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 March 31, 2000
------------------------------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from to
------------------ ---------------------
Commission file number 000-23423
------------------------------------------
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: 3,622,924 as of May 10, 2000.
------------------------------
<PAGE>
TABLE OF CONTENTS
Part I - Financial Information Page
Item 1. Financial Statements
Consolidated Balance Sheets -
March 31, 2000 and December 31, 1999........................1
Consolidated Statements of Income -
Three months ended March 31, 2000 and 1999..................2
Consolidated Statements of Shareholders' Equity
Three months ended March 31, 2000 and 1999 .................3
Consolidated Statements of Cash Flows -
Three months ended March 31, 2000 and 1999..................5
Notes to Consolidated Financial Statements......................6
Item 2. Management's Discussion and Analysis .......................... 8
Item 3.. Quantitative and Qualitative Disclosures About Market Risk..... 12
Part II - Other Information
Item 1. Legal Proceedings .............................................13
Item 2. Changes in Securities .........................................13
Item 3. Defaults Upon Senior Securities................................13
Item 4. Submission of Matters to a Vote of Security Holders ...........13
Item 5. Other Information .............................................13
Item 6. Exhibits and Reports on Form 8-K...............................13
Signatures ...............................................................14
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<CAPTION>
ASSETS March 31, 2000 December 31, 1999
- ------ -------------- -----------------
(Unaudited)
<S> <C> <C>
Cash and due from banks $ 7,736 $ 13,424
Interest -bearing deposits in other banks 2,879 2,062
----------- -----------
Total cash and cash equivalents 10,615 15,486
Securities -available for sale at fair value, amortized
cost of $32,094 and $32,112, respectively 30,334 30,208
Securities-held to maturity at amortized cost,
fair value of $34,862 and $34,976,
respectively 34,699 34,791
Loans held for sale, net 12,988 24,886
Loans, net 214,816 206,116
Federal Home Loan Bank stock 1,585 1,585
Corporate premises and equipment,
net of accumulated depreciation 8,875 8,404
Accrued interest receivable 2,069 2,136
Other assets 6,135 5,629
----------- -----------
Total assets $ 322,116 $ 329,241
=========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Non-interest-bearing demand deposits $ 33,685 $ 34,827
Savings and interest-bearing demand deposits 120,345 121,646
Time deposits 110,468 104,381
----------- -----------
Total deposits 264,498 260,854
Borrowings 18,230 30,035
Accrued interest payable 729 567
Other liabilities 2,569 2,656
----------- -----------
Total liabilities 286,026 294,112
----------- -----------
Shareholders' Equity
Preferred stock ($1.00 par value,
3,000,000 shares authorized) -- --
Common stock ($1.00 par value, 8,000,000
shares authorized, 3,643,324 and 3,644,456
shares issued and outstanding at March 31,
2000 and December 31, 1999, respectively) 3,643 3,645
Additional paid-in capital - 14
Retained earnings 33,609 32,728
Accumulated other comprehensive (loss)
net of tax of $598 and $647, respectively (1,162) (1,257)
----------- -----------
Total shareholders' equity 36,090 35,130
----------- -----------
Total liabilities and
shareholders' equity $ 322,116 $ 329,241
=========== ===========
</TABLE>
The Company's notes are an integral part of the consolidated financial
statements.
1
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands of dollars, except for per share amounts)
<CAPTION>
Three Months Ended March 31,
----------------------------
Interest Income 2000 1999
---- ----
<S> <C> <C>
Interest and fees on loans $ 5,101 $ 5,004
Interest on other market investments 44 230
Interest on securities
U.S. Treasury Securities 20 49
U.S. Government agencies and corporations 238 163
Tax-exempt obligations of states and political
subdivisions 622 529
Corporate bonds and other 122 115
------------- ------------
Total interest income 6,147 6,090
Interest Expense
Savings and interest-bearing deposits 815 699
Certificates of deposit, $100,000 or more 228 222
Other time deposits 1,078 1,137
Short-term borrowings and other 332 182
------------- -------------
Total interest expense 2,453 2,240
------------- -------------
Net interest income 3,694 3,850
Provision for loan losses 75 175
------------- -------------
Net interest income after provision for loan losses 3,619 3,675
Other Operating Income
Gain on sale of loans 1,073 2,164
Service charges on deposit accounts 306 269
Other service charges and fees 394 485
Gain on sale of available for sale securities 105 --
Other income 190 260
------------- -------------
Total other operating income 2,068 3,178
Other Operating Expenses
Salaries and employee benefits 2,331 2,260
Occupancy expenses 585 476
Goodwill amortization 69 69
Other expenses 937 1,003
------------- -------------
Total other operating expenses 3,922 3,808
------------- -------------
Income before income taxes 1,765 3,045
Income tax expense 396 899
------------- -------------
Net Income $ 1,369 $ 2,146
============= =============
Per Share Data
Net Income - Basic $ .38 $ .56
Net Income - Assuming Dilution $ .37 $ .56
Cash Dividends Paid and Declared $ .13 $ .12
Weighted average number of shares and
common stock equivalents outstanding 3,678,010 3,861,910
</TABLE>
The Company's notes are an integral part of the consolidated financial
statements.
2
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)
(Amounts in thousands of dollars)
<CAPTION>
Accumulated
Additional Other
Common Paid-In Comprehensive Retained Comprehensive
Stock Capital Income Earnings Income Total
----- ------- ------ -------- ------ -----
<S> <C> <C> <C> <C> <C> <C>
Balance January 1, 1999 $ 3,867 $ 476 $ 31,739 $ 565 $ 36,647
Comprehensive Income
Net income $ 2,146 2,146 2,146
Other comprehensive
income, net of tax
Unrealized gain on
securities, net of
reclassification
adjustment(1) (244) (244) (244)
---------
Comprehensive income $ 1,902
=========
Stock options exercised 2 14 16
Repurchase of
common stock (235) (482) (3,971) (4,688)
Cash dividends (448) (448)
--------- --------- --------- --------- ----------
Balance March 31, 1999 $ 3,634 $ 8 $ 29,466 $ 321 $ 33,429
========= ========= ========= ========= =========
</TABLE>
- ----------------------------
(1) There were no reclassification adjustments for the three months ended March
31, 1999.
The Company's notes are an integral part of the consolidated financial
statements.
3
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Amounts in thousands of dollars)
(Unaudited)
Accumulated
Additional Other
Common Paid-In Comprehensive Retained Comprehensive
Stock Capital Income Earnings Income Total
----- ------- ------ -------- ------ -----
<S> <C> <C> <C> <C> <C>
Balance January 1, 2000 $ 3,645 $ 14 $ 32,728 $(1,257) $ 35,130
Comprehensive Income
Net income $ 1,369 1,369 1,369
Other comprehensive
income, net of tax
Unrealized gain on
securities, net of
reclassification
adjustment
(See disclosure below) 95 95 95
---------
Comprehensive income $ 1,464
=========
Stock options exercised 1 17 18
Repurchase of
common stock (3) (31) (14) (48)
Cash dividends (474) (474)
--------- --------- --------- --------- ----------
Balance March 31, 2000 $ 3,643 $ -- $ 33,609 $ (1,162) $ 36,090
======== ======= ========= =========== =========
</TABLE>
- ----------------------------
Disclosure of Reclassification Amount:
Unrealized net holding gains arising during period $ 164
Less: reclassification adjustment for gains
Included in net income (69)
------
Net unrealized gains on securities $ 95
=====
The Company's notes are an integral part of the consolidated financial
statements.
4
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS ON CASH FLOWS
(Unaudited)
(Amounts in thousands of dollars)
<CAPTION>
Three Months Ended March 31,
----------------------------
2000 1999
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,369 $ 2,146
Adjustments to reconcile net income to
net cash provided by (used in) operating activities:
Depreciation 240 224
Amortization of goodwill 69 69
Provision for loan losses 75 175
Accretion of discounts and amortization of
premiums on investment securities, net (11) (12)
Proceeds from sale of loans 70,319 156,892
Origination of loans held for sale (58,420) (116,464)
Change in other assets and liabilities:
Accrued interest receivable 67 633
Other assets (641) (120)
Accrued interest payable 163 115
Other liabilities (72) (2,779)
---------- ----------
Net cash provided by operating activities 13,158 40,879
---------- ----------
Cash flows from investing activities:
Proceeds from maturities of investments
held to maturity 100 819
Proceeds from sales and maturities of
investments available for sale 372 9,685
Purchase of investment securities -- --
Purchase of investments available for sale (351) (8,900)
Net increase in customer loans (8,775) (1,752)
Purchase of corporate premises and equipment (710) (370)
---------- ----------
Net cash used in investing activities (9,364) (518)
----------- ----------
Cash flows from financing activities:
Net increase (decrease) in demand, interest bearing
interest-bearing demand and savings deposits (2,443) 8,215
Net increase (decrease) in time deposits 6,087 (2,001)
Net decrease in other borrowings (11,805) (12,870)
Repurchase of common stock (48) (4,688)
Proceeds from exercise of stock options 18 16
Cash dividends (474) (448)
----------- ----------
Net cash used in financing activities (8,665) (11,776)
----------- -----------
Net increase (decrease) in cash and cash equivalents (4,871) 28,585
Cash and cash equivalents at beginning of period 15,486 8,473
---------- ----------
Cash and cash equivalents at end of period $ 10,615 $ 37,058
========== ==========
Supplemental disclosure
Interest paid 2,290 $ 2,125
Income taxes paid 52 $ 84
</TABLE>
The Company's notes are an integral part of the consolidated financial
statements.
5
<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 March 31, 2000, the results of
operations for the three months ended March 31, 2000 and 1999, and cash flows
for the three months ended March 31, 2000 and 1999 have been made. 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 C&F
Financial Corporation's Annual Report on Form 10-K for the year ended December
31, 1999.
The consolidated financial statements include the accounts of C&F
Financial Corporation ("the Company") and its subsidiary, Citizens and Farmers
Bank ("the Bank"), with all significant intercompany transactions and accounts
being eliminated in consolidation.
Note 2
Net income per share assuming dilution 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 3,678,010 and 3,861,910
for the three months ended March 31, 2000 and 1999, respectively.
Note 3
During the first quarter of 2000 the board of directors of C&F Financial
Corporation authorized management to buy up to 10% of the Company's outstanding
common stock in the open market at prices that management and the board of
directors determine are prudent. The Company will consider current market
conditions and the Company's current capital level, in addition to other
factors, when deciding whether to repurchase stock.
During February and March of 2000 the Company repurchased 3,000 shares of
its common stock in the open market at prices between $14.625 and $16.50 per
share. During March of 1999 the Company repurchased 235,000 shares of its common
stock from six shareholders at prices between $19.88 and $20.00 per share in
privately negotiated transactions.
Note 4
On April 10, 2000 Citizens and Farmers Bank opened its tenth branch
office at 1167 Jamestown Road in the City of Williamsburg, Virginia.
Note 5
The Company operates in a decentralized fashion in two principal business
activities, retail banking and mortgage banking. Revenues from retail banking
operations consist primarily of interest earned on loans and investment
securities. Mortgage banking operating revenues consist mainly of interest
earned on mortgage loans held for sale, gains on sales of loans in the secondary
6
<PAGE>
mortgage market, and loan origination fee income. The Company also has an
investment company and a title company subsidiary which derive revenues from
brokerage and title insurance services, respectively. The results of these
subsidiaries are not significant to the Company as a whole and have been
included in "Other." The following table presents segment information for the
periods ended March 31, 2000 and 1999.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Period Ended March 31, 2000
Retail Mortgage
Banking Banking Other Eliminations Consolidated
- -------------------------------------------------------------------------------------------------------------------
Revenues:
<S> <C> <C> <C> <C> <C>
Interest income $ 6,039 $ 265 $ -- $ (157) $ 6,147
Gain on sale of loans -- 1,073 -- -- 1,073
Other 585 258 151 -- 994
- ------------------------------------------------------------------------------------------------------------------
Total operating income 6,624 1,596 151 (157) 8,214
- ------------------------------------------------------------------------------------------------------------------
Expenses:
Interest expense 2,453 157 -- (157) 2,453
Salaries and employee benefits 1,467 780 84 -- 2,331
Other 1,082 554 30 -- 1,666
- ------------------------------------------------------------------------------------------------------------------
Total operating expenses 5,002 1,491 114 (157) 6,450
- ------------------------------------------------------------------------------------------------------------------
Income before income taxes 1,622 105 38 -- 1,765
- ------------------------------------------------------------------------------------------------------------------
Total assets 317,441 14,219 23 (9,567) 322,116
Capital expenditures $ 681 $ 29 $ -- $ -- $ 710
- ------------------------------------------------------------------------------------------------------------------
<CAPTION>
Period Ended March 31, 1999
Retail Mortgage
Banking Banking Other Eliminations Consolidated
- -------------------------------------------------------------------------------------------------------------------
Revenues:
Interest income $ 5,927 $ 578 $ -- $ (415) $ 6,090
Gain on sale of loans -- 2,164 -- -- 2,164
Other 441 394 179 -- 1,014
- ------------------------------------------------------------------------------------------------------------------
Total operating income 6,367 3,136 179 (415) 9,267
- ------------------------------------------------------------------------------------------------------------------
Expenses:
Interest expense 2,240 415 -- (415) 2,240
Salaries and employee benefits 1,152 1,039 69 -- 2,260
Other 1,025 662 36 -- 1,723
- ------------------------------------------------------------------------------------------------------------------
Total operating expenses 4,417 2,116 105 (415) 6,223
- ------------------------------------------------------------------------------------------------------------------
Income before income taxes 1,951 1,020 74 -- 3,045
- ------------------------------------------------------------------------------------------------------------------
Total assets 305,814 26,150 44 (23,742) 308,266
Capital expenditures $ 300 $ 70 $ -- $ -- $ 370
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
The retail banking segment provides the mortgage banking segment with the funds
needed to originate mortgage loans through a warehouse line of credit and
charges the mortgage banking segment interest at the daily FHLB advance rate
plus 50 basis points. These transactions are eliminated to reach consolidated
totals. Certain corporate overhead costs incurred by the retail banking segment
are not allocated to the mortgage banking and other segments.
7
<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 for the three months ended March 31, 2000 was $1,369,000
compared to $2,146,000 for the same period of 1999. Earnings per diluted share
were $.37 for the three months ended March 31, 2000 compared to $.56 per diluted
share for the same period of 1999. Included in earnings for the first quarter of
1999 was $370,000 in interest income (after taxes) resulting from the payoff of
a non-accrual loan which had been on the Bank's books for the past several
years. Excluding this interest income, net income decreased 23% and earnings per
share decreased 17% over the first quarter of 1999.
Profitability, as measured by the Company's annualized return on
average assets (ROA), decreased to 1.73% for the three months ended March 31,
2000, down from 2.80% for the same period of 1999. Another key indicator of
performance, the annualized return on average equity (ROE) for the three months
ended March 31, 2000 was 15.45%, compared to 23.75% for the three months ended
March 31, 1999. Excluding the one-time interest income mentioned above, ROA and
ROE was 2.32% and 19.66%, respectively, for the three months ended March 31,
1999.
RESULTS OF OPERATIONS
Net Interest Income
Net interest income for the three months ended March 31, 2000 was $3.7
million, an increase of $404,000, or 1.2%, from $3.3 million, excluding the
one-time interest income of approximately $560,000 before taxes, for the three
months ended March 31, 1999. The increase in net interest income is a result of
an increase in the average balance of interest earning assets to $297.9 million
for the three months ended March 31, 2000 compared to $289.1 million for the
same period in 1999 and an increase in the net interest margin on a taxable
equivalent basis to 5.43% for the three months ended March 31, 1999 from 4.98%
for the same period in 1999.
The increase in average earning assets is a result of the increase in
the average balance of loans held in the Bank's portfolio and an increase in the
average balance of investment securities offset by a decrease in the average
balance of loans held for sale by C&F Mortgage Corporation and a decrease in
interest bearing deposits in other institutions. The increase in the Bank's loan
portfolio is a result of increased loan demand resulting from an increased
emphasis on commercial and consumer lending. The increase in the average balance
of the securities portfolio and the decrease in interest bearing balances in
other institutions was a result of excess funds that were deposited in other
institutions being invested in loans and securities during the second and third
quarters of 1999. During the fourth quarter of 1998 and the first quarter of
1999 interest rates were at the lowest levels in years. As a result, numerous
securities were called and the excess cash was deposited in interest bearing
accounts the Federal Home Loan Bank. As rates began to rise in 1999, funds that
were not being invested in loans were reinvested in securities.
8
<PAGE>
The decrease in loans held for sale is a result of decreased production
at C&F Mortgage due to increasing interest rates during the first quarter of
2000. Loans closed at C&F Mortgage Corporation for the three months ended March
31, 2000 were $58,420,000 compared to $116,374,000 for the comparable period in
1999. Loans sold during the first quarter of 2000 were $70,322,000 compared to
$156,999,000 for the first quarter of 1999
The increase in the Company's net interest margin on a taxable
equivalent basis to 5.43% for the first three months of 2000 from 4.98% for the
same period in 1999 was a result of an increase in the yield on interest earning
assets to 8.73% for the first quarter of 2000 from 8.07% for the same period in
1999. The cost of funds for the first quarter of 2000 was flat compared to the
first quarter of 1999. The increase in the yield on interest earning assets was
a result of an increase in the yield on loans held by the Bank, a decrease in
the average balance of lower yielding loans held for sale at C&F Mortgage
Corporation and a decrease in the significantly lower yielding deposits at the
Federal Home Loan Bank. The increase in the yield on loans held by the Bank is a
result of the rising interest rate environment
The cost of funds for the Company remained relatively flat for the
first quarter of 2000 compared to the first quarter of 1999. A decrease in the
cost of deposits for the first quarter of 2000 was offset by an increase in the
cost of borrowings from the FHLB. The decrease in the cost of deposits was
mainly a result of the increase in the average balance of lower yielding
interest checking accounts as a percentage of total average interest bearing
deposits. The increase in the cost of borrowings was a result of higher cost
funds from the FHLB resulting from the rising interest rate environment
Non-Interest Income
Non-interest income decreased $1,110,000, or 35%, for the three months
ended March 31, 1999 from the same period of 1998. The majority of this decrease
was a result of a $1,091,000 decrease in the gain on sale of loans due to the
decrease in volume of loans sold by C&F Mortgage Corporation. Loans sold during
the first quarter of 2000 amounted to $70,322,000 compared to $156,999,000 for
the first quarter of 1999.
Non-Interest Expense
Non-interest expense increased $114,000, or 3%, for the three month
period ended March 31, 2000 from the same period in 1999. This increase is
mainly attributable to an additional branch office at the Bank, the creation of
Citizens and Commerce Bank, a division of the Bank, in the fourth quarter of
1999 and the overall growth in the Company offset by a decrease in salaries
expense at C&F Mortgage Corporation.
Year 2000 Issue
The Y2K issue involved the risk that computer programs and computer
systems would not be able to perform without interruption into the year 2000. If
computer systems did not correctly recognize the date change from December 31,
1999 to January 1, 2000, computer applications that rely on the date field could
have failed or created erroneous results. All computer programs and systems at
the Corporation operated without problems when the date changed from December
31, 1999 to January 2000. While the Corporation will continue to monitor
computer programs and systems, no problems are expected.
To date the Corporation has expensed $150,000 related with the Year
2000 issue. Remaining expenditures are not expected to have a material effect on
the Corporation's consolidated financial statements.
9
<PAGE>
Income Taxes
Applicable income taxes on earnings for the first three months of 2000
amounted to $396,000 resulting in an effective tax rate of 22.4% compared to
$899,000, or 29.5%, for the same period in 1999. The decrease in the effective
tax rate for the quarter is a result of the increase in earnings subject to no
taxes, such as certain loans to municipalities or investment obligations of
state and political subdivisions, as a percentage of total income. This increase
is primarily a result of the decrease in income at C&F Mortgage Corporation.
Asset Quality-Allowance /Provision For Loan Losses
The Company had $75,000 in provision expense for the first three months
of 2000 compared to $175,000 for the same period in 1999. Loans charged off
amounted to $12,000 for the three months ended March 31, 1999 and $300 for the
same period of 1999. Recoveries amounted to $700 and $16,000 for the three
months ended March 31, 2000 and 1999, respectively. The allowance for loan
losses was $3.4 million and $3.3 million at March 31, 2000 and December 31,
1999, respectively. The allowance approximates 1.54% and 1.60% of total loans
outstanding at March 31, 2000 and December 31, 1999, respectively. Management
feels that the reserve is adequate to absorb any losses on existing loans, which
may become uncollectible.
Nonperforming Assets
Total non-performing assets, which consist of the Company's non-accrual
loans were $73,000 at March 31, 2000 compared to $49,000 at December 31, 1999.
FINANCIAL CONDITION
Summary
At March 31, 2000, the Company had total assets of $322.1 million
compared to $329.2 million at December 31, 1999.
Loan Portfolio
At March 31, 2000, loans held for sale amounted to $12.9 million
compared to $24.9 million at December 31, 1999. The decrease in the balance from
December 31, 1999 is a result of a decrease in originations from $84,000,000 for
the fourth quarter of 1999 to $58,000,000 for the first quarter of 2000. The
decrease in originations for the first quarter of 2000 is a result of an
increase in interest rates for the first quarter of 2000 as compared to the
fourth quarter of 1999.
10
<PAGE>
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>
March 31, 2000 December 31, 1999
(Dollars in Thousands)
Amount Percent Amount Percent
------ ------- ------ -------
<S> <C> <C> <C> <C>
Real estate - mortgage $ 90,472 41% $ 90,947 43%
Real estate - construction 8,810 4 7,980 4
Commercial, financial and
agricultural 97,699 45 89,139 42
Equity lines 10,313 5 10,272 5
Consumer 11,913 5 12,091 6
------------- ------ ----------- ---
Total loans 219,207 100% 210,429 100%
==== ====
Less unearned loan fees (1,026) (1,011)
Less allowance for possible
loan losses (3,365) (3,302)
------------- -----------
Total loans, net $ 214,816 $ 206,116
============= ===========
</TABLE>
Investment Securities
At March 31, 2000, total investment securities were $65,033,000 million
compared to $64,999,000 at December 31, 1999. Securities of U.S. Government
agencies and corporations represent 20% of the total securities portfolio,
obligations of state and political subdivisions were 70%, U.S. Treasury
securities were 2%, and preferred stocks were 8% at March 31, 2000.
Deposits
Deposits totaled $264.5 million at March 31, 2000 compared to $260.9
million at December 31, 1999. Non-interest bearing deposits totaled $33.7
million at March 31, 2000 compared to $34.8 million at December 31, 1999.
Liquidity
At March 31, 2000, cash, securities classified as available for sale
and interest-bearing deposits were 13.9% 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 and through an established
line with the Federal Home Loan Bank.
Capital Resources
The Company's Tier I capital ratio was 14.4% at March 31, 2000 compared to
14.0% at December 31, 1999. The total risk-based capital ratio was 15.6% at
March 31, 1999 compared to 15.2% at December 31, 1999. These ratios are in
excess of the mandated minimum requirements. The increase in the Tier I capital
ratio and the total risked based capital ratio was a result of the current
quarter's earnings.
Shareholders' equity was $36.1 million at the end of the first quarter of
2000 compared to $35.1 million at December 31, 1999. The leverage ratio consists
of Tier I capital divided by quarterly average assets. At March 31, 2000, the
Company's leverage ratio was 11.4% compared to 11.3% at December 31, 1999. Each
of these exceeds the required minimum leverage ratio of 4%. The increase in the
leverage ratio is a result of the current quarter's earnings.
11
<PAGE>
New Accounting Pronouncements
There have been no significant pronouncements since the December 31, 1999
Form 10 K was filed.
Effects of Inflation
The effect of changing prices in financial institutions is typically
different from other industries because 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.
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
The statements contained in this report that are not historical facts may
be forward-looking statements. The forward-looking statements are subject to
certain risks and uncertainties which could cause actual results to differ
materially from historical results or those anticipated. Readers are cautioned
not to place undue reliance on these forward-looking statements, which may be
estimates or speak only as of the dates the statements were made.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no significant changes from the quantitative and
qualitative disclosures made in the December 31, 1999 Form 10 K.
12
<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
C&F Financial Corporation's Annual Shareholders Meeting was held on
April 18, 2000.
(a) Larry G. Dillon and James H. Hudson III were elected as Class I Directors
to the Board of Directors until the 2003 Annual Meeting of Shareholders.
(b) The Amendment of the Company's 1994 Incentive Stock Plan was approved.
(c) Yount, Hyde & Barbour, P.C. was appointed as independent auditors of the
Company for 2000.
ITEM 5. OTHER INFORMATION - Inapplicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
On March 30, 2000 a report on Form 8-K was filed to announce the
Company's Stock Repurchase Plan.
13
<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 May 10, 2000 /s/ Larry G. Dillon
--------------------- ---------------------------------------
Larry G. Dillon, Chairman and President
Date May 10, 2000 /s/ Thomas F. Cherry
--------------------- ---------------------------------------
Thomas F. Cherry, Chief Financial Officer
14
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