Eagle Financial Services Inc

Good morning and welcome everyone to the Eagle Financial Services Inc. Second Quarter Earnings Call. All lines have been placed on mute to prevent any background noise. Today's call is being recorded. At this time, I would like to turn the conference over to Nick Smith, Deputy Chief Financial Officer. Please go ahead.

Good morning and thank you for joining us for our Second Quarter Earnings Conference Call. Before we begin, please note that the information provided during this call contains forward-looking statements. Actual results may differ materially from those statements. Please refer to our most recent Form 10-K, our Q2 earnings release, and other filings with the SEC for a detailed discussion of risk factors. We do not assume any obligation to update any forward-looking statements as a result of new information, except as required by law. Also during the call, we will discuss certain non-GAAP financial measures in reference to the company's performance. You can see our reconciliation of these measures and gap financial measures in the appendix to our presentation, which can be found on our Investor Relations website. With us today are our CEO, Brandon Morey, our CFO, Kate Chappell, and our Chief Banking Officer, Joe Zantrovich. I will now turn the call over to Brandon.

Thank you, Nick, and good morning, everyone. For the quarter, we reported net income of $5 million, or $0.92 per diluted share. Excluding the one-time gain associated with the sale of our interest in the Bering Insurance Group, adjusted net income was $2.2 million, or $0.41 per diluted share. The decrease in adjusted earnings from the prior quarter was primarily driven by higher provision expense associated with identified credit relationships and continued reserve strengthening. The second quarter reflected both the opportunities and challenges within our franchise. While earnings continued to be impacted by a small number of identified credit relationships, The more important story is the continued improvement in our core banking performance. We generated strong loan growth, meaningful margin expansion, improved our funding profile, and continued to strengthen our balance sheet. Net interest income increased 6.7% from the first quarter, and net interest margin expanded to 3.86%, representing a 23 basis point increase from the link quarter and a 44 basis point increase from a year ago. We are now seeing the full benefit of the actions we took over the past year to improve our funding costs, reduce wholesale borrowings, and reposition the balance sheet. Loan growth was also encouraging. Net loans increased $39.5 million during the quarter, driven by continued demand across several of our core lending categories, including construction, commercial real estate, and commercial and industrial lending. Our balance sheet remains a source of strength. Liquidity remains robust. Capital levels exceeded well-capitalized thresholds, deposits were stable, and we continue to maintain significant borrowing capacity shouldn't be needed. As we move through the remainder of 2026, our priorities remain unchanged. We are focused on disciplined growth, prudent credit management, operating efficiency, and identifying opportunities that enhance long-term shareholder value. Kate will now discuss the financial results in more detail.