EAGLE FINANCIAL SERVICES INC - FORM 10-Q

Attached files

file	filename
EX-32.1 - EXHIBIT 32.1 - EAGLE FINANCIAL SERVICES INC	efsi-20170630exhibit321.htm
EX-31.2 - EXHIBIT 31.2 - EAGLE FINANCIAL SERVICES INC	efsi-20170630exhibit312.htm
EX-31.1 - EXHIBIT 31.1 - EAGLE FINANCIAL SERVICES INC	efsi-20170630exhibit311.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)



ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2017



¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 0-20146

EAGLE FINANCIAL SERVICES, INC.

(Exact name of registrant as specified in its charter)



Virginia		54-1601306
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

2 East Main Street P.O. 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 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 ý No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Date File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this Chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.



Large accelerated filer	¨		Accelerated filer	¨

Non-accelerated filer	¨	(Do not check if a smaller reporting company.)	Smaller reporting company	ý
			Emerging growth company	¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.				¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No ý

The number of shares of the registrant’s Common Stock ($2.50 par value) outstanding as of August 3, 2017 was 3,474,659.

TABLE OF CONTENTS




PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements:
	Consolidated Balance Sheets at June 30, 2017 and December 31, 2016	1
	Consolidated Statements of Income for the Three and Six Months Ended June 30, 2017 and 2016	2
	Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2017 and 2016	3
	Consolidated Statements of Changes in Shareholders’ Equity for the Six Months Ended June 30, 2017 and 2016	4
	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2017 and 2016	5
	Notes to Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	42
Item 4.	Controls and Procedures	43

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	43
Item 1A.	Risk Factors	43
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	43
Item 3.	Defaults Upon Senior Securities	44
Item 4.	Mine Safety Disclosures	44
Item 5.	Other Information	44
Item 6.	Exhibits	44

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

EAGLE FINANCIAL SERVICES, INC.

Consolidated Balance Sheets

(dollars in thousands, except per share amounts)



	June 30, 2017			December 31, 2016
	(Unaudited)
Assets
Cash and due from banks	$	9,562		$	12,515
Interest-bearing deposits with other institutions	17,622			22,610
Federal funds sold	152			156
Total cash and cash equivalents	27,336			35,281
Securities available for sale, at fair value	131,655			119,262
Restricted investments	1,957			1,068
Loans	554,179			516,942
Allowance for loan losses	(4,407		)	(4,505		)
Net Loans	549,772			512,437
Bank premises and equipment, net	19,911			20,169
Other real estate owned, net of allowance	106			370
Other assets	13,312			11,562
Total assets	$	744,049		$	700,149
Liabilities and Shareholders’ Equity
Liabilities
Deposits:
Noninterest bearing demand deposits	$	218,117		$	208,948
Savings and interest bearing demand deposits	312,990			306,847
Time deposits	100,903			88,082
Total deposits	$	632,010		$	603,877
Federal Home Loan Bank advances	20,000			—
Other liabilities	8,871			16,856
Total liabilities	$	660,881		$	620,733

Commitments and contingencies

Shareholders’ Equity
Preferred stock, $10 par value; 500,000 shares authorized and unissued	$	—		$	—
Common stock, $2.50 par value; authorized 10,000,000 shares; issued and outstanding 2017, 3,481,946 including 19,401 shares of unvested restricted stock; issued and outstanding 2016, 3,468,243 including 14,901 shares of unvested restricted stock	8,656			8,633
Surplus	12,748			12,642
Retained earnings	60,705			58,165
Accumulated other comprehensive income (loss)	1,059			(24		)
Total shareholders’ equity	$	83,168		$	79,416
Total liabilities and shareholders’ equity	$	744,049		$	700,149

See Notes to Consolidated Financial Statements

EAGLE FINANCIAL SERVICES, INC.

Consolidated Statements of Income (Unaudited)

(dollars in thousands, except per share amounts)



	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2017			2016		2017			2016
Interest and Dividend Income
Interest and fees on loans	$	6,108		$	5,883	$	11,844		$	11,592
Interest and dividends on securities available for sale:
Taxable interest income	591			482		1,141			922
Interest income exempt from federal income taxes	270			232		524			465
Dividends	19			23		24			46
Interest on deposits with other institutions	16			22		37			38
Total interest and dividend income	$	7,004		$	6,642	$	13,570		$	13,063
Interest Expense
Interest on deposits	218			194		$	421		$	395
Interest on federal funds purchased	13			—		13			—
Interest on Federal Home Loan Bank advances	18			64		18			129
Interest on interest rate swap	—			39		—			80
Total interest expense	$	249		$	297	$	452		$	604
Net interest income	$	6,755		$	6,345	$	13,118		$	12,459
(Recovery of) Provision For Loan Losses	(230		)	—		(757		)	79
Net interest income after (recovery of) provision for loan losses	$	6,985		$	6,345	$	13,875		$	12,380
Noninterest Income
Income from fiduciary activities	$	309		$	380	$	601		$	708
Service charges on deposit accounts	295			290		594			580
Other service charges and fees	957			992		1,910			1,821
Gain on sale of securities	1			—		51			86
Other operating income	36			76		115			178
Total noninterest income	$	1,598		$	1,738	$	3,271		$	3,373
Noninterest Expenses
Salaries and employee benefits	$	3,364		$	3,313	$	6,714		$	6,577
Occupancy expenses	367			367		744			775
Equipment expenses	259			223		498			469
Advertising and marketing expenses	175			185		353			347
Stationery and supplies	47			51		88			101
ATM network fees	183			259		403			436
Other real estate owned expense	10			2		11			2
Loss (gain) on valuation adjustments and sales of other real estate owned	—			47		(1		)	47
FDIC assessment	55			99		107			204
Computer software expense	159			131		355			267
Bank franchise tax	134			125		259			251
Professional fees	267			281		558			509
Data processing fees	139			132		256			196
Other operating expenses	588			617		1,113			1,205
Total noninterest expenses	$	5,747		$	5,832	$	11,458		$	11,386
Income before income taxes	$	2,836		$	2,251	$	5,688		$	4,367
Income Tax Expense	809			641		1,619			1,232
Net income	$	2,027		$	1,610	$	4,069		$	3,135
Earnings Per Share
Net income per common share, basic	$	0.58		$	0.46	$	1.17		$	0.89
Net income per common share, diluted	$	0.58		$	0.46	$	1.17		$	0.89

See Notes to Consolidated Financial Statements

EAGLE FINANCIAL SERVICES, INC.

Consolidated Statements of Comprehensive Income

(Unaudited)

(dollars in thousands)



	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2017		2016		2017		2016
Net income	$	2,027	$	1,610	$	4,069	$	3,135
Other comprehensive income:
Unrealized gain on available for sale securities net of reclassification adjustments, and net of deferred income tax of $595 and $222 for the three months ended, respectively and $558 and $511 for the six months ended, respectively	1,154		430		1,083		993
Total other comprehensive income	1,154		430		1,083		993
Total comprehensive income	$	3,181	$	2,040	$	5,152	$	4,128

See Notes to Consolidated Financial Statements

EAGLE FINANCIAL SERVICES, INC.

Consolidated Statements of Changes in Shareholders’ Equity (Unaudited)

(dollars in thousands, except share amounts)



	Common Stock			Surplus			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total
Balance, December 31, 2015	$	8,758		$	13,730		$	54,682		$	1,051		$	78,221
Net income							3,135						3,135
Other comprehensive income										993			993
Vesting of restricted stock awards, stock incentive plan (8,196 shares)	20			(20		)							—
Stock-based compensation expense				107									107
Issuance of common stock, dividend investment plan (14,810 shares)	37			298									335
Issuance of common stock, employee benefit plan (648 shares)	2			14									16
Dividends declared ($0.40 per share)							(1,412		)				(1,412		)
Balance, June 30, 2016	$	8,817		$	14,129		$	56,405		$	2,044		$	81,395

Balance, December 31, 2016	$	8,633		$	12,642		$	58,165		$	(24	)	79,416
Net income							4,069						4,069
Other comprehensive income										1,083			1,083
Vesting of restricted stock awards, stock incentive plan (9,493 shares)	24			(24		)							—
Stock-based compensation expense				138									138
Issuance of common stock, dividend investment plan (8,887 shares)	22			232									254
Issuance of common stock, employee benefit plan (4,874 shares)	12			124									136
Repurchase and retirement of common stock (14,051 shares)	(35		)	(364		)							(399		)
Dividends declared ($0.44 per share)							(1,529		)				(1,529		)
Balance, June 30, 2017	$	8,656		$	12,748		$	60,705		$	1,059		$	83,168

See Notes to Consolidated Financial Statements

EAGLE FINANCIAL SERVICES, INC.

Consolidated Statements of Cash Flows (Unaudited)

(dollars in thousands)



	Six Months Ended
	June 30,
	2017			2016
Cash Flows from Operating Activities
Net income	$	4,069		$	3,135
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation	474			464
Amortization of intangible and other assets	106			86
(Recovery of) Provision for loan losses	(757		)	79
(Gain) loss on valuation adjustments and sales of other real estate owned	(1		)	47
Loss on the sale and disposal of premises and equipment	11			—
Loss on the sale of repossessed assets	6			—
(Gain) on the sale of securities	(51		)	(86		)
Fair value adjustment on derivative contract	—			(71		)
Stock-based compensation expense	138			107
Premium amortization on securities, net	246			115
Changes in assets and liabilities:
(Increase) decrease in other assets	(2,419		)	60
(Decrease) increase in other liabilities	(7,985		)	502
Net cash (used in) provided by operating activities	$	(6,163	)	$	4,438
Cash Flows from Investing Activities
Proceeds from maturities, calls, and principal payments of securities available for sale	$	4,781		$	12,593
Proceeds from the sale of securities available for sale	4,925			4,314
Purchases of securities available for sale	(20,653		)	(12,391		)
Purchases of restricted investments	(889		)	(22		)
Purchases of bank premises and equipment	(227		)	(105		)
Proceeds from the sale of other real estate owned	318			—
Proceeds from the sale of repossessed assets	3			1
Net (increase) in loans	(36,635		)	(21,905		)
Net cash (used in) investing activities	$	(48,377	)	$	(17,515	)
Cash Flows from Financing Activities
Net increase in noninterest bearing demand deposits, savings, and interest bearing demand deposits	$	15,312		$	23,749
Net increase (decrease) in time deposits	12,821			(3,238		)
Net increase in Federal Home Loan Bank advances	20,000			—
Issuance of common stock, employee benefit plan	136			16
Repurchase and retirement of common stock	(399		)	—
Cash dividends paid	(1,275		)	(1,077		)
Net cash provided by financing activities	$	46,595		$	19,450

EAGLE FINANCIAL SERVICES, INC.

Consolidated Statements of Cash Flows (Unaudited)

(continued)



	Six Months Ended
	June 30,
	2017			2016
(Decrease) increase in cash and cash equivalents	$	(7,945	)	$	6,373
Cash and Cash Equivalents
Beginning	35,281			23,221
Ending	$	27,336		$	29,594
Supplemental Disclosures of Cash Flow Information
Cash payments for:
Interest	$	452		$	612
Income taxes	$	598		$	—
Supplemental Schedule of Noncash Investing and Financing Activities:
Unrealized gain on securities available for sale	$	1,641		$	1,504
Other real estate and repossessed assets acquired in settlement of loans	$	57		$	6
Issuance of common stock, dividend investment plan	$	254		$	335

See Notes to Consolidated Financial Statements

EAGLE FINANCIAL SERVICES, INC.

Notes to Consolidated Financial Statements (Unaudited)

June 30, 2017

NOTE 1. General

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America 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 accounting principles generally accepted in the United States of America.

In the opinion of management, the accompanying financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position at June 30, 2017 and December 31, 2016, the results of operations for the three and six months ended June 30, 2017 and 2016, and cash flows for the six months ended June 30, 2017 and 2016. The results of operations for the three and six months ended June 30, 2017 are not necessarily indicative of the results to be expected for the full year. These financial statements should be read in conjunction with the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 (the “2016 Form 10-K”).

Eagle Financial Services, Inc. (the "Company") owns 100% of Bank of Clarke County (the “Bank”). The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. All significant intercompany accounts and transactions between the Company and the Bank have been eliminated.

Certain amounts in the consolidated financial statements have been reclassified to conform to current year presentations. None of the reclassifications were of a material nature and they had no effect on prior year net income or shareholders' equity.

NOTE 2. Stock-Based Compensation Plan

During 2014, the Company’s shareholders approved a stock incentive plan which allows key employees and directors to increase their personal financial interest in the Company. This plan permits the issuance of incentive stock options and non-qualified stock options and the award of stock appreciation rights, common stock, restricted stock, and phantom stock. The plan authorizes the issuance of up to 500,000 shares of common stock.

The Company periodically grants Restricted Stock to its directors and executive officers. Restricted Stock provides grantees with rights to shares of common stock upon completion of a service period or achievement of Company performance measures. During the restriction period, all shares are considered outstanding and dividends are paid to the grantee. In general, outside directors are periodically granted restricted shares which vest over a period of less than 9 months. Beginning during 2006, executive officers were granted restricted shares which vest over a 3 year service period and restricted shares which vest based on meeting annual performance measures over a 1 year period. The Company recognizes compensation expense over the restricted period. As of June 30, 2017, there was $266 thousand of unrecognized compensation cost related to nonvested restricted stock.

The following table presents Restricted Stock activity for the six months ended June 30, 2017 and 2016:



	Six Months Ended
	June 30,
	2017				2016
	Shares		Weighted Average Grant Date Fair Value		Shares		Weighted Average Grant Date Fair Value
Nonvested, beginning of period	14,901		$	23.05	14,401		$	22.98
Granted	14,650		27.46		14,650		23.07
Vested	(9,493	)	23.08		(8,196	)	22.86
Forfeited	(657	)	23.00		(954	)	23.00
Nonvested, end of period	19,401		26.37		19,901		23.09

NOTE 3. Earnings Per Common Share

Basic earnings per share represents income available to common shareholders divided by the weighted average number of common shares outstanding during the period. Nonvested restricted shares are included in the weighted average number of common shares used to compute basic earnings per share because of dividend participation and voting rights. Diluted earnings per share reflects additional common shares that would have been outstanding if dilutive potential common shares had been issued, as well as any adjustment to income that would result from the assumed issuance. The number of potential common shares is determined using the treasury method.

The following table shows the weighted average number of shares used in computing earnings per share for the three and six months ended June 30, 2017 and 2016. During 2017 and 2016, there were no potentially dilutive securities outstanding.



	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2017	2016	2017	2016
Weighted average number of common shares outstanding used to calculate basic and diluted earnings per share	3,474,628	3,539,876	3,476,159	3,535,505

NOTE 4. Securities

Amortized costs and fair values of securities available for sale at June 30, 2017 and December 31, 2016 were as follows:



	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Fair Value
	June 30, 2017
	(in thousands)
Obligations of U.S. government corporations and agencies	$	30,419	$	460	$	(135	)	$	30,744
Mortgage-backed securities	50,579		344		(223		)	50,700
Obligations of states and political subdivisions	49,110		1,224		(123		)	50,211
	$	130,108	$	2,028	$	(481	)	$	131,655
	December 31, 2016
	(in thousands)
Obligations of U.S. government corporations and agencies	$	30,404	$	316	$	(279	)	$	30,441
Mortgage-backed securities	42,681		147		(456		)	42,372
Obligations of states and political subdivisions	46,271		770		(592		)	46,449
	$	119,356	$	1,233	$	(1,327	)	$	119,262

During the six months ended June 30, 2017, the Company received proceeds of $4.9 million on sales of available for sale securities for a gross gain of $51 thousand. There were no losses on the sale of available for sale securities during the six months ended June 30, 2017. During the six months ended June 30, 2016, the Company sold $4.3 million of available for sale securities for a gross gain of $86 thousand. There were no losses on the sale of available for sale securities during the six months ended June 30, 2016.

The fair value and gross unrealized losses for securities available for sale, totaled by the length of time that individual securities have been in a continuous gross unrealized loss position, at June 30, 2017 and December 31, 2016 were as follows:



	Less than 12 months				12 months or more				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	June 30, 2017
	(in thousands)
Obligations of U.S. government corporations and agencies	$	7,879	$	135	$	—	$	—	$	7,879	$	135
Mortgage-backed securities	21,203		223		—		—		21,203		223
Obligations of states and political subdivisions	5,758		123		—		—		5,758		123
	$	34,840	$	481	$	—	$	—	$	34,840	$	481
	December 31, 2016
	(in thousands)
Obligations of U.S. government corporations and agencies	$	19,129	$	279	$	—	$	—	$	19,129	$	279
Mortgage-backed securities	28,013		456		—		—		28,013		456
Obligations of states and political subdivisions	16,823		592		—		—		16,823		592
	$	63,965	$	1,327	$	—	$	—	$	63,965	$	1,327

Gross unrealized losses on available for sale securities included thirty-seven (37) and eighty (80) debt securities at June 30, 2017 and December 31, 2016, respectively. The Company evaluates securities for other-than-temporary impairment on at least a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to the length of time and the amount of an unrealized loss, the financial condition of the issuer, and the intent and ability of the Company to retain its investment in the issuer long enough to allow for an anticipated recovery in fair value. The fair value of a security reflects its liquidity as compared to similar instruments, current market rates on similar instruments, and the creditworthiness of the issuer. Absent any change in the liquidity of a security or the creditworthiness of the issuer, prices will decline as market rates rise and vice-versa. The primary cause of the unrealized losses at June 30, 2017 and December 31, 2016 was changes in market interest rates. Since the losses can be primarily attributed to changes in market interest rates and not expected cash flows or an issuer’s financial condition, the unrealized losses were deemed to be temporary. The Company’s mortgage-backed securities are issued by U.S. government agencies, which guarantee payments to investors regardless of the status of the underlying mortgages. The Company monitors the financial condition of these issuers continuously and will record other-than-temporary impairment if the recovery of value is unlikely.

The Company’s securities are exposed to various risks, such as interest rate, market, currency and credit risks. Due to the level of risk associated with certain securities and the level of uncertainty related to changes in the value of securities, it is at least reasonably possible that changes in risks in the near term would materially affect securities reported in the financial statements. In addition, recent economic uncertainty and market events have led to unprecedented volatility in currency, commodity, credit and equity markets culminating in failures of some banking and financial services firms and government intervention to solidify others. These events underscore the level of investment risk associated with the current economic environment, and accordingly the level of risk in the Company’s securities.

Securities having a carrying value of $2.9 million at June 30, 2017 were pledged for various purposes required by law.

The composition of restricted investments at June 30, 2017 and December 31, 2016 was as follows:



	June 30, 2017		December 31, 2016
	(in thousands)
Federal Reserve Bank Stock	$	344	$	344
Federal Home Loan Bank Stock	1,473		584
Community Bankers’ Bank Stock	140		140
	$	1,957	$	1,068

NOTE 5. Allowance for Loan Losses

Changes in the allowance for loan losses for the six months ended June 30, 2017 and 2016 and the year ended December 31, 2016 were as follows:



	Six Months Ended			Year Ended			Six Months Ended
	June 30,			December 31,			June 30,
	2017			2016			2016
				(in thousands)
Balance, beginning	$	4,505		$	4,959		$	4,959
(Recovery of) provision for loan losses	(757		)	(188		)	79
Recoveries added to the allowance	799			341			90
Loan losses charged to the allowance	(140		)	(607		)	(155		)
Balance, ending	$	4,407		$	4,505		$	4,973

Nonaccrual and past due loans by class at June 30, 2017 and December 31, 2016 were as follows:



	June 30, 2017
	(in thousands)
	30 - 59 Days Past Due		60 - 89 Days Past Due		90 or More Days Past Due		Total Past Due		Current		Total Loans		90 or More Days Past Due Still Accruing		Nonaccrual Loans
Commercial - Non Real Estate:
Commercial & Industrial	$	—	$	—	$	—	$	—	$	35,678	$	35,678	$	—	$	237
Commercial Real Estate:
Owner Occupied	415		—		—		415		125,014		125,429		—		415
Non-owner occupied	49		—		—		49		112,968		113,017		—		183
Construction and Farmland:
Residential	—		—		—		—		3,519		3,519		—		—
Commercial	—		—		—		—		32,259		32,259		—		—
Consumer:
Installment	28		2		6		36		12,507		12,543		—		16
Residential:
Equity Lines	67		—		—		67		32,409		32,476		—		108
Single family	699		197		4,283		5,179		187,896		193,075		—		4,642
Multifamily	—		—		—		—		4,367		4,367		—		—
All Other Loans	—		—		—		—		1,816		1,816		—		—
Total	$	1,258	$	199	$	4,289	$	5,746	$	548,433	$	554,179	$	—	$	5,601



	December 31, 2016
	(in thousands)
	30 - 59 Days Past Due		60 - 89 Days Past Due		90 or More Days Past Due		Total Past Due		Current		Total Loans		90 or More Past Due Still Accruing		Nonaccrual Loans
Commercial - Non Real Estate:
Commercial & Industrial	$	69	$	49	$	—	$	118	$	30,223	$	30,341	$	—	$	278
Commercial Real Estate:
Owner Occupied	150		384		—		534		114,820		115,354		—		431
Non-owner occupied	—		54		135		189		92,982		93,171		—		1,066
Construction and Farmland:
Residential	50		—		—		50		4,627		4,677		—		—
Commercial	499		—		—		499		26,615		27,114		—		—
Consumer:
Installment	23		2		11		36		12,641		12,677		8		8
Residential:
Equity Lines	66		—		—		66		31,240		31,306		—		132
Single family	444		51		166		661		195,999		196,660		—		5,076
Multifamily	—		—		—		—		3,566		3,566		—		—
All Other Loans	—		—		—		—		2,076		2,076		—		—
Total	$	1,301	$	540	$	312	$	2,153	$	514,789	$	516,942	$	8	$	6,991

Allowance for loan losses by segment at June 30, 2017 and December 31, 2016 were as follows:



	As of and For the Six Months Ended
	June 30, 2017
	(in thousands)
	Construction and Farmland			Residential			Commercial Real Estate			Commercial - Non Real Estate			Consumer			All Other Loans			Unallocated		Total
Allowance for credit losses:
Beginning Balance	$	450		$	1,992		$	1,522		$	235		$	69		$	22		$	215	$	4,505
Charge-Offs	—			(33		)	—			(58		)	(24		)	(25		)	—		(140		)
Recoveries	504			163			93			14			23			2			—		799
(Recovery of) provision for loan losses	(547		)	(296		)	(33		)	93			(3		)	23			6		(757		)
Ending balance	$	407		$	1,826		$	1,582		$	284		$	65		$	22		$	221	$	4,407
Ending balance: Individually evaluated for impairment	$	—		$	205		$	64		$	2		$	—		$	—		$	—	$	271
Ending balance: collectively evaluated for impairment	$	407		$	1,621		$	1,518		$	282		$	65		$	22		$	221	$	4,136
Loans:
Ending balance	$	35,778		$	229,918		$	238,446		$	35,678		$	12,543		$	1,816		$	—	$	554,179
Ending balance individually evaluated for impairment	$	331		$	8,571		$	1,748		$	504		$	16		$	—		$	—	$	11,170
Ending balance collectively evaluated for impairment	$	35,447		$	221,347		$	236,698		$	35,174		$	12,527		$	1,816		$	—	$	543,009



	As of and for the Twelve Months Ended
	December 31, 2016
	(in thousands)
	Construction and Farmland			Residential			Commercial Real Estate		Commercial - Non Real Estate		Consumer			All Other Loans			Unallocated			Total
Allowance for credit losses:
Beginning Balance	$	775		$	2,322		$	1,268	$	211	$	109		$	53		$	221		$	4,959
Charge-Offs	—			(535		)	—		—		(30		)	(42		)	—			(607		)
Recoveries	144			124			8		11		49			5			—			341
(Recovery of) provision for loan losses	(469		)	81			246		13		(59		)	6			(6		)	(188		)
Ending balance	$	450		$	1,992		$	1,522	$	235	$	69		$	22		$	215		$	4,505
Ending balance: Individually evaluated for impairment	$	—		$	268		$	102	$	15	$	—		$	—		$	—		$	385
Ending balance: collectively evaluated for impairment	$	450		$	1,724		$	1,420	$	220	$	69		$	22		$	215		$	4,120
Loans:
Ending balance	$	31,791		$	231,532		$	208,525	$	30,341	$	12,677		$	2,076		$	—		$	516,942
Ending balance individually evaluated for impairment	$	1,320		$	8,608		$	2,864	$	581	$	7		$	—		$	—		$	13,380
Ending balance collectively evaluated for impairment	$	30,471		$	222,924		$	205,661	$	29,760	$	12,670		$	2,076		$	—		$	503,562

Impaired loans by class as of and for the periods ended June 30, 2017 and December 31, 2016 were as follows:



	As of and for the Six Months Ended
	June 30, 2017
	(in thousands)
	Unpaid Principal Balance		Recorded Investment (1)		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no related allowance:
Commercial - Non Real Estate:
Commercial & Industrial	$	258	$	237	$	—	$	266	$	7
Commercial Real Estate:
Owner Occupied	865		750		—		753		7
Non-owner occupied	215		184		—		185		—
Construction and Farmland:
Residential	—		—		—		—		—
Commercial	331		331		—		338		14
Consumer:
Installment	17		16		—		17		—
Residential:
Equity lines	236		60		—		62		—
Single family	7,273		7,083		—		7,172		60
Multifamily	—		—		—		—		—
Other Loans	—		—		—		—		—
	$	9,195	$	8,661	$	—	$	8,793	$	88
With an allowance recorded:
Commercial - Non Real Estate:
Commercial & Industrial	$	267	$	267	$	2	$	276	$	6
Commercial Real Estate:
Owner Occupied	—		—		—		—		—
Non-owner occupied	815		817		64		821		18
Construction and Farmland:
Residential	—		—		—		—		—
Commercial	—		—		—		—		—
Residential:
Equity lines	218		48		48		48		—
Single family	1,400		1,392		157		1,401		31
Multifamily	—		—		—		—		—
Other Loans	—		—		—		—		—
	$	2,700	$	2,524	$	271	$	2,546	$	55
Total:
Commercial	$	525	$	504	$	2	$	542	$	13
Commercial Real Estate	1,895		1,751		64		1,759		25
Construction and Farmland	331		331		—		338		14
Consumer	17		16		—		17		—
Residential	9,127		8,583		205		8,683

EAGLE FINANCIAL SERVICES INC - FORM 10-Q - August 14, 2017

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