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 August 12,1999 was 1,422,200.
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
June 30, 1999 and December 31, 1998 ..................... 3
Consolidated Statements of Income for the Three
and Six Months Ended June 30, 1999 and 1998 ............. 4
Consolidated Statements of Shareholders' Equity for
the Six Months Ended June 30, 1999 and 1998 ............. 5
Consolidated Statements of Cash Flows for
the Six Months Ended June 30, 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 June 30, 1999 and December 31, 1998
Jun 30, 1999 Dec 31, 1998
--------------- ---------------
Assets
Cash and due from banks $ 5,232,577 $ 5,313,475
Federal funds sold 0 2,323,000
Securities (fair value: 1999,
$42,410,208; 1998, $43,239,752) 42,971,973 43,081,952
Loans, net of unearned discounts 107,417,424 95,933,498
Less allowance for loan losses (964,445) (925,171)
--------------- ---------------
Net loans $ 106,452,979 $ 95,008,327
Bank premises and equipment, net 3,994,614 4,117,903
Other real estate owned 0 0
Other assets 3,450,077 3,279,902
--------------- ---------------
Total assets $ 162,102,220 $ 153,124,559
=============== ===============
Liabilities and Shareholders' Equity
Liabilities
Deposits:
Noninterest bearing demand deposits $ 24,885,703 $ 21,289,370
Interest bearing demand deposits,
money market and savings accounts 53,970,708 50,933,486
Time deposits 56,220,566 57,987,032
--------------- ---------------
Total deposits $ 135,076,977 $ 130,209,888
Federal funds purchased and securities
sold under agreements to repurchase 4,397,274 695,915
Federal Home Loan Bank advances 5,000,000 5,000,000
Other liabilities 902,194 1,025,255
Commitments and contingent liabilities 0 0
--------------- ---------------
Total liabilities $ 145,376,445 $ 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 5,000,000 shares;
issued 1999, 1,422,201; issued
1998, 1,418,341 shares 3,555,502 3,545,853
Surplus 2,400,627 2,307,615
Retained Earnings 10,809,840 10,262,104
Accumulated other comprehensive income (40,194) 77,929
--------------- ---------------
Total shareholders' equity $ 16,725,775 $ 16,193,501
--------------- ---------------
Total liabilities and
shareholders' equity $ 162,102,220 $ 153,124,559
=============== ===============
3
Eagle Financial Services, Inc. and Subsidiary
Consolidated Statements of Income
For the Periods Ended June 30, 1999 and 1998
Three Months Ended Six Months Ended
June 30 June 30
1999 1998 1999 1998
--------------- --------------- --------------- ---------------
Interest Income
Interest and fees on loans $ 2,066,323 $ 1,749,956 $ 4,043,182 $ 3,490,131
Interest on federal funds sold 8,039 31,457 13,600 65,594
Interest on securities held to maturity:
Taxable interest income 281,310 522,278 566,685 992,123
Interest income exempt from
federal income taxes 109,767 47,179 206,579 86,461
Interest and dividends on securities
available for sale:
Taxable interest income 144,090 34,080 320,228 83,959
Interest income exempt from
federal income taxes 5,198 0 10,864 0
Dividends 27,875 16,573 50,028 32,698
Interest on deposits in banks 327 288 491 1,070
--------------- --------------- --------------- ---------------
Total interest income $ 2,642,929 $ 2,401,811 $ 5,211,657 $ 4,752,036
--------------- --------------- --------------- ---------------
Interest Expense
Interest on deposits $ 934,034 $ 1,051,399 $ 1,897,239 $ 2,066,296
Interest on federal funds purchased and
securities sold under agreements
to repurchase 41,060 1,655 57,021 1,833
Interest on Federal Home Loan
Bank advances 62,436 0 124,186 0
--------------- --------------- --------------- ---------------
Total interest expense $ 1,037,530 $ 1,053,054 $ 2,078,446 $ 2,068,129
--------------- --------------- --------------- ---------------
Net interest income $ 1,605,399 $ 1,348,757 $ 3,133,211 $ 2,683,907
Provision For Loan Losses 75,000 57,500 150,000 137,500
--------------- --------------- --------------- ---------------
Net interest income after
provision for loan losses $ 1,530,399 $ 1,291,257 $ 2,983,211 $ 2,546,407
--------------- --------------- --------------- ---------------
Other Income
Trust Department income $ 91,966 $ 84,296 $ 164,186 $ 176,360
Service charges on deposits 149,983 134,657 283,406 272,094
Other service charges and fees 260,252 106,524 416,059 166,289
Gain (loss) on equity investment 64 (221) (3,317) (1,510)
Other operating income 38,164 111,682 61,595 202,484
--------------- --------------- --------------- ---------------
$ 540,429 $ 436,938 921,929 815,717
--------------- --------------- --------------- ---------------
Other Expenses
Salaries and wages $ 666,320 $ 577,911 $ 1,309,917 $ 1,131,946
Pension and other employee benefits 136,087 143,045 200,512 290,287
Occupancy expenses 110,064 105,831 221,002 207,523
Equipment expenses 130,982 123,732 266,857 245,235
Stationary and supplies 52,418 56,058 101,024 107,201
Postage 32,735 35,237 69,371 65,748
Credit card expense 44,008 37,801 77,715 83,112
Bank franchise tax 25,692 24,000 50,256 48,000
ATM network fees 18,905 25,081 68,259 39,064
Other operating expenses 275,122 211,873 501,169 398,949
--------------- --------------- --------------- ---------------
$ 1,492,333 $ 1,340,569 $ 2,866,082 $ 2,617,065
--------------- --------------- --------------- ---------------
Income before income taxes $ 578,495 $ 387,626 $ 1,039,058 $ 745,059
Income Tax Expense 142,330 74,462 235,846 153,563
--------------- --------------- --------------- ---------------
Net Income $ 436,165 $ 313,164 $ 803,212 $ 591,496
=============== =============== =============== ===============
Net income per common share,
basic and diluted $ 0.31 $ 0.22 $ 0.57 $ 0.42
=============== =============== =============== ===============
4
Eagle Financial Services, Inc. and Subsidiary
Consolidated Statements of Shareholders' Equity
For the Six Months Ended June 30, 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 591,496 $ 591,496 591,496
Other comprehensive income:
Unrealized gain on
securities available for
sale, net of deferred
income taxes of $9,823 19,069 19,069 19,069
------------
Total comprehensive income $ 610,565
============
Issuance of common stock, dividend
investment plan (3,836 shares) 9,591 83,319 92,910
Dividends declared ($0.16 per share) (225,514) (225,514)
Fractional shares purchased (5) (50) (55)
------------ ------------ ------------ ------------ --------------
Balance, June 30, 1998 $ 3,530,799 $ 2,191,095 $ 9,785,248 $ 28,879 $ 15,536,021
============ ============ ============ ============ ==============
Balance, December 31, 1998 $ 3,545,853 $ 2,307,615 $10,262,104 $ 77,929 $16,193,501
Comprehensive income:
Net income 803,212 $ 803,212 803,212
Other comprehensive income:
Unrealized (loss) on
securities available for
sale, net of deferred
income taxes of $60,851 (118,123) (118,123) (118,123)
------------
Total comprehensive income $ 685,089
============
Issuance of common stock, dividend
investment plan (3,864 shares) 9,659 93,113 102,772
Dividends declared ($0.18 per share) (255,476) (255,476)
Fractional shares purchased (10) (101) (111)
------------ ------------ ------------ ----------- ------------
Balance, June 30, 1999 $ 3,555,502 $ 2,400,627 $10,809,840 $ (40,194) $16,725,775
============ ============ ============ =========== ============
5
Eagle Financial Services, Inc. and Subsidiary
Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 1999 and 1998
1999 1998
------------- -------------
Cash Flows from Operating Activities
Net income $ 803,212 $ 591,496
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 221,043 189,005
Amortization of intangible assets 27,715 25,408
Loss on equity investment 3,317 1,510
Provision for loan losses 150,000 137,500
Premium amortization (discount accretion)
on securities, net 33,233 (613)
Changes in assets and liabilities:
(Increase) in other assets (226,090) (9)
(Decrease) in other liabilities (62,210) (24,480)
------------- -------------
Net cash provided by operating activities $ 950,220 $ 919,817
------------- -------------
Cash Flows from Investing Activities
Proceeds from maturities and principal
payments on securities held to maturity $ 6,014,178 $ 11,054,209
Proceeds from maturities and principal
payments on securities available for sale 3,396,284 1,565,000
Purchases of securities held to maturity (8,453,579) (15,840,486)
Purchases of securities available for sale (1,059,111) (356,802)
Purchases of bank premises and equipment (72,871) (249,450)
Net (increase) decrease in loans (11,594,652) (2,624,822)
------------- -------------
Net cash (used in) investing activities $(11,769,751) $ (6,452,351)
------------- -------------
Cash Flows from Financing Activities
Net increase in demand deposits,
money market and savings accounts $ 6,633,555 $ 3,569,928
Net increase (decrease) in certificates
of deposits (1,766,466) 4,684,238
Net increase in federal funds purchased and
securities sold under agreements to repurchase 3,701,359 0
Cash dividends paid (152,704) (132,604)
Fractional shares purchased (111) (55)
------------- -------------
Net cash provided by financing activities $ 8,415,633 $ 8,121,507
------------- -------------
Increase (decrease) in cash and
cash equivalents $ (2,403,898) $ 2,588,973
Cash and Cash Equivalents
Beginning 7,636,475 7,542,309
------------- -------------
Ending $ 5,232,577 $ 10,131,282
============= =============
Supplemental Disclosures of Cash Flow Information
Cash payments for:
Interest $ 2,111,280 $ 2,170,720
============= =============
Income taxes $ 234,038 $ 29,172
============= =============
Supplemental Schedule of Non-Cash Investing and
Financing Activities:
Issuance of common stock,
dividend investment plan $ 102,772 $ 92,910
============= =============
Unrealized gain (loss) on securities
available for sale $ (178,974) $ 28,892
============= =============
Other real estate acquired in
Settlement of loans $ 0 $ 16,495
============= =============
6
EAGLE FINANCIAL SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 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 June
30, 1999 and December 31, 1998, and the results of operations and cash
flows for the three months and six months ended June 30 , 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 and six month periods ended
June 30, 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 June 30, 1999
and December 31, 1998, are:
Jun 30, 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 3,511,456 6,490,582
Mortgage-backed securities 10,781,518 10,609,645
Obligations of states and political
subdivisions 16,662,524 11,445,246
-------------- --------------
$ 31,077,480 $ 28,667,454
============== ==============
Jun 30, 1999 Dec 31, 1998
Fair Value Fair Value
-------------- --------------
U.S. Treasury securities $ 126,957 $ 132,256
Obligations of U.S. government
corporations and agencies 3,482,875 6,577,962
Mortgage-backed securities 10,546,099 10,588,410
Obligations of states and political
subdivisions 16,359,784 11,526,626
-------------- --------------
$ 30,515,715 $ 28,825,254
============== ==============
Jun 30, 1999 Dec 31, 1998
Available for Sale Amortized Cost Amortized Cost
- ------------------ -------------- --------------
Obligations of U.S. government
corporations and agencies $ 4,153,775 $ 5,150,116
Mortgage-backed securities 5,668,793 7,421,338
Obligations of states and political
Subdivisions 497,385 497,157
Other 1,635,439 1,227,812
-------------- --------------
$ 11,955,392 $ 14,296,423
============== ==============
Jun 30, 1999 Dec 31, 1998
Fair Value Fair Value
-------------- --------------
Obligations of U.S. government
corporations and agencies $ 4,161,514 $ 5,226,059
Mortgage-backed securities 5,570,054 7,438,446
Obligations of states and political
Subdivisions 472,536 498,268
Other 1,690,389 1,251,725
-------------- --------------
$ 11,894,493 $ 14,414,498
============== ==============
(5) Net loans at June 30, 1999 and December 31, 1998 are summarized as
follows (In Thousands):
Jun 30, 1999 Dec 31, 1998
--------------- ---------------
Loans secured by real estate:
Construction and land development $ 2,502 $ 2,168
Secured by farmland 6,629 3,565
Secured by 1-4 family residential 55,440 51,444
Nonfarm, nonresidential loans 18,840 16,902
Loans to finance agricultural production 535 745
Commercial and industrial loans 8,797 6,463
Loans to individuals 13,607 13,603
Loans to U.S. state and political
subdivisions 1,031 1,093
All other loans 107 100
--------------- ---------------
Gross loans $ 107,488 $ 96,083
Less:
Unearned income (71) (150)
Allowance for loan losses (964) (925)
--------------- ---------------
Loans, net $ 106,453 $ 95,008
=============== ===============
(6) Allowance for Loan Losses
Jun 30, 1999 Jun 30, 1998 Dec 31, 1998
-------------- -------------- --------------
Balance, beginning $ 925,171 $ 748,558 $ 748,558
Provision charged to operating expense 150,000 137,500 371,886
Recoveries added to the allowance 45,052 68,352 98,208
Loan losses charged to the allowance (155,778) (150,904) (293,481)
-------------- -------------- --------------
Balance, ending $ 964,445 $ 803,506 $ 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 six months of 1999 and 1998 was $803,
212 and $591,496, respectively. This is an increase of $211,716 or 35.79%. Net
interest income after provision for loan losses for the first six months of 1999
and 1998 was $2,983,211 and $2,546,407, respectively. This is an increase of
$436,804 or 17.15%. Total other income increased $106,212 or 13.02% from
$815,717 for the first six months of 1998 to $921,929 for the first six months
of 1999. Total other expenses increased $249,017 or 9.52% from $2,617,065 during
the first six months of 1998 to $2,866,082 during the first six months of 1999.
Earnings per common share outstanding (basic and diluted) was $0.57 and $0.42
for the six months ended June 30, 1999 and 1998, respectively. Annualized return
on average assets for the six month periods ended June 30, 1999 and 1998 was
1.05% and 0.87%, respectively. Annualized return on average equity for the six
month periods ended June 30, 1999 and 1998 was 9.79% and 7.75%, 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, 1999 and 1998 increased
$12,500 from $137,500 in 1998 to $150,000 in 1999. The allowance for loan losses
increased $39,274 or 4.25% during the first six months of 1999 from $925,171 at
December 31, 1998 to $964,445 at June 30, 1999. The allowance as a percentage of
total loans decreased from 0.96% as of December 31, 1998 to 0.90% as of June 30,
1999. The Company had net charge-offs of $110,726 and $82,552 for the first six
months of 1999 and 1998, respectively. The ratio of net charge-offs to average
loans increased from 0.10% for the first six months of 1998 to 0.11% for the
first six 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 increased from 154.36% at
December 31, 1998 to 257.25% at June 30, 1999. Loans past due greater than 90
days and still accruing interest decreased from $372,101 at December 31, 1998 to
$235,919 at June 30, 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 June 30, 1999 was $823,263.
Most of these loans are well secured and management expects to incur only
immaterial losses on their disposition.
BALANCE SHEET
Total assets increased $9.0 million or 5.86% from $153.1 million at December 31,
1998 to $162.1 million at June 30, 1999. Securities decreased $0.1 million or
0.26% during the first six months of 1999 from $43.1 million at December 31,
1998 to $43.0 million at June 30, 1999. Loans, net of unearned discounts
increased $11.5 million or 11.97% during the same period from $95.9 million at
December 31, 1998 to $107.4 million at June 30, 1999.
Total liabilities increased $8.5 million or 6.17% during the first six months of
1999 from $136.9 million at December 31, 1998 to $145.4 million at June 30,
1999. Total deposits increased $4.9 million or 3.74% during the same period from
$130.2 at December 31, 1998 to $135.1 million at June 30, 1999. Total
shareholders' equity increased $0.5 million or 3.29% during the first six months
of 1999 from $16.2 million at December 31, 1998 to $16.7 million at June 30,
1999.
SHAREHOLDERS' EQUITY
The Company continues to be a well capitalized financial institution.
Shareholders' equity per share increased $0.34 or 2.98% from $11.42 per share at
December 31, 1998 to $11.76 per share at June 30, 1999. During 1998 the Company
paid $0.33 per share in dividends. The Company's 1999 total dividends for the
first two quarters was $0.18 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 $40.1 million at June 30, 1999 and $44.3 million
at December 31, 1998. These represent 27.60% and 32.38% of total liabilities as
of June 30, 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 has completed testing of its systems and has renovated areas with Year
2000 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, were installed on a stand-alone test computer and
tested using future critical dates. During March 1999 the company's ATM machines
were evaluated for Year 2000 readiness. The Bank's maintenance vendor upgraded
parts and software to ensure these machines are Year 2000 ready.
The overall cost of preparing for the Year 2000 has not had 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 also incurred hardware and
software costs to upgrade ATM's to be Year 2000 ready. The Bank utilized
existing personnel to perform testing and document Year 2000 efforts, therefore,
no outside consulting fees were 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 secure 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. Computation of Per Share Earnings
(incorporated herein as Exhibit 11).
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.
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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, 1999 /s/ JOHN R. MILLESON
--------------------------
John R. Milleson
President, Chief Executive
Officer, and Treasurer
Date: August 13, 1999 /s/ JAMES W. MCCARTY, JR.
--------------------------
James W. McCarty, Jr.
Vice President, Chief Financial
Officer, and Secretary
12