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 March 31, 1999 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 May 12, 1999 was 1,420,287. 1 EAGLE FINANCIAL SERVICES, INC. INDEX TO FORM 10-Q PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) .......................... 3 Consolidated Balance Sheets as of March 31, 1999 and December 31, 1998 .................. 3 Consolidated Statements of Income for the Three Months Ended March 31, 1999 and 1998 .................. 4 Consolidated Statements of Shareholders' for the Three Months Ended March 31, 1999 and 1998 .... 5 Consolidated Statements of Cash Flows for the Three Months Ended March 31, 1999 and 1998 ............ 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 PART I. FINANCIAL INFORMATION Item 1. Financial Statements Eagle Financial Services, Inc. and Subsidiary Consolidated Balance Sheets As of March 31, 1999 and December 31, 1998 Mar 31, 1999 Dec 31, 1998 --------------- --------------- Assets Cash and due from banks $ 5,067,075 $ 5,313,475 Federal funds sold 849,000 2,323,000 Securities held to maturity (fair value: 1999, $39,147,183; 1998, $43,239,752) 39,079,445 43,081,952 Loans, net of unearned discounts 99,156,328 95,933,498 Less allowance for loan losses (980,811) (925,171) --------------- --------------- Net loans $ 98,175,517 $ 95,008,327 Bank premises and equipment, net 4,049,851 4,117,903 Other assets 3,263,504 3,279,902 --------------- --------------- Total assets $ 150,484,392 $ 153,124,559 =============== =============== Liabilities and Shareholders' Equity Liabilities Deposits: Noninterest bearing demand deposits $ 21,345,550 $ 21,289,370 Interest bearing demand deposits, money market, and savings accounts 52,554,144 50,933,486 Time deposits 53,150,595 57,987,032 --------------- --------------- Total deposits $ 127,050,289 $ 130,209,888 Federal funds purchased and securities sold under agreements to repurchase 1,057,640 695,915 Federal Home Loan Bank advances 5,000,000 5,000,000 Other liabilities 957,237 1,025,255 Commitments and contingent liabilities 0 0 --------------- --------------- Total liabilities $ 134,065,166 $ 136,931,058 -------------- --------------- Shareholders' 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 1999, 1,420,287; issued 1998, 1,418,341 shares 3,550,717 3,545,853 Surplus 2,354,499 2,307,615 Retained Earnings 10,501,501 10,262,104 Accumulated other comprehensive income 12,509 77,929 --------------- --------------- Total shareholders' equity $ 16,419,226 $ 16,193,501 --------------- --------------- Total liabilities and shareholders' equity $ 150,484,392 $ 153,124,559 =============== =============== 3 Eagle Financial Services, Inc. and Subsidiary Consolidated Statements of Income For the Periods Ended March 31, 1999 and 1998 Three Months Ended March 31 1999 1998 --------------- --------------- Interest Income Interest and fees on loans $ 1,976,859 $ 1,740,175 Interest on federal funds sold 5,561 34,137 Interest on securities held to maturity: Taxable interest income 285,375 469,845 Interest income exempt from federal income taxes 96,812 39,282 Interest and dividends on securities available for sale: Taxable interest income 176,138 49,879 Interest income exempt from federal income taxes 5,666 0 Dividends 22,153 16,125 Interest on deposits in banks 164 782 --------------- --------------- Total interest income $ 2,568,728 $ 2,350,225 --------------- --------------- Interest Expense Interest on deposits $ 963,205 $ 1,014,897 Interest on federal funds purchased and securities sold under agreements to repurchase 15,961 178 Interest on Federal Home Loan Bank advances 61,750 0 --------------- --------------- Total interest expense $ 1,040,916 $ 1,015,075 --------------- --------------- Net interest income $ 1,527,812 $ 1,335,150 Provision For Loan Losses 75,000 80,000 --------------- --------------- Net interest income after provision for loan losses $ 1,452,812 $ 1,255,150 --------------- --------------- Other Income Trust Department income $ 72,220 $ 92,064 Service charges on deposits 133,423 137,437 Other service charges and fees 72,922 59,765 Gain (loss) on equity investment (3,381) (1,289) Other operating income 106,316 90,802 --------------- --------------- $ 381,500 $ 378,779 --------------- --------------- Other Expenses Salaries and wages $ 643,597 $ 554,035 Pension and other employee benefits 64,425 147,242 Occupancy expenses 110,938 101,692 Equipment expenses 135,875 121,503 Stationary and supplies 48,606 51,143 Postage 36,636 30,511 Credit card expense 33,707 45,311 Bank franchise tax 24,564 24,000 ATM network fees 49,354 13,983 Other operating expenses 226,047 187,076 --------------- --------------- $ 1,373,749 $ 1,276,496 --------------- --------------- Income before income taxes $ 460,563 $ 357,433 Income Tax Expense 93,516 79,101 --------------- --------------- Net Income $ 367,047 $ 278,332 =============== =============== Net income per common share, basic and diluted $ 0.26 $ 0.20 =============== =============== 4 Eagle Financial Services, Inc. and Subsidiary Consolidated Statements of Shareholders' Equity For the Three Months Ended March 31, 1999 and 1998 Accumulated Other Common Retained Comprehensive Comprehensive Stock Surplus Earnings Income (Loss) Income Total ------------ ------------ ------------ ------------ ------------ -------------- Balance, December 31, 1997 $ 3,521,213 $ 2,107,826 $ 9,419,266 $ 9,810 $ 15,058,115 Comprehensive income: Net income 278,332 $ 278,332 278,332 Other comprehensive income: Unrealized gain on securities available for sale, net of deferred income taxes of $7,354 14,275 14,275 14,275 ------------ Total comprehensive income $ 292,607 ============ Issuance of common stock, dividend investment plan (1,947 shares) 4,869 41,383 46,252 Dividends declared ($0.08 per share) (112,679) (112,679) Fractional shares purchased (3) (22) (25) ------------ ------------ ------------ ------------ -------------- Balance, March 31, 1998 $ 3,526,079 $ 2,149,187 $ 9,584,919 $ 24,085 $ 15,284,270 ============ ============ ============ ============ ============== Balance, December 31, 1998 $ 3,545,853 $ 2,307,615 $10,262,104 $ 77,929 0 $16,193,501 Comprehensive income: Net income 367,047 $ 367,047 367,047 Other comprehensive income: Unrealized gain (loss) on securities available for sale, net of deferred income taxes of $33,701 (65,420) (65,420) (65,420) ------------ Total comprehensive income $ 301,627 ============ Issuance of common stock, dividend investment plan (1,948 shares) 4,869 46,935 51,804 Dividends declared ($0.09 per share) (127,650) (127,650) Fractional shares purchased (5) (51) (56) ------------ ------------ ------------ ----------- ------------ Balance, March 31, 1999 $ 3,550,717 $ 2,354,499 $10,501,501 $ 12,509 $16,419,226 ============ ============ ============ =========== ============ 5 Eagle Financial Services, Inc. and Subsidiary Consolidated Statements of Cash Flows For the Three Months Ended March 31, 1999 and 1998 1999 1998 ------------- ------------- Cash Flows from Operating Activities Net income $ 367,047 $ 278,332 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 109,159 90,883 Amortization of intangible assets 13,281 12,705 Loss on equity investment 3,381 1,289 Provision for loan losses 75,000 80,000 Premium amortization on securities, net 7,453 14,602 (Increase) decrease in other assets (12,006) 74,803 (Decrease) in other liabilities (34,317) (50,077) ------------- ------------- Net cash provided by operating activities $ 528,998 $ 502,537 ------------- ------------- Cash Flows from Investing Activities Proceeds from maturities and principal payments on securities held to maturity $ 4,023,168 $ 3,611,912 Proceeds from maturities and principal payments on securities available for sale 2,249,845 750,000 Purchases of securities held to maturity (1,819,500) (7,633,475) Purchases of securities available for sale (557,580) (267,500) Purchases of bank premises and equipment (29,365) (163,553) Net (increase) decrease in loans (3,242,190) 1,071,411 ------------- ------------- Net cash provided by (used in) investing activities $ 624,378 $ (2,631,205) ------------- ------------- Cash Flows from Financing Activities Net increase in demand deposits, money market, and savings accounts $ 1,676,838 $ 1,101,502 Net increase (decrease) in certificates of deposits (4,836,437) 3,029,545 Net increase in federal funds purchased and securities sold under agreements to repurchase 361,725 0 Cash dividends paid (75,846) (66,427) Fractional shares purchased (56) (25) ------------- ------------- Net cash provided by (used in) financing activities $ (2,873,776) $ 4,064,595 ------------- ------------- Increase (decrease) in cash and cash equivalents $ (1,720,400) $ 1,935,927 Cash and Cash Equivalents Beginning 7,636,475 7,542,309 ------------- ------------- Ending $ 5,916,075 $ 9,478,236 ============= ============= Supplemental Disclosures of Cash Flow Information Cash payments for: Interest $ 1,084,585 $ 1,086,563 ============= ============= Income taxes $ 0 $ 0 ============= ============= Supplemental Schedule of Non-Cash Investing and Financing Activities: Issuance of common stock, dividend investment plan $ 51,804 $ 46,252 ============= ============= Unrealized gain (loss) on securities available for sale $ (99,121) $ 21,629 ============= ============= 6 EAGLE FINANCIAL SERVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 1999 (1) The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principals from 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 March 31, 1999 and December 31, 1998, and the results of operations and cash flows for the three months ended March 31, 1999 and 1998. 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, 1998. (3) The results of operations for the three month periods ended March 31, 1999 and 1998, 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 March 31, 1999 and December 31, 1998, are: Mar 31, 1999 Dec 31, 1998 Held to Maturity Amortized Cost Amortized Cost - ---------------- -------------- -------------- U.S. Treasury securities $ 121,982 $ 121,981 Obligations of U.S. government corporations and agencies 4,012,359 6,490,582 Mortgage-backed securities 9,563,364 10,609,645 Obligations of states and political subdivisions 12,759,512 11,445,246 -------------- -------------- $ 26,457,217 $ 28,667,454 ============== ============== Mar 31, 1999 Dec 31, 1998 Fair Value Fair Value -------------- -------------- U.S. Treasury securities 129,551 132,256 Obligations of U.S. government corporations and agencies 4,043,430 6,577,962 Mortgage-backed securities 9,553,073 10,588,410 Obligations of states and political subdivisions 12,798,901 11,526,626 -------------- -------------- $ 26,524,955 $ 28,825,254 ============== ============== Mar 31, 1999 Dec 31, 1998 Available for Sale Amortized Cost Amortized Cost - ------------------ -------------- -------------- Obligations of U.S. government corporations and agencies $ 4,152,526 $ 5,150,116 Mortgage-backed securities 6,308,087 7,421,338 Obligations of states and political Subdivisions 497,271 497,157 Other 1,645,392 1,227,812 -------------- -------------- $ 12,603,276 $ 14,296,423 ============== ============== Mar 31, 1999 Dec 31, 1998 Fair Value Fair Value -------------- -------------- Obligations of U.S. government corporations and agencies $ 4,198,649 $ 5,226,059 Mortgage-backed securities 6,310,144 7,438,446 Obligations of states and political Subdivisions 496,168 498,268 Other 1,617,267 1,251,725 -------------- -------------- $ 12,622,228 $ 14,414,498 ============== ============== (5) Net loans at March 31, 1999 and December 31, 1998 are summarized as follows (In Thousands): Mar 31, 1999 Dec 31, 1998 -------------- -------------- Loans secured by real estate: Construction and land development $ 2,619 $ 2,168 Secured by farmland 5,589 3,565 Secured by 1-4 family residential 51,966 51,444 Nonfarm, nonresidential loans 16,867 16,902 Loans to finance agricultural production 553 745 Commercial and industrial loans 7,402 6,463 Loans to individuals 13,069 13,603 Loans to U.S. state and political subdivisions 1,072 1,093 All other loans 126 100 -------------- -------------- Gross loans $ 99,263 $ 96,083 Less: Unearned income (106) (150) Allowance for loan losses (981) (925) -------------- -------------- Loans, net $ 98,176 $ 95,008 ============== ============== (6) Allowance for Loan Losses Mar 31, 1999 Dec 31, 1998 -------------- -------------- Balance, beginning $ 925,171 $ 748,558 Provision charged to operating expense 75,000 371,886 Recoveries added to the allowance 11,197 98,208 Loan losses charged to the allowance (30,557) (293,481) --------------- --------------- Balance, ending $ 980,811 $ 925,171 =============== =============== (7) New Accounting Pronouncements There are no new accounting pronouncements to disclose within this Form 10-Q. 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations PERFORMANCE SUMMARY Net income of the company for the first three months of 1999 and 1998 was $367, 047 and $278,332, respectively. This is an increase of $88,715 or 31.87%. Net interest income after provision for loan losses for the first three months of 1999 and 1998 was $1,452,812 and $1,255,150, respectively. This is an increase of $197,662 or 15.75%. Total other income increased $2,721 or 0.72% from $378,779 for the first three months of 1998 to $381,500 for the first three months of 1999. Total other expenses increased $97,253 or 7.62% from $1,276,496 during the first three months of 1998 to $1,373,749 during the first three months of 1999. Earnings per common share outstanding (basic and diluted) was $0.26 and $0.20 for the three months ended March 31, 1999 and 1998, respectively. Annualized return on average assets for the three month periods ended March 31, 1999 and 1998 was 0.97% and 0.84%, respectively. Annualized return on average equity for the three month periods ended March 31, 1999 and 1998 was 9.06% and 7.35%, 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 three month periods ended March 31, 1999 and 1998 decreased $5,000 from $80,000 in 1998 to $75,000 in 1999. The allowance for loan losses increased $55,640 or 6.01% during the first three months of 1999 from $925,171 at December 31, 1998 to $980,811 at March 31, 1999. The allowance as a percentage of total loans increased from 0.96% as of December 31, 1998 to 0.99% as of March 31, 1999. The Company had net charge-offs of $19,360 and $35,308 for the first three months of 1999 and 1998, respectively. The ratio of net charge-offs to average loans decreased from 0.04% for the first three months of 1998 to 0.02% for the first three months of 1999. The coverage of the allowance for loan losses over non-performing assets and loans 90 days past due and still accruing interest decreased from 154.36% at December 31, 1998 to 76.83% at March 31, 1999. Loans past due greater than 90 days and still accruing interest increased from $372,101 at December 31, 1998 to $905,731 at March 31, 1999. 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 March 31, 1999 was $1,238,548. Most of these loans are well secured and management expects to incur only immaterial losses on their disposition. BALANCE SHEET Total assets decreased $2.6 million or 1.72% from $153.1 million at December 31, 1998 to $150.5 million at March 31, 1999. Securities decreased $4.0 million or 9.29% during the first three months of 1999 from $43.1 million at December 31, 1998 to $39.1 million at March 31, 1999. Loans, net of unearned discounts increased $3.3 million or 3.36% during the same period from $95.9 million at December 31, 1998 to $99.2 million at March 31, 1999. Total liabilities decreased $2.9 million or 2.09% during the first three months of 1999 from $136.9 million at December 31, 1998 to $127.1 million at March 31, 1999. Total deposits decreased $3.2 million or 2.43% during the same period from $130.2 at December 31, 1998 to $127.1 million at March 31, 1999. Total shareholders' equity increased $0.2 million or 1.39% during the first three months of 1999 from $16.2 million at December 31, 1998 to $16.4 million at March 31, 1999. SHAREHOLDERS' EQUITY The Company continues to be a well capitalized financial institution. Shareholders' equity per share increased $0.14 or 1.23% from $11.42 per share at December 31, 1998 to $11.56 per share at March 31, 1999. During 1998 the Company paid $0.33 per share in dividends. The Company's 1999 first quarter dividend was $0.09 per share. The Company has a Dividend Investment Plan that reinvests the dividends of participating shareholders in Company stock. LIQUIDITY AND MARKET RISK 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 $36.0 million at March 31, 1999 and $44.3 million at December 31, 1998. These represent 26.88% and 32.38% of total liabilities as of March 31, 1999 and December 31, 1998, respectively. There have been no material changes in Quantitative and Qualitative Disclosures about Market Risk as reported at December 31, 1998 in the Company's Form 10-K. YEAR 2000 During 1997 the Company's subsidiary (the Bank) began to assess the effect of the Year 2000 on its systems, vendors, and customers. In January 1998, the Bank's Board of Directors approved a Year 2000 Compliance Plan which identifies particular steps necessary to achieve Year 2000 readiness and a timeline for accomplishing these steps. The plan also named the Bank's Year 2000 committee which includes members of senior management, operations, and data processing. The Bank is now well into testing its systems and renovating areas with known deficiencies. The overall test objective of the Bank is to utilize proxy testing of systems rather than attempting to simulate future date periods using production equipment. During October 1998 an employee of the Bank was sent to the site of our core processing vendor to participate in regional user group testing for the software. Actual data from a bank was used to test the critical dates identified by the Federal Financial Institutions Examination Council (F.F.I.E.C.). A representative from the Bank returned to the vendor's site during February 1999 to complete testing of the auxiliary products of the software which the Bank uses. Proxy testing was also utilized to test the software used for the Bank's Trust Department. Other softwares, which operate in a microcomputer environment, will be installed on a stand-alone test computer and tested using future critical dates. During March 1999 the company had its ATM machines evaluated for Year 2000 readiness. The Bank's maintenance vendor will be able to upgrade parts and software to ensure these machines will be Year 2000 ready. The overall cost of preparing for the Year 2000 is not expected to have a material effect on the Company's consolidated financial statements. The Bank has incurred nominal fees for participating in proxy testing which cover the cost of using the vendor's equipment, supplies, and personnel. The Bank will incur hardware and software costs to upgrade ATM's to be Year 2000 ready. The Bank is utilizing existing personnel to perform testing and document Year 2000 efforts, therefore, no outside consulting fees will be incurred in achieving Year 2000 readiness. Although the Company has no reason to conclude that a failure will occur, the most likely worst-case Year 2000 scenario would entail a disruption or failure of the Company's power supplier's or voice and data transmission supplier's capability to provide power or data transmission services to a computer system or facility. If such a failure were to occur, the Company would implement its contingency plan. While it is impossible to quantify the impact of such a scenario, the most reasonably likely worst-case scenario would entail diminishment of service levels, some customer inconvenience and additional costs associated with implementing the contingency plan. Although the Bank is confident that its efforts will result in a seamless transition into the Year 2000, a contingency plan has been prepared which addresses carrying on normal operations despite any Year 2000 problems which may be encountered. Through a careful plan for processing at the end of the year, all of the Bank's data and system files will be protected by performing Year 2000 back-up procedures, in addition to normal back-up procedures, onto magnetic tapes which will be stored in a designated area. All year-end reports will be printed for access to account and customer information in the event that the systems are unable to operate due to a program or utility company problem which hinders normal processing procedures. 8 Item 3. Quantitative and Qualitative Disclosures about Market Risk The information required by Part I, Item 3., is incorporated herein by reference to the section titled LIQUIDITY AND MARKET RISK within Part I, Item 2 "Management's Discussion and Analysis of Financial Condition and Results of Operation." 9 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. During the Annual Meeting of Shareholders of Eagle Financial Services, Inc. on April 21, 1999, the shareholders voted upon and approved a proposed amendment to the Corporation's Articles of Incorporation to increase the authorized Common Stock from 1,500,000 to 5,000,000 shares. In order to be adopted, this amendment required approval by the holders of more than two-thirds of the shares of Common Stock present or represented by properly executed and delivered proxies at the Annual Meeting. Of the 1,420,288 shares outstanding, 1,058,998 shares were present on represented by properly executed and delivered proxies at the Annual Meeting. Of the 1,058,998 shares represented, 998,457 shares voted for the amendment, 46,996 shares voted against the amendment, and 13,545 shares abstained from voting. Item 5. Other Information. None 10 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 first quarter of 1999. 11 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: May 14, 1999 /s/ LEWIS M. EWING -------------------------- Lewis M. Ewing President and CEO Date: May 14, 1999 /s/ JOHN R. MILLESON -------------------------- John R. Milleson Executive Vice President and Secretary/Treasurer Date: May 14, 1999 /s/ JAMES W. MCCARTY, JR. -------------------------- James W. McCarty, Jr. Vice President and CFO 12