EAGLE FINANCIAL SERVICES, INC. ANNOUNCES 2023 FIRST QUARTER FINANCIAL RESULTS AND QUARTERLY DIVIDEND.

BERRYVILLE, Va: Eagle Financial Services, Inc. (OTCQX: EFSI), the holding company for Bank of Clarke, whose divisions include Bank of Clarke Wealth Management, announced its first quarter 2023 results. On April 26, 2023, the Board of Directors announced a quarterly common stock cash dividend of $0.30 per common share, payable on May 19, 2023, to shareholders of record on May 8, 2023. Select highlights for the first quarter include:

Cash and cash equivalents increased $61.8 million or 92.4% during the quarter growing as a percentage of total assets to 7.3% in the first quarter as compared to 4.1% at December 31, 2022.

Total deposits increased $125.9 million or 10.0% during the quarter, while the loan to deposit ratio declined to 100.77% as compared to 104.72% as of December 31, 2022.

Net loans increased $74.2 million or 5.7%.

On January 1, 2023, the Company implemented the Current Expected Credit Losses ("CECL") standard, which resulted in a $2.1 million increase to the allowance for credit losses and was offset in shareholders' equity and deferred tax assets.

Brandon Lorey, President and CEO, stated, "Despite a tumultuous period in the banking sector, The Bank of Clarke delivered another strong quarter for Eagle Financial Services, Inc. (EFSI). As has been the case for the Bank's 142-year history, balance sheet stability remains a priority and the first quarter reflected that core belief with continued quarter over quarter revenue, loan, and deposit growth. With a significant majority of our deposits fully FDIC insured, we are in a very different position than the banks that ran into issues in the first quarter. Our conservative credit culture has always and continues to serve us well as we remain well positioned to take advantage of market opportunities through a potential economic downturn. The Bank and its employees remain steadfast in our focus and commitment to the communities we serve."

Income Statement Review

Total loan interest income was $18.6 million and $16.2 million for the quarters ended March 31, 2023 and December 31, 2022, respectively. Total loan interest income was $11.5 million for the quarter ended March 31, 2022. Total loan interest income increased $6.5 million or 61.6% from the quarter ended March 31, 2022 to the quarter ended March 31, 2023. Average loans for the quarter ended March 31, 2023 were $1.37 billion compared to $1.01 billion for the quarter ended March 31, 2022. The tax equivalent yield on average loans for the quarter ended March 31, 2023 was 5.10%, an increase of 85 basis points from the 4.25% average yield for the same time period in 2022. The majority of this increase in yield can be attributed to the current rising interest rate environment.

Interest and dividend income from the investment portfolio was $891 thousand for the quarter ended March 31, 2023 compared to $879 thousand for the quarter ended December 31, 2022. Interest income and dividend income from the investment portfolio was $872 thousand for the quarter ended March 31, 2022. The slight increase in interest and dividend income between periods resulted mainly from the increase in dividend income. The tax equivalent yield on average investments for the quarter ended March 31, 2023 was 2.29%, up three basis points from 2.26% for the quarter ended December 31, 2022 and up 46 basis points from 1.83% for the quarter ended March 31, 2022.

Total interest expense was $5.9 million for the three months ended March 31, 2023 and $2.9 million and $370 thousand for three months ended December 31, 2022 and March 31, 2022, respectively. The increase in interest expense resulted from increases on rates paid on deposit accounts, the subordinated notes that the Company issued on March 31, 2022, which are...