C&F Financial Corporation Announces Net Income for 2023
C&F Financial Corporation (CFFI) reported a consolidated net income of $23.7 million for the year ended December 31, 2023, compared to $29.4 million for the year ended December 31, 2022. The adjusted net income, a non-GAAP financial measure, was $23.7 million for 2023 compared to $27.0 million for 2022. The financial highlights also include earnings per share, return on average assets, return on average equity, and return on average tangible common equity.
Positive
Consolidated net income of $23.7 million for 2023 compared to $29.4 million for 2022
Adjusted net income of $23.7 million for 2023 compared to $27.0 million for 2022
Earnings per share - basic and diluted were $6.92 for 2023 compared to $8.29 for 2022
Return on average assets was 0.99% for 2023 compared to 1.27% for 2022
Return on average equity was 11.68% for 2023 compared to 14.84% for 2022
Return on average tangible common equity was 13.58% for 2023 compared to 17.31% for 2022
The reported financials from C&F Financial Corporation indicate a decrease in net income from $29.4 million in the previous year to $23.7 million. This decline is substantial and warrants an analysis of its causes and implications. The decrease in earnings per share (EPS) from $8.29 to $6.92 also signals a potential concern for shareholders, as EPS is a critical measure of a company's profitability on a per-share basis. Moreover, the reductions in return on average assets (ROAA) and return on average equity (ROAE) suggest less efficient use of resources and equity by the company in generating income.
Understanding the factors behind these decreases is essential. The reported figures include certain non-recurring items from the previous year, such as gains from real estate disposal and changes in accounting policy. When these are excluded, the adjusted net income still shows a decrease, albeit smaller, from $27.0 million to $23.7 million. This adjusted figure provides a clearer picture of the company's ongoing operational performance, excluding one-off events.
Investors and stakeholders should consider these figures in light of the broader economic context and the company's strategic decisions, such as branch consolidation. While the decline in net income may be a concern, the company's ability to maintain profitability amidst such changes could be seen as a positive sign of management's adaptability.
From a market perspective, the performance of C&F Financial Corporation needs to be contextualized within the banking sector and the overall economic environment. The banking industry is sensitive to interest rate changes, regulatory pressures and economic cycles. The decline in profitability metrics such as ROAA and ROAE could be reflective of broader market trends and should be compared against peer performance.
It’s also important to analyze customer and market reactions to the branch consolidation mentioned. While such measures can reduce costs and improve efficiency in the long run, they can also impact customer satisfaction and loyalty in the short term. The effects on the company's market position and competitive edge need to be monitored closely.
Additionally, the banking sector is undergoing significant transformations with the rise of digital banking solutions. C&F Financial Corporation's future strategies in embracing technological advancements and innovation will be crucial in determining its market standing and ability to attract new customers while retaining existing ones.
An economist would scrutinize the return on average tangible common equity (ROATCE), which has also seen a decrease from 17.31% to 13.58%. This metric is particularly telling as it excludes intangible assets from the calculation and thus provides insight into the returns generated from the physical or financial assets of the company. A decline in ROATCE could indicate that the company's asset base is not being utilized as effectively as in the previous year.
The overall economic conditions, including interest rate trends and economic growth rates, would also be examined to understand how they may have impacted the company's performance. For instance, a rising interest rate environment could increase the cost of borrowing and reduce demand for loans, potentially affecting the bank's net interest income and profitability.
Long-term implications for stakeholders include the necessity to track the company's strategic responses to these financial headwinds. How the company adjusts its operations, manages expenses and capitalizes on growth opportunities will be critical in evaluating its future financial health and stock performance.
01/24/2024 - 11:46 AM
TOANO, Va., Jan. 24, 2024 (GLOBE NEWSWIRE) -- C&F Financial Corporation (the Corporation) (NASDAQ: CFFI), the holding company for C&F Bank, today reported consolidated net income of $23.7 million for the year ended December 31, 2023, compared to $29.4 million for the year ended December 31, 2022. Included in net income for the year ended December 31, 2022 were the effects of real estate disposal activity related to branch consolidation and a change in accounting policy election related to the fair value of certain equity investments. Adjusted net income, a non-GAAP financial measure, was $23.7 million for the year ended December 31, 2023 compared to $27.0 million for the year ended December 31, 2022, which excludes the effects of the items mentioned above. The following table presents selected financial performance highlights for the periods indicated:
Reported (GAAP) Adjusted (non-GAAP) 1 For The Year Ended For The Year Ended Consolidated Financial Highlights (unaudited) 12/31/2023 12/31/2022 12/31/2023 12/31/2022 Net income (000's) $ 23,746 $ 29,369 $ 23,746 $ 26,990 Earnings per share - basic and diluted $ 6.92 $ 8.29 $ 6.92 $ 7.61 Return on average assets 0.99 % 1.27 % 0.99 % 1.16 % Return on average equity 11.68 % 14.84 % 11.68 % 13.64 % Return on average tangible common equity1 13.58 % 17.31 % 13.58 % 15.92 %
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1 For more information about these non-GAAP financial measures, which are 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. The Corporation uses non-GAAP measures of financial performance to provide meaningful information about operating performance to investors by excluding the effects of certain items that management does not expect to have an ongoing impact on consolidated net income. Adjusted net income for the year ended December 31, 2022 and for the fourth quarter of 2022 exclude the effects of real estate disposal activity related to branch consolidation and a change in accounting policy election. No such effects impacted the Corporation’s financial results for the quarter and year ended December 31, 2023.
The Corporation reported quarterly consolidated net income of $5.1 million for the fourth quarter of 2023, compared to $10.3 million for the fourth quarter of 2022. Adjusted net income for the fourth quarter of 2023 was 5.1 million compared to $8.0 million for the fourth quarter of 2022, which excludes the effects of the items mentioned above.
Reported (GAAP) Adjusted (non-GAAP) 1 For The Quarter Ended For The Quarter Ended Consolidated Financial Highlights (unaudited) 12/31/2023 12/31/2022 12/31/2023 12/31/2022 Net income (000's) $ 5,088 $ 10,306 $ 5,088 $ 7,990 Earnings per share - basic and diluted $ 1.50 $ 2.97 $ 1.50 $ 2.30 Annualized return on average assets 0.85 % 1.77 % 0.85 % 1.37 % Annualized return on average equity 10.06 % 21.92 % 10.06 % 16.99 % Annualized return on average tangible common equity 11.74 % 25.84 % 11.74 % 20.07 %
Tom Cherry, President and Chief Executive Officer of C&F Financial Corporation, commented, “2023 will be remembered as one of the more tumultuous years in U.S. banking history and yet still successful by many measures for C&F. Despite the difficulties within the industry, including liquidity pressures, persistent inflation, and a very challenging interest rate environment, all of our business segments remained profitable for the full year and we were able to grow both earning assets and deposits. We believe 2024 and beyond hold many opportunities for C&F, regardless of the uncertainties surrounding the future economic environment.”
Key highlights for the fourth quarter and the year ended December 31, 2023 are as follows.
Community banking segment loans grew $27.1 million , or 8.7 percent annualized, and $113.2 million , or 9.8 percent, compared to September 30, 2023 and December 31, 2022, respectively; Consumer finance segment loans decreased $2.7 million , or 2.3 percent annualized, and $6.0 million , or 1.3 percent, compared to September 30, 2023 and December 31, 2022, respectively; Deposits increased $37.7 million , or 7.4 percent annualized, and $62.3 million , or 3.1 percent, compared to September 30, 2023 and December 31, 2022, respectively; The community banking segment recorded provision for credit losses of $75,000 and $100,000 for the fourth quarters of 2023 and 2022, respectively, and recorded provision for credit losses of $1.6 million and net reversals of provision for credit losses of $600,000 for the years ended December 31, 2023 and 2022, respectively; The consumer finance segment recorded provision for credit losses of $2.4 million and $1.7 million for the fourth quarters of 2023 and 2022, respectively, and recorded provision for credit losses of $6.7 million and $3.7 million for the years ended December 31, 2023 and 2022, respectively; Consolidated annualized net interest margin was 4.17 percent for the fourth quarter of 2023 compared to 4.65 percent for the fourth quarter of 2022 and 4.29 percent in the third quarter of 2023. Consolidated net interest margin was 4.31 percent for the year ended December 31, 2023 compared to 4.27 percent for the year ended December 31, 2022; The consumer finance segment experienced net charge-offs at an annualized rate of 2.72 percent of average total loans for the fourth quarter of 2023 compared to 1.66 percent for the fourth quarter of 2022 and 1.99 percent for the third quarter of 2023. Net charge-offs as a percentage of average total loans were 1.99 percent for the year ended December 31, 2023, compared to 0.59 percent for the year ended December 31, 2022; Mortgage banking segment loan originations decreased $13.8 million , or 12.3 percent, to $98.2 million for the fourth quarter of 2023 compared to the fourth quarter of 2022 and decreased $198.5 million , or 28.5 percent, to $498.8 million for the year ended December 31, 2023 compared to the year ended December 31, 2022; 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. $5.2 million and $22.9 million for the fourth quarter and year ended December 31, 2023, respectively, compared to $10.6 million and $24.4 million , respectively, for the same periods in 2022, due primarily to:
higher interest expense due primarily to higher rates on deposits and higher borrowing balances at higher rates; lower income related to investments in other equity interests for the fourth quarter and year ended December 31, 2023, as $2.7 million of other income was recognized upon a change in accounting policy election for certain equity investments in the fourth quarter of 2022 that was not repeated in 2023; provision for credit losses of $75,000 and $1.6 million for the fourth quarter and year ended December 31, 2023, respectively, compared to $100,000 provision for credit losses and a net reversal of provision for credit losses of $600,000 for the fourth quarter and year ended December 31, 2022, respectively; higher salaries and employee benefits expense, which have generally increased in line with employment market conditions; higher Federal Deposit Insurance Corporation (FDIC) assessment expenses, due primarily to statutory increases applicable to all insured depository institutions; higher costs related to the implementation of a new loan origination system; higher debit and credit card interchange processing expenses; and no gains recognized during the fourth quarter and year ended December 31, 2023 for real estate disposal activity related to branch consolidation as compared to $165,000 and $228,000 recognized during the fourth quarter and year ended December 31, 2022, respectively; partially offset by:
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 loans. Adjusted net income for the community banking segment, which excludes the effects of real estate disposal activity related to branch consolidation and a change in accounting policy election related to the fair value of certain equity investments, was $5.2 million for the fourth quarter of 2023, compared to $8.3 million for the fourth quarter of 2022, and was $22.9 million for the year ended December 31, 2023, compared to $22.0 million for the year ended December 31, 2022.
Average loans increased $114.9 million , or 10.1 percent, for the fourth quarter of 2023 and increased $137.2 million , or 12.7 percent, for the year ended December 31, 2023, compared to the same periods in 2022, primarily from growth in the commercial real estate and residential mortgage segments of the loan portfolio. Average deposits increased $12.8 million , or less than one percent, for the fourth quarter of 2023 and increased $8.3 million , or less than one percent, for the year ended December 31, 2023, compared to the same periods in 2022. Although average deposits have remained relatively unchanged compared to prior periods, there has been a shift in the mix with noninterest-bearing, money market and savings accounts decreasing while time deposits have increased. Average deposits increased $26.5 million , or 5.2 percent annualized, for the fourth quarter of 2023 compared to the third quarter of 2023.
Average loan yields and average costs of interest-bearing deposits were higher for the fourth quarter and year ended December 31, 2023 compared to the same periods of 2022, due primarily to the effects of rising interest rates as market interest rates rose in 2022 and in 2023. While the community banking segment expects loan yields to continue to rise, management expects costs of deposits to increase faster as time deposits reprice, which management expects to drive net interest margin lower in the first part of 2024.
The community banking segment’s nonaccrual loans were $406,000 at December 31, 2023 compared to $115,000 at December 31, 2022. The community banking segment recorded provision for credit losses of $75,000 and $100,000 for the fourth quarters of 2023 and 2022, respectively. The community banking segment recorded provision for credit losses of $1.6 million for the year ended December 31, 2023 compared to a net reversal of provision for credit losses of $600,000 for the year ended December 31, 2022. The increase is due primarily to growth in the loan portfolio and the resolution of certain impaired loans in 2022, which resulted in the reversal of specific reserves with no losses being realized. At December 31, 2023, the allowance for credit losses increased to $16.1 million , compared to $14.5 million at December 31, 2022, due primarily to growth in the loan portfolio and the adoption of the CECL model, which resulted in an implementation adjustment on January 1, 2023 of $85,000. M anagement believes that the level of the allowance for credit losses is adequate to reflect the net amount expected to be collected.
Mortgage Banking Segment. $103,000 for the fourth quarter of 2023 compared to a net loss of $462,000 for same period in 2022 due primarily to:
lower variable expenses tied to mortgage loan origination volume such as commissions and bonuses, reported in salaries and employee benefits, as well as mortgage banking loan processing expenses and data processing expenses; higher reversal of provision for indemnifications; and lower salaries and employee benefits, occupancy expense and other expenses due to an effort to reduce overhead costs as mortgage loan origination volume has decreased; partially offset by:
lower volume of mortgage loan originations. The mortgage banking segment reported net income of $465,000 for the year ended December 31, 2023 compared to net income of $1.2 million for the same period in 2022 due primarily to:
lower volume of mortgage loan originations; and lower reversal of provision for indemnifications; partially offset by:
lower variable expenses tied to mortgage loan origination volume such as commissions and bonuses, reported in salaries and employee benefits, as well as mortgage banking loan processing expenses and data processing expenses; higher mortgage lender services income due to an increase in the number of institutional customers served and the types of services provided; and lower salaries and employee benefits, occupancy expense and other expenses due to an effort to reduce overhead costs as mortgage loan origination volume has decreased. The rapid rise in mortgage interest rates during 2022 and 2023, combined with higher home prices and lower levels of inventory, has led to a substantial decline in mortgage loan originations for the mortgage industry during 2023 as compared to 2022. Mortgage loan originations for the mortgage banking segment were $98.2 million for the fourth quarter of 2023, comprised of $12.5 million refinancings and $85.7 million home purchases, compared to $112.1 million , comprised of $13.4 million refinancings and $98.7 million home purchases, for same period in 2022. Mortgage loan originations for the mortgage banking segment were $498.8 million for the year ended December 31, 2023, comprised of $52.7 million refinancings and $446.1 million home purchases, compared to $697.3 million , comprised of $105.4 million refinancings and $591.9 million home purchases, for same period in 2022. Mortgage loan originations in the fourth quarter of 2023 decreased $31.4 million compared to the third quarter of 2023 due to normal industry seasonal fluctuations, low level of inventory, and the current mortgage interest rate environment.
During the fourth quarter and year ended December 31, 2023, the mortgage banking segment recorded a reversal of provision for indemnification losses of $150,000 and $585,000 , respectively, compared to no provision for indemnification losses and a reversal of provision for indemnification losses of $858,000 , respectively, in the same periods of 2022. 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. The release of indemnification reserves in 2022 and 2023 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, such as time since origination. 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. $618,000 and $2.9 million for the fourth quarter and year ended December 31, 2023, respectively, compared to net income of $795,000 and $6.8 million , respectively, for the same periods in 2022, resulting in a decrease of $177,000 and $3.9 million , respectively, due primarily to:
higher interest expense on variable rate borrowings from the community banking segment as a result of increased market interest rates; 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 for the year ended December 31, 2023 compared to the year ended December 31, 2022, and from the effects of rising market interest rates for both the fourth quarter and year ended December 31, 2023, compared to the same periods in 2022. Average loans decreased $1.3 million , or less than one percent, for the fourth quarter of 2023 and increased $42.4 million , or 9.8 percent, for the year ended December 31, 2023, compared to the same periods in 2022. The consumer finance segment experienced net charge-offs of 1.99 percent of average total loans for the year ended December 31, 2023, compared to 0.59 percent for the year ended December 31, 2022, due primarily to an increase in the number of delinquent loans, a decline in wholesale values of used automobiles from a peak during the COVID-19 pandemic and challenges in repossessing automobiles due to a decline in the number of repossession agencies, which results in a fully charged-off loan when an automobile cannot be repossessed. At December 31, 2023, total delinquent loans as a percentage of total loans was 4.09 percent, compared to 2.78 percent at December 31, 2022 and 3.30 percent at September 30, 2023. Delinquency rates have continued to move in the direction of pre-pandemic levels, due in part to the passage of time since the expiration of stimulus and enhanced unemployment benefits that benefitted borrowers. The allowance for credit losses was $23.6 million at December 31, 2023, compared to $26.0 million at December 31, 2022. The allowance for credit losses as a percentage of total loans decreased to 5.03 percent at December 31, 2023 from 5.47 percent and 5.18 percent at December 31, 2022 and September 30, 2023, 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. M anagement 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 continued elevated delinquencies or net charge-offs, the provision for credit losses may increase in future periods.
Liquidity. $250,000. As of December 31, 2023, the Corporation’s uninsured deposits, excluding intercompany cash holdings and municipal deposits which are secured with pledged securities, were approximately $404.1 million , or 19.6 percent of total deposits. The Corporation’s liquid assets, which include cash and due from banks, interest-bearing deposits at other banks and nonpledged securities available for sale, were $338.8 million and borrowing availability was $495.1 million as of December 31, 2023, which in total exceed uninsured deposits, excluding intercompany cash holdings and secured municipal deposits, by $429.7 million as of December 31, 2023.
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 $109.5 million at December 31, 2023 from $92.1 million at December 31, 2022, due primarily to higher short-term borrowings from the FHLB. Borrowings decreased $37.5 million from $147.0 million at September 30, 2023.
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. $1.76 per share, including a quarterly cash dividend of 44 cents per share during the fourth quarter of 2023, which was paid on January 1, 2024. These dividends represent a payout ratio of 29.3 percent of earnings per share for the fourth quarter of 2023 and 25.4 percent of earnings per share for the year ended December 31, 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 $20.9 million at December 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, partially offset by share repurchases, dividends paid on the Corporation’s common stock, and the Corporation’s adoption of the CECL methodology for estimating credit losses, which resulted in a decrease to opening retained earnings of $1.1 million . 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 C&F Bank. The accumulated other comprehensive loss related to the Corporation’s securities available for sale decreased to $25.0 million at December 31, 2023, compared to $35.2 million at December 31, 2022, due primarily to a decrease in debt security market interest rates.
As of December 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 December 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 December 31, 2023. For additional information, see “Capital Ratios” below. The above mentioned ratios are not impacted by unrealized losses on securities available for sale. In the event that all of these unrealized losses became realized into earnings, the Corporation and C&F Bank would both continue to exceed minimum capital requirements, including the capital conservation buffer, 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 fourth quarter of 2023, the Corporation repurchased 20,500 shares, or $1.1 million , of its common stock under this share repurchase program. In December 2023, the Board of Directors authorized a program, effective January 1, 2024, to repurchase up to $10.0 million of the Corporation’s common stock through December 31, 2024.
About C&F Financial Corporation. $56.16 per share on January 23, 2024. At December 31, 2023, the book value per share of the Corporation was $64.16 and the tangible book value per share was $56.28 . 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.
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.
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 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 conflicts between Russia and Ukraine and in the Middle East) or other major events, or the prospect of these events developments impacting the financial services industry, such as bank failures or concerns involving liquidity 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 closing of other financial institutions and their impact on the broader market through other customers, suppliers and partners, or that the conditions which resulted in the liquidity concerns experienced by closed financial institutions may also adversely impact, directly or indirectly, other financial institutions and market participants with which the Corporation has commercial or deposit relationships 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 the Corporation’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, 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.
Contact: Jason Long, CFO and Secretary (804) 843-2360
C&F Financial Corporation Selected Financial Information (dollars in thousands, except for per share data) (unaudited) Financial Condition 12/31/2023 12/31/2022 Interest-bearing deposits in other banks $ 58,777 $ 7,051 Investment securities - available for sale, at fair value 462,444 512,591 Loans held for sale, at fair value 14,176 14,259 Loans, net: Community Banking segment 1,257,557 1,145,940 Mortgage Banking segment - 671 Consumer Finance segment 444,931 448,589 Total assets 2,438,498 2,332,317 Deposits 2,066,130 2,003,860 Repurchase agreements 30,705 34,481 Other borrowings 78,834 57,603 Total equity 217,516 196,233
For The For The Quarter Ended Year Ended Results of Operations 12/31/2023 12/31/2022 12/31/2023 12/31/2022 Interest income $ 32,408 $ 28,405 $ 124,137 $ 101,354 Interest expense 8,466 2,428 26,430 7,890 Provision for credit losses: Community Banking segment 75 100 1,625 (600 ) Mortgage Banking segment - - - 32 Consumer Finance segment 2,400 1,670 6,650 3,740 Noninterest income: Gains on sales of loans 850 735 5,780 7,498 Other 6,953 9,226 23,835 20,984 Noninterest expenses: Salaries and employee benefits 14,035 13,167 54,876 47,867 Other 9,038 8,244 35,007 33,943 Income tax expense 1,109 2,451 5,418 7,595 Net income 5,088 10,306 23,746 29,369 Fully-taxable equivalent (FTE) amounts1 Interest income on loans-FTE 29,147 25,311 111,146 90,987 Interest income on securities-FTE 3,121 3,019 12,710 9,674 Total interest income-FTE 32,677 28,587 125,101 101,939 Net interest income-FTE 24,211 26,159 98,671 94,049
________________________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 Quarter Ended 12/31/2023 12/31/2022 Average Income/ Yield/ Average Income/ Yield/ Yield Analysis Balance Expense Rate Balance Expense Rate Assets Securities: Taxable $ 392,368 $ 2,093 2.13 % $ 463,173 $ 2,354 2.03 % Tax-exempt 118,263 1,028 3.48 90,142 665 2.95 Total securities 510,631 3,121 2.44 553,315 3,019 2.18 Loans: Community banking segment 1,257,418 16,813 5.30 1,142,543 13,483 4.68 Mortgage banking segment 22,288 383 6.82 23,611 362 6.08 Consumer finance segment 471,355 11,951 10.06 472,614 11,466 9.63 Total loans 1,751,061 29,147 6.60 1,638,768 25,311 6.13 Interest-bearing deposits in other banks 42,114 409 3.85 40,522 257 2.52 Total earning assets 2,303,806 32,677 5.63 2,232,605 28,587 5.08 Allowance for credit losses (40,614 ) (41,450 ) Total non-earning assets 142,252 141,775 Total assets $ 2,405,444 $ 2,332,930 Liabilities and Equity Interest-bearing deposits: Interest-bearing demand deposits $ 341,243 556 0.65 $ 356,943 468 0.52 Money market deposit accounts 299,712 896 1.19 388,392 314 0.32 Savings accounts 194,476 33 0.07 235,191 31 0.05 Certificates of deposit 635,702 5,665 3.54 382,191 926 0.96 Total interest-bearing deposits 1,471,133 7,150 1.93 1,362,717 1,739 0.51 Borrowings: Repurchase agreements 33,418 126 1.51 35,963 59 0.66 Other borrowings 98,875 1,190 4.81 55,866 630 4.51 Total borrowings 132,293 1,316 3.98 91,829 689 3.00 Total interest-bearing liabilities 1,603,426 8,466 2.10 1,454,546 2,428 0.66 Noninterest-bearing demand deposits 554,321 649,951 Other liabilities 45,462 40,363 Total liabilities 2,203,209 2,144,860 Equity 202,235 188,070 Total liabilities and equity $ 2,405,444 $ 2,332,930 Net interest income $ 24,211 $ 26,159 Interest rate spread 3.53 % 4.42 % Interest expense to average earning assets 1.46 % 0.43 % Net interest margin 4.17 % 4.65 %
For the Year Ended 12/31/2023 12/31/2022 Average Income/ Yield/ Average Income/ Yield/ Yield Analysis Balance Expense Rate Balance Expense Rate Assets Securities: Taxable $ 428,895 $ 9,110 2.12 % $ 415,669 $ 7,620 1.83 % Tax-exempt 108,006 3,600 3.33 77,052 2,054 2.67 Total securities 536,901 12,710 2.37 492,721 9,674 1.96 Loans: Community banking segment 1,214,143 62,188 5.12 1,076,948 46,510 4.32 Mortgage banking segment 25,598 1,695 6.62 46,185 2,036 4.41 Consumer finance segment 473,885 47,263 9.97 431,470 42,441 9.84 Total loans 1,713,626 111,146 6.49 1,554,603 90,987 5.85 Interest-bearing deposits in other banks 35,351 1,245 3.52 153,398 1,278 0.83 Total earning assets 2,285,878 125,101 5.47 2,200,722 101,939 4.63 Allowance for loan losses (41,047 ) (40,878 ) Total non-earning assets 148,666 159,839 Total assets $ 2,393,497 $ 2,319,683 Liabilities and Equity Interest-bearing deposits: Interest-bearing demand deposits $ 354,643 2,134 0.60 $ 350,996 1,063 0.30 Money market deposit accounts 317,601 3,017 0.95 390,235 1,043 0.27 Savings accounts 209,033 124 0.06 231,317 122 0.05 Certificates of deposit 541,252 15,112 2.79 392,579 2,996 0.76 Total interest-bearing deposits 1,422,529 20,387 1.43 1,365,127 5,224 0.38 Borrowings: Repurchase agreements 32,393 399 1.23 35,544 180 0.51 Other borrowings 116,908 5,644 4.83 55,701 2,486 4.46 Total borrowings 149,301 6,043 4.05 91,245 2,666 2.92 Total interest-bearing liabilities 1,571,830 26,430 1.68 1,456,372 7,890 0.54 Noninterest-bearing demand deposits 575,452 624,581 Other liabilities 42,954 40,854 Total liabilities 2,190,236 2,121,807 Equity 203,261 197,876 Total liabilities and equity $ 2,393,497 $ 2,319,683 Net interest income $ 98,671 $ 94,049 Interest rate spread 3.79 % 4.09 % Interest expense to average earning assets 1.16 % 0.36 % Net interest margin 4.31 % 4.27 %
12/31/2023 Funding Sources Capacity Outstanding Available Unsecured federal funds agreements $ 75,000 $ 18 $ 74,982 Borrowings from FHLB 228,382 27,500 200,882 Borrowings from Federal Reserve Bank 219,244 — 219,244 Total $ 522,626 $ 27,518 $ 495,108
Asset Quality 1 12/31/2023 12/31/2022 Community Banking Total loans $ 1,273,629 $ 1,160,454 Nonaccrual loans $ 406 $ 115 Impaired loans n/a $ 823 Allowance for credit losses (ACL) $ 16,072 $ 14,513 Nonaccrual loans to total loans 0.03 % 0.01 % ACL to total loans 1.26 % 1.25 % ACL to nonaccrual loans 3,958.62 % 12,620.00 % Year-to-date net charge-offs to average loans 0.01 % 0.02 % Mortgage Banking 2 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 % Year-to-date net charge-offs to average loans - % - % Consumer Finance Total loans $ 468,510 $ 474,557 Nonaccrual loans $ 892 $ 925 Repossessed assets $ 646 $ 352 ACL $ 23,579 $ 25,969 Nonaccrual loans to total loans 0.19 % 0.19 % ACL to total loans 5.03 % 5.47 % ACL to nonaccrual loans 2,643.39 % 2,807.46 % Year-to-date net charge-offs to average loans 1.99 % 0.59 %
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1 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.2 All loans have been transferred to the community banking segment. Total loans does not include loans held for sale.
For The For The Quarter Ended Year Ended Other Performance Data 12/31/2023 12/31/2022 12/31/2023 12/31/2022 Net Income (Loss): Community Banking $ 5,186 $ 10,620 $ 22,928 $ 24,374 Mortgage Banking (103 ) (462 ) 465 1,210 Consumer Finance 618 795 2,879 6,831 Other1 (613 ) (647 ) (2,526 ) (3,046 ) Total $ 5,088 $ 10,306 $ 23,746 $ 29,369 Net income attributable to C&F Financial Corporation $ 5,068 $ 10,308 $ 23,604 $ 29,159 Earnings per share - basic and diluted $ 1.50 $ 2.97 $ 6.92 $ 8.29 Weighted average shares outstanding - basic and diluted 3,367,931 3,475,716 3,411,995 3,517,114 Annualized return on average assets 0.85 % 1.77 % 0.99 % 1.27 % Annualized return on average equity 10.06 % 21.92 % 11.68 % 14.84 % Annualized return on average tangible common equity2 11.74 % 25.84 % 13.58 % 17.31 % Dividends declared per share $ 0.44 $ 0.42 $ 1.76 $ 1.64 Mortgage loan originations - Mortgage Banking $ 98,238 $ 112,065 $ 498,797 $ 697,323 Mortgage loans sold - Mortgage Banking 109,387 130,910 498,852 763,041
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1 Includes results of the holding company that are not allocated to the business segments and elimination of inter-segment activity.2 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 12/31/2023 12/31/2022 Market value per share $ 68.19 $ 58.27 Book value per share $ 64.16 $ 56.27 Price to book value ratio 1.06 1.04 Tangible book value per share1 $ 56.28 $ 48.54 Price to tangible book value ratio1 1.21 1.20 Price to earnings ratio (ttm) 9.87 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 12/31/2023 12/31/2022 Requirements 3 C&F Financial Corporation 1 Total risk-based capital ratio 14.8 % 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 10.1 % 9.9 % 4.0 % C&F Bank 2 Total risk-based capital ratio 14.1 % 14.2 % 8.0 % Tier 1 risk-based capital ratio 12.9 % 12.9 % 6.0 % Common equity tier 1 capital ratio 12.9 % 12.9 % 4.5 % Tier 1 leverage ratio 10.3 % 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 December 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 For The Year Ended 12/31/2023 12/31/2022 12/31/2023 12/31/2022 Reconciliation of Certain Non-GAAP Financial Measures Adjusted Net Income and Adjusted Earnings Per Share Net income, as reported $ 5,088 $ 10,306 $ 23,746 $ 29,369 Branch consolidation - disposal of real estate1 - (165 ) - (228 ) Change in accounting policy election2 - (2,151 ) - (2,151 ) Adjusted net income $ 5,088 $ 7,990 $ 23,746 $ 26,990 Weighted average shares - basic and diluted 3,367,931 3,475,716 3,411,995 3,517,114 Earnings per share - basic and diluted, as reported $ 1.50 $ 2.97 $ 6.92 $ 8.29 Branch consolidation - disposal of real estate - (0.05 ) - (0.07 ) Change in accounting policy election - (0.62 ) - (0.61 ) Adjusted earnings per share - basic and diluted $ 1.50 $ 2.30 $ 6.92 $ 7.61 Adjusted Return on Average Equity (ROE) Average total equity, as reported $ 202,235 $ 188,070 $ 203,261 $ 197,876 Annualized ROE, as reported 10.06 % 21.92 % 11.68 % 14.84 % Adjusted annualized ROE 10.06 % 16.99 % 11.68 % 13.64 % Adjusted Return on Average Assets (ROA) Average total assets, as reported $ 2,405,444 $ 2,332,930 $ 2,393,497 $ 2,319,683 Annualized ROA, as reported 0.85 % 1.77 % 0.99 % 1.27 % Adjusted annualized ROA 0.85 % 1.37 % 0.99 % 1.16 % Return on Average Tangible Common Equity & Adjusted Return on Average Tangible Common Equity Average total equity, as reported $ 202,235 $ 188,070 $ 203,261 $ 197,876 Average goodwill (25,191 ) (25,191 ) (25,191 ) (25,191 ) Average other intangible assets (1,439 ) (1,710 ) (1,538 ) (1,820 ) Average noncontrolling interest (515 ) (434 ) (675 ) (737 ) Average tangible common equity $ 175,090 $ 160,735 $ 175,857 $ 170,128 Net income $ 5,088 $ 10,306 $ 23,746 $ 29,369 Amortization of intangibles 69 74 273 298 Net loss (income) attributable to noncontrolling interest (20 ) 2 (142 ) (210 ) Net tangible income attributable to C&F Financial Corporation $ 5,137 $ 10,382 $ 23,877 $ 29,457 Adjusted net income $ 5,088 $ 7,990 $ 23,746 $ 26,990 Amortization of intangibles 69 74 273 298 Net loss (income) attributable to noncontrolling interest (20 ) 2 (142 ) (210 ) Adjusted net tangible income attributable to C&F Financial Corporation $ 5,137 $ 8,066 $ 23,877 $ 27,078 Annualized return on average tangible common equity 11.74 % 25.84 % 13.58 % 17.31 % Adjusted annualized return on average tangible common equity 11.74 % 20.07 % 13.58 % 15.92 % Adjusted Net Income, Community Banking Segment Net income, community banking segment, as reported $ 5,186 $ 10,620 $ 22,928 $ 24,374 Branch consolidation - disposal of real estate1 - (165 ) - (228 ) Change in accounting policy election2 - (2,151 ) - (2,151 ) Adjusted net income, community banking segment $ 5,186 $ 8,304 $ 22,928 $ 21,995
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1 Branch consolidation – disposal of real estate gains are gains recognized on the sale of former branch locations subsequent to consolidation into nearby branches and are net of related income taxes of $44,000 for the fourth quarter of 2022 and $61,000 for the year ended December 31, 2022.2 A change in accounting policy election for certain equity investments, primarily consisting of equity interests in an independent insurance agency and a full service title and settlement agency, resulted in fair value adjustments in the fourth quarter of 2022, which resulted in the one-time recognition of additional other income of $2.2 million , net of related income taxes of $572,000.
For The Quarter Ended For The Year Ended 12/31/2023 12/31/2022 12/31/2023 12/31/2022 Fully Taxable Equivalent Net Interest Income 1 Interest income on loans $ 29,093 $ 25,267 $ 110,938 $ 90,833 FTE adjustment 54 44 208 154 FTE interest income on loans $ 29,147 $ 25,311 $ 111,146 $ 90,987 Interest income on securities $ 2,906 $ 2,881 $ 11,954 $ 9,243 FTE adjustment 215 138 756 431 FTE interest income on securities $ 3,121 $ 3,019 $ 12,710 $ 9,674 Total interest income $ 32,408 $ 28,405 $ 124,137 $ 101,354 FTE adjustment 269 182 964 585 FTE interest income $ 32,677 $ 28,587 $ 125,101 $ 101,939 Net interest income $ 23,942 $ 25,977 $ 97,707 $ 93,464 FTE adjustment 269 182 964 585 FTE net interest income $ 24,211 $ 26,159 $ 98,671 $ 94,049
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1 Assuming a tax rate of 21% .
12/31/2023 12/31/2022 Tangible Book Value Per Share Equity attributable to C&F Financial Corporation $ 216,475 $ 195,634 Goodwill (25,191 ) (25,191 ) Other intangible assets (1,407 ) (1,679 ) Tangible equity attributable to C&F Financial Corporation $ 189,877 $ 168,764 Shares outstanding 3,374,098 3,476,614 Book value per share $ 64.16 $ 56.27 Tangible book value per share $ 56.28 $ 48.54
What was C&F Financial Corporation's reported consolidated net income for 2023?
C&F Financial Corporation's reported consolidated net income for 2023 was $23.7 million.
What was the adjusted net income for C&F Financial Corporation for 2023?
C&F Financial Corporation's adjusted net income for 2023 was $23.7 million.
What were the earnings per share for CFFI for 2023?
The earnings per share for CFFI for 2023 were $6.92.
What was the return on average assets for CFFI for 2023?
The return on average assets for CFFI for 2023 was 0.99%.
What was the return on average equity for CFFI for 2023?
The return on average equity for CFFI for 2023 was 11.68%.
What was the return on average tangible common equity for CFFI for 2023?
The return on average tangible common equity for CFFI for 2023 was 13.58%.
