C&F Financial Corporation Announces Net Income for First Quarter

TOANO, Va., April 21, 2022 (GLOBE NEWSWIRE) — C&F Monetary Company (the Company) (NASDAQ: CFFI), the one-bank holding firm for C&F Financial institution, in the present day reported consolidated web earnings of $5.7 million for the primary quarter of 2022, which represents a lower of $1.4 million, or 20.0 p.c, as in comparison with the primary quarter of 2021. Adjusted web earnings decreased $1.5 million, or 20.8 p.c, for the primary quarter of 2022 in comparison with the primary quarter of 2021.

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¹The Company makes use of non-GAAP measures of economic efficiency, together with adjusted web earnings, adjusted earnings per share, adjusted annualized return on common belongings (ROA) and adjusted annualized return on common fairness (ROE), to supply significant details about working efficiency by excluding the consequences of sure gadgets that administration doesn’t anticipate to have an ongoing influence on consolidated web earnings. Adjusted web earnings for the primary quarter of 2022 excludes the consequences of department consolidation exercise. There have been no such changes for the primary quarter of 2021. For extra details about these monetary measures, which aren’t calculated in accordance with usually accepted accounting ideas (GAAP), please see “Use of Sure Non-GAAP Monetary Measures” and “Reconciliation of Sure Non-GAAP Monetary Measures,” beneath.

Tom Cherry, President and Chief Government Officer of C&F Monetary Company, commented, “Our first quarter outcomes reveal that we’re effectively positioned for the challenges and alternatives introduced by present market circumstances. The neighborhood banking section continues to develop loans and deposits and we consider it’s poised to learn from current will increase in rates of interest by means of expanded web curiosity margins. The buyer finance section is delivering excellent progress in its mortgage portfolio. And whereas mortgage quantity has subsided from the highs of 2020 and 2021, the mortgage banking section’s conventional concentrate on buy lending will assist us to stay aggressive as refinancing exercise is more likely to proceed to say no throughout the trade. We’re watchful of the impact that inflation is having on our clients, our communities and on our personal working prices. Earnings and asset high quality stay robust, and we’re optimistic about our prospects for accountable progress as we proceed to hold out our strategic goals all through 2022.”

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Key highlights for the primary quarter of 2022 are as follows. Comparisons are to the primary quarter of 2021 until in any other case acknowledged.

• Common loans excellent on the neighborhood banking section, excluding Paycheck Safety Program (PPP) loans, elevated 6.3 p.c;

• Common deposits elevated 8.1 p.c;

• Common loans excellent on the client finance section elevated 21.3 p.c;

• The Company recorded a web reversal of provision for mortgage losses of $328,000 for first quarter of 2022 on a consolidated foundation, due primarily to the decision of sure impaired loans on the neighborhood banking section and different reserve releases, partially offset by provision for mortgage progress on the client finance and neighborhood banking segments. The Company recorded provision for mortgage losses of $280,000 for the primary quarter of 2021;

• The neighborhood banking section acknowledged web PPP origination charges of $437,000 within the first quarter of 2022, in comparison with $864,000 within the first quarter of 2021;

• Consolidated annualized web curiosity margin was 3.93 p.c for the primary quarter of 2022, in comparison with 4.33 p.c and 4.09 p.c for the primary quarter of 2021 and fourth quarter of 2021, respectively. The lower within the first quarter of 2022 in comparison with the fourth quarter of 2021 was due primarily to progress in decrease yielding money and investments whereas loans held on the market decreased, in addition to decrease accretion of web PPP origination charges;

• The buyer finance section skilled web charge-offs at an annualized price of 0.04 p.c of common complete loans for the primary quarter of 2022, in comparison with web recoveries of 0.14 p.c for the yr ended December 31, 2021. Delinquencies stay decrease than pre-pandemic ranges and a robust used automotive market has mitigated losses on defaulted loans;

• The buyer finance section’s common mortgage yield declined on account of pursuing progress in increased high quality, decrease yielding loans; and

• Mortgage banking section mortgage originations decreased 55.1 p.c for the primary quarter of 2022 amid declines in mortgage trade quantity and rising rates of interest.

Group Banking Phase. The neighborhood banking section reported web earnings of $3.5 million for the primary quarter of 2022, in comparison with $2.8 million for a similar interval in 2021.

Group banking section web earnings elevated $724,000 for the primary quarter of 2022 in comparison with the primary quarter of 2021 due primarily to:

• a reversal of provision for mortgage losses of $700,000 within the first quarter of 2022, due primarily to the decision of sure impaired loans and continued robust credit score high quality of the mortgage portfolio, in comparison with no provision for mortgage losses within the first quarter of 2021, and

• decrease curiosity expense as a result of decrease common price of time deposits and a shift in balances from time deposits towards lower-cost financial savings, cash market and demand deposits;

partially offset by:

• decrease curiosity earnings on account of decrease accretion of web PPP origination charges and decrease curiosity earnings on bought credit score impaired (PCI) loans, in addition to decrease common yields on different loans, partially offset by increased common balances of securities, loans (excluding PPP loans) and money.

Common loans decreased $22.5 million, or 2.1 p.c, for the primary quarter of 2022, in comparison with the identical interval in 2021. Excluding the influence of PPP loans, common loans elevated $60.1 million, or 6.3 p.c, for the primary quarter of 2022, in comparison with the identical interval in 2021. The rise in common loans excellent excluding PPP loans for the primary quarter 2022 in comparison with the identical interval in 2021 resulted primarily from progress within the industrial actual property section of the mortgage portfolio. Common deposits elevated $144.2 million, or 8.1 p.c, for the primary quarter of 2022, in comparison with the identical interval in 2021, and the combo of deposit balances shifted away from time deposits and towards decrease price financial savings, cash market and demand deposits.

Common mortgage yields have been decrease for the primary quarter of 2022 in comparison with the identical interval in 2021, due primarily to decrease recognition of web origination charges on PPP loans and decrease curiosity earnings on PCI loans. PPP loans earn curiosity at a observe price of 1 p.c in addition to web origination charges which might be amortized over the contractual time period of the associated mortgage or accelerated into curiosity earnings upon compensation of the mortgage. Web PPP origination charges acknowledged within the first quarter of 2022 have been $437,000, in comparison with $864,000 for a similar interval in 2021. For the reason that second quarter of 2020, the neighborhood banking section has acknowledged $6.1 million of web charges beneath the PPP, and there have been unrecognized web deferred PPP charges at March 31, 2022 of $242,000, that are anticipated to be acknowledged in 2022. The popularity of curiosity earnings on PCI loans, which have been acquired in reference to previous mergers and acquisitions, is predicated on administration’s expectation of future funds of principal and curiosity, that are inherently unsure. Sooner than anticipated repayments of sure PCI loans resulted within the recognition of extra curiosity earnings throughout the first quarters of 2022 and 2021. Curiosity earnings acknowledged on PCI loans was $363,000 for the primary quarter of 2022 and $517,000 for the primary quarter of 2021. Throughout the first quarter of 2022, market rates of interest elevated, which the neighborhood banking section expects to lead to will increase in web curiosity earnings on the neighborhood banking section in future intervals. Nevertheless, how, when and the extent to which rising rates of interest will have an effect on web curiosity earnings on the neighborhood banking section is unsure.

C&F Financial institution’s complete nonperforming belongings have been $118,000 at March 31, 2022 in comparison with $3.2 million at December 31, 2021. Nonperforming belongings included $118,000 in nonaccrual loans at March 31, 2022 and included $2.4 million in nonaccrual loans and $835,000 in different actual property owned (OREO) at December 31, 2021. The lower in nonaccrual loans at March 31, 2022 as in comparison with December 31, 2021 was primarily because of the decision of sure impaired loans throughout the first quarter of 2022. The neighborhood banking section recorded a web reversal of provision for mortgage losses of $700,000 for the primary quarter of 2022, in comparison with no provision for mortgage losses recorded for the primary quarter of 2021. At March 31, 2022, the allowance for mortgage losses decreased to $14.1 million, in comparison with $14.8 million at December 31, 2021. Decreases within the allowance for mortgage losses throughout 2022 associated to enchancment in asset high quality throughout 2022, together with impaired loans, and a launch of sure qualitative changes to reserves associated to the COVID-19 pandemic, which have been partially offset by provision associated to progress within the mortgage portfolio. Administration believes that the extent of the allowance for mortgage losses is enough to soak up losses inherent within the portfolio.

Mortgage Banking Phase. The mortgage banking section reported web earnings of $866,000 for the primary quarter of 2022, in comparison with web earnings of $2.5 million for a similar interval in 2021.

The lower in web earnings of the mortgage banking section for the primary quarter of 2022 in comparison with the primary quarter of 2021 was due primarily to (1) decrease quantity of mortgage mortgage originations and mortgage lender providers and (2) decrease margins on gross sales of mortgage loans, partially offset by decrease provision for indemnification losses.

Mortgage mortgage originations for the mortgage banking section have been $189.9 million for the primary quarter of 2022, in comparison with $422.5 million for the primary quarter of 2021. Mortgage mortgage originations for the mortgage banking section throughout the first quarter of 2022 for refinancings and residential purchases have been $48.4 million and $141.5 million, respectively, in comparison with $235.2 million and $187.3 million, respectively, throughout the first quarter of 2021. Following the elevated quantity ranges within the mortgage trade throughout 2020 and 2021 that accompanied traditionally low mortgage rates of interest and a extremely energetic residential actual property market, the primary quarter of 2022 represents a return to ranges of mortgage banking section quantity (of each refinancings and residential purchases), revenues and web earnings which might be considerably normalized and nonetheless examine favorably to intervals previous to 2020.

Throughout the first quarter of 2022, the mortgage banking section recorded a reversal of provisions for indemnification losses of $583,000, in comparison with provision for indemnification losses of $17,000 within the first quarter of 2021. The discharge of indemnification reserves within the first quarter of 2022 was due primarily to enchancment within the mortgage banking section’s evaluation of borrower cost efficiency and different elements affecting anticipated losses on mortgage loans bought within the secondary market. The mortgage banking section elevated reserves for indemnification losses throughout 2020 primarily based on widespread forbearance on mortgage loans and financial uncertainty associated to the COVID-19 pandemic. Up to now, the mortgage banking section has not made any funds for indemnification losses because the onset of the COVID-19 pandemic, and administration believes that the indemnification reserve is enough to soak up losses associated to loans which have been bought within the secondary market.

Shopper Finance Phase. The buyer finance section reported web earnings of $2.1 million for the primary quarter of 2022, in comparison with web earnings of $2.5 million for a similar interval in 2021.

Web earnings for the buyer finance section decreased $465,000 for the primary quarter of 2022 in comparison with the primary quarter of 2021 as a result of decrease yields on vehicle loans and better provision for mortgage losses, partially offset by mortgage progress. Provision for mortgage losses elevated on account of important mortgage progress in 2022, partially offset by a launch of reserves associated to continued enchancment in mortgage efficiency. Common yields on loans decreased for the primary quarter of 2022 in comparison with the identical interval in 2021 on account of the buyer finance section’s pursuing progress in increased high quality, decrease yielding loans.

Common loans excellent elevated $66.9 million, or 21.3%, for the primary quarter of 2022 in comparison with the identical interval in 2021. The buyer finance section skilled annualized web charge-offs for the primary quarter of 2022 of 0.04 p.c of common complete loans, in comparison with web charge-offs of 0.51 p.c for the primary quarter of 2021. The decline within the web charge-off ratio for the primary quarter of 2022 in comparison with the primary quarter of 2021 displays a decrease variety of charge-offs throughout 2022 and decrease losses per mortgage charged off on account of a robust used automotive market. The buyer finance section has skilled mortgage efficiency since 2020 that has been usually stronger than intervals previous to the COVID-19 pandemic, leading to half from the buyer finance section persevering with to buy increased high quality loans, and partly from authorities stimulus measures in response to the pandemic that benefitted debtors. At March 31, 2022, complete delinquent loans as a proportion of complete loans was 1.71 p.c, in comparison with 2.16 p.c at December 31, 2021 and 1.56 p.c at March 31, 2021. The allowance for mortgage losses was $25.1 million at March 31, 2022, in comparison with $24.8 million at December 31, 2021. The allowance for mortgage losses as a proportion of complete loans decreased to six.33 p.c at March 31, 2022 from 6.73 p.c at December 31, 2021, primarily on account of enhancing credit score high quality of the portfolio, which has resulted in decrease web charge-offs, and a discount of sure qualitative changes to reserves associated to the COVID-19 pandemic. Administration believes that the extent of the allowance for mortgage losses is enough to soak up losses inherent within the portfolio. If mortgage efficiency deteriorates leading to elevated delinquencies or web charge-offs, provision for mortgage losses might enhance in future intervals.

Capital and Dividends. The Company declared a quarterly money dividend of 40 cents per share throughout the first quarter of 2022, which was paid on April 1, 2022. These dividends characterize a payout ratio of 25.2 p.c of earnings per share for the primary quarter of 2022. The Board of Administrators of the Company frequently critiques the amount of money dividends per share and the ensuing dividend payout ratio in mild of modifications in financial circumstances, present and future capital necessities, and anticipated future earnings.

Complete consolidated fairness decreased $9.7 million at March 31, 2022 in comparison with December 31, 2021, due primarily to unrealized losses out there worth of securities out there on the market, that are acknowledged as a element of different complete earnings. The Company’s securities out there on the market are mounted earnings debt securities, and their decline in market worth throughout the first quarter of 2022 was a results of rising market rates of interest. The Company expects to recuperate its investments in debt securities by means of scheduled funds of principal and curiosity, and unrealized losses usually are not anticipated to have an effect on the earnings or regulatory capital of the Company or the Financial institution.

In November 2021, the Board of Administrators licensed a program, efficient December 1, 2021, to repurchase as much as $10.0 million of the Company’s frequent inventory by means of November 30, 2022. Throughout the first quarter of 2022, the Company repurchased 9,717 shares, or $493,000, of its frequent inventory beneath this share repurchase program.

About C&F Monetary Company. C&F Monetary Company’s frequent inventory is listed for buying and selling on The Nasdaq Inventory Market beneath the image CFFI. The frequent inventory closed at a value of $52.39 per share on April 20, 2022. At March 31, 2022, the e book worth of the Company was $56.57 per share and the tangible e book worth per share was $48.93. For extra details about the Company’s tangible e book worth per share, which isn’t calculated in accordance with GAAP, please see “Use of Sure Non-GAAP Monetary Measures” and “Reconciliation of Sure Non-GAAP Monetary Measures,” beneath.

C&F Financial institution operates 31 banking places of work and 4 industrial mortgage places of work positioned all through the Hampton to Charlottesville hall and the Northern Neck area in Virginia and affords full wealth administration providers by means of its subsidiary C&F Wealth Administration, Inc. C&F Mortgage Company and its subsidiary C&F Choose LLC present mortgage mortgage origination providers by means of places of work positioned in Virginia, Maryland, North Carolina, South Carolina and West Virginia. C&F Finance Firm offers vehicle, marine and RV loans by means of oblique lending applications provided 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 by means of its places of work in Richmond and Hampton, Virginia.

Further data relating to the Company’s services, in addition to entry to its filings with the Securities and Alternate Fee (SEC), can be found on the Company’s web site at http://www.cffc.com.

Use of Sure Non-GAAP Monetary Measures. The accounting and reporting insurance policies of the Company conform to GAAP in the USA and prevailing practices within the banking trade. Nevertheless, sure non-GAAP measures are utilized by administration to complement the analysis of the Company’s efficiency. These embrace adjusted web earnings, adjusted earnings per share, adjusted ROE, adjusted return on tangible frequent fairness (ROTCE), adjusted ROA, tangible e book worth per share, and the next fully-taxable equal (FTE) measures: curiosity earnings on loans-FTE, curiosity earnings on securities-FTE, complete curiosity income-FTE and web curiosity income-FTE.

Administration believes that the usage of these non-GAAP measures offers significant details about working efficiency by enhancing comparability with different monetary intervals, different monetary establishments, and between totally different sources of curiosity earnings. The non-GAAP measures utilized by administration improve comparability by excluding the consequences of (1) gadgets that don’t replicate ongoing working efficiency, (2) balances of intangible belongings, together with goodwill, that change considerably between establishments, and (3) tax advantages that aren’t constant throughout totally different alternatives for funding. These non-GAAP monetary measures shouldn’t be thought of a substitute for GAAP-basis monetary statements, and different financial institution holding corporations might outline or calculate these or related measures otherwise. A reconciliation of the non-GAAP monetary measures utilized by the Company to judge and measure the Company’s efficiency to probably the most instantly comparable GAAP monetary measures is introduced beneath.

Ahead-Trying Statements. This press launch accommodates “forward-looking statements” inside the that means of Part 27A of the Securities Act of 1933, as amended, and Part 21E of the Securities Alternate Act, as amended. These forward-looking statements are primarily based on the beliefs of the Company’s administration, in addition to assumptions made by, and data at the moment out there to, the Company’s administration, and replicate administration’s present views with respect to sure occasions that might have an effect on the Company’s future monetary efficiency. These statements, together with with out limitation statements made in Mr. Cherry’s quotes, relate to expectations regarding issues that aren’t historic truth, might specific “perception,” “intention,” “expectation,” “potential” and related expressions, and will use the phrases “consider,” “anticipate,” “anticipate,” “estimate,” “plan,” “might,” “will,” “intend,” “ought to,” “might,” or related expressions. These statements are inherently unsure, and there could be no assurance that the underlying assumptions will show to be correct. Precise outcomes might differ materially from these anticipated or implied by such statements. Ahead-looking statements on this launch might embrace, with out limitation, statements relating to anticipated future operations and monetary efficiency, future dividend funds, strategic enterprise initiatives and the anticipated results thereof, rising rates of interest and the consequences thereof on web curiosity earnings, future recognition of PPP origination charges, mortgage mortgage originations, expertise initiatives, our diversified enterprise technique, asset high quality, credit score high quality, adequacy of allowances for mortgage losses and the extent of future charge-offs, capital ranges, the impact of future market and trade tendencies, the consequences of future rate of interest fluctuations, cybersecurity dangers, and inflation. Elements that might have a cloth opposed impact on the operations and future prospects of the Company embrace, however usually are not restricted to, modifications in: (1) rates of interest, reminiscent of volatility in short-term rates of interest or yields on U.S. Treasury bonds and will increase or volatility in mortgage rates of interest, (2) basic enterprise circumstances, in addition to circumstances inside the monetary markets, (3) basic financial circumstances, together with unemployment ranges, persevering with provide chain disruption and slowdowns in financial progress, and significantly associated to additional and sustained financial impacts of the COVID-19 pandemic, the effectiveness of the Company’s efforts to answer the COVID-19 pandemic, the tempo of financial restoration when the pandemic subsides and the heightened influence it has on lots of the dangers described herein and in different periodic reviews the Company recordsdata with the SEC, (4) the legislative/regulatory local weather, regulatory initiatives with respect to monetary establishments, services, the Shopper Monetary Safety Bureau (CFPB) and the regulatory and enforcement actions of the CFPB, (5) financial and financial insurance policies of the U.S. Authorities, together with insurance policies of the U.S. Treasury and the Federal Reserve Board, and the impact of those insurance policies on rates of interest and enterprise in our markets, (6) the worth of securities held within the Company’s funding portfolios, (7) the standard or composition of the mortgage portfolios and the worth of the collateral securing these loans, (8) the stock stage and pricing of used cars, together with gross sales costs of repossessed automobiles, (9) the extent of web charge-offs on loans and the adequacy of our allowance for mortgage losses, (10) the extent of indemnification losses associated to mortgage loans bought, (11) demand for mortgage merchandise, (12) deposit flows, (13) the power of the Company’s counterparties, (14) competitors from each banks and non-banks, together with competitors within the non-prime vehicle finance markets, (15) demand for monetary providers within the Company’s market space, (16) reliance on third events for key providers, (17) the industrial and residential actual property markets, (18) demand within the secondary residential mortgage mortgage markets, (19) the Company’s expertise initiatives and different strategic initiatives, (20) the Company’s department expansions and consolidations, (21) cyber threats, assaults or occasions, (22) enlargement of C&F Financial institution’s product choices, and (23) accounting ideas, insurance policies and tips, and elections by the Company thereunder. These dangers and uncertainties must be thought of in evaluating the forward-looking statements contained herein, and readers are cautioned to not place undue reliance on any forward-looking statements, which converse solely as of the date of this launch. For extra data on danger elements that might have an effect on the forward-looking statements contained herein, see the Company’s Annual Report on Type 10-Okay for the yr ended December 31, 2021 and different reviews filed with the SEC.

C&F Monetary Company

Chosen Monetary Data
({dollars} in 1000’s, aside from per share knowledge)
(unaudited)

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¹For extra details about these non-GAAP monetary measures, please see “Use of Sure Non-GAAP Monetary Measures” and “Reconciliation of Sure Non-GAAP Monetary Measures.”

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1. Acquired loans are tracked in two separate classes: “bought performing” and “bought credit score impaired.” The remaining low cost for bought performing loans was $1.0 million at 3/31/22, $1.1 million at 12/31/21 and $1.5 million at 3/31/21. The remaining low cost for bought credit score impaired loans was $4.4 million at 3/31/22, $4.7 million at 12/31/21 and $5.6 million at 3/31/21.

2. The principal quantity of excellent PPP loans was $7.3 million at 3/31/22, $18.4 million at 12/31/21 and $106.3 million at 3/31/21.

3. Contains $835,000 at 12/31/21 associated to the land and buildings of a former financial institution department, which was consolidated into a close-by department in 2019 and was bought within the first quarter of 2022.

4. Impaired loans contains $2.2 million of loans on nonaccrual at December 31, 2021. Impaired loans additionally contains $2.2 million and $2.7 million of TDRs at March 31, 2022 and December 31, 2021, respectively.

5. The ratio of ALL to complete loans, excluding bought credit score impaired loans, contains bought performing loans and loans originated beneath the PPP for which no allowance for mortgage losses is required.

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¹ For extra details about these non-GAAP monetary measures, please see “Use of Sure Non-GAAP Monetary Measures” and “Reconciliation of Sure Non-GAAP Monetary Measures.”

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¹ For extra details about these non-GAAP monetary measures, please see “Use of Sure Non-GAAP Monetary Measures” and “Reconciliation of Sure Non-GAAP Monetary Measures.”

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¹ The Company, a small financial institution holding firm beneath relevant laws and steering, will not be topic to the minimal regulatory capital laws for financial institution holding corporations. The regulatory necessities that apply to financial institution holding corporations which might be topic to regulatory capital necessities are introduced above, together with the Company’s capital ratios as decided beneath these laws.
² All ratios at March 31, 2022 are estimates and topic to alter pending regulatory filings. All ratios at December 31, 2021 are introduced as filed.
³ The ratios introduced for minimal capital necessities are these to be thought of adequately capitalized.

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1. Department consolidation exercise is web of associated earnings taxes of $17,000 for the quarter ended March 31, 2022.

2. Assuming a tax price of 21%.