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 PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2004

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 000-23423

C&F Financial Corporation

(Exact name of registrant as specified in its charter)

Virginia

54-1680165

(State or other jurisdiction of

incorporation or 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

(Registrant’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 Securities 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

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). x Yes ¨ No

At August 2, 2004, the latest practicable date for determination, 3,564,121 shares of common stock, $1.00 par value, of the registrant were outstanding.

TABLE OF CONTENTS


		Page
Part I - Financial Information

Item 1.	Financial Statements

	Consolidated Balance Sheets - June 30, 2004 and December 31, 2003	1

	Consolidated Statements of Income - Three months and six months ended June 30, 2004 and 2003	2

	Consolidated Statements of Shareholders’ Equity - Six months ended June 30, 2004 and 2003	3

	Consolidated Statements of Cash Flows - Six months ended June 30, 2004 and 2003	5

	Notes to Consolidated Financial Statements	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	11

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26

Item 4.	Controls and Procedures	26

Part II - Other Information

Item 1.	Legal Proceedings	27

Item 2.	Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities	27

Item 4.	Submission of Matters to a Vote of Security Holders	27

Item 6.	Exhibits and Reports on Form 8-K	28

Signatures		29

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS

(In thousands, except for share and per share amounts)


	June 30, 2004		December 31, 2003
	(Unaudited)
ASSETS

Cash and due from banks	$	16,048	$	15,457
Interest bearing deposits in other banks		42,630		34,294

Total cash and cash equivalents		58,678		49,751
Securities-available for sale at fair value, amortized cost of $68,891 and $99,550, respectively		70,258		103,050
Loans held for sale, net		57,858		29,733
Loans, net		366,027		350,170
Federal Home Loan Bank stock		1,392		2,072
Corporate premises and equipment, net of accumulated depreciation		15,914		15,367
Accrued interest receivable		2,802		2,590
Goodwill		9,071		9,071
Other assets		12,465		11,742

Total assets	$	594,465	$	573,546

LIABILITIES AND SHAREHOLDERS’ EQUITY

Deposits
Non-interest bearing demand deposits	$	78,142	$	64,683
Savings and interest bearing demand deposits		179,377		176,732
Time deposits		184,635		186,220

Total deposits		442,154		427,635
Borrowings		75,922		67,733
Accrued interest payable		535		583
Other liabilities		10,176		12,211

Total liabilities		528,787		508,162

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, 3,565,421 and 3,612,571 shares issued and outstanding, respectively)		3,565		3,612
Additional paid-in capital		—		1,010
Retained earnings		61,267		58,487
Accumulated other comprehensive income, net		846		2,275

Total shareholders’ equity		65,678		65,384

Total liabilities and shareholders’ equity	$	594,465	$	573,546

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

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In thousands, except for share and per share amounts)


	Three Months Ended June 30,				Six Months Ended June 30,
	2004		2003		2004		2003
Interest income
Interest and fees on loans	$	9,056	$	9,158	$	17,722	$	17,920
Interest on other investments and fed funds		99		43		232		79
Interest on investment securities
U.S. government agencies and corporations		94		12		171		15
Tax-exempt obligations of states and political subdivisions		593		572		1,181		1,164
Corporate bonds and other		114		131		235		276

Total interest income		9,956		9,916		19,541		19,454

Interest expense
Savings and interest bearing deposits		277		414		550		832
Certificates of deposit, $100 or more		261		275		533		545
Other time deposits		677		884		1,408		1,817
Short-term borrowings and other		586		696		1,130		1,390

Total interest expense		1,801		2,269		3,621		4,584

Net interest income		8,155		7,647		15,920		14,870

Provision for loan losses		802		843		1,697		1,381

Net interest income after provision for loan losses		7,353		6,804		14,223		13,489

Other operating income
Gains on sales of loans		4,541		5,642		7,607		10,465
Service charges on deposit accounts		665		589		1,267		1,169
Other service charges and fees		1,172		1,293		1,965		2,334
Gains on calls of available for sale securities		3		116		33		156
Other income		270		455		641		815

Total other operating income		6,651		8,095		11,513		14,939

Other operating expenses
Salaries and employee benefits		6,642		6,545		12,275		12,334
Occupancy expenses		929		873		1,840		1,747
Other expenses		2,244		2,147		4,119		4,165

Total other operating expenses		9,815		9,565		18,234		18,246

Income before income taxes		4,189		5,334		7,502		10,182
Income tax expense		1,300		1,790		2,266		3,374

Net income	$	2,889	$	3,544	$	5,236	$	6,808

Per share data
Net income – basic	$	.80	$	.98	$	1.46	$	1.88
Net income – assuming dilution	$	.77	$	.94	$	1.40	$	1.81
Cash dividends paid and declared	$	.22	$	.18	$	.44	$	.34
Weighted average number of shares – basic		3,577,296		3,593,805		3,585,750		3,613,992
Weighted average number of shares – assuming dilution		3,738,087		3,774,989		3,752,786		3,769,428

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

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Unaudited)

(In thousands)


	Common Stock			Additional Paid-In Capital			Comprehensive Income			Retained Earnings			Accumulated Other Comprehensive Income			Total
Balance December 31, 2003	$	3,612		$	1,010					$	58,487		$	2,275		$	65,384

Comprehensive income
Net income							$	5,236			5,236						5,236
Other comprehensive loss, net of tax
Net change in unrealized net holding gains on securities, net of reclassification adjustment								(1,429	)					(1,429	)		(1,429	)

Comprehensive income							$	3,807

Repurchase of common stock		(50	)		(1,040	)					(881	)		—			(1,971	)

Stock options exercised		3			30						—			—			33

Cash dividends		—			—						(1,575	)		—			(1,575	)

Balance June 30, 2004	$	3,565		$	—					$	61,267		$	846		$	65,678

Disclosure of Reclassification Amount:
Change in unrealized net holding gains on securities during period							$	(1,451	)

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