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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
( X ) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998
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or
( ) 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
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C&F FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
Virginia 54-1680165
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
Eighth and Main Streets, West Point, VA 23181
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (804) 843-2360
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
Common Stock $1.00 Par
(Title of class)
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 if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. ( )
The aggregate market value of the Common Stock held by non-affiliates of
the Registrant was approximately $59,757,000 as of March 3, 1999.
The number of shares outstanding of the registrant's common stock, $1.00
par value was 3,731,888 at March 3, 1999.
DOCUMENTS INCORPORATED BY REFERENCE
Location in Form 10-K Incorporated Document
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PART II
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Item 5 - Market for Registrants Common The Company's 1998 Annual Report to
Equity and Related Stockholder Shareholders for fiscal years ended
Matters December 31, 1998, Quarterly Condensed Statements of
Income-Unaudited, page 43, and
Investor Information, page 45.
Item 6 - Selected Financial Data The Company's 1998 Annual Report to Shareholders for
fiscal years ended December 31, 1998, Five Year Financial
Summary, page 10.
Item 7 - Management's Discussion and The Company's 1998 Annual Report to Shareholders
Analysis of Financial Conditions for the fiscal years ended December 31, 1998,
and Results of Operations Management's Discussion and Analysis of Financial
Condition and Results of Operations, pages 9 through 23.
Item 7a - Quantitative and Qualitative Disclosures The Company's 1998 Annual Report to Shareholders for
about Market Risk for the fiscal years ended December 31, 1998, Market
Risk Management, pages 13 through 15.
Item 8 - Financial Statements and The Company's 1998 Annual Report to Shareholders
Supplementary Data for fiscal years ended December 31, 1998, Consolidated
Financial Statements, Notes to Consolidated Financial
Statements, and Independent Auditors' Report,
pages 24 through 44.
PART III
Item 10 - Directors and Executive The Company's 1998 Proxy Statement, Election
Officers of the Registrant of Directors, pages 2 through 3.
Item 11 - Executive Compensation The Company's 1999 Proxy Statement, Executive
Compensation, pages 5 through 6.
Item 12 - Security Ownership of Certain The Company's 1999 Proxy Statement, Principal Holders
Beneficial Owners and Management of Capital Stock, page 2.
Item 13 - Certain Relationships and The Company's 1999 Proxy Statement, Interest of
Related Transactions Management in Certain Transactions, pages 4 through 5.
TABLE OF CONTENTS
PART 1
ITEM 1. BUSINESS....................................................page 1
ITEM 2. PROPERTIES..................................................page 2
ITEM 3. LEGAL PROCEEDINGS...........................................page 3
ITEM 4. SUBMISSION OF MATTERS
TO A VOTE OF SECURITY HOLDERS.............................page 3
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS...........................page 4
ITEM 6. SELECTED FINANCIAL DATA.....................................page 4
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION..............page 4
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK..page 4
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.................page 4
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE....................page 4
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS
OF THE REGISTRANT........................................page 5
ITEM 11. EXECUTIVE COMPENSATION......................................page 5
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT.....................................page 6
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS..............................................page 6
PART IV
ITEM 14. EXHIBITS AND REPORTS ON FORM 8-K............................page 7
PART I
Item 1. BUSINESS
General
C&F Financial Corporation (the "Company") is a bank holding company which
was incorporated under the laws of the Commonwealth of Virginia in March, 1994.
The Company owns all of the stock of its sole subsidiary, Citizens and Farmers
Bank (the "Bank"), which is an independent commercial bank chartered under the
laws of the Commonwealth of Virginia. The Bank has a total of nine branches
including the main office. The Bank has its main office at Eighth and Main
Streets, West Point, Virginia, and has branch offices in the locations of Norge,
Middlesex, Providence Forge, Quinton, Tappahannock, Varina, Williamsburg and
West Point (two branches). The Bank was originally opened for business under the
name Farmers and Mechanics Bank on January 22, 1927.
The local community served by the Bank is defined as those portions of King
William County, King and Queen County, Hanover County and Henrico County which
are east of Route 360; Essex, Middlesex, New Kent, Charles City, and James City
Counties; that portion of York County which is directly north of James City
County; and that portion of Gloucester County surrounded by Routes 14 and 17.
The Company, through its subsidiaries, offers a wide range of banking
services available to both individuals and small businesses. These services
include various types of checking and savings deposit accounts, and the making
of business, real estate, development, mortgage, home equity, automobile and
other installment, demand and term loans. Also, the Bank offers ATMs at all
locations, credit card services, trust services, travelers' checks, money
orders, safe deposit rentals, collections, notary public, wire services and
other customary bank services to its customers.
The Bank has three wholly-owned subsidiaries, C&F Title Agency, Inc., C&F
Investment Services, Inc., and C&F Mortgage Corporation, all incorporated under
the laws of the Commonwealth of Virginia. C&F Title Agency, Inc. sells title
insurance to the mortgage loan customers of the Company. C&F Investment
Services, Inc., organized April, 1995, is a full-service brokerage firm offering
a comprehensive range of investment options including stocks, bonds, annuities
and mutual funds. C&F Mortgage Corporation, organized in September, 1995,
originates and sells residential mortgages. See Note 16 to the Consolidated
Financial Statements for summarized financial information by business segment.
C&F Mortgage Corporation provides mortgage services through six locations
in Virginia and two in Maryland. The Virginia offices are in Richmond (two
locations), Williamsburg, Newport News, Charlottesville, and Chester. The
Maryland offices are in Crofton and Bel Aire.
As of December 31, 1998, a total of 230 persons were employed by the
Company, of whom 17 were part-time. The Company considers relations with its
employees to be excellent.
Competition
The Bank is subject to competition from various financial institutions and
other companies or firms that offer financial services. The Bank's principal
competition in its market area consists of all the major statewide banks. The
Bank also competes for deposits with savings associations, credit unions and
money-market funds. In making loans, the Bank competes with consumer finance
companies, credit unions, leasing companies and other lenders.
C&F Mortgage Corporation competes for mortgage loans in its market areas
with other mortgage companies, commercial banks and other financial
institutions.
C&F Investment Services competes with other investment companies,
brokerage firms, and insurance companies to provide these services.
C&F Title Agency competes with other title companies owned by lawyers and
other financial institutions.
Regulation and Supervision
The Company is subject to regulation by the Federal Reserve Bank under the
Bank Holding Company Act of 1956. The Company is also under the jurisdiction of
the Securities and Exchange Commission and certain state securities commissions
with respect to matters relating to the offer and sale of its securities. In
addition, the Bank is subject to regulation and examination by the State
Corporation Commission and the Federal Deposit Insurance Corporation.
ITEM 2. PROPERTIES
The following describes the location and general character of the
principal offices and other materially important physical properties of the
Company and its subsidiary.
The Company owns the headquarters located at Eighth and Main Streets in
the business district of West Point, Virginia. The building, originally
constructed in 1923, has three floors totaling 15,000 square feet. This building
houses the Citizens and Farmers Bank main office branch and office space for the
Company's administrative personnel.
The Company also owns a building located at Seventh and Main Streets in
West Point, Virginia. The building provides space for Citizens and Farmers Bank
operations functions and staff. The building was originally constructed prior to
1935 and remodeled by the Company in 1991. The two-story building has 20,000
square feet.
Citizens and Farmers Bank owns eight other branch locations in Virginia.
Also, the Bank owns several lots in West Point, Virginia, and one other lot in
New Kent County, Virginia.
C&F Mortgage Corporation has eight leased offices, six in Virginia and two
in Maryland. Rental expense for these locations totaled $297,000 for the year
ended December 31, 1998.
All of the Company's properties are in good operating condition and are
adequate for the Company's present and anticipated future needs.
ITEM 3.LEGAL PROCEEDINGS
There are no material pending legal proceedings to which the Company is a
party or of which the property of the Company is subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted during the fourth quarter of the fiscal year
covered by this report to a vote of security holders of the Company through a
solicitation of proxies or otherwise.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The information contained on pages 43 and 45 of the 1998 Annual Report to
Shareholders, which is attached hereto as Exhibit 13, under the captions, "Note
18: Quarterly Condensed Statements of Income - Unaudited" and "Investor
Information" is incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
The information contained on page 10 of the 1998 Annual Report to
Shareholders, which is attached hereto as Exhibit 13, under the caption, "Five
Year Financial Summary" is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION
The information contained on pages 9 through 23 of the 1998 Annual Report
to Shareholders, which is attached hereto as Exhibit 13, under the caption,
"Management's Discussion and Analysis of Financial Condition and Results of
Operation", is incorporated herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information contained on pages 13 through 15 of the 1998 Annual Report
to Shareholders, which is attached hereto as Exhibit 13, under the caption,
"Management's Discussion and Analysis of Financial Condition and Results of
Operation," is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information contained on pages 24 through 44 of the 1998 Annual Report
to Shareholders, which is attached hereto as Exhibit 13, under the captions,
"Consolidated Financial Statements", "Notes to Consolidated Financial
Statements", and "Independent Auditors' Report", is incorporated herein by
reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by Item 10 with respect to the Directors of the
Registrant is contained on pages 2 through 3 of the 1999 Proxy Statement, which
is attached hereto as Exhibit 99, under the caption, "Election of Directors", is
incorporated herein by reference.
The information in the following table pertains to the executive officers
of the Company.
Executive Officers of C&F Financial Corporation
Name (Age) Business Experience Number of Shares Beneficially
Present Position During Past Five Years Owned as of March 3, 1999
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Larry G. Dillon (46) President of the Bank since 1989; 44,336 (1)
Chairman, President and Senior Vice President of the Bank
Chief Executive Officer prior to 1989
Gari B. Sullivan (61) Senior Vice President of the Bank since 1990; 10,944 (1)
Secretary Vice President of the Bank from 1989 to 1990;
President of the Middlesex Region of First
Virginia Bank prior to 1989
Brad E. Schwartz (36) Promoted to Senior Vice President of the Bank 13,106 (1)
Chief Operating Officer in December 1997. Vice President of the Bank
from 1991 to December 1997; Administrative Officer of
the Bank from 1989 to 1991; Senior Financial
Institutions Examiner with the Bureau of Financial
Institutions of the Virginia State Corporation
Commission prior to 1989
Thomas F. Cherry (30) Promoted to Senior Vice President of the Bank in 1,667 (1)
Chief Financial Officer December 1998. Vice President of the Bank from
December 1996 to December 1998. Manager with Price
Waterhouse, LLP in Norfolk, prior to December 1996.
(1)Includes exercisable options of 16,602, 8,202, 12,202 and 1,467 held by
Messrs. Dillon, Sullivan, Schwartz, and Cherry, respectively.
ITEM 11. EXECUTIVE COMPENSATION
The information contained on pages 5 through 6 of the 1999 Proxy Statement,
which is attached hereto as Exhibit 99, under the caption, "Executive
Compensation", is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP ON CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information contained on page 2 of the 1999 Proxy Statement, which is
attached hereto as Exhibit 99, under the caption, "Principal Holders of Capital
Stock", is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information contained on pages 4 through 5 of the 1999 Proxy Statement,
which is attached hereto as Exhibit 99, under the caption, "Interest of
Management In Certain Transactions", is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS AND REPORTS ON FORM 8-K
14 (a) Exhibits
Exhibit No. 3: Articles of Incorporation and Bylaws
Articles of Incorporation and Bylaws of C&F Financial Corporation
filed as Exhibit Nos. 3.1 and 3.2, respectively, to Form 10KSB
filed March 29, 1996, of C&F Financial Corporation is incorporated
herein by reference.
Exhibit No. 13: C&F Financial Corporation 1998 Annual Report to
Shareholders
Exhibit No. 21: Subsidiaries of the Registrant
Citizens and Farmers Bank, incorporated in the Commonwealth of
Virginia (100% owned)
Exhibit No. 23: Consents of experts and counsel
23.1 Consent of Yount, Hyde & Barbour, P.C.
23.2 Consent of Deloitte & Touche LLP
Exhibit No. 27: Financial Data Schedule
Exhibit No. 99: Additional Exhibits
99.1 C&F Financial Corporation 1999 Annual Meeting Proxy Statement
99.2 Independent Auditors Report of Deloitte & Touche LLP for 1996
14 (b) Reports on Form 8-K filed in the fourth quarter of 1998:
None.
14 (c) Exhibits to this Form 10-K are either filed as part of this Report or
are incorporated herein by reference.
14 (d) Financial Statements Excluded from Annual Report to Shareholders
pursuant to Rule 14a3(b).
Not applicable.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, C&F Financial Corporation has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized:
C&F FINANCIAL CORPORATION
/s/ Larry G. Dillon /s/ Thomas F. Cherry
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Larry G. Dillon Thomas F. Cherry
Chairman, President and Chief Executive Officer Senior Vice President and
Chief Financial Officer
Date: March 3, 1999 Date: March 3, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
/s/ J. P. Causey Jr. Date: March 3, 1999
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J. P. Causey Jr., Director
/s/ James H. Hudson III Date: March 3, 1999
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James H. Hudson, III, Director
/s/ Larry G. Dillon Date: March 3, 1999
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Larry G. Dillon, Director
/s/ William E. O'Connell Jr. Date: March 3, 1999
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William E. O'Connell, Jr., Director
/s/ Sture G. Olsson, Date: March 3, 1999
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Sture G. Olsson, Director