C&F Financial Corporation Announces Record Third Quarter Net Income
C&F Financial Corporation (NASDAQ:CFFI) reported a record consolidated net income of $6.9 million or $1.86 per share for Q3 2020, up from $4.9 million or $1.42 per share in Q3 2019. For the first nine months of 2020, net income totaled $14.3 million or $3.87 per share, a slight decrease from $14.5 million in the same period of 2019. The community banking segment faced challenges with higher provisions for loan losses and increased expenses, impacting net income negatively. However, mortgage banking profits surged due to record loan production.
- Record consolidated net income of $6.9 million in Q3 2020.
- Net income from mortgage banking segment increased 275% year-over-year in Q3.
- Annualized ROE for Q3 2020 reached 15.47%, up from 12.28% a year earlier.
- Average loans outstanding increased by 31.3% in Q3 2020 compared to the previous year.
- Subordinated notes issuance of $20 million to support growth.
- Net income for the community banking segment dropped to $1.1 million in Q3 2020 from $2.4 million in Q3 2019.
- Higher provisions for loan losses totaling $1.5 million in Q3 due to COVID-19 impacts.
- Increased operating expenses as a result of acquired costs from Peoples Bankshares.
- Decreased loan yields impacting overall income.
WEST POINT, Va., Oct. 27, 2020 (GLOBE NEWSWIRE) -- C&F Financial Corporation (the Corporation) (NASDAQ:CFFI), the one-bank holding company for C&F Bank, today reported record consolidated net income of
Consolidated net income for the third quarter and first nine months of 2020 and 2019 were affected by certain items that management does not expect to have an ongoing impact on consolidated net income, including merger related expenses, impairment charges related to branch consolidation, and provisions of the CARES Act, enacted in 2020, which provided income tax benefits in 2020 related to prior tax years. Excluding the effects of these items, adjusted net income for the third quarter of 2020 was
Key highlights for the third quarter and first nine months of 2020 are as follows. Comparisons are to the corresponding periods in the prior year unless otherwise stated.
- Total consolidated assets grew to over
$2.0 billion as of September 30, 2020; - Consolidated provisions for loan losses included reserves based on qualitative adjustments related to the COVID-19 pandemic and resulting economic disruption. These reserves totaled approximately
$2.5 million and$8.0 million for the third quarter and first nine months of 2020, respectively; - Consolidated annualized net interest margin for the third quarter of 2020 was 4.54 percent, compared to 4.61 percent for the second quarter of 2020 and 5.50 percent for the third quarter of 2019. The decrease compared to the second quarter of 2020 was due primarily to lower average loan yield, partially offset by growth in average loans held for sale (
$71.9 million ) and average loans at the community banking segment ($20.6 million ) and lower average costs of deposits; - Average loans outstanding at the community banking segment increased 7.6 percent for the third quarter excluding the effects of acquired loans and loans originated under the Paycheck Protection Program;
- The community banking segment opened two new financial centers in Charlottesville and Downtown Richmond in the third quarter, and consolidated its former main office in West Point, VA into a nearby branch, effective October 16, 2020;
- Mortgage banking segment gains on sales of loans increased 202.8 percent for the third quarter and 116.8 percent for the first nine months as originations of mortgage loans reached record highs and margins increased;
- The consumer finance segment’s annualized net charge-off ratio fell to 1.56 percent for the first nine months of 2020 from 2.91 percent;
- The consumer finance segment’s average loan yield declined due to growth in higher quality, lower-yielding loans, including marine and recreational vehicle loans; and
- The Corporation issued new subordinated notes with aggregate principal of
$20.0 million on September 29, 2020.
Tom Cherry, President and Chief Executive Officer of C&F Financial Corporation, commented, “Historically low interest rates have contributed to higher volume at the mortgage banking segment, setting a record for C&F Mortgage in the third quarter, and resulting in the highest consolidated net income for any quarter in the Corporation’s history. The community banking segment and consumer finance segment continued to record additional provision for loan losses related to the COVID-19 pandemic in the third quarter. While we cannot be sure of the amount of loan losses that may occur as a result of the pandemic, we continue to believe we are well positioned with substantial capital and liquidity to continue to support the needs of our customers. During the third quarter, we reopened our branch lobbies to resume normal business hours, and we opened two new financial centers in Charlottesville and Richmond that offer the full range of services of our diversified lines of business. We also completed the issuance of
Community Banking Segment. C&F Bank, which comprises the community banking segment, reported net income of
The decrease in community banking segment net income for the third quarter and first nine months of 2020, compared to the same periods in 2019, was due primarily to (1) higher provision for loan losses, as the COVID-19 pandemic continues to have a disruptive economic impact in the markets that C&F Bank serves, even as many businesses have reopened, (2) higher operating expenses, including assuming certain operating costs of Peoples Bankshares, Incorporated (Peoples), which was acquired by the Corporation on January 1, 2020, and investing in technology infrastructure to support continued growth; (3) lower yields on loans, securities, and interest-earning deposits with other banks; (4) higher average balances on interest-bearing deposit accounts; (5) lower service charges on deposit accounts and (6) higher expense associated with the FDIC insurance assessment, as credits available to banks with less than
Average loans increased
C&F Bank’s total nonperforming assets were
| September 30, 2020 | ||||||||
| Dollars in thousands | Balance | Exposure | ||||||
| Apartments | $ | 83,234 | $ | 102,220 | ||||
| Health care1 | 77,829 | 80,707 | ||||||
| Commercial real estate - retail2 | 55,341 | 60,686 | ||||||
| Restaurants | 12,362 | 16,708 | ||||||
| Fitness centers and recreation | 11,563 | 12,217 | ||||||
| Hospitality | 4,094 | 17,820 | ||||||
| $ | 244,423 | $ | 290,358 | |||||
________________________
1 Includes primarily loans secured by medical office buildings and assisted living facilities.
2 Includes loans secured by commercial real estate used or being constructed for use in a retail business, a majority of which are leased to unrelated retail tenants.
Loan modifications offered to assist customers during the pandemic were offered on loans with aggregate balances of
| September 30, 2020 | |||||||
| Dollars in thousands | Number of Loans | Balance | |||||
| Apartments | 1 | $ | 1,037 | ||||
| Commercial real estate - retail | 5 | 5,467 | |||||
| Fitness centers and recreation | 3 | 8,478 | |||||
| Hospitality | 2 | 3,398 | |||||
| Loans in COVID-19 sensitive industries | 11 | 18,380 | |||||
| Other commercial | 14 | 8,843 | |||||
| Consumer | 11 | 1,073 | |||||
| Total loans | 36 | $ | 28,296 | ||||
C&F Bank expects certain cost savings resulting from the integration of Peoples to be realized by December 31, 2020, and a majority of those cost savings have been realized as of September 30, 2020. Additionally, C&F Bank expects to realize annualized cost savings of approximately
Mortgage Banking Segment. C&F Mortgage Corporation, which comprises the mortgage banking segment, reported net income of
The increase in net income of the mortgage banking segment for the third quarter and first nine months of 2020 compared to the same periods in 2019 was due primarily to higher gains on sales of loans and mortgage banking fee income, resulting from record loan production and higher margins, higher fee income for providing mortgage origination functions to third parties and higher net interest income due to higher balances of loans held for sale. Partially offsetting these factors were higher compensation expense, loan expense and data processing expense related to higher loan volume. Mortgage loan originations for the mortgage banking segment were
Consumer Finance Segment. C&F Finance Company, which comprises the consumer finance segment, reported net income of
Favorable factors affecting net income of the consumer finance segment for the third quarter and first nine months of 2020 compared to the same periods in 2019 included a decrease in interest expense due to lower average cost of borrowings and lower net charge-offs, requiring less provision for loan losses to maintain the level of the allowance for loan losses. Unfavorable factors affecting net income of the consumer finance segment for the third quarter and first nine months of 2020 compared to the same periods in 2019 included lower interest income from loans, due primarily to lower average yields, and provision for loan losses in the third quarter and first nine months of 2020 to add to reserves based on qualitative adjustments as a result of the COVID-19 pandemic. The average yield on loans for the third quarter and first nine months of 2020 was lower compared to the same periods of 2019 due to continued competition in the non-prime automobile loan business, including the effect of a lower interest rate environment, and the consumer finance segment’s pursuing growth in higher quality, lower yielding loans, which include prime marine and recreational vehicle (RV) loans.
The annualized net charge-off ratio for the first nine months of 2020 decreased to 1.56 percent from 2.91 percent for the first nine months of 2019. The decline reflects a lower number of charge-offs during 2020, due to improvement in loan performance, and lower losses per loan charged off as a result of a strong used car market. Improvement in loan performance has resulted from C&F Finance Company continuing to purchase higher quality loans as well as borrowers benefitting from the government’s stimulus measures in response to the pandemic during 2020. C&F Finance Company offers payment deferrals at times to non-prime automobile borrowers as a management technique to achieve higher ultimate cash collections. C&F Finance Company offered a higher number of payment deferrals during the first and second quarters of 2020 to borrowers impacted by the pandemic, and as of September 30, 2020, most borrowers who received a deferral had resumed making payments and were current. The average amount deferred on a monthly basis during the third quarter and first nine months of 2020 was 2.04 percent and 3.38 percent of non-prime automobile loans outstanding, compared to 1.90 percent and 1.91 percent during the same periods in 2019. At September 30, 2020, total delinquent loans, which does not include loans that have been granted a payment deferral, as a percentage of total loans was 2.48 percent, compared to 4.17 percent at December 31, 2019 and 3.48 percent at September 30, 2019. The allowance for loan losses was
Merger Related Expenses. In the third quarter of 2020, there were no merger related expenses recorded in connection with the acquisition of Peoples. In the third quarter of 2019, the Corporation recorded merger related expenses of
Issuance of Subordinated Notes. On September 29, 2020, the Corporation completed the issuance of
Capital and Dividends. The Corporation declared a quarterly cash dividend of 38 cents per share during the third quarter of 2020, which was paid on October 1, 2020. This dividend represents a payout ratio of 20.4 percent of earnings per share for the third quarter of 2020. 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.
In May 2019, the Board of Directors authorized a program, effective June 1, 2019, to repurchase up to
About C&F Financial Corporation. C&F Financial 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
C&F Bank operates 31 retail bank branches and three commercial loan offices located throughout the Hampton to Charlottesville corridor and the Northern Neck region in 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 RV loans through indirect lending programs offered in Alabama, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Maryland, Minnesota, Missouri, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Texas, Virginia and West Virginia through its offices in Richmond and Hampton, 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 adjusted net income, adjusted earnings per share, adjusted ROE, adjusted ROA, 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 provide 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 (1) items that do not reflect ongoing operating performance, including non-recurring gains or charges, (2) balances of intangible assets, including goodwill, that vary significantly between institutions, and (3) 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. Statements in this press release which express “belief,” “intention,” “expectation,” “potential” and similar expressions, or which use the words “believe,” “expect,” “anticipate,” “estimate,” “plan,” “may,” “will,” “intend,” “should,” “could,” or similar expressions, identify forward-looking statements. 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. 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 financial performance, potential effects of the COVID-19 pandemic, including on asset quality, the allowance for loan losses, provision for loan losses and interest rates, future dividend payments, expected impacts of the Corporation’s acquisition of Peoples, strategic business initiatives and the anticipated effects thereof, including new facilities, lending under the PPP loan program, margin compression, technology initiatives, asset quality, adequacy of allowances for loan losses and the level of future charge-offs, capital levels, the effect of future market and industry trends and the effects of future interest rate fluctuations. 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: (1) interest rates, such as volatility in yields on U.S. Treasury bonds and increases or volatility in mortgage rates, (2) general business conditions, as well as conditions within the financial markets, (3) general economic conditions, including unemployment levels, and slowdowns in economic growth, especially related to further and sustained economic impacts of the COVID-19 pandemic, including the steps the Corporation takes in response to COVID-19, the severity and duration of the pandemic, including whether there is a resurgence of COVID-19 infections, the pace of recovery when the pandemic subsides and the heightened impact it has on many of the risks described herein, (4) potential claims, damages and fines related to litigation or government actions, including litigation or actions arising from the Corporation’s participation in and administration of programs related to COVID-19, including, among other things, the PPP under the Coronavirus Aid, Recovery, and Economic Security Act, (5) the legislative/regulatory climate, regulatory initiatives with respect to financial institutions, products and services, the Consumer Financial Protection Bureau (CFPB) and the regulatory and enforcement activities of the CFPB, and the application of the Basel III capital standards to C&F Bank, (6) the effect of the Economic Growth Regulatory Relief and Consumer Protection Act of 2018 (the Act) and changes in the effect of the Act due to issuance of interpretive regulatory guidance or enactment of corrective or supplemental legislation, (7) monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve Board, and the effect of these policies on interest rates and business in our markets, (8) the value of securities held in the Corporation’s investment portfolios, (9) the quality or composition of the loan portfolios and the value of the collateral securing those loans, (10) the inventory level and pricing of used automobiles, including sales prices of repossessed vehicles, (11) the level of net charge-offs on loans and the adequacy of our allowance for loan losses, (12) the level of indemnification losses related to mortgage loans sold, (13) demand for loan products, (14) deposit flows, (15) the strength of the Corporation’s counterparties and the economy in general, (16) competition from both banks and non-banks, including competition in the non-prime automobile finance markets, (17) demand for financial services in the Corporation’s market area, (18) reliance on third parties for key services, (19) the commercial and residential real estate markets, (20) demand in the secondary residential mortgage loan markets, (21) the Corporation’s technology initiatives and other strategic initiatives, (22) the Corporation’s branch expansions and consolidations, (23) cyber threats, attacks or events, (24) expansion of C&F Bank’s product offerings, (25) accounting principles, policies and guidelines, and elections by the Corporation thereunder, and (26) the ability of the Corporation and C&F Bank to realize the anticipated benefits of the acquisition of Peoples. 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, 2019 and Quarterly Report on Form 10-Q for the quarter ended June 30, 2020 and other reports filed with the SEC.
| C&F Financial Corporation Selected Financial Information (dollars in thousands, except for per share data) | ||||||||||||
| Financial Condition | 9/30/2020 | 12/31/2019 | 9/30/2019 | |||||||||
| (unaudited) | * | (unaudited) | ||||||||||
| Interest-bearing deposits in other banks | $ | 10,751 | $ | 144,285 | $ | 134,871 | ||||||
| Investment securities - available for sale, at fair value | 272,091 | 189,733 | 190,869 | |||||||||
| Loans held for sale, at fair value | 274,851 | 90,500 | 98,357 | |||||||||
| Loans, net: | ||||||||||||
| Community Banking segment | 1,025,735 | 787,068 | 761,236 | |||||||||
| Mortgage Banking segment | 5,679 | 4,044 | 2,582 | |||||||||
| Consumer Finance segment | 288,086 | 291,206 | 291,502 | |||||||||
| Restricted stock, at cost | 3,209 | 3,257 | 3,257 | |||||||||
| Total assets | 2,080,851 | 1,657,432 | 1,619,381 | |||||||||
| Deposits | 1,663,513 | 1,291,250 | 1,248,580 | |||||||||
| Repurchase agreements | 20,168 | 16,360 | 16,859 | |||||||||
| Borrowings | 133,106 | 144,810 | 144,801 | |||||||||
| Total equity | 189,052 | 165,279 | 162,061 | |||||||||
________________________
* Derived from audited consolidated financial statements.
| For The | For The | |||||||||||||||
| Quarter Ended | Nine Months Ended | |||||||||||||||
| Results of Operations | 9/30/2020 | 9/30/2019 | 9/30/2020 | 9/30/2019 | ||||||||||||
| (unaudited) | (unaudited) | |||||||||||||||
| Interest income | $ | 23,822 | $ | 23,992 | $ | 72,184 | $ | 71,219 | ||||||||
| Interest expense | 2,977 | 3,769 | 10,482 | 10,724 | ||||||||||||
| Provision for loan losses: | ||||||||||||||||
| Community Banking segment | 1,500 | - | 3,900 | 110 | ||||||||||||
| Mortgage Banking segment | - | - | - | - | ||||||||||||
| Consumer Finance segment | 1,800 | 1,800 | 5,650 | 5,895 | ||||||||||||
| Noninterest income: | ||||||||||||||||
| Gains on sales of loans | 9,706 | 3,205 | 17,987 | 8,296 | ||||||||||||
| Other | 7,232 | 5,025 | 17,527 | 15,239 | ||||||||||||
| Noninterest expenses: | ||||||||||||||||
| Salaries and employee benefits | 15,767 | 11,730 | 40,938 | 35,132 | ||||||||||||
| Other | 9,564 | 8,572 | 28,270 | 24,396 | ||||||||||||
| Income tax expense | 2,234 | 1,466 | 4,158 | 3,999 | ||||||||||||
| Net income | 6,918 | 4,885 | 14,300 | 14,498 | ||||||||||||
| Net income attributable to C&F Financial Corporation | 6,793 | 4,880 | 14,117 | 14,494 | ||||||||||||
| Earnings per share - basic and diluted | 1.86 | 1.42 | 3.87 | 4.19 | ||||||||||||
| Fully-taxable equivalent (FTE) amounts1 | ||||||||||||||||
| Interest income on loans-FTE | 22,537 | 22,260 | 67,699 | 65,514 | ||||||||||||
| Interest income on securities-FTE | 1,417 | 1,412 | 4,298 | 4,528 | ||||||||||||
| Total interest income-FTE | 23,986 | 24,132 | 72,679 | 71,673 | ||||||||||||
| Net interest income-FTE | 21,009 | 20,363 | 62,197 | 60,949 | ||||||||||||
________________________
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.”
| For The | For The | |||||||||||||||
| Quarter Ended | Nine Months Ended | |||||||||||||||
| Segment Information | 9/30/2020 | 9/30/2019 | 9/30/2020 | 9/30/2019 | ||||||||||||
| (unaudited) | (unaudited) | |||||||||||||||
| Net Income (Loss): | ||||||||||||||||
| Community Banking | $ | 1,143 | $ | 2,393 | $ | 1,781 | $ | 7,754 | ||||||||
| Mortgage Banking | 4,450 | 1,210 | 8,314 | 2,959 | ||||||||||||
| Consumer Finance | 1,601 | 1,901 | 5,169 | 5,135 | ||||||||||||
| Other | (276 | ) | (619 | ) | (964 | ) | (1,350 | ) | ||||||||
| Mortgage loan originations - Mortgage Banking | 534,683 | 286,861 | 1,243,314 | 672,442 | ||||||||||||
| Mortgage loans sold - Mortgage Banking | 443,835 | 277,642 | 1,065,367 | 617,457 | ||||||||||||
| Paycheck Protection Loans (PPP) as of September 30, 2020 | |||||||
| Number of Loans | Outstanding | ||||||
| Below | 847 | $ | 16,478 | ||||
| At least | 338 | 36,033 | |||||
| At least | 49 | 16,697 | |||||
| 23 | 20,613 | ||||||
| 1,257 | $ | 89,821 | |||||
| For The | For The | |||||||||||||||
| Quarter Ended | Nine Months Ended | |||||||||||||||
| Average Balances | 9/30/2020 | 9/30/2019 | 9/30/2020 | 9/30/2019 | ||||||||||||
| (unaudited) | (unaudited) | |||||||||||||||
| Interest-bearing deposits in other banks | $ | 44,523 | $ | 94,625 | $ | 111,329 | $ | 100,495 | ||||||||
| Investment securities - available for sale, at amortized cost | 249,226 | 194,116 | 227,651 | 204,040 | ||||||||||||
| Loans held for sale, at fair value | 209,135 | 82,156 | 138,809 | 56,202 | ||||||||||||
| Loans: | ||||||||||||||||
| Community Banking segment | 1,022,175 | 778,503 | 981,100 | 774,642 | ||||||||||||
| Mortgage Banking segment | 4,705 | 3,136 | 4,683 | 3,348 | ||||||||||||
| Consumer Finance segment | 308,374 | 312,934 | 306,688 | 304,340 | ||||||||||||
| Restricted stock, at cost | 3,209 | 3,257 | 3,275 | 3,254 | ||||||||||||
| Total earning assets | 1,841,347 | 1,468,727 | 1,773,535 | 1,446,321 | ||||||||||||
| Total assets | 1,992,244 | 1,566,302 | 1,931,968 | 1,542,055 | ||||||||||||
| Time, checking and savings deposits | 1,181,667 | 925,421 | 1,162,549 | 919,765 | ||||||||||||
| Borrowings | 99,097 | 160,340 | 133,477 | 159,963 | ||||||||||||
| Total interest-bearing liabilities | 1,280,764 | 1,085,761 | 1,296,026 | 1,079,728 | ||||||||||||
| Noninterest-bearing demand deposits | 478,232 | 286,211 | 408,876 | 275,269 | ||||||||||||
| Total equity | 178,843 | 159,106 | 177,630 | 155,254 | ||||||||||||
| Asset Quality | 9/30/2020 | 12/31/2019 | 9/30/2019 | ||||||||||
| (unaudited) | * | (unaudited) | |||||||||||
| Community Banking | |||||||||||||
| Loans, excluding purchased and affiliate loans | $ | 930,560 | $ | 770,423 | $ | 739,709 | |||||||
| Purchased performing loans1 | 101,716 | 26,422 | 31,327 | ||||||||||
| Purchased credit impaired loans1 | 7,574 | 705 | 578 | ||||||||||
| Total loans | $ | 1,039,850 | $ | 797,550 | $ | 771,614 | |||||||
| Total nonaccrual loans2 | $ | 1,338 | $ | 1,512 | $ | 950 | |||||||
| Other real estate owned (OREO)3 | 1,107 | 1,103 | 1,103 | ||||||||||
| Total nonperforming assets | $ | 2,445 | $ | 2,615 | $ | 2,053 | |||||||
| Accruing loans past due for 90 days or more | $ | 8 | $ | 109 | $ | 732 | |||||||
| Troubled debt restructurings (TDRs)2 | $ | 3,946 | $ | 4,353 | $ | 4,528 | |||||||
| Allowance for loan losses (ALL) | $ | 14,398 | $ | 10,482 | $ | 10,378 | |||||||
| Nonperforming assets to loans and OREO | 0.23 | % | 0.33 | % | 0.27 | % | |||||||
| ALL to total loans, excluding purchased credit impaired loans4 | 1.39 | % | 1.32 | % | 1.35 | % | |||||||
| ALL to total loans, excluding purchased loans and PPP loans | 1.71 | 1.36 | 1.40 | ||||||||||
| ALL to total nonaccrual loans | 1,076.08 | % | 693.25 | % | 1,092.42 | % | |||||||
| Annualized net (recoveries) charge-offs to average loans | (0.01 | ) | % | 0.04 | % | 0.03 | % | ||||||
| Mortgage Banking | |||||||||||||
| Nonaccrual loans | $ | 32 | $ | 372 | $ | 34 | |||||||
| Total Loans | $ | 6,560 | $ | 4,642 | $ | 3,180 | |||||||
| ALL | $ | 598 | $ | 598 | $ | 598 | |||||||
| Nonperforming loans to total loans | 0.49 | % | 8.01 | % | 1.07 | % | |||||||
| ALL to loans | 9.12 | % | 12.88 | % | 18.81 | % | |||||||
| Consumer Finance | |||||||||||||
| Nonaccrual loans | $ | 282 | $ | 611 | $ | 527 | |||||||
| Repossessed automobiles available for sale | $ | 178 | $ | 410 | $ | 369 | |||||||
| Accruing loans past due for 90 days or more | $ | - | $ | - | $ | - | |||||||
| Total loans | $ | 311,946 | $ | 312,999 | $ | 313,744 | |||||||
| ALL | $ | 23,860 | $ | 21,793 | $ | 22,242 | |||||||
| Nonaccrual loans to total loans | 0.09 | % | 0.20 | % | 0.17 | % | |||||||
| ALL to total loans | 7.65 | % | 6.96 | % | 7.09 | % | |||||||
| Annualized net charge-offs to average total loans | 1.56 | % | 3.05 | % | 2.91 | % | |||||||
________________________
* Derived from audited consolidated financial statements.
1 Acquired loans are tracked in two separate categories: “purchased performing” and “purchased credit impaired.” The remaining discount for purchased performing loans was
2 Total nonaccrual loans include nonaccrual TDRs of
3 Includes
4 The ratio of ALL to total loans, excluding purchased credit impaired loans, includes purchased performing loans and loans originated under the PPP for which no allowance for loan losses is required.
| For The | For The | ||||||||||||||||
| Quarter Ended | Nine Months Ended | ||||||||||||||||
| Other Performance Data | 9/30/2020 | 9/30/2019 | 9/30/2020 | 9/30/2019 | |||||||||||||
| (unaudited) | (unaudited) | ||||||||||||||||
| Annualized return on average assets | 1.39 | % | 1.25 | % | 0.99 | % | 1.25 | % | |||||||||
| Annualized return on average equity | 15.47 | % | 12.28 | % | 10.73 | % | 12.45 | % | |||||||||
| Annualized net interest margin | 4.54 | % | 5.50 | % | 4.68 | % | 5.63 | % | |||||||||
| Dividends declared per share | $ | 0.38 | $ | 0.37 | $ | 1.14 | $ | 1.11 | |||||||||
| Weighted average shares outstanding - basic and diluted | 3,648,515 | 3,430,298 | 3,646,951 | 3,459,191 | |||||||||||||
| Market Ratios | 9/30/2020 | 12/31/2019 | ||||||
| (unaudited) | * | |||||||
| Market value per share | $ | 29.70 | $ | 55.33 | ||||
| Book value per share | $ | 51.64 | $ | 48.07 | ||||
| Price to book value ratio | 0.58 | 1.15 | ||||||
| Tangible book value per share1 | $ | 44.08 | $ | 43.61 | ||||
| Price to tangible book value ratio1 | 0.67 | 1.27 | ||||||
| Price to earnings ratio (ttm) | 5.78 | 10.13 | ||||||
________________________
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 | 9/30/2020 | 12/31/2019 | Requirements3 | ||||||||||
| (unaudited) | * | ||||||||||||
| C&F Financial Corporation1 | |||||||||||||
| Total capital (to risk-weighted assets) | 14.9 | % | 14.9 | % | 8.0 | % | |||||||
| Tier 1 capital (to risk-weighted assets) | 12.1 | % | 13.6 | % | 6.0 | % | |||||||
| Common equity tier 1 capital (to risk-weighted assets) | 10.5 | % | 11.7 | % | 4.5 | % | |||||||
| Tier 1 capital (to average assets) | 9.7 | % | 11.1 | % | 4.0 | % | |||||||
| C&F Bank2 | |||||||||||||
| Total capital (to risk-weighted assets) | 13.3 | % | 14.0 | % | 8.0 | % | |||||||
| Tier 1 capital (to risk-weighted assets) | 12.0 | % | 12.8 | % | 6.0 | % | |||||||
| Common equity tier 1 capital (to risk-weighted assets) | 12.0 | % | 12.8 | % | 4.5 | % | |||||||
| Tier 1 capital (to average assets) | 9.7 | % | 10.3 | % | 4.0 | % | |||||||
________________________
* Derived from audited consolidated financial statements.
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 September 30, 2020 are estimates and subject to change pending regulatory filings. All ratios at December 31, 2019 are presented as filed.
3 The ratios presented for minimum capital requirements are those to be considered adequately capitalized.
| C&F Financial Corporation Reconciliation of Certain Non-GAAP Financial Measures (dollars in thousands, except for per share data) | |||||||||||||||||
| For The | For The | ||||||||||||||||
| Quarter Ended | Nine Months Ended | ||||||||||||||||
| 9/30/2020 | 9/30/2019 | 9/30/2020 | 9/30/2019 | ||||||||||||||
| Adjusted Net Income and Earnings Per Share | (unaudited) | (unaudited) | |||||||||||||||
| Net income, as reported | $ | 6,918 | $ | 4,885 | $ | 14,300 | $ | 14,498 | |||||||||
| Merger related expenses1 | - | 389 | 1,132 | 389 | |||||||||||||
| Branch consolidation1 | - | - | 222 | - | |||||||||||||
| Change in tax law | (23 | ) | - | (326 | ) | - | |||||||||||
| Adjusted net income | $ | 6,895 | $ | 5,274 | $ | 15,328 | $ | 14,887 | |||||||||
| Weighted average shares - basic and diluted | 3,648,515 | 3,430,298 | 3,646,951 | 3,459,191 | |||||||||||||
| Earnings per share - basic and diluted, as reported | $ | 1.86 | $ | 1.42 | $ | 3.87 | $ | 4.19 | |||||||||
| Merger related expenses | - | 0.12 | 0.31 | 0.11 | |||||||||||||
| Branch consolidation | - | - | 0.06 | - | |||||||||||||
| Change in tax law | (0.01 | ) | - | (0.09 | ) | - | |||||||||||
| Adjusted earnings per share - basic and diluted | $ | 1.85 | $ | 1.54 | $ | 4.15 | $ | 4.30 | |||||||||
| Adjusted Return on Average Equity (ROE) | |||||||||||||||||
| Average total equity, as reported | $ | 178,843 | $ | 159,106 | $ | 177,630 | $ | 155,254 | |||||||||
| Annualized ROE, as reported | 15.47 | % | 12.28 | % | 10.73 | % | 12.45 | % | |||||||||
| Adjusted annualized ROE | 15.42 | % | 13.26 | % | 11.50 | % | 12.78 | % | |||||||||
| Adjusted Return on Average Assets (ROA) | |||||||||||||||||
| Average assets, as reported | $ | 1,992,244 | $ | 1,566,302 | $ | 1,931,968 | $ | 1,542,055 | |||||||||
| Annualized ROA, as reported | 1.39 | % | 1.25 | % | 0.99 | % | 1.25 | % | |||||||||
| Adjusted annualized ROA | 1.38 | % | 1.35 | % | 1.06 | % | 1.29 | % | |||||||||
| Fully Taxable Equivalent Net Interest Income2 | |||||||||||||||||
| Interest income on loans | $ | 22,506 | $ | 22,254 | $ | 67,607 | $ | 65,497 | |||||||||
| FTE adjustment | 31 | 6 | 92 | 17 | |||||||||||||
| FTE interest income on loans | $ | 22,537 | $ | 22,260 | $ | 67,699 | $ | 65,514 | |||||||||
| Interest income on securities | $ | 1,284 | $ | 1,278 | $ | 3,895 | $ | 4,091 | |||||||||
| FTE adjustment | 133 | 134 | 403 | 437 | |||||||||||||
| FTE interest income on securities | $ | 1,417 | $ | 1,412 | $ | 4,298 | $ | 4,528 | |||||||||
| Total interest income | $ | 23,822 | $ | 23,992 | $ | 72,184 | $ | 71,219 | |||||||||
| FTE adjustment | 164 | 140 | 495 | 454 | |||||||||||||
| FTE interest income | $ | 23,986 | $ | 24,132 | $ | 72,679 | $ | 71,673 | |||||||||
| Net interest income | $ | 20,845 | $ | 20,223 | $ | 61,702 | $ | 60,495 | |||||||||
| FTE adjustment | 164 | 140 | 495 | 454 | |||||||||||||
| FTE net interest income | $ | 21,009 | $ | 20,363 | $ | 62,197 | $ | 60,949 | |||||||||
________________________
1 Merger related expenses are net of related income taxes of
2 Assuming a tax rate of
| 9/30/2020 | 12/31/2019 | |||||||
| Tangible Book Value Per Share | (unaudited) | * | ||||||
| Equity attributable to C&F Financial Corporation | $ | 188,388 | $ | 164,798 | ||||
| Less goodwill | 25,191 | 14,425 | ||||||
| Less other intangible assets | 2,374 | 912 | ||||||
| Tangible equity attributable to C&F Financial Corporation | $ | 160,823 | $ | 149,461 | ||||
| Shares outstanding | 3,647,898 | 3,438,126 | ||||||
| Book value per share | $ | 51.64 | $ | 48.07 | ||||
| Tangible book value per share | $ | 44.08 | $ | 43.61 | ||||
________________________
* Derived from audited consolidated financial statements.
| Contact: | Jason Long, CFO and Secretary |
| (804) 843-2360 |
FAQ
What was CFFI's net income for the third quarter of 2020?
How much did CFFI's adjusted net income change in the first nine months of 2020?
What factors affected CFFI's community banking segment performance in Q3 2020?
What is the significance of CFFI's mortgage banking segment in Q3 2020?
What did CFFI do with the $20 million from subordinated notes issued on September 29, 2020?
