SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant (X) Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement ( ) Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
EAGLE FINANCIAL SERVICES, INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
(X) No fee required
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
( ) Fee paid previously with preliminary materials.
( ) Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule, or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
EAGLE FINANCIAL SERVICES, INC.
P. O. Box 391
Berryville, VA 22611
Notice of Annual Meeting of Stockholders
The Annual Meeting of Shareholders of Eagle Financial Services, Inc., (the
"Corporation") will be held on Wednesday, April 15, 1998, at Noon at the John H.
Enders Fire Company Social Hall, Berryville, Virginia. The purpose of the
meeting shall be as follows:
1. To elect four (4) directors for terms of three (3) years.
2. To transact such other business as shall properly come before the Annual
Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on March 20, 1998,
as the record date for determining the shareholders of the Corporation entitled
to notice of and to vote at the Annual Meeting and any adjournments thereof.
By order of the Board of Directors,
/s/ JOHN R. MILLESON
--------------------
John R. Milleson
Executive Vice President and Secretary/Treasurer
Berryville, Virginia
April 1, 1998
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. PLEASE
SIGN, DATE, AND RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING POSTAGE-PAID
ENVELOPE SO THAT YOUR SHARES WILL BE REPRESENTED AT THE MEETING. SHAREHOLDERS
ATTENDING THE MEETING MAY PERSONALLY VOTE ON ALL MATTERS THEN CONSIDERED, AND
ANY PROXIES PREVIOUSLY SUBMITTED BY THEM WILL BE REVOKED.
<PAGE>
PROXY STATEMENT
OF
EAGLE FINANCIAL SERVICES, INC.
GENERAL INFORMATION
This Proxy Statement is being furnished to the shareholders of Eagle
Financial Services, Inc. (the "Corporation") in connection with the solicitation
of proxies by the Board of Directors of the Corporation to be voted at the
Annual Meeting of Shareholders to be held on April 15, 1998, at Noon at the John
H. Enders Fire Company Social Hall, Berryville, Virginia, and at any adjournment
thereof.
The cost of solicitation of proxies and preparation of proxy materials will
be borne by the Corporation. Solicitations of proxies will be made by use of the
United States mail and may be made by direct or telephone contact by employees
of the Corporation. Brokerage houses and nominees will be requested to forward
the proxy materials to the beneficial holders of the shares held of record by
these persons, and the Corporation will reimburse them for their reasonable
charges in this connection. Shares represented by duly executed proxies in the
accompanying form received by the Corporation prior to the meeting and not
subsequently revoked will be voted at the meeting. The approximate date on which
this proxy statement, the accompanying proxy card and Annual Report to
Shareholders (which is not part of the Corporation's soliciting materials) are
being mailed to the Corporation's shareholders is April 1, 1998.
The purposes of the meeting are to elect directors and to vote on such
other business, if any, that may properly come before the meeting or any
adjournment. The Corporation does not know of any other matters that are to come
before the meeting. If any other matters are properly presented for action, the
persons named in the accompanying form of proxy will vote the proxy in
accordance with their best judgment. Each outstanding share of the Corporation's
Common Stock is entitled to one vote on all matters submitted to shareholders at
the meeting. There are no cumulative voting rights.
Where a shareholder directs in the proxy a choice with respect to any
matter that is to be voted on, that direction will be followed. If no direction
is made, proxies will be voted in favor of the election of the directors and in
the best judgment of Messrs. Milleson, Vinson and Dr. Beck on such other
business, if any, that may properly come before the meeting or any adjournment.
Any person who has returned a proxy has the power to revoke it at any time
before it is exercised by submitting a subsequently dated proxy, by giving
notice in writing to the Secretary of the Corporation, or by voting in person at
the meeting.
The close of business on March 20, 1998, has been fixed as the record date
for the meeting and any adjournment. As of that date, there were approximately
1,410,432 shares of Common Stock outstanding. As of the record date, and on the
date hereof, no person was known by the Corporation to own beneficially more
than 5% of the outstanding shares of the Corporation's Common Stock. The
directors and executive officers of the Corporation beneficially own in the
aggregate 138,936.3997 shares of the Corporation's Common Stock, representing
9.85% of the amount outstanding on the date hereof.
ELECTION OF DIRECTORS
The Board of Directors of the Corporation is structured into three
classes with one class elected each year to serve a three-year term. All
nominees are currently members of the Board. All have consented to be named and
have indicated their intent to serve if elected. Those nominees receiving the
greatest number of votes shall be deemed elected even though they may not
receive a majority. Abstentions and broker non-votes will not be considered a
vote for, or a vote against, a director. The directors who are nominated at this
year's meeting are Messrs. J. Fred Jones, A. Douglas McIntire, Thomas T.
Gilpin and Robert W. Smalley, Jr.
1
<PAGE>
Information Concerning Directors, Nominees and Executive Officers
The following table sets forth, as of February 28, 1998, certain
information with respect to the directors, nominees for directors, and executive
officers of the Corporation.
<TABLE>
<CAPTION>
Name, Age and Year
First Became Director or Shares of
Officer of the Corporation *Principal Common Stock Percent
or previously the Occupation For Beneficially of
Bank of Clarke County Past Five Years Owned Class
- ---------------------- --------------- -------- -------
<S><C>
Lewis M. Ewing President and CEO of the
Age 63 Corporation; President and CEO,
Director since 1984 Bank of Clarke County 13,104.739 (1)(2) .93
John D. Hardesty Partner/Manager, John O.
Age 66 Hardesty & Son, a dairy farming
Director since 1963 operation; Chairman of the
Board of the Corporation,
Chairman of the Board,
Bank of Clarke County 10,640 (1) .75
Marilyn C. Beck President, Lord Fairfax
Age 58 Community College
Director since 1995 1,120 (1) .08
Thomas T. Byrd President and Publisher
Age 51 Winchester Evening Star, Inc.
Director since 1995 4,300 (3) .30
Thomas T. Gilpin President, Lenoir City Real
Age 44 Estate Investment
Director since 1986 44,243.4631 (1) 3.14
J. Fred Jones Retired Insurance Executive
Age 72
Director since 1969 13,092 (1) .93
A. Douglas McIntire Vice President, P. T. McIntire
Age 51 & Sons, Inc., a beef farming
Director since 1982 operation 9,005 (1) .64
John F. Milleson, Jr. Chairman of the Board,
Age 69 Loudoun Mutual Insurance Co.
Director since 1979 15,410 (1) 1.09
Robert W. Smalley, Jr. President and CEO, Smalley
Age 46 Package Co., Inc.
Director since 1989 5,868.0628 (1) .42
Randall G. Vinson Pharmacist, Owner Berryville
Age 51 Pharmacy
Director since 1985 10,405.4747 (1) .74
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Name, Age and Year
First Became Director or Shares of
Officer of the Corporation *Principal Common Stock Percent
or previously the Occupation For Beneficially of
Bank of Clarke County Past Five Years Owned Class
- ----------------------- ------------------ -------- ------
<S><C>
John R. Milleson Executive Vice President, Treasurer
Age 41 and Secretary of the Corporation;
Officer since 1985 Executive Vice President and
Chief Administrative Officer,
Bank of Clarke County 8,776.8063 (1)(2) .62
Daisy W. McDonald Vice President of the
Age 55 Corporation; Vice President,
Officer since 1985 Bank of Clarke County 2,402.1424 (2) .17
James W. McCarty, Jr. Vice President and Chief
Age 28 Financial Officer of the Corporation;
Officer since 1995 Vice President and Chief Financial
Officer, Bank of Clarke County 568.7114 (1)(2) .04
Directors and executive
Officers as a group (13) 138,936.3997 9.85
</TABLE>
- ------------------------
(1) Includes shares held jointly with spouse and/or as custodian under the
Virginia Uniform Gifts to Minors Act and/or as trustee under the terms of
certain trusts.
(2) Amounts include shares of the Corporation's Common Stock allocated to
participants and held in trust under the Bank of Clarke County Employee Stock
Ownership Plan (the "ESOP Plan") as of December 31, 1997. As of such date, the
ESOP Plan held 62,475 shares of Common Stock, or 4.43% of the total number of
such shares outstanding. Of the shares of Common Stock held in the ESOP Plan,
13,303.0426 shares were held for the accounts of executive officers. Each
participant in the ESOP Plan has the right to instruct the trustees of the ESOP
Plan with respect to the voting of shares allocated to his or her account. The
trustees, however, may use their discretion in voting any shares for which they
received no instruction.
(3) Includes shares held by Winchester Evening Star, Inc., where the director is
an executive officer of that corporation.
On December 31, 1997, there were 13 individuals in the director and
executive officer category, which includes ten directors and four officers, one
of whom (the President) is also a director and three who are not directors.
John F. Milleson, Jr., a director of the Corporation, is the father of
John R. Milleson, Executive Vice President, Treasurer and Secretary of the
Corporation, and first cousin of Daisy W. McDonald, Vice President of the
Corporation.
Board and Committee Meetings of the Corporation
During 1997, the Board of Directors of the Corporation held five
meetings. The Corporation has no standing Committees.
The directors of the Corporation also serve as directors of the
wholly-owned subsidiary, the Bank of Clarke County (the "Bank"). The Bank's
Board held twelve meetings in 1997, plus one planning conference. During 1997
each director attended greater than 75% of the aggregate number of meetings of
both Board of Directors and the Bank's Board committees of which he or she was a
member, with the exception of Mr. McIntire. The Bank's Board has established the
following committees: Loan, Audit, Personnel, Marketing and Trust. There is no
nominating committee of the Board of Directors.
3
<PAGE>
The Loan Committee met twenty-six times to review the Bank's lending
practices. The committee consists of Messrs. Jones, Byrd, Smalley and Ewing.
The Personnel Committee consists of Messrs. Smalley, Ewing and Dr.
Beck. This committee met once in 1997 to review and monitor personnel activities
in the Bank, including compensation.
The Audit Committee met three times in 1997 to review the work of the
Audit Department and to follow up on the examinations performed by the external
auditors and the regulatory authorities. This committee consisted of Messrs.
McIntire, Jones, Smalley and Byrd.
The Trust Committee met eleven times in 1997. The committee is composed
of Messrs. Gilpin, Vinson, Ewing and Dr. Beck. The purpose of the Trust
Committee is to monitor the activities of the Trust Department of the Bank.
The Marketing Committee met three times in 1997. The committee is
composed of Messrs. Milleson, McIntire, Vinson and Ewing. The committee meets to
review the activities of the Marketing Department of the Bank.
Cash Compensation
The Corporation did not pay any cash compensation to the executive
officers of the Corporation in 1997.
The following table shows the aggregate cash and cash equivalent
compensation paid by the Bank for the years ended December 31, 1997, 1996 and
1995 to the Chief Executive Officer.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation
---------------------
(e)
(a) Other Annual
Name and (b) (c) (d) Compensation
Principal Position Year Salary($) Bonus($)(1) ($)(2)
------------------ ---- -------- ---------- ------
<S><C>
Lewis M. Ewing, 1997 112,000 -- --
President and CEO 1996 105,300 -- --
1995 102,611 -- --
<CAPTION>
Long-Term Compensation
----------------------
Awards Payouts
------ -------
(f) (g)
Restricted Securities (h) (i)
(a) Stock Underlying LTIP All Other
Name and (b) Awards(s) Options/ Payouts Compensation
Principal Position Year ($) SARs(#) ($) ($)
------------------ ---- --- ------- --- ---
Lewis M. Ewing, 1997 -- -- -- 21,786 (3)
President and CEO 1996 -- -- -- 21,578
1995 -- -- -- 21,459
</TABLE>
- -------------------------------
(1) The Company does not maintain a bonus plan.
(2) The aggregate of this compensation does not exceed the lesser of $50,000 or
10% of the total salary and bonus for the named executive.
(3) Includes contributions of $840 to the 401(k) Savings Plan and $20,946 to the
Executive Supplemental Income Plan.
Directors in 1997 each received $5,000 as compensation for
services as director plus a per meeting fee of $50 for each committee meeting
attended.
Option Grants
The Corporation does not grant options to its executive officers.
4
<PAGE>
Compensation Pursuant to Plans
The Bank maintains certain plans that provide, or may provide, additional
compensation to current executive officers, directors and other employees of the
Bank. These plans include the Employee Retirement Plan, the ESOP Plan, 401-(k)
Savings Plan and the Executive Supplemental Income Plan. The Corporation does
not have any such plans for its officers, directors and employees.
Employee Retirement Plan
Effective March 1, 1953, the Bank adopted a non-contributory, tax qualified
employee retirement plan (the "Retirement Plan") for employees of the Bank who
have been employed for six months prior to any January 1 and who are at least 20
1/2 years old. The Retirement Plan was substantially amended effective March 1,
1987. Under its existing terms, benefits are based on an employee's average
compensation during his or her employment. The Retirement Plan provides for 20%
vesting upon completion of three years of service and 20% for each additional
year of service up to 100%, for early retirement at age 55 and 10 years of
vested service and for the payment of certain annuity benefits to the surviving
spouse of an employee. Because the Retirement Plan is a defined benefit plan
under which benefits vary with years of service, average annual salary and age
at retirement, the costs under the plan are not included in the foregoing cash
compensation table. The 1997 cost to the Bank under the plan represented 3.77%
of total compensation, including overtime and bonuses. Assuming that Mr. Ewing
retires at the normal retirement age of 65, it is estimated that his annual
retirement benefit will be $21,984 based on current compensation.
Employee Stock Ownership Plan
In 1987, the Bank established the ESOP Plan to provide additional
retirement benefits to substantially all employees. Contributions under the ESOP
Plan are at the Bank's discretion, and are allocated according to each
participant's compensation relative to total compensation. Vesting is the same
as for the Retirement Plan. The contributions are made to the Bank of Clarke
County Employee Retirement Trust to be used to purchase the Corporation's Common
Stock. The plan was leveraged to the extent that money was borrowed during 1995
to purchase available stock. The debt is guaranteed by the Bank.
401(k) Savings Plan
The Corporation sponsors a 401(k) savings plan under which eligible
employees may choose to save up to 15% of their salary on a pretax basis,
subject to certain IRS limits. The Corporation matches 25% (up to 6% of the
employee's salary) of employee contributions with the Corporation's Common
Stock. The shares for this purpose are provided principally by the Corporation's
employee stock ownership plan (ESOP), supplemented, as needed, by newly issued
shares. Contributions amounted to $8,160 in 1997, $8,160 in 1996 and $7,924 in
1995, including $840 in 1997, $632 in 1996 and $515 in 1995 for Mr. Ewing.
Executive Supplemental Income Plan
During 1994, the Executive Supplemental Plan was amended from the 1987
plan. Certain key employees, including Mr. Ewing, will have benefits paid in
monthly installments for 15 years following retirement or death while some
employees will be paid a lump sum of $4,000 upon retirement. The Plan provides
that if employment is terminated for reasons other than death or disability
prior to age 65, the amount of benefits would be reduced or forfeited. For Mr.
Ewing the age when the benefit begins is age 65 and his annual supplemental
salary will be $26,820. The executive supplemental income benefit expense was
$47,590 in 1997, $38,499 in 1996 and $34,899 in 1995, based on the present value
of the retirement benefits, including $20,946 for Mr. Ewing. The Plan is
unfunded. However, life insurance has been acquired on the lives of these
employees in amounts sufficient to discharge the obligations thereunder.
5
<PAGE>
Transactions with Management
The officers, directors, their immediate families and affiliated companies
in which they are shareholders maintain normal relationships with the
Corporation and the Bank. Loans made by the Bank are made in the ordinary course
of business on the same terms, including interest rate and collateral, as those
prevailing at the time for comparable transactions with others, and do not
involve more than normal risks of collectability or present other unfavorable
features. At December 31, 1997, these persons and firms were indebted to the
Bank for loans totalling $719,373.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
NOMINEES SET FORTH ABOVE.
Section 16(a) Beneficial Ownership Reporting Compliance
Under Section 16(a) of the Securities Exchange Act of 1934, as amended,
directors and executive officers of the Corporation and beneficial owners of
more than 10% of the Corporation's Common Stock are required to file reports
with the Securities and Exchange Commission and the Corporation of their
beneficial ownership and changes in ownership of Common Stock.
Based solely on a review of the forms that were filed and any written
representations from reporting persons, the Corporation believes that all
required forms were complied with, except that Mr. Jones inadvertently filed
late a report on Form 4 on January 23, 1998 covering the sale of 500 shares and
Mr. Byrd inadvertently filed late a report on Form 4 on January 23, 1998
covering the purchase of 500 shares of the Corporation's Common Stock.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Yount, Hyde & Barbour, P.C. has been selected by the Board of
Directors as the independent accountants for the Corporation for the year 1998.
The firm of Yount, Hyde & Barbour, P.C. has served the Corporation, and the
Bank of Clarke County prior to the establishment of the Corporation, since 1979.
The independent accountants have no direct or indirect financial interest in the
Corporation. Representatives of the firm of Yount, Hyde & Barbour, P.C. are
expected to be present at the Annual Meeting, will have the opportunity to make
a statement, if they desire to do so, and are expected to be available to
respond to appropriate questions from the shareholders.
6
<PAGE>
SHAREHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Shareholder proposals for presentation at the 1999 Annual Meeting of the
shareholders must be received by the Secretary of the Corporation no later than
December 2, 1998. If such proposal complies with all of the requirements of Rule
14a-8 of the Exchange Act, it will be included in the proxy statement and set
forth in the form of proxy issued for the 1999 Annual Meeting.
OTHER MATTERS
Management is not aware of any matters to be presented for action at the
meeting other than as set forth herein. If any other matters properly come
before the meeting, or any adjournment thereof, the person or persons voting the
proxies will vote them in accordance with their best judgment.
By Order of the Board of Directors
John R. Milleson
Executive Vice President, Secretary and Treasurer
April 1, 1998
7
<PAGE>
EAGLE FINANCIAL SERVICES, INC.
Proxy for 1997 Annual Meeting of Shareholders Solicited on behalf
of the Board of Directors
The undersigned hereby constitutes and appoints Messrs. John F. Milleson,
Jr., Randall G. Vinson and Dr. Marilyn C. Beck, or any one of them, attorneys
and proxies, with the power of substitution in each, to act for the undersigned
with respect to all of the Corporation's Common Stock of the undersigned at the
Annual Meeting of Shareholders to be held at the John F. Enders Fire Company
Social Hall on Wednesday, April 15, 1998, at noon.
<TABLE>
<S><C>
1. Election of Directors [ ] For all nominees listed below [ ] Withhold authority to
for a three (3) year (except as marked to the vote for all nominees
term contrary).
J. Fred Jones, A. Douglas McIntire, Thomas T. Gilpin, Robert W. Smalley, Jr.
</TABLE>
(INSTRUCTION: To withhold authority to vote for any individual nominee, strike a
line through the nominee's name in the list above.)
2. To vote in accordance with their best judgment on such other business, if
any, that may properly come before the meeting.
This proxy when properly executed will be voted in the manner directed
herein by the shareholder. If no direction is made, this proxy will be voted
for the nominees for election of directors listed in item l.
Please sign and date on the back.
Please sign your name(s) exactly as registered.
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, 1998
--------------------------------------------
Please date when you sign
PLEASE RETURN PROMPTLY IN THE ENCLOSED POSTAGE PAID ENVELOPE
