BERRYVILLE, Va., Oct. 27 /PRNewswire-FirstCall/ -- Eagle Financial
Services, Inc. (OTC:EFSI) (BULLETIN BOARD: EFSI) , the holding
company for Bank of Clarke County, whose divisions include Eagle
Investment Group, announces third quarter 2009 financial results
and a quarterly dividend. The Company's common stock is listed for
trading on the Over-the-Counter (OTC) Bulletin Board under the
ticker symbol EFSI. Third Quarter 2009 Financial Results: -- Net
income of $790,000 -- Dividend of $0.17 per share -- Diluted
earnings per share of $0.25 -- Net interest margin of 4.51% --
Total equity to assets of 9.72% -- Retail deposit growth of $14.6
million since December 31, 2008 -- Allowance for loan losses at
1.25% of total loans John R. Milleson, President and CEO, stated
"Our third quarter income was $790,000, down slightly from our
second quarter earnings of $904,000. While these net income levels
are not up to our standards, we are encouraged that we continue to
be a consistently profitable and a well capitalized local bank.
While no bank is immune to the downturns in the local and national
economy, we are proud of our quality loan portfolio and that our
strong capital levels allow us to operate without government
assistance. The Bank of Clarke County remains committed to
operating a conservative but progressive banking operation that is
prepared for the opportunities that the future may hold." Net
Interest Income and Net Interest Margin Net interest income for the
quarter ended September 30, 2009 was $5.4 million which represented
an increase of 11.8% when compared to $4.8 million for the same
period in 2008. This increase in net interest income resulted
mostly from the decline in the Company's funding costs. Total loan
interest income was $5.8 million for the quarter ended September
30, 2009, reflecting a decrease of $368,000 from the quarter ended
September 30, 2008. Average loans for the quarter ended September
30, 2009 were $389.6 million compared to $391.0 million for the
same period in 2008. The tax equivalent yield on average loans for
the quarter ended September 30, 2009 was 5.91%, down 40 basis
points from the same time period in 2008. Interest income from the
investment portfolio was $1.1 million for the quarters ended
September 30, 2009 and 2008. Total interest expense for the three
months ended September 30, 2009 decreased $1.0 million when
compared to the three months ended September 30, 2008. The average
cost of interest bearing liabilities decreased 143 basis points
when comparing the quarter ended September 30, 2009 to the same
time period in 2008. The average balance of interest bearing
liabilities decreased $7.7 million from the quarter ended September
30, 2008 to the same period in 2009. The net interest margin was
4.51% for the quarter September 30, 2009. When compared to the
quarter ended September 30, 2008, the net interest margin increased
77 basis points. This increase was attributable to the decreased
balance and cost of interest bearing liabilities. 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%. Asset Quality and Provision
for Loan Losses Provisions for loan losses were $1.1 million for
the three months ended September 30, 2009, compared to $710,000 for
the quarter ended September 30, 2008. Given the level of problem
loans, continued uncertainty in the economy, and the ongoing
nationwide credit crisis, the Company deemed it prudent to continue
increase its allowance for loan losses. Non performing assets
decreased from $4.7 million or .90% of total assets at September
30, 2008 to $4.2 million or .81% of total assets at September 30,
2009. This decline resulted from the decrease in both non accrual
and past due loans greater than 90 days. During the third quarter
of 2009, the Bank foreclosed upon real estate assets valued at
$473,000 and sold two pieces of other real estate owned recorded at
$180,500. Loans greater than 90 days past due decreased from
$688,000 at September 30, 2008 to $284,000 at September 30, 2009.
The Company realized $537,000 in net charge-offs for the quarter
ended September 30, 2009 versus $132,000 for the same period in
2008. Given the current economic environment, it is anticipated
there could be an increase in past due loans, non performing loans
and other real estate owned. However, the Company believes that the
allowance for loan losses will be maintained at a level adequate to
mitigate any negative impact resulting from such increases.
Noninterest Income and Noninterest Expense Noninterest income was
$878,000 for the quarter ended September 30, 2009. For the same
time period in 2008, the Company reflected a loss in noninterest
income of $1.0 million. During the third quarter of 2008, the
Company recorded an impairment charge of $2.5 million related to
its holdings of preferred stock issued by Fannie Mae and Freddie
Mac. Noninterest expense was $4.2 million and $4.1 million for the
quarters ended September 30, 2009 and 2008, respectively. Despite
an increase in FDIC insurance premiums of $142,000 for the quarter
ended September 30, 2009 versus the same period in 2008, the
Company has diligently managed and monitored its other operating
expenses. Total Consolidated Assets Total consolidated assets of
the Company at September 30, 2009 were $521.1 million, which
represents a decrease of $7.1 million or 1.3% from total assets of
$528.1 million at December 31, 2008. Total loans increased $2.2
million from $390.1 million at December 31, 2008 to $392.3 million
at September 30, 2009. Considering the current interest rate and
competitive market environment, the Company has been conscientious
about maintaining both its underwriting standards and its net
interest margin and thereby cautious about the growth it has
permitted in the loan portfolio. Deposits and Other Borrowings
Total deposits, which include brokered deposits, decreased $10.9
million to $375.6 million at September 30, 2009 from $386.5 million
at December 31, 2008. The Company held no brokered deposits at
September 30, 2009. At December 31, 2008 brokered deposits were
$25.5 million. Securities sold under agreement to repurchase were
$14.4 million at September 30, 2009 and $14.7 million at December
31, 2008. Borrowings with the Federal Home Loan Bank of Atlanta
were $62.3 million at September 30, 2009 and $70.0 million at
December 31, 2008. Equity Shareholders' equity at September 30,
2009 and December 31, 2008 was $50.7 million and $46.8 million,
respectively. The book value of the Company at September 30, 2009
was $15.88 per common share. Total common shares outstanding were
3,190,304 at September 30, 2009. On October 21, 2009, the board of
directors declared a $0.17 per common share cash dividend for
shareholders of record as of November 2, 2009 and payable on
November 16, 2009. 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, 2008,
and other filings with the Securities and Exchange Commission.
EAGLE FINANCIAL SERVICES, INC. KEY STATISTICS For the Three Months
Ended -------------------------- 3Q09 2Q09 1Q09 3Q08 ---- ---- ----
---- Net Income (dollars in thousands) $790 $904 $955 $(1,403)
Earnings per share, basic $0.25 $0.29 $0.30 $(0.45) Earnings per
share, diluted $0.25 $0.28 $0.30 $(0.45) Return on average total
assets 0.60% 0.71% 0.74% -1.10% Return on average total equity
6.33% 7.80% 8.27% -12.45% Dividend payout ratio 68.00% 58.62%
56.67% -37.78% Fee revenue as a percent of total revenue 11.35%
15.44% 15.13% 23.95% Net interest margin(1) 4.51% 4.24% 3.98% 3.74%
Yield on average earning assets 5.73% 5.67% 5.66% 6.10% Yield on
average interest-bearing liabilities 1.56% 1.82% 2.12% 2.99% Net
interest spread 4.17% 3.85% 3.54% 3.11% Tax equivalent adjustment
to net interest income (dollars in thousands) $184 $187 $182 $165
Non-interest income to average assets 0.67% 0.95% 0.92% -0.79%
Non-interest expense to average assets 3.20% 3.10% 2.92% 3.16%
Efficiency ratio(2) 60.82% 62.88% 63.04% 104.89% (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%. For the
quarters ended September 30, 2009 and September 30, 2008 net
interest income on a tax equivalent basis was $5.6 million and $5.0
million, respectively. For the quarters ended June 30, 2009 and
March 31, 2009 net interest income on a tax equivalent basis was
$5.3 million and $4.9 million, respectively. See the table below
for a 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. The tax
rate utilized is 34%. For the quarters ended September 30, 2009 and
September 30, 2008 net interest income on a tax equivalent basis
was $5.6 million and $5.0 million, respectively. For the quarters
ended June 30, 2009 and March 31, 2009 net interest income on a tax
equivalent basis was $5.3 million and $4.9 million, respectively.
See the table below for a reconciliation of net interest income to
tax equivalent net interest income. See the table below for a
reconciliation of net interest income to tax equivalent net
interest income. Total non interest income, excluding gains and
losses on the investment portfolio, for the quarters ended
September 30, 2009 and September 30, 2008, was $1.3 million and
$1.5 million, respectively. Total non interest income, excluding
gains and losses on the investment portfolio, for the quarters
ended June 30, 2009 and March 31, 2009, was $1.3 million and $1.2
million, respectively. 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 3Q09 2Q09 1Q09 3Q08 ---- ----
---- ---- BALANCE SHEET RATIOS Loans to deposits 104.31% 102.20%
96.85% 106.64% Average interest- earning assets to average-interest
bearing liabilities 136.59% 126.56% 125.56% 126.62% PER SHARE DATA
Dividends $0.17 $0.17 $0.17 $0.17 Book value $15.88 $15.28 $14.74
$14.00 Tangible book value $15.88 $15.26 $14.71 $13.97 SHARE PRICE
DATA Closing price $15.35 $15.00 $14.60 $18.00 Diluted earnings
multiple(1) 0.97 0.98 0.99 1.29 Book value multiple(2) 0.97 0.98
0.99 1.29 COMMON STOCK DATA Outstanding shares at end of period
3,190,304 3,180,899 3,167,250 3,143,568 Weighted average shares
outstanding 3,185,806 3,169,197 3,162,666 3,139,734 Weighted
average shares outstanding, diluted 3,193,758 3,172,659 3,166,620
3,148,282 CAPITAL RATIOS Total equity to total assets 9.72% 9.30%
8.72% 8.55% CREDIT QUALITY Net charge-offs to average loans 0.14%
0.43% 0.08% 0.03% Total non-performing loans to total loans 0.34%
0.54% 1.52% 0.98% Total non-performing assets to total assets 0.81%
0.82% 1.30% 0.90% Non-accrual loans to: total loans 0.27% 0.53%
1.10% 0.81% total assets 0.20% 0.39% 0.80% 0.61% Allowance for loan
losses to: total loans 1.25% 1.13% 1.29% 1.00% non-performing
assets 116.68% 102.74% 72.12% 84.07% non-accrual loans 458.66%
213.60% 116.66% 123.81% NON-PERFORMING ASSETS: (dollars in
thousands) Loans delinquent over 90 days $284 $50 $1,624 $688
Non-accrual loans 1,067 2,052 4,293 3,159 Other real estate owned
and repossessed assets 2,845 2,164 1,027 805 NET LOAN CHARGE-OFFS
(RECOVERIES): (dollars in thousands) Loans charged off $617 $1,727
$361 $156 (Recoveries) (79) (52) (48) (24) Net charge-offs
(recoveries) 537 1,675 313 132 PROVISION FOR LOAN LOSSES (dollars
in thousands) $1,050 $1,050 $800 $710 ALLOWANCE FOR LOAN LOSS
SUMMARY (dollars in thousands) Balance at the beginning of period
$4,383 $5,008 $4,521 $3,333 Provision 1,050 1,050 800 710 Net
charge-offs (recoveries) 537 1,675 313 132 Balance at the end of
period $4,896 $4,383 $5,008 $3,911 (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 9/30/2009 9/30/2008 ---------
--------- Assets Cash and due from banks $8,625 $8,598 Federal
funds sold - - Securities available for sale, at fair value 97,882
94,879 Loans, net of allowance for loan losses 387,418 387,478 Bank
premises and equipment, net 14,980 15,544 Other assets 12,180 8,532
------ ----- Total assets $521,085 $515,031 ======== ========
Liabilities and Shareholders' Equity Liabilities Deposits:
Noninterest bearing demand deposits $87,105 $85,083 Savings and
interest bearing demand deposits 159,929 143,173 Time deposits
128,565 138,770 ------- ------- Total deposits $375,599 $367,026
Federal funds purchased and securities sold under agreements to
repurchase 21,807 19,362 Federal Home Loan Bank advances 62,250
75,000 Trust preferred capital notes 7,217 7,217 Other liabilities
3,547 2,407 Commitments and contingent liabilities - - --- ---
Total liabilities $470,420 $471,012 -------- -------- Shareholders'
Equity Preferred stock, $10 par value $- $- Common stock, $2.50 par
value 7,976 7,859 Surplus 8,307 7,620 Retained earnings 33,804
31,600 Accumulated other comprehensive income 578 (3,060) ---
------ Total shareholders' equity $50,665 $44,019 ------- -------
Total liabilities and shareholders' equity $521,085 $515,031
======== ======== EAGLE FINANCIAL SERVICES, INC. CONSOLIDATED
STATEMENTS OF INCOME (dollars in thousands) Unaudited Three Months
Ended Nine Months Ended September 30, September 30, -------------
------------- 2009 2008 2009 2008 ---- ---- ---- ---- Interest and
Dividend Income Interest and fees on loans $5,765 $6,133 $17,067
$18,818 Interest on federal funds sold 2 7 9 43 Interest and
dividends on securities available for sale: Taxable interest income
666 724 2,167 2,009 Interest income exempt from federal income
taxes 307 284 890 871 Dividends 116 149 348 550 Interest on
deposits in banks 1 1 3 4 --- --- --- --- Total interest and
dividend income $6,857 $7,298 $20,484 $22,295 ------ ------ -------
------- Interest Expense Interest on deposits $826 $1,618 $3,234
$5,427 Interest on federal funds purchased and securities sold
under agreements to repurchase 102 132 294 369 Interest on Federal
Home Loan Bank advances 484 672 1,578 2,036 Interest on trust
preferred capital notes 39 77 148 266 Interest on interest rate
swap 43 - 91 - -- -- -- -- Total interest expense $1,494 $2,499
$5,345 $8,098 ------ ------ ------ ------ Net interest income
$5,363 $4,799 $15,139 $14,197 Provision For Loan Losses 1,050 710
2,900 1,210 ----- --- ----- ----- Net interest income after
provision for loan losses $4,313 $4,089 $12,239 $12,987 ------
------ ------- ------- Noninterest Income Income from fiduciary
activities $200 $207 $644 $700 Service charges on Deposit accounts
537 629 1,531 1,766 Other service charges and fees 634 664 1,614
2,092 Gain on the sale of loans - - - 376 Gain on the sale of bank
premises and equipment - - - 742 Gain (loss) on the sale of
repossessed assets (54) (70) (50) (70) Gain (loss) on securities
(439) (2,488) (439) (2,488) Other operating income - 23 37 238 ---
--- --- --- Total noninterest income $878 $(1,035) $3,337 $3,356
---- ------- ------ ------ Noninterest Expenses Salaries and
employee benefits $2,493 $2,329 $6,950 $3,947 Occupancy expenses
291 256 935 901 Equipment expenses 176 173 513 519 Advertising and
marketing expenses 102 113 284 291 Stationery and supplies 52 51
217 244 ATM network fees 21 126 84 341 Other operating expenses
1,046 1,073 3,133 2,826 ----- ----- ----- ----- Total noninterest
expenses $4,181 $4,121 $12,116 $9,069 ------ ------ ------- ------
Income before income taxes $1,010 $(1,067) $3,460 $7,274 Income Tax
Expense 220 363 811 1,934 --- --- --- ----- Net income $790
$(1,430) $2,649 $5,340 ==== ======= ====== ====== Earnings Per
Share Net income per common share, basic $0.25 $(0.45) $0.84 $0.75
===== ====== ===== ===== Net income per common share, diluted $0.25
$(0.45) $0.83 $0.75 ===== ====== ===== ===== EAGLE FINANCIAL
SERVICES, INC. Average Balances, Income and Expenses, Yields and
Rates (dollars in thousands) For the Three Months Ended September
30, ---------------------------------------------------------- 2009
2008 ---------------------------- ---------------------------
Interest Interest Average Income/ Average Average Income/ Average
Assets: Balance Expense Rate Balance Expense Rate
---------------------------- ---------------------------
Securities: Taxable 65,059 3,103 4.77% 67,579 3,492 5.17%
Tax-Exempt(1) 33,136 1,841 5.56% 29,963 1,721 5.74% ------ -----
------ ----- Total Securities 98,195 4,943 5.03% 97,542 5,213 5.34%
Loans: Taxable 383,466 22,588 5.89% 385,401 24,279 6.30%
Tax-Exempt(1) 6,090 431 7.08% 5,588 384 6.87% ------ ----- ------
----- Total Loans 389,556 23,019 5.91% 390,989 24,663 6.31% Federal
funds sold 496 8 1.60% 1,507 28 1.86% Interest-bearing deposits in
other banks 273 4 1.45% 297 4 1.35% ------ ----- ------ ----- Total
earning assets 488,520 27,974 5.73% 490,335 29,908 6.10% ------
------ Allowance for loan losses (4,499) (3,419) Total non-earning
assets 34,457 31,141 ------ ------ Total assets 518,478 518,057
======= ======= Liabilities and Shareholders' Equity:
Interest-bearing deposits: NOW accounts 59,995 246 0.41% 59,801 657
1.10% Money market accounts 58,952 428 0.73% 57,106 1,137 1.99%
Savings accounts 36,946 78 0.21% 33,799 214 0.63% Time deposits:
$100,000 and more 48,606 813 1.67% 63,652 2,164 3.40% Less than
$100,000 88,576 1,710 1.93% 73,495 2,688 3.66% ------ ----- ------
----- Total interest- bearing deposits 293,075 3,276 1.12% 287,853
6,860 2.38% Federal funds purchased and securities sold under
agreements to repurchase 17,145 402 2.34% 18,488 528 2.86% Federal
Home Loan Bank advances 62,141 1,922 3.09% 73,696 3,888 5.28% Trust
preferred capital notes 7,217 325 4.51% 7,217 308 4.27% ----- ---
----- --- Total interest- bearing liabilities 379,578 5,925 1.56%
387,254 11,584 2.99% ------- ----- ------- ------ Noninterest-
bearing liabilities: Demand deposits 85,962 82,106 Other
Liabilities 3,390 2,736 ----- ----- Total liabilities 468,930
472,096 Shareholders' equity 49,548 45,961 ------ ------ Total
liabilities and shareholders' equity 518,478 518,057 =======
======= Net interest ------ ------ income 22,049 18,324 ======
====== Net interest spread 4.17% 3.11% Interest expense as a
percent of average earning assets 1.21% 2.36% Net interest margin
4.51% 3.74% (1) Income and yields are reported on a tax equivalent
basis using a federal tax rate of 34%. EAGLE FINANCIAL SERVICES,
INC. Reconciliation of Tax-Equivalent Net Interest Income (dollars
in thousands) Three Months Ended ------------------ 9/30/2009
6/30/2009 3/31/2009 9/30/2008 --------- --------- ---------
--------- GAAP Financial Measurements: Interest Income - Loans
$5,765 $5,698 $5,604 $6,133 Interest Income - Securities and Other
Interest-Earnings Assets 1,092 1,170 1,155 1,165 Interest Expense -
Deposits 826 1,080 1,328 1,618 Interest Expense - Other Borrowings
668 704 739 881 --- --- --- --- Total Net Interest Income $5,363
$5,084 $4,692 $4,799 Non-GAAP Financial Measurements: Add: Tax
Benefit on Tax-Exempt Interest Income - Loans $37 $33 $35 $33 Add:
Tax Benefit on Tax-Exempt Interest Income - Securities 158 154 147
133 --- --- --- --- Total Tax Benefit on Tax-Exempt Interest Income
$195 $187 $182 $166 ---- ---- ---- ---- Tax-Equivalent Net Interest
Income $5,558 $5,271 $4,874 $4,965 ====== ====== ====== ======
DATASOURCE: Eagle Financial Services, Inc. CONTACT: Kathleen J.
Chappell, Vice President and CFO, +1-540-955-2510,
Copyright