Eagle Financial Services, Inc. (EFSI) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. I am Tom Gilpin, Chairman of the Board of Directors. It is my pleasure to welcome you, and thank you for attending the 31st Annual Meeting of Eagle Financial Services, Inc., parent company of the Bank of Clarke County. We proudly say Bank of Clarke County is the fourth oldest bank in Virginia, celebrating its 141st continuous year of service to our shareholders, our customers and our community. We appreciate you joining the meeting and hope you will find the information interesting and informative. I now call to order this Annual Meeting of Shareholders. Without objection, I will appoint Michael Brian as parliamentarian of this meeting. Board of Directors has appointed Kaley Crosen to serve as inspector of election. The poll for casting ballots or submitted proxies are now open. For purposes of determining the presence of a quorum and for all matters on which shareholders will vote at this meeting, the polls will close prior to the adjournment of this meeting. I will now call on Kaley to certify the mailing of the notice of this meeting to shareholders.

Company's shareholder register reflects that after the close of business on the record date of March 18, 2022, there were 3,478,772 shares outstanding and entitled to vote at this meeting. I hereby certify that Notice of this Meeting was mailed on or about April 6, 2022, to all shareholders of record on the record date in accordance with the corporation's bylaws.

Thank you, Kaley. Will you please report on the number of shares represented in person or by proxy?

Don't have a final count at this time. However, a quorum is present.

Thank you. I will call on you later in the meeting for your final report. I would now like to call on Eagle Financial Services, Inc. President and CEO, Brandon Lorey who will deliver his 2022 annual report. Brandon?

Thank you, Tom. Thank you for our shareholders who have joined us today in what I hope to be our last remote annual meeting as we look forward to absolutely going back doing this in person next year. 2021 was another year for the record books for Eagle Financial Services and the Bank of Clarke, which showed 36th consecutive annual increase in our dividend to $1.10 and earnings per share of $3.20. Excluding the bank's onetime legal charges related to the growth of our Trust and Marine units, which had also experienced its highest net income with an ROA above 1% and an ROE of 11.6%. The bank also reported record loan and deposit compound annual growth rates of 13.98% and 14.28%, respectively, as we continue to support our legacy markets of Clarke and Frederick Counties, along with the city of Winchester and expand in the Loudoun, Fairfax and Virginia and Frederick County in Maryland. The company also continued its long-standing tradition of giving back to the community in 2021 with combined charitable contributions of $237,000 and countless personal hours donated by our phenomenal employees to a multitude of causes. With the creation of The Bank of Clarke Foundation in 2021, we expect [ charities ] to increase in the coming years as the company can only be as strong as the community it serves. In addition to our very strong results related to our traditional, commercial and consumer lending and deposit growth, the company experienced significant success in some of its ancillary businesses driving significant income now and expected in the future. Our Trust department grew from $149 million of assets under management, or AUM, at the beginning of the year to just over $400 million at year-end. This has also provided an opportunity for expansion in the Fauquier County, which I expect to be another strong growth market for the organization in the near term. Additionally, our Marine division that was started in 2020 continued to surpass expectations. This company now benefits from loan sale premiums on sold loans, ongoing servicing revenues of those loans and increased interest income on the loans we have in the portfolio. We look forward to both of these businesses continuing to provide strong returns in the coming years. Celebrating our 140th year of existence in 2021, the core of our mission continues to be that we meet the needs of all of our markets at every turn. In 2022 and beyond, we will continue to build upon the technological infrastructure that's been so pivotal to our success over the last few years. Now more than ever, the importance of allowing customers to interact with us through the channel that they prefer, regardless of the transaction, cannot be overstated. At the end of the day, what differentiates us is our tradition of building lifelong relationships with our customers and communities. By leveraging the power of every connection we have at our disposal, we will aim to be the foremost trusted partner and preferred provider of financial solutions for the communities we serve. Finally, I would like to thank our shareholders for their confidence in the company, our Board of Directors, my management team and our phenomenal employees. Your continued support of this organization ensures we're able to serve our wonderful communities, customers and employees while providing our shareholders with continued strong returns on their investments. Tom?

Yes. Go ahead.

I now move forward the option by the shareholders of this report and the same be made by part of the minutes of this meeting.

Is there a second to that motion?

Second.

Any discussion? All in favor say aye. All opposed, none. [Voting]

And motion passes. Thank you, Brandon, very much for that report. There are 4 items for consideration at today's meeting as set forth in the proxy statement: to elect 4 directors: Tom T. Gilpin; Scott M. Hamberger; John R. Milleson; and Robert W. Smalley, Jr., each for a term of 3 years; and elect 2 directors: Tatiana C. Matthews and Edward Hill, III, each for a term of 2 years; to ratify the appointment of Yount, Hyde & Barbour, P.C., as our independent registered public accounting firm for the year ended December 31, 2022; to approve in an advisory, nonbinding vote, the compensation of the company's named executive officers disclosed in the proxy statement; to transact such other business as shall properly come before the annual meeting or any adjournments thereof. As the items of the business for this annual meeting set forth in the proxy statement, no motions or seconds are required from the floor to act on these items. The company's transfer agent has previously tabulated the shareholders' proxy votes on the foregoing items of business. Additionally, voting is open during this meeting should you wish to cast your vote or change the previous vote. At this point, while Kaley is finishing -- tabulating the number of shares present, I would like to introduce the Board members here who are present either physically or virtually. They are Robert W. Smalley, Jr.; Edward Hill, III; Tatiana Matthews; John Milleson; Mary Bruce Glaize; Scott Hamberger; John Stokely, Jr.; Douglas Rinker; Cary Nelson; Brandon Lorey; and myself, Thomas Gilpin. Thank you all for your work during this past year. I think we all would agree that it's been inactive without your participation and advice and wisdom. It's been very much appreciated. Now I'd like to resume the business portion of our annual meeting. The inspector advises that she has completed her report, and I will ask her to give us the results at this time. Kaley?

Over 2,256,000 shares represented in person or by proxy, which represents over 64% of the outstanding shares. Therefore, I certify that a quorum exist for the transaction of business at the meeting. By the necessary number of votes for transaction, the election of directors approved having received a majority of the affirmative vote. Ratification of Yount, Hyde & Barbour, P.C. has been approved having received a majority of affirmative vote. Approval in an advisory, nonbinding vote, the compensation of company's named executive officers disclosed in the proxy statement has been approved, having received the majority of affirmative vote.

Kaley, thank you for your report. The inspectors' report will be filed with the minutes of this meeting. At this time, as is our custom, we are prepared to answer questions that have been submitted by shareholders. Do you have any questions been submitted by shareholders?

No questions at this time.

Do any other shareholders who are present have any questions? Again, this is our meeting together as a shareholder. Hearing none, I thank you all for being with us today. There being no further business, I declare this annual meeting adjourned, and we look forward to seeing everyone in person in 2023. We are adjourned.