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. Margin Expands as Borrowing Costs Decline 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.