EAGLE FINANCIAL SERVICES INC Q1 FY2026 earnings call

• Brandon noted that first quarter results reflect continued progress executing the long-term strategy, with margin expansion, improved efficiency ratio, and well-controlled credit quality. Net interest margin increased due to lower funding costs. Non-interest expense decreased as incentive compensation was lower. Credit quality was stable though non-performing assets saw a slight increase but were well secured. Balance sheet remained strong with capital levels exceeding well-capitalized regulatory thresholds and wholesale borrowings reduced. - Kate discussed net income, net interest income, and the expansion of net interest margin driven by lower interest expense on deposits. Fee income details included a decline in wealth management fees but an increase in loan sale gains. Non-interest expense decreased. Credit provision and net charge-offs were mentioned, along with balance sheet changes in assets and deposits. - Joe talked about the loan portfolio, noting a modest decline due to marine portfolio amortization, SBA loan sales, and commercial loan payoffs. However, there were loan closings in the first quarter and a solid pipeline of $275 million, with emphasis on credit discipline like strong collateral and proactive borrower engagement.

For the quarter, net income was reported as 3.7 million, or 69 cents per diluted share. Net interest income totaled 15.9 million, with the net interest margin increasing to 3.63%. Non-interest income amounted to $4.9 million. Non-interest expense decreased to $14.2 million, leading to an efficiency ratio of 68%. Credit quality remained stable, with non-performing assets slightly rising to 0.80% of total assets. Net interest margin expanded primarily due to continued improvement in funding costs and the benefits of last year's balance sheet repositioning. Non-interest expense declined sequentially mainly because of lower incentive compensation. On the fee side, wealth management fees decreased sequentially but were partially offset by higher gains on sales of loans. Credit provision for the quarter was $2 million, with net recoveries recorded and criticized assets actively managed.

• Continues to support clients and communities. Engaging in conversations with potential bank partners that align with the community-focused model and long-term strategic objectives. Disciplined approach to mergers and acquisitions, pursuing opportunities that enhance the franchise. Looks forward to updating on progress in the next quarter.

• The information provided contains forward-looking statements where actual results may differ materially. Refer to the most recent form 10-K, Q1 earnings release, and other SEC filings for detailed risk factors. No obligation to update forward-looking statements except as required by law.