UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year end December 31, 1998
-------------------------------------------------------
OR
[ ] TRANSITION REPORT PUSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from ____________________ to ___________________
Commission file number 000-23423 (C&F Financial Corporation)
A. Full title of the plans and the address of the plans, if different from
that of the issuer named below:
Virginia Bankers Association Defined Contribution Plan for Citizens and
Farmers Bank
802 Main Street
West Point, Virginia 23181
Virginia Bankers Association Defined Contribution Plan for C&F Mortgage
Corporation
300 Arboretum Place, Suite 245
Richmond, Virginia 23236
B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office:
C & F Financial Corporation
802 Main Street
West Point, Virginia 23181
<PAGE>
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of
1934, the trustees (or other persons who administer the employee benefit plan)
have duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
Virginia Bankers Association Defined
Contribution Plan for Citizens and Farmers
Bank
Virginia Bankers Association Defined
Contribution Plan for C & F Mortgage
Corporation
(Name of Plans)
Date June 25, 1999 /s/ Thomas F. Cherry
------------------------- -------------------------------
Thomas F. Cherry
Chief Financial Officer
<PAGE>
VIRGINIA BANKERS ASSOCIATION DEFINED
CONTRIBUTION PLAN FOR
CITIZENS AND FARMERS BANK
West Point, Virginia
FINANCIAL REPORT
DECEMBER 31, 1998
<PAGE>
C O N T E N T S
Page
INDEPENDENT AUDITOR'S REPORT
ON THE FINANCIAL STATEMENTS 1
FINANCIAL STATEMENTS
Statements of net assets available for benefits 2
Statements of changes in net assets available for
benefits with fund information 3-6
Notes to financial statements 7-13
SUPPLEMENTAL SCHEDULES
Schedule of assets held for investment purposes 14
Supplemental schedule of reportable transaction 15
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Virginia Bankers Association Defined Contribution
Plan for Citizens and Farmers Bank
West Point, Virginia
We have audited the accompanying statements of net assets available for
benefits of Virginia Bankers Association Defined Contribution Plan for Citizens
and Farmers Bank as of December 31, 1998 and 1997, and the related statements of
changes in net assets available for benefits with fund information for the years
then ended. These financial statements are the responsibility of the Plan's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the net assets available for benefits of the
Plan as of December 31, 1998 and 1997, and the changes in net assets available
for benefits for the years then ended in conformity with generally accepted
accounting principles.
Our audits were performed for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental schedules as
listed in the accompanying table of contents are presented for the purpose of
additional analysis and are not a required part of the basic financial
statements but are supplementary information required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. The Fund Information in the changes in
net assets available for benefits is presented for purposes of additional
analysis rather than to present changes in net assets available of each fund.
The supplemental schedules and Fund Information have been subjected to the
auditing procedures applied in the audits of the basic financial statements and,
in our opinion, are fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
Winchester, Virginia
May 19, 1999
1
<PAGE>
VIRGINIA BANKERS ASSOCIATION DEFINED CONTRIBUTION PLAN
FOR CITIZENS AND FARMERS BANK
Statements of Net Assets Available for Benefits
December 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
---------------- ----------------
<S> <C>
Assets
Investments, at fair value:
Common collective trusts $ 3,093,468 $ 2,562,081
Treasury obligation money market fund 11,821 189,780
Participants notes 26,082 22,008
---------------- ----------------
Total investments $ 3,131,371 $ 2,773,869
---------------- ----------------
Receivables:
Employer $ 154,683 $ 11,822
Participant 6,210 14,731
Other 6 39
---------------- ----------------
Total receivables $ 160,899 $ 26,592
---------------- ----------------
Cash $ 55 $ - -
---------------- ----------------
Total assets $ 3,292,325 $ 2,800,461
---------------- ----------------
Liabilities and Net Assets Available for Benefits
Other liabilities $ 12,396 $ 31,065
---------------- ----------------
Net assets available for benefits $ 3,279,929 $ 2,769,396
================ ================
</TABLE>
See Notes to Financial Statements.
2
<PAGE>
VIRGINIA BANKERS ASSOCIATION DEFINED CONTRIBUTION PLAN
FOR CITIZENS AND FARMERS BANK
Statement of Changes in Net Assets Available
for Benefits with Fund Information
For the Year Ended December 31, 1998
<TABLE>
<CAPTION>
VBA Current VBA Capital VBA Moderate VBA Wealth
Income Preservation Growth Buildings
Fund Fund Fund Fund
<S> <C>
Assets
Additions to net assets
attributable to:
Investment income
Net appreciation in fair
value of investments $ 7,418 $ 9,843 $ 22,701 $ 166,462
Interest - - - - - - -
-------------- ------------- --------------- --------------
$ 7,418 $ 9,843 $ 22,701 $ 166,462
-------------- ------------- --------------- --------------
Contributions
Employer $ 11,753 $ 9,482 $ 19,134 $ 138,785
Participants 3,840 3,909 7,806 96,289
Rollover contributions - - - - - - 18,700
Loan repayments - - - - - - - -
Other - - (4) 5 1,769
-------------- -------------- --------------- --------------
$ 15,593 $ 13,387 $ 26,945 $ 255,543
-------------- ------------- --------------- --------------
Total additions $ 23,011 $ 23,230 $ 49,646 $ 422,005
-------------- ------------- --------------- --------------
Deductions
Deductions from net assets
attributable to:
Benefits paid to participant $ - - $ - - $ 30,821 $ 192,510
Loans paid to employees - - - - - - - -
-------------- ------------- --------------- --------------
Total deductions $ - - $ - - $ 30,821 $ 192,510
-------------- ------------- --------------- --------------
Net increase (decrease) prior
to interfund transfers $ 23,011 $ 23,230 $ 18,825 $ 229,495
Interfund transfers (7,432) 71,749 91,796 (465,102)
--------------- ------------- --------------- ---------------
Net increase (decrease) $ 15,579 $ 94,979 $ 110,621 $ (235,607)
Net assets available for benefits
Beginning of period 174,223 17,667 247,338 1,675,067
-------------- ------------- --------------- --------------
End of period $ 189,802 $ 112,646 $ 357,959 $ 1,439,460
============== ============= =============== ==============
</TABLE>
See Notes to Financial Statements.
3
<PAGE>
<TABLE>
<CAPTION>
VBA
Aggressive
Appreciation Employer Participant
Fund Stock Fun Notes Other Cash Total
--------------- ---------------- ------------- -------------- -------------- ----------------
<S> <C>
$ 91,330 $ - - $ - - $ - - $ - - $ 297,754
- - - - 2,199 - - 2,669 4,868
--------------- -------------- ------------- -------------- ------------- ----------------
$ 91,330 $ - - $ 2,199 $ - - $ 2,669 $ 302,622
--------------- -------------- ------------- -------------- ------------- ----------------
$ 101,334 $ 198 $ - - $ (10,963) $ - - $ 269,723
66,428 - - - - (14,731) - - 163,541
- - - - - - - - - - 18,700
25,928 - - (25,928) - - - - - -
1 - - - - - - - - 1,771
--------------- -------------- ------------- -------------- ------------- ----------------
$ 193,691 $ 198 $ (25,928) $ (25,694) $ - - $ 453,735
--------------- -------------- -------------- --------------- ------------- ----------------
$ 285,021 $ 198 $ (23,729) $ (25,694) $ 2,669 $ 756,357
--------------- -------------- -------------- --------------- ------------- ----------------
$ 22,493 $ - - $ - - $ - - $ - - $ 245,824
29,000 - - (29,000) - - - - - -
--------------- -------------- -------------- -------------- ------------- ----------------
$ 51,493 $ - - $ (29,000) $ - - $ - - $ 245,824
--------------- -------------- -------------- -------------- ------------- ----------------
$ 233,528 $ 198 $ 5,271 $ (25,694) $ 2,669 $ 510,533
253,406 59,449 (1,197) - - (2,669) - -
--------------- -------------- -------------- -------------- -------------- ----------------
$ 486,934 $ 59,647 $ 4,074 $ (25,694) $ - - $ 510,533
607,399 - - 22,008 25,694 - - 2,769,396
--------------- -------------- ------------- -------------- ------------- ----------------
$ 1,094,333 $ 59,647 $ 26,082 $ - - $ - - $ 3,279,929
=============== ============== ============= ============== ============= ================
</TABLE>
4
<PAGE>
VIRGINIA BANKERS ASSOCIATION DEFINED CONTRIBUTION PLAN
FOR CITIZENS AND FARMERS BANK
Statement of Changes in Net Assets Available
for Benefits with Fund Information
For the Year Ended December 31, 1997
<TABLE>
<CAPTION>
VBA Current VBA Capital VBA Moderate VBA Wealth
Income Preservation Growth Buildings
Fund Fund Fund Fund
--------------- --------------- ------------- --------------
<S> <C>
Assets
Additions to net assets
attributable to:
Investment income
Net appreciation in fair
value of investments $ 6,467 $ 1,648 $ 29,389 $ 246,557
Interest - - - - - - - -
---------------- --------------- --------------- --------------
$ 6,467 $ 1,648 $ 29,389 $ 246,557
---------------- --------------- --------------- --------------
Contributions
Employer $ 6,950 $ 1,837 $ 19,167 $ 147,456
Participants 3,404 889 5,949 82,205
Loan repayments - - - - - - - -
---------------- --------------- --------------- --------------
$ 10,354 $ 2,726 $ 25,116 $ 229,661
---------------- --------------- --------------- --------------
Total additions $ 16,821 $ 4,374 $ 54,505 $ 476,218
---------------- --------------- --------------- --------------
Deductions
Deductions from net assets
attributable to:
Benefits paid to participant $ 888 $ - - $ 1,201 $ 35,266
Loans paid to employees - - - - - - - -
---------------- --------------- --------------- --------------
Total deductions $ 888 $ - - $ 1,201 $ 35,266
---------------- --------------- --------------- --------------
Net increase prior
to interfund transfers $ 15,933 $ 4,374 $ 53,304 $ 440,952
Interfund transfers 158,290 13,293 194,034 (784,617)
---------------- --------------- --------------- ---------------
Net increase (decrease) $ 174,223 $ 17,667 $ 247,338 $ (343,665)
Net assets available for benefits
Beginning of period - - - - - - 2,018,732
---------------- --------------- --------------- --------------
End of period $ 174,223 $ 17,667 $ 247,338 $ 1,675,067
================ =============== =============== ==============
</TABLE>
See Notes to Financial Statements.
5
<PAGE>
<TABLE>
<CAPTION>
VBA
Aggressive
Appreciation Participant
Fund Notes Other Cash Total
---------------- ---------------- ----------------- --------------- ------------------
<S> <C>
$ 85,426 $ - - $ - - $ - - $ 369,487
- - 492 - - 2,187 2,679
--------------- ---------------- ----------------- --------------- ------------------
$ 85,426 $ 492 $ - - $ 2,187 $ 372,166
--------------- ---------------- ----------------- --------------- ------------------
$ 79,315 $ - - $ 10,963 $ - - $ 265,688
42,987 - - 14,731 - - 150,165
834 (834) - - - - - -
--------------- ----------------- ----------------- --------------- ------------------
$ 123,136 $ (834) $ 25,694 $ - - $ 415,853
--------------- ----------------- ----------------- --------------- ------------------
$ 208,562 $ (342) $ 25,694 $ 2,187 $ 788,019
--------------- ----------------- ----------------- --------------- ------------------
$ - - $ - - $ - - $ - - $ 37,355
22,842 (22,842) - - - - - -
--------------- ----------------- ----------------- --------------- ------------------
$ 22,842 $ (22,842) $ - - $ - - $ 37,355
--------------- ----------------- ----------------- --------------- ------------------
$ 185,720 $ 22,500 $ 25,694 $ 2,187 $ 750,664
421,679 (492) - - (2,187) - -
--------------- ----------------- ----------------- ---------------- ------------------
$ 607,399 $ 22,008 $ 25,694 $ - - $ 750,664
- - - - - - - - 2,018,732
--------------- ------------------ ----------------- --------------- ------------------
$ 607,399 $ 22,008 $ 25,694 $ - - $ 2,769,396
=============== ================== ================= =============== ==================
</TABLE>
6
<PAGE>
VIRGINIA BANKERS ASSOCIATION DEFINED CONTRIBUTION PLAN
FOR CITIZENS AND FARMERS BANK
Notes to Financial Statements
Note 1. Description of the Plan
The following description of the Virginia Bankers Association
Defined Contribution Plan for Citizens and Farmers Bank (Plan)
provides only general information. Participants should refer to
the Plan agreement for a more complete description of the Plan's
provisions.
General
The Plan is a defined contribution plan maintained by
Citizens and Farmers Bank pursuant to the provisions of
Section 401(k) of the Internal Revenue Code (Code)
established for the benefit of substantially all
full time employees electing to participate in the Plan.
Employees are eligible to participate in the Plan on the
first day of the calendar quarter after completing three
months of service and must be eighteen years old or
older. The Plan is subject to the provisions of the
Employee Retirement Income Security Act of 1974 (ERISA).
Effective January 1, 1999, the Plan was restated to
include the investment option of C & F Financial
Corporation Stock (Employee Stock) registered under the
Securities Act of 1933.
Contributions
Each participant may elect to defer from 1% to 20% of
their pretax annual compensation, as defined in the
Plan. The Bank makes a matching contribution to the Plan
on behalf of each participant who makes a pretax
contribution. The amount the Bank contributes is 100% of
the first 5% that a participant contributes. The Bank
may also make a discretionary profit sharing
contribution, determined annually by the Board of
Directors. This contribution is allocated in proportion
of a participant's covered compensation to covered
compensation of all participants. Discretionary
contributions declared or made by the Bank were $150,056
and $132,814 during the plan year ended December 31,
1998 and 1997, respectively. Participants entering the
Plan may roll over contributions from other plans.
Contributions are subject to certain limitations as
established by the Code.
7
<PAGE>
Notes to Financial Statements
Participants' Accounts
Each participant's account is credited with the
participant's contribution and allocations of (a) the
Bank's contributions (b) plan earnings and (c)
forfeitures. Allocations are based on participant
earnings or account balances, as defined. The benefit to
which a participant is entitled is the benefit that can
be provided from the participant's vested account.
Vesting
The Plan's vesting provision provides that participants
are immediately 100% vested in their elective
contributions and earnings thereon. Vesting in the
Bank's contributions occurs as follows:
Number of Years of
Vesting Service Vested Interest
Less than 3 years 0%
3 years but less than 4 years 20%
4 years but less than 5 years 40%
5 years but less than 6 years 60%
6 years but less than 7 years 80%
7 years or more 100%
Investment Options
All assets in the Plan are directed by individual
participants. Participants are given the option to
direct account balances and all contributions made into
separate investment funds established in the Trust Fund.
The following provides a description of each available
investment option as stated in the summary plan
description:
Current Income Fund - This investment fund is
invested primarily in short-term and
intermediate-term bond funds that the Investment
Manager considers appropriate from time to time.
This investment fund will generally earn higher
income than money market instruments or
certificates of deposit. While the investment
division is designed to emphasize safety and
stability, its value may in fact decrease.
8
<PAGE>
Capital Preservation Fund - This investment fund
is invested primarily in corporate and government
funds that the Investment Manager considers
appropriate from time to time. Generally, the
funds will be selected for their income and
relative stability in the price of fund shares.
This investment division will also contain a small
stock component which provides some potential for
growth. While this investment division is designed
to safeguard your principal investment, its value
generally will fluctuate up and down based on
market conditions.
Moderate Growth Fund - This investment fund is
invested in bond and stock funds that the
Investment Manager considers appropriate from time
to time. Generally, this investment fund will
maintain a strong commitment to bond funds to
provide current income and help stabilize the
portfolio for inordinate swings in value. The
value of this investment fund generally will
fluctuate up and down based on market conditions.
Wealth Building Fund - This investment fund is
invested in a diversified mix of stock and bond
funds that the Investment Manager considers
appropriate from time to time. Generally, this
investment fund is designed to build assets and
protect against inflation over the long run. The
value of this investment fund generally will
fluctuate up and down based on market conditions.
Aggressive Appreciation Fund - This investment
fund is invested exclusively in stock funds that
the Investment Manager considers appropriate from
time to time. This investment fund is designed to
provide the highest growth potential. Stock funds
offer the greatest opportunity for significant
gains and correspondingly, the highest degree of
risk of loss in value.
Employer Stock Fund - This investment fund is
invested exclusively in common stock of C & F
Financial Corporation ("Employer Stock") and such
temporary cash investments as the named Fiduciary
considers appropriate from time to time.
Generally, this investment fund will be invested
50% to 100% in Employer Stock. Investments in C &
F Financial Corporation Stock are available
beginning January 1, 1999.
9
<PAGE>
A participant may choose to invest up to 25% (in
increments of 5%) of their account balance and future
contributions in the Employer Stock Fund, the remaining
balance and future contributions may be invested in one
other investment fund. Participants may change their
investment options quarterly and any investment
direction will apply to your entire account balance and
to any future contributions made by you or on your
behalf. If no option is selected, the account balance
and any contributions will be placed into the Current
Income Fund, the fund with the least potential for loss
of principal value and correspondingly, the lowest
anticipated return. The statement for changes in net
assets available for plan benefits discloses all
activity per individual funds directed by participants.
Participants Notes Receivable
Participants may borrow from their fund accounts a
minimum of $1,000 up to a maximum equal to the lesser of
$50,000 or 50% of their vested account balance. Loan
transactions are treated as a transfer to (from) the
investment fund from (to) the Participants Notes Fund.
Loan terms are limited to 5 years or up to 30 years for
the purchase of a primary residence. The loans are fully
secured by the balance in the participant's account and
bear interest at 1/4 of 1% over the Corporation's prime
rate and will remain unchanged for the life of the loan.
Principal and interest is paid ratably through monthly
payroll deductions.
Payment of Benefits
Upon retirement or termination of service a participant
may elect to receive either a lump sum amount equal to
the value of the participants vested interest in his or
her account, periodic installments for a period of up to
10 years or a combination of both. A written election
must be made with the administrator at least 30 days
before the benefit payment date. Participants whose
vested account balance has never exceeded $5,000 must be
paid out in the form of a lump sum distribution.
Forfeited Accounts
At December 31, 1998, all forfeited nonvested accounts
balances were reallocated among remaining plan
participants.
10
<PAGE>
Note 2. Summary of Accounting Policies
Basis of Accounting
The financial statements of the Plan are prepared under
the accrual method of accounting.
Use of Estimates
The preparation of financial statements in conformity
with generally accepted accounting principles requires
management to make estimates and assumptions that affect
the reported amounts of assets at the date of the
financial statements and the reported amounts of
revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Investment Valuation and Income Recognition
The Plan's investments in collective trusts are stated
at contract value. Contract values as stated by Virginia
Bankers Association Benefits Corporation (VBA), Plan
Trustee, are determined by closing quoted market prices
of the underlying securities and therefore approximate
fair value at the end of the Plan year. Participant
notes receivable are valued at cost which approximates
fair value.
Purchases and sales of securities are recorded on a
trade-date basis. Interest income is recorded on the
accrual basis.
In accordance with the policy of stating investments at
current value, net realized and unrealized appreciation
(depreciation) for the year is reflected in the
statements of changes in net assets available for plan
benefits.
Benefit Payments
Benefit payments are recorded when paid.
Note 3. Plan Termination
Although it has not expressed any intent to do so, the Bank
has the right under the Plan to terminate the Plan subject to
the provisions of ERISA. In the event of plan termination,
participants become 100 percent vested in the portion of his
or her account not previously vested.
11
<PAGE>
Note 4. Investments
The Plan's investment assets are held by the custodian,
SouthTrust Asset Management Company of Georgia, N.A.
The following table presents the fair value of investments.
Investments that represent five percent or more of the Plan's net
assets are separately identified.
<TABLE>
<CAPTION>
December 31, 1998 December 31, 1997
-------------------------------- --------------------------------
Number of Number of
Shares/Face Fair Shares/Face Fair
Amount Value Amount Value
----------- --------- --------------- ----------
<S> <C>
Investment at fair value as
determined by quoted market price:
Common Collective Trust Funds:
VBA Current Income Fund 1,631 $ 183,540 1,601 $ 172,814
VBA Capital Preservation
Fund 905 116,322 138 16,356
VBA Moderate Growth Fund 2,045 274,476 1,869 231,348
VBA Wealth Building Fund 10,299 1,464,659 12,494 1,598,604
VBA Aggressive Appreciation
Fund 6,918 1,054,471 4,033 542,959
------------ --------------
$ 3,093,468 $ 2,562,081
------------ --------------
SouthTrust Treasury Obligation
Money Market Fund 11,821 $ 11,821 189,780 $ 189,780
------------ --------------
Participant's Notes - - $ 26,082 - - $ 22,008
------------ --------------
Total investment at fair value $ 3,131,371 $ 2,773,869
============ ==============
</TABLE>
12
<PAGE>
Note 5. Tax Status
The Internal Revenue Service has determined and informed the
trustee/administrator by a letter dated December 23, 1997, that
the master Plan and related trust are designed in accordance with
applicable sections of the Internal Revenue Code (IRC). The Plan
administrator and Plan sponsor believe that the Plan is designed
and currently being operated in compliance with the applicable
requirements of the IRC.
Note 6. Party-in-Interest
The majority of the Plan's assets are invested in common
collective Trust Funds which are managed by the Virginia Bankers
Association Benefits Corporation, Plan administrator and trustee
of the Plan. Therefore, transactions in these funds qualify as a
party-in-interest. Fair market value of these funds are based on
closing market quotes of the underlying securities and fees.
Charges for services by the party-in-interest are based on
customary rates for such services.
Note 7. Year 2000 Issue
The Year 2000 Issue is the result of computer programs being
written using two digits rather than four to define the
applicable year. Any computer program that has time sensitive
software may recognize a date using "00" as the year 1900 rather
than the year 2000. Management is aware of potential problems,
not only to its own systems, but also the potential effects to
the Plan of malfunctions in systems of its trustee and custodian.
Note 8. Administrative Expenses
Certain administrative expenses are absorbed by Citizens and
Farmers Bank, the Plan Sponsor. Total administrative expenses
paid by the Plan Sponsor were $4,790 and $4,852 for the plan
years ended December 31, 1998 and 1997, respectively.
Note 9. Significant Amendments and Events
Investment in C & F Financial Corporation Stock is available
beginning January 1, 1999. No stock has been purchased as of
December 31, 1998, however allocations into the stock fund have
occurred based on participants direction in anticipation of the
stock purchases. Funds of the stock fund are held in a money
market account until stock purchase is initiated.
13
<PAGE>
VIRGINIA BANKERS ASSOCIATION DEFINED CONTRIBUTION PLAN
FOR CITIZENS AND FARMERS BANK
Schedule of Assets Held for Investment Purposes
December 31, 1998
<TABLE>
<CAPTION>
Fair
Description of Asset Type of Asset Cost Value
- ---------------------------------------- ---------------------------- -------------- ---------------
<S> <C>
VBA Current Income Fund Common Collective Trust Fund $ 170,062 $ 183,540
VBA Capital Preservation Fund Common Collective Trust Fund 105,730 116,322
VBA Moderate Growth Fund Common Collective Trust Fund 228,190 274,476
VBA Wealth Building Fund Common Collective Trust Fund 1,078,179 1,464,659
VBA Aggressive Appreciation Fund Common Collective Trust Fund 890,958 1,054,471
SouthTrust Treasury Obligation
Money Market Fund Cash Equivalent 11,821 11,821
-------------- -------------
$ 2,484,940 $ 3,105,289
Participant Note Loan 26,082 26,082
-------------- -------------
$ 2,511,022 $ 3,131,371
============== =============
</TABLE>
14
<PAGE>
VIRGINIA BANKERS ASSOCIATION DEFINED CONTRIBUTION PLAN
FOR CITIZENS AND FARMERS BANK
Supplemental Schedule of Reportable Transactions
For the Year Ended December 31, 1998
<TABLE>
<CAPTION>
Number of Purchase Selling Net Gain
Transactions Description of Asset Price Price (Loss)
------------ --------------------------------------- ------------ ------------- --------------
<S> <C>
40 Sales SouthTrust Treasury Obligation $ 717,031 $ 717,031 $ - -
Money Market Fund
65 Purchases SouthTrust Treasury Obligation 539,072 - - - -
Money Market Fund
9 Sales VBA Wealth Building Fund 406,904 528,683 121,779
18 Purchases VBA Wealth Building Fund 226,473 - - - -
3 Sales VBA Aggressive Appreciation Fund 33,207 41,614 8,407
25 Purchases VBA Aggressive Appreciation Fund 461,797 - - - -
</TABLE>
15
<PAGE>
VIRGINIA BANKERS ASSOCIATION DEFINED
CONTRIBUTION PLAN
FOR
C & F MORTGAGE CORPORATION
Richmond, Virginia
FINANCIAL REPORT
DECEMBER 31, 1998
<PAGE>
C O N T E N T S
Page
INDEPENDENT AUDITOR'S REPORT
ON THE FINANCIAL STATEMENTS 1
FINANCIAL STATEMENTS
Statement of net assets available for benefits 2
Statement of changes in net assets available
for benefits with fund information 3-4
Notes to financial statements 5-11
SUPPLEMENTAL SCHEDULES
Schedule of assets held for investment purposes 12
Supplemental schedule of reportable transaction 13
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Virginia Bankers Association Defined Contribution
Plan for C & F Mortgage Corporation
Richmond, Virginia
We have audited the accompanying statement of net assets available for
benefits of Virginia Bankers Association Defined Contribution Plan for C & F
Mortgage Corporation as of December 31, 1998 and 1997, and the related statement
of changes in net assets available for benefits with fund information for the
years then ended. These financial statements are the responsibility of the
Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the net assets available for benefits of the
Plan as of December 31, 1998 and 1997, and the changes in net assets available
for benefits for the years then ended in conformity with generally accepted
accounting principles.
Our audits were performed for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental schedules as
listed in the accompanying table of contents are presented for the purpose of
additional analysis and are not a required part of the basic financial
statements but are supplementary information required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. The Fund Information in the changes in
net assets available for benefits is presented for purposes of additional
analysis rather than to present changes in net assets available of each fund.
The supplemental schedules and Fund Information have been subjected to the
auditing procedures applied in the audits of the basic financial statements and,
in our opinion, are fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
Winchester, Virginia
May 25, 1999
1
<PAGE>
VIRGINIA BANKERS ASSOCIATION DEFINED CONTRIBUTION PLAN
FOR C & F MORTGAGE CORPORATION
Statement of Net Assets Available for Benefits
December 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
<S> <C>
-------------- --------------
Assets
Investments, at fair value:
Common collective trusts $ 888,368 $ 399,253
Treasury obligation money market fund 29,580 13,586
-------------- --------------
Total investments $ 917,948 $ 412,839
-------------- --------------
Receivables:
Employer $ 185,000 $ 50,000
Participant 23,033 9,998
-------------- --------------
Total receivables $ 208,033 $ 59,998
-------------- --------------
Cash $ 66 $ 24
-------------- --------------
Total assets $ 1,126,047 $ 472,861
Liabilities and Net Assets Available for Benefits
Other liabilities 30,482 12,488
-------------- --------------
Net assets available for benefits $ 1,095,565 $ 460,373
============== ==============
</TABLE>
See Notes to Financial Statements.
2
<PAGE>
VIRGINIA BANKERS ASSOCIATION DEFINED CONTRIBUTION PLAN
FOR C & F MORTGAGE CORPORATION
Statement of Changes in Net Assets Available
for Benefits with Fund Information
For the Year Ended December 31, 1998
<TABLE>
<CAPTION>
VBA
VBA Capital VBA VBA VBA
Current Preser- Moderate Wealth Aggressive Employer
Income vation Growth Building Appreciation Stock
Fund Fund Fund Fund Fund Fund Cash Total
--------- --------- ---------- ----------- ------------ ---------- ---------- -------------
<S> <C>
Assets
Additions to net assets
attributable to:
Investment income
Net appreciation
in fair value of
investments $ 129 $ 69 $ 4,388 $ 24,571 $ 51,547 $ - - $ - - $ 80,704
Interest - - - - - - - - - - - - 1,234 1,234
--------- -------- --------- ---------- ------------ --------- --------- ------------
$ 129 $ 69 $ 4,388 $ 24,571 $ 51,547 $ - - $ 1,234 $ 81,938
--------- -------- --------- ---------- ------------ --------- --------- ------------
Contributions
Employer $ 1,695 $ - - $ 20,122 $ 56,315 $ 106,868 $ - - $ - - $ 185,000
Participants 3,690 230 54,451 136,142 240,257 - - - - 434,770
Rollover contributions - - - - 3,798 4,781 28,346 - - - - 36,925
--------- -------- --------- ---------- ------------ --------- --------- ------------
$ 5,385 $ 230 $ 78,371 $ 197,238 $ 375,471 $ - - $ - - $ 656,695
--------- -------- --------- ---------- ------------ --------- --------- ------------
Total additions $ 5,514 $ 299 $ 82,759 $ 221,809 $ 427,018 $ - - $ 1,234 $ 738,633
--------- -------- --------- ---------- ------------ --------- --------- ------------
Deductions
Deductions from net
assets attributable to:
Benefits paid to
participants $ - - $ 288 $ 6,023 $ 15,191 $ 81,007 $ - - $ - - $ 102,509
Unallocated forfeitures - - - - - - 101 831 - - - - 932
Total deductions $ - - $ 288 $ 6,023 $ 15,292 $ 81,838 $ - - $ - - $ 103,441
--------- -------- --------- ---------- ------------ --------- --------- ------------
Net increase prior to
interfund transfers $ 5,514 $ 11 $ 76,736 $ 206,517 $ 345,180 $ - - $ 1,234 $ 635,192
Interfund transfers 6 (44) (46,815) 23,781 (57,697) 82,003 (1,234) - -
--------- -------- -------- ---------- ------------ --------- --------- ------------
Net increase (decrease $ 5,520 $ (33) $ 29,921 $ 230,298 $ 287,483 $ 82,003 $ - - $ 635,192
Net assets available for benefits
Beginning of period 2,413 274 24,576 148,984 284,126 - - - - 460,373
--------- -------- --------- ---------- ------------ --------- --------- ------------
End of period $ 7,933 $ 241 $ 54,497 $ 379,282 $ 571,609 $ 82,003 $ - - $ 1,095,565
========= ======== ========= ========== ============ ========= ========= ============
</TABLE>
See Notes to Financial Statements.
3
<PAGE>
VIRGINIA BANKERS ASSOCIATION DEFINED CONTRIBUTION PLAN
FOR C & F MORTGAGE CORPORATION
Statement of Changes in Net Assets Available
for Benefits with Fund Information
For the Year Ended December 31, 1997
<TABLE>
<CAPTION>
VBA
VBA Capital VBA VBA VBA
Current Preser- Moderate Wealth Aggressive
Income vation Growth Building Appreciation
Fund Fund Fund Fund Fund Cash Total
---------- --------- --------- ------------ ------------ ---------- -------------
<S> <C>
Assets
Additions to net assets
attributable to:
Investment income
Net appreciation
in fair value of
investments $ 151 $ 190 $ 2,476 $ 22,313 $ 33,498 $ - - $ 58,628
Interest - - - - - - - - - - 611 611
---------- --------- --------- ---------- ------------ --------- ----------
$ 151 $ 190 $ 2,476 $ 22,313 $ 33,498 $ 611 $ 59,239
---------- --------- --------- ---------- ------------ --------- ----------
Contributions
Employer $ 101 $ 464 $ 8,168 $ 14,064 $ 27,203 $ - - $ 50,000
Participants 348 1,768 30,268 54,285 113,253 - - 199,922
Rollover contributions - - - - - - 3,777 4,094 - - 7,871
---------- --------- --------- ---------- ------------ --------- ----------
$ 449 $ 2,232 $ 38,436 $ 72,126 $ 144,550 $ - - $ 257,793
---------- --------- --------- ---------- ------------ --------- ----------
Total additions $ 600 $ 2,422 $ 40,912 $ 94,439 $ 178,048 $ 611 $ 317,032
---------- --------- --------- ---------- ------------ --------- ----------
Deductions
Deductions from net assets
attributable to:
Benefits paid to participants $ 518 $ 532 $ 2,933 $ 44,939 $ 23,827 $ - - $ 72,749
Unallocated forfeitures 3 - - - - - - 2 - - 5
---------- --------- --------- ---------- ------------ --------- ----------
Total deductions $ 521 $ 532 $ 2,933 $ 44,939 $ 23,829 $ - - $ 72,754
---------- --------- --------- ---------- ------------ --------- ----------
Net increase prior to
interfund transfers $ 79 $ 1,890 $ 37,979 $ 49,500 $ 154,219 $ 611 $ 244,278
Interfund transfers 6 (2,431) (19,220) 189 22,067 (611) - -
---------- --------- --------- ---------- ------------ --------- ----------
Net increase (decrease) $ 85 $ (541) $ 18,759 $ 49,689 $ 176,286 $ - - $ 244,278
Net assets available for benefits
Beginning of period 2,328 815 5,817 99,295 107,840 - - 216,095
---------- --------- --------- ---------- ------------ --------- ----------
End of period $ 2,413 $ 274 $ 24,576 $ 148,984 $ 284,126 $ - - $ 460,373
========== ========= ========= ========== ============ ========= ==========
</TABLE>
See Notes to Financial Statements.
4
<PAGE>
VIRGINIA BANKERS ASSOCIATION DEFINED CONTRIBUTION PLAN
FOR C & F MORTGAGE CORPORATION
Notes to Financial Statements
Note 1. Description of the Plan
The following description of the Virginia Bankers Association
Defined Contribution Plan for C & F Mortgage Corporation (Plan)
provides only general information. Participants should refer to
the Plan agreement for a more complete description of the Plan's
provisions.
General
The Plan is a defined contribution plan maintained by C
& F Mortgage Corporation pursuant to the provisions of
Section 401(k) of the Internal Revenue Code (Code)
established for the benefit of substantially all
employees electing to participate in the Plan. Employees
are eligible to participate in the Plan on the first day
of the month following their employment date and must be
eighteen years old or older. The Plan is subject to the
provisions of the Employee Retirement Income Security
Act of 1974 (ERISA).
Effective January 1, 1999, the Plan was restated to
include the investment option of C & F Financial
Corporation Stock (Employee Stock) registered under
the Securities Act of 1933. Prior to restatement, the
Plan was known as the C & F Mortgage Corporation 401(k)
Plan.
Contributions
Each participant may elect to defer from 1% to 15% of
their pretax annual compensation, as defined in the
Plan. The Company may also make a discretionary profit
sharing contribution, determined annually by the Board
of Directors. The contribution is allocated in
proportion of a participant's contributions to the total
contributions of all participants. Discretionary
contributions declared or made by the Company were
$185,000 and $50,000 during the plan years ended
December 31, 1998 and 1997, respectively. Participants
entering the Plan may roll over contributions from other
plans. Contributions are subject to certain limitations
as established by the Code.
5
<PAGE>
Notes to Financial Statements
Participants' Accounts
Each participant's account is credited with the
participant's contribution and allocations of the
Company's contributions and plan earnings. Allocations
are based on participant contributions or account
balances, as defined. The benefit to which a participant
is entitled is the benefit that can be provided from the
participant's vested account.
Vesting
The Plan's vesting provision provides that participants
are immediately 100% vested in their elective
contributions and earnings thereon. Vesting in the
Company's contributions occurs as follows:
<TABLE>
<CAPTION>
Vested Interest
Prior Effective
Number of Years of January 1, January 1,
Vesting Service 1998 1998
----------------------------- ---------- --------------
<S> <C>
Less than 1 year 0% 0%
1 year but less than 2 years 25% 0%
2 years but less than 3 years 50% 25%
3 years but less than 4 years 75% 50%
4 years but less than 5 years 100% 75%
5 years or more 100% 100%
</TABLE>
Investment Options
All assets in the Plan are directed by individual
participants. Participants are given the option to
direct account balances and all contributions made into
separate investment funds established in the Trust Fund.
The following provides a brief description of each
available investment option as stated in the summary
plan description:
Current Income Fund - This investment fund is
invested primarily in short-term and
intermediate-term bond funds that the Investment
Manager considers appropriate from time to time.
This investment fund will generally earn higher
income than money market instruments or
certificates of deposit. While the investment
division is designed to emphasize safety and
stability, its value may in fact decrease.
6
<PAGE>
Capital Preservation Fund - This investment fund
is invested primarily in corporate and government
funds that the Investment Manager considers
appropriate from time to time. Generally, the
funds will be selected for their income and
relative stability in the price of fund shares.
This investment division will also contain a small
stock component which provides some potential for
growth. While this investment division is designed
to safeguard your principal investment, its value
generally will fluctuate up and down based on
market conditions.
Moderate Growth Fund - This investment fund is
invested in bond and stock funds that the
Investment Manager considers appropriate from time
to time. Generally, this investment fund will
maintain a strong commitment to bond funds to
provide current income and help stabilize the
portfolio for inordinate swings in value. The
value of this investment fund generally will
fluctuate up and down based on market conditions.
Wealth Building Fund - This investment fund is
invested in a diversified mix of stock and bond
funds that the Investment Manager considers
appropriate from time to time. Generally, this
investment fund is designed to build assets and
protect against inflation over the long run. The
value of this investment fund generally will
fluctuate up and down based on market conditions.
Aggressive Appreciation Fund - This investment
fund is invested exclusively in stock funds that
the Investment Manager considers appropriate from
time to time. This investment fund is designed to
provide the highest growth potential. Stock funds
offer the greatest opportunity for significant
gains and correspondingly, the highest degree of
risk of loss in value.
Employer Stock Fund - This investment fund is
invested exclusively in common stock of C & F
Financial Corporation ("Employer Stock") and such
temporary cash investments as the named Fiduciary
considers appropriate from time to time.
Generally, this investment fund will be invested
50% to 100% in Employer Stock. Investment in C & F
Financial Corporation stock is available beginning
January 1, 1999.
7
<PAGE>
A participant may choose to invest up to 25% (in
increments of 5%) of their account balance and future
contributions in the Employer Stock Fund, the remaining
balance and future contributions may be invested in one
other investment fund. Participants may change their
investment options quarterly and any investment
direction will apply to your entire account balance and
to any future contributions made by you or on your
behalf. If no option is selected the account balance and
any contributions will be placed into the Current Income
Fund, the fund with the least potential for loss of
principal value and correspondingly, the lowest
anticipated return. The statement for changes in net
assets available for plan benefits discloses all
activity per individual funds directed by participants.
Payment of Benefits
Upon retirement or termination of service a participant
may elect to receive either a lump sum amount equal to
the value of the participants vested interest in his or
her account, periodic installments for a period of up to
10 years or a combination of both. A written election
must be made with the administrator at least 30 days
before the benefit payment date. Participants whose
vested account balance has never exceeded $5,000 must be
paid out in the form of a lump sum distribution.
Forfeited Accounts
At December 31, 1998, forfeited nonvested accounts
totalled $937. These accounts will be used to reduce
future employer contributions.
Note 2. Summary of Accounting Policies
Basis of Accounting
The financial statements of the Plan are prepared under the
accrual method of accounting.
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets at the date of the financial statements and
the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those
estimates.
8
<PAGE>
Investment Valuation and Income Recognition
The Plan's investments in collective trusts are stated at
contract value. Contract values as stated by Virginia Bankers
Association Benefits Corporation (VBA), Plan Trustee, are
determined by closing quoted market prices of the underlying
securities and therefore approximate fair value at the end of
the Plan year.
Purchases and sales of securities are recorded on a trade-date
basis. Interest income is recorded on the accrual basis.
In accordance with the policy of stating investments at
current value, net realized and unrealized appreciation
(depreciation) for the year is reflected in the statements of
changes in net assets available for plan benefits.
Benefit Payments
Benefit payments are recorded when paid.
Note 3. Plan Termination
Although it has not expressed any intent to do so, the
Corporation has the right under the Plan to terminate the Plan
subject to the provisions of ERISA. In the event of plan
termination, participants are 100 percent vested in the portion
of his or her account not previously vested.
9
<PAGE>
Note 4. Investments
The Plan's investment assets are held by the custodian,
SouthTrust Asset Management Company of Georgia, N.A.
The following table presents the fair value of investments.
Investments that represent five percent or more of the Plan's net
assets are separately identified.
<TABLE>
<CAPTION>
December 31, 1998 December 31, 1997
------------------------------------ ----------------------------------
Number of Number of
Shares/Face Fair Shares/Face Fair
Amount Value Amount Value
<S> <C>
Investment at fair value as determined
by quoted market price:
Common Collective Trust Funds:
VBA Current Income Fund 51 $ 5,721 20 $ 2,196
VBA Capital Preservation Fund 2 241 5 648
VBA Moderate Growth Fund 546 73,216 182 22,515
VBA Wealth Building Fund 2,039 289,916 1,025 131,181
VBA Aggressive Appreciation
Fund 3,407 519,274 1,803 242,713
---------------- -----------
$ 888,368 $ 399,253
---------------- -----------
SouthTrust Treasury Obligation
Money Market Fund 29,580 $ 29,580 13,586 $ 13,586
---------------- -----------
Total investment
at fair value $ 917,948 $ 412,839
================ ===========
</TABLE>
Note 5. Tax Status
The Internal Revenue Service has determined and informed the
trustee/administrator by a letter dated December 23, 1997, that
the Master Plan and related trust are designed in accordance with
applicable sections of the Internal Revenue Code (IRC). The Plan
administrator and Plan sponsor believe that the Plan is designed
and currently being operated in compliance with the applicable
requirements of the IRC.
10
<PAGE>
Note 6. Party-in-Interest
The majority of the Plan's assets are invested in common
collective trust funds which are managed by the Virginia Bankers
Association Benefits Corporation, Plan administrator and trustee
of the Plan. Therefore, transactions in these funds qualify as a
party-in-interest. Fair market value of these funds are based on
closing market quotes of the underlying securities and fees
charged for services by the party-in-interest are based on
customary rates for such services.
Note 7. Year 2000 Issue
The Year 2000 Issue is the result of computer programs being
written using two digits rather than four to define the
applicable year. Any computer program that has time sensitive
software may recognize a date using "00" as the year 1900 rather
than the year 2000. Management is aware of potential problems,
not only to its own systems, but also the potential effects to
the Plan of malfunctions in systems of its trustees and
custodian.
Note 8. Administrative Expenses
Certain administrative expenses are absorbed by C & F Mortgage
Corporation, the Plan sponsor. Total administrative expenses paid
by the Plan sponsor were $4,598 and $4,040 for the Plan years
ended December 31, 1998 and 1997, respectively.
Note 9. Significant Amendments and Events
Investment in C & F Financial Corporation stock is available
beginning January 1, 1999. No stock has been purchased as of
December 31, 1998, however allocations into the stock fund have
occurred based on participants direction in anticipation of the
stock purchases. Funds of the stock fund are held in a money
market account until stock purchase is initiated.
11
<PAGE>
VIRGINIA BANKERS ASSOCIATION DEFINED CONTRIBUTION PLAN
FOR C & F MORTGAGE CORPORATION
Schedule of Assets Held for Investment Purposes
December 31, 1998
<TABLE>
<CAPTION>
Fair
Description of Asset Type of Asset Cost Value
- ------------------------------------------ ---------------------- --------------- --------------
<S> <C>
VBA Current Income Fund Common Collective
Trust Fund $ 5,475 $ 5 ,21
VBA Capital Preservation Fund Common Collective
Trust Fund 226 241
VBA Moderate Growth Fund Common Collective
Trust Fund 68,287 73,216
VBA Wealth Building Fund Common Collective
Trust Fund 247,061 289,916
VBA Aggressive Appreciation Fund Common Collective
Trust Fund 438,615 519,274
SouthTrust Treasury Obligation
Money Market Fund Cash Equivalent 29,580 29,580
-------------- --------------
$ 789,244 $ 917,948
============== ==============
</TABLE>
12
<PAGE>
VIRGINIA BANKERS ASSOCIATION DEFINED CONTRIBUTION PLAN
FOR C & F MORTGAGE CORPORATION
Supplemental Schedule of Reportable Transactions
For the Year Ended December 31, 1998
<TABLE>
<CAPTION>
Number of Purchase Selling Net
Transactions Description of Asset Price Price Gain (Loss)
- -------------- ---------------------------------- --------------- --------------- ---------------
<S> <C>
30 Sales SouthTrust Treasury Obligation $ 558,380 $ 558,380 $ - -
Money Market Fund
44 Purchases SouthTrust Treasury Obligation 574,374 - - - -
Money Market Fund
4 Sales VBA Moderate Growth Fund 14,903 16,056 1,153
15 Purchases VBA Moderate Growth Fund 62,369 - - - -
6 Sales VBA Wealth Building Fund 13,317 15,687 2,370
15 Purchases VBA Wealth Building Fund 149,858 - - - -
5 Sales VBA Aggressive Appreciation Fund 40,639 47,790 7,151
15 Purchases VBA Aggressive Appreciation Fund 272,820 - - - -
</TABLE>
13
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement (No. 333-67535) on Form S-8 of the Virginia Bankers Association
Defined Contribution Plan for Citizens and Farmers Bank and Virginia Bankers
Association Defined Contribution Plan for C & F Mortgage Corporation (the Plans)
of our reports dated May 19, 1999 and May 25, 1999, relating to the statements
of net assets available for benefits as of December 31, 1998 and 1997, and the
statements of changes in net assets available for benefits for the years ended
December 31, 1998 and 1997, which reports appear in the December 31, 1998 annual
report on Form 11-K of the plans.
/s/ Yount, Hyde & Barbour, P.C.
- -------------------------------
Winchester, Virginia
June 28, 1999
