UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
- --------------------------------------------------------------------------------
Form 10-Q
X Quarterly Report Under Section 13 or 15(d) of the Securities
---------- Exchange Act of 1934
For the quarterly period ended September 30, 1997
Transition Report Under Section 13 or 15(d) of the Exchange
---------- Act
- --------------------------------------------------------------------------------
EAGLE FINANCIAL SERVICES, INC
(Exact name of registrant as specified in its charter)
Virginia 54-1601306
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
Post Office Box 391, Berryville, Virginia 22611
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 540-955-2510
Indicate by check mark whether the registrant (1) has filed all documents and
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
-------------- -------------
Indicate the number of shares outstanding of each of the Registrant's classes of
common stock as of the latest practicable date:
Class Common Stock Number of shares 1,406,454 Outstanding at November 11, 1997
($2.50 par value)
<PAGE>
EAGLE FINANCIAL SERVICES, INC.
INDEX TO FORM 10-Q
Part I. Financial Information
Item 1. Financial Statements (Unaudited) ....................... 3
Consolidated Balance Sheets as of
September 30, 1997 and December 31, 1996 .......... 3
Consolidated Statements of Income for the Three
and Nine Months Ended September 30, 1997 and 1996 ... 4
Consolidated Statement of Changes in
Stockholder's Equity for the Nine Months
Ended September 30, 1997 and 1996 ........... 6
Consolidated Statements of Cash Flows for the
Nine Months Ended September 30, 1997 and 1996 ...... 7
Notes to Consolidated Financial Statements ....... 9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations .... 12
Part II. Other Information
Item 6. Exhibits and reports on Form 8-K ...................... 14
Signatures ........................................................ 15
Exhibit 27 - Financial Data Schedule .............................. 16
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
Eagle Financial Services, Inc. and Subsidiary
Consolidated Balance Sheets
As of September 30, 1997 and December 31, 1996
<CAPTION>
September 30, 1997 December 31, 1996
------------- -------------
<S> <C>
Assets
Cash and due from banks $ 5,120,846 $ 4,409,250
Securities held to maturity (fair value:
1997, $30,280,660; 1996, $24,042,342) 30,346,316 24,345,102
Securities available for sale, at fair value 4,252,581 1,744,472
Federal funds sold 2,049,000 1,553,000
Loans, net of unearned discounts 81,928,399 87,870,194
Less allowance for loan losses (788,094) (913,955)
------------- -------------
Net loans 81,140,305 86,956,239
Bank premises and equipment, net 4,118,743 4,251,675
Other real estate owned 72,492 46,605
Intangible assets 615,653 653,624
Other assets 2,866,213 2,281,774
------------- -------------
Total assets $ 130,582,149 $ 126,241,741
============= =============
Liabilities and Stockholders' Equity
Liabilities
Deposits:
Noninterest bearing $ 16,931,065 $ 15,175,041
Interest bearing 97,705,944 95,912,826
------------- -------------
Total deposits $ 114,637,009 $ 111,087,867
Federal funds purchased 0 0
Other liabilities 1,027,480 957,018
------------- -------------
Total liabilities $ 115,664,489 $ 112,044,885
------------- -------------
Stockholders' Equity
Preferred Stock, $10 par value;
authorized 500,000 shares; no
shares outstanding $ 0 $ 0
Common Stock, $2.50 par value;
authorized 1,500,000 shares;
issued 1997, 1,406,454; issued
1996, 1,399,885 shares 3,516,136 3,499,714
Surplus 2,066,599 1,945,891
Retained Earnings 9,328,849 8,756,281
Unrealized loss on securities
available for sale, net 6,076 (5,030)
------------- -------------
Total stockholders' equity $ 14,917,660 $ 14,196,856
------------- -------------
Total liabilities and stockholders'
equity $ 130,582,149 $ 126,241,741
============= =============
</TABLE>
- 3 -
<PAGE>
<TABLE>
Eagle Financial Services, Inc. and Subsidiary
Consolidated Statements of Income
For the Periods Ended September 30, 1997 and 1996
<CAPTION>
Three Months Ended
September 30,
1997 1996
------------- -------------
<S> <C>
Interest Income
Interest and fees on loans $ 1,792,685 $ 1,925,600
Interest on securities held to
maturity:
Taxable interest income 418,674 340,284
Interest income exempt from
federal income taxes 34,888 38,237
Interest and dividends on securities
available for sale, taxable 65,989 28,090
Interest on federal funds sold 10,776 20,741
Interest on deposits in banks 452 278
----------- -----------
Total interest income $ 2,323,464 $ 2,353,230
----------- -----------
Interest Expense
Interest on deposits $ 999,933 $ 987,229
Interest on federal funds purchased 1,516 70
----------- -----------
Total interest expense $ 1,001,449 $ 987,299
----------- -----------
Net interest income $ 1,322,015 $ 1,365,931
Provision For Loan Losses 140,000 65,000
----------- -----------
Net interest income after
provision for loan losses $ 1,182,015 $ 1,300,931
----------- -----------
Other Income
Trust Department income $ 56,906 $ 42,900
Service charges on deposits 131,918 119,033
Other service charges and fees 142,932 71,463
Gain (loss) on equity investment (2,362) (792)
Other operating income 1,911 51,926
----------- -----------
$ 331,305 $ 284,530
----------- -----------
Other Expenses
Salaries and wages $ 505,072 $ 452,964
Pension and other employee benefits 127,325 132,702
Occupancy expenses 83,241 77,368
Equipment expenses 117,608 141,407
FDIC assessment 0 500
Stationary and supplies 44,850 19,036
Postage 28,240 28,288
Credit card expense 24,936 24,479
Bank franchise tax 24,726 22,954
ATM network fees 39,637 30,248
Intangible amortization 12,704 21,732
Other operating expenses 208,949 143,194
----------- -----------
$ 1,217,288 $ 1,094,872
----------- -----------
Income before income taxes $ 296,032 $ 490,589
Income Tax Expense 58,344 138,780
----------- -----------
Net Income $ 237,688 $ 351,809
=========== ===========
Earnings Per Share $ 0.17 $ 0.25
=========== ===========
</TABLE>
- 4 -
<PAGE>
<TABLE>
Eagle Financial Services, Inc. and Subsidiary
Consolidated Statements of Income
For the Periods Ended September 30, 1997 and 1996
<CAPTION>
Nine Months Ended
September 30,
1997 1996
------------- -------------
<S> <C>
Interest Income
Interest and fees on loans $ 5,502,130 $ 5,783,949
Interest on securities held to
maturity:
Taxable interest income 1,170,176 976,603
Interest income exempt from
federal income taxes 108,198 121,863
Interest and dividends on securities
available for sale, taxable 123,915 105,189
Interest on federal funds sold 62,586 37,726
Interest on deposits in banks 912 600
----------- -----------
Total interest income $ 6,967,917 $ 7,025,930
----------- -----------
Interest Expense
Interest on deposits $ 2,879,700 $ 2,921,454
Interest on federal funds purchased 4,427 53,428
----------- -----------
Total interest expense $ 2,884,127 $ 2,974,882
----------- -----------
Net interest income $ 4,083,790 $ 4,051,048
Provision For Loan Losses 306,667 185,000
----------- -----------
Net interest income after
provision for loan losses $ 3,777,123 $ 3,866,048
----------- -----------
Other Income
Trust Department income $ 160,941 $ 133,144
Service charges on deposits 387,947 384,283
Other service charges and fees 236,216 161,425
Gain (loss) on equity investment (5,508) (603)
Other operating income 95,154 71,137
----------- -----------
$ 874,750 $ 749,386
----------- -----------
Other Expenses
Salaries and wages $ 1,440,204 $ 1,293,841
Pension and other employee benefits 359,208 358,171
Occupancy expenses 245,528 239,573
Equipment expenses 337,343 344,823
FDIC assessment 6,465 2,000
Stationary and supplies 123,479 101,973
Postage 84,471 94,551
Credit card expense 81,767 72,568
Bank franchise tax 70,618 77,380
ATM network fees 99,587 88,440
Intangible amortization 37,972 36,641
Other operating expenses 580,299 530,366
----------- -----------
$ 3,466,941 $ 3,240,327
----------- -----------
Income before income taxes $ 1,184,932 $ 1,375,107
Income Tax Expense 275,852 368,851
----------- -----------
Net Income $ 909,080 $ 1,006,256
=========== ===========
Earnings Per Share $ 0.65 $ 0.72
=========== ===========
</TABLE>
- 5 -
<PAGE>
<TABLE>
Eagle Financial Services, Inc. and Subsidiary
Consolidated Statements of Changes in Stockholders' Equity
For the Nine Months Ended September 30, 1997 and 1996
<CAPTION>
Unrealized
Gain (Loss)
on Securities
Common Retained Available for
Stock Surplus Earnings Sale, Net Total
------------ ------------ ------------ ------------ ------------
<S> <C>
Balance, Dec 31, 1995 $ 1,738,212 $ 1,782,186 $ 9,612,627 ($ 12,606) $ 13,120,419
Net income 1,006,256 1,006,256
Issuance of common
stock, dividend
investment plan
(1,732 shares) 4,330 59,841 64,171
Dividend declared
($.22 per share) (152,962) (152,962)
Net change in
unrealized gain (loss)
on securities avail-
able for sale 4,910 4,910
Fractional shares
purchased (9) (142) (151)
------------ ------------ ------------ ------------ ------------
Balance, Sept 30, 1996 $ 1,742,533 $ 1,841,885 $ 10,465,921 ($ 7,696) $ 14,042,643
============ ============ ============ ============ ============
Balance, Dec 31, 1996 $ 3,499,714 $ 1,945,891 $ 8,756,281 ($ 5,030) $ 14,196,856
Net income 909,080 909,080
Issuance of common
stock, dividend
investment plan
(6,571 shares) 16,427 120,749 137,176
Dividend declared
($.24 per share) (336,512) (336,512)
Net change in
unrealized gain (loss)
on securities avail-
able for sale 11,106 11,106
Fractional shares
purchased (5) (41) (46)
------------ ------------ ------------ ------------ ------------
Balance, Sept 30, 1997 $ 3,516,136 $ 2,066,599 $ 9,328,849 $ 6,076 $ 14,917,660
============ ============ ============ ============ ============
</TABLE>
- 6 -
<PAGE>
<TABLE>
Eagle Financial Services, Inc. and Subsidiary
Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 1997 and 1996
<CAPTION>
1997 1996
------------ ------------
<S> <C>
Cash Flows from Operating Activities
Net income $ 909,080 $ 1,006,256
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 223,505 286,531
Amortization of intangible assets 37,972 36,641
(Gain) loss on equity investment 5,508 603
Provision for loan losses 306,667 185,000
Premium amortization on securities, net 43,706 28,773
Deferred tax 0 23,620
(Increase) in other assets (474,456) (338,452)
Increase in other liabilities 70,462 28,002
------------ ------------
Net cash provided by operating activities $ 1,122,444 $ 1,256,974
------------ ------------
Cash Flows from Investing Activities
Proceeds from maturities and principal
payments of securities held to maturity $ 4,383,825 $ 3,319,002
Proceeds from maturities and principal
payments of securities available for sale 377,000 1,844,000
Purchases of securities held to maturity (10,428,722) (4,777,567)
Purchases of securities available for sale (2,868,304) (194,500)
Purchases of bank premises and equipment (211,787) (1,028,921)
Acquisition of intangible assets 0 (692,830)
Net (increase) decrease in loans 5,483,380 (959,054)
------------ ------------
Net cash (used in) investing activities ($ 3,264,608) ($ 2,489,870)
------------ ------------
Cash Flows from Financing Activities
Net increase (decrease) in demand deposits,
money market, and savings accounts ($ 759,643) $ 6,437,178
Net increase in certificates of deposit 4,308,785 (2,360,320)
Net (decrease) in federal funds purchased 0 (1,867,000)
Cash dividends paid (199,336) (88,791)
Fractional shares purchased (46) (151)
------------ ------------
Net cash provided by financing activities $ 3,349,760 $ 2,120,916
------------ ------------
Increase in cash and cash equivalents $ 1,207,596 $ 888,020
Cash and Cash Equivalents
Beginning 5,962,250 4,106,467
------------ ------------
Ending $ 7,169,846 $ 4,994,487
============ ============
</TABLE>
- 7 -
<PAGE>
<TABLE>
Eagle Financial Services, Inc. and Subsidiary
Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 1997 and 1996
<CAPTION>
1997 1996
---------- ----------
<S> <C>
Supplemental Disclosures of Cash Flow Information
Cash payments for:
Interest $2,899,014 $3,059,409
========== ==========
Income taxes $ 439,616 $ 428,936
========== ==========
Supplemental Schedule of Non-Cash Financing
Activities:
Issuance of common stock,
dividend investment plan $ 137,176 $ 64,171
========== ==========
Unrealized gain on securities
available for sale $ 16,828 $ 7,440
========== ==========
Other real estate acquired in settlement
of loans $ 25,887 $ 0
========== ==========
</TABLE>
- 8 -
<PAGE>
EAGLE FINANCIAL SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1997
(1) The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principals for interim
financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles.
(2) In the opinion of management, the accompanying unaudited financial
statements contain all adjustments (consisting of only normal recurring
accruals) necessary to present fairly the financial position as of
September 30, 1997 and December 31, 1996, and the result of operations
and cash flows for the three and nine months ended September 30, 1997
and 1996. The statements should be read in conjunction with the Notes
to Financial Statements included in the Company's Annual Report for the
year ended December 31, 1996.
(3) The results of operations for the nine month period ended September 30,
1997 and 1996 are not necessarily indicative of the results to be
expected for the full year.
(4) Securities held to maturity and available for sale as of September 30,
1997 and December 31, 1996, are:
<TABLE>
<CAPTION>
<S> <C>
September 30, 1997 December 31, 1996
Held to Maturity Amortized Cost Amortized Cost
- ---------------- -------------- --------------
U.S. Treasury securities $ 371,905 $ 821,632
Obligations of U.S. government
corporations and agencies 9,498,020 5,467,491
Mortgage-backed securities 16,600,480 14,960,458
Obligations of states and political
subdivisions 3,875,911 2,995,521
Other securities 0 100,000
----------- -----------
$30,346,316 $24,345,102
=========== ===========
September 30, 1997 December 31, 1996
Fair Value Fair Value
----------- -----------
U.S. Treasury securities $ 376,993 $ 823,361
Obligations of U.S. government
corporations and agencies 9,492,887 5,396,463
Mortgage-backed securities 16,509,523 14,730,775
Obligations of states and political
subdivisions 3,901,257 2,991,733
Other securities 0 100,010
----------- -----------
$30,280,660 $24,042,342
=========== ===========
</TABLE>
- 9 -
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
September 30, 1997 December 31, 1996
Available for Sale Amortized Cost Amortized Cost
- ------------------ -------------- --------------
Obligations of U.S. government
corporations and agencies 3,501,175 999,994
Other securities 742,200 752,100
------------ ------------
$ 4,243,375 $ 1,752,094
============ ============
September 30, 1997 December 31, 1996
Fair Value Fair Value
----------- -----------
Obligations of U.S. government
corporations and agencies 3,510,381 992,372
Other securities 742,200 752,100
------------ ------------
$ 4,252,581 $ 1,744,472
============ ============
</TABLE>
(5) Net loans at September 30, 1997 and December 31, 1996 are summarized
as follows:
<TABLE>
<CAPTION>
<S> <C>
September 30, 1997 December 31, 1996
----------- -----------
Loans secured by real estate:
Construction and land development $ 1,202,542 $ 1,434,277
Secured by farmland 3,750,685 4,013,322
Secured by 1-4 family residential 44,635,203 45,156,222
Nonfarm, nonresidential loans 10,191,441 9,517,839
Loans to finance agricultural production 826,519 1,446,108
Commercial and industrial loans 5,140,493 6,145,077
Loans to individuals 15,410,131 19,632,667
Loans to U.S. state and political
subdivisions 1,155,340 1,517,111
All other loans 218,512 214,483
------------ ------------
Gross loans $ 82,530,866 $ 89,077,106
Less:
Unearned income (602,467) (1,206,912)
Allowance for loan losses (788,094) (913,955)
------------ ------------
Loans, net $ 81,140,305 $ 86,956,239
============ ============
</TABLE>
- 10 -
<PAGE>
(6) Allowance for Loan Losses
<TABLE>
<CAPTION>
<S> <C>
September 30, 1997 December 31, 1996
------------------ -----------------
Balance, beginning $913,955 $828,104
Provision charged to operating expense 306,667 290,000
Recoveries added to the allowance 24,058 63,561
Loan losses charged to the allowance (456,586) (267,710)
-------- --------
Balance, ending $788,094 $913,955
======== ========
</TABLE>
(7) New Accounting Pronouncements
FASB Statement No. 125, "Accounting for Transfers and Servicing of Financial
Assets and Extinguishments of Liabilities," was issued in June 1996 and
establishes, among other things, new criteria for determining whether a transfer
of financial assets in exchange for cash or other consideration should be
accounted for as a sale or as a pledge of collateral in a secured borrowing.
Statement 125 also establishes new accounting requirements for pledged
collateral. As issued, Statement 125 is effective for all transfers and
servicing of financial assets and extinguishments of liabilities occurring after
December 1996.
FASB Statement No. 127, "Deferral of the Effective Date of Certain Provisions of
FASB Statement No. 125," defers for one year the effective date (a) of para-
graph 15 of Statement 125 and (b) for repurchase agreement, dollar-roll, secur-
ities lending, or similar transactions, of paragraph 9-12 and 237(b) of
Statement 125.
FASB Statement No. 128, "Earnings per Share", was issued in February 1997 and
establishes standards for computing and presenting earnings per (EPS) and
applies to entities with publicly held common stock or potential common stock.
This Statement simplifies the standards for computing earnings per share
previously found in APB Opinion No. 15, "Earnings per Share", and makes them
comparable to international EPS standards. It replaces the presentation of
primary EPS with a presentation of basic EPS. It also requires dual presentation
of basic and diluted EPS on the face of the income statement for all entities
with complex capital structures and requires a reconciliation of
the numerator and denominator of the basic EPS computation to the numerator and
denominator of the diluted EPS computation. This Statement is effective for
financial statements issued for periods ending after December, 15 1997 including
interim periods.
FASB Statement No. 129, "Disclosure of Information About Capital Structure", was
issued in February 1997 and establishes standards for disclosing information
about an entity's capital structure. It applies to all entities. This Statement
continues the previous requirements to disclose certain information about an
entity's capital structure found in APB Opinions No. 10, "Omnibus Opinion -
1966", and No. 15, "Earnings per Share", and FASB Statement No. 47, "Disclosure
of Long-Term Obligations", for entities that were subject to the requirements of
those standards. This Statement is effective for financial statements for
periods ending after December 15, 1997.
FASB Statement No. 130, "Reporting Comprehensive Income", was issued in June
1997 and establishes standards for reporting and display of comprehensive income
and its components (revenues, expenses, gains, and losses) in a full set of
general-purpose financial statements. This Statement requires that all items
that are required to be recognized under accounting standards as components of
comprehensive income be reported in a financial statement that is displayed with
the same prominence as other financial statements.
This Statement requires that an enterprise (a) classify items of other
comprehensive income by their nature in a financial statement and (b) display
the accumulated balance of other comprehensive income separately from retained
earnings and additional paid-in capital in the equity section of a statement of
financial position. This Statement is effective for fiscal years beginning after
December 15, 1997.
The effects of these Statements on the Bank's financial statements are not
expected to be material.
- 11 -
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Performance Summary
Net income of the company for the first nine months of 1997 and 1996 was
$909,080 and $1,006,256, respectively. This is a decrease of $97,176 or 9.66%.
The results of operations for the nine month periods ended September 30, 1997
and 1996 are not necessarily indicative of the results to be expected for the
full year. Net interest income after provision for loan losses for the first
nine months of 1997 and 1996 was $3,777,123 and $3,866,048, respectively. This
is a decrease of $88,925 or 2.30%. Total other income increased $125,364 or
16.73% from $749,386 for the first nine months of 1996 to $874,750 for the first
nine months of 1997. Total other expenses increased $226,614 or 6.99% from
$3,240,327 during the first nine months of 1996 to $3,466,941 during the first
nine months of 1997.
Earnings per common share outstanding was $0.65 and $0.72 for the nine months
ended September 30, 1997 and 1996, respectively. Annualized return on average
assets for the nine month periods ended September 30, 1996 and 1997 was 1.08%
and 0.95%, respectively. Annualized return on average equity for the nine months
ended September 30, 1997 was 8.33% as compared to 9.87% for the nine months
ended September 30, 1996.
Provision and Allowance for Loan Losses
The provision for loan losses is based upon management's estimate of the amount
required to maintain an adequate allowance for loan losses reflective of the
risks in the loan portfolio. The Company reviews the adequacy of the allowance
for loan losses monthly and utilizes the results of these evaluations to
establish the provision for loan losses. The allowance is maintained at a level
believed by management to absorb potential losses in the loan portfolio. The
methodology considers specific identifications, specific and estimate pools,
trends in delinquencies, local and regional economic trends, concentrations,
commitments, off balance sheet exposure and other factors. The provision for
loan losses increased $121,667 from $185,000 for the nine months ended September
30, 1996 to $306,667 for the nine months ended September 30, 1997. The allowance
for loan losses decreased $125,861 or 13.77% during the first nine months of
1997 from $913,955 at December 31, 1996 to $788,094 at September 30, 1997. The
allowance as a percentage of total loans decreased from 1.04% at December 31,
1996 to 0.96% at September 30, 1997. The Company had net charge-offs of $130,274
and $432,528 for the first nine months of 1996 and 1997, respectively. The ratio
of net charge-offs to average loans was 0.51% for the first nine months of 1997
as compared to 0.15% for the first nine months of 1996.
The coverage of the allowance for loan losses over non-performing assets and
loans 90 days past due and still accruing interest has decreased from 90.14% at
December 31, 1996 to 53.08% at September 30, 1997. Loans past due greater than
90 days and still accruing interest decreased from $967,319 at December 31, 1996
to $572,805 at September 30, 1997.
Potential problem loans are included in the loans past due 90 days or more and
still accruing interest. Loans are viewed as potential problem loans when
management questions the ability of the borrower to comply with current
repayment terms. These loans are subject to constant review by management and
their status is reviewed on a regular basis. The amount of problem loans as of
September 30, 1997 was $302,279. Most of these loans are well secured and
management expects to incur only immaterial losses on their disposition.
Loans are placed on nonaccrual when they are greater than ninety days past due
without being in the process of collection or where the collection of their
principal or interest is doubtful. Interest and fees are not accrued on these
loans from the day they enter nonaccrual status and any interest or fees which
were earned previously are reversed. As of September 30, 1997 nonaccrual loans
totalled $840,644, of which $617,009 is secured by real estate. Management does
not expect to incur any material losses on the nonaccrual loans secured by real
estate upon foreclosure.
- 12 -
<PAGE>
Balance Sheet
Total assets increased $4.34 million or 3.44% from $126.24 million at December
31, 1996 to $130.58 million at September 30, 1997. Securities increased $8.51
million or 32.62% during the first nine months of 1997 from $26.09 million at
December 31, 1996 to $34.60 million at September 30, 1997. Loans, net of
unearned discounts decreased $5.94 million or 6.76% during the same period from
$87.87 million at December 31, 1996 to $81.93 million at September 30, 1997.
Total liabilities increased $3.62 million or 3.23% during the first nine months
of 1997 from $112.04 million at December 31, 1996 to $115.66 million at
September 30, 1997. Total deposits increased $3.55 million or 3.19% during the
same period from $111.09 at December 31, 1996 to $114.64 million at September
30, 1997. Total stockholders' equity increased $0.72 million or 5.08% during the
first nine months of 1997 from $14.20 million at December 31, 1996 to $14.92
million at September 30, 1997.
Stockholders' Equity
The Company continues to be a strongly capitalized financial institution.
Stockholders' equity per share increased $0.47 or 4.64% from $10.14 per share at
December 31, 1996 to $10.61 per share at September 30, 1997. During 1996 the
Company paid $0.30 per share in dividends. During 1997, the Company changed its
dividend policy to begin paying quarterly dividends. The Company has paid $0.24
per share in dividends during the first nine months of 1997. The Company has a
Dividend Investment Plan that reinvests the dividends of participating
shareholders in Company stock.
Liquidity
Asset and liability management assures liquidity and maintains the balance
between rate sensitive assets and liabilities. Liquidity management involves
meeting the present and future financial obligations of the Company with the
sale or maturity of assets or through the occurrence of additional liabilities.
Liquidity needs are met with cash on hand, deposits in banks, federal funds
sold, securities classified as available for sale and loans maturing within one
year. Total liquid assets were $29.3 million at September 30, 1997 and $34.5
million at December 31, 1996. These represent 25.34% and 30.8% of total
liabilities as of September 30, 1997 and December 31, 1996, respectively.
- 13 -
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal proceedings.
None
Item 2. Changes in securities.
None.
Item 3. Defaults upon senior securities.
None.
Item 4. Submission of matters to a vote of security holders.
None.
Item 5. Other Information.
None
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
Exhibit 2 Not applicable
<PAGE>
Exhibit 3 (i) Articles of Incorporation of Registrant
(incorporated herein by reference as Exhibit 3.1
of Registrant's Form S-4 Registration Statement,
Registration No. 33-43681).
(ii) Bylaws of Registrant (incorporated herein by
reference as Exhibit 3.2 of Registrant's Form
S-4 Registration Statement, Registration No.
33-43681).
Exhibit 4 Not applicable
Exhibit 10 Material Contracts
10.1 Description of Executive Supplemental
Income Plan, Incorporated by reference
to Exhibit 10.1 to the Company's Annual
Report on Form 10-K for the year ended
December 31, 1996, File No. 0-20146.
10.2 Lease Agreement between Bank of Clarke
County (tenant) and Winchester
Development Company (landlord) dated
August 1, 1992 for the branch office at
625 East Jubal Early Drive, Winchester,
Virginia, Incorporated herein by
reference to Exhibit 10.2 of the
Company's Annual Report on Form 10-K for
the year ended December 31, 1995, File
No. 0-20146.
10.3 Lease Agreement between Bank of Clarke
County (tenant) and Winchester
Development Company (landlord) dated
July 1, 1997 for an office at 615 East
Jubal Early Drive, Winchester, Virginia,
Incorporated herein by reference to
Exhibit 10.3 of the Company's Quarterly
Report on Form 10-Q for the quarter
ended June 30, 1997, File No. 0-20146.
Exhibit 11 Not applicable
Exhibit 15 Not applicable
Exhibit 18 Not applicable
Exhibit 19 Not applicable
Exhibit 22 Not applicable
Exhibit 23 Not applicable
Exhibit 24 Not applicable
Exhibit 27 Financial Data Schedule, Incorporated
herein as Exhibit 27
Exhibit 99 Not applicable
(b) Reports on Form 8-K.
None.
- 14 -
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
EAGLE FINANCIAL SERVICES, INC.
Date: November 12, 1997 /s/ LEWIS M. EWING
------------------------------
Lewis M. Ewing
President and CEO
Date: November 12, 1997 /s/ JOHN R. MILLESON
------------------------------
John R. Milleson
Vice President, Secretary and
Treasurer
Date: November 12, 1997 /s/ JAMES W. MCCARTY, JR.
------------------------------
James W. McCarty, Jr.
Controller
- 15 -
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