C&F Financial Corporation (the Corporation) (NASDAQ: CFFI), the
one-bank holding company for C&F Bank, today reported
consolidated net income of $6.5 million for the first quarter of
2023, which represents an increase of $762,000, or 13.3 percent, as
compared to the first quarter of 2022. The following table presents
selected financial performance highlights for the periods
indicated:
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|
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For The Quarter Ended |
|
|
Consolidated Financial Highlights (unaudited) |
|
3/31/2023 |
|
|
3/31/2022 |
|
|
Consolidated net income
(000's) |
|
$ |
6,497 |
|
|
$ |
5,735 |
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share - basic and
diluted |
|
$ |
1.86 |
|
|
$ |
1.59 |
|
|
|
|
|
|
|
|
|
|
|
|
Annualized return on average
equity |
|
|
12.87% |
|
|
|
10.99% |
|
|
Annualized return on average
tangible common equity1 |
|
|
14.93% |
|
|
|
12.61% |
|
|
Annualized return on average
assets |
|
|
1.10% |
|
|
|
1.01% |
|
|
1For more information about this non-GAAP financial measure,
which is not calculated in accordance with generally accepted
accounting principles (GAAP), please see “Use of Certain Non-GAAP
Financial Measures” and “Reconciliation of Certain Non-GAAP
Financial Measures,” below.
"We are very pleased with our first quarter
results,” commented Tom Cherry, President and Chief Executive
Officer of C&F Financial Corporation. “Each of our three
business segments was profitable, but the changing economy has
affected them differently. While rising interest rates and the
related impacts on loan originations at our mortgage banking
segment and borrowings costs at our consumer finance segment have
decreased their respective earnings, compared to the same period
last year, earnings at our community banking segment were up 83%,
due primarily to an increase in our net interest income resulting
from an increase in margins and an increase in loans outstanding.
We believe these results demonstrate what makes our diversified
business model both unique and exceptionally valuable.
With the failures of two banks in the first
quarter, we are mindful of the general uneasiness and uncertainty
within the banking industry. The issues that gave rise to these
bank failures were unique to those two banks and are not indicative
of broader problems in banking and absolutely do not represent what
is happening at C&F. We remain well capitalized, even after
considering unrealized losses in our bond portfolio, and we have
fast access to liquidity through lines of credit that exceed the
amount of our uninsured deposits. Our total deposits are down less
than 1% from December 31, 2022, and are up 1.3% from March of 2022.
The majority of this slight decrease in deposits during the first
quarter is seasonal changes in our municipal deposits, which are
secured with pledged investments.
C&F and the overall United States banking
system will continue to perform their vital roles of protecting
deposits and providing households and businesses with access to
credit in a manner that promotes strong and sustainable
growth.”
Key highlights for the first quarter of 2023 are
as follows.
- Community banking segment loans
grew $37.6 million, or 13.0 percent annualized, and $162.8 million,
or 15.7%, compared to December 31, 2022 and March 31, 2022,
respectively;
- Consumer finance segment loans grew
$601 thousand, or less than 1 percent annualized, and $78.4
million, or 19.8%, compared to December 31, 2022 and March 31,
2022, respectively;
- Deposits decreased $8.1 million, or
1.6 percent annualized, and increased $26.1 million, or 1.3%,
compared to December 31, 2022 and March 31, 2022,
respectively;
- The community banking segment’s
borrowings availability increased to $658.3 million at March 31,
2023, up from $432.6 million at December 31, 2022;
- Uninsured deposits, excluding
intercompany cash holdings and municipal deposits, which are
secured with pledged investments, were $418.8 million, or 21.0
percent of total deposits at March 31, 2023;
- The community banking segment
recorded provision for credit losses of $450,000 for the first
quarter of 2023 and recorded net reversals of provision for credit
losses of $700,000 for the first quarter of 2022;
- The consumer finance segment
recorded provision for credit losses of $1.6 million and $350,000
for the first quarters of 2023 and 2022, respectively;
- Consolidated annualized net
interest margin was 4.52 percent for the first quarter of 2023,
compared to 3.93 percent and 4.65 percent for the first quarter of
2022 and fourth quarter of 2022, respectively;
- The consumer finance segment
experienced net charge-offs at an annualized rate of 1.77 percent
of average total loans for the first quarter of 2023, compared to
0.04 percent for the first quarter of 2022;
- Mortgage banking segment loan
originations increased 3.3 percent and decreased 39.0 percent for
the first quarter of 2023 compared to the fourth quarter of 2022
and first quarter of 2022, respectively; and
- On January 1, 2023, the Corporation
adopted the Current Expected Credit Loss (CECL) methodology for
estimating credit losses, which resulted in a decrease to opening
retained earnings of $1.1 million.
Community Banking
Segment. The community banking segment reported net
income of $6.4 million for the first quarter of 2023 compared to
$3.5 million for the same period in 2022, an increase of $2.9
million due primarily to:
- higher interest income resulting
from the effects of rising interest rates on asset yields,
including on variable rate loans to the consumer finance segment,
and higher average balances of interest-earning assets, including
loans and securities;
partially offset by:
- higher interest expense due
primarily to higher rates on deposits and higher borrowing
balances;
- provision for credit losses of
$450,000 for the first quarter of 2023, compared to a reversal of
provision for credit losses of $700,000 for the first quarter of
2022;
- higher salaries and employee
benefits expense, which increased in line with employment market
conditions; and
- higher Federal Deposit Insurance
Corporation (FDIC) assessment expenses, due primarily to statutory
increases applicable to all insured depository institutions.
Average loans increased $148.8 million, or 14.5
percent, for the first quarter of 2023 compared to the same period
in 2022, primarily from growth in the commercial real estate and
residential mortgage segments of the loan portfolio. Average
deposits increased $62.0 million, or 3.2 percent, for the first
quarter of 2023 compared to the same period in 2022 and decreased
$27.7 million, or 1.4 percent, compared to the fourth quarter of
2022.
Average loan yields were higher for the first
quarter of 2023 compared to the first quarter of 2022, due
primarily to the effects of rising interest rates as market
interest rates rose in 2022 and have risen so far in 2023. While
the community banking segment expects loan yields to continue to
rise, the cost of deposits is expected to rise at a faster pace
therefore decreasing net interest margin for the remainder of the
2023.
The community banking segment’s nonaccrual loans
were $262,000 at March 31, 2023 compared to $115,000 at December
31, 2022. The community banking segment recorded provision for
credit losses of $450,000 for the first quarter of 2023, due
primarily to growth in the loan portfolio, compared to a net
reversal of provision for credit losses of $700,000 for the first
quarter of 2022, due primarily to the resolution of certain
impaired loans, which resulted in no losses being realized, and the
reduction of certain qualitative adjustments to reserves. At March
31, 2023, the allowance for credit losses increased to $15.0
million, compared to $14.5 million at December 31, 2022, due
primarily to growth in the loan portfolio and the adoption of CECL,
which resulted in an implementation adjustment on January 1, 2023
of $85,000. Management believes that the level of the allowance for
credit losses is adequate to reflect the net amount expected to be
collected.
Mortgage Banking
Segment. The mortgage banking segment reported net
income of $227,000 for the first quarter of 2023 compared to net
income of $866,000 for the same period in 2022, a decrease of
$639,000 due primarily to:
- lower volume of mortgage loan
originations; and
- lower reversals of provision for
indemnifications;
partially offset by:
- lower expenses tied to mortgage
loan origination volume such as salaries and employee benefits,
loan processing, and data processing.
The rapid rise in mortgage interest rates during
2022, combined with higher home prices, has led to a substantial
decline in mortgage loan originations for the mortgage industry.
Mortgage loan originations for the mortgage banking segment were
$115.8 million for the first quarter of 2023 compared to $189.9
million for the same period in 2022. Mortgage loan originations
during the first quarter of 2023 for refinancings and home
purchases were $14.0 million and $101.8 million, respectively,
compared to $48.4 million and $141.5 million, respectively, during
the first quarter of 2022. Mortgage loan originations in the first
quarter of 2023 increased $3.7 million compared to the fourth
quarter of 2022.
During the first quarter of 2023, the mortgage
banking segment recorded no provision for indemnification losses
compared to a reversal of provision for indemnification losses of
$583,000 in the same period of 2022. The release of indemnification
reserves in 2022 was due primarily to improvement in the mortgage
banking segment’s assessment of borrower payment performance and
other factors affecting expected losses on mortgage loans sold in
the secondary market. The mortgage banking segment increased
reserves for indemnification losses during 2020 based on widespread
forbearance on mortgage loans and economic uncertainty related to
the COVID-19 pandemic. To date, the mortgage banking segment has
not made any payments for indemnification losses since the onset of
the COVID-19 pandemic in the first quarter of 2020, and management
believes that the indemnification reserve is sufficient to absorb
losses related to loans that have been sold in the secondary
market.
Consumer Finance
Segment. The consumer finance segment reported net
income of $509,000 for the first quarter of 2023 compared to net
income of $2.1 million for the same period in 2022, a decrease of
$1.6 million due primarily to:
- margin compression resulting from
lower average yields on automobile loans, as a result of pursuing
growth in higher quality, lower yielding loans, and increased costs
on variable rate borrowings from the community banking segment;
and
- higher provision for credit losses
as a result of increased net charge-offs;
partially offset by:
- higher interest income resulting
from higher average balances of interest-earning assets and the
effects of rising market interest rates.
Average loans outstanding increased $94.1
million, or 24.7%, for the first quarter of 2023 compared to the
same period in 2022. The consumer finance segment experienced net
charge-offs at an annualized rate of 1.77 percent of average total
loans for the first quarter of 2023, compared to 0.04 percent for
the first quarter of 2022, due primarily to an increase in the
number of delinquent loans following a period of historically low
delinquencies during the COVID-19 pandemic, a decline in wholesale
values of used automobiles from a recent peak during the COVID-19
pandemic and continued recent challenges in repossessing
automobiles due to a decline in the number of repossession
agencies, which results in a fully charged-off loan when the
automobile cannot be repossessed. At March 31, 2023, total
delinquent loans as a percentage of total loans was 2.33 percent,
compared to 2.78 percent at December 31, 2022 and 1.71 percent at
March 31, 2022. The allowance for credit losses was $25.9 million
at March 31, 2023, compared to $26.0 million at December 31, 2022.
The allowance for credit losses as a percentage of total loans
decreased to 5.45 percent at March 31, 2023 from 5.47 percent and
6.33 percent at December 31, 2022 and March 31, 2022, respectively,
primarily as a result of growth in loans with stronger credit
quality while balances of loans with lower credit quality declined,
partially offset by the adoption of CECL, which resulted in an
implementation adjustment on January 1, 2023 of $406,000.
Management believes that the level of the allowance for credit
losses is adequate to reflect the net amount expected to be
collected. If loan performance deteriorates resulting in elevated
delinquencies or net charge-offs, provision for credit losses may
increase in future periods.
Liquidity. The objective of the
Corporation’s liquidity management is to ensure the continuous
availability of funds to satisfy the credit needs of our customers
and the demands of our depositors, creditors and investors.
Uninsured deposits represent amounts above the FDIC limit. As of
March 31, 2023, the Corporation’s uninsured deposits, adjusted to
exclude intercompany cash holdings and municipal deposits, which
are secured with pledged investments, were $418.8 million, or 21.0
percent of total deposits. The Corporation’s borrowing availability
as of March 31, 2023 was $658.3 million, exceeding uninsured
deposits by $239.5 million.
In addition to deposits, the Corporation
utilizes short-term and long-term borrowings as sources of funds.
Short-term borrowings from the Federal Reserve Bank and the Federal
Home Loan Bank of Atlanta (FHLB) may be used to fund the
Corporation’s day-to-day operations. Short-term borrowings also
include securities sold under agreements to repurchase. Borrowings
increased to $201.0 million at March 31, 2023 from $92.1 million at
December 31, 2022 and $88.1 million at March 31, 2022, due
primarily to short-term borrowings from the FHLB.
Additional sources of liquidity available to the
Corporation include cash flows from operations, loan payments and
payoffs, deposit growth, maturities, calls and sales of securities
and the issuance of brokered certificates of deposit.
Capital and Dividends. The
Corporation increased its quarterly cash dividend by 5 percent
compared to the previous quarterly dividend, to 44 cents per share
during the first quarter of 2023, which was paid on April 1, 2023.
This dividend represents a payout ratio of 23.7 percent of earnings
per share for the first quarter of 2023. The Board of Directors of
the Corporation continually reviews the amount of cash dividends
per share and the resulting dividend payout ratio in light of
changes in economic conditions, current and future capital
requirements, and expected future earnings.
Total consolidated equity increased $7.0 million
at March 31, 2023 compared to December 31, 2022, due primarily to
net income and lower unrealized losses in the market value of
securities available for sale, which are recognized as a component
of other comprehensive loss. The Corporation’s securities available
for sale are fixed income debt securities, and their unrealized
loss position is a result of rising market interest rates since
they were purchased. The Corporation expects to recover its
investments in debt securities through scheduled payments of
principal and interest, and unrealized losses are not expected to
affect the earnings or regulatory capital of the Corporation or the
Bank.
As of March 31, 2023, the most recent
notification from the FDIC categorized the C&F Bank as well
capitalized under the regulatory framework for prompt corrective
action. To be categorized as well capitalized under regulations
applicable at March 31, 2023, C&F Bank was required to maintain
minimum total risk-based, Tier 1 risk-based, CET1 risk-based and
Tier 1 leverage ratios. In addition to the regulatory risk-based
capital requirements, C&F Bank must maintain a capital
conservation buffer of additional capital of 2.5 percent of
risk-weighted assets as required by the Basel III capital rules.
The Corporation and C&F Bank exceeded these ratios at March 31,
2023. On April 1, 2023, the Corporation repaid $4.0 million of
outstanding subordinated notes, which is expected to have an
immaterial impact on capital levels of the Corporation and no
impact on capital levels of C&F Bank. For additional
information, see “Capital Ratios” below. The above mentioned ratios
are not impacted by unrealized losses on securities available for
sale. In the unlikely event that all of these unrealized losses
became realized into earnings, the Corporation and C&F Bank
would both continue to exceed minimum capital requires and be
considered well capitalized.
In November 2022, the Board of Directors
authorized a program, effective December 1, 2022, to repurchase up
to $10.0 million of the Corporation’s common stock through December
31, 2023. During the first quarter of 2023, the Corporation
repurchased 35,984 shares, or $2.1 million, of its common stock
under this share repurchase program.
About C&F Financial
Corporation. The Corporation’s common stock is listed
for trading on The Nasdaq Stock Market under the symbol CFFI. The
common stock closed at a price of $53.32 per share on April 25,
2023. At March 31, 2023, the book value of the Corporation was
$58.81 per share and the tangible book value per share was $51.03.
For more information about the Corporation’s tangible book value
per share, which is not calculated in accordance with GAAP, please
see “Use of Certain Non-GAAP Financial Measures” and
“Reconciliation of Certain Non-GAAP Financial Measures,” below.
C&F Bank operates 31 banking offices and
four commercial loan offices located throughout eastern and central
Virginia and offers full wealth management services through its
subsidiary C&F Wealth Management, Inc. C&F Mortgage
Corporation and its subsidiary C&F Select LLC provide mortgage
loan origination services through offices located in Virginia,
Maryland, North Carolina, South Carolina and West Virginia. C&F
Finance Company provides automobile, marine and recreational
vehicle loans through indirect lending programs offered in Alabama,
Colorado, Florida, Georgia, Illinois, Indiana, Iowa, Kansas,
Kentucky, Maryland, Minnesota, Missouri, New Jersey, North
Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Texas,
Virginia and West Virginia from its headquarters in Henrico,
Virginia.
Additional information regarding the
Corporation’s products and services, as well as access to its
filings with the Securities and Exchange Commission (SEC), are
available on the Corporation’s website at http://www.cffc.com.
Use of Certain Non-GAAP Financial
Measures. The accounting and reporting policies of the
Corporation conform to GAAP in the United States and prevailing
practices in the banking industry. However, certain non-GAAP
measures are used by management to supplement the evaluation of the
Corporation’s performance. These include return on tangible common
equity (ROTCE), tangible book value per share, and the following
fully-taxable equivalent (FTE) measures: interest income on
loans-FTE, interest income on securities-FTE, total interest
income-FTE and net interest income-FTE.
Management believes that the use of these
non-GAAP measures provides meaningful information about operating
performance by enhancing comparability with other financial
periods, other financial institutions, and between different
sources of interest income. The non-GAAP measures used by
management enhance comparability by excluding the effects of
balances of intangible assets, including goodwill, that vary
significantly between institutions, and tax benefits that are not
consistent across different opportunities for investment. These
non-GAAP financial measures should not be considered an alternative
to GAAP-basis financial statements, and other bank holding
companies may define or calculate these or similar measures
differently. A reconciliation of the non-GAAP financial measures
used by the Corporation to evaluate and measure the Corporation’s
performance to the most directly comparable GAAP financial measures
is presented below.
Forward-Looking
Statements. This press release contains
“forward-looking statements” within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act, as amended. These forward-looking
statements are based on the beliefs of the Corporation’s
management, as well as assumptions made by, and information
currently available to, the Corporation’s management, and reflect
management’s current views with respect to certain events that
could have an impact on the Corporation’s future financial
performance. These statements, including without limitation
statements made in Mr. Cherry’s quote and statements regarding
future conditions in the Corporation’s industries and markets,
relate to expectations concerning matters that are not historical
fact, may express “belief,” “intention,” “expectation,” “potential”
and similar expressions, and may use the words “believe,” “expect,”
“anticipate,” “estimate,” “plan,” “may,” “might,” “will,” “intend,”
“target,” “should,” “could,” or similar expressions. These
statements are inherently uncertain, and there can be no assurance
that the underlying assumptions will prove to be accurate. Actual
results could differ materially from those anticipated or implied
by such statements. Forward-looking statements in this release may
include, without limitation, statements regarding expected future
operations and financial performance, expected future recovery of
investments in debt securities, future dividend payments, strategic
business initiatives and the anticipated effects thereof, changes
in interest rates and the effects thereof on net interest income,
mortgage loan originations, expectations regarding C&F Bank’s
regulatory risk-based capital requirement levels, technology
initiatives, our diversified business strategy, asset quality,
credit quality, adequacy of allowances for credit losses and the
level of future charge-offs, adequacy of the reserve for
indemnification losses related to loans sold in the secondary
market, the effect of future market and industry trends, the
effects of future interest rate fluctuations, cybersecurity risks,
and inflation. 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, such as volatility
in short-term interest rates or yields on U.S. Treasury bonds,
increases in interest rates following actions by the Federal
Reserve and increases or volatility in mortgage interest rates
- general business conditions, as
well as conditions within the financial markets
- general economic conditions,
including unemployment levels, inflation rates, supply chain
disruptions and slowdowns in economic growth, and also including
the economic impacts of the COVID-19 pandemic
- market disruptions including
pandemics or significant health hazards, severe weather conditions,
natural disasters, terrorist activities, financial crises,
political crises, war and other military conflicts (including the
ongoing military conflict between Russia and Ukraine) or other
major events, or the prospect of these events
- attracting, hiring, training,
motivating and retaining qualified employees
- the legislative/regulatory climate,
regulatory initiatives with respect to financial institutions,
products and services, the Consumer Financial Protection Bureau
(the CFPB) and the regulatory and enforcement activities of the
CFPB
- monetary and fiscal policies of the
U.S. Government, including policies of the FDIC, U.S. Department of
the Treasury and the Board of Governors of the Federal Reserve
System (the Federal Reserve Board), and the effect of these
policies on interest rates and business in our markets
- demand for financial services in
the Corporation’s market area
- the value of securities held in the
Corporation’s investment portfolios
- the quality or composition of the
loan portfolios and the value of the collateral securing those
loans
- the inventory level, demand and
fluctuations in the pricing of used automobiles, including sales
prices of repossessed vehicles
- the level of automobile loan
delinquencies or defaults and our ability to repossess automobiles
securing delinquent automobile finance installment contracts
- the level of net charge-offs on
loans and the adequacy of our allowance for credit losses
- the level of indemnification losses
related to mortgage loans sold
- demand for loan products
- deposit flows
- the strength of the Corporation’s
counterparties
- the soundness of other financial
institutions and any indirect exposure related to the closings of
Silicon Valley Bank (“SVB”), Signature Bank and Silvergate Bank and
their impact on the broader market through other customers,
suppliers and partners, or that the conditions which resulted in
the liquidity concerns with SVB, Signature Bank and Silvergate Bank
may also adversely impact, directly or indirectly, other financial
institutions and market participants with which the Corporation has
commercial or deposit relationships with
- competition from both banks and
non-banks, including competition in the non-prime automobile
finance markets
- reliance on third parties for key
services
- the commercial and residential real
estate markets
- the demand for residential
mortgages and conditions in the secondary residential mortgage loan
markets
- the Corporation’s technology
initiatives and other strategic initiatives
- the Corporation’s branch expansions
and consolidations
- cyber threats, attacks or
events
- expansion of C&F Bank’s product
offerings
- accounting principles, policies and
guidelines, and elections by the Corporation thereunder, including,
for example, our adoption of the CECL methodology and the potential
volatility in the Corporation’s operating results due to the
application of the CECL methodology
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
any forward-looking statements, which speak only as of the date of
this release. For additional information on risk factors that could
affect the forward-looking statements contained herein, see the
Corporation’s Annual Report on Form 10-K for the year ended
December 31, 2022 and other reports filed with the SEC. The
Corporation undertakes no obligation to update any forward-looking
statement, whether as a result of new information, future events or
otherwise.
C&F Financial
Corporation
Selected Financial
Information(dollars in thousands, except for per
share data)(unaudited)
|
|
|
|
|
|
|
|
|
|
|
Financial
Condition |
|
3/31/2023 |
|
12/31/2022 |
|
3/31/2022 |
|
Interest-bearing deposits in
other banks |
|
$ |
68,624 |
|
$ |
7,051 |
|
$ |
254,178 |
|
Investment securities -
available for sale, at fair value |
|
|
513,625 |
|
|
512,591 |
|
|
415,532 |
|
Loans held for sale, at fair
value |
|
|
26,330 |
|
|
14,259 |
|
|
46,659 |
|
Loans, net: |
|
|
|
|
|
|
|
|
|
|
Community Banking segment |
|
|
1,183,078 |
|
|
1,145,940 |
|
|
1,021,112 |
|
Mortgage Banking segment |
|
|
- |
|
|
671 |
|
|
9,106 |
|
Consumer Finance segment |
|
|
449,283 |
|
|
448,589 |
|
|
371,623 |
|
Total assets |
|
|
2,440,333 |
|
|
2,332,317 |
|
|
2,301,843 |
|
Deposits |
|
|
1,995,798 |
|
|
2,003,860 |
|
|
1,969,661 |
|
Repurchase agreements |
|
|
35,579 |
|
|
34,481 |
|
|
32,434 |
|
Other borrowings |
|
|
165,444 |
|
|
57,603 |
|
|
55,669 |
|
Total equity |
|
|
203,184 |
|
|
196,233 |
|
|
201,278 |
|
|
|
|
|
|
|
|
|
|
|
|
For The |
|
|
|
Quarter Ended |
|
Results of
Operations |
|
3/31/2023 |
|
|
3/31/2022 |
|
Interest income |
|
$ |
29,305 |
|
|
$ |
22,231 |
|
|
Interest expense |
|
|
4,347 |
|
|
|
1,755 |
|
|
Provision for credit
losses: |
|
|
|
|
|
|
|
|
Community Banking segment |
|
|
450 |
|
|
|
(700 |
) |
|
Mortgage Banking segment |
|
|
- |
|
|
|
22 |
|
|
Consumer Finance segment |
|
|
1,600 |
|
|
|
350 |
|
|
Noninterest income: |
|
|
|
|
|
|
|
|
Gains on sales of loans |
|
|
1,794 |
|
|
|
2,695 |
|
|
Other |
|
|
5,649 |
|
|
|
4,034 |
|
|
Noninterest expenses: |
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
|
13,898 |
|
|
|
11,856 |
|
|
Other |
|
|
8,503 |
|
|
|
8,355 |
|
|
Income tax expense |
|
|
1,453 |
|
|
|
1,587 |
|
|
Net income |
|
|
6,497 |
|
|
|
5,735 |
|
|
|
|
|
|
|
|
|
|
|
Fully-taxable equivalent (FTE)
amounts1 |
|
|
|
|
|
|
|
|
Interest income on loans-FTE |
|
|
26,107 |
|
|
|
20,510 |
|
|
Interest income on securities-FTE |
|
|
3,232 |
|
|
|
1,733 |
|
|
Total interest income-FTE |
|
|
29,515 |
|
|
|
22,349 |
|
|
Net interest income-FTE |
|
|
25,168 |
|
|
|
20,594 |
|
|
1For more information about these non-GAAP financial measures,
please see “Use of Certain Non-GAAP Financial Measures” and
“Reconciliation of Certain Non-GAAP Financial Measures.”
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For The |
|
|
|
|
Quarter Ended |
|
|
Average
Balances |
|
3/31/2023 |
|
|
12/31/2022 |
|
|
3/31/2022 |
|
|
Securities |
|
$ |
561,054 |
|
|
$ |
553,315 |
|
|
$ |
407,007 |
|
|
Loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Community Banking segment |
|
|
1,172,164 |
|
|
|
1,142,543 |
|
|
|
1,023,397 |
|
|
Mortgage Banking segment |
|
|
19,076 |
|
|
|
23,611 |
|
|
|
59,942 |
|
|
Consumer Finance segment |
|
|
475,225 |
|
|
|
472,614 |
|
|
|
381,115 |
|
|
Interest-bearing deposits in
other banks |
|
|
25,911 |
|
|
|
40,522 |
|
|
|
255,027 |
|
|
Total earning assets |
|
|
2,253,430 |
|
|
|
2,232,605 |
|
|
|
2,126,488 |
|
|
Total assets |
|
|
2,367,376 |
|
|
|
2,332,930 |
|
|
|
2,262,828 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Time, checking and savings
deposits |
|
|
1,393,229 |
|
|
|
1,362,717 |
|
|
|
1,336,995 |
|
|
Repurchase agreements |
|
|
35,260 |
|
|
|
35,963 |
|
|
|
32,724 |
|
|
Other borrowings |
|
|
105,421 |
|
|
|
55,866 |
|
|
|
55,707 |
|
|
Total interest-bearing
liabilities |
|
|
1,533,910 |
|
|
|
1,454,546 |
|
|
|
1,425,426 |
|
|
Noninterest-bearing demand
deposits |
|
|
591,709 |
|
|
|
649,951 |
|
|
|
585,922 |
|
|
Total equity |
|
|
201,856 |
|
|
|
188,070 |
|
|
|
208,755 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annualized Average
Yields and Rates |
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Community Banking segment |
|
|
4.95 |
% |
|
|
4.68 |
% |
|
|
4.14 |
% |
|
Mortgage Banking segment |
|
|
6.29 |
|
|
|
6.08 |
|
|
|
3.30 |
|
|
Consumer Finance segment |
|
|
9.82 |
|
|
|
9.63 |
|
|
|
10.19 |
|
|
Time, checking and savings
deposits |
|
|
0.88 |
|
|
|
0.51 |
|
|
|
0.34 |
|
|
Net interest margin |
|
|
4.52 |
|
|
|
4.65 |
|
|
|
3.93 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2023 |
|
Funding
Sources |
|
Capacity |
|
Outstanding |
|
Available |
|
Unsecured federal funds
agreements |
|
$ |
75,000 |
|
$ |
— |
|
$ |
75,000 |
|
Repurchase lines of
credit |
|
|
35,000 |
|
|
— |
|
|
35,000 |
|
Borrowings from FHLB |
|
|
221,308 |
|
|
110,000 |
|
|
111,308 |
|
Borrowings from Federal
Reserve Bank |
|
|
437,004 |
|
|
— |
|
|
437,004 |
|
Total |
|
$ |
768,312 |
|
$ |
110,000 |
|
$ |
658,312 |
|
|
|
|
|
|
|
|
|
Asset
Quality1 |
|
3/31/2023 |
|
12/31/2022 |
|
Community
Banking |
|
|
|
|
|
|
|
Total loans |
|
$ |
1,198,037 |
|
$ |
1,160,454 |
|
Nonaccrual loans |
|
$ |
262 |
|
$ |
115 |
|
Impaired loans |
|
$ |
n/a |
|
$ |
823 |
|
|
|
|
|
|
|
|
|
Allowance for credit losses (ACL) |
|
$ |
14,959 |
|
$ |
14,513 |
|
Nonaccrual loans to total loans |
|
|
0.02% |
|
|
0.01% |
|
ACL to total loans |
|
|
1.25% |
|
|
1.25% |
|
ACL to nonaccrual loans |
|
|
5,709.54% |
|
|
12,620.00% |
|
Annualized year-to-date net charge-offs to average loans |
|
|
0.01% |
|
|
0.02% |
|
|
|
|
|
|
|
|
|
Mortgage
Banking2 |
|
|
|
|
|
|
|
Total loans |
|
$ |
- |
|
$ |
707 |
|
Nonaccrual loans |
|
$ |
- |
|
$ |
149 |
|
ACL |
|
$ |
- |
|
$ |
36 |
|
Nonaccrual loans to total loans |
|
|
- % |
|
|
21.07% |
|
ACL to total loans |
|
|
- % |
|
|
5.09% |
|
ACL to nonaccrual loans |
|
|
- % |
|
|
24.16% |
|
Annualized year-to-date net charge-offs to average loans |
|
|
- % |
|
|
- % |
|
|
|
|
|
|
|
|
|
Consumer
Finance |
|
|
|
|
|
|
|
Total loans |
|
$ |
475,158 |
|
$ |
474,557 |
|
Nonaccrual loans |
|
$ |
647 |
|
$ |
925 |
|
Repossessed assets |
|
$ |
499 |
|
$ |
352 |
|
ACL |
|
$ |
25,875 |
|
$ |
25,969 |
|
Nonaccrual loans to total loans |
|
|
0.14% |
|
|
0.19% |
|
ACL to total loans |
|
|
5.45% |
|
|
5.47% |
|
ACL to nonaccrual loans |
|
|
3,999.23% |
|
|
2,807.46% |
|
Annualized year-to-date net charge-offs to average loans |
|
|
1.77% |
|
|
0.59% |
|
- Current period balances and ratios presented based upon
current, post-CECL implementation GAAP whereas prior period
balances and ratios presented based upon the applicable GAAP at
that time.
- The servicing of all loans has been moved to the community
banking segment as of March 31, 2023. Total loans does not include
loans held for sale.
|
|
|
|
|
|
|
|
|
|
|
For The |
|
|
|
Quarter Ended |
|
Other Performance
Data |
|
3/31/2023 |
|
|
3/31/2022 |
|
Net Income (Loss): |
|
|
|
|
|
|
|
|
Community Banking |
|
$ |
6,418 |
|
|
|
$ |
3,517 |
|
|
Mortgage Banking |
|
|
227 |
|
|
|
|
866 |
|
|
Consumer Finance |
|
|
509 |
|
|
|
|
2,062 |
|
|
Other1 |
|
|
(657 |
) |
|
|
|
(710 |
) |
|
Total |
|
$ |
6,497 |
|
|
|
$ |
5,735 |
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to
C&F Financial Corporation |
|
$ |
6,441 |
|
|
|
$ |
5,629 |
|
|
|
|
|
|
|
|
|
|
|
Earnings per share - basic and
diluted |
|
$ |
1.86 |
|
|
|
$ |
1.59 |
|
|
Weighted average shares
outstanding - basic and diluted |
|
|
3,464,895 |
|
|
|
|
3,547,780 |
|
|
|
|
|
|
|
|
|
|
|
Annualized return on average
assets |
|
|
1.10 |
|
% |
|
|
1.01 |
|
% |
Annualized return on average
equity |
|
|
12.87 |
|
% |
|
|
10.99 |
|
% |
Annualized return on average
tangible common equity2 |
|
|
14.93 |
|
% |
|
|
12.61 |
|
% |
Dividends declared per
share |
|
$ |
0.44 |
|
|
|
$ |
0.40 |
|
|
|
|
|
|
|
|
|
|
|
Mortgage loan originations -
Mortgage Banking |
|
$ |
115,815 |
|
|
|
$ |
189,904 |
|
|
Mortgage loans sold - Mortgage
Banking |
|
|
104,027 |
|
|
|
|
224,192 |
|
|
- Includes results of the holding company that are not allocated
to the business segments and elimination of inter-segment
activity.
- For more information about these non-GAAP financial measures,
please see “Use of Certain Non-GAAP Financial Measures” and
“Reconciliation of Certain Non-GAAP Financial Measures.”
|
|
|
|
|
|
|
|
Market
Ratios |
|
3/31/2023 |
|
|
12/31/2022 |
Market value per share |
|
$ |
51.71 |
|
|
$ |
58.27 |
Book value per share |
|
$ |
58.81 |
|
|
$ |
56.27 |
Price to book value ratio |
|
|
0.88 |
|
|
|
1.04 |
Tangible book value per
share1 |
|
$ |
51.03 |
|
|
$ |
48.54 |
Price to tangible book value
ratio1 |
|
|
1.01 |
|
|
|
1.20 |
Price to earnings ratio
(ttm) |
|
|
6.02 |
|
|
|
7.00 |
1 For more information about these non-GAAP
financial measures, please see “Use of Certain Non-GAAP Financial
Measures” and “Reconciliation of Certain Non-GAAP Financial
Measures.”
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minimum Capital |
Capital
Ratios |
|
3/31/2023 |
|
12/31/2022 |
|
Requirements3 |
C&F Financial
Corporation1 |
|
|
|
|
|
|
|
|
|
|
Total risk-based capital ratio |
|
|
15.1% |
|
|
15.4% |
|
|
8.0% |
|
Tier 1 risk-based capital ratio |
|
|
12.6% |
|
|
12.8% |
|
|
6.0% |
|
Common equity tier 1 capital ratio |
|
|
11.3% |
|
|
11.4% |
|
|
4.5% |
|
Tier 1 leverage ratio |
|
|
9.9% |
|
|
9.9% |
|
|
4.0% |
|
|
|
|
|
|
|
|
|
|
|
|
C&F
Bank2 |
|
|
|
|
|
|
|
|
|
|
Total risk-based capital ratio |
|
|
14.0% |
|
|
14.2% |
|
|
8.0% |
|
Tier 1 risk-based capital ratio |
|
|
12.8% |
|
|
12.9% |
|
|
6.0% |
|
Common equity tier 1 capital ratio |
|
|
12.8% |
|
|
12.9% |
|
|
4.5% |
|
Tier 1 leverage ratio |
|
|
10.0% |
|
|
9.9% |
|
|
4.0% |
|
1 The Corporation, a small bank holding company under
applicable regulations and guidance, is not subject to the minimum
regulatory capital regulations for bank holding companies. The
regulatory requirements that apply to bank holding companies that
are subject to regulatory capital requirements are presented above,
along with the Corporation’s capital ratios as determined under
those regulations.2 All ratios at March 31, 2023 are estimates
and subject to change pending regulatory filings. All ratios at
December 31, 2022 are presented as filed.3 The ratios
presented for minimum capital requirements are those to be
considered adequately capitalized.
|
|
|
|
|
|
|
|
|
|
|
For The Quarter Ended |
|
|
|
3/31/2023 |
|
|
3/31/2022 |
|
Reconciliation of
Certain Non-GAAP Financial Measures |
|
|
|
|
|
|
Return on Average
Tangible Common Equity |
|
|
|
|
|
|
|
|
Average total equity, as
reported |
|
$ |
201,856 |
|
|
|
$ |
208,755 |
|
|
Average goodwill |
|
|
(25,191 |
) |
|
|
|
(25,191 |
) |
|
Average other intangible
assets |
|
|
(1,640 |
) |
|
|
|
(1,937 |
) |
|
Average noncontrolling
interest |
|
|
(654 |
) |
|
|
|
(733 |
) |
|
Average tangible common
equity |
|
$ |
174,371 |
|
|
|
$ |
180,894 |
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
6,497 |
|
|
|
$ |
5,735 |
|
|
Amortization of
intangibles |
|
|
68 |
|
|
|
|
75 |
|
|
Net income attributable to
noncontrolling interest |
|
|
(56 |
) |
|
|
|
(106 |
) |
|
Net tangible income
attributable to C&F Financial Corporation |
|
$ |
6,509 |
|
|
|
$ |
5,704 |
|
|
|
|
|
|
|
|
|
|
|
Annualized return on average tangible common equity |
|
|
14.93 |
|
% |
|
|
12.61 |
|
% |
|
|
|
|
|
|
|
|
|
Fully Taxable
Equivalent Net Interest Income1 |
|
|
|
|
|
|
|
|
Interest income on loans |
|
$ |
26,060 |
|
|
|
$ |
20,484 |
|
|
FTE adjustment |
|
|
47 |
|
|
|
|
26 |
|
|
FTE interest income on loans |
|
$ |
26,107 |
|
|
|
$ |
20,510 |
|
|
|
|
|
|
|
|
|
|
|
Interest income on securities |
|
$ |
3,069 |
|
|
|
$ |
1,641 |
|
|
FTE adjustment |
|
|
163 |
|
|
|
|
92 |
|
|
FTE interest income on securities |
|
$ |
3,232 |
|
|
|
$ |
1,733 |
|
|
|
|
|
|
|
|
|
|
|
Total interest income |
|
$ |
29,305 |
|
|
|
$ |
22,231 |
|
|
FTE adjustment |
|
|
210 |
|
|
|
|
118 |
|
|
FTE interest income |
|
$ |
29,515 |
|
|
|
$ |
22,349 |
|
|
|
|
|
|
|
|
|
|
|
Net interest income |
|
$ |
24,958 |
|
|
|
$ |
20,476 |
|
|
FTE adjustment |
|
|
210 |
|
|
|
|
118 |
|
|
FTE net interest income |
|
$ |
25,168 |
|
|
|
$ |
20,594 |
|
|
- Assuming a tax rate of 21%.
|
|
|
|
|
|
|
|
|
|
3/31/2023 |
|
|
12/31/2022 |
Tangible Book Value
Per Share |
|
|
|
|
|
Equity attributable to C&F
Financial Corporation |
|
$ |
202,583 |
|
|
|
$ |
195,634 |
|
Goodwill |
|
|
(25,191 |
) |
|
|
|
(25,191 |
) |
Other intangible assets |
|
|
(1,611 |
) |
|
|
|
(1,679 |
) |
Tangible equity attributable
to C&F Financial Corporation |
|
$ |
175,781 |
|
|
|
$ |
168,764 |
|
|
|
|
|
|
|
|
|
Shares outstanding |
|
|
3,444,671 |
|
|
|
|
3,476,614 |
|
|
|
|
|
|
|
|
|
Book value per share |
|
$ |
58.81 |
|
|
|
$ |
56.27 |
|
Tangible book value per share |
|
$ |
51.03 |
|
|
|
$ |
48.54 |
|
Contact: |
Jason Long, CFO and Secretary |
|
(804)
843-2360 |
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