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 June 30, 1998
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)
(540) 955-2510
(Registrant's telephone number, including area code)
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 [ ]
The number of shares of the Registrant's Common Stock ($2.50 par value)
outstanding as of August 12, 1998 was 1,412,320
1
<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
June 30, 1998 and December 31, 1997 ................... 3
Consolidated Statements of Income for the
Three and Six Months Ended June 30, 1998 and 1997 ..... 4
Consolidated Statement of Changes in
Stockholder's Equity for the Six Months
Ended June 30, 1998 and 1997 .......................... 5
Consolidated Statements of Cash Flows for the
Six Months Ended June 30, 1998 and 1997 ............... 6
Notes to Consolidated Financial Statements ............ 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations ............. 8
Item 3. Quantitative and Qualitative Disclosures
about Market Risk ......................................... 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings ........................................ 10
Item 2. Changes in Securities .................................... 10
Item 3. Defaults Upon Senior Securities .......................... 10
Item 4. Submission of Matters to a Vote of Security Holders ...... 10
Item 5. Other Information ........................................ 10
Item 6. Exhibits and reports on Form 8-K ......................... 11
2
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Eagle Financial Services, Inc. and Subsidiary
Consolidated Balance Sheets
As of June 30, 1998 and December 31, 1997
<TABLE>
<CAPTION>
June 30, 1998 December 31, 1997
-------------- --------------
<S> <C>
Assets
Cash and due from banks $ 5,124,282 $ 5,242,309
Securities held to maturity (fair value:
1998, $38,007,614; 1997, $33,207,946) 37,947,049 33,160,658
Securities available for sale, at fair value 3,079,315 4,258,122
Federal funds sold 5,007,000 2,300,000
Loans, net of unearned discounts 83,950,961 81,425,186
Less allowance for loan losses (803,506) (748,558)
-------------- --------------
Net loans 83,147,455 80,676,628
Bank premises and equipment, net 4,120,946 4,060,501
Other real estate owned 206,183 189,688
Intangible assets 577,541 602,949
Other assets 2,747,045 2,748,546
-------------- --------------
Total assets $ 141,956,816 $ 133,239,401
============== ==============
Liabilities and Stockholders' Equity
Liabilities
Deposits:
Noninterest bearing $ 18,211,930 $ 17,774,480
Interest bearing 107,121,591 99,304,875
-------------- --------------
Total deposits $ 125,333,521 $ 117,079,355
Other liabilities 1,087,274 1,101,931
-------------- --------------
Total liabilities $ 126,420,795 $ 118,181,286
-------------- --------------
Stockholders' Equity
Preferred Stock, $10 par value;
500,000 shares authorized
and unissued $ 0 $ 0
Common Stock, $2.50 par value;
authorized 1,500,000 shares;
issued 1998, 1,412,320; issued
1997, 1,408,485 shares 3,530,799 3,521,213
Surplus 2,191,095 2,107,826
Retained Earnings 9,785,248 9,419,266
Accumulated other comprehensive income 28,879 9,810
-------------- --------------
Total stockholders' equity $ 15,536,021 $ 15,058,115
-------------- --------------
Total liabilities and stockholders'
equity $ 141,956,816 $ 133,239,401
============== ==============
</TABLE>
3
<PAGE>
Eagle Financial Services, Inc. and Subsidiary
Consolidated Statements of Income
For the Periods Ended June 30, 1998 and 1997
<TABLE>
<CAPTION>
Three Months Ended
June 30,
1998 1997
-------------- --------------
<S> <C>
Interest Income
Interest and fees on loans $ 1,749,956 $ 1,846,204
Interest on securities held to
maturity:
Taxable interest income 522,278 402,492
Interest income exempt from
federal income taxes 47,179 37,562
Interest and dividends on securities
available for sale, taxable 50,653 37,562
Interest on federal funds sold 31,457 23,159
Interest on deposits in banks 288 460
-------------- --------------
Total interest income $ 2,401,811 $ 2,347,317
-------------- --------------
Interest Expense
Interest on deposits $ 1,051,399 $ 956,024
Interest on federal funds purchased 1,655 2,911
-------------- --------------
Total interest expense $ 1,053,054 $ 958,935
-------------- --------------
Net interest income $ 1,348,757 $ 1,388,382
Provision For Loan Losses 57,500 91,667
-------------- --------------
Net interest income after
provision for loan losses $ 1,291,257 $ 1,296,715
-------------- --------------
Other Income
Trust Department income $ 84,296 $ 55,373
Service charges on deposits 134,657 133,265
Other service charges and fees 106,524 46,921
Gain (loss) on equity investment (221) (996)
Other operating income 111,682 55,093
-------------- --------------
$ 436,938 $ 289,656
-------------- --------------
Other Expenses
Salaries and wages $ 577,911 $ 480,536
Pension and other employee benefits 143,045 103,577
Occupancy expenses 105,831 65,476
Equipment expenses 123,732 112,076
Stationary and supplies 56,058 35,105
Postage 35,237 32,280
Credit card expense 37,801 24,567
Bank franchise tax 24,000 21,844
ATM network fees 25,081 27,397
Intangible amortization 12,703 12,705
Other operating expenses 199,170 167,473
-------------- --------------
$ 1,340,569 $ 1,083,036
-------------- --------------
Income before income taxes $ 387,626 $ 503,335
Income Tax Expense 74,462 136,823
-------------- --------------
Net Income $ 313,164 $ 366,512
============== ==============
Earnings Per Share
(basic and assuming dilution) $ 0.22 $ 0.26
============== ==============
</TABLE>
Eagle Financial Services, Inc. and Subsidiary
Consolidated Statements of Income
For the Periods Ended June 30, 1998 and 1997
<TABLE>
<CAPTION>
Six Months Ended
June 31,
1998 1997
-------------- --------------
<S> <C>
Interest Income
Interest and fees on loans $ 3,490,131 $ 3,709,445
Interest on securities held to
maturity:
Taxable interest income 992,123 751,502
Interest income exempt from
federal income taxes 86,461 73,310
Interest and dividends on securities
available for sale, taxable 116,657 57,926
Interest on federal funds sold 65,594 51,810
Interest on deposits in banks 1,070 460
-------------- --------------
Total interest income $ 4,752,036 $ 4,644,453
-------------- --------------
Interest Expense
Interest on deposits $ 2,066,296 $ 1,879,767
Interest on federal funds purchased 1,833 2,911
-------------- --------------
Total interest expense $ 2,068,129 $ 1,882,678
-------------- --------------
Net interest income $ 2,683,907 $ 2,761,775
Provision For Loan Losses 137,500 166,667
-------------- --------------
Net interest income after
provision for loan losses $ 2,546,407 $ 2,595,108
-------------- --------------
Other Income
Trust Department income $ 176,360 $ 104,035
Service charges on deposits 272,094 256,029
Other service charges and fees 166,289 93,284
Gain (loss) on equity investment (1,510) (3,146)
Other operating income 202,484 93,243
-------------- --------------
$ 815,717 $ 543,445
-------------- --------------
Other Expenses
Salaries and wages $ 1,131,946 $ 935,132
Pension and other employee benefits 290,287 231,883
Occupancy expenses 207,523 162,287
Equipment expenses 245,235 219,735
Stationary and supplies 107,201 78,629
Postage 65,748 56,231
Credit card expense 83,112 56,831
Bank franchise tax 48,000 45,892
ATM network fees 39,064 59,950
Intangible amortization 25,408 25,268
Other operating expenses 373,541 377,815
-------------- --------------
$ 2,617,065 $ 2,249,653
-------------- --------------
Income before income taxes $ 745,059 $ 888,900
Income Tax Expense 153,563 217,508
-------------- --------------
Net Income $ 591,496 $ 671,392
============== ==============
Earnings Per Share
(basic and assuming dilution) $ 0.42 $ 0.48
============== ==============
</TABLE>
4
<PAGE>
<TABLE>
Eagle Financial Services, Inc. and Subsidiary
Consolidated Statements of Changes in Stockholders' Equity
For the Six Months Ended June 30, 1998 and 1997
<CAPTION>
Accumulated
Other
Comprehensive Common Retained Comprehensive
Income Stock Surplus Earnings Income (Loss) Total
----------- ----------- ----------- ----------- ----------- -----------
<S> <C>
Balance, December 31, 1996 $ 0 $ 3,499,714 $ 1,945,891 $ 8,756,281 $ (5,030) $14,196,856
Comprehensive income
Net income 671,392 671,392 671,392
Other comprehensive income (loss)
Unrealized gain on
securities available for
sale, net of deferred
income taxes of $3,291 6,387 6,387 6,387
-----------
Total comprehensive income $ 677,779
===========
Dividend declared ($0.16 per share) (224,163) (224,163)
Issuance of common stock, dividend
investment plan (4,472 shares) 11,179 80,131 91,310
Fractional shares purchased (4) (32) (36)
----------- ----------- ----------- ----------- -----------
Balance, June 30, 1997 $ 3,510,889 $ 2,025,990 $ 9,203,510 $ 1,357 $14,741,746
=========== =========== =========== =========== ===========
Accumulated
Other
Comprehensive Common Retained Comprehensive
Income Stock Surplus Earnings Income (Loss) Total
----------- ----------- ----------- ----------- ----------- -----------
<S><C>
Balance, December 31, 1997 $ 0 $ 3,521,213 $ 2,107,826 $ 9,419,266 $ 9,810 $15,058,115
Comprehensive income
Net income 591,496 591,496 591,496
Other comprehensive income (loss)
Unrealized gain (loss) on
securities available for
sale, net of deferred
income taxes of $9,823 19,069 19,069 19,069
-----------
Total comprehensive income $ 610,565
===========
Dividend declared ($0.16 per share) (225,514) (225,514)
Issuance of common stock, dividend
investment plan (3,836 shares) 9,591 83,319 92,910
Fractional shares purchased (5) (50) (55)
----------- ----------- ----------- ----------- -----------
Balance, June 30 , 1998 $ 3,530,799 $ 2,191,095 $ 9,785,248 $ 28,879 $15,536,021
=========== =========== =========== =========== ===========
</TABLE>
5
<PAGE>
Eagle Financial Services, Inc. and Subsidiary
Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
------------ ------------
<S><C>
Cash Flows from Operating Activities
Net income $ 591,496 $ 671,392
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 189,005 207,559
Amortization of intangible assets 25,408 25,268
Loss on equity investment 1,510 3,146
Provision for loan losses 137,500 166,667
Premium amortization on securities, net (613) 25,347
(Increase) in other assets (9) (233,500)
Increase (decrease) in other liabilities (24,480) 137,861
------------ ------------
Net cash provided by operating activities $ 919,817 $ 1,003,740
------------ ------------
Cash Flows from Investing Activities
Proceeds from maturities and principal
payments on securities held to maturity $ 11,054,209 $ 1,863,774
Proceeds from maturities and principal
payments on securities available for sale 1,565,000 377,000
Purchases of securities held to maturity (15,840,486) (7,344,416)
Purchases of securities available for sale (356,802) (2,366,549)
Purchases of bank premises and equipment (249,450) (233,148)
Net (increase) decrease in loans (2,624,822) 4,232,407
------------ ------------
Net cash (used in) investing activities $ (6,452,351) $ (3,470,932)
------------ ------------
Cash Flows from Financing Activities
Net increase (decrease) in demand deposits,
money market, and savings accounts $ 3,569,928 $ (1,119,073)
Net increase in certificates of deposits 4,684,238 3,241,905
Cash dividends paid (132,604) (132,853)
Fractional shares purchased (55) (36)
------------ ------------
Net cash provided by financing activities $ 8,121,507 $ 1,989,943
------------ ------------
Increase in cash and cash equivalents $ 2,588,973 $ (477,249)
Cash and Cash Equivalents
Beginning 7,542,309 5,962,250
------------ ------------
Ending $ 10,131,282 $ 5,485,001
============ ============
Supplemental Disclosures of Cash Flow Information
Cash payments for:
Interest $ 2,170,720 $ 1,854,902
============ ============
Income taxes $ 29,172 $ 262,988
============ ============
Supplemental Schedule of Non-Cash Investing and
Financing Activities:
Issuance of common stock,
dividend investment plan $ 92,910 $ 91,310
============ ============
Unrealized gain (loss) on securities
available for sale $ 28,892 $ 9,678
============ ============
Other real estate acquired in settlement
of loans $ 16,495 $ 24,812
============ ============
</TABLE>
6
<PAGE>
EAGLE FINANCIAL SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1998
(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 June
30, 1998 and December 31, 1997, and the results of operations and cash
flows for the three and six months ended June 30, 1998 and 1997. 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, 1997.
(3) The results of operations for the three and six month periods ended
June 30, 1998 and 1997, 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 June 30, 1998
and December 31, 1997, are:
<TABLE>
<CAPTION>
June 30, 1998 December 31, 1997
Held to Maturity Amortized Cost Amortized Cost
- ---------------- -------------- --------------
<S><C>
U.S. Treasury securities $ 381,923 $ 371,922
Obligations of U.S. government
corporations and agencies 13,068,198 10,148,139
Mortgage-backed securities 17,813,595 17,257,777
Obligations of states and political
subdivisions 6,683,333 5,382,820
-------------- --------------
$ 37,947,049 $ 33,160,658
============== ==============
June 30, 1998 December 31, 1997
Fair Value Fair Value
-------------- --------------
U.S. Treasury securities $ 389,473 $ 378,455
Obligations of U.S. government
corporations and agencies 13,123,534 10,178,461
Mortgage-backed securities 17,779,116 17,231,410
Obligations of states and political
subdivisions 6,715,491 5,419,620
-------------- --------------
$ 38,007,614 $ 33,207,946
============== ==============
</TABLE>
<TABLE>
<CAPTION>
June 30, 1998 December 31, 1997
Available for Sale Amortized Cost Amortized Cost
- ------------------ -------------- --------------
<S><C>
Obligations of U.S. government
corporations and agencies $ 2,001,556 $ 3,501,058
Other securities 1,034,002 742,200
-------------- --------------
$ 3,035,558 $ 4,243,258
============== ==============
June 30, 1998 December 31, 1997
Fair Value Fair Value
-------------- --------------
Obligations of U.S. government
corporations and agencies $ 2,020,313 $ 3,515,922
Other securities 1,059,002 742,200
-------------- --------------
$ 3,079,315 $ 4,258,122
============== ==============
</TABLE>
(5) Net loans at June 30, 1998 and December 31, 1997 are summarized as
follows (In Thousands):
<TABLE>
<CAPTION>
June 30, 1998 December 31, 1997
-------------- --------------
<S><C>
Loans secured by real estate:
Construction and land development $ 1,413 $ 588
Secured by farmland 3,695 3,700
Secured by 1-4 family residential 46,553 44,863
Nonfarm, nonresidential loans 11,721 11,141
Loans to finance agricultural production 760 770
Commercial and industrial loans 5,816 5,116
Loans to individuals 12,985 14,458
Loans to U.S. state and political
subdivisions 1,164 1,155
All other loans 136 97
-------------- --------------
Gross loans $ 84,243 $ 81,888
Less:
Unearned income (292) (462)
Allowance for loan losses (804) (749)
-------------- --------------
Loans, net $ 83,147 $ 80,677
============== ==============
</TABLE>
(6) Allowance for Loan Losses
<TABLE>
<CAPTION>
June 30, 1998 December 31, 1997
-------------- --------------
<S><C>
Balance, beginning $ 748,558 $ 913,955
Provision charged to operating expense 137,500 476,667
Recoveries added to the allowance 68,352 44,624
Loan losses charged to the allowance (150,904) (686,688)
-------------- --------------
Balance, ending $ 803,506 $ 748,558
============== ==============
</TABLE>
(7) New Accounting Pronouncements
In February 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 132, "Employers Disclosures about Pensions
and Other Post Retirement Benefits." This statement revises empoyers'
disclosures about pension and other postretirement benefit plans. It does not
change the measurement or recognition of those plans. This Statement
standardizes the disclosure requirements for pensions and other postretirement
benefits to the extent practicable, requires additional information on changes
in the benefit obligations and fair values of plan assets that will facilitate
financial analysis, and eliminates certain disclosures. Restatement of
disclosures for earlier periods is required. This Statement is effective for the
Company's financial statements for the year ended December 31, 1998.
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities." This statement requires companies to record derivatives
on the balance sheet as assets and liabilities, measured at fair value. Gains or
losses resulting from changes in the values of those derivatives would be
accounted for depending on the use of the derivative and whether it qualifies
for hedge accounting. This statement is not expected to have a material impact
on the Company's financial statements. This statement is effective for fiscal
years beginning after June 15, 1999, with earlier adoption encouraged. The
Company will adopt this accounting standard as required by January 1, 2000.
In March 1998, the American Institute of Certified Public Accountants (AICPA)
issued Statement of Position ("SOP") 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use." This SOP provides guidance on
accounting for the costs of computer software developed or obtained for internal
use. This SOP requires that entities capitalize certain internal-use software
costs once certain criteria are met. This statement is not expected to have a
material impact on the Company's financial statements.
In April 1998, the AICPA issued SOP 98-5, "Reporting on the Costs of Start-Up
Activities," which requires the costs of start-up activities and organization
costs to be expensed as incurred. This statement is effective for the fiscal
year 1999 financial statements. This statement is not expected to have a
material impact on the Company's financial statements.
Effective January 1, 1998, the company adopted Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income." This statement establishes
standards for reporting and the display of comprehensive income and its
components (revenues, expenses, gains and losses) in full for general purpose
financial statements. Financial statements for prior periods have been restated
as required.
7
<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 six months of 1998 and 1997 was $591,
496 and $671,392, respectively. This is a decrease of $79,896 or 11.90%.The
results of operations for the six month periods ended June 30, 1998 and 1997 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 six months of 1998
and 1997 was $2,546,407 and $2,595,108, respectively. This is a decrease of
$48,701 or 1.88%. Total other income increased $272,272 or 50.10% from $543,445
for the first six months of 1997 to $815,717 for the first six months of 1998.
Total other expenses increased $367,412 or 16.33% from $2,249,653 during the
first six months of 1997 to $2,617,065 during the first six months of 1998.
Earnings per common share outstanding (basic and diluted) was $0.42 and $0.48
for the six months ended June 30, 1998 and 1997, respectively. Annualized return
on average assets for the six month periods ended June 30, 1998 and 1997 was
0.87% and 1.06%, respectively. Annualized return on average equity for the six
month periods ended June 30, 1998 and 1997 was 7.75% and 9.31%, respectively.
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 for the six month periods ended June 30, 1998 and 1997 decreased
$29,167 from $166,667 in 1997 to $137,500 in 1998. The allowance for loan losses
increased $54,948 or 7.34% during the first six months of 1998 from $748,558 at
December 31, 1997 to $803,506 at June 30, 1998. The allowance as a percentage of
total loans increased from 0.92% at December 31, 1997 to 0.96% at June 30, 1998.
The Company had net charge-offs of $82,552 and $249,065 for the first six months
of 1998 and 1997, respectively. The ratio of net charge-offs to average loans
was 0.10% for the first six months of 1998 as compared to 0.29% for the first
six months of 1997.
The coverage of the allowance for loan losses over non-performing assets and
loans 90 days past due and still accruing interest has increased from 60.42% at
December 31, 1997 to 86.32% at June 30, 1998. Loans past due greater than 90
days and still accruing interest decreased from $615,410 at December 31, 1997 to
$529,015 at June 30, 1998.
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 June 30, 1998 was $1,275,068.
Most of these loans are well secured and management expects to incur only
immaterial losses on their disposition.
BALANCE SHEET
Total assets increased $8.8 million or 6.54% from $133.2 million at December 31,
1997 to $142.0 million at June 30, 1998. Securities increased $3.6 million or
9.64% during the first six months of 1998 from $37.4 million at December 31,
1997 to $41.0 million at June 30, 1998. Loans, net of unearned discounts
increased $2.6 million or 3.10% during the same period from $81.4 million at
December 31, 1997 to $84.0 million at June 31, 1998.
Total liabilities increased $8.2 million or 6.97% during the first six months of
1998 from $118.2 million at December 31, 1997 to $126.4 million at June 30,
1998. Total deposits increased $8.2 million or 7.05% during the same period from
$117.1 at December 31, 1997 to $125.3 million at June 30, 1998. Total
stockholders' equity increased $0.4 million or 3.17% during the first six months
of 1998 from $15.1 million at December 31, 1997 to $15.5 million at June 30,
1998.
STOCKHOLDERS' EQUITY
The Company continues to be a well capitalized financial institution.
Stockholders' equity per share increased $0.31 or 2.90% from $10.69 per share at
December 31, 1997 to $11.00 per share at June 30, 1998. During 1997 the Company
paid $0.32 per share in dividends. The Company's 1998 dividends have been $0.08
per quarter for a total dividend of $0.16 per share. 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 $32.4 million at June 30, 1998 and $28.6 million
at December 31, 1997. These represent 25.6% and 24.2% of total liabilities as of
June 30, 1998 and December 31, 1997, respectively.
8
<PAGE>
Item 3. Quantitative and Qualitative Disclosures about Market Risk
There have been no material changes in information reported as of
December 31, 1997 in Form 10-K.
9
<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
10
<PAGE>
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
The following exhibits, when applicable, are filed with this Form 10-Q or
incorporated by reference to previous filings.
Number Description
--------- -----------------------------------------
Exhibit 2. Not applicable.
Exhibit 3. (i) Articles of Incorporation of
Registrant (incorporated herein by
reference to Exhibit 3.1 of Registrant's
Form S-4 Registration Statement,
Registration No.
33-43681.)
(ii) Bylaws of Registrant (incorporated
herein by reference to 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).
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).
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).
10.4 Lease Agreement between Bank of Clarke
County (tenant) and Steven R. Koman
(landlord) dated December 2, 1997 for the
branch office at 40 West Piccadilly
Street, Winchester, Virginia
(incorporated herein by reference to
Exhibit 10.4 of the Company's Annual
Report on Form 10-K for the year ended
December 31, 1997).
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.
No reports on Form 8-K were filed by the registrant during the second
quarter of 1998.
11
<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: August 13, 1998 /s/ LEWIS M. EWING
--------------------------
Lewis M. Ewing
President and CEO
Date: August 13, 1998 /s/ JOHN R. MILLESON
--------------------------
John R. Milleson
Executive Vice President and
Secretary/Treasurer
Date: August 13, 1998 /s/ JAMES W. MCCARTY, JR.
--------------------------
James W. McCarty, Jr.
Vice President and CFO
12
<PAGE>
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