Eagle Financial Services Inc's Business Segments

Eagle Financial Services, Inc. is a bank holding company that was incorporated in 1991. The company is headquartered in Berryville, Virginia and conducts its operations through its subsidiary, Bank of Clarke County (the “Bank”). The Bank is chartered under Virginia law.
The Bank has twelve full-service branches and one drive-through only facility. The Bank’s main office is located at 2 East Main Street in Berryville, Virginia. The Bank opened for business on April 1, 1881. The Bank has offices located in Clarke County and Frederick County, as well as the Towns of Leesburg, Purcellville, and Ashburn, and the City of Winchester. This market area is located in the Shenandoah Valley and Northern Virginia.

The Bank offers a wide range of retail and commercial banking services, including demand, savings and time deposits and consumer, mortgage and commercial loans. The Bank has thirteen ATM locations in its trade area and issues both ATM cards and Debit cards to deposit customers. These cards can be used to withdraw cash at most ATM’s through the Bank’s membership in both regional and national networks. These cards can also be used to make purchases at retailers who accept transactions through the same regional and national networks. The Bank offers telephone banking, internet banking, and mobile banking to its customers. Internet banking also offers online bill payment to consumer and commercial customers. The Bank offers other commercial deposit account services such as ACH origination and remote deposit capture.

Eagle Investment Group (“EIG”) offers both a trust department and investment services. The trust services division of EIG offers a full range of personal and retirement plan services, which include serving as agent for bill paying and custody of assets, as investment manager with full authority or advisor, as trustee or co-trustee for trusts under will or under agreement, as trustee of life insurance trusts, as guardian or committee, as agent under a power of attorney, as executor or co-executor for estates, as custodian or investment advisor for individual retirement plans, and as trustee or trust advisor for corporate retirement plans such as profit sharing and 401(k) plans. The brokerage division of EIG offers a full range of investment services, which include tax-deferred annuities, IRAs and rollovers, mutual funds, retirement plans, 529 college savings plans, life insurance, long term care insurance, fixed income investing, brokerage CDs, and full service or discount brokerage services. Non-deposit investment products are offered through a third party provider.

In addition to the Bank, as of December 31, 2014, the Company had a wholly owned subsidiary, Eagle Financial Statutory Trust II, which was formed in connection with the issuance of $7,000,000 in trust preferred securities in 2007. On August 7, 2015, the Eagle Financial Statutory Trust II was dissolved. The Company’s subsidiary, Bank of Clarke County, is a partner in Bankers Title Shenandoah, LLC, which sells title insurance and is an investor in Virginia Bankers Insurance Center, LLC, which serves as the broker for insurance sales through its member banks. Bank of Clarke County is also an investor in State Theatre Owner, LLC which rehabilitated the State Theatre of Culpeper, Virginia and is an investor in Moore Street Investor, LLC which is rehabilitating two buildings located in Richmond, Virginia.

Eagle Financial Services Inc. offers a diverse range of financial products and services designed to meet the needs of individual consumers, businesses, and commercial enterprises. Their offerings can be categorized into several key segments, each tailored to address different financial needs and risk considerations.

1. One-to-Four-Family Residential Real Estate Lending

Eagle Financial Services provides residential mortgage loans primarily based on the borrowers capacity to repay the loan from their income and other financial resources. These loans are secured by residential real estate, which has a well-established market value. During the application process, comprehensive information about the borrowers income, employment history, and creditworthiness is collected. The evaluation of the real estate collateral is conducted by independent appraisers, whose credentials have been approved by the Bank’s Directors Loan Committee, ensuring an unbiased and accurate property valuation.

Commercial Real Estate Lending

The commercial real estate lending segment poses additional risks compared to residential lending. Loans in this category typically involve larger amounts and are concentrated among single borrowers or affiliated groups. The repayment of these loans is usually reliant on the successful operation of income-generating properties, meaning that economic downturns or unfavorable real estate market conditions could significantly impact repayment capability. Eagle Financial Services takes a thorough due diligence approach to assess potential borrowers, which includes evaluating market conditions and the viability of the commercial properties involved.

Construction and Land Development Lending

Eagle Financial Services engages in construction and land development lending, which introduces unique risk factors. A significant portion of this risk arises from the concentration of large loan balances provided to specific developers or contractors. Additionally, collateral risk is prominent because loan disbursements are based on expected value upon completion rather than current appraisals. To manage these risks, the Bank caps loan amounts at 80% of the anticipated appraised value post-construction. This prudent approach aims to mitigate issues related to cost overruns or inaccuracies in the estimation of construction expenses.

Commercial and Industrial Lending

In the commercial and industrial lending segment, Eagle Financial Services provides loans that are typically riskier than traditional residential mortgages. However, these loans can offer higher yields. The lending approach involves obtaining collateral and personal guarantees from the principal owners of borrowing entities, along with careful monitoring of the businesses financial health. Loans are tailored based on the company’s cash flow and are secured by various business assets, including real estate, accounts receivable, equipment, and inventory. Given the potential depreciation of collateral, Eagle Financial Services emphasizes rigorous assessment processes to ensure adequate security for its lending activities.

Consumer Lending

Consumer lending at Eagle Financial Services encompasses loans that often present higher risks compared to residential real estate financing, especially when dealing with unsecured loans or loans backed by assets with rapid depreciation, such as vehicles. The likelihood that the value of repossessed assets may fall short of covering the outstanding loan balance in default scenarios is acknowledged as a significant risk. The Bank employs stringent underwriting standards, typically requiring income verification and a review of credit history to assess borrowers capacity for repayment.

Additional Services

Beyond lending, Eagle Financial Services may also provide various ancillary financial products and services, which could include:

- Financial Advisory Services: Personalized advice regarding investments, wealth management, and retirement planning.
- Insurance Services: Offering products such as life, property, and casualty insurance to help protect borrowers’ assets and financial health.
- Business Banking Solutions: Tailored checking and savings accounts, merchant services, and payment processing for small and medium-sized enterprises.

Conclusion

Eagle Financial Services Inc. efficiently addresses a variety of lending needs, from residential mortgages to complex commercial loans, while maintaining a robust risk management framework. Each financial segment is designed with the intent to facilitate both the borrower’s needs and the Bank’s long-term stability and profitability, ensuring mutual growth and sustainability in an evolving economic landscape.