UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One) FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934.
For the quarterly period ended September 30, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from to
Commission file number 33-70184
C&F Financial Corporation
(Exact name of small business issuer as
specified in its charter)
Virginia 54-1680165
(State or other jurisdiction of (I.R.S. Employer
incorporation of organization) Identification No.)
Eighth and Main Streets West Point VA 23181
(Address of principal executive offices) (Zip Code)
(Issuer's telephone number) (804) 843-2360
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the 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. [x] Yes [ ] No
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 1,908,358 as of November 10,
1997.
<PAGE>
TABLE OF CONTENTS
Part I - Financial Information
<TABLE>
<CAPTION>
Page
----
<S> <C>
Item 1. Financial Statements
Consolidated Balance Sheets -
September 30, 1997 and December 31, 1996.......................................................1
Consolidated Statements of Income -
Three months and nine months ended September 30, 1997 and 1996.................................2
Consolidated Statements of Shareholders' Equity
Nine months ended September 30, 1997 ..........................................................3
Consolidated Statements of Cash Flows -
Nine months ended September 30, 1997 and 1996..................................................4
Notes to Consolidated Financial Statements.........................................................5
Item 2. Management's Discussion and Analysis ..............................................................6
Part II - Other Information
Item 1. Legal Proceedings ................................................................................11
Item 2. Changes in Securities ............................................................................11
Item 3. Defaults Upon Senior Securities...................................................................11
Item 4. Submission of Matters to a Vote of Security Holders ..............................................11
Item 5. Other Information ................................................................................11
Item 6. Exhibits and Reports on Form 8-K..................................................................12
Signatures ..................................................................................................13
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<TABLE>
<CAPTION>
ASSETS September 30, 1997 December 31, 1996
- ------ ------------------ -----------------
(Unaudited)
<S> <C>
Cash and due from banks $ 6,561 $ 8,254
Interest -bearing deposits in other banks 32 545
----------- -----------
Total cash and cash equivalents 6,593 8,799
Investment securities
Available for sale securities at fair value,
amortized cost of $22,381 and $19,022,
respectively 22,481 18,918
Held to maturity at amortized cost,
fair value of $52,280 and $67,687,
respectively 50,729 66,651
Loans held for sale, net 23,491 12,285
Loans, net 151,384 136,732
Federal Home Loan Bank stock 1,062 857
Corporate premises and equipment,
net of accumulated depreciation 6,255 6,011
Accrued interest receivable 2,049 2,270
Other assets 4,483 4,148
----------- -----------
Total assets $ 268,527 $ 256,671
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Non-interest-bearing demand deposits $ 37,267 $ 30,829
Savings and interest-bearing demand deposits 92,568 91,828
Time deposits 99,574 93,765
----------- -----------
Total deposits 229,409 216,422
Other borrowings 5,070 5,055
Accrued interest payable 668 541
Other liabilities 2,686 2,438
----------- -----------
Total liabilities 237,833 224,456
----------- -----------
Shareholders' Equity
Preferred stock ($1.00 par value,
3,000,000 shares authorized) -- --
Common stock ($1.00 par value, 8,000,000
shares authorized, 1,908,358 and 2,113,041
shares issued and outstanding at September
30, 1997 and December 31, 1996, respectively) 1,908 2,113
Additional paid-in capital -- --
Retained earnings 28,375 29,796
Net unrealized gain on securities
available for sale, net of tax of
$212 and $157, respectively 411 306
----------- -----------
Total shareholders' equity 30,694 32,215
----------- -----------
Total liabilities and
shareholders' equity $ 268,527 $ 256,671
=========== ===========
</TABLE>
The Company's notes are an integral part of the consolidated financial
statements.
1
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands of dollars, except for per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
Interest Income 1997 1996 1997 1996
---- ---- ---- ----
<S> <C>
Interest and fees on loans $ 3,839 $ 3,108 $ 10,731 $ 8,879
Interest on other market investments 13 61 59 126
Interest on investment securities
U.S. Treasury securities 50 69 149 290
U.S. Government agencies and
corporations 549 765 1,846 2,398
Tax-exempt obligations of states
and political subdivisions 494 540 1,540 1,565
Corporate bonds and other 68 102 282 303
------------ ------------ ------------ ------------
Total interest income 5,013 4,645 14,607 13,561
Interest Expense
Savings and interest-bearing deposits 689 637 2,009 1,882
Certificates of deposit, $100,000 or more 102 120 318 373
Other time deposits 1,173 1,091 3,336 3,342
Short-term borrowings and other 86 83 265 161
------------ ------------ ------------ ------------
Total interest expense 2,050 1,931 5,928 5,758
Net interest income 2,963 2,714 8,679 7,803
Provision for loan losses 75 -- 165 --
------------ ------------ ------------ ------------
Net interest income after provision for loan losses 2,888 2,714 8,514 7,803
Other Operating Income
Gain on sale of loans 1,263 811 2,634 1,902
Service charges on deposit accounts 249 241 749 700
Other service charges and fees 301 164 725 514
Other income 167 101 437 258
------------ ------------ ------------ ------------
Total other operating income 1,980 1,317 4,545 3,374
Other Operating Expenses
Salaries and employee benefits 1,721 1,552 4,546 4,425
Occupancy expenses 449 450 1,290 1,292
Goodwill amortization 69 80 206 202
Other expenses 811 591 2,147 1,643
------------ ------------ ------------ ------------
Total other operating expenses 3,050 2,673 8,189 7,562
Income before income taxes 1,818 1,358 4,870 3,615
Income tax expense 484 289 1,139 681
------------ ------------ ------------ ------------
Net Income $ 1,334 $ 1,069 $ 3,731 $ 2,934
============ ============ ============ ============
Per Share Data
Net Income $ .69 $ .48 $ 1.87 $ 1.31
Dividends per common share $ .18 $ .15 $ .36 .30
Weighted average number of shares and
common stock equivalents outstanding 1,920,587 2,232,844 1,992,214 2,232,844
</TABLE>
The Company's notes are an integral part of the consolidated financial
statements.
2
<PAGE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)
(Amounts in thousands of dollars)
<TABLE>
<CAPTION>
Net Unrealized
Additional Gain (Loss)
Common Pain-In Retained on Securities
Stock Capital Earnings Available for Sale Total
-------- ---------- --------- ------------------ ----------
<S> <C>
Balance January 1, 1997 $ 2,113 $ -- $ 29,796 $ 306 $ 32,215
Repurchase of common stock (205) -- (4,126) -- (4,331)
Net income 3,731 3,731
Cash dividends (1,026) (1,026)
Change in unrealized gains
and losses on securities
available for sale 105 105
-------- ----------- --------- -------- ---------
Balance September 30, 1997 $ 1,908 $ -- $ 28,375 $ 411 $ 30,694
======== =========== ========= ======== =========
</TABLE>
The Company's notes are an integral part of the consolidated financial
statements.
3
<PAGE>
CONSOLIDATED STATEMENTS ON CASH FLOWS
(Unaudited)
(Amounts in thousands of dollars)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
-------------------------------
1997 1996
---- ----
<S> <C>
Cash flows from operating activities:
Net income $ 3,731 $ 2,934
Adjustments to reconcile net income to
net cash provided by (used in) operating activities:
Depreciation 635 608
Amortization of goodwill 206 202
Provision for loan losses 165
Accretion of discounts and amortization of
premiums on investment securities, net (72) (208)
Net realized (gain) loss on securities 7 (13)
Proceeds from sale of loans 189,749 119,161
Origination of loans held for sale (198,321) (128,963)
Gain on sale of loans (2,634) 1,902
Change in other assets and liabilities:
Accrued interest receivable 221 224
Other assets (541) (708)
Accrued interest payable 127 75
Other liabilities 194 (60)
----------- -----------
Net cash used in operating activities (6,533) (4,846)
----------- -----------
Cash flows from investing activities:
Proceeds from maturities of investments
held to maturity 18,198 13,351
Proceeds from sales and maturities of
investments available for sale 5,577 9,531
Purchase of investment securities (2,250) (1,975)
Purchase of investments available for sale (8,942) (7,340)
Net decrease (increase) in customer loans (14,817) (21,572)
Proceeds from sale of corporate premises and equipment 170
Purchase of corporate premises and equipment (1,049) (837)
Purchase of Federal Home Loan Bank stock (205) (52)
----------- -----------
Net cash used in investing activities (3,318) (8,894)
----------- -----------
Cash flows from financing activities:
Net increase (decrease) in demand,
interest-bearing demand and savings deposits 7,178 (7,778)
Net increase in time deposits 5,809 4,189
Assumption of deposit liabilities in
branch acquisition, net of premium paid -- 7,837
Net increase in other borrowings 15 6,885
Proceeds from exercise of stock options -- 13
Repurchase of common stock (4,331) --
Cash dividends (1,026) (1,027)
----------- -----------
Net cash provided by financing activities 7,645 10,119
----------- -----------
Net increase (decrease) in cash and cash equivalents (2,206) (3,621)
Cash and cash equivalents at beginning of period 8,799 13,450
---------- ----------
Cash and cash equivalents at end of period $ 6,593 $ 9,829
========== ==========
Supplemental disclosure
Interest paid$ $ 5,801 $ 5,610
Income taxes paid $ 1,103 $ 436
</TABLE>
The Company's notes are an integral part of the consolidated financial
statements.
4
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q and, therefore, do not
include all of the disclosures and notes required by generally accepted
accounting principles. In the opinion of C&F Financial Corporation's management,
all adjustments, consisting only of normal recurring accruals, necessary to
present fairly the financial position as of September 30, 1997, the results of
operations for the three and nine months ended September 30, 1997 and 1996, and
cash flows for the nine months ended September 30, 1997 and 1996. The results of
operations for the interim periods are not necessarily indicative of the results
to be expected for the full year.
These consolidated financial statements should be read in conjunction
with the consolidated financial statements and notes thereto included in the C&F
Financial Annual Report on Form 10-KSB for the year ended December 31, 1996.
Certain previously reported amounts have been reclassified to agree with the
current presentation.
The consolidated financial statements include the accounts of the Company
and its subsidiary, with all significant intercompany transactions and accounts
being eliminated in consolidation.
Note 2
Net income per share has been calculated on the basis of the weighted
average number of shares of common stock and common stock equivalents
outstanding for the applicable periods. Weighted average number of shares of
common stock and common stock equivalents was 1,920,587 and 2,232,844 for the
three months ended September 30, 1997 and 1996, respectively and 1,992,214 and
2,232,844 for the nine months ended September 30, 1997 and 1996, respectively.
There is no material difference between primary and fully-diluted earnings per
share.
Note 3
On April 4, 1997, the Company repurchased 204,683 shares of its common
stock at a price of $21.00 per share.
5
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
The following discussion supplements and provides information about the
major components of the results of operations and financial condition, liquidity
and capital resources of C&F Financial Corporation (the "Company"). This
discussion and analysis should be read in conjunction with the Consolidated
Financial Statements, and supplemental financial data.
Overview
Net income increased 24.8% to $1,334,000 for the three months ended
September 30, 1997 compared to $1,069,000 for the same period of 1996. Earnings
per share were $.69 for the three month period, up 43.8% from $.48 per share for
the three months ended September 30, 1996. Net income for the first nine months
ended September 30, 1997 increased 27.2% to $3,731,000 compared to $2,934,000
for the same period of 1996. Earnings per share were $1.87 for the nine month
period, up 42.7% from $1.31 per share for the nine months ended September 30,
1996.
Profitability as measured by the Company's annualized return on average
assets (ROA) increased to 2.03% for the nine months ended September 30, 1997, up
from 1.72% for the same period of 1996. For the first nine months of 1997, ROA
increased to 1.94%, up from 1.56% for the first nine months of 1996. Another key
indicator of performance, the annualized return on average equity (ROE) for the
three months ended September 30, 1997 was 17.84%, compared to 12.92% for the
three months ended September 30, 1996. For the first nine months of 1997, ROE
was 16.14% compared to 12.14% for the first nine months of 1996.
RESULTS OF OPERATIONS
Net Interest Income
Net interest income for the three months ended September 30, 1997 was
$2,963,000, an increase of $249,000, or 9.2% from $2,714,000 for the three
months ended September 30, 1996. The increase in net interest income is a result
of an increase in the average balance of interest earning assets to $246.1
million for the three months ended September 30, 1997 compared to $231.3 million
for the same period in 1996 and the increase in the Company's interest rate
spread on a taxable equivalent basis to 4.38% for the three months ended
September 30, 1997 from 4.33% for the same period in 1996. In addition, the
Company's net interest margin on a tax equivalent basis increased to 5.23% for
the three months ended September 30, 1997 from 5.17% for the same period in
1996. The increase in the Company's interest rate spread and net interest margin
was a result of the Company's continued effort in reallocating a portion of
lower yielding investments into higher yielding loans and the overall increase
in the loan portfolio, particularly in higher yielding commercial and consumer
loans. The average balance for loans increased to $172,392,000 for the three
months ended September 30, 1997 compared to $138,679,000 for the same period in
1996, while the average balance for investments decreased to $72,720,000 for the
three months ended September 30, 1997 compared to $88,925,000 for the same
period in 1996.
Net interest income for the first nine months of 1997 was $8,679,000,
an increase of $876,000, or 11.2% from $7,803,000 for the first nine months of
1996. The increase in net interest income is a result of an increase in the
average balance of interest earning assets to $240.1 million for the nine months
ended September 30, 1997 compared to $228.0 million for the same period in 1996
6
<PAGE>
and the increase in the Company's interest rate spread on a taxable equivalent
basis to 4.45% for the nine months ended September 30, 1997 from 4.20% for the
same period in 1996. In addition, the Company's net interest margin on a tax
equivalent basis increased to 5.26% for the nine months ended September 30, 1997
from 5.03% for the same period in 1996. As was the case for the three months
ended September 30, 1997, the increase in the Company's interest rate spread and
net interest margin was a result of an increase in the average balance of loans
and a change in the overall mix of loans. The average balance for loans
increased to $161,005,000 for the first nine months of 1997 versus $133,716,000
for the first nine months of 1996. The average balance of investments decreased
to $77,609,000 for the first nine months of 1997 compared to $91,157,000 for the
first nine months of 1996.
Non-Interest Income
Non-interest income increased $663,000 or 50.3% for the three months
ended September 30, 1997 from the same period of 1996. Non-interest income for
the nine months ended September 30, 1997 increased $1,171,000, or 34.7% to
$4,545,000 from $3,374,000 for the same period in 1996. The majority of the
increase is a result of increased loan production at C&F Mortgage Corporation, a
subsidiary of the Bank. This increase is also a result of the Company's
continued effort to generate and increase other sources of non-interest income,
including fees generated from the sale of investments by C&F Investment
Services, Inc., a subsidiary of the Bank.
Non-Interest Expense
Non-interest expense increased $377,000, or 14.1%, for the three month
period ended September 30, 1997 from the same period in 1996. Non-interest
expense increased $627,000, or 8.3% for the nine month period ended September
30, 1997 from the same period in 1996. These increases are mainly attributable
to increases in the volume of activity at C&F Mortgage Corporation.
Income Taxes
Income tax expense for the three months ended June 30, 1997 amounted to
$484,000, compared to $289,000 for the three months ended September 30, 1996.
Income tax expense for the nine months ended September 30, 1997 amounted to
$1,139,000 compared to $681,000 for the nine months ended September 30, 1996.
Asset Quality-Allowance /Provision For Loan Losses
The Company had $165,000 in provision expense for the first nine months
of 1997 compared to $0 for the same period in 1996. Loans charged off amounted
to $11,000 and $12,000 for the nine months ended September 30, 1997 and 1996,
respectively. Recoveries amounted to $4,000 and $8,000 for the nine months ended
September 30, 1997 and 1996, respectively. The ratio of net charge-offs to
average outstanding loans was .004% for the nine months ended September 30,
1997. The allowance for loan losses was $2.1 million at September 30, 1997 and
$1.9 million at December 31, 1996. The allowance approximates 1.4% of total
loans outstanding at September 30, 1997 and December 31, 1996. Management feels
that the reserve is adequate to absorb any losses on existing loans which may
become uncollectible.
7
<PAGE>
Nonperforming Assets
Total non-performing assets, which consist of the Company's non-accrual
loans was $935,000 at September 30, 1997, an increase of $410,000 from December
31, 1996. This increase is a result of a $435,000 non-accrual single family
mortgage loan which is currently held by C&F Mortgage Corporation that was not
held at December 31, 1996. The loan is adequately collateralized and no
significant loss is anticipated.
FINANCIAL CONDITION
Summary
At September 30, 1997, the Company had total assets of $268.5
million compared to $256.7 million at December 31, 1996.
Loan Portfolio
At September 30, 1997, loans held for sale amounted to $23.5 million,
an increase over the $12.3 million held at December 31, 1996. This increase is a
result of increased loan production at C&F Mortgage Corporation. At September
30, 1997, the Bank's loans net of unearned income and reserve for loan losses,
totals $151.4 million, an increase of 11% over the 1996 year-end total of $136.7
million.
The following table sets forth the composition of the Company's loans
in dollar amounts and as a percentage of the Company's total gross loans held
for investment at the dates indicated:
<TABLE>
<CAPTION>
September 30, 1997 December 31, 1996
(Dollars in Thousands)
Amount Percent Amount Percent
------ ------- ------ -------
<S> <C>
Real estate - mortgage $ 89,337 58.2% $ 86,324 62.3%
Real estate - construction 4,629 3.0 3,415 2.5
Commercial, financial and
agricultural 45,515 29.7 36,385 26.2
Equity lines 6,940 4.5 6,180 4.4
Consumer 7,050 4.6 6,360 4.6
------------- ------ ----------- ------
Total loans 153,471 100.0% 138,664 100.0%
====== ======
Less unearned discount (2) (5)
Less allowance for possible
loan losses (2,085) (1,927)
-------------- ------------
Total loans, net $ 151,384 $ 136,732
============== ============
</TABLE>
Investment Securities
At September 30, 1997, total investment securities were $73.2 million
compared to $85.6 for December 31, 1996. This decrease is a result of securities
not being fully reinvested as they are called or mature. Securities of U.S.
Government agencies and corporations represent 42.2% of the total securities
portfolio, obligations of state and political subdivisions were 47.7%, U.S.
Treasury securities were 4.1%, investment-grade corporate bonds totaled .4% and
preferred stocks were 5.6% at September 30, 1997.
8
<PAGE>
Deposits
Deposits totaled $229.4 million at September 30, 1997 compared to
$216.4 at December 31, 1996. Non-interest bearing deposits totaled $37.3 million
at September 30, 1997 compared to $30.8 million at December 31, 1996.
Liquidity
Liquidity represents an institution's ability to meet present and
future financial obligations through either the sale or maturity of existing
assets or the acquisition of additional funds through liability management.
Liquid assets include cash, interest bearing deposits with banks, federal funds
sold, investments and loans maturing within one year. The Company's ability to
obtain deposits and purchase funds at favorable rates determines its liability
liquidity. As a result of the Company's management of liquid assets and the
ability to generate liquidity through liability funding, management believes
that the Company maintains overall liquidity which is sufficient to satisfy its
depositors' requirements and to meet customers' credit needs.
At September 30, 1997, cash, securities classified as available for
sale and interest-bearing deposits were 11.9% of total earning assets. Asset
liquidity is also provided by managing the investment maturities.
Additional sources of liquidity available to the Company include its
subsidiary bank's capacity to borrow additional funds through an established
federal funds line with a regional correspondent bank.
Capital Resources
The Company's capital position continues to exceed regulatory
requirements. The Company's Tier I capital ratio was 14.1% at September 30, 1997
compared to 20.8% at December 31, 1996. The total risk-based capital ratio was
15.5% at September 30, 1997 compared to 22.1% at December 31, 1996. These ratios
are in excess of the mandated minimum requirements.
Shareholders' equity was $30.7 million at the end of the third quarter of
1997 compared to $32.2 million at December 31, 1996. The leverage ratio consists
of Tier I capital divided by average assets. At September 30, 1997, the
Company's leverage ratio was 11.1% compared to 12.2% at December 31, 1996. Each
of these exceeds the required minimum leverage ratio of 3%. The decrease in
shareholders' equity and all of the capital ratios is primarily a result of the
repurchase of 204,683 shares of the Company's common stock in April of 1997.
New Accounting Pronouncements
In February 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("FAS") No. 128, "Earnings per
Share." This new standard requires dual presentation of basic and diluted
earnings per share (EPS) on the face of the earnings statement and requires a
reconciliation of numerators and denominators of basic and diluted EPS
calculations. The statement is effective for financial statements for both
interim and annual periods ending after December 15, 1997. Early adoption of the
statement is not permitted. The Corporation has determined that the adoption of
this statement will not have a material impact on earnings per share.
In June 1997, the FASB issued FAS 130, "Reporting Comprehensive Income"
and FAS 131, "Disclosures about Segments of an Enterprise and Related
Information." FAS 130 requires that all items that are required to be recognized
under accounting standards as components of comprehensive income be reported in
a financial statement that is displayed with the same prominence as other
9
<PAGE>
financial statements. This statement requires that an enterprise (a) classify
items of other comprehensive income by their nature in a financial statement and
(b) display the accumulated balance of other comprehensive income separately
from retained earnings and additional paid-in capital in the equity section of a
statement of financial position. This statement is effective for fiscal years
beginning after December 15, 1997. This statement will require the Company to
report changes in unrealized gains or losses on securities available for sale as
part of comprehensive income.
FAS 131 requires that a public business enterprise report financial and
descriptive information about its reportable operating segments. It requires
that a public business enterprise report a measure of segment profit or loss,
certain specific revenue and expense items, and segment assets. This statement
is effective for fiscal years beginning after December 15, 1997. Management is
currently reviewing this statement to determine the impact it will have on the
Company.
Effects of Inflation
The effect of changing prices and financial institutions is typically
different from other industries as the Company's assets and liabilities are
monetary in nature. Interest rates are significantly impacted by inflation, but
neither the timing nor the magnitude of the changes are directly related to
price level indices. Impacts of inflation on interest rates, loan demands, and
deposits are reflected in the consolidated financial statements.
10
<PAGE>
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
There are no material pending legal proceedings to which the Company is
a party or of which property of the Company is subject.
ITEM 2 - CHANGES IN SECURITIES - Inapplicable
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES - Inapplicable
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - None
ITEM 5 - OTHER INFORMATION - Inapplicable
On November 7, 1997, C&F Financial Corporation dismissed Deloitte &
Touche LLP as its independent accountants. The Company's Audit Committee and
Board of Directors participated in and approved the decision to change
independent accountants.
The reports of Deloitte & Touche LLP on the financial statements for
the past two fiscal years contained no adverse opinion or disclaimer of opinion
and were not qualified or modified as to uncertainty, audit scope or accounting
principle.
In connection with its audits for the two most recent fiscal years and
through November 7, 1997, there have been no disagreements with Deloitte &
Touche LLP on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which disagreements would
have caused them to make reference thereto in their report on the financial
statements for such years.
The Company has requested that Deloitte & Touche LLP furnish it with a
letter addressed to the SEC stating whether or not it agrees with the above
statements. A copy of such letter, dated November 10, 1997, is filed as Exhibit
16 to this Form 10Q.
The Company engaged Yount, Hyde & Barbour, P.C. as its new independent
accountants as of November 7, 1997. During the two most recent fiscal years and
through November 7, 1997, the Company has not consulted with Yount, Hyde &
Barbour, P.C. on items which (1) were or should have been subject to SAS 50 or
(2) concerned the subject matter of a disagreement or reportable event with
Deloitte & Touche LLP.
11
<PAGE>
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 16 - Letter regarding change in independent accountants
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
None.
12
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
C&F FINANCIAL CORPORATION
(Registrant)
Date November 10, 1997 /s/ Larry G. Dillon
---------------- -------------------
Larry G. Dillon, President and
Chief Executive Officer
Date November 10, 1997 /s/ Thomas F. Cherry
---------------- --------------------
Thomas F. Cherry, Chief
Accounting Officer
Suite 500 Telephone: (804) 697-1500
Eighth & Main Building Facsimile: (804) 697-1825
707 East Main Street
Richmond, Virginia 23219
November 10, 1997
Securities and Exchange Commission
Mail Stop 9-5
450 5th Street, N.W.
Washington, D.C. 20549
Dear Sirs/Madams:
We have read and agree with the comments in Item 5 of Form 10-Q of C&F Financial
Corporation dated November 10, 1997.
Yours truly,
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 6,561
<INT-BEARING-DEPOSITS> 32
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 22,481
<INVESTMENTS-CARRYING> 50,729
<INVESTMENTS-MARKET> 52,280
<LOANS> 153,469
<ALLOWANCE> 2,085
<TOTAL-ASSETS> 268,527
<DEPOSITS> 229,409
<SHORT-TERM> 5,070
<LIABILITIES-OTHER> 3,354
<LONG-TERM> 0
0
0
<COMMON> 1,908
<OTHER-SE> 0
<TOTAL-LIABILITIES-AND-EQUITY> 268,527
<INTEREST-LOAN> 10,731
<INTEREST-INVEST> 3,876
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 14,607
<INTEREST-DEPOSIT> 5,663
<INTEREST-EXPENSE> 265
<INTEREST-INCOME-NET> 8,679
<LOAN-LOSSES> 165
<SECURITIES-GAINS> (7)
<EXPENSE-OTHER> 8,182
<INCOME-PRETAX> 4,870
<INCOME-PRE-EXTRAORDINARY> 4,870
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,731
<EPS-PRIMARY> 1.87
<EPS-DILUTED> 1.87
<YIELD-ACTUAL> 8.55
<LOANS-NON> 935
<LOANS-PAST> 896
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,927
<CHARGE-OFFS> 11
<RECOVERIES> 4
<ALLOWANCE-CLOSE> 2,085
<ALLOWANCE-DOMESTIC> 2,085
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
