C & F FINANCIAL CORP - 10-Q Quarterly Report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)


	x	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the quarterly period ended June 30, 2002

	o	TRANSITION REPORT UNDER TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT
		For the transition period from ___________to_____________

000-23423
Commission file number

C&F Financial Corporation

(Exact name of small business issuer as specified in its charter)

Virginia		54-1680165

(State or other jurisdiction of incorporation of organization)		(I.R.S. Employer Identification No.)

Eighth and Main Streets	West Point VA	23181

(Address of principal executive offices)		(Zip Code)

(804) 843-2360

(Issuer's telephone number)

(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.Yesx No o

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: 3,539,793 as of August 6, 2002.

TABLE OF CONTENTS

Part I-Financial Information		Page
Item 1.	Financial Statements
	Consolidated Balance Sheets - June 30, 2002 and December 31, 2001	1
	Consolidated Statements of Income - Three months ended June 30, 2002 and 2001	2
	Consolidated Statements of Shareholders' Equity Three months ended June 30, 2002 and 2001	3
	Consolidated Statements of Cash Flows - Three months ended June 30, 2002 and 2001	5
	Notes to Consolidated Financial Statements	6
Item 2.	Management's Discussion and Analysis	9
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	16
Part II-Other Information
Item 1.	Legal Proceedings	16
Item 2.	Changes in Securities	16
Item 3.	Defaults Upon Senior Securities	16
Item 4.	Submission of Matters to a Vote of Security Holders	16
Item 5.	Other Information	16
Item 6.	Exhibits and Reports on Form 8-K	16
Signature		17

CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except for per share amounts)

ASSETS	June 30, 2002		December 31, 2001

		(Unaudited)
Cash and due from banks	$	9,859	$	10,127
Interest -bearing deposits in other banks		22,006		930

Total cash and cash equivalents		31,865		11,057
Securities -available for sale at fair value, amortized cost of $60,779 and $53,123, respectively		62,865		53,953
Loans held for sale, net		47,657		69,263
Loans, net		247,611		246,112
Federal Home Loan Bank stock		1,690		1,595
Corporate premises and equipment, net of accumulated depreciation		14,382		14,639
Accrued interest receivable		2,023		2,134
Other assets		5,255		5,323

Total assets	$	413,348	$	404,076

LIABILITIES AND SHAREHOLDERS' EQUITY

Deposits
Non-interest-bearing demand deposits	$	47,578	$	38,489
Savings and interest-bearing demand deposits		143,593	131,509

Time deposits		155,183	153,914
Total deposits		346,354	323,912
Borrowings		11,927	27,204
Accrued interest payable		673	811
Other liabilities		5,585	7,406

Total liabilities		364,539	359,333

Commitments and contingent liabilities
Shareholders' equity
Preferred stock ($1.00 par value, 3,000,000 shares authorized)		—	—
Common stock ($1.00 par value, 8,000,000
shares authorized, 3,539,793 and 3,526,126
shares issued and outstanding at June 30, 2002 and December 31, 2001, respectively)		3,540	3,526
Additional paid-in capital		213	47
Retained earnings		43,679	40,622
Accumulated other comprehensive income net of tax of $709 and $282, respectively		1,377	548

Total shareholders' equity		48,809	44,743

Total liabilities and shareholders' equity	$	413,348	$	404,076

The accompanying notes are an integral part of the consolidated financial statements.

CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Dollars in thousands, except for per share amounts)

	Three Months Ended				Six Months Ended

	June 30,				June 30,

Interest Income		2002		2001			2002		2001

Interest and fees on loans	$	5,451	$	6,333		$	11,220	$	12,262
Interest on other investments and fed funds		148		12			217		30
Interest on investment securities
U.S. treasury securities		—		10			—		30
U.S. government agencies and corporations		—		149			—		365
Tax-exempt obligations of states and political subdivisions		607		600			1,185		1,219
Corporate bonds and other		199		118			335		232

Total interest income		6,405		7,222			12,957		14,138
Interest expense
Savings and interest-bearing deposits		516		713			1,126		1,514
Certificates of deposit, $100 or more		304		453			667		901
Other time deposits		1,155		1,757			2,405		3,447
Short-term borrowings and other		84		275			189		485

Total interest expense		2,059		3,198			4,387		6,347
Net interest income		4,346		4,024			8,570		7,791
Provision for loan losses		125		100			200		200

Net interest income after provision for loan losses		4,221		3,924			8,370		7,591
Other operating income
Gain on sale of loans		3,045		2,424			5,639		4,119
Service charges on deposit accounts		471		364			884		742
Other service charges and fees		820		849			1,551		1,460
Gain on maturities and calls of available for sale securities		20		—			35		—
Other income		625		245			953		519

Total other operating income		4,981		3,882			9,062		6,840
Other operating expenses
Salaries and employee benefits		3,921		3,192			7,656		6,136
Occupancy expenses		796		679			1,571		1,281
Goodwill amortization		47		69			94		137
Other expenses		1,305		1,256			2,468		2,268

Total other operating expenses		6,069		5,196			11,789		9,822
Income before income taxes		3,133		2,610			5,643		4,609
Income tax expense		826		744			1,526		1,246

Net income	$	2,307	$	1,866		$	4,117	$	3,363

Per share data
Net income - basic	$	.65	$	.52		$	1.17	$	.94
Net income - assuming dilution		.64	$	.52			1.14	$	.94
Cash dividends paid and declared		.15	$	.14			.30	$	.28
Weighted average number of shares - basic		3,534,200		3,556,639			3,531,734		3,562,880
Weighted average number of shares - assuming dilution		3,626,289		3,589,145			3,611,056		3,592,513

The accompanying notes are an integral part of the consolidated financial statements.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)
(Dollars in thousands)

													Accumulated
					Additional								Other
		Common			Paid-In			Comprehensive		Retained			Comprehensive
		Stock			Capital			Income		Earnings			Income (Loss)			Total

Balance January 1, 2001	$	3,571		$	20				$	35,523		$	(333	)		38,781

Comprehensive income
Net income		—			—		$	3,363		3,363			—			3,363
Other comprehensive income, net of tax
Unrealized gain on securities, net of reclassification
adjustment1		—			—			1,185		—			1,185			1,185

Comprehensive income							$	4,548

Stock options exercised		8			66					—			—			74
Repurchase of common stock		(22	)		(86	)				(229	)		—			(337	)
Cash dividends		—			—					(997	)		—			(997	)

Balance June 30, 2001	$	3,557		$	--				$	37,660		$	852		$	42,069

There were no reclassification adjustments for the six months ended June 30, 2001.

The accompanying notes are an integral part of the consolidated financial statements.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Dollars in thousands)
(Unaudited)

										Accumulated
				Additional						Other
		Common		Paid-In		Comprehensive		Retained		Comprehensive
		Stock		Capital		Income		Earnings		Income	Total

Balance January 1, 2002	$	3,526	$	47	$	40,622	$	548	$	44,743

Comprehensive income
Net income		—		—	$	4,117		4,117		—	4,117
Other comprehensive income, net of tax
Unrealized gain on securities, net of reclassification
adjustment (See disclosure below)		—		—		829		—		829	829

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents