EFSI

This article first appeared on GuruFocus. Release Date: July 24, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Eagle Financial Services Inc (NASDAQ:EFSI) reported a net income of $5 million or $0.92 per diluted share for the quarter. Net interest income increased by 6.7% from the first quarter, with net interest margin expanding to 3.86%. The company experienced strong loan growth, with net loans increasing by $39.5 million during the quarter. EFSI's balance sheet remains robust, with liquidity and capital levels exceeding well-capitalized thresholds. The company continues to improve its funding profile and reduce wholesale borrowings, enhancing its financial stability. Adjusted net income decreased to $2.2 million or $0.41 per diluted share, primarily due to higher provision expenses. Non-performing assets increased to $16.5 million, largely due to a commercial real estate relationship moving to non-accrual status. Provision expense rose to $3.2 million, driven by changes in historical loss factors and higher specific reserves. Non-interest expense increased to $15.5 million, attributed to higher incentive compensation and workforce investments. The company faced challenges with a limited number of larger problem credits, impacting overall credit performance. Warning! GuruFocus has detected 6 Warning Signs with EFSI. Is EFSI fairly valued? Test your thesis with our free DCF calculator. Q: Can you provide more details on the factors driving the increase in net interest margin this quarter? A: (CFO, Kate Chappell) The net interest margin expanded to 3.86% this quarter, up from 3.53% in the prior quarter. This increase was driven by continued loan growth, the elimination of FHLB borrowing costs following the payoff of all advances in March, and ongoing improvements in our deposit mix and funding costs. Additionally, we recognized approximately five basis points of benefit from above-average fees and prepayment penalties during the quarter. Q: What were the main contributors to the increase in non-interest expense this quarter? A: (CFO, Kate Chappell) Non-interest expense increased to $15.5 million from $14.2 million in the first quarter. The rise was primarily due to higher incentive compensation accruals tied to performance metrics, increased loan production incentives associated with higher loan growth, annual merit increases, and workforce investments. Q: How is the company addressing the increase in non-performing assets? A: (Chief Banking Officer, Joe Zentrovich) The increase in non-performing assets to $16.5 million was largely due to one commercial real estate relationship moving to non-accrual status. We have completed updated collateral evaluations and established specific reserves where appropriate. We believe several of these credits have identifiable paths toward resolution in the second half of 2026, and we continue to actively manage these relationships. Q: Could you elaborate on the loan growth experienced this quarter? A: (Chief Banking Officer, Joe Zentrovich) Loan growth was strong, with net loans increasing by approximately $39.5 million. This growth was broad-based across several key lending categories, including construction, commercial real estate, and commercial and industrial lending. Residential mortgage settlements also increased by 19% year-over-year, contributing to higher gain on sale and fee income. Q: What is the outlook for the company's credit environment moving forward? A: (Chief Banking Officer, Joe Zentrovich) We view the current credit environment as one of concentrated challenges rather than broad deterioration across the portfolio. While there are a limited number of larger problem credits, they are well understood and actively managed. We do not see systemic weakness in our markets or across our loan book, and our proactive approach to credit management positions us well as we progress with workout efforts and reduce criticized assets over time. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Interested in Eagle Financial Services Inc.? Here are five stocks we like better. Second-quarter profit was boosted by a one-time gain from the sale of Eagle Financial Services’ stake in Bering Insurance Group. Excluding that item, adjusted net income fell to $2.2 million, or $0.41 per share. Core banking performance improved as net interest income rose 6.7% sequentially to $16.9 million and net interest margin expanded to 3.86%. Management credited loan growth, lower borrowing costs after repaying FHLB advances, and better deposit/funding mix. Credit costs and problem assets increased, with provision expense reaching $3.2 million and nonperforming assets rising to $16.5 million. The company said the issues are concentrated in a few previously identified credits rather than reflecting broad portfolio weakness. Eagle Financial Services (NASDAQ:EFSI) reported second-quarter net income of $5 million, or $0.92 per diluted share, including a one-time gain from the sale of its ownership interest in Bering Insurance Group. Excluding that gain, adjusted net income was $2.2 million, or $0.41 per diluted share. Chief Executive Officer Brandon Lorey said adjusted earnings declined from the prior quarter primarily because of higher provision expense tied to identified credit relationships and continued reserve strengthening. Still, he pointed to growth in net interest income, expansion in net interest margin, loan growth and funding improvements as evidence of progress in the company’s core banking operations. → Could Truth API Become Trump Media’s First Meaningful Revenue Driver? Net interest income rose 6.7% from the first quarter to $16.9 million, while net interest margin expanded 23 basis points sequentially to 3.86%. The margin was also 44 basis points higher than a year earlier. Chief Financial Officer Kate Chappell attributed the improvement to loan growth, the elimination of Federal Home Loan Bank borrowing costs after the company repaid all advances in March, and continued improvements in deposit mix and funding costs. The quarter also included approximately five basis points of benefit from above-average fees and prepayment penalties. → GE Vernova Just Sent a Mixed AI Signal to Investors Chappell said Eagle Financial Services expects net interest margin to move to approximately 3.75% during the second half of 2026. The company’s reported return on average assets was 1.08%, while reported return on average equity was 10.35%. → D-Wave Quantum or a Quantum ETF: Which Is the Better Bet? Net loans increased by $39.5 million during the quarter, supported by demand in construction, commercial real estate and commercial-and-industrial lending, according to management. Chief Banking Officer Joe Zmitrovich said growth was broad-based across those categories and that the company’s lending pipeline remained healthy. Residential mortgage settlements increased 19% year over year, Zmitrovich said, contributing to higher gain-on-sale and fee income. Total assets ended the quarter at $1.85 billion, while deposits increased modestly to $1.62 billion. Lorey said deposits remained stable, liquidity was robust, capital levels were above well-capitalized thresholds, and the company retained significant borrowing capacity if needed. Provision expense totaled $3.2 million in the second quarter. Chappell said the increase reflected changes in certain historical loss factors, higher qualitative adjustments, loan growth and higher specific reserves associated with identified credits. Nonperforming assets rose to $16.5 million, or 0.89% of total assets. The increase was largely driven by one commercial real estate relationship being placed on nonaccrual status, according to Chappell. The company completed updated collateral evaluations and established specific reserves where appropriate, she said, adding that most nonaccrual balances are secured by real estate. Net charge-offs totaled $2.2 million, primarily due to a partial write-down of a previously identified multifamily credit based on the estimated fair value of underlying collateral. The allowance for credit losses rose to $18.3 million, or 1.22% of total loans, from 1.19% in the prior quarter and 1.11% a year earlier. Zmitrovich characterized the credit issues as concentrated among a limited number of larger, previously identified problem credits rather than evidence of broad portfolio weakness. He said the company sees potential for meaningful resolution milestones on several credits during the second half of 2026 and continues to actively manage the affected relationships. Adjusted noninterest income was $5.1 million. Wealth management revenue benefited from higher assets under management and increased transaction-related revenue from estate and client services activity, Chappell said. Those gains were partly offset by lower gain-on-sale revenue from SBA loan production. Noninterest expense increased to $15.5 million from $14.2 million in the first quarter. The rise reflected higher incentive compensation accruals linked to performance metrics, increased loan-production incentives, annual merit increases and workforce investments. Looking ahead, Lorey said the company’s priorities remain disciplined growth, prudent credit management, operating efficiency and opportunities to enhance long-term shareholder value. He added that Eagle Financial Services remains open to strategic opportunities, including potential partnerships and acquisitions, but intends to pursue only transactions it believes create long-term value. Eagle Financial Services, Inc (NASDAQ: EFSI) is the bank holding company for Eagle National Bank, a community-oriented financial institution headquartered in Fredericksburg, Virginia. The company offers a broad range of retail and commercial banking solutions, focusing on personalized service for individuals, small businesses, and nonprofit organizations. Through its subsidiary, Eagle National Bank, it maintains a commitment to local decision-making and relationship-driven service. Eagle Financial Services provides deposit products including checking and savings accounts, money market funds, certificates of deposit, and individual retirement accounts. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Eagle Financial Services Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for July 2026.

BERRYVILLE, Va., July 23, 2026 /PRNewswire/ -- Eagle Financial Services, Inc. (NASDAQ: EFSI) (the "Company"), the holding company for Bank of Clarke, announced its second quarter 2026 results. Also, on July 23, 2026, the Board of Directors announced a quarterly common stock cash dividend of $0.31 per common share, payable on August 14, 2026, to shareholders of record on August 3, 2026. The following table presents selected financial performance highlights for the periods indicated: Additional key highlights for the second quarter of 2026 are as follows: Net loans increased by $39.5 million or 2.74%. Net interest margin increased from 3.63% for the quarter ended March 31, 2026 to 3.86% for the quarter ended June 30, 2026. Net interest spread increased from 2.80% for the quarter ended March 31, 2026 to 3.01% for the quarter ended June 30, 2026. Brandon Lorey, President and CEO, stated, "Our second quarter results reflect continued progress in the core operating performance of the franchise. Meaningful loan growth, improved net interest income, and a net interest margin of 3.86% demonstrate the benefits of the strategic balance sheet actions taken over the last two years and the disciplined execution of our team. While earnings for the quarter were impacted by a higher provision for credit losses, the underlying performance of the organization remained solid, and we continue to believe our strong capital, liquidity, and balance sheet position us well to support our customers, communities, and shareholders." Summary Total net income for the quarters ended June 30, 2026 and March 31, 2026 was $5.0 million and $3.7 million, respectively. Net income was $5.3 million for the quarter ended June 30, 2025. During the second quarter of 2026, the Company sold its membership interest in Bearing Insurance Group, LLC (Bearing) to an unaffiliated third party. A pre-tax gain on the sale in the amount of $3.5 million was recognized in the gain on sale of other assets in the consolidated statements of operations during the second quarter of 2026. Excluding the tax effected impact of the gain, adjusted net income for the quarter ended June 30, 2026, was $2.2 million. This is a non-GAAP financial measure. Please refer to the "Reconciliation of GAAP to Non-GAAP Performance Highlights" table for additional information. For the quarter ending June 30, 2026, adjusted net income decreased $1.5 million or 40.5% from the quarter ended March 31, 2026 and decreased $3.0 million or 57.7% from the quarter ended June 30, 2025. The declines in both periods were primarily driven by a higher provision for credit losses during the quarter ended June 30, 2026. Additional details regarding these changes are provided below. Interest Income Total loan interest income was $21.7 million and $20.7 million for the quarters ended June 30, 2026 and March 31, 2026, respectively. Total loan interest income was $20.4 million for the quarter ended June 30, 2025. Total loan interest income increased $1.0 million or 5.0% from the quarter ended March 31, 2026 to the quarter ended June 30, 2026. Average loans increased by $43.9 million or 3.0% from the quarter ended March 31, 2026 to the quarter ended June 30, 2026. Average loans increased $55.4 million or 3.8% between the quarter ended June 30, 2026 and June 30, 2025. The tax equivalent yield on average loans for the quarter ended June 30, 2026 was 5.82%, an increase of five basis points from the 5.77% average yield for the quarter ended March 31, 2026. The tax equivalent yield on average loans increased 15 basis points from the 5.67% average yield for the quarter ended June 30, 2025. Overall, the increase in loan interest income was mainly due to loan growth. Interest and dividend income from the investment portfolio was $1.3 million for the quarters ended June 30, 2026 and March 31, 2026. Interest and dividend income from the investment portfolio was also $1.3 million for the quarter ended June 30, 2025. The tax equivalent yield on average investments for the quarter ended June 30, 2026 was 4.34%, with no change from the quarter ended March 31, 2026 and down three basis points from 4.37% for the quarter ended June 30, 2025. The slight decrease in yield compared with the quarter ended June 30, 2025 reflects normal portfolio activity, including modest securities paydowns and purchases, and was not indicative of a significant change in investment portfolio performance. Interest Expense Total interest expense was $7.4 million and $7.9 million for the three months ended June 30, 2026 and March 31, 2026, respectively, and $9.1 million for three months ended June 30, 2025. The decrease in interest expense between the quarter ended March 31, 2026 and the quarter ended June 30, 2026 was mainly due to lower interest expense on Federal Home Loan Bank of Atlanta ("FHLB") advances. The average balance of FHLB advances decreased $28.4 million from the quarter ended March 31, 2026 to the quarter ended June 30, 2026. All FHLB advances were paid off in March. The decrease in interest expense between the quarter ended June 30, 2025 and the quarter ended June 30, 2026 was largely due to a $1.2 million decrease in interest expense on deposits. The average balance of interest-bearing deposits decreased by $46.3 million during the period, while the average yield paid on these deposits declined by 31 basis points. The decrease was primarily driven by a reduction in higher-cost time deposits. The decrease was also attributable to lower interest expense on FHLB advances by $499 thousand for the same comparative periods. The average balance of FHLB advances decreased $40.8 million from the quarter ended June 30, 2025 to the same period in 2026. Net Interest Income Net interest income for the quarter ended June 30, 2026 was $16.9 million reflecting an increase of $1.1 million or 6.7% from the quarter ended March 31, 2026 and an increase of $1.3 million or 8.1% from the quarter ended June 30, 2025. Net interest income was $15.9 million and $15.7 million, respectively, for the quarters ended March 31, 2026 and June 30, 2025. The net interest margin was 3.86% for the quarter ended June 30, 2026. For the quarters ended March 31, 2026 and June 30, 2025, the net interest margin was 3.63% and 3.42%, respectively. The increase in the net interest margin from March 31, 2026 and June 30, 2025 can primarily be attributed to two main factors. FHLB advances paid off in the first quarter of 2026 and there was no FHLB interest expense in the second quarter of 2026. In addition, the run off of higher interest bearing non core deposits during the periods had a positive impact to the net interest margin. The net interest spread increased to 3.01% for the quarter ended June 30, 2026 from 2.80% for the quarter ended March 31, 2026 and from 2.51% from the quarter ended June 30, 2025. 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 profitable 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%. This is a non-GAAP financial measure. Please refer to the "Reconciliation of Tax-Equivalent Net Interest Income" table for additional information. Noninterest Income and Expense Total noninterest income was $8.6 million and $4.9 million for the quarters ended June 30, 2026 and March 31, 2026 respectively. Total noninterest income was $4.9 million for the quarter ended June 30, 2025. Total noninterest income increased in the second quarter of 2026 compared to the first quarter of 2026, primarily due to a gain on the sale of other assets. During the quarter, the Company sold its membership interest in Bearing to an unaffiliated third party and recognized a pre-tax gain of $3.5 million, which was recorded in gain on sale of other assets. Noninterest income, as adjusted to exclude the one-time effect of the gain on the sale, was $5.1 million for the quarter ended June 30, 2026. This adjusted amount is a non-GAAP financial measure. See the "Reconciliation of GAAP to Non-GAAP Performance Highlights" table for additional information. Compared to both the first quarter of 2026 and the second quarter of 2025, adjusted noninterest income increased primarily due to higher wealth management fee income. Assets under management increased from $544 million at June 30, 2025 to $599 million at June 30, 2026. The second quarter of 2026 benefited from elevated transaction-based revenues related to estates and other client services. The increase was partially offset by lower sales volume of loans held for sale, primarily within the Small Business Administration ("SBA") portfolio. Noninterest expense increased $1.3 million, or 9.3%, to $15.5 million for the quarter ended June 30, 2026 from $14.2 million for the quarter ended March 31, 2026 and increased $2.1 million or 15.9% compared to the quarter ended June 30, 2026. Total noninterest expense increased in the second quarter of 2026 compared to the first quarter of 2026, primarily due to higher salaries and benefits expense. The increase was largely attributable to higher incentive compensation accruals as performance metrics reached payout levels during the quarter, as well as increased loan production incentive accruals associated with loan growth. In addition, annual merit increases and compensation adjustments, which were implemented at the end of the first quarter and became effective in the second quarter, contributed to the increase. Total noninterest expense increased in the second quarter of 2026 compared to the second quarter of 2025, primarily due to higher salaries and employee benefits expense and increased other operating expenses. In addition to the higher incentive compensation accruals discussed above, salaries and employee benefits expense increased as a result of growth in the Company's workforce, with full-time equivalent ("FTE") employees increasing from 245 to 259 during the period. Other operating expenses increased largely due to higher contributions toward charitable activities, primarily driven by the Bank's matching of donations from a very successful "Give with BOC" campaign as well as elevated loan collection costs associated with a single multifamily relationship included in the nonaccrual loan balance discussed below. 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 by $1.7 million between March 31, 2026 and June 30, 2026. This increase was due to the addition of one $3.6 million multifamily loan to nonaccrual status which was partially offset by the $1.6 million partial write-down to an already existing multi-family relationship. Based on a recent valuation, the Bank has specifically allocated $525 thousand to this new nonaccrual loan. Nonperforming assets decreased slightly as of June 30, 2026 in comparison to June 30, 2025 mainly due to one large loan being paid off during the period. The collateral for this loan (multifamily real estate) was offered for sale on July 8, 2025, for $5.7 million with the Bank agreeing to a short sale of $4.8 million. This decrease was partially offset by four relationships in excess of $1 million being placed in nonaccrual status during the same period. 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. Specific reserves on nonaccrual loans totaled $3.1 million, $2.1 million and $1.5 million as of June 30, 2026, March 31, 2026 and June 30, 2025, respectively. The increase in the specific reserve as of June 30, 2026 was due to the $525 thousand specific allocation for the recently added nonaccrual multifamily loan discussed above as well as an increase in an existing nonaccrual loan allocation as collateral was liquidated. Net charge-offs totaled $2.2 million for the quarter ended June 30, 2026, compared to net recoveries of $34 thousand for the linked quarter and net charge-offs of $159 thousand for the second quarter of 2025. The majority of second quarter 2026 charge-offs related to a $1.6 million partial write-down of a single multifamily relationship to the fair value of the underlying collateral, net of estimated selling costs. The remaining charge-offs were attributable to five smaller relationships. The charge-offs reflect the Company's continued efforts to proactively identify and address credit deterioration while maintaining appropriate collateral-based valuations within the loan portfolio. The allowance for credit losses as a percentage of total loans was 1.22% at June 30, 2026, compared to 1.19% at March 31, 2026 and 1.11% at June 30, 2025. The increase from the linked quarter primarily reflected changes in historical loss factors, most notably within the marine and non-owner-occupied commercial real estate portfolios, as well as higher qualitative factor adjustments in certain portfolios, including commercial and industrial and construction and farmland loans, associated with loan growth and credit quality trends. There were also increased specific reserves during this period. Compared to June 30, 2025, the increase in the allowance ratio was driven primarily by higher specific reserves resulting from updated collateral valuations. The Company's allowance level continues to reflect management's assessment of the credit risk inherent in the loan portfolio and its commitment to maintaining appropriate reserve coverage. The provision for credit losses on loans reflects management's ongoing assessment of the adequacy of the allowance for credit losses and the credit risk inherent in the loan portfolio. The Company recorded a provision for credit losses on loans of $3.2 million for the quarter ended June 30, 2026, compared to $2.0 million for the quarter ended March 31, 2026 and $856 thousand for the quarter ended June 30, 2025. The increase in provision compared to both periods was primarily driven by changes in certain historical loss factors, increases in qualitative factor adjustments, and higher specific reserves, as discussed above. Continued loan growth also contributed to the higher provision levels. The provision reflects management's disciplined approach to reserve methodology and its commitment to maintaining a strong allowance for credit losses that appropriately reflects portfolio growth, current economic conditions, and identified credit risks. 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 expected credit losses over the life of the loan portfolio. Balance Sheet Total consolidated assets were $1.85 billion at June 30, 2026, an increase of $9.0 million, or 0.5%, from $1.84 billion at March 31, 2026. Compared to June 30, 2025, total consolidated assets were down from $2.04 billion. The linked-quarter increase was driven primarily by growth in the loan portfolio, reflecting continued customer demand, and was partially offset by a reduction in cash and cash equivalents as excess liquidity was deployed to support loan growth. The year-over-year decrease in total assets was primarily attributable to the runoff of non-core deposits, which resulted in a corresponding decline in cash and cash equivalents. Despite the reduction in total assets from the prior-year period, the Company continued to maintain a strong balance sheet while strategically deploying capital into higher-yielding earning assets. Total net loans increased $39.5 million, or 2.7%, to $1.48 billion at June 30, 2026 from $1.44 billion at March 31, 2026, driven by growth across several key lending categories, including construction, commercial real estate, and commercial and industrial loans. Compared to June 30, 2025, total net loans increased $58.4 million, or 4.1%, from $1.42 billion, reflecting continued success in generating new lending opportunities and serving the credit needs of the Company's markets. Year-over-year growth was concentrated in the same core lending segments that contributed to the linked-quarter increase, demonstrating the strength and consistency of the Company's loan production efforts. Total deposits were $1.60 billion at June 30, 2026, an increase of $3.7 million, or 0.2%, from March 31, 2026. Total deposits were $1.77 billion at June 30, 2025. The modest linked-quarter increase reflects the continued stability of the Company's deposit base. The year-over-year decrease was primarily attributable to the temporary nature of unusually large noninterest-bearing deposit balances received during the second quarter of 2025. Specifically, noninterest-bearing deposits increased by approximately $151.7 million during that period, largely due to business sale proceeds from two customers. As anticipated, the majority of these funds had exited the Bank by the end of 2025. Excluding the impact of these temporary balances, the Company's deposit base has remained relatively stable and continues to provide a solid source of funding for loan growth and other balance sheet initiatives. Core deposit change for the quarter and twelve months ended June 30, 2026 was an increase of $102 thousand and a decrease of $13.7 million, respectively. Core deposits consist of checking accounts, NOW accounts, money market accounts, regular savings accounts and time deposits less than $250 thousand. Liquidity The objective of the Company's liquidity management is to ensure the continuous availability of funds to satisfy the credit needs of our customers and the demands of our depositors, creditors and investors. Uninsured deposits represent an estimate of amounts above the Federal Deposit Insurance Corporation ("FDIC") insurance coverage limit of $250,000. As of June 30, 2026, the Company's uninsured deposits were approximately $217.3 million or 13.6% of total deposits. The Company's liquid assets, which include cash and due from banks, interest-bearing deposits at other banks, loans with a maturity less than one year and nonpledged securities available for sale, were $345.3 million and borrowing availability was $618.6 million as of June 30, 2026, which in total exceed uninsured deposits, excluding intercompany cash holdings and secured municipal deposits, by $746.6 million. Liquid assets decreased by $83.9 million during the second quarter of 2026 due mainly to loan growth. In addition to deposits, the Company utilizes short-term and long-term borrowings as sources of funds. Short-term borrowings from the Federal Reserve Bank and the FHLB as well as federal funds purchased from Community Bankers Bank may be used to fund the Company's day-to-day operations. Long-term borrowings include FHLB advances as well as subordinated debt. Total outstanding borrowings decreased to $29.6 million at June 30, 2026 from $69.7 million at June 30, 2025. The decrease was primarily due to the paydown of outstanding FHLB advances. Borrowings remained stable from March 31, 2026 to June 30, 2026. Additional sources of liquidity available to the Company include cash flows from operations, loan payments and payoffs, deposit growth, maturities, calls and sales of securities and the issuance of brokered certificates of deposit. Capital and Dividends On July 23, 2026, the Board of Directors announced a quarterly common stock cash dividend of $0.31 per common share, payable on August 14 2026, to shareholders of record on August 3, 2026. The Board of Directors of the Company regularly reviews the amount of cash dividends per share and the resulting dividend payout ratio in light of changes in economic conditions, current and future capital requirements, and expected future earnings. Total consolidated equity increased $14.3 million to $193.9 million at June 30, 2026 compared to June 30, 2025 and increased $3.6 million compared to March 31, 2026. The increases are primarily due to increased retained earnings from net income. The Company's securities available for sale are fixed income debt securities and their unrealized loss position is a result of increased market interest rates since they were purchased. The Company expects to recover its investments in debt securities through scheduled payments of principal and interest. The accumulated other comprehensive loss related to the Company's securities available for sale increased to $6.1 million at June 30, 2026 compared to $6.0 million at March 31, 2026 and decreased from $7.3 million at June 30, 2025. As of June 30, 2026, the most recent notification from the FDIC categorized the Bank of Clarke as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized under regulations applicable at June 30, 2026, Bank of Clarke was required to maintain minimum total risk-based, Tier 1 risk-based, CET1 risk-based and Tier 1 leverage ratios. In addition to the regulatory risk-based capital requirements, Bank of Clarke must maintain a capital conservation buffer of additional capital of 2.5 percent of risk-weighted assets as required by the Basel III capital rules. The Bank of Clarke exceeded these ratios at June 30, 2026. Explanation of Non-GAAP Financial Measures This release contains financial information determined by methods other than in accordance with GAAP. Management believes that the supplemental Non-GAAP information provides a better comparison of period-to-period operating performance and the impact of non-recurring transactions on the Bank's results. Additionally, the Company believes this information is utilized by regulators and market analysts to evaluate a company's results and financial condition and therefore, such information is useful to investors. These disclosures should not be viewed as a substitute for or more important than financial results in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures which may be presented by other companies. Second Quarter 2026 Earnings Release Conference Call and Webcast Eagle Financial Services' Chief Executive Officer, Brandon Lorey, and Chief Financial Officer, Kate Chappell, will hold a listen-only conference call and webcast to discuss second quarter results on Friday, July 24, 2026, at 10 a.m. eastern time. Those wishing to listen to the conference call should call the applicable number below and reference the Conference ID below. USA / International – (Toll) - +1.646.968.2525USA – (Toll-Free) +1.888.596.4144Canada – (Toronto) +1.647.495.7514Canada – (Toll-Free) +1.888.596.4144Conference ID – 4519726 and press # A replay of the call and webcast will be accessible at investors.bankofclarke.bank. Webcast URL: https://events.q4inc.com/attendee/682653491 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. Forward-looking statements speak only as of the date of this release. The Company undertakes no obligation to update or revise any forward-looking statement, except as required by law. 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; the quality or composition of the Company's loan or investment portfolios; the Company's ability to successfully resolve non-performing assets; demand for loan products; liquidity and 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, 2025 and other filings with the Securities and Exchange Commission. % 91.65%88.21%81.44%Average interest-earning assets to average-interest bearing liabilities150.25%146.04%147.54%155.33%146.08%PER SHARE DATADividends$0.31$0.31$0.31$0.31$0.31Book value35.8335.1635.1434.5233.41Tangible book value35.8335.1635.1434.5233.41SHARE PRICE DATAClosing price$41.46$34.98$39.80$37.83$30.62Diluted earnings multiple(1)11.2712.6712.289.097.81Book value multiple(2)1.160.991.131.100.92COMMON STOCK DATAOutstanding shares at end of period5,411,6155,412,3765,374,2055,376,3465,376,346Weighted average shares outstanding5,412,0165,412,0215,376,0885,376,3465,378,214Weighted average shares outstanding, diluted5,412,0165,412,0215,376,0885,376,3465,378,214CREDIT QUALITYNet charge-offs (recoveries) to average loans0.15%(0.00)%0.02%0.16%0.01%Total non-performing loans to total loans (3)1.08%1.01%0.98%0.91%1.20%Total non-performing assets to total assets (4)0.89%0.80%0.77%0.74%0.86%Non-accrual loans to:Total loans1.08%1.01%0.98%0.90%1.16%Total assets0.87%0.80%0.76%0.68%0.82%Allowance for credit losses to:Total loans1.22%1.19%1.04%1.01%1.11%Non-performing assets (4)111.16%117.67%104.98%103.81%91.24%Non-accrual loans113.38%117.78%106.40%112.48%95.48%NON-PERFORMING ASSETS:Loans delinquent over 90 days and still accruing$20$13$60$91$593Non-accrual loans16,14614,71114,39813,16716,735Other real estate owned and repossessed assets302—1351,009186NET LOAN CHARGE-OFFS (RECOVERIES):Loans charged off$2,269$155$318$2,417$335(Recoveries)(42)(189)(81)(117)(176)Net charge-offs (recoveries)2,227(34)2372,300159PROVISION FOR CREDIT LOSSES ON LOANS$3,207$1,972$747$1,131$856ALLOWANCE FOR CREDIT LOSSES ON LOANS$18,306$17,326$15,320$14,810$15,979 View original content to download multimedia:https://www.prnewswire.com/news-releases/eagle-financial-services-inc-announces-2026-second-quarter-financial-results-and-quarterly-dividend-302833543.html

Eagle reported Q1 net income of $3.7 million ($0.69/share) with margin and efficiency gains — a higher net interest margin of 3.63% and an improved efficiency ratio of 68% — though earnings were modestly below the prior quarter. Provision for credit losses increased to $2.0 million driven by specific reserves for two commercial relationships and non-performing assets rose to 0.80% of assets; management says collateral appears sufficient, net recoveries were recorded, and reserves were strengthened while one large problem relationship is being closely monitored. The bank fully paid down its remaining FHLB borrowing, reducing reliance on wholesale funding and boosting balance-sheet flexibility, while loan activity remained steady with a growing pipeline of $275 million. Interested in Eagle Financial Services Inc.? Here are five stocks we like better. Eagle Financial Services (NASDAQ:EFSI) reported first-quarter net income of $3.7 million, or $0.69 per diluted share, as the company pointed to margin expansion, improved operating efficiency, and what management described as well-controlled credit metrics despite a higher provision expense tied to specific credits. In prepared remarks, CEO Brandon Lorey said the company’s first-quarter performance showed “continued progress executing against our long-term strategy,” while operating in what he described as a “more normalized growth environment following the liquidity events that we discussed throughout 2025.” → Pipelines and Automation: 2 Energy Plays Built for Any Oil Price Compared with the fourth quarter, earnings were lower. CFO Kathleen Chappell said net income of $3.7 million compared to $4.3 million in the prior quarter. Chappell reported return on average assets of 0.81% and return on average equity of 7.98% for the quarter. Lorey acknowledged the modest sequential decline in earnings but said “the underlying performance of the franchise remained solid,” citing stronger margins, a better efficiency ratio, and stable credit quality. → 3 Stocks Poised to Grow on European Rearmament Spending The company reported net interest income of $15.9 million, which Chappell said was down modestly from the fourth quarter “primarily due to lower average earning assets.” However, Eagle Financial posted a higher net interest margin of 3.63%. Lorey said net interest margin increased to 3.63% “driven primarily by continued improvement in funding costs and the benefits of last year’s balance sheet repositioning.” He added that “deposit pricing discipline and the runoff of our higher cost funding continued to positively impact our spread.” → Homebuilder Earnings: D.R. Horton Sticks Out as Pulte & NVR Sales Tank Chappell similarly attributed the margin improvement to lower interest expense—particularly deposit costs—as “pricing moderated and the funding mix continued to improve.” Noninterest income totaled $4.9 million in the first quarter. Chappell said wealth management fees declined from the fourth quarter after “several elevated estate-related transactions” in the prior quarter that management had previously described as non-recurring. The decline was “partially offset by higher gains on sales of loans driven by increased SBA production and solid mortgage activity,” she said. On expenses, both Lorey and Chappell highlighted sequential improvement. Noninterest expense declined to $14.2 million, down $1.3 million from the fourth quarter. Chappell said the decrease was “driven primarily by lower salaries and benefit expense,” reflecting higher incentive compensation accruals booked in the fourth quarter due to year-end performance metrics. Lorey also cited lower incentive compensation accruals as a key driver of the expense decline. As a result, the efficiency ratio improved to 68% in the quarter, down from 70% in the fourth quarter, according to management. Management described credit conditions as stable overall, while detailing specific items that lifted provision expense and nonperforming assets. Lorey said non-performing assets increased slightly to 0.80% of total assets, driven by “the addition of two smaller relationships to non-accrual status.” He said those relationships were well secured and that, based on updated valuations, management believed “the collateral is sufficient.” He also noted the company recorded net recoveries during the quarter. Chappell reported provision for credit losses of $2 million, an increase from the fourth quarter. She said the higher provision was “driven primarily by higher specific reserves related to two commercial and industrial relationships, as well as changes in certain historical loss factors.” Chappell added that net charge-offs were negative for the quarter “due to net recovery.” In addition, Chappell said Eagle Financial was “actively managing one large problem relationship” that is “well identified and closely monitored.” Looking to the second quarter, she said management expected to receive additional information that “could result in either a resolution of the exposure or an incremental reserve build.” Outside of that specific relationship, Chappell said the company was not seeing “broader underlying credit issues within the portfolio,” and that delinquencies, non-performing assets, and criticized loan trends remained “well controlled.” Chappell said the quarter’s provision “meaningfully strengthens our reserve position,” bringing coverage “more in line with regional peers” and providing a “strong safety net” as the bank works through the identified credit. On the balance sheet, Chappell said total assets declined to $1.84 billion, primarily due to lower cash balances and continued runoff of higher-cost borrowing. Total deposits declined slightly to $1.6 billion, though she said core deposits increased during the quarter, driven by growth in non-interest-bearing demand deposits. A key funding change during the quarter was the paydown of wholesale funding. Chappell said Eagle Financial “fully paid down our remaining FHLB borrowing,” which she said reduced reliance on wholesale funding and improved balance sheet flexibility. Lorey also highlighted that wholesale borrowings were reduced “meaningfully” during the quarter and said capital levels exceeded well-capitalized regulatory thresholds. From a lending standpoint, Chief Banking Officer Joseph Zmitrovich said loan balances declined modestly due to continued amortization in the marine portfolio and the sale of about $7.5 million of SBA loans. He also cited three commercial loan payoffs totaling $17.9 million, including “a maturing commercial bridge note and a municipal loan taken out by pre-planned bond financing.” Despite the decline in balances, Zmitrovich said business activity remained steady, reporting $81 million in loan closings during the first quarter and pointing to a “strong increase in owner-occupied commercial real estate balances” tied to the bank’s focus on relationship-based lending. He said the loan pipeline was $275 million, “which is over $100 million more year-over-year.” Looking ahead, Lorey said the operating environment remains competitive, but he emphasized the company’s relationship-based model and disciplined balance sheet management. He also said Eagle Financial continues to hold conversations with potential bank partners aligned with its community-focused approach, adding that the company’s M&A approach remains disciplined and opportunities would be pursued only if they clearly enhance franchise value. Eagle Financial Services, Inc (NASDAQ: EFSI) is the bank holding company for Eagle National Bank, a community-oriented financial institution headquartered in Fredericksburg, Virginia. The company offers a broad range of retail and commercial banking solutions, focusing on personalized service for individuals, small businesses, and nonprofit organizations. Through its subsidiary, Eagle National Bank, it maintains a commitment to local decision-making and relationship-driven service. Eagle Financial Services provides deposit products including checking and savings accounts, money market funds, certificates of deposit, and individual retirement accounts. The article "Eagle Financial Services Q1 Earnings Call Highlights" was originally published by MarketBeat.

BERRYVILLE, Va., April 23, 2026 /PRNewswire/ -- Eagle Financial Services, Inc. (NASDAQ: EFSI) (the "Company"), the holding company for Bank of Clarke, announced its first quarter 2026 results. Also, on April 23, 2026, the Board of Directors announced a quarterly common stock cash dividend of $0.31 per common share, payable on May 15, 2026, to shareholders of record on May 4, 2026. The following table presents selected financial performance highlights for the periods indicated: Additional key highlights for the first quarter of 2026 are as follows: Net interest margin increased from 3.61% for the quarter ended December 31, 2025 to 3.63% for the quarter ended March 31, 2026. Net interest spread increased from 2.74% for the quarter ended December 31, 2025 to 2.80% for the quarter ended March 31, 2026. Efficiency ratio decreased from 70.39% for the quarter ended December 31, 2025 to 67.97% for the quarter ended March 31, 2026. Brandon Lorey, President and CEO, stated, "Our first quarter results reflect steady progress in our core operating performance and continued improvement in several key metrics. Net interest margin increased modestly, efficiency improved from the prior quarter, and asset quality remained stable. These results demonstrate the impact of the balance sheet actions we have taken and our ongoing focus on disciplined execution. We continue to maintain solid capital and liquidity levels, which positions us to thoughtfully support our customers and communities while remaining mindful of the broader economic environment." Summary Total net income for the quarters ended March 31, 2026 and December 31, 2025 was $3.7 million and $4.3 million, respectively. Net loss was $7.0 million for the quarter ended March 31, 2025. For the quarter ended March 31, 2026, net income decreased $594 thousand or 13.7% from the quarter ended December 31, 2025 and increased $10.7 million or 153.6% from the quarter ended March 31, 2025. The decrease from the quarter ended December 31, 2025 was due to a decrease in interest and dividend income as well as an increase in the provision for credit losses during the quarter ended March 31, 2026. These changes are discussed below in greater detail. The increase from the quarter ended March 31, 2025 was primarily due to the loss on sales of securities as a part of the balance sheet repositioning during the first quarter of 2025. Excluding the net of tax effected impact of the $12.4 million loss recognized during the first quarter of 2025 from the balance sheet repositioning, adjusted net income for the quarter ended March 31, 2025 was $2.8 million. This is a non-GAAP financial measure. Please refer to the "Reconciliation of GAAP to Non-GAAP Performance Highlights" table for additional information. The increase in net income for the quarter ended March 31, 2026 compared to the as-adjusted quarter ended March 31, 2025 was due to several factors. Gain on sale of loans held for sale increased by $583 thousand as well as net interest income, which increased by $2.6 million. These increases were partially offset by increases in noninterest expenses of $1.6 million. These changes are discussed below in greater detail. Interest Income Total loan interest income was $20.7 million and $21.3 million for the quarters ended March 31, 2026 and December 31, 2025, respectively. Total loan interest income was $20.0 million for the quarter ended March 31, 2025. Total loan interest income decreased $555 thousand or 2.6% from the quarter ended December 31, 2025 to the quarter ended March 31, 2026. Average loans decreased by $10.2 million or 0.7% from the quarter ended December 31, 2025 to the quarter ended March 31, 2026. The tax equivalent yield on average loans for the quarter ended March 31, 2026 was 5.77%, an increase of one basis point from the 5.76% average yield for the quarter ended December 31, 2025. The slight increase in loan interest income between the quarters ended March 31, 2026 and March 31, 2025 was mainly due to an increase in interest rates. The tax equivalent yield on average loans for the quarter ended March 31, 2026 was 5.77%, an increase of 20 basis points from the 5.57% average yield for the quarter ended March 31, 2025. Average loans remained stable at $1.46 billion for the quarter ended March 31, 2026 and March 31, 2025. Early during the first quarter of 2025, ahead of its public offering, the Company sold a pool of mortgage loans at par in order to bolster on-balance sheet liquidity. This pool had a total balance of $18.8 million with a weighted average yield of 6.58%. Interest and dividend income from the investment portfolio was $1.3 million for the quarters ended March 31, 2026 and December 31, 2025. Interest and dividend income from the investment portfolio was $848 thousand for the quarter ended March 31, 2025. The tax equivalent yield on average investments for the quarter ended March 31, 2026 was 4.34%, up nine basis points from 4.25% for the quarter ended December 31, 2025 and up 141 basis points from 2.93% for the quarter ended March 31, 2025. The increase in yield was due largely to lower yielding investments sold during the first quarter of 2025 being replaced with higher yielding securities. During the quarter ended March 31, 2025, $99.2 million in securities were sold with a weighted average yield of 1.72%. During the same quarter, $76.0 million in securities were purchased. Of the $76.0 million in securities purchased, $66.0 million were purchased as a part of the executed balance sheet repositioning with a weighted average yield of 4.72%. Interest Expense Total interest expense was $7.9 million and $8.4 million for the three months ended March 31, 2026 and December 31, 2025, respectively, and $10.2 million for three months ended March 31, 2025. The decrease in interest expense between the quarter ended December 31, 2025 and the quarter ended March 31, 2026 was mainly due to lower interest expense on deposits. The average balance of interest-bearing deposits increased by $4.7 million during this time period but the average yield paid on these deposits decreased by six basis points for the same period. The decrease in interest expense between the quarter ended March 31, 2025 and the quarter ended March 31, 2026 was largely due to a $964 thousand decrease in Federal Home Loan Bank of Atlanta ("FHLB") interest expense. The average balance of FHLB advances decreased $82.1 million from the quarter ended March 31, 2025 to the same period in 2026. The decrease was also attributable to lower interest expense on deposits by $1.3 million for the same comparative periods. The average balance of interest-bearing deposits decreased by $21.2 million during this time period and the average yield paid on these deposits decreased by 39 basis points for the same period. Net Interest Income Net interest income for the quarter ended March 31, 2026 was $15.9 million reflecting a decrease of 2.9% from the quarter ended December 31, 2025 and an increase of 19.2% from the quarter ended March 31, 2025. Net interest income was $16.4 million and $13.3 million, respectively, for the quarters ended December 31, 2025 and March 31, 2025. The net interest margin was 3.63% for the quarter ended March 31, 2026. For the quarters ended December 31, 2025 and March 31, 2025, the net interest margin was 3.61% and 2.98%, respectively. The increase in the net interest margin from December 31, 2025 was mainly due to the decrease in yield paid on interest bearing liabilities. The increase in the net interest margin from March 31, 2025 can be attributed to two main factors. Both the repositioning of the securities portfolio and the run off of higher interest bearing non core deposits during the period had a positive impact to the net interest margin. The net interest spread increased to 2.80% for the quarter ended March 31, 2026 from 2.13% for the quarter ended March 31, 2025. 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 profitable 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%. This is a non-GAAP financial measure. Please refer to the "Reconciliation of Tax-Equivalent Net Interest Income" table for additional information. Noninterest Income and Expense Total noninterest income was $4.9 million and $5.4 million for the quarters ended March 31, 2026 and December 31, 2025 respectively. Total noninterest loss was $8.5 million for the quarter ended March 31, 2025. The decrease in total noninterest income for the first quarter of 2026 compared to the fourth quarter of 2025 was primarily driven by lower wealth management fee income. The prior quarter benefited from higher transaction‑based revenues related to estates and other services, which did not recur at the same level in the first quarter. This decline was partially offset by an increase in small business investment company income. Cash distributions from these investments are dependent on performance results and the timing of distributions, which can result in quarter‑to‑quarter fluctuations. Noninterest income, as adjusted to exclude the one-time effect of the previously disclosed significant transaction, was $3.9 million for the quarter ended March 31, 2025. This is a non-GAAP financial measure. Please refer to the "Reconciliation of GAAP to Non-GAAP Performance Highlights" table for additional information. When comparing the first quarter of 2026 to the as adjusted first quarter of 2025, gain on sale of loans held for sale was the largest driver of the increase between the periods. This increase was due to increased volume in both small business administration "SBA" and mortgage loans sold. The volume of SBA loans sold increased from $2.0 million during the quarter ended March 31, 2025 to $10.0 million for the same period in 2026. Mortgage loan sales volume increased from $14.9 million during the quarter ended March 31, 2025 to $16.6 million for the same period in 2026. Noninterest expense decreased $1.3 million, or 8.5%, to $14.2 million for the quarter ended March 31, 2026 from $15.5 million for the quarter ended December 31, 2025. Noninterest expense was $12.6 million for the quarter ended March 31, 2025, representing an increase of $1.6 million or 12.9% when comparing to the quarter ended March 31, 2026. The decrease in total noninterest expense when comparing the first quarter of 2026 to the fourth quarter of 2025 is mainly due to the decrease in salaries and benefits expense. This decrease was largely due to increased incentive accruals resulting from plan metrics reaching payout levels during the fourth quarter of 2025. When comparing the first quarter of 2026 to the same quarter of 2025, the increase in total noninterest expense was mainly due to the increases in salaries and employee benefits expenses as well as other operating expenses. The increase in salaries and benefit expense is mostly due to the increase in the number of full time equivalent "FTE" employees. During this period, FTE's increased from 233 to 253. Other operating expenses increased largely due to higher contributions toward charitable activities, primarily driven by the Bank's matching of donations from a very successful Give with BOC campaign as well as elevated loan collection costs associated with a single multifamily relationship included in the nonaccrual loan balance discussed below. 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 slightly between December 31, 2025 to and March 31, 2026. This increase was due to the addition of two small loans to nonaccrual status which was partially offset by the sale of one repossessed asset during the first quarter of 2026. Based on a recent valuation, the Bank believes that there is sufficient collateral to cover the entirety of the outstanding balance of the new nonaccrual relationships. Nonperforming assets decreased as of March 31, 2026 in comparison to March 31, 2025 mainly due to one large loan being paid off during the period. The collateral for this loan (multifamily real estate) was offered for sale on July 8, 2025, for $5.7 million with the Bank agreeing to a short sale of $4.8 million. This decrease was partially offset by several large relationships being placed in nonaccrual status during the same period. 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. Specific reserves on nonaccrual loans totaled $2.1 million, $467 thousand and $152 thousand as of March 31, 2026, December 31, 2025 and March 31, 2025, respectively. The increase in the specific reserve as of March 31, 2026 was primarily attributable to two commercial and industrial relationships for which new or increased specific allocations were recorded during the first quarter of 2026, driven by updated collateral information. Additional appraisals on certain nonaccrual and individually evaluated loans have been ordered and are expected to be received in the middle to late portion of the second quarter of 2026. The results of these appraisals may indicate that further specific reserves are warranted on certain existing nonaccrual or impaired loans, which could result in additional provisioning in future periods. The Company realized $34 thousand in net recoveries for the quarter ended March 31, 2026 compared to net charge-offs of $237 thousand for the three months ended December 31, 2025. During the three months ended March 31, 2025, $891 thousand in net charge-offs were recognized. The majority of charge-offs recognized during the first quarter of 2025 were attributable to the write-down of one large multifamily relationship to the fair value of collateral, net of selling costs. The ratio of allowance for credit losses to total loans was 1.19% and 1.04% at March 31, 2026 and December 31, 2025, respectively. The ratio of allowance for credit losses to total loans was 1.05% at March 31, 2025. The basis point increase in the allowance for credit losses to total loans between March 31, 2026, December 31, 2025, and March 31, 2025 was primarily driven by higher specific reserves, as discussed above. Increases in specific reserves accounted for 11 and 14 basis points, respectively, of the total basis point increase, with the remaining increase largely attributable to changes in historical loss ratios, primarily within the consumer and non‑owner‑occupied commercial real estate portfolios. The amount of provision for credit losses on loans reflects the results of the Bank's analysis used to determine the adequacy of the allowance for credit losses. The Company recorded $2.0 million in provision for credit losses on loans for the quarter ended March 31, 2026. The Company recognized provision for credit losses on loans of $747 thousand and $1.1 million for the quarters ended December 31, 2025 and March 31, 2025, respectively. The higher provision for the quarter ended March 31, 2026, compared to the quarter ended December 31, 2025, was primarily driven by higher specific reserves, as well as increases in certain historical loss ratios, as discussed above. The higher provision for the quarter ended March 31, 2026, compared to the quarter ended March 31, 2025, was also primarily driven by higher specific reserves and increases in certain historical loss ratios, partially offset by higher charge‑offs recognized during the first quarter of 2025. 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 expected credit losses over the life of the loan portfolio. Balance Sheet Total consolidated assets of the Company at March 31, 2026 were $1.84 billion, which represented a decrease of $50.3 million or 2.66% from total assets of $1.89 billion at December 31, 2025. At March 31, 2025, total consolidated assets were $1.90 billion. Total assets decreased during the first quarter of 2026 in comparison to December 31, 2025 and March 31, 2025 primarily due to the decrease in cash and cash equivalents. Cash and cash equivalents were at a lower level as of March 31, 2026 due to declines in deposits and Federal Home Loan Bank advances during the quarter. Total net loans decreased $16.2 million or 1.11% from $1.46 billion at December 31, 2025 to $1.44 billion at March 31, 2026 driven largely by the decline in commercial and industrial loans of $11.9 million as well as marine loan amortization. Approximately $7.5 million in commercial and industrial SBA loans were sold during the first quarter of 2026 along with the paydown of $3.1 million on one commercial and industrial line of credit. Total deposits decreased to $1.60 billion as of March 31, 2026 when compared to December 31, 2025 deposits of $1.61 billion. At March 31, 2025 total deposits were $1.61 billion. During the second quarter of 2025, total deposits increased $152.7 million. While deposit balances remained fairly stable in total when comparing each period end, there was fairly significant movement in individual deposit categories. The majority of change to the deposit categories was due to large deposits in non-interest bearing accounts totaling $151.7 million that were made during the second quarter of 2025 and was primarily related to sales proceeds of two customer's businesses. During the third quarter of 2025, $72.4 million of these funds left the bank, with $79.3 million still remaining at September 30, 2025. During the fourth quarter of 2025, $74.4 million of these funds left the bank leaving a remaining $4.9 million. Core deposit change for the quarter and twelve months ended March 31, 2026 was an increase of $29.7 million and a decrease of $7.1 million, respectively. Core deposits consist of checking accounts, NOW accounts, money market accounts, regular savings accounts and time deposits less than $250 thousand. The increase for the quarter ended March 31, 2026 was mainly due to strong growth in noninterest bearing demand deposits. Liquidity The objective of the Company's liquidity management is to ensure the continuous availability of funds to satisfy the credit needs of our customers and the demands of our depositors, creditors and investors. Uninsured deposits represent an estimate of amounts above the Federal Deposit Insurance Corporation ("FDIC") insurance coverage limit of $250,000. As of March 31, 2026, the Company's uninsured deposits were approximately $207.3 million or 13.1% of total deposits. The Company's liquid assets, which include cash and due from banks, interest-bearing deposits at other banks, loans with a maturity less than one year and nonpledged securities available for sale, were $423.9 million and borrowing availability was $635.3 million as of March 31, 2026, which in total exceed uninsured deposits, excluding intercompany cash holdings and secured municipal deposits, by $851.9 million. Liquid assets have decreased by only $535 thousand during the first quarter. In addition to deposits, the Company utilizes short-term and long-term borrowings as sources of funds. Short-term borrowings from the Federal Reserve Bank and the FHLB as well as federal funds purchased from Community Bankers Bank may be used to fund the Company's day-to-day operations. Long-term borrowings include FHLB advances as well as subordinated debt. Total outstanding borrowings decreased to $29.6 million at March 31, 2026 from $94.5 million at March 31, 2025. Borrowings decreased by $40.0 million from December 31, 2025 to March 31, 2026. The decreases were primarily due to the paydown of outstanding FHLB advances. Additional sources of liquidity available to the Company include cash flows from operations, loan payments and payoffs, deposit growth, maturities, calls and sales of securities and the issuance of brokered certificates of deposit. Capital and Dividends On April 23, 2026, the Board of Directors announced a quarterly common stock cash dividend of $0.31 per common share, payable on May 15, 2026, to shareholders of record on May 4, 2026. The Board of Directors of the Company regularly reviews the amount of cash dividends per share and the resulting dividend payout ratio in light of changes in economic conditions, current and future capital requirements, and expected future earnings. Total consolidated equity increased $13.9 million to $190.3 million at March 31, 2026 compared to March 31, 2025 and increased $1.5 million compared to December 31, 2025. The increases are primarily due to increased retained earnings from net income. The Company's securities available for sale are fixed income debt securities and their unrealized loss position is a result of increased market interest rates since they were purchased. The Company expects to recover its investments in debt securities through scheduled payments of principal and interest. The accumulated other comprehensive loss related to the Company's securities available for sale increased to $6.0 million at March 31, 2026 compared to $5.3 million at December 31, 2025 and decreased from $6.6 million at March 31, 2025. As of March 31, 2026, the most recent notification from the FDIC categorized the Bank of Clarke as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized under regulations applicable at March 31, 2026, Bank of Clarke was required to maintain minimum total risk-based, Tier 1 risk-based, CET1 risk-based and Tier 1 leverage ratios. In addition to the regulatory risk-based capital requirements, Bank of Clarke must maintain a capital conservation buffer of additional capital of 2.5 percent of risk-weighted assets as required by the Basel III capital rules. The Bank of Clarke exceeded these ratios at March 31, 2026. Explanation of Non-GAAP Financial Measures This release contains financial information determined by methods other than in accordance with GAAP. Management believes that the supplemental Non-GAAP information provides a better comparison of period-to-period operating performance and the impact of non-recurring transactions on the Bank's results. Additionally, the Company believes this information is utilized by regulators and market analysts to evaluate a company's results and financial condition and therefore, such information is useful to investors. These disclosures should not be viewed as a substitute for or more important than financial results in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures which may be presented by other companies. First Quarter 2026 Earnings Release Conference Call and Webcast Eagle Financial Services' Chief Executive Officer, Brandon Lorey, and Chief Financial Officer, Kate Chappell, will hold a listen-only conference call and webcast to discuss first quarter results on Friday, April 24, 2026, at 10 a.m. eastern time. Those wishing to listen to the conference call should call the applicable number below and reference the Conference ID below. USA / International – (Toll) - +1.646.968.2525 USA – (Toll-Free) +1.888.596.4144 Canada – (Toronto) +1.647.495.7514 Canada – (Toll-Free) +1.888.596.4144 Conference ID – 3461943 and press # A replay of the call and webcast will be accessible at investors.bankofclarke.bank. Webcast URL: https://events.q4inc.com/attendee/201720331 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; the quality or composition of the Company's loan or investment portfolios; the Company's ability to successfully resolve non-performing assets; demand for loan products; liquidity and 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, 2025 and other filings with the Securities and Exchange Commission. 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Eagle reported Q4 net income of $4.3 million ($0.81 per diluted share), down from Q3 as lower net interest income and higher salaries/incentives pushed non‑interest expense up 8% and raised the efficiency ratio to 70.3%. The bank posted $13.1 million of net loan growth in Q4 driven by commercial real estate and C&I originations, which largely offset a $10.3 million reduction in the marine portfolio, and the loan pipeline entering 2026 is over $100 million higher year‑over‑year. Credit quality is steady with non‑performing assets at $14.6 million (0.77% of assets), and management reiterated a focus on relationship‑driven organic growth and a disciplined approach to any M&A. Interested in Eagle Financial Services Inc.? Here are five stocks we like better. Eagle Financial Services (NASDAQ:EFSI) executives highlighted steady credit quality, continued commercial loan growth and a more expense-heavy quarter during the company’s fourth-quarter earnings call, while reiterating a focus on relationship-driven banking and disciplined balance sheet management heading into 2026. CEO Brandon Lorey said the company’s fourth-quarter results reflected “the progress we’ve made throughout 2025 and the intentional way we executed our strategy.” Eagle Financial Services reported net income of $4.3 million for the quarter, down from $5.6 million in the third quarter. Lorey attributed the linked-quarter change primarily to lower net interest income and higher salaries and benefits, which he said were anticipated as part of continued investment in staff. → Kinder Morgan’s Natural Gas/Dividend Growth Cycle Still in Play CFO Kate Chappell added that fourth-quarter net income was $4.3 million, or $0.81 per diluted share. The company posted an annualized return on average assets of 0.91% and an annualized return on average equity of 9.18% for the quarter. The efficiency ratio rose to 70.3% from 64.1% in the third quarter. Chappell reported net interest income of $16.4 million, a 4.8% decrease from the third quarter. She said the decline was driven by “the expected outflow of excess cash as the customer worked through the disposition of proceeds from the sale of their business.” → The Last Time Qualcomm’s RSI Did This, the Stock Rallied 70% Despite the decline in net interest income, net interest margin improved slightly to 3.61% from 3.58% in the third quarter. Chappell said the increase reflected continued improvement in earning-asset yields and a better funding mix over the past year. Non-interest income increased to $5.4 million from $5.2 million in the third quarter. Chappell pointed to wealth management as a notable contributor, with fees rising to $2.3 million, up 25% from the third quarter. She said the increase was partially driven by the recognition of account settlement fees. Looking ahead, Chappell said the company expects both wealth management fees and gain-on-sale revenue to remain generally consistent with 2025 levels. → Trump Triggers Buying Opportunity in UnitedHealth Group Non-interest expense rose 8% sequentially to $15.5 million. Chappell said the increase was driven primarily by higher salaries and employee benefits, reflecting increased headcount and incentive compensation tied to performance. She said the higher efficiency ratio in the quarter was mainly due to the combination of lower net interest income and higher operating expenses, partially offset by stronger fee income. For 2026, Chappell said Eagle Financial Services anticipates the efficiency ratio will move slightly below 70% as spread income continues to improve and salaries and benefits normalize. Management emphasized ongoing momentum in commercial lending. Lorey said the company produced an additional $13.1 million in net loan growth in the fourth quarter, driven by commercial real estate and C&I lending, and described the performance as evidence the “commercial engine is both resilient and scalable.” He also referenced “expected headwinds from marine runoff,” noting that commercial teams continued to deliver organic growth despite those pressures. Chief Banking Officer Joe Zmitrovich provided additional detail, stating the loan portfolio expanded by $13.1 million, driven by $67 million in total originations and $18.5 million of growth in commercial loan categories. He said that was partially offset by a $10.3 million reduction in the marine portfolio. Zmitrovich said demand across the company’s markets remained steady and that the bank’s relationship-driven approach continued to resonate with clients. He also said the loan pipeline entering 2026 was up over $100 million compared with January 2025, with opportunities in established markets and through new and expanding client relationships. He noted the company expects continued growth from its commercial team in Maryland as they “build momentum and expand their presence.” Lorey said credit quality remained stable, with non-performing assets ending the year at $14.6 million, or 0.77% of total assets, compared with $14.3 million, or 0.74% in the prior quarter. He noted NPAs were higher than the prior year due to “several large relationships moving to non-accrual” that the company has discussed in prior quarters, but said management remained confident in its collateral position and outlook. On strategy, Lorey recapped goals set at the beginning of the year following a capital raise, including building a more granular and relationship-driven loan portfolio, growing core deposits and fee income by bringing a full suite of products to customers, and expanding markets. He said the company accomplished those goals in 2025. Looking ahead, Lorey said the company continues to hold conversations with potential bank partners aligned with its community-focused model and long-term objectives, while emphasizing a disciplined approach. “We’ll only pursue opportunities that clearly enhance the strength and value of our franchise,” he said. At the same time, he described Eagle Financial Services as “a strong organic growth company” with a platform positioned to scale. Q4 net income: $4.3 million ($0.81 per diluted share) Net interest income: $16.4 million, down 4.8% from Q3 Net interest margin: 3.61%, up from 3.58% Non-interest income: $5.4 million, up from $5.2 million Wealth management fees: $2.3 million, up 25% from Q3 Non-interest expense: $15.5 million, up 8% from Q3 Non-performing assets: $14.6 million (0.77% of total assets) Net loan growth: $13.1 million in Q4 Eagle Financial Services, Inc (NASDAQ: EFSI) is the bank holding company for Eagle National Bank, a community-oriented financial institution headquartered in Fredericksburg, Virginia. The company offers a broad range of retail and commercial banking solutions, focusing on personalized service for individuals, small businesses, and nonprofit organizations. Through its subsidiary, Eagle National Bank, it maintains a commitment to local decision-making and relationship-driven service. Eagle Financial Services provides deposit products including checking and savings accounts, money market funds, certificates of deposit, and individual retirement accounts. The article "Eagle Financial Services Q4 Earnings Call Highlights" was originally published by MarketBeat.

BERRYVILLE, Va., Jan. 26, 2026 /PRNewswire/ -- Eagle Financial Services, Inc. (NASDAQ: EFSI) (the "Company"), the holding company for Bank of Clarke, announced its fourth quarter 2025 results. The following table presents selected financial performance highlights for the periods indicated: Additional key highlights for the fourth quarter of 2025 are as follows: Non-interest income to average assets increased to 1.12% for the three months ended December 31, 2025 as compared to 1.02% for the prior quarter. Wealth management fee income increased 25.8% to $2.3 million for the three months ended December 31, 2025 as compared to the prior quarter. Loan yield increased from 5.68% for the quarter ended September 30, 2025 to 5.76% for the quarter ended December 31, 2025. Net interest spread increased from 2.57% for the quarter ended September 30, 2025 to 2.74% for the quarter ended December 31, 2025. Brandon Lorey, President and CEO, stated, "2025 was a pivotal year for our organization, marked by a successful capital raise, the strategic balance sheet repositioning, and subsequent uplist to NASDAQ that have significantly strengthened our balance sheet and improved our forward earnings profile. Net of the 2024 sale leaseback transaction, annualized return on average assets increased 36%, led by a 19% improvement in net interest margin over the year. Importantly, the steps we have taken—both operationally and strategically—have further strengthened our franchise value, positioning us for sustained growth, resilience, and enhanced competitiveness in the years ahead. I want to extend my sincere appreciation to our employees, whose dedication and professionalism made this progress possible. To our customers, thank you for placing your trust in us every day. And to our shareholders, we are grateful for your continued confidence and support as we advance our strategic priorities." Income Statement Review Total net income for the quarters ended December 31, 2025 and September 30, 2025 was $4.3 million and $5.6 million, respectively. Net income was $6.2 million for the quarter ended December 31, 2024. For the quarter ended December 31, 2025, net income decreased $1.3 million or 22.4% from the quarter ended September 30, 2025 and decreased $1.9 million or 29.9% from the quarter ended December 31, 2024. The decrease from the quarter ended September 30, 2025 was due to a decrease in net interest income as well as an increase in salaries and employee benefits expense during the quarter ended December 31, 2025. These changes are discussed below in greater detail. The decrease from the quarter ended December 31, 2024 was primarily due to the sale-leaseback transaction of our OTC branch in Winchester, during the fourth quarter of 2024. Excluding the net of tax effected impact of the $3.9 million gain recognized during the fourth quarter of 2024 from the sales-leaseback transaction, adjusted net income for the quarter ended December 31, 2024 was $3.1 million. This is a non-GAAP financial measure. Please refer to the "Reconciliation of GAAP to Non-GAAP Performance Highlights" table for additional information. The increase in net income for the quarter ended December 31, 2025 compared to the as-adjusted quarter ended December 31, 2024 was due to several factors. Wealth management fee income increased by $919 thousand as well as net interest income, which increased by $2.9 million. These increases were partially offset by increases in noninterest expenses of $2.0 million. These changes are discussed below in greater detail Total loan interest income was $21.3 million and $20.7 million for the quarters ended December 31, 2025 and September 30, 2025, respectively. Total loan interest income was $21.1 million for the quarter ended December 31, 2024. Total loan interest income increased $546 thousand or 2.6% from the quarter ended September 30, 2025 to the quarter ended December 31, 2025. Average loans increased by $18.9 million or 1.3% from the quarter ended September 30, 2025 to the quarter ended December 31, 2025. The tax equivalent yield on average loans for the quarter ended December 31, 2025 was 5.76%, an increase of eight basis points from the 5.68% average yield for the quarter ended September 30, 2025. The slight increase in loan interest income between the quarters ended December 31, 2025 and December 31, 2024 was mainly due to an increase in interest rates offset partially by a lower level of outstanding loans. The tax equivalent yield on average loans for the quarter ended December 31, 2025 was 5.76%, an increase of six basis points from the 5.70% average yield for the quarter ended December 31, 2024. Average loans decreased by $12.1 million or 0.82% for the quarter ended December 31, 2025 compared to the quarter ended December 31, 2024. Early during the first quarter of 2025, ahead of its public offering, the Company sold a pool of mortgage loans at par in order to bolster on-balance sheet liquidity. This pool had a total balance of $18.8 million with a weighted average yield of 6.58%. Interest and dividend income from the investment portfolio was $1.3 million for the quarter ended December 31, 2025 compared to $1.4 million for the quarter ended September 30, 2025. Interest and dividend income from the investment portfolio was $879 thousand for the quarter ended December 31, 2024. The tax equivalent yield on average investments for the quarter ended December 31, 2025 was 4.25%, down five basis points from 4.30% for the quarter ended September 30, 2025 and up 168 basis points from 2.57% for the quarter ended December 31, 2024. The increase in yield was due largely to lower yielding investments sold during the first quarter of 2025 being replaced with higher yielding securities. During the quarter ended March 31, 2025, $99.2 million in securities were sold with a weighted average yield of 1.72%. During the same quarter, $76.0 million in securities were purchased. Of the $76.0 million in securities purchased, $66.0 million were purchased as a part of the executed balance sheet repositioning with a weighted average yield of 4.72%. Total interest expense was $8.4 million and $8.7 million for the three months ended December 31, 2025 and September 30, 2025, respectively and $10.5 million for three months ended December 31, 2024. The decrease in interest expense between the quarter ended December 31, 2024 and the quarter ended December 31, 2025 was largely due to a $1.2 million decrease in FHLB interest expense. The average balance of FHLB advances decreased $101.7 million from the quarter ended December 31, 2024 to the same period in 2025. The decrease was also partially attributable to lower interest expense on deposits by $970 thousand for the same comparative periods. The average balance of interest-bearing deposits increased by $11.2 million during this time period but the average yield paid on these deposits decreased by 37 basis points for the same period. The decrease in interest expense between the quarter ended September 30, 2025 and the quarter ended December 31, 2025 was due to lower interest expense on deposits. The average balance of interest-bearing deposits decreased by $5.6 million during this time period. Net interest income for the quarter ended December 31, 2025 was $16.4 million reflecting a decrease of 4.8% from the quarter ended September 30, 2025 and an increase of 21.3% from the quarter ended December 31, 2024. Net interest income was $17.2 million and $13.5 million, respectively, for the quarters ended September 30, 2025 and December 31, 2024. The net interest margin was 3.61% for the quarter ended December 31, 2025. For the quarters ended September 30, 2025 and December 31, 2024, the net interest margin was 3.58% and 3.03%, respectively. The increases in the net interest margin from September 30, 2025 was mainly due to the increase in loans combined with the increase in loan rates during the quarter. The increase in the net interest margin from December 31, 2024 can be attributed to several factors. The net interest spread increased to 2.74% at December 31, 2025 from 2.21% at December 31, 2024, respectively. Both the repositioning of the securities portfolio and the run off of higher interest bearing non core deposits during the period had a positive impact to the net interest margin. 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 profitable 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%. This is a non-GAAP financial measure. Please refer to the "Reconciliation of Tax-Equivalent Net Interest Income" table for additional information. Total noninterest income was $5.4 million and $5.2 million for the quarters ended December 31, 2025 and September 30, 2025 respectively. Total noninterest income was $8.5 million for the quarter ended December 31, 2024. The increase in total noninterest income when comparing the fourth quarter of 2025 to the third quarter of 2025 is mainly due to the increase in wealth management fee income by $472 thousand or 25.8%. This increase was partially offset by a decrease to gain on sale of loans held for sale of $182 thousand due to a lower volume of SBA loan sales during the fourth quarter of 2025. When comparing the fourth quarter of 2025 to the same quarter of 2024, wealth management fee income increased by $919 thousand or 66.7% which was more than offset by the $3.9 million gain on sale from the sale-leaseback transaction of our OTC branch in Winchester, during the fourth quarter of 2024. In addition, small business investment company income was $435 thousand lower in the fourth quarter of 2025 when compared to the fourth quarter of 2024. Wealth management fee income is comprised of income from fiduciary activities as well as commissions from the sale of non-deposit investment products. The amount of income from fiduciary activities is determined by the number of active accounts and total assets under management which has increased during the quarter ended December 31, 2025. Additionally, per transaction fees for estates and other services have also contributed to the increase in revenue. Noninterest expense increased $1.2 million, or 8.3%, to $15.5 million for the quarter ended December 31, 2025 from $14.3 million for the quarter ended September 30, 2025. Noninterest expense was $13.6 million for the quarter ended December 31, 2024, representing an increase of $2.0 million or 14.6% when comparing to the quarter ended December 31, 2025. Salaries and benefits expense increased $745 thousand or 8.5% between December 31, 2025 and September 30, 2025, largely due to increased incentive accruals resulting from additional plan metrics reaching payout levels during the quarter. Salaries and benefits expense increased $1.5 million or 18.7% between December 31, 2025 and December 31, 2024, mainly due to the increase in the number of employees as well as increased incentive accruals. Full time equivalent employees were 254 and 231 at December 31, 2025 and December 31, 2024, respectively. 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 slightly from $14.3 million or 0.74% of total assets at September 30, 2025 to $14.6 million or 0.77% of total assets at December 31, 2025. This increase was due to the addition of one $2.1 million commercial and industrial relationship to nonaccrual status which was partially offset by the sale of several other real estate owned and repossessed assets during the fourth quarter. Based on a recent valuation, the Bank believes that there is sufficient collateral to cover the entirety of the outstanding balance of the new nonaccrual relationship. Nonperforming assets were $3.0 million or 0.16% of total assets at December 31, 2024. Nonperforming assets increased as of December 31, 2025 in comparison to December 31, 2024 mainly due to two large relationships being placed in nonaccrual status during the first quarter of 2025 and one large relationship being placed in nonaccrual status during the fourth quarter of 2025. These three relationships had a total balance of $9.7 million as of December 31, 2025. The first large relationship placed into nonaccrual status during the first quarter of 2025 had an outstanding balance of $2.2 million as of December 31, 2025 and was a partially owner-occupied property whose owner passed away unexpectedly causing the business to halt. The courts have assigned an executor of the estate, and the Bank has filed and been found in favor on summary judgment. This permits the Bank to move forward with the foreclosure process. Based on a recent appraisal, the Bank believes that there is sufficient collateral to cover the entirety of the outstanding balance of the loan. The second large relationship placed into nonaccrual status during the first quarter was comprised of four residential multifamily income producing properties in Washington D.C. (the District) with a current combined exposure of approximately $5.5 million. The largest of the four properties had a corresponding loan balance of $5.9 million at June 30, 2025. This property was offered for sale on July 8, 2025, for $5.7 million with the Bank agreeing to a short sale of $4.8 million, thereby creating a deficiency balance of $1.1 million after consideration of past due taxes and other costs. The property owner has entered into an agreement with the Bank to pay back the deficiency balance and the Bank has collateralized this note with the property owner's remaining three properties, as well as a third deed of trust on two additional properties, as a condition of the aforementioned short sale. The Bank charged-off the full amount of the deficiency balance during the third quarter of 2025 due to the unlikelihood of repayment and the limited amount of remaining collateral value and will now be working through recovery on the collateralized properties. Concurrently, the Bank has been granted receivership on the remaining three properties. The Bank is now actively working with the receiver to update the properties and ready them for sale while continuing to collect the housing payments directly from the District. The remaining properties in non-accrual status have been written down to their current estimated values and the Bank is working through its normal work-out process. The Bank does not anticipate having to make any further significant write-downs on these three properties. The large relationship placed into nonaccrual status during the fourth quarter of 2025 had an outstanding balance of $2.1 million as of December 31, 2025. The Bank's portion is part of a larger syndicated loan, with the Bank's portion being 0.31% of the total loan commitment. The borrower is currently under a forbearance agreement, for financial covenant violations and past due payments. The borrower's new management team along with the lead bank continue to work on a restructuring of the business. Performance has improved with the new management team in place. Based on most recent business valuation, the Bank believes there is sufficient collateral to cover the entirety of the outstanding balance of the loan. The Bank will continue to closely monitor this relationship. 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. Specific reserves on nonaccrual loans totaled $467 thousand, $418 thousand and $248 thousand as of December 31, 2025, September 30, 2025 and December 31, 2024, respectively. The Company realized $237 thousand in net charge-offs for the quarter ended December 31, 2025 compared to $2.3 million for the three months ended September 30, 2025. During the three months ended December 31, 2024, $486 thousand in net charge-offs were recognized. The majority of the charge-offs recognized during the third quarter of 2025 were for the $1.1 million deficiency balance discussed above along with a $468 thousand write-down on a nonaccrual commercial real estate loan. The ratio of allowance for credit losses to total loans was 1.04% and 1.01% at December 31, 2025 and September 30, 2025, respectively. The 3 basis point increase in the allowance for credit losses to total loans between September 30, 2025 and December 31, 2025 was largely due to slight increases in both the overall quantitative and qualitative factors due mainly to increased loss rates. The ratio of allowance for credit losses to total loans was 1.02% at December 31, 2024. The amount of provision for credit losses on loans reflects the results of the Bank's analysis used to determine the adequacy of the allowance for credit losses. The Company recorded $747 thousand in provision for credit losses on loans for the quarter ended December 31, 2025. The Company recognized provision for credit losses on loans of $1.1 million and $210 thousand for the quarters ended September 30, 2025 and December 31, 2024, respectively. The higher provision for the quarter ended September 30, 2025 was mainly due to the larger net charge-offs during the quarter. This was partially offset by the reduction in specific allocations needed at quarter end. Net charge-off levels were lower during the fourth quarter of 2025. 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 expected credit losses over the life of the loan portfolio. Balance Sheet Total consolidated assets of the Company at December 31, 2025 were $1.89 billion, which represented a decrease of $43.8 million or 2.27% from total assets of $1.93 billion at September 30, 2025. At December 31, 2024, total consolidated assets were $1.87 billion. Total assets decreased during the fourth quarter of 2025 primarily due to the decrease in cash and cash equivalents of $50.9 million during the fourth quarter of 2025. Cash and cash equivalents were at a lower level as of December 31, 2025 due to declines in deposits during the quarter. See below for further discussion on deposits. Total net loans increased $12.6 million from $1.45 billion at September 30, 2025 to $1.46 billion at December 31, 2025 driven largely by the growth of commercial real estate loans of $8.8 million and commercial and industrial loans of $9.8 million and partially offset by marine loan amortization. Numerous commercial real estate owner-occupied and non owner-occupied loans were originated during the fourth quarter totaling approximately $15.5 million and $14.5 million, respectively. These originations were partially offset by paydowns and payoffs in the normal course of business. Commercial and industrial loans originated during the fourth quarter of 2025 had an outstanding balance of $8.6 million as of December 31, 2025. In addition to these originations, there were some increases to the usage of commercial lines of credit. Total deposits decreased to $1.61 billion as of December 31, 2025 when compared to September 30, 2025 deposits of $1.66 billion. At December 31, 2024 total deposits were $1.58 billion. During the second quarter of 2025, total deposits increased $152.7 million. The majority of this increase was due to large deposits in non-interest bearing accounts totaling $151.7 million during the quarter and is primarily related to sales proceeds of two customer's businesses. During the third quarter of 2025, $72.4 million of these funds left the bank, with $79.3 million still remaining at September 30, 2025. During the fourth quarter of 2025, $74.4 million of these funds left the bank leaving a remaining $4.9 million. This accounts for the majority of the decrease in total deposits during the quarter. Year over year deposits increased $32.2 million and the majority of the growth was in savings and interest bearing deposits. Core deposit change for the quarter and twelve months ended December 31, 2025 was a decrease of $9.5 million and an increase of $5.4 million, respectively. Core deposits consist of checking accounts, NOW accounts, money market accounts, regular savings accounts and time deposits less than $250 thousand. Liquidity The objective of the Company's liquidity management is to ensure the continuous availability of funds to satisfy the credit needs of our customers and the demands of our depositors, creditors and investors. Uninsured deposits represent an estimate of amounts above the Federal Deposit Insurance Corporation (FDIC) insurance coverage limit of $250,000. As of December 31, 2025, the Company's uninsured deposits were approximately $199.0 million or 12.4% of total deposits. The Company's liquid assets, which include cash and due from banks, interest-bearing deposits at other banks, loans with a maturity less than one year and nonpledged securities available for sale, were $423.4 million and borrowing availability was $595.3 million as of December 31, 2025, which in total exceed uninsured deposits, excluding intercompany cash holdings and secured municipal deposits, by $819.7 million. Liquid assets have decreased by $44.3 million during the fourth quarter mainly due to a $50.9 million decrease in cash and cash equivalent balance as discussed above. In addition to deposits, the Company utilizes short-term and long-term borrowings as sources of funds. Short-term borrowings from the Federal Reserve Bank and the Federal Home Loan Bank of Atlanta (FHLB) as well as federal funds purchased from Community Bankers Bank may be used to fund the Company's day-to-day operations. Long-term borrowings include FHLB advances as well as subordinated debt. Total outstanding borrowings decreased to $69.6 million at December 31, 2025 from $149.5 million at December 31, 2024. This decrease was primarily due to deposit growth and higher levels of loan sales during the first quarter of 2025 enabling the payoff of borrowings. Borrowings remained stable from September 30, 2025 to December 31, 2025. Additional sources of liquidity available to the Company include cash flows from operations, loan payments and payoffs, deposit growth, maturities, calls and sales of securities and the issuance of brokered certificates of deposit. Capital and Dividends On January 21, 2026, the Board of Directors announced a quarterly common stock cash dividend of $0.31 per common share, payable on February 13, 2026, to shareholders of record on February 2, 2026. The Board of Directors of the Company continually reviews the amount of cash dividends per share and the resulting dividend payout ratio in light of changes in economic conditions, current and future capital requirements, and expected future earnings. Total consolidated equity increased $69.9 million to $188.9 million at December 31, 2025 compared to December 31, 2024 and increased $3.3 million compared to September 30, 2025. During the first quarter of 2025, the Company completed a public offering of common stock. A total of 1,796,875 shares were issued with net proceeds of $53.5 million. The Company's securities available for sale are fixed income debt securities and their unrealized loss position is a result of increased market interest rates since they were purchased. The Company expects to recover its investments in debt securities through scheduled payments of principal and interest. The accumulated other comprehensive loss related to the Company's securities available for sale decreased to $5.3 million at December 31, 2025 compared to $5.6 million at September 30, 2025 and decreased from $18.6 million at December 31, 2024. As part of a balance sheet repositioning as discussed above, the Bank sold available for sale debt securities with an amortized cost balance of $99.2 million (fair value of $86.8 million) and a weighted average yield of 1.72% and reinvested $66.0 million into purchases of available for sale debt securities with a weighted average yield of 4.70%. The sale of debt securities resulted in a net pre-tax realized loss of $12.4 million (after-tax of $9.8 million) that was recognized in the first quarter of 2025. As of December 31, 2025, the most recent notification from the FDIC categorized the Bank of Clarke as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized under regulations applicable at December 31, 2025, Bank of Clarke was required to maintain minimum total risk-based, Tier 1 risk-based, CET1 risk-based and Tier 1 leverage ratios. In addition to the regulatory risk-based capital requirements, Bank of Clarke must maintain a capital conservation buffer of additional capital of 2.5 percent of risk-weighted assets as required by the Basel III capital rules. The Bank of Clarke exceeded these ratios at December 31, 2025. Explanation of Non-GAAP Financial Measures This release contains financial information determined by methods other than in accordance with GAAP. Management believes that the supplemental Non-GAAP information provides a better comparison of period-to-period operating performance and the impact of non-recurring transactions on the Bank's results. Additionally, the Company believes this information is utilized by regulators and market analysts to evaluate a company's results and financial condition and therefore, such information is useful to investors. These disclosures should not be viewed as a substitute for or more important than financial results in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures which may be presented by other companies. Fourth Quarter 2025 Earnings Release Conference Call and Webcast Eagle Financial Services' Chief Executive Officer, Brandon Lorey, and Chief Financial Officer, Kate Chappell, will hold a listen-only conference call and webcast to discuss fourth quarter results on Tuesday, January 27, 2026, at 10 a.m. eastern time. Those wishing to listen to the conference call should call the applicable number below and reference the Conference ID below. USA / International – (Toll) - +1.646.968.2525 USA – (Toll-Free) +1.888.596.4144 Canada – (Toronto) +1.647.495.7514 Canada – (Toll-Free) +1.888.596.4144 Conference ID – 3461943 and press # A replay of the call and webcast will be accessible at investors.bankofclarke.bank. Webcast URL: https://events.q4inc.com/attendee/675800700 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; the quality or composition of the Company's loan or investment portfolios; the Company's ability to successfully resolve non-performing assets; demand for loan products; liquidity and 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, 2024 and other filings with the Securities and Exchange Commission. Unaudited 06/30/2025 Unaudited 03/31/2025 * 12/31/2024 Assets Cash and due from banks $ 13,942 $ 15,558 $ 17,401 $ 16,527 $ 13,129 Interest-bearing deposits with other institutions 103,984 189,119 260,568 187,018 162,595 Federal funds sold 99,268 63,452 118,033 61,401 17,435 Securities available for sale, at fair value and restricted stock 123,329 125,165 124,693 114,844 128,887 Loans held for sale 4,786 3,479 3,302 3,173 2,660 Loans, net of allowance for credit losses 1,457,757 1,445,118 1,422,653 1,436,982 1,452,022 Bank premises and equipment, net 14,906 14,878 14,693 14,625 14,339 Bank owned life insurance 31,720 31,440 31,172 30,894 30,621 Other assets 38,934 44,264 42,565 39,013 44,527 Total assets $ 1,888,626 $ 1,932,473 $ 2,035,080 $ 1,904,477 $ 1,866,215 Liabilities and Shareholders' Equity Liabilities Deposits: Noninterest bearing demand deposits $ 432,171 $ 521,149 $ 574,596 $ 421,342 $ 406,180 Savings and interest bearing demand deposits 728,545 687,530 728,370 697,679 679,330 Time deposits 446,644 446,369 463,558 494,770 489,646 Total deposits $ 1,607,360 $ 1,655,048 $ 1,766,524 $ 1,613,791 $ 1,575,156 Federal funds purchased — 101 172 — — Federal Home Loan Bank advances, short-term — — 25,000 — Federal Home Loan Bank advances 40,000 40,000 40,000 40,000 120,000 Subordinated debt, net 29,579 29,562 29,545 29,529 29,512 Other liabilities 22,848 22,181 19,191 19,682 22,560 Total liabilities $ 1,699,787 $ 1,746,892 $ 1,855,432 $ 1,728,002 $ 1,747,228 Commitments and contingent liabilities Shareholders' Equity Preferred stock, $10 par value — — — — — Common stock, $2.50 par value 13,264 13,260 13,260 13,252 8,714 Surplus 64,720 64,458 64,154 63,922 14,901 Retained earnings 116,115 113,448 109,530 105,928 114,012 Accumulated other comprehensive (loss) (5,260) (5,585) (7,296) (6,627) (18,640) Total shareholders' equity $ 188,839 $ 185,581 $ 179,648 $ 176,475 $ 118,987 Total liabilities and shareholders' equity $ 1,888,626 $ 1,932,473 $ 2,035,080 $ 1,904,477 $ 1,866,215 View original content to download multimedia:https://www.prnewswire.com/news-releases/eagle-financial-services-inc-announces-2025-fourth-quarter-financial-results-302670419.html