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