Key Highlights

  • Net income was USD 4.75 million, or USD 0.88 per share.
  • Adjusted Net Income was USD 5.02 million, or USD 0.93 per share.
  • Net interest Margin rose to 3.95% from 3.86%.
  • The company announced a proposed Merger with John Marshall Bancorp.

Results and Merger

Eagle Financial Services (NASDAQ:EFSI), the Holding Company for Bank of Clarke, reported third-quarter 2026 results on Thursday. Net income was USD 4.75 million, or USD 0.88 per share, against USD 4.98 million, or USD 0.92, in the second quarter and USD 5.58 million, or USD 1.04, a year earlier. Return on average Equity was 9.66% against 10.35% and 12.20%, and return on average Assets was 1.01% against 1.08% and 1.10%.

In September the company announced a proposed strategic merger with John Marshall Bancorp, which it described as a transformative transaction. Third-quarter results include USD 342 thousand of pre-tax merger-related expenses. President and Chief Executive Officer Brandon Lorey said the company entered the combination from a position of strength.

Adjusted Results

The second quarter included a USD 3.5 million pre-tax gain from the sale of the company's interest in Bearing Insurance Group. Excluding the tax-effected merger expenses and that gain, adjusted net income was USD 5.02 million in the third quarter and USD 2.23 million in the second quarter. Adjusted Earnings Per Share were USD 0.93 against USD 0.41, and adjusted return on average equity was 10.21% against 4.63%.

Adjusted net income rose USD 2.8 million, or 125.4%, from the second quarter, mainly on a lower provision for Credit losses, and fell USD 564 thousand, or 10.1%, from a year earlier, mainly on higher salary and employee benefit expense.

Net Interest Income and Margin

Net interest income was USD 17.6 million, up USD 659 thousand, or 3.9%, from the second quarter and up USD 430 thousand, or 2.5%, from a year earlier. The net interest margin rose to 3.95% from 3.86%, and the net interest spread rose to 3.09% from 3.01%.

Loan interest income was USD 22.7 million against USD 21.7 million and USD 20.7 million, up 4.6% and 9.8%. Average loans rose USD 13.6 million, or 0.9%, from the second quarter and USD 66.3 million, or 4.6%, from a year earlier, while the tax equivalent Loan Yield rose 14 basis points and 28 basis points. Investment income was USD 1.1 million against USD 1.3 million, with the yield down 38 basis points to 3.96% on lower Federal Home Loan Bank stock dividends after advances were repaid.

Interest expense was USD 7.6 million against USD 7.4 million and USD 8.7 million. Against a year earlier, deposit interest expense fell USD 651 thousand on a 20 basis point lower rate, from runoff of higher cost time deposits, and Federal Home Loan Bank advance expense fell USD 494 thousand.

Loans, Deposits, Fees and Dividend

Net loans rose USD 32.4 million, or 2.19%, and deposits rose USD 21.3 million, or 1.33%, from June 30. Lorey said loan growth reflected customer Demand and the work of the lending teams.

Noninterest income was USD 5.30 million against USD 8.59 million in the second quarter, or USD 5.10 million excluding the Bearing gain, and USD 5.17 million a year earlier. Noninterest expense was USD 16.13 million, or USD 15.79 million excluding merger expenses, against USD 15.53 million in the second quarter and USD 14.34 million a year earlier, a 12.4% increase on the reported figure.

The board declared a quarterly dividend of USD 0.31 per common share, payable Nov. 13 to holders of record on Nov. 2. At USD 0.88 of earnings per share, the dividend equals about 35% of the quarter's reported earnings.

Indicators to Follow

Reported earnings per share fell 15% from a year earlier while net interest income rose 2.5% and noninterest expense rose 12.4%, a gap that reflects expense growth, merger costs and the lower provision benefit. Reference points include the margin at 3.95%, merger-related costs after USD 342 thousand in the quarter, loan growth of 2.19% in the quarter, and noninterest expense of USD 16.13 million.