EAGLE FINANCIAL SERVICES INC - FORM 10-Q

Attached files

file	filename
EX-32.1 - EXHIBIT 32.1 - EAGLE FINANCIAL SERVICES INC	efsi-20180331exhibit321.htm
EX-31.2 - EXHIBIT 31.2 - EAGLE FINANCIAL SERVICES INC	efsi-20180331exhibit312.htm
EX-31.1 - EXHIBIT 31.1 - EAGLE FINANCIAL SERVICES INC	efsi-20180331exhibit311.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 March 31, 2018



¨	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	ý

Non-accelerated filer	¨	(Do not check if a smaller reporting company.)	Smaller reporting company	¨
			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 May 3, 2018 was 3,461,720.

TABLE OF CONTENTS




PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements:
	Consolidated Balance Sheets at March 31, 2018 and December 31, 2017	1
	Consolidated Statements of Income for the Three Months Ended March 31, 2018 and 2017	2
	Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2018 and 2017	3
	Consolidated Statements of Changes in Shareholders’ Equity for the Three Months Ended March 31, 2018 and 2017	4
	Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2018 and 2017	5
	Notes to Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	40
Item 4.	Controls and Procedures	40

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	41
Item 1A.	Risk Factors	41
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41
Item 3.	Defaults Upon Senior Securities	41
Item 4.	Mine Safety Disclosures	41
Item 5.	Other Information	41
Item 6.	Exhibits	42

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

EAGLE FINANCIAL SERVICES, INC.

Consolidated Balance Sheets

(dollars in thousands, except per share amounts)



	March 31, 2018			December 31, 2017
	(Unaudited)
Assets
Cash and due from banks	$	8,484		$	10,578
Interest-bearing deposits with other institutions	24,548			22,094
Federal funds sold	152			3,176
Total cash and cash equivalents	33,184			35,848
Securities available for sale, at fair value	128,820			132,566
Restricted investments	1,166			1,107
Loans	581,605			568,817
Allowance for loan losses	(4,530		)	(4,411		)
Net Loans	577,075			564,406
Bank premises and equipment, net	19,474			19,579
Other real estate owned, net of allowance	3,302			106
Other assets	12,843			12,139
Total assets	$	775,864		$	765,751
Liabilities and Shareholders’ Equity
Liabilities
Deposits:
Noninterest bearing demand deposits	$	252,144		$	234,990
Savings and interest bearing demand deposits	328,655			322,948
Time deposits	104,847			105,476
Total deposits	$	685,646		$	663,414
Other liabilities	7,147			18,520
Total liabilities	$	692,793		$	681,934

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 2018, 3,461,117 including 16,701 shares of unvested restricted stock; issued and outstanding 2017, 3,449,027 including 14,401 shares of unvested restricted stock	8,611			8,587
Surplus	12,155			12,075
Retained earnings	64,588			62,845
Accumulated other comprehensive (loss) income	(2,283		)	310
Total shareholders’ equity	$	83,071		$	83,817
Total liabilities and shareholders’ equity	$	775,864		$	765,751

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
	March 31,
	2018			2017
Interest and Dividend Income
Interest and fees on loans	$	6,541		$	5,736
Interest and dividends on securities available for sale:
Taxable interest income	605			550
Interest income exempt from federal income taxes	262			254
Dividends	13			5
Interest on deposits with other institutions	54			21
Total interest and dividend income	$	7,475		$	6,566
Interest Expense
Interest on deposits	$	426		$	203
Total interest expense	$	426		$	203
Net interest income	$	7,049		$	6,363
Provision for (Recovery of) Loan Losses	205			(527		)
Net interest income after provision for (recovery of) loan losses	$	6,844		$	6,890
Noninterest Income
Income from fiduciary activities	$	444		$	292
Service charges on deposit accounts	308			299
Other service charges and fees	961			953
Gain on sale of securities	11			50
Loss on disposal of bank premises and equipment	(3		)	(6		)
Other operating income	80			85
Total noninterest income	$	1,801		$	1,673
Noninterest Expenses
Salaries and employee benefits	$	3,526		$	3,350
Occupancy expenses	371			377
Equipment expenses	219			239
Advertising and marketing expenses	185			178
Stationery and supplies	56			41
ATM network fees	206			220
Other real estate owned expense	130			1
(Gain) on foreclosure and sales of other real estate owned	(397		)	(1		)
FDIC assessment	58			52
Computer software expense	139			196
Bank franchise tax	134			125
Professional fees	275			291
Data processing fees	125			117
Other operating expenses	603			525
Total noninterest expenses	$	5,630		$	5,711
Income before income taxes	$	3,015		$	2,852
Income Tax Expense	476			810
Net income	$	2,539		$	2,042
Earnings Per Share
Net income per common share, basic	$	0.73		$	0.59
Net income per common share, diluted	$	0.73		$	0.59

See Notes to Consolidated Financial Statements

EAGLE FINANCIAL SERVICES, INC.

Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

(dollars in thousands)



	Three Months Ended
	March 31,
	2018			2017
Net income	$	2,539		$	2,042
Other comprehensive (loss):
Unrealized (loss) on available for sale securities net of reclassification adjustments, and net of deferred income tax of ($689) and ($37) for the three months ended, respectively	(2,593		)	(71		)
Total other comprehensive (loss)	(2,593		)	(71		)
Total comprehensive (loss) income	$	(54	)	$	1,971

See Notes to Consolidated Financial Statements

EAGLE FINANCIAL SERVICES, INC.

Consolidated Statements of Changes in Shareholders’ Equity (Unaudited)

(dollars in thousands, except per share amounts)



	Common Stock			Surplus			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total
Balance, December 31, 2016	$	8,633		$	12,642		$	58,165		$	(24	)	$	79,416
Net income							2,042						2,042
Other comprehensive (loss)										(71		)	(71		)
Vesting of restricted stock awards, stock incentive plan (5,250 shares)	13			(13		)							—
Stock-based compensation expense				65									65
Issuance of common stock, dividend investment plan (3,150 shares)	8			77									85
Repurchase and retirement of common stock (8,857 shares)	(22		)	(223		)							(245		)
Dividends declared ($0.22 per share)							(765		)				(765		)
Balance, March 31, 2017	$	8,632		$	12,548		$	59,442		$	(95	)	$	80,527

Balance, December 31, 2017	$	8,587		$	12,075		$	62,845		$	310		83,817
Net income							2,539						2,539
Other comprehensive (loss)										(2,593		)	(2,593		)
Vesting of restricted stock awards, stock incentive plan (9,109 shares)	23			(23		)							—
Stock-based compensation expense				81									81
Issuance of common stock, dividend investment plan (5,681 shares)	14			166									180
Repurchase and retirement of common stock (5,000 shares)	(13		)	(144		)							(157		)
Dividends declared ($0.23 per share)							(796		)				(796		)
Balance, March 31, 2018	$	8,611		$	12,155		$	64,588		$	(2,283	)	$	83,071

See Notes to Consolidated Financial Statements

EAGLE FINANCIAL SERVICES, INC.

Consolidated Statements of Cash Flows (Unaudited)

(dollars in thousands)



	Three Months Ended
	March 31,
	2018			2017
Cash Flows from Operating Activities
Net income	$	2,539		$	2,042
Adjustments to reconcile net income to net cash (used in) operating activities:
Depreciation	234			236
Amortization of intangible and other assets	45			54
Provision for (recovery of) loan losses	205			(527		)
(Gain) on foreclosure and sales of other real estate owned	(397		)	(1		)
Loss on the sale and disposal of premises and equipment	3			6
Loss on the sale of repossessed assets	—			2
(Gain) on the sale of securities	(11		)	(50		)
Stock-based compensation expense	81			65
Premium amortization on securities, net	149			133
Changes in assets and liabilities:
(Increase) in other assets	(60		)	(1,181		)
(Decrease) in other liabilities	(11,373		)	(8,116		)
Net cash (used in) operating activities	$	(8,585	)	$	(7,337	)
Cash Flows from Investing Activities
Proceeds from maturities, calls, and principal payments of securities available for sale	$	5,181		$	2,016
Proceeds from the sale of securities available for sale	3,464			2,925
Purchases of securities available for sale	(8,319		)	(17,251		)
Purchases of restricted investments	(59		)	—
Purchases of bank premises and equipment	(132		)	(32		)
Proceeds from the sale of other real estate owned	—			265
Proceeds from the sale of repossessed assets	—			2
Net (increase) in loans	(15,673		)	(1,981		)
Net cash (used in) investing activities	$	(15,538	)	$	(14,056	)
Cash Flows from Financing Activities
Net increase in noninterest bearing demand deposits, savings, and interest bearing demand deposits	$	22,861		$	15,072
Net (decrease) in time deposits	(629		)	(3,076		)
Repurchase and retirement of common stock	(157		)	(245		)
Cash dividends paid	(616		)	(680		)
Net cash provided by financing activities	$	21,459		$	11,071

EAGLE FINANCIAL SERVICES, INC.

Consolidated Statements of Cash Flows (Unaudited)

(dollars in thousands)

(continued)



	Three Months Ended
	March 31,
	2018			2017
(Decrease) in cash and cash equivalents	$	(2,664	)	$	(10,322	)
Cash and Cash Equivalents
Beginning	35,848			35,281
Ending	$	33,184		$	24,959
Supplemental Disclosures of Cash Flow Information
Cash payments for:
Interest	$	410		$	210
Income taxes	$	—		$	—
Supplemental Schedule of Noncash Investing and Financing Activities:
Unrealized (loss) on securities available for sale	$	(3,282	)	$	(108	)
Other real estate and repossessed assets acquired in settlement of loans	$	2,799		$	5
Issuance of common stock, dividend investment plan	$	180		$	85

See Notes to Consolidated Financial Statements

EAGLE FINANCIAL SERVICES, INC.

Notes to Consolidated Financial Statements (Unaudited)

March 31, 2018

NOTE 1. General

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) 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 March 31, 2018 and December 31, 2017, the results of operations for the three months ended March 31, 2018 and 2017, and cash flows for the three months ended March 31, 2018 and 2017. The results of operations for the three months ended March 31, 2018 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, 2017 (the “2017 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.

On January 1, 2018, the Company adopted ASU No. 2014-09, "Revenue from Contracts with Customers: Topic 606." This ASU revised guidance for the recognition, measurement, and disclosure of revenue from contracts with customers. The original guidance was amended through subsequent accounting standard updates that resulted in technical corrections, improvements, and a one-year deferral of the effective date to January 1, 2018. The guidance, as amended, is applicable to all entities and replaces significant portions of existing industry and transaction-specific revenue recognition rules with a more principles-based recognition model. Most revenue associated with financial instruments, including interest income, loan origination fees, and credit card fees, is outside the scope of the guidance. Gains and losses on investment securities, derivatives, financial guarantees, and sales of financial instruments are similarly excluded from the scope. The guidance is applicable to noninterest revenue streams such as trust and asset management income, deposit related fees, interchange fees, and merchant income. The Company adopted this guidance via the modified retrospective approach, meaning the standard is applied only to the most current period presented in the financial statements with the cumulative effect of initially applying the standard recognized at the date of initial application.

Since the guidance does not apply to revenue associated with financial instruments, including loans and securities that are accounted for under other GAAP, the new guidance did not have a material impact on revenue most closely associated with financial instruments, including interest income and expense. The Company completed its overall assessment of revenue streams and review of related contracts potentially affected by the ASU, including trust and asset management fees, deposit related fees, interchange fees, and merchant income. The Company also completed an evaluation of certain costs related to these revenue streams to determine whether such costs should be presented gross versus net. Based on these assessments, the Company concluded that ASU 2014-09 did not materially change the method in which the Company currently recognizes revenue for these revenue streams. Since there was no net income impact upon adoption of the new guidance, a cumulative effect adjustment to opening retained earnings was not deemed necessary.

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, executive officers and certain non-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. Beginning during 2018, certain non-executive officers also were granted restricted shares which vest over a 3 year service period. The Company recognizes compensation expense over the restricted period based on the fair value of the Company's stock on the grant date. The Company's policy is to recognize forfeitures as they occur. As of March 31, 2018, there was $253 thousand of unrecognized compensation cost related to nonvested restricted stock.

The following table presents Restricted Stock activity for the three months ended March 31, 2018 and 2017:



	Three Months Ended
	March 31,
	2018				2017
	Shares		Weighted Average Grant Date Fair Value		Shares		Weighted Average Grant Date Fair Value
Nonvested, beginning of period	14,401		$	24.68	14,901		$	23.05
Granted	11,450		32.00		9,650		25.50
Vested	(9,109	)	24.63		(5,250	)	23.15
Forfeited	(41	)	25.50		—		—
Nonvested, end of period	16,701		29.72		19,301		24.25

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 months ended March 31, 2018 and 2017. During 2018 and 2017, there were no potentially dilutive securities outstanding.



	Three Months Ended
	March 31,
	2018	2017
Weighted average number of common shares outstanding used to calculate basic and diluted earnings per share	3,463,118	3,478,053

NOTE 4. Securities

Amortized costs and fair values of securities available for sale at March 31, 2018 and December 31, 2017 were as follows:



	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Fair Value
	March 31, 2018
	(in thousands)
Obligations of U.S. government corporations and agencies	$	19,351	$	65	$	(597	)	$	18,819
Mortgage-backed securities	64,768		5		(1,936		)	62,837
Obligations of states and political subdivisions	47,645		397		(878		)	47,164
	$	131,764	$	467	$	(3,411	)	$	128,820
	December 31, 2017
	(in thousands)
Obligations of U.S. government corporations and agencies	$	21,565	$	213	$	(258	)	$	21,520
Mortgage-backed securities	61,464		126		(346		)	61,244
Obligations of states and political subdivisions	49,199		789		(186		)	49,802
	$	132,228	$	1,128	$	(790	)	$	132,566

During the three months ended March 31, 2018, the Company received proceeds of $3.5 million on sales of available for sale securities for gross gains of $54 thousand and gross losses of $43 thousand. During the three months ended March 31, 2017, the Company sold $2.9 million of available for sale securities for gross gains of $50 thousand. There were no losses on the sale of available for sale securities during the three months ended March 31, 2017.

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 March 31, 2018 and December 31, 2017 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
	March 31, 2018
	(in thousands)
Obligations of U.S. government corporations and agencies	$	6,203	$	211	$	7,524	$	386	$	13,727	$	597
Mortgage-backed securities	45,579		1,194		16,832		742		62,411		1,936
Obligations of states and political subdivisions	19,583		594		4,555		284		24,138		878
	$	71,365	$	1,999	$	28,911	$	1,412	$	100,276	$	3,411
	December 31, 2017
	(in thousands)
Obligations of U.S. government corporations and agencies	$	4,455	$	58	$	7,810	$	200	$	12,265	$	258
Mortgage-backed securities	11,885		59		17,931		287		29,816		346
Obligations of states and political subdivisions	4,071		27		4,692		159		8,763		186
	$	20,411	$	144	$	30,433	$	646	$	50,844	$	790

Gross unrealized losses on available for sale securities included one hundred thirteen (113) and fifty-four (54) debt securities at March 31, 2018 and December 31, 2017, 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 March 31, 2018 and December 31, 2017 was changes in market interest rates and not credit concerns of the issuers. Since the losses can be primarily attributed to changes in market interest rates and not expected cash flows or an issuer’s financial condition and management does not intend to sell and it is likely that management will not be required to sell the securities prior to their anticipated recovery, 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.

Securities having a carrying value of $2.9 million at March 31, 2018 were pledged for various purposes required by law.

The composition of restricted investments at March 31, 2018 and December 31, 2017 was as follows:



	March 31, 2018		December 31, 2017
	(in thousands)
Federal Reserve Bank Stock	$	344	$	344
Federal Home Loan Bank Stock	682		623
Community Bankers’ Bank Stock	140		140
	$	1,166	$	1,107

NOTE 5. Loans and Allowance for Loan Losses

The composition of loans at March 31, 2018 and December 31, 2017 was as follows:



	March 31,			December 31,
	2018			2017
	(in thousands)
Mortgage loans on real estate:
Construction and land development	$	48,276		$	43,786
Secured by farmland	8,351			8,568
Secured by 1-4 family residential properties	218,030			223,210
Multifamily	4,030			4,095
Commercial	245,909			239,915
Commercial and industrial loans	38,498			37,427
Consumer installment loans	9,471			10,187
All other loans	9,468			2,050
Total loans	$	582,033		$	569,238
Net deferred loan fees	(428		)	(421		)
Allowance for loan losses	(4,530		)	(4,411		)
Net Loans	$	577,075		$	564,406

Changes in the allowance for loan losses for the three months ended March 31, 2018 and 2017 and the year ended December 31, 2017 were as follows:



	Three Months Ended			Year Ended			Three Months Ended
	March 31,			December 31,			March 31,
	2018			2017			2017
				(in thousands)
Balance, beginning	$	4,411		$	4,505		$	4,505
Provision for (recovery of) loan losses	205			(625		)	(527		)
Recoveries added to the allowance	52			901			502
Loan losses charged to the allowance	(138		)	(370		)	(62		)
Balance, ending	$	4,530		$	4,411		$	4,418

Nonaccrual and past due loans by class at March 31, 2018 and December 31, 2017 were as follows:



	March 31, 2018
	(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	$	—	$	17	$	75	$	92	$	38,406	$	38,498	$	—	$	331
Commercial Real Estate:
Owner Occupied	—		—		—		—		132,667		132,667		—		—
Non-owner occupied	175		239		—		414		112,828		113,242		—		747
Construction and Farmland:
Residential	—		—		—		—		7,288		7,288		—		—
Commercial	—		—		—		—		49,339		49,339		—		—
Consumer:
Installment	9		—		9		18		9,453		9,471		—		10
Residential:
Equity Lines	—		—		18		18		31,654		31,672		18		43
Single family	334		74		294		702		185,656		186,358		—		669
Multifamily	—		—		—		—		4,030		4,030		—		—
All Other Loans	240		—		—		240		9,228		9,468		—		—
Total	$	758	$	330	$	396	$	1,484	$	580,549	$	582,033	$	18	$	1,800



	December 31, 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 Past Due Still Accruing		Nonaccrual Loans
Commercial - Non Real Estate:
Commercial & Industrial	$	75	$	10	$	142	$	227	$	37,200	$	37,427	$	—	$	594
Commercial Real Estate:
Owner Occupied	—		—		—		—		127,018		127,018		—		—
Non-owner occupied	—		368		—		368		112,529		112,897		—		767
Construction and Farmland:
Residential	—		—		—		—		3,214		3,214		—		—
Commercial	187		—		—		187		48,953		49,140		—		—
Consumer:
Installment	17		—		2		19		10,168		10,187		—		13
Residential:
Equity Lines	18		—		—		18		32,820		32,838		—		44
Single family	829		572		4,060		5,461		184,911		190,372		—		4,921
Multifamily	—		—		—		—		4,095		4,095		—		—
All Other Loans	—		—		—		—		2,050		2,050		—		—
Total	$	1,126	$	950	$	4,204	$	6,280	$	562,958	$	569,238	$	—	$	6,339

Allowance for loan losses by segment at March 31, 2018 and December 31, 2017 were as follows:



	As of and for the Three Months Ended
	March 31, 2018
	(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	$	332	$	1,754		$	1,627	$	570		$	69		$	29		$	30	$	4,411
Charge-Offs	—		—			—		(122		)	(1		)	(15		)	—		(138		)
Recoveries	11		8			2		20			7			4			—		52
(Recovery of) provision for loan losses	19		(51		)	35		35			(10		)	95			82		205
Ending balance	$	362	$	1,711		$	1,664	$	503		$	65		$	113		$	112	$	4,530
Ending balance: Individually evaluated for impairment	$	—	$	167		$	58	$	92		$	9		$	—		$	—	$	326
Ending balance: collectively evaluated for impairment	$	362	$	1,544		$	1,606	$	411		$	56		$	113		$	112	$	4,204
Loans:
Ending balance	$	56,627	$	222,060		$	245,909	$	38,498		$	9,471		$	9,468		$	—	$	582,033
Ending balance individually evaluated for impairment	$	306	$	3,947		$	1,877	$	574		$	10		$	—		$	—	$	6,714
Ending balance collectively evaluated for impairment	$	56,321	$	218,113		$	244,032	$	37,924		$	9,461		$	9,468		$	—	$	575,319



	As of and for the Twelve Months Ended
	December 31, 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	(19		)	(55		)	(1		)	(187		)	(59		)	(49		)	—			(370		)
Recoveries	535			212			65			44			40			5			—			901
(Recovery of) provision for loan losses	(634		)	(395		)	41			478			19			51			(185		)	(625		)
Ending balance	$	332		$	1,754		$	1,627		$	570		$	69		$	29		$	30		$	4,411
Ending balance: Individually evaluated for impairment	$	—		$	195		$	59		$	195		$	9		$	—		$	—		$	458
Ending balance: collectively evaluated for impairment	$	332		$	1,559		$	1,568		$	375		$	60		$	29		$	30		$	3,953
Loans:
Ending balance	$	52,354		$	227,305		$	239,915		$	37,427		$	10,187		$	2,050		$	—		$	569,238
Ending balance individually evaluated for impairment	$	315		$	8,315		$	1,904		$	858		$	34		$	—		$	—		$	11,426
Ending balance collectively evaluated for impairment	$	52,039		$	218,990		$	238,011		$	36,569		$	10,153		$	2,050		$	—		$	557,812

Impaired loans by class as of and for the periods ended March 31, 2018 and December 31, 2017 were as follows:



	As of and for the Three Months Ended
	March 31, 2018
	(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	$	740	$	482	$	—	$	505	$	7
Commercial Real Estate:
Owner Occupied	328		328		—		330		4
Non-owner occupied	795		747		—		752		—
Construction and Farmland:
Residential	—		—		—		—		—
Commercial	354		307		—		311		7
Consumer:
Installment	2		2		—		2		—
Residential:
Equity lines	—		—		—		—		—
Single family	3,123		2,705		—		2,904		25
Multifamily	—		—		—		—		—
Other Loans	—		—		—		—		—
	$	5,342	$	4,571	$	—	$	4,804	$	43
With an allowance recorded:
Commercial - Non Real Estate:
Commercial & Industrial	$	92	$	92	$	92	$	92	$	—
Commercial Real Estate:
Owner Occupied	—		—		—		—		—
Non-owner occupied	801		804		58		806		9
Construction and Farmland:
Residential	—		—		—		—		—
Commercial	—		—		—		—		—
Consumer:
Installment	9		9		9		9		—
Residential:
Equity lines	217		43		43		43		—
Single family	1,263		1,211		124		1,215		14
Multifamily	—		—		—		—		—
Other Loans	—		—		—		—		—
	$	2,382	$	2,159	$	326	$	2,165	$	23
Total:
Commercial	$	832	$	574	$	92	$	597	$	7
Commercial Real Estate	1,924		1,879		58		1,888		13
Construction and Farmland	354		307		—		311		7
Consumer	11		11		9		11		—
Residential	4,603		3,959		167		4,162		39
Other	—		—		—		—		—
Total	$	7,724	$	6,730	$	326	$	6,969	$	66

(1) Recorded investment is defined as the summation of the outstanding principal balance, accrued interest, net deferred loan fees or costs, and any partial charge-offs. Accrued interest and net deferred loan fees or costs totaled $16 thousand at March 31, 2018.



	As of and for the Twelve Months End
	December 31, 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	$	626	$	304	$	—	$	342	$	23
Commercial Real Estate:
Owner Occupied	330		331		—		336		15
Non-owner occupied	805		767		—		785		20
Construction and Farmland:
Residential	—		—		—		—		—
Commercial	362		316		—		330		28
Consumer:
Installment	25		25		—		27		1
Residential:
Equity lines	—		—

EAGLE FINANCIAL SERVICES INC - FORM 10-Q - May 10, 2018

Attached files