-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IEMuSi4/RzzFKGa5xNjufy+yssN4c63OZzTgJgFC2PERXJG0XNsh07l/fooIf8Ow QQVAl02MrTuTifAQp1kIjw== 0000916641-97-000511.txt : 19970520 0000916641-97-000511.hdr.sgml : 19970520 ACCESSION NUMBER: 0000916641-97-000511 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970515 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: EAGLE FINANCIAL SERVICES INC CENTRAL INDEX KEY: 0000880641 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 541601306 STATE OF INCORPORATION: VA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-20146 FILM NUMBER: 97605977 BUSINESS ADDRESS: STREET 1: 2 E MAIN ST CITY: BERRYVILLE STATE: VA ZIP: 22611 BUSINESS PHONE: 7039552510 MAIL ADDRESS: STREET 1: PO BOX 391 CITY: BERRYVILLE STATE: VA ZIP: 22611 10-Q 1 EAGLE FINANCIAL SERVICES 10-Q 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, 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 1,402,152 Outstanding at May 10, 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 March 31, 1997 and December 31, 1996 .................. 3 Consolidated Statements of Income for the Three Months Ended March 31, 1997 and 1996 ............ 4 Consolidated Statement of Changes in Stockholder's Equity for the Three Months Ended March 31, 1997 and 1996 ................... 6 Consolidated Statements of Cash Flows for the Three Months Ended March 31, 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 Eagle Financial Services, Inc. and Subsidiary Consolidated Balance Sheets As of March 31, 1997 and December 31, 1996
March 31, 1997 December 31, 1996 -------------- ----------------- Assets Cash and due from banks $ 5,027,212 $ 4,409,250 Securities held to maturity (fair value: 1997, $26,090,001; 1996, $24,042,342) 26,649,059 24,345,102 Securities available for sale, at fair value 1,480,104 1,744,472 Federal funds sold 3,315,000 1,553,000 Loans, net of unearned discounts 84,329,252 87,870,194 Less allowance for loan losses (828,012) (913,955) ------------- ------------- Net loans 83,501,240 86,956,239 Bank premises and equipment, net 4,095,237 4,251,675 Other real estate owned 46,605 46,605 Intangible assets 641,061 653,624 Other assets 2,256,152 2,281,774 ------------- ------------- Total assets $ 127,011,670 $ 126,241,741 ============= ============= Liabilities and Stockholders' Equity Liabilities Deposits: Noninterest bearing $ 14,555,826 $ 15,175,041 Interest bearing 96,981,244 95,912,826 ------------- ------------- Total deposits $ 111,537,070 $ 111,087,867 Federal funds purchased 0 0 Other liabilities 1,040,610 957,018 ------------- ------------- Total liabilities $ 112,577,680 $ 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, 1,402,152; issued 1996, 1,399,885 shares 3,505,379 3,499,714 Surplus 1,985,444 1,945,891 Retained Earnings 8,949,171 8,756,281 Unrealized loss on securities available for sale, net (6,004) (5,030) ------------- ------------- Total stockholders' equity $ 14,433,990 $ 14,196,856 ------------- ------------- Total liabilities and stockholders' equity $ 127,011,670 $ 126,241,741 ============= =============
- 3 - Eagle Financial Services, Inc. and Subsidiary Consolidated Statements of Income For the Three Months Ended March 31, 1997 and 1996
Three Months Ended March 31, 1997 1996 ------------ ------------- Interest Income Interest and fees on loans $ 1,863,241 $ 1,910,514 Interest on securities held to maturity: Taxable interest income 349,010 308,424 Interest income exempt from federal income taxes 35,748 41,425 Interest and dividends on securities available for sale, taxable 20,486 41,739 Interest on federal funds sold 28,651 3,507 ----------- ----------- Total interest income $ 2,297,136 $ 2,305,609 ----------- ----------- Interest Expense Interest on deposits $ 923,743 $ 957,938 Interest on federal funds purchased 0 47,260 ----------- ----------- Total interest expense $ 923,743 $ 1,005,198 ----------- ----------- Net interest income $ 1,373,393 $ 1,300,411 Provision For Loan Losses 75,000 60,000 ----------- ----------- Net interest income after provision for loan losses $ 1,298,393 $ 1,240,411 ----------- ----------- Other Income Trust Department income $ 48,662 $ 48,353 Service charges on deposits 122,764 118,396 Other service charges and fees 46,363 43,633 Gain (loss) on equity investment (2,150) (1,306) Other operating income 38,150 12,677 ----------- ----------- $ 253,789 $ 221,753 ----------- -----------
- 4 - Eagle Financial Services, Inc. and Subsidiary Consolidated Statements of Income For the Three Months Ended March 31, 1997 and 1996
Three Months Ended March 31, 1997 1996 ----------- ------------ Other Expenses Salaries and wages $ 454,596 $ 407,092 Pension and other employee benefits 128,306 105,554 Occupancy expenses 96,811 76,341 Equipment expenses 107,659 60,969 FDIC assessment 3,832 1,000 Stationary and supplies 43,524 44,290 Postage 23,951 39,020 Credit card expense 32,264 22,915 Bank franchise tax 24,048 27,213 ATM network fees 32,553 25,851 Intangible amortization 12,563 2,199 Other operating expenses 206,510 224,892 ---------- ---------- $1,166,617 $1,037,336 ---------- ---------- Income before income taxes $ 385,565 $ 424,828 Income Tax Expense 80,685 114,729 ---------- ---------- Net Income $ 304,880 $ 310,099 ========== ========== Earnings Per Share $ 0.22 $ 0.23 ========== ==========
- 5 - Eagle Financial Services, Inc. and Subsidiary Consolidated Statements of Changes in Stockholders' Equity For the Three Months Ended March 31, 1997 and 1996
Unrealized Gain (Loss) on Securities Common Retained Available for Stock Surplus Earnings Sale, Net Total ------------- ------------ ------------- ------------- ------------ Balance, Dec 31, 1995 $ 1,738,212 $ 1,782,186 $ 9,612,627 ($ 12,606) $13,120,419 Net income 310,099 310,099 Net change in unrealized (loss) on securities avail- able for sale 3,652 3,652 Fractional shares purchased (5) (71) (76) ----------- ----------- ----------- ----------- ----------- Balance, Mar 31, 1996 $ 1,738,207 $ 1,782,115 $ 9,922,726 ($ 8,954) $13,434,094 =========== =========== =========== =========== =========== Balance, Dec 31, 1996 $ 3,499,714 $ 1,945,891 $ 8,756,281 ($ 5,030) $14,196,856 Net income 304,880 304,880 Issuance of common stock, dividend investment plan (2,268 shares) 5,669 39,585 45,254 Dividend declared ($.08 per share) (111,990) (111,990) Net change in unrealized (loss) on securities avail- able for sale (974) (974) Fractional shares purchased (4) (32) (36) ----------- ----------- ----------- ----------- ----------- Balance, Mar 31, 1997 $ 3,505,379 $ 1,985,444 $ 8,949,171 ($ 6,004) $14,433,990 =========== =========== =========== =========== ===========
- 6 - Eagle Financial Services, Inc. and Subsidiary Consolidated Statements of Cash Flows For the Three Months Ended March 31, 1997 and 1996
1997 1996 ---------- ------------ Cash Flows from Operating Activities Net income $ 304,880 $ 310,099 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 103,511 77,243 Amortization of intangible assets 12,563 3,150 Loss on equity investment 2,150 1,306 Provision for loan losses 75,000 60,000 Premium amortization on securities, net 8,940 11,638 Deferred tax 0 7,873 (Increase) decrease in other assets 103,654 (96,969) Increase in other liabilities 83,592 99,333 ----------- ----------- Net cash provided by operating activities $ 694,290 $ 473,673 ----------- ----------- Cash Flows from Investing Activities Proceeds from maturities and principal payments on securities held to maturity $ 920,129 $ 793,045 Proceeds from maturities and principal payments on securities available for sale 308,000 998,844 Purchases of securities held to maturity (3,233,032) (2,573,513) Purchases of securities available for sale (45,100) (140,377) Purchases of bank premises and equipment (26,755) (868,165) Acquisition of intangible assets 0 (737,348) Net decrease in loans 3,379,999 1,109,589 ----------- ----------- Net cash provided by (used in) investing activities $ 1,303,241 ($1,417,925) ----------- ----------- Cash Flows from Financing Activities Net increase (decrease) in demand deposits, money market, and savings accounts ($ 115,303) $ 2,538,395 Net increase (decrease) in certificates of deposit 564,506 (174,048) Net (decrease) in federal funds purchased 0 (966,000) Cash dividends paid (66,736) 0 Fractional shares purchased (36) (76) ----------- ----------- Net cash provided by financing activities $ 382,431 $ 1,398,271 ----------- ----------- Increase in cash and cash equivalents $ 2,379,962 $ 454,019 Cash and Cash Equivalents Beginning 5,962,250 4,106,467 ----------- ----------- Ending $ 8,342,212 $ 4,560,486 =========== ===========
- 7 - Eagle Financial Services, Inc. and Subsidiary Consolidated Statements of Cash Flows For the Three Months Ended March 31, 1997 and 1996
1997 1996 ----------- ---------- Supplemental Disclosures of Cash Flow Information Cash payments for: Interest $ 976,620 $1,019,297 ========== ========== Income taxes $ 0 $ 6,480 ========== ========== Supplemental Schedule of Non-Cash Financing Activities: Issuance of common stock, dividend investment plan $ 45,254 $ 0 ========== ========== Unrealized gain (loss) on securities available for sale ($ 1,474) $ 5,534 ========== ==========
- 8 - EAGLE FINANCIAL SERVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 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 March 31, 1997 and December 31, 1996, and the result of operations and cash flows for the three months ended March 31, 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 three month period ended March 31, 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 March 31, 1997 and December 31, 1996, are:
March 31, 1997 December 31, 1996 Held to Maturity Amortized Cost Amortized Cost ------------------- ------------------ ----------------- U.S. Treasury securities $ 622,676 $ 821,632 Obligations of U.S. government corporations and agencies 5,469,285 5,467,491 Mortgage-backed securities 17,238,058 14,960,458 Obligations of states and political subdivisions 3,269,040 2,995,521 Other securities 50,000 100,000 ----------- ----------- $26,649,059 $24,345,102 =========== =========== March 31, 1997 December 31, 1996 Fair Value Fair Value ----------- ----------- U.S. Treasury securities $ 620,239 $ 823,361 Obligations of U.S. government corporations and agencies 5,333,061 5,396,463 Mortgage-backed securities 16,825,107 14,730,775 Obligations of states and political subdivisions 3,261,606 2,991,733 Other securities 49,988 100,010 ----------- ----------- $26,090,001 $24,042,342 =========== ===========
- 9 -
March 31, 1997 December 31, 1996 Available for Sale Amortized Cost Amortized Cost - ----------------------- --------------- ----------------- Obligations of U.S. government corporations and agencies 750,000 999,994 Other securities 739,200 752,100 ---------- ---------- $1,489,200 $1,752,094 ========== ========== March 31, 1997 December 31, 1996 Fair Value Fair Value -------------- ----------------- Obligations of U.S. government corporations and agencies 740,904 992,372 Other securities 739,200 752,100 ---------- ---------- $1,480,104 $1,744,472 ========== ==========
(5) Net loans at March 31, 1997 and December 31, 1996 are summarized as follows:
March 31, 1997 December 31, 1996 --------------- ----------------- Loans secured by real estate: Construction and land development $ 1,563,328 $ 1,434,277 Secured by farmland 3,724,178 4,013,322 Secured by 1-4 family residential 44,865,729 45,156,222 Nonfarm, nonresidential loans 9,365,280 9,517,839 Loans to finance agricultural production 1,242,628 1,446,108 Commercial and industrial loans 5,513,386 6,145,077 Loans to individuals 17,516,049 19,632,667 Loans to U.S. state and political subdivisions 1,435,111 1,517,111 All other loans 111,910 214,483 ------------ ------------ Gross loans $ 85,337,599 $ 89,077,106 Less: Unearned income (1,008,347) (1,206,912) Allowance for loan losses (828,012) (913,955) ------------ ------------ Loans, net $ 83,501,240 $ 86,956,239 ============ ============
- 10 - (6) Allowance for Loan Losses
March 31, 1997 December 31, 1996 -------------- ----------------- Balance, beginning $ 913,955 $ 828,104 Provision charged to operating expense 75,000 290,000 Recoveries added to the allowance 4,438 63,561 Loan losses charged to the allowance (165,381) (267,710) --------- --------- Balance, ending $ 828,012 $ 913,955 ========= =========
(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. 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 three months of 1997 and 1996 was $304, 880 and $310,099, respectively. This is a slight decrease of $5,219 or 1.68%. The results of operations for the three month periods ended March 31, 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 three months of 1997 and 1996 was $1,298,393 and $1,240,411, respectively. This is an increase of $57,982 or 4.67%. Total other income increased $32,036 or 14.45% from $221,753 for the first three months of 1996 to $253,789 for the first three months of 1997. Total other expenses increased $129,281 or 12.46% from $1,037,336 during the first three months of 1996 to $1,166,617 during the first three months of 1997. Earnings per common share outstanding was $0.22 and $0.23 for the three months ended March 31, 1997 and 1996, respectively. Annualized return on average assets for the quarter ended March 31, 1997 was 0.97% as compared to 1.03% for quarter ended March 31, 1996. Annualized return on average equity for 1997 was 8.54% as compared to 9.34% for 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 $15,000 from $60,000 in 1996 to $75,000 in 1997. The allowance for loan losses decreased $85,943 or 9.40% during the first three months of 1997 from $913,955 at December 31, 1996 to $828,012 at March 31, 1997. The allowance as a percentage of total loans decreased from 1.04% at December 31, 1996 to 0.98% at March 31, 1997. The Company had net charge-offs of $160,943 and $45,491 for the first three months of 1997 and 1996, respectively. The ratio of net charge-offs to average loans was 0.19% for the first three months of 1997 as compared to 0.05% for the first three months of 1996. The coverage for the allowance for loan losses over non-performing assets and loans 90 days past due and still accruing interest has increased from 90.14% at December 31, 1996 to 122.69% at March 31, 1997. Loans past due greater than 90 days and still accruing interest decreased from $967,319 at December 31, 1996 to $628,285 at March 31, 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 March 31, 1997 was $360,626. Most of these loans are well secured and management expects to incur only immaterial losses on their disposition. - 12 - Balance Sheet Total assets increased $0.77 million or 0.61% from $126.24 million at December 31, 1996 to $127.01 million at March 31, 1997. Securities increased $2.04 million or 7.82% during the first three months of 1997 from $26.09 million at December 31, 1996 to $28.13 million at March 31, 1997. Loans, net of unearned discounts decreased $3.54 million or 4.03% during the same period from $87.87 million at December 31, 1996 to $84.33 million at March 31, 1997. Total liabilities increased $0.53 million or 0.48% during the first three months of 1997 from $112.04 million at December 31, 1996 to $112.58 million at March 31, 1997. Total deposits increased $0.45 million or 0.40% during the same period from $111.09 at December 31, 1996 to $111.54 million at March 31, 1997. Total stockholders' equity increased $0.24 million during the first three months of 1997 from $14.20 million at December 31, 1996 to $14.43 million at March 31, 1997. Stockholders' Equity The Company continues to be a strongly capitalized financial institution. Stockholders' equity per share increased $0.15 or 1.48% from $10.14 per share at December 31, 1996 to $10.29 per share at March 31, 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's first quarter dividend was $0.08 per share. The Company has a Dividend Investment Plan that reinvests the dividends of participating shareholders in Company stock. Liquidity Asset and liability management assures liquidity and maintains the balance between rate sensitive assets and liabilities. Liquidity management involves meeting the present and future financial obligations of the Company with the sale or maturity of assets or through the occurrence of additional liabilities. Liquidity needs are met with cash on hand, deposits in banks, federal funds sold, securities classified as available for sale and loans maturing within one year. Total liquid assets were $32.8 million at March 31, 1997 and $34.5 million at December 31, 1996. These represent 29.1% and 30.8% of total liabilities as of March 31, 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 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) 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: May 13, 1997 /s/ LEWIS M. EWING ---------------------------------- Lewis M. Ewing President and CEO Date: May 13, 1997 /s/ JOHN R. MILLESON ---------------------------------- John R. Milleson Vice President, Secretary and Treasurer Date: May 13, 1997 /s/ JAMES W. MCCARTY, JR. ---------------------------------- James W. McCarty, Jr. Controller - 15 - EX-27 2 FINANCIAL DATA SCHEDULES
9 1,000 3-MOS DEC-31-1996 MAR-31-1997 5,027 0 3,315 0 1,480 26,649 26,090 84,329 828 127,012 111,537 0 1,041 0 5,491 0 0 8,943 127,012 1,863 405 29 2,297 924 924 1,373 75 0 1,167 386 386 0 0 305 0.22 0.22 4.79 0 628 0 361 914 165 4 828 125 0 703
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