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 September 30, 1997 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) Registrant's telephone number, including area code: 540-955-2510 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 -------------- ------------- Indicate the number of shares outstanding of each of the Registrant's classes of common stock as of the latest practicable date: Class Common Stock Number of shares 1,406,454 Outstanding at November 11, 1997 ($2.50 par value)
EAGLE FINANCIAL SERVICES, INC. INDEX TO FORM 10-Q Part I. Financial Information Item 1. Financial Statements (Unaudited) ....................... 3 Consolidated Balance Sheets as of September 30, 1997 and December 31, 1996 .......... 3 Consolidated Statements of Income for the Three and Nine Months Ended September 30, 1997 and 1996 ... 4 Consolidated Statement of Changes in Stockholder's Equity for the Nine Months Ended September 30, 1997 and 1996 ........... 6 Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 1997 and 1996 ...... 7 Notes to Consolidated Financial Statements ....... 9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations .... 12 Part II. Other Information Item 6. Exhibits and reports on Form 8-K ...................... 14 Signatures ........................................................ 15 Exhibit 27 - Financial Data Schedule .............................. 16 PART I. FINANCIAL INFORMATION Item 1. Financial Statements <TABLE> Eagle Financial Services, Inc. and Subsidiary Consolidated Balance Sheets As of September 30, 1997 and December 31, 1996 <CAPTION> September 30, 1997 December 31, 1996 ------------- ------------- <S> <C> Assets Cash and due from banks $ 5,120,846 $ 4,409,250 Securities held to maturity (fair value: 1997, $30,280,660; 1996, $24,042,342) 30,346,316 24,345,102 Securities available for sale, at fair value 4,252,581 1,744,472 Federal funds sold 2,049,000 1,553,000 Loans, net of unearned discounts 81,928,399 87,870,194 Less allowance for loan losses (788,094) (913,955) ------------- ------------- Net loans 81,140,305 86,956,239 Bank premises and equipment, net 4,118,743 4,251,675 Other real estate owned 72,492 46,605 Intangible assets 615,653 653,624 Other assets 2,866,213 2,281,774 ------------- ------------- Total assets $ 130,582,149 $ 126,241,741 ============= ============= Liabilities and Stockholders' Equity Liabilities Deposits: Noninterest bearing $ 16,931,065 $ 15,175,041 Interest bearing 97,705,944 95,912,826 ------------- ------------- Total deposits $ 114,637,009 $ 111,087,867 Federal funds purchased 0 0 Other liabilities 1,027,480 957,018 ------------- ------------- Total liabilities $ 115,664,489 $ 112,044,885 ------------- ------------- Stockholders' Equity Preferred Stock, $10 par value; authorized 500,000 shares; no shares outstanding $ 0 $ 0 Common Stock, $2.50 par value; authorized 1,500,000 shares; issued 1997, 1,406,454; issued 1996, 1,399,885 shares 3,516,136 3,499,714 Surplus 2,066,599 1,945,891 Retained Earnings 9,328,849 8,756,281 Unrealized loss on securities available for sale, net 6,076 (5,030) ------------- ------------- Total stockholders' equity $ 14,917,660 $ 14,196,856 ------------- ------------- Total liabilities and stockholders' equity $ 130,582,149 $ 126,241,741 ============= ============= </TABLE> - 3 -
<TABLE> Eagle Financial Services, Inc. and Subsidiary Consolidated Statements of Income For the Periods Ended September 30, 1997 and 1996 <CAPTION> Three Months Ended September 30, 1997 1996 ------------- ------------- <S> <C> Interest Income Interest and fees on loans $ 1,792,685 $ 1,925,600 Interest on securities held to maturity: Taxable interest income 418,674 340,284 Interest income exempt from federal income taxes 34,888 38,237 Interest and dividends on securities available for sale, taxable 65,989 28,090 Interest on federal funds sold 10,776 20,741 Interest on deposits in banks 452 278 ----------- ----------- Total interest income $ 2,323,464 $ 2,353,230 ----------- ----------- Interest Expense Interest on deposits $ 999,933 $ 987,229 Interest on federal funds purchased 1,516 70 ----------- ----------- Total interest expense $ 1,001,449 $ 987,299 ----------- ----------- Net interest income $ 1,322,015 $ 1,365,931 Provision For Loan Losses 140,000 65,000 ----------- ----------- Net interest income after provision for loan losses $ 1,182,015 $ 1,300,931 ----------- ----------- Other Income Trust Department income $ 56,906 $ 42,900 Service charges on deposits 131,918 119,033 Other service charges and fees 142,932 71,463 Gain (loss) on equity investment (2,362) (792) Other operating income 1,911 51,926 ----------- ----------- $ 331,305 $ 284,530 ----------- ----------- Other Expenses Salaries and wages $ 505,072 $ 452,964 Pension and other employee benefits 127,325 132,702 Occupancy expenses 83,241 77,368 Equipment expenses 117,608 141,407 FDIC assessment 0 500 Stationary and supplies 44,850 19,036 Postage 28,240 28,288 Credit card expense 24,936 24,479 Bank franchise tax 24,726 22,954 ATM network fees 39,637 30,248 Intangible amortization 12,704 21,732 Other operating expenses 208,949 143,194 ----------- ----------- $ 1,217,288 $ 1,094,872 ----------- ----------- Income before income taxes $ 296,032 $ 490,589 Income Tax Expense 58,344 138,780 ----------- ----------- Net Income $ 237,688 $ 351,809 =========== =========== Earnings Per Share $ 0.17 $ 0.25 =========== =========== </TABLE> - 4 -
<TABLE> Eagle Financial Services, Inc. and Subsidiary Consolidated Statements of Income For the Periods Ended September 30, 1997 and 1996 <CAPTION> Nine Months Ended September 30, 1997 1996 ------------- ------------- <S> <C> Interest Income Interest and fees on loans $ 5,502,130 $ 5,783,949 Interest on securities held to maturity: Taxable interest income 1,170,176 976,603 Interest income exempt from federal income taxes 108,198 121,863 Interest and dividends on securities available for sale, taxable 123,915 105,189 Interest on federal funds sold 62,586 37,726 Interest on deposits in banks 912 600 ----------- ----------- Total interest income $ 6,967,917 $ 7,025,930 ----------- ----------- Interest Expense Interest on deposits $ 2,879,700 $ 2,921,454 Interest on federal funds purchased 4,427 53,428 ----------- ----------- Total interest expense $ 2,884,127 $ 2,974,882 ----------- ----------- Net interest income $ 4,083,790 $ 4,051,048 Provision For Loan Losses 306,667 185,000 ----------- ----------- Net interest income after provision for loan losses $ 3,777,123 $ 3,866,048 ----------- ----------- Other Income Trust Department income $ 160,941 $ 133,144 Service charges on deposits 387,947 384,283 Other service charges and fees 236,216 161,425 Gain (loss) on equity investment (5,508) (603) Other operating income 95,154 71,137 ----------- ----------- $ 874,750 $ 749,386 ----------- ----------- Other Expenses Salaries and wages $ 1,440,204 $ 1,293,841 Pension and other employee benefits 359,208 358,171 Occupancy expenses 245,528 239,573 Equipment expenses 337,343 344,823 FDIC assessment 6,465 2,000 Stationary and supplies 123,479 101,973 Postage 84,471 94,551 Credit card expense 81,767 72,568 Bank franchise tax 70,618 77,380 ATM network fees 99,587 88,440 Intangible amortization 37,972 36,641 Other operating expenses 580,299 530,366 ----------- ----------- $ 3,466,941 $ 3,240,327 ----------- ----------- Income before income taxes $ 1,184,932 $ 1,375,107 Income Tax Expense 275,852 368,851 ----------- ----------- Net Income $ 909,080 $ 1,006,256 =========== =========== Earnings Per Share $ 0.65 $ 0.72 =========== =========== </TABLE> - 5 -
<TABLE> Eagle Financial Services, Inc. and Subsidiary Consolidated Statements of Changes in Stockholders' Equity For the Nine Months Ended September 30, 1997 and 1996 <CAPTION> Unrealized Gain (Loss) on Securities Common Retained Available for Stock Surplus Earnings Sale, Net Total ------------ ------------ ------------ ------------ ------------ <S> <C> Balance, Dec 31, 1995 $ 1,738,212 $ 1,782,186 $ 9,612,627 ($ 12,606) $ 13,120,419 Net income 1,006,256 1,006,256 Issuance of common stock, dividend investment plan (1,732 shares) 4,330 59,841 64,171 Dividend declared ($.22 per share) (152,962) (152,962) Net change in unrealized gain (loss) on securities avail- able for sale 4,910 4,910 Fractional shares purchased (9) (142) (151) ------------ ------------ ------------ ------------ ------------ Balance, Sept 30, 1996 $ 1,742,533 $ 1,841,885 $ 10,465,921 ($ 7,696) $ 14,042,643 ============ ============ ============ ============ ============ Balance, Dec 31, 1996 $ 3,499,714 $ 1,945,891 $ 8,756,281 ($ 5,030) $ 14,196,856 Net income 909,080 909,080 Issuance of common stock, dividend investment plan (6,571 shares) 16,427 120,749 137,176 Dividend declared ($.24 per share) (336,512) (336,512) Net change in unrealized gain (loss) on securities avail- able for sale 11,106 11,106 Fractional shares purchased (5) (41) (46) ------------ ------------ ------------ ------------ ------------ Balance, Sept 30, 1997 $ 3,516,136 $ 2,066,599 $ 9,328,849 $ 6,076 $ 14,917,660 ============ ============ ============ ============ ============ </TABLE> - 6 -
<TABLE> Eagle Financial Services, Inc. and Subsidiary Consolidated Statements of Cash Flows For the Nine Months Ended September 30, 1997 and 1996 <CAPTION> 1997 1996 ------------ ------------ <S> <C> Cash Flows from Operating Activities Net income $ 909,080 $ 1,006,256 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 223,505 286,531 Amortization of intangible assets 37,972 36,641 (Gain) loss on equity investment 5,508 603 Provision for loan losses 306,667 185,000 Premium amortization on securities, net 43,706 28,773 Deferred tax 0 23,620 (Increase) in other assets (474,456) (338,452) Increase in other liabilities 70,462 28,002 ------------ ------------ Net cash provided by operating activities $ 1,122,444 $ 1,256,974 ------------ ------------ Cash Flows from Investing Activities Proceeds from maturities and principal payments of securities held to maturity $ 4,383,825 $ 3,319,002 Proceeds from maturities and principal payments of securities available for sale 377,000 1,844,000 Purchases of securities held to maturity (10,428,722) (4,777,567) Purchases of securities available for sale (2,868,304) (194,500) Purchases of bank premises and equipment (211,787) (1,028,921) Acquisition of intangible assets 0 (692,830) Net (increase) decrease in loans 5,483,380 (959,054) ------------ ------------ Net cash (used in) investing activities ($ 3,264,608) ($ 2,489,870) ------------ ------------ Cash Flows from Financing Activities Net increase (decrease) in demand deposits, money market, and savings accounts ($ 759,643) $ 6,437,178 Net increase in certificates of deposit 4,308,785 (2,360,320) Net (decrease) in federal funds purchased 0 (1,867,000) Cash dividends paid (199,336) (88,791) Fractional shares purchased (46) (151) ------------ ------------ Net cash provided by financing activities $ 3,349,760 $ 2,120,916 ------------ ------------ Increase in cash and cash equivalents $ 1,207,596 $ 888,020 Cash and Cash Equivalents Beginning 5,962,250 4,106,467 ------------ ------------ Ending $ 7,169,846 $ 4,994,487 ============ ============ </TABLE> - 7 -
<TABLE> Eagle Financial Services, Inc. and Subsidiary Consolidated Statements of Cash Flows For the Nine Months Ended September 30, 1997 and 1996 <CAPTION> 1997 1996 ---------- ---------- <S> <C> Supplemental Disclosures of Cash Flow Information Cash payments for: Interest $2,899,014 $3,059,409 ========== ========== Income taxes $ 439,616 $ 428,936 ========== ========== Supplemental Schedule of Non-Cash Financing Activities: Issuance of common stock, dividend investment plan $ 137,176 $ 64,171 ========== ========== Unrealized gain on securities available for sale $ 16,828 $ 7,440 ========== ========== Other real estate acquired in settlement of loans $ 25,887 $ 0 ========== ========== </TABLE> - 8 -
EAGLE FINANCIAL SERVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 1997 (1) The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principals for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles. (2) In the opinion of management, the accompanying unaudited financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position as of September 30, 1997 and December 31, 1996, and the result of operations and cash flows for the three and nine months ended September 30, 1997 and 1996. 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, 1996. (3) The results of operations for the nine month period ended September 30, 1997 and 1996 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 September 30, 1997 and December 31, 1996, are: <TABLE> <CAPTION> <S> <C> September 30, 1997 December 31, 1996 Held to Maturity Amortized Cost Amortized Cost - ---------------- -------------- -------------- U.S. Treasury securities $ 371,905 $ 821,632 Obligations of U.S. government corporations and agencies 9,498,020 5,467,491 Mortgage-backed securities 16,600,480 14,960,458 Obligations of states and political subdivisions 3,875,911 2,995,521 Other securities 0 100,000 ----------- ----------- $30,346,316 $24,345,102 =========== =========== September 30, 1997 December 31, 1996 Fair Value Fair Value ----------- ----------- U.S. Treasury securities $ 376,993 $ 823,361 Obligations of U.S. government corporations and agencies 9,492,887 5,396,463 Mortgage-backed securities 16,509,523 14,730,775 Obligations of states and political subdivisions 3,901,257 2,991,733 Other securities 0 100,010 ----------- ----------- $30,280,660 $24,042,342 =========== =========== </TABLE> - 9 -
<TABLE> <CAPTION> <S> <C> September 30, 1997 December 31, 1996 Available for Sale Amortized Cost Amortized Cost - ------------------ -------------- -------------- Obligations of U.S. government corporations and agencies 3,501,175 999,994 Other securities 742,200 752,100 ------------ ------------ $ 4,243,375 $ 1,752,094 ============ ============ September 30, 1997 December 31, 1996 Fair Value Fair Value ----------- ----------- Obligations of U.S. government corporations and agencies 3,510,381 992,372 Other securities 742,200 752,100 ------------ ------------ $ 4,252,581 $ 1,744,472 ============ ============ </TABLE> (5) Net loans at September 30, 1997 and December 31, 1996 are summarized as follows: <TABLE> <CAPTION> <S> <C> September 30, 1997 December 31, 1996 ----------- ----------- Loans secured by real estate: Construction and land development $ 1,202,542 $ 1,434,277 Secured by farmland 3,750,685 4,013,322 Secured by 1-4 family residential 44,635,203 45,156,222 Nonfarm, nonresidential loans 10,191,441 9,517,839 Loans to finance agricultural production 826,519 1,446,108 Commercial and industrial loans 5,140,493 6,145,077 Loans to individuals 15,410,131 19,632,667 Loans to U.S. state and political subdivisions 1,155,340 1,517,111 All other loans 218,512 214,483 ------------ ------------ Gross loans $ 82,530,866 $ 89,077,106 Less: Unearned income (602,467) (1,206,912) Allowance for loan losses (788,094) (913,955) ------------ ------------ Loans, net $ 81,140,305 $ 86,956,239 ============ ============ </TABLE> - 10 -
(6) Allowance for Loan Losses <TABLE> <CAPTION> <S> <C> September 30, 1997 December 31, 1996 ------------------ ----------------- Balance, beginning $913,955 $828,104 Provision charged to operating expense 306,667 290,000 Recoveries added to the allowance 24,058 63,561 Loan losses charged to the allowance (456,586) (267,710) -------- -------- Balance, ending $788,094 $913,955 ======== ======== </TABLE> (7) New Accounting Pronouncements FASB Statement No. 125, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities," was issued in June 1996 and establishes, among other things, new criteria for determining whether a transfer of financial assets in exchange for cash or other consideration should be accounted for as a sale or as a pledge of collateral in a secured borrowing. Statement 125 also establishes new accounting requirements for pledged collateral. As issued, Statement 125 is effective for all transfers and servicing of financial assets and extinguishments of liabilities occurring after December 1996. FASB Statement No. 127, "Deferral of the Effective Date of Certain Provisions of FASB Statement No. 125," defers for one year the effective date (a) of para- graph 15 of Statement 125 and (b) for repurchase agreement, dollar-roll, secur- ities lending, or similar transactions, of paragraph 9-12 and 237(b) of Statement 125. FASB Statement No. 128, "Earnings per Share", was issued in February 1997 and establishes standards for computing and presenting earnings per (EPS) and applies to entities with publicly held common stock or potential common stock. This Statement simplifies the standards for computing earnings per share previously found in APB Opinion No. 15, "Earnings per Share", and makes them comparable to international EPS standards. It replaces the presentation of primary EPS with a presentation of basic EPS. It also requires dual presentation of basic and diluted EPS on the face of the income statement for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. This Statement is effective for financial statements issued for periods ending after December, 15 1997 including interim periods. FASB Statement No. 129, "Disclosure of Information About Capital Structure", was issued in February 1997 and establishes standards for disclosing information about an entity's capital structure. It applies to all entities. This Statement continues the previous requirements to disclose certain information about an entity's capital structure found in APB Opinions No. 10, "Omnibus Opinion - 1966", and No. 15, "Earnings per Share", and FASB Statement No. 47, "Disclosure of Long-Term Obligations", for entities that were subject to the requirements of those standards. This Statement is effective for financial statements for periods ending after December 15, 1997. FASB Statement No. 130, "Reporting Comprehensive Income", was issued in June 1997 and establishes standards for reporting and display of comprehensive income and its components (revenues, expenses, gains, and losses) in a full set of general-purpose financial statements. This Statement requires that all items that are required to be recognized under accounting standards as components of comprehensive income be reported in a financial statement that is displayed with the same prominence as other financial statements. This Statement requires that an enterprise (a) classify items of other comprehensive income by their nature in a financial statement and (b) display the accumulated balance of other comprehensive income separately from retained earnings and additional paid-in capital in the equity section of a statement of financial position. This Statement is effective for fiscal years beginning after December 15, 1997. The effects of these Statements on the Bank's financial statements are not expected to be material. - 11 -
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Performance Summary Net income of the company for the first nine months of 1997 and 1996 was $909,080 and $1,006,256, respectively. This is a decrease of $97,176 or 9.66%. The results of operations for the nine month periods ended September 30, 1997 and 1996 are not necessarily indicative of the results to be expected for the full year. Net interest income after provision for loan losses for the first nine months of 1997 and 1996 was $3,777,123 and $3,866,048, respectively. This is a decrease of $88,925 or 2.30%. Total other income increased $125,364 or 16.73% from $749,386 for the first nine months of 1996 to $874,750 for the first nine months of 1997. Total other expenses increased $226,614 or 6.99% from $3,240,327 during the first nine months of 1996 to $3,466,941 during the first nine months of 1997. Earnings per common share outstanding was $0.65 and $0.72 for the nine months ended September 30, 1997 and 1996, respectively. Annualized return on average assets for the nine month periods ended September 30, 1996 and 1997 was 1.08% and 0.95%, respectively. Annualized return on average equity for the nine months ended September 30, 1997 was 8.33% as compared to 9.87% for the nine months ended September 30, 1996. 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 increased $121,667 from $185,000 for the nine months ended September 30, 1996 to $306,667 for the nine months ended September 30, 1997. The allowance for loan losses decreased $125,861 or 13.77% during the first nine months of 1997 from $913,955 at December 31, 1996 to $788,094 at September 30, 1997. The allowance as a percentage of total loans decreased from 1.04% at December 31, 1996 to 0.96% at September 30, 1997. The Company had net charge-offs of $130,274 and $432,528 for the first nine months of 1996 and 1997, respectively. The ratio of net charge-offs to average loans was 0.51% for the first nine months of 1997 as compared to 0.15% for the first nine months of 1996. The coverage of the allowance for loan losses over non-performing assets and loans 90 days past due and still accruing interest has decreased from 90.14% at December 31, 1996 to 53.08% at September 30, 1997. Loans past due greater than 90 days and still accruing interest decreased from $967,319 at December 31, 1996 to $572,805 at September 30, 1997. Potential problem loans are included in the loans past due 90 days or more and still accruing interest. 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 September 30, 1997 was $302,279. Most of these loans are well secured and management expects to incur only immaterial losses on their disposition. Loans are placed on nonaccrual when they are greater than ninety days past due without being in the process of collection or where the collection of their principal or interest is doubtful. Interest and fees are not accrued on these loans from the day they enter nonaccrual status and any interest or fees which were earned previously are reversed. As of September 30, 1997 nonaccrual loans totalled $840,644, of which $617,009 is secured by real estate. Management does not expect to incur any material losses on the nonaccrual loans secured by real estate upon foreclosure. - 12 -
Balance Sheet Total assets increased $4.34 million or 3.44% from $126.24 million at December 31, 1996 to $130.58 million at September 30, 1997. Securities increased $8.51 million or 32.62% during the first nine months of 1997 from $26.09 million at December 31, 1996 to $34.60 million at September 30, 1997. Loans, net of unearned discounts decreased $5.94 million or 6.76% during the same period from $87.87 million at December 31, 1996 to $81.93 million at September 30, 1997. Total liabilities increased $3.62 million or 3.23% during the first nine months of 1997 from $112.04 million at December 31, 1996 to $115.66 million at September 30, 1997. Total deposits increased $3.55 million or 3.19% during the same period from $111.09 at December 31, 1996 to $114.64 million at September 30, 1997. Total stockholders' equity increased $0.72 million or 5.08% during the first nine months of 1997 from $14.20 million at December 31, 1996 to $14.92 million at September 30, 1997. Stockholders' Equity The Company continues to be a strongly capitalized financial institution. Stockholders' equity per share increased $0.47 or 4.64% from $10.14 per share at December 31, 1996 to $10.61 per share at September 30, 1997. During 1996 the Company paid $0.30 per share in dividends. During 1997, the Company changed its dividend policy to begin paying quarterly dividends. The Company has paid $0.24 per share in dividends during the first nine months of 1997. The Company has a Dividend Investment Plan that reinvests the dividends of participating shareholders in Company stock. Liquidity Asset and liability management assures liquidity and maintains the balance between rate sensitive assets and liabilities. Liquidity management involves meeting the present and future financial obligations of the Company with the sale or maturity of assets or through the occurrence of additional liabilities. Liquidity needs are met with cash on hand, deposits in banks, federal funds sold, securities classified as available for sale and loans maturing within one year. Total liquid assets were $29.3 million at September 30, 1997 and $34.5 million at December 31, 1996. These represent 25.34% and 30.8% of total liabilities as of September 30, 1997 and December 31, 1996, respectively. - 13 -
PART II. OTHER INFORMATION Item 1. Legal proceedings. None Item 2. Changes in securities. None. Item 3. Defaults upon senior securities. None. Item 4. Submission of matters to a vote of security holders. None. Item 5. Other Information. None Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits. Exhibit 2 Not applicable
Exhibit 3 (i) Articles of Incorporation of Registrant (incorporated herein by reference as Exhibit 3.1 of Registrant's Form S-4 Registration Statement, Registration No. 33-43681). (ii) Bylaws of Registrant (incorporated herein by reference as 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, File No. 0-20146. 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, File No. 0-20146. 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, File No. 0-20146. 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. None. - 14 -
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: November 12, 1997 /s/ LEWIS M. EWING ------------------------------ Lewis M. Ewing President and CEO Date: November 12, 1997 /s/ JOHN R. MILLESON ------------------------------ John R. Milleson Vice President, Secretary and Treasurer Date: November 12, 1997 /s/ JAMES W. MCCARTY, JR. ------------------------------ James W. McCarty, Jr. Controller - 15 -