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, 2001
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[_] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from to
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Commission file number 000-23423
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C&F Financial Corporation
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(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
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(Address of principal executive offices) (Zip Code)
(Issuer's telephone number) (804) 843-2360
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________________________________________________________________________________
(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: 3,556,639 as of May 3, 2001.
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TABLE OF CONTENTS
Part I - Financial Information Page
- ------------------------------ ----
Item 1. Financial Statements
Consolidated Balance Sheets -
March 31, 2001 and December 31, 2000........................ 1
Consolidated Statements of Income -
Three months ended March 31, 2001 and 2000.................. 2
Consolidated Statements of Shareholders' Equity
Three months ended March 31, 2001 and 2000 ................. 3
Consolidated Statements of Cash Flows -
Three months ended March 31, 2001 and 2000.................. 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 .............................................. 12
Item 2. Changes in Securities .......................................... 12
Item 3. Defaults Upon Senior Securities................................. 12
Item 4. Submission of Matters to a Vote of Security Holders ............ 12
Item 5. Other Information .............................................. 12
Item 6. Exhibits and Reports on Form 8-K................................ 12
Signatures............................................................... 13
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
ASSETS March 31, 2001 December 31, 2000
- ------ -------------- -----------------
(Unaudited)
Cash and due from banks $ 8,540 $ 8,923
Interest -bearing deposits in other banks 1,173 5,915
----------- -----------
Total cash and cash equivalents 9,713 14,838
Securities -available for sale at fair value, amortized
cost of $62,341 and $32,419, respectively 63,928 31,913
Securities-held to maturity at amortized cost,
fair value of $0 and $34,836, respectively -- 33,770
Loans held for sale, net 40,190 17,600
Loans, net 243,040 229,944
Federal Home Loan Bank stock 1,595 1,595
Corporate premises and equipment,
net of accumulated depreciation 11,581 9,890
Accrued interest receivable 2,406 2,404
Other assets 4,735 5,518
----------- -----------
Total assets $ 377,188 $ 347,472
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Deposits
Non-interest-bearing demand deposits $ 43,620 $ 35,735
Savings and interest-bearing demand deposits 119,630 117,566
Time deposits 147,861 137,387
----------- -----------
Total deposits 311,111 290,688
Borrowings 17,355 13,969
Accrued interest payable 1,111 993
Other liabilities 6,716 3,041
----------- -----------
Total liabilities 336,293 308,691
----------- -----------
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, 3,556,639 and 3,571,039
shares issued and outstanding at March 31,
2001 and December 31, 2000, respectively) 3,557 3,571
Additional paid-in capital -- 20
Retained earnings 36,292 35,523
Accumulated other comprehensive income (loss)
net of tax of $540 and $172, respectively 1,046 (333)
----------- ------------
Total shareholders' equity 40,895 38,781
----------- -----------
Total liabilities and
shareholders' equity $ 377,188 $ 347,472
=========== ===========
The accompanying notes are an integral part of the consolidated financial
statements.
1
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands of dollars, except for per share amounts)
Three Months Ended March 31,
------------------------------------------
Interest Income 2001 2000
---- ----
Interest and fees on loans $ 5,929 $ 5,101
Interest on other market investments 18 44
Interest on securities
U.S. treasury securities 20 20
U.S. government agencies and corporations 216 238
Tax-exempt obligations of states and political
subdivisions 618 622
Corporate bonds and other 114 122
------------- ------------
Total interest income 6,915 6,147
------------- ------------
Interest Expense
Savings and interest-bearing deposits 801 815
Certificates of deposit, $100,000 or more 448 228
Other time deposits 1,689 1,078
Short-term borrowings and other 210 332
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Total interest expense 3,148 2,453
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Net interest income 3,767 3,694
Provision for loan losses 100 75
------------- ------------
Net interest income after provision for loan losses 3,667 3,619
------------- ------------
Other Operating Income
Gain on sale of loans 1,696 1,073
Service charges on deposit accounts 378 306
Other service charges and fees 611 394
Gain on sale of available for sale securities -- 105
Other income 273 190
------------- -------------
Total other operating income 2,958 2,068
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Other Operating Expenses
Salaries and employee benefits 2,944 2,331
Occupancy expenses 601 585
Goodwill amortization 69 69
Other expenses 1,012 937
------------- -------------
Total other operating expenses 4,626 3,922
------------- -------------
Income before income taxes 1,999 1,765
Income tax expense 502 396
------------- -------------
Net income $ 1,497 $ 1,369
============= =============
Per Share Data
Net income - basic $ .42 $ .38
Net income - assuming dilution $ .42 $ .37
Cash dividends paid and declared $ .14 $ .13
Weighted average number of shares and
common stock equivalents outstanding 3,595,882 3,678,010
The accompanying notes are an integral part of the consolidated financial
statements.
2
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
----- ------- ------ -------- ------ -----
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
======== ======= ========== ========= =========
- ----------------------------
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 accompanying notes are an integral part of the consolidated financial
statements.
3
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)
(Amounts in thousands of dollars)
Accumulated
Additional Other
Common Paid-In Comprehensive Retained Comprehensive
Stock Capital Income Earnings Income Total
----- ------- ------ -------- ------ -----
Balance January 1, 2001 $ 3,571 $ 20 $ 35,523 $ (333) $ 38,781
Comprehensive Income
Net income $ 1,497 1,497 1,497
Other comprehensive
income, net of tax
Unrealized gain on
securities, net of
reclassification
adjustment/1/ 1,379 1,379 1,379
---------
Comprehensive income $ 2,876
=========
Stock options exercised 8 66 -- -- 74
Repurchase of
common stock (22) (86) (229) -- (337)
Cash dividends -- -- (499) -- (499)
-------- --------- --------- -------- ---------
Balance March 31, 2001 $ 3,557 $ -- $ 36,292 $ 1,046 $ 40,895
======== ========= ========= ======== =========
- ----------------------------
/1/ There were no reclassification adjustments for the three months ended March
31, 2001.
The accompanying notes are an integral part of the consolidated financial
statements.
4
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Amounts in thousands of dollars)
Three Months Ended March 31,
2001 2000
--------- ---------
Cash flows from operating activities:
Net income $ 1,497 $ 1,369
Adjustments to reconcile net income to
net cash provided by (used in) operating activities:
Depreciation 307 240
Amortization of goodwill 69 69
Provision for loan losses 100 75
Accretion of discounts and amortization of
premiums on investment securities, net (23) (11)
Proceeds from sale of loans 84,506 70,319
Origination of loans held for sale (107,095) (58,420)
Change in other assets and liabilities:
Accrued interest receivable (2) 67
Other assets 3 (641)
Accrued interest payable 118 163
Other liabilities 3,738 (72)
--------- ---------
Net cash provided by (used in) operating activities (16,782) 13,158
--------- ---------
Cash flows from investing activities:
Proceeds from maturities of investments
held to maturity -- 100
Proceeds from sales and maturities of
investments available for sale 3,955 372
Purchase of investments available for sale (87) (351)
Net increase in customer loans (13,196) (8,775)
Purchase of corporate premises and equipment (1,999) (710)
--------- ---------
Net cash used in investing activities (11,327) (9,364)
--------- ---------
Cash flows from financing activities:
Net increase (decrease) in demand, interest bearing
interest-bearing demand and savings deposits 9,886 (2,443)
Net increase (decrease) in time deposits 10,474 6,087
Net increase (decrease) in other borrowings 3,386 (11,805)
Repurchase of common stock (337) (48)
Proceeds from exercise of stock options 74 18
Cash dividends (499) (474)
--------- ---------
Net cash provided by (used in) financing activities 22,984 (8,665)
--------- ---------
Net increase (decrease) in cash and cash equivalents (5,125) (4,871)
Cash and cash equivalents at beginning of period 14,838 15,486
--------- ---------
Cash and cash equivalents at end of period $ 9,713 $ 10,615
========= =========
Supplemental disclosure
Interest paid $ 3,030 $ 2,290
Income taxes paid $ -- $ 52
The accompanying notes are an integral part of the consolidated financial
statements.
5
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, 2001, the results of
operations for the three months ended March 31, 2001 and 2000, and cash flows
for the three months ended March 31, 2001 and 2000 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, 2000.
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 3,595,882 and 3,678,010
for the three months ended March 31, 2001 and 2000, 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 the first three months of 2001 the Company repurchased 22,000
shares of its common stock in the open market at prices between $14.88 and
$15.50 per share. During the first three months 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.
Note 4
In June 1998, the Financial Accounting Standards Board issued Statement
No. 133, Accounting for Derivative Instruments and Hedging Activities, which is
required to be adopted in years beginning after June 15, 2000. This Statement
establishes accounting and reporting standards for derivative instruments and
hedging activities, including certain derivative instruments embedded in other
contracts, and requires that an entity recognize all derivatives as assets or
liabilities in the balance sheet and measure them at fair value. The Company
adopted this Statement effective January 1, 2001 and, as permitted by the
Statement, transferred securities with a book value of $33,770,000 and a market
value of $34,836,000 to the available-for-sale category. Since the Company does
not use derivative instruments and strategies, the adoption of the Statement did
not have any effect on earnings or financial position.
6
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
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, 2001 and 2000.
- -------------------------------------------------------------------------------------------------------------------
Period Ended March 31, 2001
Retail Mortgage
Banking Banking Other Eliminations Consolidated
- -------------------------------------------------------------------------------------------------------------------
Revenues:
Interest income $ 6,809 $ 407 $ -- $ (301) $ 6,915
Gain on sale of loans -- 1,696 -- -- 1,696
Other 530 515 217 -- 1,262
- ------------------------------------------------------------------------------------------------------------------
Total operating income 7,339 2,618 217 (301) 9,873
- ------------------------------------------------------------------------------------------------------------------
Expenses:
Interest expense 3,148 301 -- (301) 3,148
Salaries and employee benefits 1,593 1,251 100 -- 2,944
Other 1,117 632 33 -- 1,782
- ------------------------------------------------------------------------------------------------------------------
Total operating expenses 5,858 2,184 133 (301) 7,874
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Income before income taxes 1,481 434 84 -- 1,999
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Total assets 365,947 43,499 21 (32,279) 377,188
Capital expenditures $ 1,928 $ 71 $ -- $ -- $ 1,999
- ------------------------------------------------------------------------------------------------------------------
Period Ended March 31, 2000
Retail Mortgage
Banking Banking Other Eliminations Consolidated
- -------------------------------------------------------------------------------------------------------------------
Revenues:
Interest income $ 6,039 $ 265 $ -- $ (157) $ 6,147
Gain on sale of loans -- 1,073 -- -- 1,073
Other 585 258 152 -- 995
- ------------------------------------------------------------------------------------------------------------------
Total operating income 6,624 1,596 152 (157) 8,215
- ------------------------------------------------------------------------------------------------------------------
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
- ------------------------------------------------------------------------------------------------------------------
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
7
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.
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 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, 2001 was $1,497,000
compared to $1,369,000 for the same period of 2000. Earnings per diluted share
were $.42 for the three months ended March 31, 2001 compared to $.37 per diluted
share for the same period of 2000.
Profitability, as measured by the Company's annualized return on
average assets (ROA), decreased to 1.68% for the three months ended March 31,
2001, down from 1.73% for the same period of 2000. Another key indicator of
performance, the annualized return on average equity (ROE) for the three months
ended March 31, 2001 was 15.02%, compared to 15.45% for the three months ended
March 31, 2000. For the year ended December 31, 2000, the Company's peer group,
as reported by the Federal Reserve, had an average ROE and ROA of 12.06% and
1.05%, respectively.
RESULTS OF OPERATIONS
Net Interest Income
Net interest income for the three months ended March 31, 2001 was $3.8
million, an increase of $73,000, or 1.9%, from $3.7 million for the three months
ended March 31, 2000. The increase in net interest income is a result of an
increase in the average balance of interest earning assets to $333.2 million for
the three months ended March 31, 2001 compared to $297.9 million for the same
period in 2000 offset by a decrease in the net interest margin on a taxable
equivalent basis to 4.88% for the three months ended March 31, 2001 from 5.43%
for the same period in 2000.
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 loans held for sale by C&F Mortgage Corporation. The increase
in the Bank's loan portfolio is a result of increased loan demand resulting from
a continuing emphasis on commercial and consumer lending. The increase in loans
held for sale is a result of increased production at C&F Mortgage Corporation
due to decreasing interest rates during the first quarter of 2001. Loans closed
at C&F Mortgage Corporation for the three months ended March 31, 2001 were
$107,455,000 compared to $58,420,000 for the comparable period in 2000. Loans
sold during the first quarter of 2001 were $84,506,000 compared to $70,322,000
for the first quarter of 2000.
The decrease in the Company's net interest margin on a taxable
equivalent basis to 4.88% for the first three months of 2001 from 5.43% for the
same period in 2000 was a result of a decrease in the yield on interest earning
assets to 8.68% for the first quarter of 2001 from 8.73% for the same period in
2000 and an increase in the cost of funds for the first quarter of 2001 to
8
4.57% from 3.95% the first quarter of 2000. The decrease in the yield on
interest earning assets was a result of a decrease in the yield on loans held by
the Bank and an increase in the average balance of lower yielding loans held for
sale at C&F Mortgage Corporation. Also, the yield on the Company's securities
portfolio declined to 7.72% for the first quarter of 2001 compared to 7.91% for
the same period in 2000 as a result of the maturities and calls of higher
yielding securities. The decrease in the yield on loans held by the Bank is a
result of the falling interest rate environment. The increase in the cost of
funds for the Company was a result of the increase in the average balance of
higher cost certificates of deposit as a percentage of total average interest
bearing deposits. The increase in the average balance of certificates of deposit
was a result of the increase in rates paid during 2000. The Federal Reserve
increased interest rates 100 basis points during the first half of 2000. As a
result rates paid on certificates of deposit rose accordingly. As interest rates
have begun to decline during the first quarter of this year, the majority of
these certificates of deposit should reprice throughout the current year thus
reducing the company's cost of funds.
Non-Interest Income
Non-interest income increased $890,000, or 43%, to $2,958,000 for the
three months ended March 31, 2001 from $2,068,000 for the same period in 2000.
The majority of this increase was a result of a $623,000 increase in the gain on
sale of loans and other fees due to the increase in volume of loans originated
and sold by C&F Mortgage Corporation.
Non-Interest Expense
Non-interest expense increased $704,000, or 18%, to $4,626,000 for the
three month period ended March 31, 2001 from $3,922,000 for the same period in
2000. This increase is mainly attributable to an additional branch office at the
Bank, the overall growth in the Company and an increase in salaries expense and
other operating expenses at C&F Mortgage Corporation resulting from the increase
in origination of loans due to the lower interest rate environment.
Income Taxes
Applicable income taxes on earnings for the first three months of 2001
amounted to $502,000 resulting in an effective tax rate of 25.1% compared to
$396,000, or 22.4%, for the same period in 2000. The increase in the effective
tax rate for the quarter is a result of the decrease 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 decrease
in earnings subject to no taxes as a percentage of total income is primarily a
result of the increase in income at C&F Mortgage Corporation.
Asset Quality-Allowance /Provision For Loan Losses
The Company had $100,000 in provision expense for the first three
months of 2001 compared to $75,000 for the same period in 2000. Loans charged
off amounted to $23,000 for the three months ended March 31, 2001 and $12,000
for the same period of 2000. Recoveries amounted to $2,000 and $700 for the
three months ended March 31, 2001 and 2000, respectively. The allowance for loan
losses was $3.7 million and $3.6 million at March 31, 2001 and December 31,
2000, respectively. The allowance approximates 1.50% and 1.55% of total loans
outstanding at March 31, 2001 and December 31, 2000, respectively. Management
feels
9
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 and other real estate owned were $291,000 at March 31, 2001 compared to
$473,000 at December 31, 2000.
FINANCIAL CONDITION
Summary
At March 31, 2001, the Company had total assets of $377.2 million
compared to $347.5 million at December 31, 2000.
Loan Portfolio
At March 31, 2001 loans held for sale amounted to $40.2 million
compared to $17.6 million at December 31, 2000. The increase is a result of
increased originations at C&F Mortgage Corporation resulting from the decrease
in interest rates during the first quarter of this year.
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:
March 31, 2001 December 31, 2000
(Dollars in Thousands)
Amount Percent Amount Percent
-------- --------- -------- ----------
Real estate - mortgage $ 87,924 35% $ 87,428 37%
Real estate - construction 9,100 4 9,109 4
Commercial, financial and
agricultural 126,750 51 113,571 48
Equity lines 11,304 5 11,616 5
Consumer 12,642 5 12,815 6
------------- --- ----------- ---
Total loans 247,720 100% 234,539 100%
=== ===
Less unearned loan fees (992) (986)
Less allowance for possible
loan losses (3,688) (3,609)
------------- -----------
Total loans, net $ 243,040 $ 229,944
============= ===========
Investment Securities
At March 31, 2001, total investment securities were $65,523,000
compared to $67,278,000 at December 31, 2000. Securities of U.S. Government
agencies and corporations represent 18% of the total securities portfolio,
obligations of state and political subdivisions were 72%, U.S. Treasury
securities were 2%, and preferred stocks were 8% at March 31, 2001.
10
Deposits
Deposits totaled $311.1 million at March 31, 2001 compared to $290.7
million at December 31, 2000. Non-interest bearing deposits totaled $43.6
million at March 31, 2001 compared to $35.7 million at December 31, 2000.
Liquidity
At March 31, 2001, cash, securities classified as available for sale
and interest-bearing deposits were 21.09% 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 13.5% at March 31, 2001 compared to
14.4% at December 31, 2000. The total risk-based capital ratio was 14.7% at
March 31, 2001 compared to 15.6% at December 31, 2000. These ratios are in
excess of the mandated minimum requirements. The decrease in the Tier I capital
ratio and the total risked based capital ratio was a result of an increase in
the Company's loan portfolio and in loans held for sale by C&F Mortgage
Corporation.
Shareholders' equity was $40.9 million at the end of the first quarter of
2001 compared to $38.8 million at December 31, 2000. The leverage ratio consists
of Tier I capital divided by quarterly average assets. At March 31, 2001 and
December 31, 2000, the Company's leverage ratio was 10.9%. This exceeds the
required minimum leverage ratio of 4%.
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.
11
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, 2000 Form 10 K.
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 17, 2001.
(a) Joshua H. Lawson and Paul C. Robinson were elected as Class II Directors to
the Board of Directors until the 2004 Annual Meeting of Shareholders.
(b) Yount, Hyde & Barbour, P.C. was appointed as independent auditors of the
Company for 2001.
ITEM 5. OTHER INFORMATION - Inapplicable
ITEM 6. REPORTS ON FORM 8-K
(a) Reports on Form 8-K
On March 27, 2001 a report on Form 8-K was filed to announce the
continuation of the Company's Stock Repurchase Plan.
12
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 3, 2001 /s/ Larry G. Dillon
----------- ---------------------------------------
Larry G. Dillon, Chairman and President
Date May 3, 2001 /s/ Thomas F. Cherry
----------- ---------------------------------------
Thomas F. Cherry, Chief Financial Officer