses of $403 thousand and provision for loan losses of zero for the quarters ended June 30, 2023 and September 30, 2022, respectively. The provision for the quarter ended June 30, 2023 resulted mostly from loan growth during the quarter. The lack of any provision for the quarter ended September 30, 2022 resulted mostly from the large amount of net recoveries received during the quarter.

 

 

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The ratio of allowance for credit losses to total loans was 1.01% and 0.99% at September 30, 2023 and June 30, 2023, respectively. The ratio of allowance for loan losses to total loans was 0.89% at September 30, 2022. The increase in the ratio is mainly attributable to the adoption of CECL. The ratio of allowance for credit losses to total nonaccrual loans was 255.80% and 466.74% at September 30, 2023 and June 30, 2023, respectively. The ratio of allowance for loan losses to total nonaccrual loans was 442.59% at September 30, 2022. 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.

Balance Sheet

Total consolidated assets of the Company at September 30, 2023 were $1.80 billion, which represented an increase of $24.8 million or 1.39% from total assets of $1.78 billion at June 30, 2023. At September 30, 2022, total consolidated assets were $1.47 billion. The majority of the growth in consolidated assets during the quarter ended September 30, 2023 was due to the increase in cash and cash equivalents and partially offset by the reduction in net loans, which are discussed in further detail below. The majority of growth in consolidated assets between September 30, 2022 and September 30, 2023 was due to increase in cash and cash equivalents along with the growth in net loans.

Total cash and cash equivalents (including cash and due from banks and federal funds sold) increased $61.1 million or 80.0% as of September 30, 2023, compared to June 30, 2023. Cash and cash equivalents increased as a percentage of total assets to 7.9% in the third quarter as compared to 4.4% at June 30, 2023 and 2.4% at September 30, 2022. The increase was due mainly to the growth of deposits in excess of the change in net loans which are discussed in further detail below.

At September 30, 2023, total securities available for sale were $142.6 million, a decrease of $9.0 million from June 30, 2023, and a decrease of $13.8 million from September 30, 2022. At September 30, 2023, total net unrealized losses on the AFS securities portfolio were $29.8 million, an additional loss of $5.2 million from total net unrealized losses on AFS securities of $24.6 million at June 30, 2023 and a decline of $3.9 million from December 31, 2022.

Total net loans decreased $30.0 million from $1.46 billion at June 30, 2023 to $1.43 billion at September 30, 2023. During the quarter ended September 30, 2023, through the normal course of business, $26.7 million in loans were sold. The Company sold $15.9 million in mortgage loans on the secondary market and $10.8 million of loans from the commercial and consumer loan portfolios. These loan sales resulted in net gains of $265 thousand. This decline was offset partially by growth in loans largely due to organic loan portfolio growth as the Company expands lending types and markets.

On August 23, 2023, the Company completed the sale of its marine finance business, operating under the name LaVictoire Finance, to Axos Bank. Under the Asset Purchase Agreement, Axos Bank agreed to assume the servicing of Bank of Clarke’s retail marine loans and those of third parties, each of which were previously being serviced by Bank of Clarke. All LaVictoire Finance employees became employees of Axos Bank. Pursuant to the Loan Purchase Agreement, Axos Bank acquired all the marine vessel dealer floor plans loans currently held by Bank of Clarke at par value. The acquired loans had an aggregate principal balance of approximately $52.8 million as of the date of the Loan Purchase Agreement. All marine finance loans, with a balance of $260.5 million as of September 30, 2023, are still assets of Bank of Clarke.

 

 

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Total deposits increased to $1.50 billion as of September 30, 2023 when compared to June 30, 2023 deposits of $1.46 billion. At September 30, 2022 total deposits were $1.25 billion. During the third quarter of 2023, the majority of growth in deposits was from core accounts, which include all transactional deposit accounts as well as certificates of deposits less than $250 thousand. Approximately $28.5 million of total deposit growth was core deposit growth as the Company continued to expand and grow into newer market areas. Non-core deposits increased by $11.8 million, attributable to increases in certificates of deposit accounts $250 thousand and greater. As interest rates have risen, the Company has noticed a shift in the mix of deposits away from non-interest bearing deposits and towards time deposits. Time deposits increased by $32.4 million or 2.8% between June 30, 2023 and September 30, 2023, while non-interest bearing deposits have decreased $2.3 million or 0.5% and savings and interest bearing demand deposits have increased by $10.3 million or 1.6% for the same time period. Time deposits as a percentage of total deposits have increased from 10.4% and 26.0% at September 30, 2022 and June 30, 2023, respectively, to 27.5% at September 30, 2023. The increase in time deposits between September 30, 2022 and September 30, 2023 is partially due to $30.0 million in brokered accounts that the Company entered into during the first quarter of 2023. At September 30, 2023, over 75% of deposits were fully FDIC insured.

The Company had $145.0 million and $170.0 million, respectively, in outstanding borrowings from the Federal Home Loan Bank of Atlanta at September 30, 2023 and June 30, 2023. There was $75.0 million in outstanding borrowings from the Federal Home Loan Bank as of September 30, 2022. The average rate paid on Federal Home Loan Bank advances as of September 30, 2023 and June 30, 2023 was 4.65% and 4.73%, respectively. These borrowings were used mainly to fund the strong loan growth that occurred during the past several quarters.

On March 31, 2022, the Company entered into Subordinated Note Purchase Agreements with certain qualified institutional buyers and accredited institutional investors, pursuant to which the Company issued 4.50% Fixed-to-Floating Rate Subordinated Notes due 2032, in the aggregate principal amount of $30.0 million.

Shareholders’ equity was $101.2 million and $104.0 million at September 30, 2023 and June 30, 2023, respectively. Shareholders’ equity was $98.5 million at September 30, 2022. Shareholders’ equity has been impacted by an accumulated other comprehensive loss related to securities available-for-sale. These unrealized losses are primarily a result of rapid increases in interest rates during 2022 and 2023. The book value of the Company at September 30, 2023 was $28.74 per common share. Total common shares outstanding were 3,520,894 at September 30, 2023. On October 25, 2023, the Board of Directors announced a quarterly common stock cash dividend of $0.30 per common share, payable on November 17, 2023, to shareholders of record on November 6, 2023.

Cautionary Note Regarding Forward-Looking Statements

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.

Factors that could have a material adverse effect on the operations and future prospects of the Company include, but are not limited to: changes in interest rates and general economic conditions; the legislative and regulatory climate; monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and Federal Reserve; changes in interest rates; the quality or composition of the Company’s loan or investment portfolios; demand for loan products; deposit flows; competition; demand for financial services in the Company's market area; acquisitions and dispositions; the Company’s ability to keep pace with new technologies; a failure in or breach of the Company’s operational or security systems or infrastructure, or those of third-party vendors or other service providers, including as a result of cyberattacks; the Company’s capital and liquidity; changes in tax and accounting rules, principles, policies and guidelines; and other factors included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 and other filings with the Securities and Exchange Commission.

 

 

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EAGLE FINANCIAL SERVICES, INC.

KEY STATISTICS

 

		For the Three Months Ended
		3Q23				2Q23				1Q23				4Q22				3Q22
Net Income (dollars in thousands)		$	2,319			$	2,058			$	2,585			$	3,197			$	4,082
Earnings per share, basic		$	0.66			$	0.58			$	0.73			$	0.92			$	1.17
Earnings per share, diluted		$	0.66			$	0.58			$	0.73			$	0.92			$	1.17
Return on average total assets			0.51	%			0.48	%			0.63	%			0.83	%			1.12	%
Return on average total equity			8.87	%			7.93	%			9.99	%			12.70	%			15.93	%
Dividend payout ratio			45.45	%			51.72	%			41.10	%			32.61	%			24.79	%
Fee revenue as a percent of total revenue			16.51	%			18.01	%			16.33	%			14.92	%			16.11	%
Net interest margin(1)			2.93	%			2.99	%			3.27	%			3.68	%			3.72	%
Yield on average earning assets			5.03	%			4.88	%			4.79	%			4.48	%			4.14	%
Rate on average interest-bearing liabilities			2.98	%			2.71	%			2.23	%			1.25	%			0.68	%
Net interest spread			2.05	%			2.17	%			2.56	%			3.23	%			3.46	%
Tax equivalent adjustment to net interest income (dollars in thousands)		$	28			$	25			$	26			$	20			$	32
Non-interest income to average assets			1.03	%			0.78	%			0.85	%			0.80	%			0.87	%
Non-interest expense to average assets			3.23	%			3.00	%			3.00	%			2.99	%			3.04	%
Efficiency ratio(2)			87.41	%			81.91	%			76.52	%			70.53	%			65.73	%

 

 

 

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EAGLE FINANCIAL SERVICES, INC.

SELECTED FINANCIAL DATA BY QUARTER

		3Q23				2Q23				1Q23				4Q22				3Q22
BALANCE SHEET RATIOS
Loans to deposits			96.17	%			100.89	%			100.77	%			104.72	%			95.83	%
Average interest-earning assets to average-interest bearing liabilities			142.07	%			142.63	%			146.06	%			155.58	%			161.11	%
PER SHARE DATA
Dividends		$	0.30			$	0.30			$	0.30			$	0.30			$	0.29
Book value			28.74				29.47				29.65				29.15				28.28
Tangible book value			28.74				29.47				29.65				29.15				28.28
SHARE PRICE DATA
Closing price		$	31.90			$	30.50			$	33.96			$	35.95			$	36.92
Diluted earnings multiple(1)			12.08				13.15				11.63				9.77				7.89
Book value multiple(2)			1.11				1.04				1.15				1.23				1.31
COMMON STOCK DATA
Outstanding shares at end of period			3,520,894				3,528,240				3,522,874				3,490,086				3,483,571
Weighted average shares outstanding			3,523,943				3,526,934				3,522,431				3,489,764				3,487,555
Weighted average shares outstanding, diluted			3,523,943				3,526,934				3,522,431				3,489,764				3,482,820
CAPITAL RATIOS (BANK ONLY)
Leverage ratio			8.36	%			8.61	%			9.02	%			9.19	%			9.44	%
CREDIT QUALITY
Net charge-offs to average loans			0.01	%			(0.01	)%			0.00	%			0.04	%			(0.08	)%
Total non-performing loans to total loans			0.40	%			0.23	%			0.14	%			0.19	%			0.20	%
Total non-performing assets to total assets			0.33	%			0.19	%			0.11	%			0.16	%			0.16	%
Non-accrual loans to:
total loans			0.40	%			0.21	%			0.13	%			0.16	%			0.20	%
total assets			0.32	%			0.17	%			0.10	%			0.13	%			0.16	%
Allowance for credit/loan losses to:
total loans			1.01	%			0.99	%			1.00	%			0.85	%			0.89	%
non-performing assets			242.83	%			433.94	%			702.77	%			433.45	%			442.59	%
non-accrual loans			255.80	%			466.74	%			758.56	%			518.86	%			442.59	%
NON-PERFORMING ASSETS:
(dollars in thousands)
Loans delinquent over 90 days		$	0			$	235			$	146			$	318			$	—
Non-accrual loans			5,697				3,109				1,839				2,162				2,427
Other real estate owned and repossessed assets			304				—				—				108				—
NET LOAN CHARGE-OFFS (RECOVERIES):
(dollars in thousands)
Loans charged off		$	187			$	52			$	75			$	491			$	80
(Recoveries)			(31	)			(202	)			(21	)			(37	)			(975	)
Net charge-offs (recoveries)			156				(150	)			54				454				(895	)
PROVISION FOR CREDIT LOSSES (dollars in thousands)		$	216			$	403			$	664			$	930			$	—
ALLOWANCE FOR CREDIT LOSSES (dollars in thousands)		$	14,573			$	14,511			$	13,905			$	11,218			$	10,742

 

 

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EAGLE FINANCIAL SERVICES, INC.

CONSOLIDATED BALANCE SHEETS

(dollars in thousands)

 

		Unaudited 09/30/2023				Unaudited 06/30/2023				Unaudited 03/31/2023				Unaudited 12/31/2022				Unaudited 09/30/2022
Assets
Cash and due from banks		$	63,239			$	48,907			$	117,342			$	66,531			$	30,782
Federal funds sold			78,799				29,988				11,373				363				5,153
Securities available for sale, at fair value			142,559				151,513				160,192				158,389				156,361
Loans held for sale			3,564				3,570				—				153				90
Loans, net of allowance for credit losses			1,426,412				1,456,459				1,386,750				1,312,565				1,191,099
Bank premises and equipment, net			18,421				18,064				17,827				18,064				17,972
Bank owned life insurance			24,404				24,219				24,041				23,862				23,731
Other assets			44,072				43,996				39,197				36,790				47,932
Total assets		$	1,801,470			$	1,776,716			$	1,756,722			$	1,616,717			$	1,473,120
Liabilities and Shareholders' Equity
Liabilities
Deposits:
Noninterest bearing demand deposits		$	430,910			$	433,220			$	464,123			$	478,750			$	491,184
Savings and interest bearing demand deposits			656,111				645,834				652,802				627,431				632,081
Time deposits			411,359				378,954				273,026				157,894				130,849
Total deposits		$	1,498,380			$	1,458,008			$	1,389,951			$	1,264,075			$	1,254,114
Federal funds purchased			—				—				—				32,980				—
Federal Home Loan Bank advances, short-term			—				25,000				125,000				175,000				75,000
Federal Home Loan Bank advances, long-term			145,000				145,000				95,000				—				—
Subordinated debt			29,428				29,411				29,394				29,377				29,360
Other liabilities			27,479				15,327				12,917				13,556				16,146
Commitments and contingent liabilities			—				—				—				—				—
Total liabilities		$	1,700,287			$	1,672,746			$	1,652,262			$	1,514,988			$	1,374,620
Shareholders' Equity
Preferred stock, $10 par value			—				—				—				—				—
Common stock, $2.50 par value			8,660				8,661				8,651				8,629				8,600
Surplus			13,970				13,881				13,435				13,268				13,003
Retained earnings			102,106				100,844				99,845				100,278				98,128
Accumulated other comprehensive (loss)			(23,553	)			(19,416	)			(17,471	)			(20,446	)			(21,231	)
Total shareholders' equity		$	101,183			$	103,970			$	104,460			$	101,729			$	98,500
Total liabilities and shareholders' equity		$	1,801,470			$	1,776,716			$	1,756,722			$	1,616,717			$	1,473,120

 

 

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EAGLE FINANCIAL SERVICES, INC.

LOAN DATA

(dollars in thousands)

		9/30/2023				6/30/2023				3/31/2023				12/31/2022				9/30/2022
Mortgage real estate loans:
Construction & Secured by Farmland		$	80,012			$	95,433			$	90,660			$	89,652			$	85,476
HELOCs			44,719				44,333				41,827				43,587				40,971
Residential First Lien - Investor			120,547				117,265				113,483				111,074				100,761
Residential First Lien - Owner Occupied			162,919				142,417				130,383				125,088				118,371
Residential Junior Liens			12,284				11,869				11,142				11,417				11,666
Commercial - Owner Occupied			244,088				243,610				238,578				230,983				219,260
Commercial - Non-Owner Occupied & Multifamily			355,122				350,210				353,330				316,458				310,981
Commercial and industrial loans:
BHG loans			5,419				5,747				6,185				6,688				7,058
SBA PPP loans			57				62				69				74				112
Other commercial and industrial loans			91,411				95,012				95,943				92,883				69,924
Marine loans			260,518				299,304				253,893				230,874				178,685
Triad Loans			26,519				27,157				27,795				28,472				25,374
Consumer loans			16,019				16,486				16,046				16,369				15,683
Overdrafts			207				308				151				218				185
Other loans			13,089				13,805				13,608				12,503				10,981
Total loans		$	1,432,930			$	1,463,018			$	1,393,093			$	1,316,340			$	1,195,488
Net deferred loan costs and premiums			8,055				7,952				7,609				7,443				6,353
Allowance for credit/loan losses			(14,573	)			(14,511	)			(13,950	)			(11,218	)			(10,742	)
Net loans		$	1,426,412			$	1,456,459			$	1,386,752			$	1,312,565			$	1,191,099

 

 

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EAGLE FINANCIAL SERVICES, INC.

CONSOLIDATED STATEMENTS OF INCOME

(dollars in thousands)

Unaudited

 

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		9/30/2023				6/30/2023				3/31/2023				12/31/2022				9/30/2022
Interest and Dividend Income
Interest and fees on loans		$	20,179			$	18,754			$	17,167			$	15,117			$	13,282
Interest on federal funds sold			51				28				10				15				9
Interest and dividends on securities available for sale:
Taxable interest income			781				785				804				815				851
Interest income exempt from federal income taxes			3				5				4				4				59
Dividends			147				136				83				60				22
Interest on deposits in banks			1,030				656				490				153				143
Total interest and dividend income		$	22,191			$	20,364			$	18,558			$	16,164			$	14,366
Interest Expense
Interest on deposits		$	6,978			$	5,535			$	3,459			$	1,474			$	714
Interest on federal funds purchased			—				—				70				151				11
Interest on Federal Home Loan Bank advances			1,943				2,032				2,031				891				404
Interest on subordinated debt			354				355				354				392				338
Total interest expense		$	9,275			$	7,922			$	5,914			$	2,908			$	1,467
Net interest income		$	12,916			$	12,442			$	12,644			$	13,256			$	12,899
Provision For Credit Losses			216				403				664				930				—
Net interest income after provision for credit losses		$	12,700			$	12,039			$	11,980			$	12,326			$	12,899
Noninterest Income
Wealth management fees		$	1,190			$	1,263			$	1,158			$	1,072			$	1,094
Service charges on deposit accounts			460				447				436				423				432
Other service charges and fees			1,252				1,135				1,047				944				1,061
Gain on the sale of marine finance business			913				—				—				—				—
Gain (loss) on the sale of bank premises and equipment			7				7				—				(8	)			8
(Loss) on the sale of AFS securities			—				—				—				—				(737	)
Gain on sale of loans HFS			265				192				456				331				568
Officer insurance income			184				179				179				131				138
Other operating income			388				134				250				196				600
Total noninterest income		$	4,659			$	3,357			$	3,526			$	3,089			$	3,164
Noninterest Expenses
Salaries and employee benefits		$	7,598			$	7,561			$	7,298			$	6,857			$	6,938
Occupancy expenses			570				533				518				506				528
Equipment expenses			341				315				323				307				299
Advertising and marketing expenses			228				342				296				332				181
Stationery and supplies			69				56				22				64				34
ATM network fees			426				365				351				336				381
Other real estate owned expenses			—				—				5				34				—
(Gain) on the sale of other real estate owned			—				—				(7	)			—				—
FDIC assessment			495				346				266				184				116
Computer software expense			396				281				310				270				252
Bank franchise tax			340				313				263				233				234
Professional fees			947				753				713				409				270
Data processing fees			542				478				402				393				427
Other operating expenses			2,631				1,612				1,626				1,623				1,398
Total noninterest expenses		$	14,583			$	12,955			$	12,386			$	11,548			$	11,058
Income before income taxes		$	2,776			$	2,441			$	3,120			$	3,867			$	5,005
Income Tax Expense			457				383				535				670				923
Net income		$	2,319			$	2,058			$	2,585			$	3,197			$	4,082
Earnings Per Share
Net income per common share, basic		$	0.66			$	0.58			$	0.73			$	0.92			$	1.17
Net income per common share, diluted		$	0.66			$	0.58			$	0.73			$	0.92			$	1.17

 

 

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EAGLE FINANCIAL SERVICES, INC.

Average Balances, Income and Expenses, Yields and Rates

(dollars in thousands)

		Three Months Ended
		September 30, 2023												June 30, 2023												September 30, 2022
						Interest												Interest												Interest
		Average				Income/				Average				Average				Income/				Average				Average				Income/				Average
Assets:		Balance				Expense				Rate				Balance				Expense				Rate				Balance				Expense				Rate
Securities:
Taxable		$	148,549			$	928				2.48	%		$	155,347			$	922				2.38	%		$	172,848			$	873				2.00	%
Tax-Exempt (1)			490				4				4.10	%			510				5				4.11	%			8,745				75				3.38	%
Total Securities		$	149,039			$	932				2.48	%		$	155,857			$	927				2.39	%		$	181,593			$	948				2.07	%
Loans:
Taxable		$	1,458,347			$	20,077				5.46	%		$	1,425,873			$	18,659				5.25	%		$	1,160,966			$	13,222				4.52	%
Non-accrual			3,639				—				—	%			2,608				—				—	%			2,038				—				—	%
Tax-Exempt (1)			10,403				129				4.94	%			9,810				119				4.86	%			7,649				76				3.94	%
Total Loans		$	1,472,389			$	20,206				5.44	%		$	1,438,291			$	18,778				5.24	%		$	1,170,653			$	13,298				4.51	%
Federal funds sold and interest-bearing deposits in other banks			132,432				1,081				3.24	%			80,251				684				3.42	%			27,817				152
Total earning assets		$	1,753,860			$	22,219				5.03	%		$	1,674,399			$	20,389				4.88	%		$	1,380,063			$	14,398				4.14	%
Allowance for loan losses			(14,642	)											(14,201	)											(10,218	)
Total non-earning assets			52,307												73,702												90,501
Total assets		$	1,791,525											$	1,733,900											$	1,460,346
Liabilities and Shareholders' Equity:
Interest-bearing deposits:
NOW accounts		$	241,033			$	1,354				2.23	%		$	240,401			$	1,247				2.08	%		$	178,669			$	170				0.38	%
Money market accounts			260,692				1,260				1.92	%			254,136				1,093				1.72	%			276,851				283				0.41	%
Savings accounts			145,673				44				0.12	%			153,659				46				0.12	%			183,774				35				0.08	%
Time deposits:
$250,000 and more			137,487				1,543				4.45	%			99,903				888				3.57	%			57,901				144				0.98	%
Less than $250,000			257,257				2,777				4.28	%			224,041				2,261				4.05	%			59,979				82				0.54	%
Total interest-bearing deposits		$	1,042,142			$	6,978				2.66	%		$	972,140			$	5,535				2.28	%		$	757,174			$	714				0.37	%
Federal funds purchased			—				—				—	%			178				—				—	%			1,949				11				2.27	%
Federal Home Loan Bank advances			162,935				1,943				4.73	%			172,198				2,032				4.73	%			66,848				404				2.40	%
Subordinated debt			29,416				354				4.78	%			29,400				355				4.83	%			29,349				338				4.56	%
Total interest-bearing liabilities		$	1,234,493			$	9,275				2.98	%		$	1,173,916			$	7,922				2.71	%		$	855,320			$	1,467				0.68	%
Noninterest-bearing liabilities:
Demand deposits			434,807												440,728												487,761
Other Liabilities			18,505												15,212												14,462
Total liabilities		$	1,687,805											$	1,629,856											$	1,357,543
Shareholders' equity			103,720												104,044												102,803
Total liabilities and shareholders' equity		$	1,791,525											$	1,733,900											$	1,460,346
Net interest income						$	12,944											$	12,467											$	12,931
Net interest spread											2.05	%											2.17	%											3.46	%
Interest expense as a percent of average earning assets											2.10	%											1.90	%											0.42	%
Net interest margin											2.93	%											2.99	%											3.72	%

 

 

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EAGLE FINANCIAL SERVICES, INC.

Reconciliation of Tax-Equivalent Net Interest Income

(dollars in thousands)

 

		Three Months Ended
		9/30/2023				6/30/2023				3/31/2023				12/31/2022				9/30/2022
GAAP Financial Measurements:
Interest Income - Loans		$	20,179			$	18,754			$	17,167			$	15,117			$	13,282
Interest Income - Securities and Other Interest-Earnings Assets			2,012				1,610				1,391				1,047				1,084
Interest Expense - Deposits			6,978				5,535				3,459				1,474				714
Interest Expense - Other Borrowings			2,297				2,387				2,455				1,434				753
Total Net Interest Income		$	12,916			$	12,442			$	12,644			$	13,256			$	12,899
Non-GAAP Financial Measurements:
Add: Tax Benefit on Tax-Exempt Interest Income - Loans		$	27			$	24			$	25			$	19			$	16
Add: Tax Benefit on Tax-Exempt Interest Income - Securities			1				1				1				1				16
Total Tax Benefit on Tax-Exempt Interest Income		$	28			$	25			$	26			$	20			$	32
Tax-Equivalent Net Interest Income		$	12,944			$	12,467			$	12,670			$	13,276			$	12,931

 

 

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v3.23.3

Document And Entity Information	Oct. 27, 2023
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Oct. 27, 2023
Entity Registrant Name	EAGLE FINANCIAL SERVICES, INC.
Entity Central Index Key	0000880641
Entity Emerging Growth Company	false
Securities Act File Number	0-20146
Entity Incorporation, State or Country Code	VA
Entity Tax Identification Number	54-1601306
Entity Address, Address Line One	2 East Main Street
Entity Address, City or Town	Berryville
Entity Address, State or Province	VA
Entity Address, Postal Zip Code	22611
City Area Code	(540)
Local Phone Number	955-2510
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	None
No Trading Symbol Flag	true
Security Exchange Name	NONE

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