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 March 31, 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 May 3, 2004, the latest practicable date for determination, 3,582,671 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 - March 31, 2004 and December 31, 2003	1

	Consolidated Statements of Income - Three months ended March 31, 2004 and 2003	2

	Consolidated Statements of Shareholders’ Equity - Three months ended March 31, 2004 and 2003	3

	Consolidated Statements of Cash Flows - Three months ended March 31, 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	23

Item 4.	Controls and Procedures	23

Part II - Other Information

Item 1.	Legal Proceedings	24

Item 2.	Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities	24

Item 5.	Other Information	24

Item 6.	Exhibits and Reports on Form 8-K	24

Signatures		26

PART I - FINANCIAL INFORMATION

ITEM 1. - FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS

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


	March 31, 2004		December 31, 2003
	(Unaudited)
ASSETS

Cash and due from banks	$	13,359	$	15,457
Interest-bearing deposits in other banks		52,756		34,294

Total cash and cash equivalents		66,115		49,751
Securities-available for sale at fair value, amortized cost of $68,848 and $99,550, respectively		73,475		103,050
Loans held for sale, net		47,587		29,733
Loans, net		351,751		350,170
Federal Home Loan Bank stock		1,392		2,072
Corporate premises and equipment, net of accumulated depreciation		15,352		15,367
Accrued interest receivable		2,664		2,590
Goodwill		9,071		9,071
Other assets		10,981		11,742

Total assets	$	578,388	$	573,546

LIABILITIES AND SHAREHOLDERS’ EQUITY

Deposits
Non-interest-bearing demand deposits	$	66,153	$	64,683
Savings and interest-bearing demand deposits		177,039		176,732
Time deposits		184,352		186,220

Total deposits		427,544		427,635
Borrowings		70,983		67,733
Accrued interest payable		569		583
Other liabilities		12,785		12,211

Total liabilities		511,881		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, 3,585,871 and 3,612,571 shares issued and outstanding, respectively)		3,586		3,612
Additional paid-in capital		15		1,010
Retained earnings		59,937		58,487
Accumulated other comprehensive income, net		2,969		2,275

Total shareholders’ equity		66,507		65,384

Total liabilities and shareholders’ equity	$	578,388	$	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 March 31,
	2004		2003
Interest income
Interest and fees on loans	$	8,666	$	8,762
Interest on other market investments		133		36
Interest on securities
U.S. government agencies and corporations		77		3
Tax-exempt obligations of states and political subdivisions		588		592
Corporate bonds and other		121		145

Total interest income		9,585		9,538

Interest expense
Savings and interest-bearing deposits		273		418
Certificates of deposit, $100,000 or more		271		270
Other time deposits		732		933
Short-term borrowings and other		544		694

Total interest expense		1,820		2,315

Net interest income		7,765		7,223

Provision for loan losses		895		538

Net interest income after provision for loan losses		6,870		6,685

Other operating income
Gain on sale of loans		3,066		4,823
Service charges on deposit accounts		602		580
Other service charges and fees		793		1,041
Gain on calls of available for sale securities		30		40
Other income		371		360

Total other operating income		4,862		6,844

Other operating expenses
Salaries and employee benefits		5,633		5,789
Occupancy expenses		911		874
Other expenses		1,875		2,018

Total other operating expenses		8,419		8,681

Income before income taxes		3,313		4,848
Income tax expense		966		1,584

Net income	$	2,347	$	3,264

Per share data
Net income – basic	$	.65	$	.90
Net income – assuming dilution	$	.62	$	.87
Cash dividends paid and declared	$	.22	$	.16
Weighted average number of shares – basic		3,594,204		3,634,179
Weighted average number of shares – assuming dilution		3,767,485		3,763,867

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							$	2,347			2,347					2,347
Other comprehensive income, net of tax
Unrealized gain on securities, net of reclassification adjustment								694						694		694

Comprehensive income							$	3,041

Repurchase of common stock		(27	)		(1,010	)					(108	)		—		(1,145	)
Stock options exercised		1			15						—			—		16
Cash dividends		—			—						(789	)		—		(789)

Balance March 31, 2004	$	3,586		$	15					$	59,937		$	2,969	$	66,507


Disclosure of Reclassification Amount:

Unrealized net holding gains arising during period							$	714
Less: reclassification adjustment for gains included in net income								(20	)

Net unrealized gains on securities							$	694

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, 2002	$	3,650		$	2,506					$	48,161		$	1,916	$	56,233
Comprehensive income
Net income							$	3,264			3,264					3,264
Other comprehensive income, net of tax
Unrealized gain on securities, net of reclassification adjustment								388						388		388

Comprehensive income							$	3,652

Repurchase of common stock		(80	)		(2,182	)					—			—		(2,262	)
Stock options exercised		16			215						—			—		231
Cash dividends		—			—						(573	)		—		(573	)

Balance March 31, 2003	$	3,586		$	539					$	50,852		$	2,304	$	57,281


Disclosure of Reclassification Amount:

Unrealized net holding gains arising during period							$	414
Less: reclassification adjustment for gains included in net income								(26	)

Net unrealized gains on securities							$	388

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

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)


	Three Months Ended March 31,
	2004			2003
Cash flows from operating activities:
Net income	$	2,347		$	3,264
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation		400			396
Amortization of intangible assets		33			42
Provision for loan losses		895			538
Accretion of discounts and amortization of premiums on investment securities, net		19			21
Net realized gain on securities		(30	)		(40	)
Proceeds from sale of loans		152,550			259,936
Origination of loans held for sale		(170,404	)		(242,043	)
Change in other assets and liabilities:
Accrued interest receivable		(74	)		(324	)
Other assets		295			(370	)
Accrued interest payable		(14	)		(18	)
Other liabilities		574			142

Net cash (used in) provided by operating activities		(13,409	)		21,544

Cash flows from investing activities:
Proceeds from maturities and calls of securities available for sale		41,811			2,694
Purchase of securities available for sale		(11,097	)		(3,252	)
Net increase in customer loans		(2,476	)		(5,546	)
Purchase of corporate premises and equipment		(397	)		(263	)
Sale of corporate premises and equipment		12			—
Redemption of Federal Home Loan Bank stock		680			688

Net cash provided by (used in) investing activities		28,533			(5,679	)

Cash flows from financing activities:
Net increase in demand, interest bearing demand and savings deposits		1,777			2,520
Net (decrease) increase in time deposits		(1,868	)		3,058
Net increase (decrease) in other borrowings		3,250			(20,214	)
Repurchase of common stock		(1,145	)		(2,262	)
Proceeds from exercise of stock options		16			231
Cash dividends		(789	)		(573	)

Net cash provided by (used in) financing activities		1,241			(17,240	)

Net increase (decrease) in cash and cash equivalents		16,365			(1,375	)
Cash and cash equivalents at beginning of period		49,751			18,331

Cash and cash equivalents at end of period	$	66,115		$	16,956

Supplemental disclosure
Interest paid	$	1,834		$	2,333
Income taxes paid	$	94		$	64

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial reporting and with applicable quarterly reporting regulations of the Securities and Exchange Commission. They do not include all of the information and notes required by accounting principles generally accepted in the United States of America for complete financial statements. Therefore, these consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the C&F Financial Corporation Annual Report on Form 10-K for the year ended December 31, 2003.

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, 2004 and the results of operations and cash flows for the three months ended March 31, 2004 and 2003 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.

The consolidated financial statements include the accounts of C&F Financial Corporation (the “Corporation”) and its subsidiary, Citizens and Farmers Bank (the “Bank”), with all significant intercompany transactions and accounts being eliminated in consolidation.

Stock Compensation Plans: The Corporation has three stock-based compensation plans that are accounted for under the recognition and measurement principles of APB Opinion No. 25, Accounting for Stock Issued to Employees, and related Interpretations. No stock-based compensation cost is reflected in net income, as all options granted under these plans had an exercise price equal to the market value of the underlying common stock on the date of grant. The following table illustrates the effect on net income and earnings per share if the Corporation had applied the fair value recognition provisions of Statement of Financial Accounting Standards (“SFAS”) No. 123, Accounting for Stock-Based Compensation, to stock-based compensation.


	Three Months Ended March 31,
(in 000’s, except per share amounts)	2004		2003
Net income, as reported	$	2,347	$	3,264
Total stock-based compensation expense determined under fair value based method for all awards, net of related tax effects		141		82

Pro forma net income	$	2,206	$	3,182

Earnings per share:
Basic – as reported	$	.65	$	.90
Basic – pro forma	$	.61	$	.88
Diluted – as reported	$	.62	$	.87
Diluted – pro forma	$	.59	$	.85

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. Potential dilutive common stock had no effect on income available to common shareholders.

Note 3

During the first three months of 2004, the Corporation repurchased 26,200 shares of its common stock in privately-negotiated transactions and 1,500 shares in open-market transactions at prices from $38.50 to $41.50. During the first three months of 2003, the Corporation repurchased 80,000 shares of its common stock in privately-negotiated transactions at prices between $28.00 and $28.50 per share.

Note 4

Securities in an unrealized loss position at March 31, 2004, by duration of the period of unrealized loss, are shown below. No impairment has been recognized on any securities in a loss position because management believes that the decline in value is temporary and the Corporation has the intent and demonstrated ability to hold securities to scheduled maturity or call dates.


	Less Than 12 Months				12 Months or More				Total
(in 000’s)	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Mortgage-backed securities	$	2,115	$	8	$	—	$	—	$	2,115	$	8
Obligations of states and political subdivisions		274		2		—		—		274		2

Subtotal-debt securities		2,389		10		—		—		2,389		10

Preferred stock		—		—		253		22		253		22

Total temporarily impaired securities	$	2,389	$	10	$	253	$	22	$	2,642	$	32

Note 5

The Bank has a non-contributory defined benefit plan for which the components of net periodic benefit cost are as follows:


	Three Months Ended March 31,
(in 000’s)	2004			2003
Service cost	$	105		$	79
Interest cost		64			54
Expected return on plan assets		(58	)		(48	)
Amortization of net obligation at transition		(1	)		(1	)
Amortization of prior service cost		1			1
Amortization of net (gain) or loss		9			6

Net periodic benefit cost	$	120		$	91

In December 2003, the Bank paid a $1,279,806 contribution to the plan for its 2004 fiscal year.

Note 6

The Corporation operates in a decentralized fashion in three principal business activities: retail banking, mortgage banking and consumer finance. Revenues from retail banking operations consist primarily of interest earned on loans and investment securities and service charges on deposit accounts. Mortgage banking operating revenues consist principally of interest earned on mortgage loans held for sale, gains on sales of loans in the secondary mortgage market and loan origination fee income. Revenues from consumer finance operations consist primarily of interest earned on automobile loans. The Corporation’s subsidiaries also include an investment company, an insurance company, a title company and a settlement company that derive revenues from investment management, insurance, title insurance and residential mortgage loan settlement services, respectively. The results of these subsidiaries are not significant to the Corporation as a whole and have been included in “Other.” The following table presents segment information for the three months ended March 31, 2004 and 2003.


	Three Months Ended March 31, 2004
(in 000’s)	Retail Banking		Mortgage Banking		Consumer Finance		Other		Eliminations			Consolidated
Revenues:
Interest income	$	6,119	$	375	$	3,450	$	—	$	(359	)	$	9,585
Gain on sale of loans		—		3,066		—		—		—			3,066
Other		895		632		15		254		—			1,796

Total operating income		7,014		4,073		3,465		254		(359	)		14,447

Expenses:
Interest expense		1,448		60		671		—		(359	)		1,820
Personnel expenses		2,437		2,557		527		112		—			5,633
Provision for loan losses		—		—		895		—		—			895
Other		1,450		848		448		40		—			2,786

Total operating expenses		5,335		3,465		2,541		152		(359	)		11,134

Income before income taxes		1,679		608		924		102		—			3,313
Provision for income taxes		345		231		351		39		—			966

Net income	$	1,334	$	377	$	573	$	63	$	—		$	2,347

Total assets	$	505,838	$	53,814	$	93,028	$	10	$	(74,302	)	$	578,388
Capital expenditures	$	317	$	79	$	1	$	—	$	—		$	397


	Three Months Ended March 31, 2003
(in 000’s)	Retail Banking		Mortgage Banking		Consumer Finance		Other		Eliminations			Consolidated
Revenues:
Interest income	$	6,338	$	944	$	2,851	$	—	$	(595	)	$	9,538
Gain on sale of loans		—		4,823		—		—		—			4,823
Other		816		919		6		280		—			2,021

Total operating income		7,154		6,686		2,857		280		(595	)		16,382

Expenses:
Interest expense		1,995		290		625		—		(595	)		2,315
Personnel expenses		2,034		3,213		411		131		—			5,789
Provision for loan losses		75		—		463		—		—			538
Other		1,382		1,014		437		59		—			2,892

Total operating expenses		5,486		4,517		1,936		190		(595	)		11,534

Income before income taxes		1,668		2,169		921		90		—			4,848
Provision for income taxes		376		824		350		34		—			1,584

Net income	$	1,292	$	1,345	$	571	$	56	$	—		$	3,264

Total assets	$	476,911	$	95,802	$	81,920	$	27	$	(116,202	)	$	538,458
Capital expenditures	$	105	$	155	$	3	$	—	$	—		$	263

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. The Retail Banking segment also provides the Consumer Finance segment with a portion of the funds needed to originate loans and charges the Consumer Finance segment interest at LIBOR plus 250 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, Consumer Finance and Other segments.

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This report contains statements concerning the Corporation’s expectations, plans, objectives, future financial performance and other statements that are not historical facts. These statements may constitute “forward-looking statements” as defined by federal securities laws. These statements may address issues that involve estimates and assumptions made by management, risks and uncertainties, and actual results could differ materially from historical results or those anticipated by such statements. Factors that could have a material adverse effect on the operations and future prospects of the Corporation include, but are not limited to, changes in: interest rates, general economic conditions, the legislative/regulatory climate, monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve Board, the quality or composition of the loan or investment portfolios, demand for loan products, deposit flows, competition, demand for financial services in the Corporation’s market area and accounting principles, policies and guidelines. These risks and uncertainties should be considered in evaluating the forward-looking statements contained herein, and readers are cautioned not to place undue reliance on such statements, which speak only as of the date of this report.

The following discussion supplements and provides information about the major components of the results of operations, financial condition, liquidity and capital resources of the Corporation. This discussion and analysis should be read in conjunction with the accompanying consolidated financial statements.

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements requires management to make estimates and assumptions. Those accounting policies that required management’s most difficult, subjective or complex judgments and uncertainties affecting the application of these policies, and the likelihood that materially different amounts would be reported under different conditions, or using different assumptions, are described below.

Allowance for Loan Losses: The allowance for loan losses is established through charges to earnings in the form of a provision for loan losses. Loan losses are charged against the allowance when management believes that the collectibility of the principal is unlikely. Subsequent recoveries, if any, are credited to the allowance. The allowance represents an amount that, in management’s judgment, will be adequate to absorb any losses on existing loans that may become uncollectible. Management’s judgment in determining the adequacy of the allowance is based on evaluations of the collectibility of loans while taking into consideration such factors as changes in the nature and volume of the loan portfolio, current economic conditions which may affect a borrower’s ability to repay, overall portfolio quality and review of specific potential losses. This evaluation is inherently subjective, as it requires estimates that are susceptible to significant revision as more information becomes available.

Impairment of Loans: Impaired loans are measured based on the present value of expected future cash flows discounted at the effective interest rate of the loan (or, as a practical expedient, at the loan’s observable market price) or the fair value of the collateral if the loan is collateral dependent. The Corporation considers a loan impaired when it is probable that the Corporation will be unable to

collect all interest and principal payments as scheduled in the loan agreement. A loan is not considered impaired during a period of delay in payment if the ultimate collection of all amounts due is expected. A valuation allowance is maintained to the extent that the measure of the impaired loan is less than the recorded investment.

Impairment of Securities: Impairment of investment securities results in a write-down that should be included in net income when a market decline below cost is other than temporary. Management regularly reviews each investment security for impairment based on criteria that include the extent to which cost exceeds market, the duration of that market decline, the financial health of and specific prospects for the issuer and management’s ability and intention with regard to holding the security to maturity.

Valuation of Derivatives: The Corporation enters into commitments to originate mortgage loans whereby the interest rate on the loan is determined prior to funding (i.e., rate lock commitments). Rate lock commitments on mortgage loans that are intended to be sold are considered to be derivatives. The period of time between issuance of a loan commitment and closing and sale of the loan generally ranges from 45 to 120 days. For such rate lock commitments, the Corporation protects itself from changes in interest rates through the use of best efforts forward delivery commitments, whereby an investor commits to buy the loan at the time the borrower commits to an interest rate with the intent that the investor has assumed the interest rate risk on the loan. As a result, the Corporation is not exposed to losses nor will it realize gains related to its rate lock commitments due to changes in interest rates.

The market values of rate lock commitments and best efforts contracts are not readily ascertainable with precision because rate lock commitments and best efforts contracts are not actively traded. The Corporation determines the fair value of rate lock commitments and best efforts contracts by measuring the change in the value of the underlying asset while taking into consideration the probability that the rate lock commitments will close. Because of the high correlation between rate lock commitments and best efforts contracts, no gain or loss occurs on the rate lock commitments.

Goodwill: On January 1, 2002, the Corporation adopted SFAS No. 142, Goodwill and Other Intangible Assets (“SFAS 142”). Accordingly, goodwill is no longer subject to amortization over its estimated useful life, but is subject to at least an annual assessment for impairment using a two-step process that begins with an estimation of the fair value of the reporting unit. In assessing the recoverability of the Corporation’s goodwill, all of which was recognized in connection with the Bank’s acquisition of Moore Loans, Inc. in September 2002, management must make assumptions regarding estimated future cash flows and other factors to determine the fair value of the respective assets. The Corporation completed the annual test for impairment during the fourth quarter of 2003 and determined there was no impairment to be recognized in 2003. If the underlying estimates and related assumptions change in the future, the Corporation may be required to record impairment charges not previously recorded.

Defined Benefit Pension Plan: The Bank maintains a non-contributory, defined benefit pension plan for eligible full-time employees as defined by the plan. Plan assets, which consist primarily of marketable equity securities and corporate and government fixed income securities, are valued using market quotations. Plan obligations and annual pension and postretirement benefit expense are determined by actuaries using a number of key assumptions. Key assumptions include the discount rate, the estimated future return on plan assets, and the anticipated rate of future salary increases. Changes in these assumptions in the future, if any, may impact pension expense as measured in accordance with SFAS No. 87, Employers’ Accounting for Pensions.

Accounting for Income Taxes: Significant judgment is required in determining the Corporation’s effective tax rate. In the ordinary course of business, there are transactions and calculations where the ultimate tax outcomes are uncertain. Additionally, the Corporation’s tax returns are subject to audit by various tax authorities. Although management believes that the estimates are reasonable, no assurance can be given that the final tax outcome will not be materially different than that which is reflected in the historical income tax provision and accrual.

For further information concerning accounting policies, refer to Note 1 of the Corporation’s Consolidated Financial Statements.

OVERVIEW

The Corporation’s primary financial goals are to maximize its earnings and to deploy capital in profitable growth initiatives that will enhance shareholder value. Management tracks three primary performance measures in order to assess the level of success in achieving these goals: (i) growth in earnings, (ii) return on average assets (“ROA”) and (iii) return on average equity (“ROE”). Management considers the change in each measure and how the measure relates to the performance of the Corporation’s peer group. In addition to these financial performance measures, management tracks the performance of the Corporation’s three principal business activities: retail banking, mortgage banking and consumer finance.

The Corporation reported quarterly net income of $2.3 million, or $.62 per diluted share, for the first quarter ended March 31, 2004, compared with $3.3 million, or $.87 per diluted share, for the first quarter ended March 31, 2003. The Corporation’s annualized ROA was 1.66% for the first quarter of 2004, compared with 2.48% for the same quarter of 2003, and its annualized ROE was 14.38% for the first quarter of 2004, compared with 22.81% for the same quarter of 2003.

The decrease in net income and net earnings per share for the first quarter of 2004 was primarily attributable to the decrease in the earnings of the Mortgage Banking segment, partly offset by increased earnings from the Retail Banking segment. Earnings from the Consumer Finance segment were substantially unchanged from last year’s first quarter. The decrease in 2004’s first quarter earnings follows a record first quarter in 2003, driven by growth in all segments, but particularly the Mortgage Banking segment.

Retail Banking: Net income for the Retail Banking segment increased approximately $42,000 to $1.3 million for the quarter ended March 31, 2004. The performance of the Retail Banking segment was constrained by the net interest margin compression that began in the second quarter of 2003, the initial costs associated with the expansion of the Retail Banking segment into the Peninsula and Hanover markets of Virginia, and an increase in operations and administrative personnel to support growth. The net interest margin compression for the first quarter of 2004 was attributable in part to lower funding needs of the Mortgage Banking segment than those experienced in the first quarter of last year, which resulted in excess funds in lower-yielding accounts. Management expects net interest margin compression to continue until such time as interest rates on the Bank’s variable rate loans begin to increase and the Bank is able to increase loans to third parties and reduce deposits at other banks.

Mortgage Banking: Net income for the Mortgage Banking segment decreased approximately $968,000 to $377,000 for the quarter ended March 31, 2004. This decrease resulted from a decline in the gain on sales of loans, which was offset in part by lower production-based compensation. As mortgage rates began to increase in the third quarter of 2003, the Mortgage Banking segment began experiencing a decline in the number of applications for home purchase and refinance loans, which resulted in a decrease in originations and sales of loans. The decline in refinance loans continued into the first quarter of 2004. Originations of loans for new and resale home purchases were level with the first quarter of 2003. For the first quarter of 2004, the amount of loan originations at C&F Mortgage resulting from refinancings was $56.2 million compared to $128.2 million for the first quarter of 2003. Loans originated for new and resale home purchases for these two time periods were $114.2 million and $113.8 million, respectively. Based on the volume of mortgage loan applications in March 2004, the level of the mortgage loan pipeline and the most recent interest rate trends, management expects earnings from the Mortgage Banking segment to follow a more normal seasonal pattern in 2004 resulting in peak earnings from the Mortgage Banking segment in the second and third quarters. However, future earnings for the Mortgage Banking segment will be affected by any changes in interest rates, new and resale home sales and loan refinancings.

Consumer Finance: First quarter 2004 net income for the Consumer Finance segment was $573,000, substantially level with the net earnings of the first quarter of 2003. Net earnings were favorably impacted by a 17.6% increase in average loans outstanding. However, the first quarter of 2004 included a $268,000 after-tax increase in the provision for loan losses as a result of higher charge-offs in 2004 and an increase in operating expenses to support growth and technology investments. Throughout 2003, management implemented changes to the loan underwriting guidelines to improve asset quality on new loans. The majority of the charge-offs in the first quarter of 2004 occurred on loans originated under previous guidelines. Future earnings of the Consumer Finance segment in the short-term will be affected by the continuing investments in technology to create future efficiencies and the initial start-up costs associated with the expansion of the Consumer Finance segment into the Northern Virginia and Nashville, Tennessee consumer finance markets.

RESULTS OF OPERATIONS

Net Interest Income

Selected Average Balance Sheet Data


	Three Months Ended
	March 31, 2004				March 31, 2003
(in 000’s)	Average Balance		Yield/ Cost		Average Balance		Yield/ Cost
Securities	$	71,106	6.29	%	$	59,035	7.41	%
Loans		388,779	8.69			414,221	8.58
Interest bearing deposits at other banks		57,920	.92			12,814	1.14

Total earning assets	$	517,805	7.49	%	$	486,070	8.24	%

Time and savings deposits	$	358,480	1.42	%	$	330,288	1.99	%
Other borrowings		68,604	3.17			74,321	3.79

Total interest bearing liabilities	$	427,084	1.70	%	$	404,609	2.32	%

Net interest margin			6.08	%			6.31	%

Net interest income, on a taxable equivalent basis, for the three months ended March 31, 2004 was $7.9 million. Net interest income, on a taxable equivalent basis, for the first quarter of 2003 was $7.6 million. The increase was a result of a 6.5% increase in the average balance of interest-earning assets, which was offset in part by a decrease in the net interest margin to 6.08% for the quarter ended March 31, 2004 from 6.31% for the quarter ended March 31, 2003. The decline in the net interest margin reflects the increase in lower-yielding average earning assets. Average securities available for sale increased $12.1 million, which was accompanied by a 112 basis point decline in their average yield. The decline in the tax-equivalent yield resulted from the maturities and calls of higher-yielding securities throughout 2003, coupled with the reinvestment of proceeds in lower-yielding securities. Average interest earning deposits at other banks (primarily the Federal Home Loan Bank) increased $45.1 million, which was accompanied by a 22 basis point decline in their average yield. The increase in average interest-earning deposits at other banks is a result of deposit growth exceeding loan demand, which resulted in excess funds in lower-yielding accounts. Average loans decreased $25.4 million, consisting of a $44.6 million decline in loans held for sale, which was offset in part by increases in loans to third parties of $7.2 million at the Retail Banking segment and $12.0 million at the Consumer Finance segment. The 11 basis point increase in the yield on loans was attributable to the increase in higher-yielding loans at the Consumer Finance segment. The Corporation began experiencing noticeable net interest margin compression in the fourth quarter of 2003. Management expects net interest margin compression to continue until such time as interest rates on the Bank’s variable rate loans begin to increase and the Bank is able to increase loans to third parties and reduce deposits at other banks.

The decrease in the cost of deposits for the Corporation was a result of the falling interest rate environment resulting in a decrease in the rates paid on savings and interest-bearing checking accounts, and the repricing of maturing certificates of deposit at lower rates. The decrease in the rate on other borrowings resulted from a lower LIBOR-based rate on Moore Loans’ line of credit with an unrelated third party, coupled with the repayment of $8 million in debt with interest rates of 6% to 8% associated with the acquisition of Moore Loans.

Non-Interest Income


	Three Months Ended March 31, 2004
(in 000’s)	Retail Banking		Mortgage Banking		Consumer Finance		Other		Total
Gain on sale of loans	$	—	$	3,066	$	—	$	—	$	3,066
Service charges on deposit accounts		602		—		—		—		602
Other service charges and fees		185		608		—		—		793
Gain on calls of available for sale securities		30		—		—		—		30
Other income		78		24		15		254		371

Total non-interest income	$	895	$	3,698	$	15	$	254	$	4,862


	Three Months Ended March 31, 2003
(in 000’s)	Retail Banking		Mortgage Banking		Consumer Finance		Other		Total
Gain on sale of loans	$	—	$	4,823	$	—	$	—	$	4,823
Service charges on deposit accounts		580		—		—		—		580
Other service charges and fees		164		877		—		—		1,041
Gain on calls of available for sale securities		40		—		—		—		40
Other income		32		42		6		280		360

Total non-interest income	$	816	$	5,742	$	6	$	280	$	6,844

Total non-interest income decreased $2.0 million, or 29.0%, to $4.9 million for the first quarter of 2004 from $6.8 million for the first quarter of 2003. This decrease is mainly attributable to a decrease in the gains on sale of loans and other service charges and fees resulting from a decrease in volume of loans closed and sold by C&F Mortgage Corporation.

Non-Interest Expense

Three Months Ended March 31, 2004

(in 000’s)

Retail

Banking

Mortgage

Banking

Consumer

Finance

Other

Total

Salaries and employee benefits

2,437

2,557

527

112

5,633

Occupancy expense

580

278

911

Other expenses

869

571

402

1,875

Total non-interest expense

3,886

3,406

975

152

8,419


	Three Months Ended March 31, 2003
(in 000’s)	Retail Banking		Mortgage Banking		Consumer Finance		Other		Total
Salaries and employee benefits	$	2,034	$	3,213	$	411	$	131	$	5,789
Occupancy expense		573		246		49		6		874
Other expenses		806		768		391		53		2,018

Total non-interest expense	$	3,413	$	4,227	$	851	$	190	$	8,681

Total non-interest expense decreased $262,000, or 3.0%, to $8.4 million for the first quarter of 2004 from $8.7 million for the first quarter of 2003. This decrease occurred at the Mortgage Banking segment as a result of lower production-based compensation and operating expenses. The decrease was offset in part by higher personnel and operating expenses at the Retail Banking segment to support growth and at the Consumer Finance segment to support growth and technology enhancements. The Retail Banking segment opened a new branch in Mechanicsville, Virginia at the end of 2003 and a new branch in Newport News, Virginia in January of 2004. Start-up costs associated with the Bank’s expansion efforts will continue throughout 2004 as the Bank recently signed two contracts for parcels of land for future branch sites in Newport News, Virginia and is negotiating a contract for a parcel of land in Hampton, Virginia The Consumer Finance segment continues to invest in technology to create future efficiencies and is in the process of converting its loan system to that used by the Bank. Additional personnel have been hired to begin serving the Northern Virginia and Nashville, Tennessee consumer finance markets.

Income Taxes

Income tax expense for the three months ended March 31, 2004 amounted to $966,000, resulting in an effective tax rate of 29.2% compared to $1.6 million, or 32.7%, for the three months ended March 31, 2003. The decrease in the effective tax rate for the quarter is a result of an increase in earnings from tax-exempt assets as a percentage of total income mainly resulting from the lower earnings at C&F Mortgage.

ASSET QUALITY

Allowance for Loan Losses

The allowance for loan losses represents an amount that, in management’s judgment, will be adequate to absorb any losses on existing loans that may become uncollectible. The allowance is increased by the provision for loan losses and reduced by loans charged off, net of recoveries. The following table summarizes the allowance activity for periods indicated:


	Three Months Ended March 31, 2004
(in 000’s)	Retail and Mortgage Banking			Consumer Finance			Total
Allowance, beginning of period	$	4,256		$	4,401		$	8,657
Provision for loan losses		—			895			895

		4,256			5,296			9,552

Loans charged off		(5	)		(672	)		(677	)
Recoveries of loans previously charged off		4			209			213

Net loans charged off		(1	)		(463	)		(464	)

Allowance, end of period	$	4,255		$	4,833		$	9,088


	Three Months Ended March 31, 2003
(in 000’s)	Retail and Mortgage Banking			Consumer Finance			Total
Allowance, beginning of period	$	3,765		$	2,957		$	6,722
Provision for loan losses		75			463			538

		3,840			3,420			7,260

Loans charged off		—			(476	)		(476	)
Recoveries of loans previously charged off		48			123			171

Net loans charged off		48			(353	)		(305	)

Allowance, end of period	$	3,888		$	3,067		$	6,955

During the first quarter of 2004, there was no provision for loan losses at the Retail Banking segment. Management believes that the current level of the allowance for loan losses is adequate to absorb any losses on existing loans that may become uncollectible.

The Consumer Finance segment, consisting solely of Moore Loans, accounted for the majority of the activity in the allowance for loan losses during the first quarter of 2004. Moore Loans serves customers who have limited access to traditional automobile financing. Moore Loans’ typical borrowers have experienced prior credit difficulties or have modest income. Because Moore Loans serves customers who are unable to meet the credit standards imposed by most traditional automobile financing sources, Moore Loans expects to sustain a higher level of credit losses than traditional automobile financing sources. As Moore Loans provides financing in a relatively higher risk market, Moore Loans generally charges interest at higher rates than those charged by traditional financing sources. Throughout 2003, management implemented changes to the loan underwriting guidelines to improve asset quality on new loans. The majority of the charge-offs in the first quarter of 2004 occurred on loans originated under previous guidelines.

In addition to maintaining the allowance for loan losses, Moore Loans retains dealer reserves that are established at the time a loan is made and are specific to each individual dealer. Loans charged off at Moore Loans are first charged to the dealer reserves, to the extent that an individual dealer has reserves, and the remainder is charged to the allowance for loan losses. Dealer reserves are a liability of Moore Loans and payable to individual dealers upon the termination of the relationship with Moore Loans and the payment of outstanding loans associated with a specific dealer. The following table summarizes the dealer reserves activity for the periods indicated:


	Three Months Ended March 31,
(in 000’s)	2004			2003
Dealer reserves, beginning of period	$	2,119		$	2,071
Reserve holdback at loan origination		21			615
Loans charged off		(384	)		(576	)
Recoveries of loans previously charged off		62			38

Dealer reserves, end of period	$	1,818		$	2,148

Effective January 1, 2004, Moore Loans no longer originates loans with a dealer reserve provision. Existing dealer reserves at December 31, 2003 will be retained to absorb future losses for each dealer with a dealer reserve balance at December 31, 2003. The provision for loan losses and the corresponding allowance for loan losses at the Consumer Finance segment will increase in future periods as dealer reserves are reduced to zero by virtue of loan charge-offs or the termination of dealer relationships. The increase in the provision for loan losses will be offset to some degree by the elimination of the amortization of the dealer holdback.

Non-Performing Assets

Retail and Mortgage Banking


*(in 000’s)*	March 31, 2004			December 31, 2003
Non-accrual loans	$	3,976		$	1,993
Real estate owned		—			8

Total non-performing assets	$	3,976		$	2,001

Accruing loans past due for 90 days or more	$	2,214		$	1,092

Allowance for loan losses	$	4,255		$	4,256

Non-performing assets to total loans* and real estate owned		1.43	%		.72	%
Allowance for loan losses to total loans* and real estate owned		1.53			1.52
Allowance for loan losses to non-performing assets		107.02			212.69

*	Total loans above does not include consumer finance loans at Moore Loans, which are shown below.

Consumer Finance


*(in 000’s)*	March 31, 2004			December 31, 2003
Non-accrual loans	$	957		$	1,149

Accruing loans past due for 90 days or more	$	241		$	233

Allowance for loan losses	$	4,833		$	4,401

Dealer reserves	$	1,818		$	2,119

Non-accrual consumer finance loans to total consumer finance loans		1.15	%		1.44	%
Allowance for loan losses and dealer reserves to non-accrual consumer finance loans		694.91			567.45

Allowance for loan losses to total consumer finance loans		5.79	%		5.52	%
Dealer reserves to total consumer finance loans		2.18			2.66

Allowance for loan losses and dealer reserves to total consumer finance loans		7.97	%		8.18	%

The non-performing assets of the combined Retail and Mortgage Banking segment have increased $2.0 million to $4.0 million at March 31, 2004 from $2.0 million at December 31, 2003. This increase resulted from one commercial real estate loan relationship, which became more than 90 days delinquent after December 31, 2003. Management is closely monitoring this relationship. The non-accrual principal balance outstanding of this relationship is $3.0 million for which management has allocated a reserve of $767,000. Management believes this is an adequate reserve to cover potential losses. The increase in non-accrual loans attributable to this relationship was offset in part by the removal of another commercial loan relationship approximating $996,000 from non-accrual status. The return of this relationship to accrual status accounted for the majority of the increase in accruing loans past due for 90 days or more. While this relationship is contractually past due, management has determined that a return to accrual status is appropriate based on an evaluation of the net realizable value of the collateral and the improved financial strength of the borrower.

There was no significant change in non-performing assets of the Consumer Finance segment since December 31, 2003, and the allowance for loan losses and dealer reserves to non-accrual loans declined slightly. As previously mentioned, effective January 1, 2004, Moore Loans no longer originates loans with a dealer reserve provision. Therefore, the ratio of dealer reserves to total consumer finance loans declined from 2.66% at December 31, 2003 to 2.18% at March 31, 2004. The decline in the dealer reserves is offset in part by a higher provision for loan losses that resulted in an increase in the ratio of the allowance for loan losses to total consumer finance loans from 5.52% at December 31, 2003 to 5.79% at March 31, 2004.

FINANCIAL CONDITION

At March 31, 2004, the Corporation had total assets of $578.4 million compared to $573.5 million at December 31, 2003. The increase is principally a result of an increase in loans held for sale and cash and cash equivalents. These increases were offset in part by a decline in securities available for sale. At December 31, 2003, the Bank invested in short-term securities that had a slight effective yield advantage to the Bank’s overnight interest-bearing account at the FHLB. These securities matured in the first quarter of 2004, and to the extent these funds were not used to fund the increase in loans held for sale, they were held in the Bank’s overnight interest-bearing account at the FHLB at March 31, 2004.

Loan Portfolio

The following table sets forth the composition of the Corporation’s loans held for investment in dollar amounts and as a percentage of the Corporation’s total gross loans held for investment at the dates indicated:


	March 31, 2004					December 31, 2003
(in 000’s)	Amount			Percent		Amount			Percent
Real estate - mortgage	$	80,391		22	%	$	78,638		22	%
Real estate - construction		13,681		4			9,591		3
Commercial, financial and agricultural		159,175		44			167,207		47
Equity lines		13,500		4			13,044		3
Consumer		11,347		3			11,401		3
Consumer-Moore Loans		83,497		23			79,703		22

Total loans		361,591		100	%		359,584		100	%

Less unearned loan fees		(752	)				(757	)
Less allowance for loan losses
Retail and Mortgage Banking		(4,255	)				(4,256	)
Consumer Finance		(4,833	)				(4,401	)

Total loans, net	$	351,751				$	350,170

Investment Securities

The following table sets forth the composition of the Corporation’s securities available for sale in dollar amounts at fair value and as a percentage of the Corporation’s total securities available for sale at the dates indicated:


	March 31, 2004				December 31, 2003
(in 000’s)	Amount		Percent		Amount		Percent
U.S. government agencies and corporations	$	11,415	16	%	$	47,088	46	%
Mortgage-backed securities		3,833	5			1,763	2
Obligations of states and Political subdivisions		52,518	71			48,754	47

Total debt securities		67,766	92			97,605	95
Preferred stock		5,709	8			5,445	5

Total available for sale securities	$	73,475	100	%	$	103,050	100	%

The decline in securities occurred primarily in securities of U.S. government agencies and corporations as a result of the 2003 year-end investment in short-term securities with a slight effective yield advantage to the Bank’s overnight interest-bearing account at the FHLB. These securities matured in January 2004.

Other Borrowings

Borrowings totaled $71.0 million at March 31, 2004 compared to $67.7 million at December 31, 2003. This increase occurred in the Consumer Finance segment’s line of credit and was used to fund loan growth.

Liquidity

Liquid assets, which includes cash and due from banks, interest-bearing deposits at other banks and nonpledged securities available-for-sale, at March 31, 2004 totaled $110.0 million. The Corporation’s funding sources consist of an established federal funds line with a regional correspondent bank of $14.0 million that had no outstanding balance as of March 31, 2004, an established line with the FHLB that had $20.0 million outstanding under a total line of $96.9 million as of March 31, 2004 and a revolving line of credit with a third party bank that had $42.1 million outstanding under a total line of $55 million as of March 31, 2004. Management has no reason to believe these arrangements will not be renewed at maturity.

As a result of the Corporation’s management of liquid assets and the ability to generate liquidity through liability funding, management believes that the Corporation maintains overall liquidity sufficient to satisfy its operational requirements and contractual obligations.

Capital Resources

The Corporation’s and the Bank’s actual capital amounts and ratios are presented in the following table.

Actual

Minimum Capital

Requirements

Minimum To Be

Well Capitalized

Under Prompt

Corrective Action

Provisions

(in 000’s)

Amount

Ratio

Amount

Ratio

Amount

Ratio

As of March 31, 2004:

Total Capital (to Risk-Weighted Assets)

Corporation

59,781

13.8

34,712

8.0

N/A

Bank

54,020

12.6

34,264

8.0

42,830

10.0

Tier I Capital (to Risk-Weighted Assets)

Corporation

54,312

12.5

17,356

4.0

N/A

Bank

48,621

11.4

17,132

4.0

25,698

6.0

Tier I Capital (to Average Assets)

Corporation

54,312

9.8

22,279

4.0

N/A

Bank

48,621

8.8

22,021

4.0

27,527

5.0

As of December 31, 2003:

Total Capital (to Risk-Weighted Assets)

Corporation

59,320

13.7

34,753

8.0

N/A

Bank

52,602

12.3

34,279

8.0

42,848

10.0

Tier I Capital (to Risk-Weighted Assets)

Corporation

53,850

12.4

17,377

4.0

N/A

Bank

47,206

11.0

17,151

4.0

25,709

6.0

Tier I Capital (to Average Assets)

Corporation

53,850

9.6

22,505

4.0

N/A

Bank

47,206

8.5

22,202

4.0

27,753

5.0

Recent Accounting Pronouncements

The Financial Accounting Standards Board has issued no accounting pronouncements during the first quarter of 2004 that are pertinent to the Corporation’s lines of business.

Effects of Inflation

The effect of changing prices on financial institutions is typically different from other industries as the Corporation’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 demand and deposits are reflected in the consolidated financial statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no significant changes from the quantitative and qualitative disclosures made in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2003.

ITEM 4. CONTROLS AND PROCEDURES

The Corporation, under the supervision and with the participation of the Corporation’s management, including the Corporation’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Corporation’s disclosure controls and procedures. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that the Corporation’s disclosure controls and procedures were effective as of March 31, 2004 to ensure that information required to be disclosed by the Corporation in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and regulations.

There were no changes in the Corporation’s internal control over financial reporting during the Corporation’s first quarter ended March 31, 2004 that have materially affected, or are reasonably likely to materially affect, the Corporation’s internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. - LEGAL PROCEEDINGS

There are no material pending legal proceedings to which the Corporation or any of its subsidiaries is a party or of which property of the Corporation or any of its subsidiaries is subject.

ITEM

2. – CHANGES IN SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF EQUITY SECURITIES


	Issuer Purchases of Equity Securities
	Total Number Of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Program¹	Maximum Number of Shares that May Yet Be Purchased Under the Program¹
January 1-31, 2004	26,200	$	41.50	26,200	154,429
February 1-29, 2004	1,500		38.50	1,500	152,929
March 1-31, 2004	—		—	—	152,929

	27,700		41.34	27,700

On January 20, 2004, the Corporation’s board of directors authorized the repurchase of up to 5% of the Corporation’s common stock (approximately 180,629 shares) over the twelve months ending January 19, 2005. The stock may be purchased in the open market and/or in privately negotiated transactions, as management and the board of directors determine prudent.

ITEM 5. - OTHER INFORMATION

C&F Financial Corporation’s 2004 Annual Meeting of Shareholders was held on April 20, 2004. Joshua H. Lawson and Paul C. Robinson were elected as Class II Directors to the Board of Directors to serve until the 2007 Annual Meeting of Shareholders. In addition, shareholders approved the C&F Financial Corporation 2004 Incentive Stock Plan and the reservation of 500,000 shares of Corporation common stock for this plan.

ITEM 6. - EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits–

2.1 Stock Purchase Agreement by and between Citizens and Farmers Bank, C&F Financial Corporation, Moore Loans, Inc., Abby W. Moore, Joanne Moore and John D. Moore dated as of August 30, 2002 (incorporated by reference to Exhibit 2.1 to Form 8-K filed on September 3, 2002)

3.1 Articles of Incorporation of C&F Financial Corporation (incorporated by reference to Exhibit 3.1 to Form 10-KSB filed March 29, 1996)

3.2 Bylaws of C&F Financial Corporation (incorporated by reference to Exhibit 3.2 to Form 10-KSB filed March 29, 1996)

10.9 C&F Financial Corporation 2004 Incentive Stock Plan

31.1 Certification of CEO pursuant to Rule 13a-14(a)

31.2 Certification of CFO pursuant to Rule 13a-14(a)

32 Certification of CEO/CFO pursuant to 18 U.S.C. Section 1350

(b) Reports on Form 8-K–

On January 26, 2004, the Corporation filed a report on Form 8-K to announce (i) the Corporation’s board of directors’ authorization to repurchase up to 5% of the Corporation’s common stock over the next twelve months and (ii) the Corporation’s financial results for the quarter and year ended December 31, 2003.

On February 19, 2004, the Corporation filed a report on Form 8-K to announce its declaration of a cash dividend payable April 1, 2004.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


C&F FINANCIAL CORPORATION
(Registrant)

Date May 5, 2004		/s/ Larry G. Dillon
		Larry G. Dillon
		Chairman, President and Chief Executive Officer
		(Principal Executive Officer)

Date May 5, 2004		/s/ Thomas F. Cherry
		Thomas F. Cherry
		Senior Vice President,
		Chief Financial Officer and Secretary
		(Principal Financial and Accounting Officer)