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8-K - C&F FINANCIAL CORPORATION 8-K 1-26-2012 - C & F FINANCIAL CORP | form8k.htm |
EXHIBIT 99.1
C&F FINANCIAL CORPORATION
Thursday, January 26, 2012
Contact:
|
Tom Cherry, Executive Vice President & CFO
|
(804) 843-2360
C&F Financial Corporation
Announces Record Net Income for 2011
West Point, Va., January 26, 2012—C&F Financial Corporation (NASDAQ: CFFI), the one-bank holding company for C&F Bank, today reported net income of $3.41 million for the fourth quarter of 2011, compared with $2.38 million for the fourth quarter of 2010. Net income available to common shareholders for the fourth quarter of 2011 was $3.27 million, or $1.02 per common share assuming dilution, compared with $2.09 million, or 67 cents per common share assuming dilution, for the fourth quarter of 2010. The corporation’s net income was a record $12.98 million for the year ended December 31, 2011, compared with $8.11 million for the year ended December 31, 2010. Net income available to common shareholders for 2011 was $11.79 million, or $3.72 per common share assuming dilution, compared with $6.96 million, or $2.24 per common share assuming dilution, for 2010.
For the fourth quarter of 2011, the corporation’s return on average common equity and return on average assets, on an annualized basis, were 15.46 percent and 1.42 percent, respectively, compared to 11.33 percent and 0.92 percent, respectively, for the fourth quarter of 2010. For the year ended December 31, 2011, the corporation’s return on average common equity was 14.86 percent and its return on average assets was 1.30 percent, compared to a 9.74 percent return on average common equity and a 0.78 percent return on average assets for the year ended December 31, 2010.
C&F FINANCIAL CORPORATION
Thursday, January 26, 2012
Contact:
|
Tom Cherry, Executive Vice President & CFO
|
(804) 843-2360
“For the consumer finance segment, increases in net income of $625,000 for the fourth quarter of 2011 and $3.2 million for the year ended December 31, 2011, over the comparable periods of 2010, were due in part to growth in the segment’s average loans of 13.1 percent for the fourth quarter of 2011 and 15.9 percent for the year ended December 31, 2011, as compared to the same periods of 2010. Also contributing to the comparative improvement in financial results for this segment are the favorable effects of sustained low funding costs on its variable-rate borrowings and strong asset quality. This segment’s strong asset quality is a result of prudent underwriting criteria for new loans, effective collection processes and higher recovery rates on sales of repossessed vehicles, all of which contributed to a decline in this segment’s net charge-off ratio.”
“For the retail banking segment, its modest net income for the fourth quarter of 2011 and smaller net loss for the year ended December 31, 2011 were improvements over the comparable periods of 2010,” said Dillon. “The retail banking segment’s 2011 results, although improved over 2010, were negatively affected by a decline in loans to non-affiliates because demand for new loans has remained weak and competition for the limited loan demand has intensified. This resulted in the reinvestment of funds obtained from loan repayments and from deposit growth in lower-yielding earning assets. The results for the quarter and year ended December 31, 2011 included lower loan loss provisions and foreclosed properties expenses, as compared to the same periods in 2010. Despite the declines in loan loss provisions, we believe we have provided adequate loan loss reserves for the retail banking segment’s loans and we continue to be focused on proactively identifying and managing risks within this segment’s loan portfolio.”
2
C&F FINANCIAL CORPORATION
Thursday, January 26, 2012
Contact:
|
Tom Cherry, Executive Vice President & CFO
|
(804) 843-2360
“For the mortgage banking segment, net income of $285,000 for the fourth quarter of 2011 declined compared to the fourth quarter of 2010. However, net income of $1.3 million for the year ended December 31, 2011 was an improvement over 2010. The comparative quarterly and annual results were both negatively affected by lower gains on sales of loans as a result of lower loan originations and sales volumes, as well as higher non-production salaries expense in order to manage the increasingly complex regulatory environment. However, the lower gains on sales of loans and higher non-production salaries for the year ended December 31, 2011 were offset in part by decreased expenses associated with loan indemnifications, and both the quarter and year ended December 31, 2011 benefited from lower production-based salaries expense attributable to the decline in mortgage loan originations and sales.”
“We have strived to make decisions and take actions that we believe are in the best long-term interest of our shareholders, customers and employees. One such decision was to follow a diversified business approach, which resulted in record-breaking net income for the corporation during 2011. In addition, the corporation’s board of directors approved a four percent increase in the corporation’s quarterly dividend to its shareholders in November 2011. While the overall economy is still fragile and competition for loan originations at the consumer finance segment is growing, we expect continued strong financial performance for the corporation in 2012, dependent upon improvement in asset quality at the retail banking segment, continued strong asset quality at the consumer finance segment, and no significant adverse effects from the eventual implementation of new and pending laws and regulations and the costs of complying with them,” concluded Dillon.
3
C&F FINANCIAL CORPORATION
Thursday, January 26, 2012
Contact:
|
Tom Cherry, Executive Vice President & CFO
|
(804) 843-2360
Retail Banking Segment. C&F Bank reported net income of $63,000 for the fourth quarter of 2011, compared to a net loss of $848,000 for the fourth quarter of 2010. For the year ended December 31, 2011, C&F Bank reported a net loss of $432,000, compared to a net loss of $1.49 million for the year ended December 31, 2010.
The improvements in quarterly and annual financial results for 2011 resulted from an increase in activity-based interchange income, lower loan loss provisions and lower expenses associated with write-downs and holding costs of foreclosed properties and FDIC insurance premiums. Offsetting these positive factors were the negative effects of the following: (1) decreases in average loans to non-affiliates to $404.44 million for the fourth quarter of 2011 from $416.11 million for the fourth quarter of 2010 and to $406.06 million for the year ended December 31, 2011 from $430.04 million for the year ended December 31, 2010 resulting from weak demand in the current economic environment, intensified competition for loans in our markets, loan charge-offs and transfers of loans to foreclosed properties and (2) higher occupancy expenses associated with depreciation and maintenance of technology investments related to expanding the banking products we offer to our customers and to improving our operational efficiency and security.
4
C&F FINANCIAL CORPORATION
Thursday, January 26, 2012
Contact:
|
Tom Cherry, Executive Vice President & CFO
|
(804) 843-2360
Mortgage Banking Segment. Fourth quarter net income for C&F Mortgage Corporation was $285,000 in 2011, compared to $906,000 in 2010. Net income for the year ended December 31, 2011 was $1.33 million, compared to $782,000 for the year ended December 31, 2010.
5
C&F FINANCIAL CORPORATION
Thursday, January 26, 2012
Contact:
|
Tom Cherry, Executive Vice President & CFO
|
(804) 843-2360
The improvement in net income for year ended December 31, 2011, as compared to the same period in 2010, was primarily attributable to a decrease of $2.94 million in the provision for indemnification losses. During the second quarter of 2010, the mortgage banking segment entered into an agreement with one of its largest investors that resolved all known and unknown indemnification obligations for loans sold to that investor prior to 2010. As expected, with this agreement in place, there has been a reduction in indemnification expense in 2011. Also contributing to the improvement in net income was lower production-based compensation for the year ended December 31, 2011, compared to the same period of 2010.
Loan origination volume for the year ended December 31, 2011 decreased to $616.44 million from $748.26 million for the year ended December 31, 2010. The decline in origination volume is largely a result of continued overall weakness in the housing market due to the challenging economic conditions and housing market value declines, as well as the expiration of the homebuyer tax credits, which were available during the first half of 2010.
6
Thursday, January 26, 2012
Contact:
|
Tom Cherry, Executive Vice President & CFO
|
(804) 843-2360
Lower loan originations in 2011 resulted in a decline in gains on sales of loans, which were $16.09 million for the year ended December 31, 2011 compared to $18.56 million for year ended December 31, 2010. In addition to the decline in gains on sales of loans, the mortgage banking segment’s earnings for 2011 were negatively affected by an increase of $452,000 in non-production salaries expense in order to manage the increasingly complex regulatory environment.
Consumer Finance Segment. Fourth quarter net income for C&F Finance Company was $3.13 million in 2011, compared to $2.50 million in 2010. Net income for the year ended December 31, 2011 was $12.61 million, compared to $9.40 million for the year ended December 31, 2010.
The increases in 2011 net income included the effects of the following: (1) increases in average loans outstanding of 13.15 percent and 15.91 percent for the three months and year ended December 31, 2011, respectively, compared to the same periods of 2010, (2) the sustained low cost of the consumer finance segment’s variable-rate borrowings, and (3) an increase of $25,000 and a decrease of $625,000 in the provision for loan losses for the fourth quarter and year ended December 31, 2011, respectively, compared to the same periods of 2010. The slight increase in the loan loss provision for the fourth quarter of 2011 over the comparable period of 2010 resulted from a seasonal fluctuation in charge-off activity and the overall increase in the size of the segment’s loan portfolio. The reduction in the provision for loan losses for the year ended December 31, 2011 was attributable to lower net charge-offs at the consumer finance segment resulting from well-defined underwriting criteria, effective collection processes and higher recovery rates on the sale of repossessed vehicles.
7
C&F FINANCIAL CORPORATION
Thursday, January 26, 2012
Contact:
|
Tom Cherry, Executive Vice President & CFO
|
(804) 843-2360
Capital and Dividends. The corporation’s capital and liquidity positions remain strong. The corporation continues its participation in the Capital Purchase Program (“CPP”), although at a reduced level of $10.00 million after the corporation repaid $10.00 million of CPP funding on July 27, 2011. Management and the Board of Directors continue to assess on-going participation in the CPP based upon the economic and regulatory environment and the corporation’s capital levels.
The corporation paid a quarterly cash dividend of 26 cents per common share for the fourth quarter of 2011, which was a four percent increase over the 25 cents per common share for each of the first three quarters of 2011. The Board of Directors of the corporation continues to review the dividend payout ratio, which was 25.0 percent and 26.9 percent of net income available to common shareholders for the fourth quarter and year ended December 31, 2011, respectively, in light of changes in economic conditions, capital levels and expected future levels of earnings.
8
C&F FINANCIAL CORPORATION
Thursday, January 26, 2012
Contact:
|
Tom Cherry, Executive Vice President & CFO
|
(804) 843-2360
C&F Bank operates 18 retail bank branches located throughout the Hampton to Richmond corridor in Virginia and offers full investment services through its subsidiary C&F Investment Services, Inc. C&F Mortgage Corporation provides mortgage, title and appraisal services through 22 offices located in Virginia, Maryland, North Carolina, Delaware, Pennsylvania and New Jersey. C&F Finance Company provides automobile loans in Virginia, Tennessee, Maryland, North Carolina, Georgia, Ohio, Kentucky, Indiana, Alabama, Missouri and West Virginia through its offices in Richmond and Hampton, Virginia, in Nashville, Tennessee and in Towson, Maryland.
9
Thursday, January 26, 2012
Contact:
|
Tom Cherry, Executive Vice President & CFO
|
(804) 843-2360
Additional information regarding the corporation’s products and services, as well as access to its filings with the Securities and Exchange Commission, are available on the corporation’s web site at http://www.cffc.com.
10
C&F FINANCIAL CORPORATION
Thursday, January 26, 2012
Contact:
|
Tom Cherry, Executive Vice President & CFO
|
(804) 843-2360
11
C&F Financial Corporation
Selected Financial Information
(in thousands, except for share and per share data)
Balance Sheets
|
12/31/11
|
12/31/10
|
||||||
(unaudited)
|
||||||||
Interest-bearing deposits with other banks and federal funds sold
|
$ | 5,720 | $ | 2,530 | ||||
Investment securities - available for sale, at fair value
|
144,646 | 130,275 | ||||||
Loans held for sale, net
|
70,062 | 67,153 | ||||||
Loans, net:
|
||||||||
Retail Banking segment
|
388,095 | 400,865 | ||||||
Mortgage Banking segment
|
2,131 | 2,568 | ||||||
Consumer Finance segment
|
226,758 | 203,311 | ||||||
Federal Home Loan Bank stock
|
3,767 | 3,887 | ||||||
Total assets
|
928,124 | 904,137 | ||||||
Deposits
|
646,416 | 625,134 | ||||||
Borrowings
|
161,152 | 164,140 | ||||||
Shareholders' equity
|
96,090 | 92,777 |
For The
Quarter Ended |
For The
Twelve Months Ended |
|||||||||||||||
Statements of Income
|
12/31/11
|
12/31/10
|
12/31/11
|
12/31/10
|
||||||||||||
(unaudited)
|
(unaudited)
|
|||||||||||||||
Interest income
|
$ | 18,871 | $ | 18,158 | $ | 73,790 | $ | 69,848 | ||||||||
Interest expense
|
2,918 | 3,208 | 11,881 | 13,235 | ||||||||||||
Provision for loan losses:
|
||||||||||||||||
Retail Banking segment
|
1,450 | 2,450 | 6,000 | 6,500 | ||||||||||||
Mortgage Banking segment
|
125 | 15 | 360 | 34 | ||||||||||||
Consumer Finance segment
|
2,300 | 2,275 | 7,800 | 8,425 | ||||||||||||
Other operating income:
|
||||||||||||||||
Gains on sales of loans
|
4,316 | 5,272 | 16,094 | 18,564 | ||||||||||||
Other
|
3,016 | 3,528 | 10,952 | 11,136 | ||||||||||||
Other operating expenses:
|
||||||||||||||||
Salaries and employee benefits
|
9,430 | 9,415 | 34,317 | 34,889 | ||||||||||||
Other
|
5,054 | 6,276 | 21,767 | 25,406 | ||||||||||||
Income tax expense
|
1,515 | 941 | 5,735 | 2,949 | ||||||||||||
Net income
|
3,411 | 2,378 | 12,976 | 8,110 | ||||||||||||
Net income available to common shareholders
|
3,265 | 2,090 | 11,793 | 6,961 | ||||||||||||
Earnings per common share - assuming dilution
|
1.02 | 0.67 | 3.72 | 2.24 | ||||||||||||
Earnings per common share - basic
|
1.04 | 0.68 | 3.76 | 2.26 |
For The
Quarter Ended |
For The
Twelve Months Ended |
|||||||||||||||
Segment Information
|
12/31/11
|
12/31/10
|
12/31/11
|
12/31/10
|
||||||||||||
(unaudited)
|
(unaudited)
|
|||||||||||||||
Net income (loss) - Retail Banking
|
$ | 63 | $ | (848 | ) | $ | (432 | ) | $ | (1,494 | ) | |||||
Net income - Mortgage Banking
|
285 | 906 | 1,331 | 782 | ||||||||||||
Net income - Consumer Finance
|
3,129 | 2,504 | 12,610 | 9,402 | ||||||||||||
Net loss - Other and Eliminations
|
(66 | ) | (184 | ) | (533 | ) | (580 | ) | ||||||||
Mortgage loan originations - Mortgage Banking
|
188,728 | 203,087 | 616,438 | 748,263 | ||||||||||||
Mortgage loans sold - Mortgage Banking
|
155,043 | 213,349 | 613,529 | 709,866 |
For The
Quarter Ended |
For The
Twelve Months Ended |
|||||||||||||||
Average Balances
|
12/31/11
|
12/31/10
|
12/31/11
|
12/31/10
|
||||||||||||
(unaudited)
|
(unaudited)
|
|||||||||||||||
Interest-bearing deposits in other banks and federal funds sold
|
$ | 15,612 | $ | 4,367 | $ | 19,863 | $ | 11,628 | ||||||||
Investment securities - available for sale, at amortized cost
|
135,363 | 127,209 | 134,514 | 122,170 | ||||||||||||
Loans held for sale
|
48,866 | 67,994 | 36,470 | 46,295 | ||||||||||||
Loans:
|
||||||||||||||||
Retail Banking segment
|
404,438 | 416,109 | 406,056 | 430,036 | ||||||||||||
Mortgage Banking segment
|
2,630 | 2,533 | 2,721 | 2,665 | ||||||||||||
Consumer Finance segment
|
246,982 | 218,285 | 238,401 | 205,671 | ||||||||||||
FHLB stock
|
3,784 | 3,887 | 3,836 | 3,887 | ||||||||||||
Total earning assets
|
857,675 | 840,384 | 841,861 | 822,352 | ||||||||||||
Time, checking and savings deposits
|
542,473 | 533,614 | 537,261 | 522,262 | ||||||||||||
Borrowings
|
159,684 | 167,499 | 159,710 | 167,984 | ||||||||||||
Total interest-bearing liabilities
|
702,157 | 701,113 | 696,971 | 690,246 | ||||||||||||
Demand deposits
|
98,372 | 90,822 | 93,912 | 89,430 | ||||||||||||
Shareholders' equity
|
94,458 | 93,797 | 94,964 | 91,438 |
Asset Quality
|
12/31/11
|
12/31/10
|
||||||
(unaudited)
|
||||||||
Retail and Mortgage Banking Segments
|
||||||||
Nonaccrual loans* - Retail Banking
|
$ | 10,011 | $ | 7,765 | ||||
Nonaccrual loans - Mortgage Banking
|
621 | - | ||||||
Real estate owned** - Retail Banking
|
6,059 | 10,295 | ||||||
Real estate owned** - Mortgage Banking
|
- | 379 | ||||||
Total nonperforming assets
|
$ | 16,691 | $ | 18,439 | ||||
Accruing loans past due for 90 days or more
|
$ | 68 | $ | 1,030 | ||||
Troubled debt restructurings*
|
$ | 17,094 | $ | 9,769 | ||||
Total loans - Retail and Mortgage Banking segments
|
$ | 404,356 | $ | 414,831 | ||||
Allowance for loan losses - Retail and Mortgage Banking segments
|
$ | 14,130 | $ | 11,398 | ||||
Nonperforming assets to loans and real estate owned
|
4.07 | % | 4.33 | % | ||||
Allowance for loan losses to loans
|
3.49 | % | 2.75 | % | ||||
Allowance for loan losses to nonaccrual loans
|
132.90 | % | 146.79 | % | ||||
Net charge-offs to average loans
|
0.89 | % | 0.97 | % |
*
|
Nonaccrual loans include nonaccrual troubled debt restructurings of $8.441 million at 12/31/11 and $402 thousand at
|
12/31/10.
|
|
**
|
Real estate owned is recorded at its estimated fair market value less cost to sell.
|
Consumer Finance Segment
|
||||||||
Nonaccrual loans
|
$ | 381 | $ | 151 | ||||
Accruing loans past due for 90 days or more
|
$ | - | $ | - | ||||
Total loans
|
$ | 246,305 | $ | 220,753 | ||||
Allowance for loan losses
|
$ | 19,547 | $ | 17,442 | ||||
Nonaccrual consumer finance loans to total consumer finance loans
|
0.15 | % | 0.07 | % | ||||
Allowance for loan losses to total consumer finance loans
|
7.94 | % | 7.90 | % | ||||
Net charge-offs to average total consumer finance loans
|
2.39 | % | 2.89 | % |
As Of and For The
Quarter Ended |
As Of and For The
Twelve Months Ended |
|||||||||||||||
Other Data and Ratios
|
12/31/11
|
12/31/10
|
12/31/11
|
12/31/10
|
||||||||||||
(unaudited)
|
(unaudited)
|
|||||||||||||||
Annualized return on average assets
|
1.42 | % | 0.92 | % | 1.30 | % | 0.78 | % | ||||||||
Annualized return on average common equity
|
15.46 | % | 11.33 | % | 14.86 | % | 9.74 | % | ||||||||
Dividends declared per common share
|
$ | 0.26 | $ | 0.25 | $ | 1.01 | $ | 1.00 | ||||||||
Weighted average common shares outstanding - assuming dilution
|
3,188,317 | 3,115,549 | 3,172,277 | 3,103,469 | ||||||||||||
Weighted average common shares outstanding - basic
|
3,145,581 | 3,092,947 | 3,135,645 | 3,085,025 | ||||||||||||
Market value per common share at period end
|
$ | 26.60 | $ | 22.31 | $ | 26.60 | $ | 22.31 | ||||||||
Book value per common share at period end
|
$ | 27.08 | $ | 23.35 | $ | 27.08 | $ | 23.35 | ||||||||
Price to book value ratio at period end
|
0.98 | 0.96 | 0.98 | 0.96 | ||||||||||||
Price to earnings ratio at period end (ttm)
|
7.15 | 9.96 | 7.15 | 9.96 |