Eagle Financial Services Q3 2025 Earnings Results & Report

Eagle Financial Services EPS Results

• Actual EPS: $1.04
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A
• EPS Beat Rate: 1 of last 4 quarters

Eagle Financial Services Revenue Results

• Actual Revenue: $22.39 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Eagle Financial Services (NASDAQ:EFSI), Inc. is a bank holding company headquartered in Berryville, Virginia. Through its principal subsidiary, Bank of Clarke County, the company provides community banking services to individuals, families, businesses and organizations.

Bank of Clarke County offers a range of deposit products, including checking, savings and certificates of deposit, along with commercial, residential mortgage and consumer lending. Its services also include online and mobile banking, treasury management and other financial solutions designed for personal and business customers.

The bank traces its history to the establishment of Bank of Clarke County in 1881 and serves communities in Virginia’s Northern Shenandoah Valley, including Clarke, Frederick and Loudoun counties and the Winchester area. Eagle Financial Services focuses on relationship-based banking and supporting the financial needs of the local communities in which it operates.

Eagle Financial Services Q3 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Net income of $5.6 million ( $1.04 per diluted share ) with net interest income of $17.2 million and an improved net interest margin of 3.58%, up 16 bps linked quarter.
• Positive Sentiment: Loan portfolio expanded by $21.3 million with approximately $90 million of originations and a commercial pipeline that grew by $35 million, signaling continued lending momentum.
• Negative Sentiment: Total deposits declined by $111 million in the quarter (including a $72.4 million reduction tied to client distributions), and the bank allowed higher‑cost non‑core funding to roll off, reducing funding balances.
• Neutral Sentiment: Non‑performing assets improved to $14.3 million (0.74% of assets) after a partial resolution and $1.1 million charge‑off, though two new CRE non‑accruals and remaining workout exposures remain under remediation.
• Negative Sentiment: Non‑interest income benefited from wealth, mortgage banking and SBA gains this quarter, but management warns SBA loan sale activity is likely paused by the government shutdown, which could reduce gain‑on‑sale revenue until settlements resume.

Presentation

[Operator]

Thank you for standing by. My name is Carly, and I will be your conference operator today. At this time, I would like to welcome everyone to the Eagle Financial Services Inc. Q3 earnings call. All lines have been placed on mute to prevent any background noise. I would now like to turn the call over to Nick Smith, Executive Vice President, Deputy Chief Financial Officer. Please go ahead.

[Nick Smith, EVP and Deputy CFO at Eagle Financial Services Inc]

Thank you. Good morning. Thank you for joining us for our third quarter earnings conference call. Before we begin, please note that the information provided during this call will contain forward-looking statements. Actual results or outcomes may differ materially from those expressed by those statements. I would like to direct all listeners to read the cautionary note regarding forward-looking statements contained in our most recent annual report on Form 10-K filed with the SEC and in our earnings release, as well as the risk factors identified in the annual report and in our more recent periodic reports filed with the SEC. Relevant factors that could cause actual results to differ materially from any forward-looking statements are included in the earnings release and in our SEC filings. The company does not undertake to update any of the forward-looking statements made today.

[Nick Smith, EVP and Deputy CFO at Eagle Financial Services Inc]

A copy of our earnings release, which contains non-GAAP financial measures, is available on our website at investors.eaglefinancialservices.com. Information regarding our use of the non-GAAP financial measures may be found in the body of the earnings release. A reconciliation to their most directly comparable GAAP financial measures is included at the end of the earnings release for your reference. This quarter, along with our earnings release, we published an updated investor presentation that has additional disclosures that we believe will be helpful. The presentation can be accessed on our investor relations website. Please also note that as we discuss our financials today, unless otherwise noted, all of the prior period comparisons will be with the second quarter of 2025. Joining us from management this morning, Brandon Laurie, our Chief Executive Officer, Joseph Zmitrovich, our Chief Banking Officer, and Kate Chappel, our Chief Financial Officer.

[Nick Smith, EVP and Deputy CFO at Eagle Financial Services Inc]

At this time, I will turn the call over to Brandon Laurie. Brandon?

[Brandon Lorry, CEO at Eagle Financial Services Inc]

Thank you, Nick, and thank you all for listening to the call today. Last night, we reported net income for the third quarter of $5.6 million. The efforts of our team are evident in our financial results as we continue to improve our funding composition and continue to deliver solutions for our clients across our markets. I will take a minute to update you on credit. Credit quality showed improvement during the third quarter, with non-performing assets declining to $14.3 million, or 0.74% of total assets, compared to $17.5 million, or 0.86% of total assets as of June 30, 2025. This reduction was primarily driven by the partial resolution of a large non-accrual loan, which resulted in a $4.8 million payment with a $1.1 million charge-off. Offsetting this improvement were two new commercial real estate relationships, each approximately $1.8 million, added to the non-accrual status during the quarter.

[Brandon Lorry, CEO at Eagle Financial Services Inc]

Both are well collateralized based on recent appraisals. Workout efforts continue on two previously disclosed large relationships included in our non-performing assets. The first loan was a partially owner-occupied property whose owner had passed away unexpectedly and had an outstanding balance of $2.2 million at 9/30. The courts have assigned an executor, and the bank has filed and been found in favor on summary judgment, allowing the bank to move forward with the foreclosure process in the fourth quarter. The second relationship, a multifamily portfolio in Washington, DC, now totals $5.5 million in exposure. As mentioned earlier, we received partial resolution on the largest property, which was sold by a short sale in Q3, creating a $1.1 million deficiency balance, which was then fully charged off. Remaining properties are under receivership and are actively being made ready for sale.

[Brandon Lorry, CEO at Eagle Financial Services Inc]

We do not anticipate having to make any significant additional write-downs on these properties. Overall, while non-performing assets remain elevated versus prior year levels, the quarter demonstrated meaningful progress in resolving issues and maintaining strong collateral positions. Looking ahead, we maintain a positive outlook on the credit environment and remain confident in the performance trajectory of Eagle Financial Services and the Bank of Quality for the remainder of 2025. I'll let Kate walk you through the financial results with greater detail. Kate?

[Kate Chappel, CFO at Eagle Financial Services Inc]

Thanks, Brandon. Last evening, we reported net income of $5.6 million, or $1.04 per diluted share. Net interest income for the period was $17.2 million, reflecting an increase of 9.6% linked quarter. Net interest margin for the quarter was 3.58%, an improvement of 16 basis points when compared to a net interest margin of 3.42% linked quarter. Total deposits declined $111 million during the quarter, primarily due to the continued distribution of proceeds from the customers who had sold their businesses during Q2. This balance has decreased by $72.4 million, ending the quarter at $79.3 million. In addition, we allowed higher-cost non-core funding sources to roll off as part of our funding strategy. Looking ahead to the fourth quarter, we expect our net interest margin to remain near 3.5%.

[Kate Chappel, CFO at Eagle Financial Services Inc]

Non-interest income totaled $5.2 million, up approximately $300,000 from Q2, driven by continued strength in wealth management and trust services, totaling $1.8 million in non-interest income for the quarter. Mortgage banking and SBA gain on sale activity also delivered an excellent performance during Q3, contributing $1 million in fee income to the quarter's results. Gain on sales loans held for sale will likely be impacted in the fourth quarter as the government shutdown has paused SBA loan settlement. We expect to resume fundings and sales once operations normalize. Non-interest expense increased $945,000 to $14.3 million, primarily due to higher salaries, benefits, and incentive accruals as we continue to meet performance goals for the year. I will now let Joe speak about our loan portfolio.

[Joseph Zmitrovich, CBO at Eagle Financial Services Inc]

Thank you, Kate. The third quarter reflected strong momentum in lending activity. The loan portfolio expanded by $21.3 million, driven by $32.7 million in commercial loan growth, partially offset by $10.5 million of runoff in the marine portfolio. Loan originations totaled approximately $90 million, and the commercial pipeline expanded by $35 million since the end of Q2, highlighting continued demand and opportunities. While competition remains intense, our disciplined approach and relationship-driven strategy continue to differentiate us in the market. We also are actively monitoring the government shutdown, and we have implemented measures to support any potentially affected clients and remain confident in our ability to navigate these challenges. Looking ahead, we expect steady commercial loan growth through year-end and are well-positioned to capitalize on targeted opportunities as they arise. I'll now turn it back to Brandon.

[Brandon Lorry, CEO at Eagle Financial Services Inc]

Thank you, Joe. First off, I'd like to congratulate our very own Nick Smith on his recent promotion to Deputy CFO. This advancement reflects our disciplined approach to succession planning and our commitment to building leadership depth that supports long-term shareholder value. The recent opening of our full-service McLean location in the third quarter marks an important step in our growth strategy. This expansion positions us to capture new opportunities and strengthen our ability to deliver solutions to clients. We continue discussions with potential bank partners and acquisition targets that fit our community-focused model and strategic goals. Our M&A approach is disciplined. We pursue only transactions that enhance franchise value. At the same time, we remain a strong organic operator, driving growth through execution and relationship banking. We are very confident in the scalability of our platform and our ability to deliver accretive growth.

[Brandon Lorry, CEO at Eagle Financial Services Inc]

Thank you all for joining today's call. We appreciate your continued support and are very excited about the opportunities ahead as we execute on our strategic plan.

[Operator]

This concludes today's call. Thank you for participating. You may now disconnect.

Participants

Executives

• Brandon Lorry, CEO
• Kate Chappel, CFO
• Nick Smith, EVP and Deputy CFO
• Joseph Zmitrovich, CBO