UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One)
| x | ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2005
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number 000-23423
| A. | Full title of the plan and the address of the plan, if different from that of the issuer named below: |
C&F Mortgage Corporation 401(k) Plan
1400 Alverser Drive
Midlothian, Virginia 23113
| B. | Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: |
C & F Financial Corporation
802 Main Street
West Point, Virginia 23181
The C&F Mortgage Corporation 401(k) Plan (the “Plan”) is subject to the Employee Retirement Income Security Act of 1974 (“ERISA”). Therefore, in lieu of the requirements of Items 1-3 of Form 11-K, the following financial statements and schedule of the Plan for the years ended December 31, 2005 and 2004, which have been prepared in accordance with the financial reporting requirements of ERISA, are provided:
| Page | ||
| 1 | ||
| Statements of Net Assets Available for Benefits December 31, 2005 and 2004 |
2 | |
| 3 | ||
| 4-9 | ||
| Schedule of Assets Held for Investment Purposes at December 31, 2005 |
10-11 | |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Plan Administrator
C&F Mortgage Corporation 401(k) Plan
Midlothian, Virginia
We have audited the accompanying statements of net assets available for benefits of the C&F Mortgage Corporation 401(k) Plan as of December 31, 2005 and 2004, and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the auditing standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial status of the C&F Mortgage Corporation 401(k) Plan as of December 31, 2005 and 2004, and the changes in financial status for the years then ended, in conformity with U.S. generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule of assets held for investment purposes as of December 31, 2005 is presented for the purpose of additional analysis and is not a required part of the basic financial statements, but is supplementary information required by the United States Department of Labor Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental schedule is the responsibility of the Plan’s management. The supplemental schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
/s/ Yount, Hyde & Barbour, P.C.
YOUNT, HYDE & BARBOUR, P.C.
Winchester, Virginia
June 23, 2006
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C&F MORTGAGE CORPORATION 401(K) PLAN
Statements of Net Assets Available for Benefits
December 31, 2005 and 2004
| 2005 | 2004 | |||||
| Assets |
||||||
| Investments, at fair value |
$ | 7,548,929 | $ | 7,119,999 | ||
| Receivables: |
||||||
| Employer contribution |
263,069 | 295,822 | ||||
| Employee deferrals |
809 | 608 | ||||
| Dividends |
3,664 | 3,588 | ||||
| Total receivables |
267,542 | 300,018 | ||||
| Cash |
37,398 | 17,102 | ||||
| Net assets available for benefits |
$ | 7,853,869 | $ | 7,437,119 | ||
See Notes to Financial Statements.
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C&F MORTGAGE CORPORATION 401(K) PLAN
Statements of Changes in Net Assets
Available for Benefits
For the Years Ended December 31, 2005 and 2004
| 2005 | 2004 | |||||
| Additions to net assets attributed to: |
||||||
| Investment income: |
||||||
| Net appreciation in fair value of investments |
$ | 514,488 | $ | 657,292 | ||
| Interest and dividends |
17,598 | 15,198 | ||||
| 532,086 | 672,490 | |||||
| Contributions: |
||||||
| Employer |
263,069 | 295,822 | ||||
| Participant |
975,108 | 851,670 | ||||
| Rollover and other contributions |
17,040 | 103,057 | ||||
| 1,255,217 | 1,250,549 | |||||
| Total additions |
1,787,303 | 1,923,039 | ||||
| Deductions from net assets attributed to: |
||||||
| Benefits paid to participants |
1,326,138 | 255,060 | ||||
| Administrative expenses |
44,415 | 37,302 | ||||
| Total deductions |
1,370,553 | 292,362 | ||||
| Net increase |
416,750 | 1,630,677 | ||||
| Net assets available for benefits: |
||||||
| Beginning of period |
7,437,119 | 5,806,442 | ||||
| End of period |
$ | 7,853,869 | $ | 7,437,119 | ||
See Notes to Financial Statements.
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C&F MORTGAGE CORPORATION 401(K) PLAN
Notes to Financial Statements
Note 1. Description of the Plan
The following description of the C&F Mortgage Corporation 401(k) Plan (Plan) provides only general information. Participants should refer to the Plan agreement for a more complete description of the Plan’s provisions.
General
The Plan is a defined contribution plan maintained by C&F Mortgage Corporation (Company), a wholly-owned subsidiary of C&F Financial Corporation, pursuant to the provisions of Section 401(k) of the Internal Revenue Code (Code) established for the benefit of substantially all employees electing to participate in the Plan. Employees are eligible to participate in the Plan on the first day of the month following their employment date and must be eighteen years old or older. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA).
Contributions
Each participant may elect to have compensation deferred up to the maximum percentage allowed by the Code. Participants who have attained age 50 before the end of the Plan year are eligible to make catch-up contributions. The Company may make a discretionary profit sharing contribution, determined annually by its Board of Directors. The contribution is allocated in proportion to a participant’s contributions to the total contributions of all participants. Discretionary contributions declared or made by the Company, net of forfeitures, were $263,069 and $295,822 during the plan years ended December 31, 2005 and 2004, respectively. Participants entering the Plan may roll over contributions from other plans. Contributions are subject to certain limitations as established by the Internal Revenue Code.
Participants’ Accounts
Each participant’s account is credited with the participant’s contribution and allocations of (a) the Company’s contributions and (b) plan earnings, and charged with an allocation of administrative expenses. Allocations are based on participant contributions or account balances, as defined. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account.
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Vesting
The Plan’s vesting provision provides that participants are immediately vested in their elective contributions and earnings thereon. Vesting in the Company’s contributions occurs as follows:
| Number of Years of Vesting Service |
Vested Interest | ||
| Less than 2 years |
0 | % | |
| 2 years but less than 3 years |
25 | % | |
| 3 years but less than 4 years |
50 | % | |
| 4 years but less than 5 years |
75 | % | |
| 5 years or more |
100 | % |
Investment Options
All assets in the Plan are directed by individual participants. Participants are given the option to direct account balances and all contributions into over 50 separate investment options. The options include managed accounts, pooled separate accounts and guaranteed interest accounts. A participant may also choose to invest up to 25% (in increments of 5%) of their account balance and future contributions in the common stock of C&F Financial Corporation (Employer Common Stock). Participants may change their investment options two times per month.
Payment of Benefits
Upon retirement or termination of service a participant may elect to receive either a lump sum amount equal to the value of the participant’s vested interest in his or her account, periodic installments for a period of up to 10 years or a combination of both. A written election must be made by the participant and filed with the administrator at least 30 days before the benefit payment date. A vested account balance greater than $1,000, but not over $5,000, for a participant who has not reached age 65 at the time of termination of service will automatically be transferred or rolled over into an IRA selected by the Plan Trustee, unless the participant affirmatively elects to have the amount paid to an IRA that he or she selects or to another employer’s eligible retirement plan, or the participant affirmatively elects to receive the amount in cash, subject to applicable state and Federal tax withholding. A vested account balance of $1,000 or less for a participant who has not reached age 65 or a vested account balance of $5,000 or less for a participant who has reached age 65 will automatically be distributed to the participant in cash, subject to applicable state and Federal income tax withholding, unless the participant affirmatively elects a rollover to an IRA that he or she selects or to another employer’s eligible retirement plan.
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Forfeited Accounts
For the years ended December 31, 2005 and 2004, forfeited nonvested accounts totaling $33,906 and $14,179, respectively, were used to reduce employer contributions.
Note 2. Summary of Accounting Policies
Basis of Accounting
The financial statements of the Plan are prepared under the accrual method of accounting.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and changes therein, and disclosure of contingent assets and liabilities. Actual results could differ from those estimates.
Investment Valuation and Income Recognition
The Plan’s investments in managed accounts and pooled separate accounts of John Hancock Life Insurance Company (U.S.A.) (John Hancock USA) represent ownership of units of participation in various mutual funds. The value of a unit of participation is the total value of the investment in each mutual fund within the separate accounts divided by the number of units outstanding. The investments in the managed accounts and the pooled separate accounts are stated at fair value and are based on quoted redemption values of the underlying mutual funds on the last day of the year. The Plan’s Guaranteed Interest Accounts guarantee a rate of return for a defined term. The assets are commingled with other assets of John Hancock USA’s general account and are reported at fair value as determined by John Hancock USA. Common stock is stated at the fair value determined by quoted market prices.
Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date.
In accordance with the policy of stating investments at current value, net realized and unrealized appreciation (depreciation) for the year is reflected in the statements of changes in net assets available for benefits.
Benefit Payments
Benefit payments are recorded when paid.
Note 3. Plan Termination
Although it has not expressed any intent to do so, the Company has the right under the Plan to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, participants would become 100% vested in the portion of their account not previously vested.
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Note 4. Investments
The Plan’s investment assets are currently held by the custodians, John Hancock USA and BI Investments, LLC. The following tables present investments for the years ended December 31, 2005 and 2004 that represent 5 percent or more of the Plan’s net assets.
| December 31, 2005 | |||
| John Hancock Lifestyle Fund – Aggressive Portfolio |
$ | 1,063,777 | |
| John Hancock Lifestyle Fund – Balanced Portfolio |
739,952 | ||
| John Hancock Lifestyle Fund – Growth Portfolio |
1,622,290 | ||
| John Hancock Money Market Fund |
399,948 | ||
| C&F Financial Corporation – Employer Common Stock |
515,698 | ||
| December 31, 2004 | |||
| Manulife Lifestyle Fund – Aggressive Portfolio |
$ | 1,067,713 | |
| Manulife Lifestyle Fund – Balanced Portfolio |
752,409 | ||
| Manulife Lifestyle Fund – Growth Portfolio |
1,581,999 | ||
| C&F Financial Corporation – Employer Common Stock |
603,232 | ||
During the years ended December 31, 2005 and 2004, the Plan’s investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated in value by $514,488 and $657,292, respectively as follows:
| December 31, | ||||||||
| 2005 | 2004 | |||||||
| Managed and pooled separate accounts |
$ | 554,854 | $ | 647,461 | ||||
| Employer Common Stock |
(39,142 | ) | 10,110 | |||||
| Guaranteed investment contracts |
(1,224 | ) | (279 | ) | ||||
| $ | 514,488 | $ | 657,292 | |||||
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Note 5. Tax Status
The Plan has received a determination letter from the Internal Revenue Service dated February 17, 2005, stating that the Plan, as then designed, is qualified based on the tax laws reviewed and, therefore, the trust established under the Plan is tax exempt. This determination letter may not be relied on with respect to whether the Plan satisfies the requirements of section 401(a) of the Code, as amended by the Economic Growth and Tax Relief Reconciliation Act of 2001. However, the Plan administrator believes the Plan is being operated in compliance with the applicable requirements of the Code and, therefore, believes that the Plan is qualified and the related trust is tax exempt.
8
Note 6. Related Party Transactions
The Plan allows funds to be invested in the common stock of C&F Financial Corporation, the parent company of C&F Mortgage Corporation, the Plan Sponsor. Therefore C&F Financial Corporation is a party-in-interest. Investment in employer securities is allowed by ERISA and the United States Department of Labor Rules and Regulations and the fair value of Employer Common Stock is based on quotes from an active market.
Note 7. Administrative Expenses
All administrative expenses are absorbed by the Plan.
Note 8. Risks and Uncertainties
The Plan invests in various investment securities. Investment securities are exposed to various risks such as interest rate, market, and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect participants’ account balances and the amounts reported in the statement of net assets available for benefits.
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C&F MORTGAGE CORPORATION 401(K) PLAN
Schedule of Assets Held for Investment Purposes
EIN: 54-1773964 Plan No. 001
December 31, 2005
| Description of Asset/Identity of Issue |
Fair Value | ||
| Managed Accounts |
|||
| John Hancock Lifestyle Fund-Aggressive Portfolio |
$ | 1,063,777 | |
| John Hancock Lifestyle Fund-Balanced Portfolio |
739,952 | ||
| John Hancock Lifestyle Fund-Conservative Portfolio |
111,241 | ||
| John Hancock Lifestyle Fund-Growth Portfolio |
1,622,290 | ||
| John Hancock Lifestyle Fund-Moderate Portfolio |
225,209 | ||
| 3,762,469 | |||
| Pooled Separate Accounts |
|||
| John Hancock American Century Vista |
21,764 | ||
| John Hancock Oppenheimer Developing Markets Fund |
140,447 | ||
| John Hancock Mutual Discovery Fund |
911 | ||
| John Hancock Quantitative Value Fund |
16,334 | ||
| John Hancock Templeton Foreign Fund |
12,295 | ||
| John Hancock TRP Blue Chip Fund |
18,739 | ||
| John Hancock Jennison Growth Fund |
11,664 | ||
| John Hancock Fidelity Advisor Large-Cap Fund |
97,715 | ||
| John Hancock Fidelity Advisor Dividend Growth Fund |
30,809 | ||
| John Hancock TRP Spectrum Income Fund |
26,405 | ||
| John Hancock 500 Index Fund |
132,920 | ||
| John Hancock Legg Mason Growth Fund |
93,810 | ||
| John Hancock Wietz Partners Value Fund |
62,248 | ||
| John Hancock AIM Constellation Fund |
5,431 | ||
| John Hancock Mutual Beacon Fund |
66,384 | ||
| John Hancock TRP Science & Technology Fund |
245,239 | ||
| John Hancock Smith Barney Aggressive Growth Fund |
170,359 | ||
| John Hancock Quantitative Mid-Cap Fund |
68,627 | ||
| John Hancock Franklin Small/Mid-Cap Growth Fund |
41,342 | ||
| John Hancock Scudder International Select Equity Fund |
34,852 | ||
| John Hancock AIM Small-Cap Growth Fund |
309 | ||
| John Hancock Domini Social Equity Fund |
6,647 | ||
| John Hancock Excelsior Value & Restructuring Fund |
36,393 | ||
| John Hancock Oppenheimer Global Fund |
42,890 | ||
| John Hancock Short Term Federal Fund |
7,934 | ||
| John Hancock PIMCO Total Return Fund |
119,949 | ||
| John Hancock Davis New York Venture Fund |
53,264 | ||
| John Hancock Franklin Balance Sheet Fund |
117,644 | ||
| John Hancock MFS Strategic Value Fund |
32,254 | ||
| Carried Forward |
$ | 1,715,579 | |
10
C&F MORTGAGE CORPORATION 401(K) PLAN
Schedule of Assets Held for Investment Purposes
EIN: 54-1773964 Plan No. 001
(Continued)
December 31, 2005
| Description of Asset/Identity of Issue |
Fair Value | ||
| Carried Forward |
$ | 1,715,579 | |
| Pooled Separate Accounts (cont’d) |
|||
| John Hancock Templeton World Fund |
1,321 | ||
| John Hancock Templeton Foreign Small Company Fund |
76,427 | ||
| John Hancock TRP Equity Income Fund |
102,796 | ||
| John Hancock Scudder Mid-Cap Growth Fund |
64,518 | ||
| John Hancock Total Stock Market Index Fund |
3,553 | ||
| John Hancock Small-Cap Index |
44,877 | ||
| John Hancock PIMCO Real Return Fund |
1,262 | ||
| John Hancock American Funds American Balanced Fund |
226,836 | ||
| John Hancock American Funds Washington Mutual Investors Fund |
41,651 | ||
| John Hancock American Funds Investment Company of America |
41,447 | ||
| John Hancock Smith Barney Small Cap Value Fund |
20,344 | ||
| John Hancock Merrill Lynch Large-Cap Value Fund |
6,791 | ||
| John Hancock American Funds Growth Fund of America |
215,603 | ||
| John Hancock American Funds EuroPacific Growth Fund |
153,967 | ||
| John Hancock American Century Small Company Fund |
39,494 | ||
| John Hancock Quantitative All Cap Fund |
25,487 | ||
| John Hancock Mid-Cap Index Fund |
3,023 | ||
| John Hancock Salomon Brothers High-Yield Fund |
40 | ||
| John Hancock International Equity Index Fund |
6 | ||
| John Hancock Emerging Growth Fund |
35 | ||
| John Hancock Money Market Fund |
399,948 | ||
| 3,185,005 | |||
| Common Stock |
|||
| C&F Financial Corporation – Employer Stock |
515,698 | ||
| Guaranteed Interest Accounts |
|||
| Guaranteed Investment Contract |
85,757 | ||
| Total assets held for investment purposes |
$ | 7,548,929 | |
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SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the plan administrator of the Plan has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
| C&F MORTGAGE CORPORATION 401(k) PLAN | ||
| (Name of Plan) | ||
| Date June 28, 2006 | /s/ Bryan E. McKernon | |
| Bryan E. McKernon, President & Chief Executive Officer | ||
| C&F MORTGAGE CORPORATION, Plan Administrator | ||
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