Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Mar. 31, 2020 | May 07, 2020 | |
Document and Entity Information | ||
Entity Registrant Name | C & F FINANCIAL CORP | |
Document Type | 10-Q | |
Amendment Flag | false | |
Entity Central Index Key | 0000913341 | |
Entity Filer Category | Accelerated Filer | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Document Period End Date | Mar. 31, 2020 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Entity Common Stock, Shares Outstanding | 3,647,673 | |
Current Fiscal Year End Date | --12-31 | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 | [1] |
Assets | |||
Cash and due from banks | $ 37,006,000 | $ 21,148,000 | |
Interest-bearing deposits in other banks | 111,003,000 | 144,285,000 | |
Total cash and cash equivalents | 148,009,000 | 165,433,000 | |
Securities—available for sale at fair value, amortized cost of $230,245 and $187,759, respectively | 234,424,000 | 189,733,000 | |
Loans held for sale, at fair value | 125,667,000 | 90,500,000 | |
Loans, net of allowance for loan losses of $33,298 and $32,873, respectively | 1,204,171,000 | 1,082,318,000 | |
Restricted stock, at cost | 3,209,000 | 3,257,000 | |
Corporate premises and equipment, net | 38,731,000 | 35,261,000 | |
Other real estate owned, net of valuation allowance of $88 and $88, respectively | 1,103,000 | 1,103,000 | |
Accrued interest receivable | 7,253,000 | 6,776,000 | |
Goodwill | 25,117,000 | 14,425,000 | |
Other intangible assets, net | 2,540,000 | 912,000 | |
Bank-owned life insurance | 19,749,000 | 16,044,000 | |
Net deferred tax asset | 12,737,000 | 11,219,000 | |
Other assets | 54,582,000 | 40,451,000 | |
Total assets | 1,877,292,000 | 1,657,432,000 | |
Deposits | |||
Noninterest-bearing demand deposits | 334,648,000 | 296,985,000 | |
Savings and interest-bearing demand deposits | 641,976,000 | 572,209,000 | |
Time deposits | 507,750,000 | 422,056,000 | |
Total deposits | 1,484,374,000 | 1,291,250,000 | |
Short-term borrowings | 18,391,000 | 16,360,000 | |
Long-term borrowings | 116,254,000 | 119,529,000 | |
Trust preferred capital notes | 25,289,000 | 25,281,000 | |
Accrued interest payable | 1,508,000 | 1,291,000 | |
Other liabilities | 52,232,000 | 38,442,000 | |
Total liabilities | 1,698,048,000 | 1,492,153,000 | |
Commitments and contingent liabilities (Note 11) | |||
Equity | |||
Common stock ($1.00 par value, 8,000,000 shares authorized, 3,648,658 and 3,438,126 shares issued and outstanding, respectively, includes 139,820 and 142,020 of unvested shares, respectively) | 3,509,000 | 3,296,000 | |
Additional paid-in capital | 20,710,000 | 9,503,000 | |
Retained earnings | 156,438,000 | 154,248,000 | |
Accumulated other comprehensive loss, net | (1,955,000) | (2,249,000) | |
Equity attributable to C&F Financial Corporation | 178,702,000 | 164,798,000 | |
Noncontrolling interest | 542,000 | 481,000 | |
Total equity | 179,244,000 | 165,279,000 | |
Total liabilities and equity | $ 1,877,292,000 | $ 1,657,432,000 | |
[1] | Derived from audited consolidated financial statements. |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Consolidated Balance Sheets | ||
Available-for-sale securities, amortized cost | $ 230,245 | $ 187,759 |
Loans, allowance for loan losses | 33,298 | 32,873 |
Other real estate owned, valuation allowance | $ 88 | $ 88 |
Common stock par value (in dollars per share) | $ 1 | $ 1 |
Common stock, shares authorized | 8,000,000 | 8,000,000 |
Common stock, shares issued | 3,648,658 | 3,438,126 |
Common stock, shares outstanding | 3,648,658 | 3,438,126 |
Common stock, unvested shares | 139,820 | 142,020 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Interest income | ||
Interest and fees on loans | $ 22,897 | $ 20,920 |
Interest on interest-bearing deposits and federal funds sold | 598 | 589 |
Interest and dividends on securities | ||
U.S. government agencies and corporations | 126 | 101 |
Mortgage-backed securities | 520 | 611 |
Tax-exempt obligations of states and political subdivisions | 496 | 583 |
Taxable obligations of states and political subdivisions | 92 | 93 |
Other | 49 | 54 |
Total interest income | 24,778 | 22,951 |
Interest expense | ||
Savings and interest-bearing deposits | 586 | 602 |
Time deposits | 2,299 | 1,306 |
Borrowings | 1,001 | 1,111 |
Trust preferred capital notes | 289 | 285 |
Total interest expense | 4,175 | 3,304 |
Net interest income | 20,603 | 19,647 |
Provision for loan losses | 2,650 | 2,395 |
Net interest income after provision for loan losses | 17,953 | 17,252 |
Noninterest income | ||
Gains on sales of loans | 3,676 | 2,136 |
Mortgage banking fee income | 1,305 | 769 |
Interchange income | 1,089 | 958 |
Service charges on deposit accounts | 1,002 | 918 |
Wealth management services income, net | 585 | 449 |
Other service charges and fees | 375 | 299 |
Net gains on sales, maturities and calls of available for sale securities | 4 | 4 |
Other | 993 | 1,570 |
Total noninterest income | 9,029 | 7,103 |
Noninterest expenses | ||
Salaries and employee benefits | 10,817 | 11,907 |
Occupancy | 2,327 | 2,190 |
Other | 9,222 | 5,580 |
Total noninterest expenses | 22,366 | 19,677 |
Income before income taxes | 4,616 | 4,678 |
Income tax expense | 977 | 907 |
Net income | 3,639 | 3,771 |
Less net income (loss) attributable to noncontrolling interest | 61 | |
Net income attributable to C&F Financial Corporation | $ 3,578 | $ 3,771 |
Net income per share - basic and diluted (in dollars per share) | $ 0.98 | $ 1.08 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | ||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||
Net income | $ 3,639 | $ 3,771 | |
Defined benefit plan: | |||
Reclassification of recognized net actuarial losses into net income | [1],[2] | 42 | 42 |
Related income tax effects | (9) | (9) | |
Amortization of prior service credit into net income | [1],[2] | (17) | (17) |
Related income tax effects | 4 | 4 | |
Defined benefit plan, net of tax | 20 | 20 | |
Cash flow hedges: | |||
Unrealized holding losses arising during the period | (1,974) | (108) | |
Related income tax effects | 508 | 28 | |
Amortization of hedging gains into net income | [3] | (3) | |
Related income tax effects | 1 | ||
Cash flow hedges, net of tax | (1,468) | (80) | |
Securities available for sale: | |||
Unrealized holding gains arising during the period | 2,209 | 1,826 | |
Related income tax effects | (464) | (383) | |
Reclassification of net realized gains into net income | [4] | (4) | (4) |
Related income tax effects | 1 | 1 | |
Securities available for sale, net of tax | 1,742 | 1,440 | |
Other comprehensive income, net of tax | 294 | 1,380 | |
Comprehensive income | 3,933 | 5,151 | |
Less comprehensive income (loss) attributable to noncontrolling interest | 61 | ||
Comprehensive income attributable to C&F Financial Corporation | $ 3,872 | $ 5,151 | |
[1] | These items are included in the computation of net periodic benefit cost and are included in “Noninterest income - Other” on the Consolidated Statements of Income. See “Note 8: Employee Benefit Plans,” for additional information. | ||
[2] | These items are included in the computation of net periodic benefit cost and are included in “Noninterest income - Other” on the Consolidated Statements of Income. See “Note 8: Employee Benefit Plans,” for additional information.These items are included in | ||
[3] | These items are included in “Interest expense - Trust preferred capital notes” on the Consolidated Statements of Income. | ||
[4] | These items are included in “Net gains on sales, maturities and calls of available for sale securities” on the Consolidated Statements of Income. |
Consolidated Statements of Shar
Consolidated Statements of Shareholders’ Equity - USD ($) $ in Thousands | Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Loss, Net | Noncontrolling Interest | Total | |
Balance, beginning of the period at Dec. 31, 2018 | $ 3,358 | $ 12,752 | $ 140,520 | $ (4,672) | $ 151,958 | ||
Comprehensive income: | |||||||
Net income | 3,771 | 3,771 | |||||
Other comprehensive income | 1,380 | 1,380 | |||||
Issuance of noncontrolling interest | $ 490 | 490 | |||||
Share-based compensation | 457 | 457 | |||||
Restricted stock vested | 15 | (15) | |||||
Common stock issued | 1 | 35 | 36 | ||||
Common stock purchased | (37) | (1,867) | (1,904) | ||||
Cash dividends declared | (1,288) | (1,288) | |||||
Balance, end of period at Mar. 31, 2019 | 3,337 | 11,362 | 143,003 | (3,292) | 490 | 154,900 | |
Balance, beginning of the period at Dec. 31, 2019 | 3,296 | 9,503 | 154,248 | (2,249) | 481 | 165,279 | [1] |
Comprehensive income: | |||||||
Net income | 3,578 | 61 | 3,639 | ||||
Other comprehensive income | 294 | 294 | |||||
Share-based compensation | 389 | 389 | |||||
Restricted stock vested | 16 | (16) | |||||
Acquisition of Peoples Bankshares, Incorporated | 210 | 11,402 | 11,612 | ||||
Common stock issued | 1 | 36 | 37 | ||||
Common stock purchased | (14) | (604) | (618) | ||||
Cash dividends declared | (1,388) | (1,388) | |||||
Balance, end of period at Mar. 31, 2020 | $ 3,509 | $ 20,710 | $ 156,438 | $ (1,955) | $ 542 | $ 179,244 | |
[1] | Derived from audited consolidated financial statements. |
Consolidated Statements of Sh_2
Consolidated Statements of Shareholders’ Equity (Parentheticals) - $ / shares | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
CONSOLIDATED STATEMENTS OF EQUITY | ||
Cash dividends declared – common stock (in dollars per share) | $ 0.38 | $ 0.37 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | ||
Operating activities: | |||
Net income | $ 3,639,000 | $ 3,771,000 | |
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | |||
Depreciation | 885,000 | 916,000 | |
Provision for loan losses | 2,650,000 | 2,395,000 | |
Share-based compensation | 389,000 | 457,000 | |
Pension expense | 172,000 | 141,000 | |
Accretion of certain acquisition-related discounts, net | (1,259,000) | (365,000) | |
Amortization of intangible assets | 83,000 | 78,000 | |
Net realized gains on sales, maturities and calls of securities available for sale | (4,000) | (4,000) | |
Accretion of discounts and amortization of premiums on securities, net | 370,000 | 410,000 | |
Income from bank-owned life insurance | (103,000) | (83,000) | |
Proceeds from sales of loans held for sale | 227,422,000 | 146,701,000 | |
Origination of loans held for sale | (253,868,000) | (138,705,000) | |
Gains on sales of loans held for sale | (3,676,000) | (2,136,000) | |
Other (gains) and losses, net | 257,000 | (10,000) | |
Change in other assets and liabilities: | |||
Accrued interest receivable | (47,000) | 169,000 | |
Other assets | 4,455,000 | 3,508,000 | |
Accrued interest payable | (43,000) | 246,000 | |
Other liabilities | (3,100,000) | (3,322,000) | |
Net cash (used in) provided by operating activities | (21,778,000) | 14,167,000 | |
Investing activities: | |||
Acquisition of Peoples Bankshares, Incorporated | 19,101,000 | ||
Disposition of assets related to business combination | 8,004,000 | ||
Proceeds from sales, maturities and calls of securities available for sale and payments on mortgage-backed securities | 39,063,000 | 15,657,000 | |
Purchases of securities available for sale | (64,746,000) | (8,338,000) | |
Repayments on loans held for investment by non-bank affiliates | 32,448,000 | 30,599,000 | |
Purchases of loans held for investment by non-bank affiliates | (29,305,000) | (36,854,000) | |
Net increase in retail banking loans held for investment | (4,911,000) | (9,250,000) | |
Proceeds from sales of other real estate owned | 281,000 | ||
Purchases of corporate premises and equipment | (1,548,000) | (753,000) | |
Change in collateral posted with other financial institutions, net | (8,270,000) | (2,370,000) | |
Other investing activities, net | 199,000 | 3,000 | |
Net cash used in investing activities | (9,684,000) | (11,306,000) | |
Financing activities: | |||
Net increase (decrease) in demand and savings deposits | 12,632,000 | (11,057,000) | |
Net increase in time deposits | 8,745,000 | 31,590,000 | |
Net increase in short-term borrowings | 2,030,000 | 2,107,000 | |
Repayments of long-term borrowings | (7,519,000) | ||
Repurchase of common stock warrant | (355,000) | (1,667,000) | |
Cash dividends paid | (1,388,000) | (1,288,000) | |
Other financing activities, net | (107,000) | (108,000) | |
Net cash provided by financing activities | 14,038,000 | 19,577,000 | |
Net (decrease) increase in cash and cash equivalents | (17,424,000) | 22,438,000 | |
Cash and cash equivalents at beginning of periods | 165,433,000 | [1] | 115,013,000 |
Cash and cash equivalents at end of period | 148,009,000 | 137,451,000 | |
Supplemental cash flow disclosures: | |||
Interest paid | 4,175,000 | 3,049,000 | |
Income taxes paid | 3,000 | 8,000 | |
Supplemental disclosure of noncash investing and financing activities | |||
Value of shares withheld at vesting for employee taxes | 246,000 | 237,000 | |
Liabilities assumed to acquire right of use assets under operating leases | $ 204,000 | 821,000 | |
Issuance of noncontrolling interest | $ 490,000 | ||
[1] | Derived from audited consolidated financial statements. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2020 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | C&F FINANCIAL CORPORATION AND SUBSIDIARIES NOTE (Unaudited) NOTE 1: Summary of Significant Accounting Policies Principles of Consolidation: The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) for interim financial reporting and with applicable quarterly reporting regulations of the Securities and Exchange Commission (the SEC). They do not include all of the information and notes required by U.S. GAAP for complete financial statements. Therefore, these consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the C&F Financial Corporation Annual Report on Form 10-K for the year ended December 31, 2019. The unaudited consolidated financial statements include the accounts of C&F Financial Corporation (the Corporation) and its direct wholly-owned subsidiary, Citizens and Farmers Bank (the Bank or C&F Bank) and indirect subsidiaries that are wholly-owned or controlled. Subsidiaries that are less than wholly owned are fully consolidated if they are controlled by the Corporation or one of its subsidiaries, and the portion of any subsidiary not owned by the Corporation is reported as noncontrolling interest. All significant intercompany accounts and transactions have been eliminated in consolidation. In addition, the Corporation owns all of the common stock of C&F Financial Statutory Trust I, C&F Financial Statutory Trust II and Central Virginia Bankshares Statutory Trust I, all of which are unconsolidated subsidiaries. The subordinated debt owed to these trusts is reported as liabilities of the Corporation. The accounting and reporting policies of the Corporation conform to U.S. GAAP and to predominant practices within the banking industry. Nature of Operations: The Corporation is a bank holding company incorporated under the laws of the Commonwealth of Virginia. The Corporation owns all of the stock of its subsidiary, C&F Bank, which is an independent commercial bank chartered under the laws of the Commonwealth of Virginia. C&F Bank has five wholly-owned subsidiaries: C&F Mortgage Corporation (C&F Mortgage), C&F Finance Company (C&F Finance), C&F Wealth Management Corporation (C&F Wealth Management), C&F Insurance Services, Inc. and CVB Title Services, Inc., all incorporated under the laws of the Commonwealth of Virginia. C&F Mortgage, organized in September 1995, was formed to originate and sell residential mortgages and through its subsidiary, Certified Appraisals LLC, provides ancillary mortgage loan production services for residential appraisals. C&F Mortgage owns a 51 percent interest in C&F Select LLC, which was organized in January 2019 and is also engaged in the business of originating and selling residential mortgages. C&F Finance, acquired in September 2002, is a finance company purchasing automobile, marine and recreational vehicle (RV) loans through indirect lending programs. C&F Wealth Management, organized in April 1995, is a full-service brokerage firm offering a comprehensive range of wealth management services and insurance products through third-party service providers. C&F Insurance Services, Inc., was organized in July 1999, for the primary purpose of owning an equity interest in an independent insurance agency that operates in Virginia and North Carolina. CVB Title Services, Inc. was organized for the primary purpose of owning an equity interest in a full service title and settlement agency. Business segment data is presented in Note 10. Basis of Presentation: The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses, impairment of loans and goodwill impairment. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, which are necessary for a fair presentation of the results of operations in these financial statements, have been made. The outbreak of the novel coronavirus and the resulting COVID-19 illness has caused a significant disruption in economic activity worldwide, and the Corporation expects that it will have a significant impact on businesses and consumers in its market areas and on its results of operations. It is unknown how long these conditions will last and what the ultimate financial impact will be to the Corporation. Business Combination: On January 1, 2020, the Corporation completed the acquisition of Peoples Bankshares, Incorporated (Peoples) and its banking subsidiary, Peoples Community Bank for an aggregate purchase price of $22.19 million of cash and stock. Additional information about the acquisition is presented in Note 2. Reclassification: Certain reclassifications have been made to the prior period financial statements to conform to the current period presentation. None of these reclassifications are considered material. Derivative Financial Instruments: The Corporation recognizes derivative financial instruments at fair value as either an other asset or other liability in the Consolidated Balance Sheets. The Corporation’s derivative financial instruments include (1) interest rate swaps that qualify and are designated as cash flow hedges on the Corporation’s trust preferred capital notes, (2) interest rate swaps with certain qualifying commercial loan customers and dealer counterparties and (3) interest rate contracts arising from mortgage banking activities, including interest rate lock commitments (IRLCs) on mortgage loans and related forward sales of mortgage loans and mortgage backed securities. The gain or loss on the Corporation’s cash flow hedges is reported as a component of other comprehensive income, net of deferred income taxes, and reclassified into earnings in the same period(s) during which the hedged transactions affect earnings. IRLCs, forward sales contracts and interest rate swaps with loan customers and dealer counterparties are not designated as hedging instruments, and therefore changes in the fair value of these instruments are reported as noninterest income or noninterest expense, as applicable. The Corporation’s derivative financial instruments are described more fully in Note 12. Share-Based Compensation: Share-based compensation expense, net of forfeitures, for the three months ended March 31, 2020 was $389,000 ($217,000 after tax) for restricted stock granted during 2015 through 2020. As of March 31, 2020, there was $3.73 million of total unrecognized compensation expense related to unvested restricted stock that will be recognized over the remaining requisite service periods. A summary of activity for restricted stock awards during the three months ended March 31, 2020 and 2019 is presented below: 2020 Weighted- Average Grant Date Shares Fair Value Unvested, December 31, 2019 142,020 $ 48.88 Granted 14,650 53.22 Vested (16,230) 39.97 Forfeited (620) 53.46 Unvested, March 31, 2020 139,820 50.39 2019 Weighted- Average Grant Date Shares Fair Value Unvested, December 31, 2018 139,455 $ 45.75 Granted 16,100 51.73 Vested (15,490) 41.31 Forfeited (70) 60.95 Unvested, March 31, 2019 139,995 46.92 Recently Adopted Accounting Pronouncements: On January 1, 2020, the Corporation adopted Accounting Standards Update (ASU) 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement.” These amendments modified the disclosure requirements in Topic 820 to add disclosures regarding changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements and the narrative description of measurement uncertainty. The applicable amendments of ASU 2018-13 were applied prospectively and did not have a material effect on the Corporation’s consolidated financial statements. Recent Significant Accounting Pronouncements: In June 2016, the Financial Accounting Standards Board (FASB) issued ASU 2016-13, “ Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” as part of its project on financial instruments. Subsequently, this ASU was amended when the FASB issued ASU 2018-19, “ Codification Improvements to Topic 326, Financial Instruments – Credit Losses, ” ASU 2019-04, “ Codification Improvements to Topic 326, Financial Instruments – Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments ,” ASU 2019-05, “ Financial Instruments – Credit Losses (Topic 326): Targeted Transition Relief ,” ASU 2019-10, “ Financial Instruments—Credit losses (Topic 326), Derivatives and hedging (Topic 815), and Leases (Topic 842)—Effective dates, ” ASU 2019-11, “ Codification Improvements to Topic 326, Financial Instruments—Credit Losses, ” ASU 2020-02, “ Financial Instruments-Credit Losses (Topic 326) and Leases (Topic 842) ” and ASU 2020-03, “ Codification Improvements to Financial Instruments ” (collectively, ASC 326). ASC 326 introduces an approach based on expected losses to estimate credit losses on certain types of financial instruments. It also modifies the impairment model for available-for-sale debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination. The new standard will be effective for the Corporation beginning on January 1, 2023. Early adoption of the new standard is permitted. The amendments of ASC 326, upon adoption, will be applied on a modified retrospective basis, with the cumulative effect of adopting the new standard being recorded as an adjustment to opening retained earnings in the period of adoption. The Corporation has established a working group to prepare for and implement changes related to ASC 326 and has gathered historical loan loss data for purposes of evaluating appropriate portfolio segmentation and modeling methods under the standard. The Corporation has performed procedures to validate the historical loan loss data to ensure its suitability and reliability for purposes of developing an estimate of expected credit losses under ASC 326. The Corporation has engaged a vendor to assist in modeling expected lifetime losses under ASC 326, and is continuing to develop and refine an approach to estimating the allowance for credit losses. The adoption of ASC 326 will result in significant changes to the Corporation’s consolidated financial statements, which may include changes in the level of the allowance for credit losses that will be considered adequate, a reduction in total equity and regulatory capital of C&F Bank, differences in the timing of recognizing changes to the allowance for credit losses and expanded disclosures about the allowance for credit losses. The Corporation has not yet determined an estimate of the effect of these changes. The adoption of the standard will also result in significant changes in the Corporation’s internal control over financial reporting related to the allowance for credit losses. In August 2018, the FASB issued ASU 2018-14, “Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans.” These amendments modify the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. Certain disclosure requirements have been deleted while the following disclosure requirements have been added: the weighted-average interest crediting rates for cash balance plans and other plans with promised interest crediting rates and an explanation of the reasons for significant gains and losses related to changes in the benefit obligation for the period. The amendments also clarify the disclosure requirements regarding the projected benefit obligation (PBO) and fair value of plan assets for plans with PBOs in excess of plan assets and the accumulated benefit obligation (ABO) and fair value of plan assets for plans with ABOs in excess of plan assets. The amendments are effective for fiscal years ending after December 15, 2020. Early adoption is permitted. The Corporation does not expect the adoption of ASU 2018-14 to have a material effect on its consolidated financial statements. Other accounting standards that have been issued by the FASB or other standards-setting bodies are not currently expected to have a material effect on the Corporation’s financial position, results of operations or cash flows. |
Business Combination
Business Combination | 3 Months Ended |
Mar. 31, 2020 | |
Business Combination | |
Business Combination | NOTE 2: Business Combination On January 1, 2020, the Corporation completed its acquisition of Peoples. Peoples shareholders received 0.5366 shares of the Corporation’s common stock and $27.00 in cash for each share of Peoples common stock, with cash paid in lieu of any fractional shares of the Corporation’s common stock. In connection with the transaction, the Corporation paid aggregate cash consideration of $10.58 million and issued 209,871 shares of its common stock to the shareholders of Peoples. The Corporation accounted for the acquisition using the acquisition method of accounting in accordance with ASC 805, Business Combinations . Under the acquisition method of accounting, the assets acquired and liabilities assumed in the acquisition and the common stock of the Corporation issued as consideration were recorded at their respective acquisition date fair values. Determining the fair value of assets and liabilities, particularly related to the loan portfolio, is inherently subjective and involves significant judgment regarding the methods and assumptions used to estimate fair value. During the measurement period, the acquirer shall adjust the amounts recognized at the acquisition date and may recognize additional assets or liabilities to reflect new information obtained from facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date. Measurement period adjustments are recognized in the reporting period in which they are determined. The measurement period may not exceed one year from the acquisition date. The following table presents as of January 1, 2020 the total consideration paid by the Corporation in connection with the acquisition of Peoples, the fair values of the assets acquired and liabilities assumed, and the resulting goodwill. (Dollars in thousands) Purchase price: Cash paid $ 10,579 Common stock issued 11,612 Total purchase price $ 22,191 Identifiable assets acquired: Cash and cash equivalents $ 29,680 Securities available for sale 17,169 Loans 124,290 Accrued interest receivable 430 Corporate premises and equipment 3,105 Other real estate owned 281 Core deposit intangible asset 1,711 Bank-owned life insurance 3,591 Investment in small business investment company 1,493 Other receivables 5,234 Other assets 3,637 Total identifiable assets acquired 190,621 Identifiable liabilities assumed: Demand and savings deposits 94,798 Time deposits 77,018 Borrowings 4,245 Accrued interest payable 260 Salaries, benefits and deferred compensation 2,054 Other liabilities 747 Total identifiable liabilities assumed 179,122 Net identifiable assets assumed $ 11,499 Goodwill resulting from acquisition $ 10,692 In connection with the acquisition, the Corporation recorded approximately $10.69 million of goodwill and $1.71 million of other intangible assets related to the core deposits of Peoples. The goodwill arising from the acquisition of Peoples is not deductible for income taxes. The core deposit intangible asset (CDI) will be amortized over a period of 15 years using a declining balance method. Loans acquired from Peoples had aggregate outstanding principal of $131.92 million and an estimated fair value of $124.29 million. The discount between the outstanding principal balance and fair value represents expected credit losses and adjustments for market interest rates. Under the acquisition method, the allowance for loan losses recorded in the books of Peoples in the amount of $2.87 million was not carried over into the books of the Corporation. Loans that have evidence of deterioration in credit quality since origination are categorized as purchased credit impaired (PCI). PCI loans acquired from Peoples included medical student loans with an outstanding principal balance of $4.28 million and a fair value of $635,000 at January 1, 2020, which were purchased by Peoples and the performance of which was previously backed by surety bonds. The surety bonds were terminated in 2018 when the issuer of the bond was placed into liquidation by its insurance regulator, and replacement surety bond coverage has not been obtained. Information about PCI loans acquired from Peoples as of January 1, 2020 is as follows: (Dollars in thousands) January 1, 2020 Contractual principal and interest due $ 20,239 Nonaccretable difference (7,679) Expected cash flows 12,560 Accretable yield (3,366) Purchase credit impaired loans - estimated fair value $ 9,194 Fair values of the major categories of assets acquired and liabilities assumed were determined as follows: Loans: The acquired loans were recorded at fair value at the acquisition date without carryover of People's allowance for loan losses. The fair value of the loans was determined using market participant assumptions in estimating the amount and timing of both principal and interest cash flows expected to be collected on the loans and then discounting those cash flows based on a discount rate that would be required by a market participant. In this regard, the acquired loans were segregated into pools based on loan type and credit risk. Loan type was determined based on collateral type, loan purpose and loan structure. Credit risk characteristics included risk rating groups (pass rated loans and adversely classified loans), updated loan-to-value ratios and lien position, and past loan performance. For valuation purposes, these pools were further disaggregated by maturity and pricing characteristics (e.g., fixed-rate, adjustable-rate, balloon maturities). Core Deposit Intangible: The fair value of the CDI was determined based on a discounted cash flow analysis using a discount rate based on the estimated cost of equity capital for a market participant. To calculate cash flows, deposit account servicing costs (net of deposit fee income) and interest expense on deposits were compared to the cost of alternative funding sources available through the FHLB. The life of the deposit base and projected deposit attrition rates were determined using Peoples’ historical deposit data. The CDI was estimated at $1.71 million or 1.8% of non-maturity deposits. Deposits: The fair value adjustment of deposits represents a premium over the value of the contractual repayments of fixed-maturity deposits using prevailing market interest rates for similar term certificates of deposit. The resulting estimated fair value adjustment of certificates of deposit ranging in maturity from three months to five years is a $557,000 premium and is being amortized into income over a period of two years. The following table presents certain unaudited pro forma information as if the acquisition had taken place on January 1, 2019. These results combine the historical results of Peoples and the Corporation for the period prior to the merger. While certain adjustments were made for estimated effects resulting from the application of the acquisition method, including certain fair value adjustments, this pro forma information is not indicative of what would have occurred had the acquisition actually taken place on January 1, 2019. Pro forma adjustments for the three months ended March 31, 2019 include the net impact of accretion of loan discounts related to market interest rates, amortization of premiums on deposits and borrowings, amortization of intangible assets and related income taxes. Additionally, the Corporation expects to achieve further operational cost savings and other efficiencies as a result of the acquisition which are not reflected in the unaudited pro forma amounts below. Unaudited Pro Forma Three Months Ended (Dollars in thousands, except per share amounts) March 31, 2019 Total revenues (net interest income plus nonintererest income) $ 28,655 Net income $ 4,289 Net income per share, basic and diluted $ 1.16 The revenue and earnings amounts specific to Peoples since the acquisition date that are included in the consolidated results for 2020 are not readily determinable. The disclosures of these amounts are impracticable due to the merging of certain processes and systems at the acquisition date. Merger related expenses associated with the acquisition of Peoples were $957,000 ($785,000 after income taxes) for the three months ended March 31, 2020 and $1.67 million ($1.44 million after income taxes) in the aggregate through March 31, 2020. There were no merger related expenses during the three months ended March 31, 2019. These costs included the integration of systems and operations and legal and consulting expenses, which have been expensed as incurred. Additional merger related expenses are expected to be incurred during 2020 in connection with the systems conversion and ongoing integration. |
Securities
Securities | 3 Months Ended |
Mar. 31, 2020 | |
Securities | |
Securities | NOTE 3: Securities The Corporation’s debt securities, all of which are classified as available for sale, are summarized as follows: March 31, 2020 Gross Gross Amortized Unrealized Unrealized (Dollars in thousands) Cost Gains Losses Fair Value U.S. government agencies and corporations $ 31,985 $ 57 $ — $ 32,042 Mortgage-backed securities 101,424 2,941 — 104,365 Obligations of states and political subdivisions 96,836 1,225 (44) 98,017 $ 230,245 $ 4,223 $ (44) $ 234,424 December 31, 2019 Gross Gross Amortized Unrealized Unrealized (Dollars in thousands) Cost Gains Losses Fair Value U.S. government agencies and corporations $ 21,454 $ 3 $ (17) $ 21,440 Mortgage-backed securities 85,649 979 (43) 86,585 Obligations of states and political subdivisions 80,656 1,111 (59) 81,708 $ 187,759 $ 2,093 $ (119) $ 189,733 The amortized cost and estimated fair value of securities at March 31, 2020, by the earlier of contractual maturity or expected maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to prepay obligations with or without call or prepayment penalties. March 31, 2020 Amortized (Dollars in thousands) Cost Fair Value Due in one year or less $ 50,438 $ 50,564 Due after one year through five years 144,867 148,251 Due after five years through ten years 32,550 33,111 Due after ten years 2,390 2,498 $ 230,245 $ 234,424 The following table presents the gross realized gains and losses on and the proceeds from the sales, maturities and calls of securities. During the three months ended March 31, 2020, $6.64 million in proceeds were related to sales of assets acquired in the acquisition of Peoples. There were no sales of securities during the three months ended March 31, 2019. Three Months Ended March 31, (Dollars in thousands) 2020 2019 Realized gains from sales, maturities and calls of securities: Gross realized gains $ 4 $ 4 Gross realized losses — — Net realized gains $ 4 $ 4 Proceeds from sales, maturities, calls and paydowns of securities $ 39,063 $ 15,657 The Corporation pledges securities primarily to secure public deposits and repurchase agreements. Securities with an aggregate amortized cost of $119.52 million and an aggregate fair value of $122.74 million were pledged at March 31, 2020. Securities with an aggregate amortized cost of $126.22 million and an aggregate fair value of $127.47 million were pledged at December 31, 2019. Securities in an unrealized loss position at March 31, 2020, by duration of the period of the unrealized loss, are shown below. Less Than 12 Months 12 Months or More Total Fair Unrealized Fair Unrealized Fair Unrealized (Dollars in thousands) Value Loss Value Loss Value Loss U.S. government agencies and corporations $ — $ — $ — $ — $ — $ — Mortgage-backed securities — — — — — — Obligations of states and political subdivisions 9,612 39 604 5 10,216 44 Total temporarily impaired securities $ 9,612 $ 39 $ 604 $ 5 $ 10,216 $ 44 There were 25 debt securities totaling $10.21 million of aggregate fair value considered temporarily impaired at March 31, 2020. The primary cause of the temporary impairments in the Corporation’s investments in debt securities was fluctuations in interest rates. The Corporation’s mortgage-backed securities are entirely issued by either U.S. government agencies or U.S. government-sponsored enterprises. Collectively, these entities provide a guarantee, which is either explicitly or implicitly supported by the full faith and credit of the U.S. government, that investors in such mortgage-backed securities will receive timely principal and interest payments. At March 31, 2020, all of the Corporation’s obligations of states and political subdivisions that were in a net unrealized loss position were rated “A” or better by Standard & Poor's or Moody's Investors Service. The Corporation considers these to meet regulatory credit quality standards, meaning that the securities have low risk of default by the obligor and the full and timely repayment of principal and interest is expected over the expected life of the investment. Because the Corporation intends to hold these investments in debt securities to maturity and it is more-likely-than-not that the Corporation will not be required to sell these investments before a recovery of unrealized losses, the Corporation does not consider these investments to be other-than-temporarily impaired at March 31, 2020 and no other-than-temporary impairment loss has been recognized in net income. Securities in an unrealized loss position at December 31, 2019, by duration of the period of the unrealized loss, are shown below. Less Than 12 Months 12 Months or More Total Fair Unrealized Fair Unrealized Fair Unrealized (Dollars in thousands) Value Loss Value Loss Value Loss U.S. government agencies and corporations $ 6,256 $ 11 $ 4,094 $ 6 $ 10,350 $ 17 Mortgage-backed securities 4,099 7 10,166 36 14,265 43 Obligations of states and political subdivisions 9,187 53 1,368 6 10,555 59 Total temporarily impaired securities $ 19,542 $ 71 $ 15,628 $ 48 $ 35,170 $ 119 The Corporation’s investment in restricted stock totaled $3.21 million at March 31, 2020 and consisted of Federal Home Loan Bank (FHLB) stock. Restricted stock is generally viewed as a long-term investment, which is carried at cost because there is no market for the stock other than the FHLBs. Therefore, when evaluating restricted stock for impairment, its value is based on the ultimate recoverability of the par value rather than by recognizing any temporary decline in value. The Corporation did not consider its investment in restricted stock to be other-than-temporarily impaired at March 31, 2020 and no impairment has been recognized. |
Loans
Loans | 3 Months Ended |
Mar. 31, 2020 | |
Loans | |
Loans | NOTE 4: Loans Major classifications of loans are summarized as follows: March 31, December 31, (Dollars in thousands) 2020 2019 Real estate – residential mortgage $ 202,767 $ 181,295 Real estate – construction 1 65,937 54,246 Commercial, financial and agricultural 2 588,585 500,812 Equity lines 56,306 52,083 Consumer 16,283 13,756 Consumer finance 307,591 312,999 1,237,469 1,115,191 Less allowance for loan losses (33,298) (32,873) Loans, net $ 1,204,171 $ 1,082,318 1 Includes the Corporation’s real estate construction lending and consumer real estate lot lending. 2 Includes the Corporation’s commercial real estate lending, land acquisition and development lending, builder line lending and commercial business lending. Consumer loans included $227,000 and $449,000 of demand deposit overdrafts at March 31, 2020 and December 31, 2019, respectively. Loans acquired in business combinations are recorded in the Consolidated Balance Sheets at fair value at the acquisition date under the acquisition method of accounting. The outstanding principal balance and the carrying amount at March 31, 2020 and December 31, 2019 of loans acquired in business combinations were as follows: March 31, 2020 December 31, 2019 Acquired Loans - Acquired Loans - Acquired Loans - Acquired Loans - Purchased Purchased Acquired Loans - Purchased Purchased Acquired Loans - (Dollars in thousands) Credit Impaired Performing Total Credit Impaired Performing Total Outstanding principal balance $ 20,139 $ 128,098 $ 148,237 $ 6,262 $ 27,839 $ 34,101 Carrying amount Real estate – residential mortgage $ 3,195 $ 25,269 $ 28,464 $ 107 $ 7,035 $ 7,142 Real estate – construction 103 7,139 7,242 — — — Commercial, financial and agricultural 1 5,234 78,272 83,506 563 11,338 11,901 Equity lines 50 12,379 12,429 35 8,046 8,081 Consumer 637 2,469 3,106 — 3 3 Total acquired loans $ 9,219 $ 125,528 $ 134,747 $ 705 $ 26,422 $ 27,127 1 Includes acquired loans classified by the Corporation as commercial real estate lending and commercial business lending. The following table presents a summary of the change in the accretable yield of loans classified as purchased credit impaired (PCI): Three Months Ended March 31, (Dollars in thousands) 2020 2019 Accretable yield, balance at beginning of period $ 4,721 $ 5,987 Acquisition of Peoples Bankshares, Incorporated 3,366 — Accretion (959) (469) Reclassification of nonaccretable difference due to improvement in expected cash flows 733 256 Other changes, net 57 162 Accretable yield, balance at end of period $ 7,918 $ 5,936 Loans on nonaccrual status were as follows: March 31, December 31, (Dollars in thousands) 2020 2019 Real estate – residential mortgage $ 931 $ 1,526 Commercial, financial and agricultural: Commercial business lending — 11 Equity lines 278 229 Consumer 699 118 Consumer finance 377 611 Total loans on nonaccrual status $ 2,285 $ 2,495 The past due status of loans as of March 31, 2020 was as follows: 90+ Days 30 - 59 Days 60 - 89 Days 90+ Days Total Past Due and (Dollars in thousands) Past Due Past Due Past Due Past Due PCI Current 1 Total Loans Accruing Real estate – residential mortgage $ 1,251 $ 179 $ 556 $ 1,986 $ 3,195 $ 197,586 $ 202,767 $ — Real estate – construction: Construction lending — — — — 103 50,644 50,747 — Consumer lot lending — — — — — 15,190 15,190 — Commercial, financial and agricultural: Commercial real estate lending — 677 — 677 5,234 397,312 403,223 — Land acquisition and development lending — — — — — 40,189 40,189 — Builder line lending — — — — — 25,026 25,026 — Commercial business lending 11 — — 11 — 120,136 120,147 — Equity lines 304 — 88 392 50 55,864 56,306 9 Consumer 5 — — 5 637 15,641 16,283 — Consumer finance 8,825 1,187 377 10,389 — 297,202 307,591 — Total $ 10,396 $ 2,043 $ 1,021 $ 13,460 $ 9,219 $ 1,214,790 $ 1,237,469 $ 9 1 For the purposes of the table above, “Current” includes loans that are 1-29 days past due. The table above includes nonaccrual loans that are current of $556,000, 30-59 days past due of $114,000, 60-89 days past due of $20,000 and 90+ days past due of $1.01 million, as well as nonaccrual loans that are PCI of $538,000. The past due status of loans as of December 31, 2019 was as follows: 90+ Days 30 - 59 Days 60 - 89 Days 90+ Days Total Past Due and (Dollars in thousands) Past Due Past Due Past Due Past Due PCI Current 1 Total Loans Accruing Real estate – residential mortgage $ 1,428 $ 161 $ 1,016 $ 2,605 $ 107 $ 178,583 $ 181,295 $ — Real estate – construction: Construction lending — — — — — 40,943 40,943 — Consumer lot lending — — — — — 13,303 13,303 — Commercial, financial and agricultural: Commercial real estate lending — — — — 563 325,991 326,554 — Land acquisition and development lending — — — — — 42,891 42,891 — Builder line lending — — — — — 26,373 26,373 — Commercial business lending 73 18 — 91 — 104,903 104,994 — Equity lines 229 56 223 508 35 51,540 52,083 109 Consumer 20 10 — 30 — 13,726 13,756 — Consumer finance 11,034 1,420 611 13,065 — 299,934 312,999 — Total $ 12,784 $ 1,665 $ 1,850 $ 16,299 $ 705 $ 1,098,187 $ 1,115,191 $ 109 1 For the purposes of the table above, “Current” includes loans that are 1-29 days past due. The table above includes nonaccrual loans that are current of $547,000, 30-59 days past due of $197,000, 60‑89 days past due of $10,000 and 90+ days past due of $1.74 million. There was one loan modification during the three months ended March 31, 2020 that was classified as a troubled debt restructuring (TDR). This TDR was an equity line with a recorded investment of $84,000 at the time of its modification and included modifications of the loan’s payment structure. There were no loan modifications that were classified as TDRs during the three months ended March 31, 2019. All TDRs are considered impaired loans and are individually evaluated in the determination of the allowance for loan losses. A TDR payment default occurs when, within 12 months of the original TDR modification, either a full or partial charge-off occurs or a TDR becomes 90 days or more past due. The specific reserve associated with a TDR is reevaluated when a TDR payment default occurs. There were no TDR payment defaults during the three months ended March 31, 2020 and 2019. In response to the effects of the COVID-19 pandemic, including economic disruption and adverse impacts to commercial and consumer borrowers, the Bank has accommodated certain borrowers by granting short-term payment deferrals or periods of interest-only payments, including, as of April 30, 2020, over 130 loans with outstanding principal of approximately $70 million. Generally, a short-term payment deferral does not result in a loan modification being classified as a TDR. Management cannot predict the overall impact of the COVID-19 pandemic on its loan portfolio or the extent of payment deferrals or other modifications that may be granted. Impaired loans, which included TDRs of $4.17 million, and the related allowance at March 31, 2020 were as follows: Recorded Recorded Investment Investment Average Unpaid in Loans in Loans Balance- Interest Principal without with Related Impaired Income (Dollars in thousands) Balance Specific Reserve Specific Reserve Allowance Loans Recognized Real estate – residential mortgage $ 3,357 $ 1,313 $ 1,820 $ 47 $ 3,295 $ 31 Commercial, financial and agricultural: Commercial real estate lending 1,403 — 1,403 76 1,417 18 Equity lines 121 114 — — 121 — Consumer 130 — 119 108 119 — Total $ 5,011 $ 1,427 $ 3,342 $ 231 $ 4,952 $ 49 Impaired loans, which included TDRs of $4.35 million, and the related allowance at December 31, 2019 were as follows: Recorded Recorded Investment Investment Average Unpaid in Loans in Loans Balance- Interest Principal without with Related Impaired Income (Dollars in thousands) Balance Specific Reserve Specific Reserve Allowance Loans Recognized Real estate – residential mortgage $ 3,891 $ 2,192 $ 1,479 $ 72 $ 3,506 $ 155 Commercial, financial and agricultural: Commercial real estate lending 1,459 4 1,447 77 1,581 82 Equity lines 31 31 — — 32 2 Consumer 130 — 121 118 123 — Total $ 5,511 $ 2,227 $ 3,047 $ 267 $ 5,242 $ 239 |
Allowance for Loan Losses
Allowance for Loan Losses | 3 Months Ended |
Mar. 31, 2020 | |
Allowance for Loan Losses | |
Allowance for Loan Losses | NOTE 5: Allowance for Loan Losses The following table presents the changes in the allowance for loan losses by major classification during the three months ended March 31, 2020: Real Estate Commercial, Residential Real Estate Financial & Equity Consumer (Dollars in thousands) Mortgage Construction Agricultural Lines Consumer Finance Total Allowance for loan losses: Balance at December 31, 2019 $ 2,080 $ 681 $ 7,121 $ 733 $ 465 $ 21,793 $ 32,873 Provision (credited) charged to operations 60 90 831 37 (18) 1,650 2,650 Loans charged off (4) — (18) — (93) (3,426) (3,541) Recoveries of loans previously charged off 4 — 1 — 62 1,249 1,316 Balance at March 31, 2020 $ 2,140 $ 771 $ 7,935 $ 770 $ 416 $ 21,266 $ 33,298 The following table presents the changes in the allowance for loan losses by major classification during the three months ended March 31, 2019: Real Estate Commercial, Residential Real Estate Financial & Equity Consumer (Dollars in thousands) Mortgage Construction Agricultural Lines Consumer Finance Total Allowance for loan losses: Balance at December 31, 2018 $ 2,246 $ 727 $ 6,688 $ 1,106 $ 257 $ 22,999 $ 34,023 Provision (credited) charged to operations (47) 114 (25) (205) 163 2,395 2,395 Loans charged off — — — — (76) (3,890) (3,966) Recoveries of loans previously charged off 5 — 1 — 42 1,089 1,137 Balance at March 31, 2019 $ 2,204 $ 841 $ 6,664 $ 901 $ 386 $ 22,593 $ 33,589 The following table presents, as of March 31, 2020, the balance of the allowance for loan losses and the balance of loans by impairment methodology. Real Estate Commercial, Residential Real Estate Financial & Equity Consumer (Dollars in thousands) Mortgage Construction Agricultural Lines Consumer Finance Total Allowance balance attributable to loans: Individually evaluated for impairment $ 47 $ — $ 76 $ — $ 108 $ — $ 231 Collectively evaluated for impairment 2,093 771 7,859 770 308 21,266 33,067 Acquired loans - PCI — — — — — — — Total allowance $ 2,140 $ 771 $ 7,935 $ 770 $ 416 $ 21,266 $ 33,298 Loans: Individually evaluated for impairment $ 3,133 $ — $ 1,403 $ 114 $ 119 $ — $ 4,769 Collectively evaluated for impairment 196,439 65,834 581,948 56,142 15,527 307,591 1,223,481 Acquired loans - PCI 3,195 103 5,234 50 637 — 9,219 Total loans $ 202,767 $ 65,937 $ 588,585 $ 56,306 $ 16,283 $ 307,591 $ 1,237,469 The following table presents, as of December 31, 2019, the balance of the allowance for loan losses, the allowance by impairment methodology, total loans and loans by impairment methodology. Real Estate Commercial, Residential Real Estate Financial & Equity Consumer (Dollars in thousands) Mortgage Construction Agricultural Lines Consumer Finance Total Allowance balance attributable to loans: Individually evaluated for impairment $ 72 $ — $ 77 $ — $ 118 $ — $ 267 Collectively evaluated for impairment 2,008 681 7,044 733 347 21,793 32,606 Acquired loans - PCI — — — — — — — Total allowance $ 2,080 $ 681 $ 7,121 $ 733 $ 465 $ 21,793 $ 32,873 Loans: Individually evaluated for impairment $ 3,671 $ — $ 1,451 $ 31 $ 121 $ — $ 5,274 Collectively evaluated for impairment 177,517 54,246 498,798 52,017 13,635 312,999 1,109,212 Acquired loans - PCI 107 — 563 35 — — 705 Total loans $ 181,295 $ 54,246 $ 500,812 $ 52,083 $ 13,756 $ 312,999 $ 1,115,191 Loans by credit quality indicators as of March 31, 2020 were as follows: Special Substandard (Dollars in thousands) Pass Mention Substandard Nonaccrual Total 1 Real estate – residential mortgage $ 199,087 $ 1,396 $ 1,353 $ 931 $ 202,767 Real estate – construction: Construction lending 50,747 — — — 50,747 Consumer lot lending 15,190 — — — 15,190 Commercial, financial and agricultural: Commercial real estate lending 374,717 25,886 2,620 — 403,223 Land acquisition and development lending 31,778 8,411 — — 40,189 Builder line lending 24,749 277 — — 25,026 Commercial business lending 116,594 3,553 — — 120,147 Equity lines 55,907 97 24 278 56,306 Consumer 14,947 54 583 699 16,283 $ 883,716 $ 39,674 $ 4,580 $ 1,908 $ 929,878 1 At March 31, 2020, the Corporation did not have any loans classified as Doubtful or Loss. Included in the table above are loans purchased in connection with the acquisition of Peoples of $104.70 million pass rated, $1.33 million special mention, $3.11 million substandard and $583,000 substandard nonaccrual. Non- (Dollars in thousands) Performing Performing Total Consumer finance $ 307,214 $ 377 $ 307,591 Loans by credit quality indicators as of December 31, 2019 were as follows: Special Substandard (Dollars in thousands) Pass Mention Substandard Nonaccrual Total 1 Real estate – residential mortgage $ 177,049 $ 1,839 $ 881 $ 1,526 $ 181,295 Real estate – construction: Construction lending 40,943 — — — 40,943 Consumer lot lending 13,303 — — — 13,303 Commercial, financial and agricultural: Commercial real estate lending 323,218 3,266 70 — 326,554 Land acquisition and development lending 33,870 9,021 — — 42,891 Builder line lending 25,995 378 — — 26,373 Commercial business lending 104,291 692 — 11 104,994 Equity lines 51,662 181 11 229 52,083 Consumer 13,632 6 — 118 13,756 $ 783,963 $ 15,383 $ 962 $ 1,884 $ 802,192 1 At December 31, 2019, the Corporation did not have any loans classified as Doubtful or Loss. Non- (Dollars in thousands) Performing Performing Total Consumer finance $ 312,388 $ 611 $ 312,999 |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill and Other Intangible Assets | |
Goodwill and Other Intangible Assets | NOTE 6: Goodwill and Other Intangible Assets The carrying amount of goodwill was $25.12 million and $14.43 million at March 31, 2020 and December 31, 2019, respectively. The following table presents the changes in goodwill during the three months ended March 31, 2020. There were no changes in the recorded balance of goodwill during the three months ended March 31, 2019. Retail Consumer (Dollars in thousands) Banking Finance Total Balance as of January 1, 2020 $ 3,702 $ 10,723 $ 14,425 Acquisition of Peoples Bankshares, Incorporated 10,692 — 10,692 Balance at March 31, 2020 $ 14,394 $ 10,723 $ 25,117 The Corporation had $2.54 million and $912,000 of other intangible assets as of March 31, 2020 and December 31, 2019, respectively. Other intangible assets were recognized in connection with the core deposits acquired from Peoples in 2020 and customer relationships acquired by C&F Wealth Management in 2016. The following table summarizes the gross carrying amounts and accumulated amortization of other intangible assets: March 31, December 31, 2020 2019 Gross Gross Carrying Accumulated Carrying Accumulated (Dollars in thousands) Amount Amortization Amount Amortization Amortized intangible assets: Core deposit intangibles $ 1,711 $ (43) $ — $ — Other intangibles 1,405 (533) 1,405 (493) Total $ 3,116 $ (576) $ 1,405 $ (493) Amortization expense was $83,000 and $78,000 for the three months ended March 31, 2020 and 2019, respectively. |
Equity, Other Comprehensive Inc
Equity, Other Comprehensive Income and Earnings Per Share | 3 Months Ended |
Mar. 31, 2020 | |
Equity, Other Comprehensive Income and Earnings Per Share | |
Equity, Other Comprehensive Income and Earnings Per Share | NOTE 7: Equity, Other Comprehensive Income and Earnings Per Share Equity and Noncontrolling Interest During the three months ended March 31, 2020 and 2019, the Corporation repurchased 8,963 shares and 32,407 shares of its common stock, respectively, for an aggregate cost of $355,000 and $1.67 million, respectively, under share repurchase programs authorized by its Board of Directors. Additionally during the three months ended March 31, 2020 and 2019, the Corporation withheld 5,069 shares and 4,641 shares of its common stock, respectively, from employees to satisfy tax withholding obligations upon vesting of restricted stock. During the three months ended March 31, 2019, C&F Select LLC, a subsidiary of C&F Mortgage, issued a 49 percent ownership interest to an unrelated investor. In exchange for this noncontrolling interest in C&F Select LLC, C&F Bank received a note receivable from the investor for $490,000, which is included in loans in the Consolidated Balance Sheets and is secured by cash deposits at C&F Bank. Accumulated Other Comprehensive Loss, Net The following table presents the cumulative balances of the components of accumulated other comprehensive loss, net of deferred taxes of $644,000 and $604,000 as of March 31, 2020 and December 31, 2019, respectively. March 31, December 31, (Dollars in thousands) 2020 2019 Net unrealized gains on securities $ 3,302 $ 1,560 Net unrecognized losses on cash flow hedges (1,537) (69) Net unrecognized losses on defined benefit plan (3,720) (3,740) Total accumulated other comprehensive loss, net $ (1,955) $ (2,249) Earnings Per Share (EPS) The components of the Corporation’s EPS calculations are as follows: Three Months Ended March 31, (Dollars in thousands) 2020 2019 Net income attributable to C&F Financial Corporation $ 3,578 $ 3,771 Weighted average shares outstanding — basic and diluted 3,644,614 3,484,592 The Corporation has applied the two-class method of computing basic and diluted EPS for each period presented because the Corporation’s unvested restricted shares outstanding contain rights to nonforfeitable dividends equal to dividends on the Corporation’s common stock. Accordingly, the weighted average number of shares used in the calculation of basic and diluted EPS includes both vested and unvested shares outstanding. |
Employee Benefit Plans
Employee Benefit Plans | 3 Months Ended |
Mar. 31, 2020 | |
Employee Benefit Plans | |
Employee Benefit Plans | NOTE 8: Employee Benefit Plans The following table summarizes the components of net periodic benefit cost for the Bank’s non-contributory cash balance pension plan. Three Months Ended March 31, (Dollars in thousands) 2020 2019 Components of net periodic benefit cost: Service cost, included in salaries and employee benefits $ 386 $ 293 Other components of net periodic benefit cost: Interest cost 135 153 Expected return on plan assets (374) (330) Amortization of prior service credit (17) (17) Amortization of net obligation at transition — — Recognized net actuarial losses 42 42 Other components of net periodic benefit cost, included in other noninterest income (214) (152) Net periodic benefit cost $ 172 $ 141 |
Fair Value of Assets and Liabil
Fair Value of Assets and Liabilities | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value of Assets and Liabilities | |
Fair Value of Assets and Liabilities | NOTE 9: Fair Value of Assets and Liabilities Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. U.S. GAAP requires that valuation techniques maximize the use of observable inputs and minimize the use of unobservable inputs. U.S. GAAP also establishes a fair value hierarchy which prioritizes the valuation inputs into three broad levels. Based on the underlying inputs, each fair value measurement in its entirety is reported in one of the three levels. These levels are: · Level 1—Valuation is based upon quoted prices for identical instruments traded in active markets. Level 1 assets and liabilities include debt securities traded in an active exchange market, as well as U.S. Treasury securities. · Level 2—Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. · Level 3—Valuation is determined using model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect the Corporation’s estimates of assumptions that market participants would use in pricing the respective asset or liability. Valuation techniques may include the use of pricing models, discounted cash flow models and similar techniques. U.S. GAAP allows an entity the irrevocable option to elect fair value (the fair value option) for the initial and subsequent measurement for certain financial assets and liabilities on a contract-by-contract basis. The Corporation has elected to use fair value accounting for its entire portfolio of loans held for sale (LHFS). Assets and Liabilities Measured at Fair Value on a Recurring Basis The following describes the valuation techniques and inputs used by the Corporation in determining the fair value of certain assets recorded at fair value on a recurring basis in the financial statements. Securities available for sale. The Corporation primarily values its investment portfolio using Level 2 fair value measurements, but may also use Level 1 or Level 3 measurements if required by the composition of the portfolio. At March 31, 2020 and December 31, 2019, the Corporation’s entire investment securities portfolio was comprised of securities available for sale, which were valued using Level 2 fair value measurements. The Corporation has contracted with third party portfolio accounting service vendors for valuation of its securities portfolio. The vendors’ sources for security valuation are ICE Data Services (ICE) and Thomson Reuters Pricing Service (TRPS). Each source provides opinions, known as evaluated prices, as to the value of individual securities based on model-based pricing techniques that are partially based on available market data, including prices for similar instruments in active markets and prices for identical assets in markets that are not active. ICE provides evaluated prices for the Corporation’s obligations of states and political subdivisions category of securities. ICE uses proprietary pricing models and pricing systems, mathematical tools and judgment to determine an evaluated price for a security based upon a hierarchy of market information regarding that security or securities with similar characteristics. TRPS provides evaluated prices for the Corporation’s U.S. government agencies and corporations and mortgage-backed categories of securities. Fixed-rate callable securities of the U.S. government agencies and corporations category are individually evaluated on an option adjusted spread basis for callable issues or on a nominal spread basis incorporating the term structure of agency market spreads and the appropriate risk free benchmark curve for non-callable issues. Pass-through mortgage-backed securities (MBS) in the mortgage-backed category are grouped into aggregate categories defined by issuer program, weighted average coupon, and weighted average maturity. Each aggregate is benchmarked to relative to-be-announced mortgage-backed securities (TBA securities) or other benchmark prices. TBA securities prices are obtained from market makers and live trading systems. Collateralized mortgage obligations in the mortgage-backed category are individually evaluated based upon a hierarchy of security specific information and market data regarding that security or securities with similar characteristics. Each evaluation is determined using an option adjusted spread and prepayment model based on volatility-driven, multi-dimensional spread tables. Fixed-rate securities issued by the Small Business Association in the mortgage backed category are individually evaluated based upon a hierarchy of security specific information and market data regarding that security or securities with similar characteristics. Investments in small business investment companies. The Corporation holds an investment in a small business investment company, which is recorded at fair value and included in other assets in the Consolidated Balance Sheets. Changes in fair value are recognized in net income. At March 31, 2020, the fair value of the Corporation’s investment in small business investment companies, based on net asset value, was $1.56 million. Investments in small business investment companies measured at net asset value are not presented in the tables below related to fair value measurements. There were no unrealized gains or losses on investments in small business investment companies recorded during the quarter ended March 31, 2020. Loans held for sale. Fair value of the Corporation’s LHFS is based on observable market prices for similar instruments traded in the secondary mortgage loan markets in which the Corporation conducts business. The Corporation’s portfolio of LHFS is classified as Level 2. Derivative asset - IRLCs. The Corporation recognizes IRLCs at fair value. Fair value of IRLCs is based on either (i) the price of the underlying loans obtained from an investor for loans that will be delivered on a best efforts basis or (ii) the observable price for individual loans traded in the secondary market for loans that will be delivered on a mandatory basis. All of the Corporation’s IRLCs are classified as Level 2. Derivative asset/liability – interest rate swaps on loans. The Corporation recognizes interest rate swaps at fair value. The Corporation has contracted with a third party vendor to provide valuations for these interest rate swaps using standard valuation techniques. All of the Corporation’s interest rate swaps on loans are classified as Level 2. Derivative asset/liability – cash flow hedges. The Corporation recognizes cash flow hedges at fair value. The fair value of the Corporation’s cash flow hedges is determined using the discounted cash flow method. All of the Corporation’s cash flow hedges are classified as Level 2. Derivative asset/liability – forward sales of TBA securities. The Corporation recognizes forward sales of TBA securities at fair value. The fair value of forward sales of TBA securities is based on prices obtained from market makers and live trading systems for TBA securities of similar issuer programs, coupons and maturities. All of the Corporation’s forward sales of TBA securities are classified as Level 2. The following table presents the balances of financial assets and liabilities measured at fair value on a recurring basis. March 31, 2020 Fair Value Measurements Using Assets/Liabilities at (Dollars in thousands) Level 1 Level 2 Level 3 Fair Value Assets: Securities available for sale U.S. government agencies and corporations $ — $ 32,042 $ — $ 32,042 Mortgage-backed securities — 104,365 — 104,365 Obligations of states and political subdivisions — 98,017 — 98,017 Total securities available for sale — 234,424 — 234,424 Loans held for sale — 125,667 — 125,667 Derivatives IRLC — 3,208 — 3,208 Interest rate swaps on loans — 8,842 — 8,842 Total assets $ — $ 372,141 $ — $ 372,141 Liabilities: Derivatives Interest rate swaps on loans $ — $ 8,842 $ — $ 8,842 Cash flow hedges — 2,119 — 2,119 Forward sales of TBA securities — 374 — 374 Total liabilities $ — $ 11,335 $ — $ 11,335 December 31, 2019 Fair Value Measurements Using Assets/Liabilities at (Dollars in thousands) Level 1 Level 2 Level 3 Fair Value Assets: Securities available for sale U.S. government agencies and corporations $ — $ 21,440 $ — $ 21,440 Mortgage-backed securities — 86,585 — 86,585 Obligations of states and political subdivisions — 81,708 — 81,708 Total securities available for sale — 189,733 — 189,733 Loans held for sale — 90,500 — 90,500 Derivatives IRLC — 1,083 — 1,083 Interest rate swaps on loans — 2,462 — 2,462 Total assets $ — $ 283,778 $ — $ 283,778 Liabilities: Derivatives Interest rate swaps on loans $ — $ 2,462 $ — $ 2,462 Cash flow hedges — 145 — 145 Forward sales of TBA securities — 25 — 25 Total liabilities $ — $ 2,632 $ — $ 2,632 Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis The Corporation may be required, from time to time, to measure and recognize certain assets at fair value on a nonrecurring basis in accordance with U.S. GAAP. The following describes the valuation techniques and inputs used by the Corporation in determining the fair value of certain assets recorded at fair value on a nonrecurring basis in the financial statements. Impaired loans. The Corporation does not record loans held for investment at fair value on a recurring basis. However, there are instances when a loan is considered impaired and an allowance for loan losses is established. The Corporation measures impairment either based on the fair value of the loan using the loan’s obtainable market price or the fair value of the collateral if the loan is collateral dependent, or using the present value of expected future cash flows discounted at the loan’s effective interest rate, which is not a fair value measurement. The Corporation maintains a valuation allowance to the extent that this measure of the impaired loan is less than the recorded investment in the loan. When an impaired loan is measured at fair value based solely on observable market prices or a current appraisal without further adjustment for unobservable inputs, the Corporation records the impaired loan as a nonrecurring fair value measurement classified as Level 2. However, if based on management’s review, additional discounts to observed market prices or appraisals are required or if observable inputs are not available, the Corporation records the impaired loan as a nonrecurring fair value measurement classified as Level 3. Impaired loans that are measured based on expected future cash flows discounted at the loan’s effective interest rate rather than the market rate of interest, are not recorded at fair value and are therefore excluded from fair value disclosure requirements. OREO. Assets acquired through, or in lieu of, loan foreclosure are held for sale and are initially recorded at fair value less estimated costs to sell at the date of foreclosure. Initial fair value is based upon appraisals the Corporation obtains from independent licensed appraisers. Subsequent to foreclosure, management periodically performs valuations of the foreclosed assets based on updated appraisals, general market conditions, recent sales of similar properties, length of time the properties have been held, and our ability and intent with regard to continued ownership of the properties. The Corporation may incur additional write-downs of foreclosed assets to fair value less estimated costs to sell if valuations indicate a further deterioration in market conditions. As such, the Corporation records OREO as a nonrecurring fair value measurement classified as Level 3. The following table presents the balances of assets measured at fair value on a nonrecurring basis. At March 31, 2020 there were no impaired loans that were measured at fair value. March 31, 2020 Fair Value Measurements Using Assets at Fair (Dollars in thousands) Level 1 Level 2 Level 3 Value Other real estate owned, net $ — $ — $ 268 $ 268 Total $ — $ — $ 268 $ 268 December 31, 2019 Fair Value Measurements Using Assets at Fair (Dollars in thousands) Level 1 Level 2 Level 3 Value Impaired loans, net $ — $ — $ 102 $ 102 Other real estate owned, net — — 268 268 Total $ — $ — $ 370 $ 370 The following table presents quantitative information about Level 3 fair value measurements for financial assets measured at fair value on a nonrecurring basis: Fair Value Measurements at March 31, 2020 (Dollars in thousands) Fair Value Valuation Technique(s) Unobservable Inputs Range (Weighted Average) 1 Other real estate owned, net $ 268 Appraisals Discount to reflect current market conditions and estimated selling costs 33%-75% (45%) Total $ 268 1 The weighted average of unobservable inputs is calculated based on the relative asset fair values. Fair Value of Financial Instruments FASB ASC 825, Financial Instruments , requires disclosure about fair value of financial instruments, including those financial assets and financial liabilities that are not required to be measured and reported at fair value on a recurring or nonrecurring basis. ASC 825 excludes certain financial instruments and all nonfinancial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Corporation. The Corporation uses the exit price notion in calculating the fair values of financial instruments not measured at fair value on a recurring basis. The following tables reflect the carrying amounts and estimated fair values of the Corporation’s financial instruments whether or not recognized on the Consolidated Balance Sheets at fair value. Carrying Fair Value Measurements at March 31, 2020 Using Total Fair (Dollars in thousands) Value Level 1 Level 2 Level 3 Value Financial assets: Cash and short-term investments $ 148,009 $ 148,009 $ — $ — $ 148,009 Securities available for sale 234,424 — 234,424 — 234,424 Loans, net 1,204,171 — — 1,199,524 1,199,524 Loans held for sale 125,667 — 125,667 — 125,667 Derivatives IRLC 3,208 — 3,208 — 3,208 Interest rate swaps on loans 8,842 — 8,842 — 8,842 Bank-owned life insurance 19,749 — 19,749 — 19,749 Accrued interest receivable 7,253 7,253 — — 7,253 Financial liabilities: Demand deposits 976,624 976,624 — — 976,624 Time deposits 507,750 — 514,744 — 514,744 Borrowings 159,934 — 162,855 — 162,855 Derivatives Cash flow hedges 2,119 — 2,119 — 2,119 Interest rate swaps on loans 8,842 — 8,842 — 8,842 Forward sales of TBA securities 374 — 374 — 374 Accrued interest payable 1,508 1,508 — — 1,508 Carrying Fair Value Measurements at December 31, 2019 Using Total Fair (Dollars in thousands) Value Level 1 Level 2 Level 3 Value Financial assets: Cash and short-term investments $ 165,433 $ 165,433 $ — $ — $ 165,433 Securities available for sale 189,733 — 189,733 — 189,733 Loans, net 1,082,318 — — 1,082,783 1,082,783 Loans held for sale 90,500 — 90,500 — 90,500 Derivatives IRLC 1,083 — 1,083 — 1,083 Interest rate swaps on loans 2,462 — 2,462 — 2,462 Bank-owned life insurance 16,044 — 16,044 — 16,044 Accrued interest receivable 6,776 6,776 — — 6,776 Financial liabilities: Demand deposits 869,194 869,194 — — 869,194 Time deposits 422,056 — 423,605 — 423,605 Borrowings 161,170 — 154,964 — 154,964 Derivatives Cash flow hedges 145 — 145 — 145 Interest rate swaps on loans 2,462 — 2,462 — 2,462 Forward sales of TBA securities 25 — 25 25 Accrued interest payable 1,291 1,291 — — 1,291 |
Business Segments
Business Segments | 3 Months Ended |
Mar. 31, 2020 | |
Business Segments | |
Business Segments | NOTE 10: Business Segments The Corporation operates in a decentralized fashion in three principal business segments: retail banking, mortgage banking and consumer finance. Revenues from retail banking operations consist primarily of interest earned on loans and investment securities and fees earned on deposit accounts and debit card interchange activity. Mortgage banking operating revenues consist principally of gains on sales of loans in the secondary market, mortgage banking fee income related to loan originations, and interest earned on mortgage loans held for sale. Revenues from consumer finance consist primarily of interest earned on purchased retail installment sales contracts. C&F Wealth Management derives revenues from offering wealth management services and insurance products through third-party service providers. The Corporation’s revenues and expenses are comprised primarily of interest expense associated with the Corporation’s trust preferred capital notes, general corporate expenses, and changes in the value of the rabbi trust and deferred compensation liability related to its nonqualified deferred compensation plan. The results of C&F Wealth Management and the Corporation are not significant to the Corporation on a consolidated basis and are included in “Other.” Three Months Ended March 31, 2020 Retail Mortgage Consumer (Dollars in thousands) Banking Banking Finance Other Eliminations Consolidated Revenues: Interest income $ 15,915 $ 661 $ 10,101 $ — $ (1,899) $ 24,778 Gains on sales of loans — 3,676 — — — 3,676 Other noninterest income 2,962 1,611 117 663 — 5,353 Total operating income 18,877 5,948 10,218 663 (1,899) 33,807 Expenses: Provision for loan losses 1,000 — 1,650 — — 2,650 Interest expense 3,144 305 2,286 339 (1,899) 4,175 Salaries and employee benefits 8,060 1,845 2,243 (1,331) — 10,817 Depreciation and amortization 807 72 46 43 — 968 Other noninterest expenses 5,329 1,651 1,341 2,260 — 10,581 Total operating expenses 18,340 3,873 7,566 1,311 (1,899) 29,191 Income (loss) before income taxes 537 2,075 2,652 (648) — 4,616 Income tax expense (benefit) (33) 532 722 (244) — 977 Net income (loss) $ 570 $ 1,543 $ 1,930 $ (404) $ — $ 3,639 Total assets $ 1,689,244 $ 140,084 $ 310,249 $ 19,242 $ (281,527) $ 1,877,292 Capital expenditures $ 752 $ 294 $ 502 $ — $ — $ 1,548 Three Months Ended March 31, 2019 Retail Mortgage Consumer (Dollars in thousands) Banking Banking Finance Other Eliminations Consolidated Revenues: Interest income $ 14,324 $ 350 $ 10,145 $ 2 $ (1,870) $ 22,951 Gains on sales of loans — 2,136 — — — 2,136 Other noninterest income 2,438 838 129 1,562 — 4,967 Total operating income 16,762 3,324 10,274 1,564 (1,870) 30,054 Expenses: Provision for loan losses — — 2,395 — — 2,395 Interest expense 2,175 163 2,551 285 (1,870) 3,304 Salaries and employee benefits 6,978 1,147 2,185 1,597 — 11,907 Depreciation and amortization 835 62 52 45 — 994 Other noninterest expenses 4,068 1,182 1,323 203 — 6,776 Total operating expenses 14,056 2,554 8,506 2,130 (1,870) 25,376 Income (loss) before income taxes 2,706 770 1,768 (566) — 4,678 Income tax expense (benefit) 416 203 483 (195) — 907 Net income (loss) $ 2,290 $ 567 $ 1,285 $ (371) $ — $ 3,771 Total assets $ 1,380,790 $ 53,642 $ 301,579 $ 6,836 $ (193,487) $ 1,549,360 Capital expenditures $ 721 $ 24 $ 8 $ — $ — $ 753 During the three months ended March 31, 2020, the Corporation recorded merger related expenses of $957,000 ($785,000 after income taxes) in connection with its acquisition of Peoples, of which $857,000 ($685,000 after income taxes) was allocated to the retail banking segment and recorded as $69,000 of salaries and benefits expense and $788,000 of other noninterest expense. The remainder was recorded as other noninterest expense at the holding company. The retail banking segment extends two warehouse lines of credit to the mortgage banking segment, providing a portion of the funds needed to originate mortgage loans. The retail banking segment charges the mortgage banking segment interest at the daily FHLB advance rate plus a spread ranging from 50 basis points to 175 basis points. The retail banking segment also provides the consumer finance segment with a portion of the funds needed to purchase loan contracts by means of variable rate notes that carry interest at one-month LIBOR plus 200 basis points, with a floor of 3.0 percent and fixed rate notes that carry interest at rates ranging from 2.0 percent to 8.0 percent. The retail banking segment acquires certain residential real estate loans from the mortgage banking segment at prices similar to those paid by third-party investors. These transactions are eliminated to reach consolidated totals. Certain corporate overhead costs incurred by the retail banking segment are not allocated to the mortgage banking, consumer finance and other segments. |
Commitments and Contingent Liab
Commitments and Contingent Liabilities | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingent Liabilities | |
Commitments and Contingent Liabilities | NOTE 11: Commitments and Contingent Liabilities The Corporation enters into commitments to extend credit in the normal course of business to meet the financing needs of its customers, including loan commitments and standby letters of credit. These instruments involve elements of credit and interest rate risk in excess of the amounts recorded on the Consolidated Balance Sheets. The Corporation’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit written is represented by the contractual amount of these instruments. The Corporation uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments. Collateral is obtained based on management’s credit assessment of the customer. Loan commitments are agreements to extend credit to a customer provided that there are no violations of the terms of the contract prior to funding. Commitments have fixed expiration dates or other termination clauses and may require payment of a fee by the customer. Because many of the commitments may expire without being completely drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Bank evaluates each customer’s creditworthiness on a case-by-case basis. The amount of loan commitments at the Bank was $257.50 million at March 31, 2020 and $256.15 million at December 31, 2019, which does not include IRLCs at the mortgage banking segment, which are discussed in Note 12. Standby letters of credit are written conditional commitments issued by the Bank to guarantee the performance of a customer to a third party. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers. The total contract amount of standby letters of credit, whose contract amounts represent credit risk, was $17.61 million at March 31, 2020 and $16.60 million at December 31, 2019. The mortgage banking segment sells substantially all of the residential mortgage loans it originates to third-party investors. As is customary in the industry, the agreements with these investors require the mortgage banking segment to extend representations and warranties with respect to program compliance, borrower misrepresentation, fraud, and early payment performance. Under the agreements, the investors are entitled to make loss claims and repurchase requests of the mortgage banking segment for loans that contain covered deficiencies. The mortgage banking segment has obtained early payment default recourse waivers for a significant portion of its business. Recourse periods for early payment default for the remaining investors vary from 90 days up to one year. Recourse periods for borrower misrepresentation or fraud, or underwriting error do not have a stated time limit. The mortgage banking segment maintains an allowance for indemnifications that represents management’s estimate of losses that are probable of arising under these recourse provisions. As performance data for loans that have been sold is not made available to the mortgage banking segment by the investors, the evaluation of potential losses is inherently subjective. A schedule of expected losses on loans with claims or indemnifications is maintained to ensure the reserve is adequate to cover estimated losses. For the three months ended March 31, 2020, the Corporation recorded $7,000 of provision for indemnifications, compared to no provision for indemnifications for the three months ended March 31, 2019. The allowance for indemnifications was $2.48 million at both March 31, 2020 and December 31, 2019. |
Derivative Financial Instrument
Derivative Financial Instruments | 3 Months Ended |
Mar. 31, 2020 | |
Derivative Financial Instruments | |
Derivative Financial Instruments | NOTE 12: Derivative Financial Instruments The Corporation uses derivative financial instruments primarily to manage risks to the Corporation associated with changing interest rates, and to assist customers with their risk management objectives. The Corporation designates certain interest rate swaps as hedging instruments in qualifying cash flow hedges. The changes in fair value of these designated hedging instruments is reported as a component of other comprehensive income. Derivative contracts that are not designated in a qualifying hedging relationship include customer accommodation loan swaps and contracts related to mortgage banking activities. Cash flow hedges . The Corporation designates interest rate swaps as cash flow hedges when they are used to manage exposure to variability in cash flows on variable rate borrowings such as the Corporation’s trust preferred capital notes. These interest rate swaps are derivative financial instruments that manage the risk of variability in cash flows by exchanging variable-rate interest payments on a notional amount of the Corporation’s borrowings for fixed-rate interest payments. Interest rate swaps designated as cash flow hedges are expected to be highly effective in offsetting the effect of changes in interest rates on the amount of variable-rate interest payments, and the Corporation assesses the effectiveness of each hedging relationship quarterly. If the Corporation determines that a cash flow hedge is no longer highly effective, future changes in the fair value of the hedging instrument would be reported in earnings. As of March 31, 2020, the Corporation has designated cash flow hedges to manage its exposure to variability in cash flows on certain variable rate borrowings for periods that end between June 2024 and June 2029. All interest rate swaps were entered into with counterparties that met the Corporation’s credit standards and the agreements contain collateral provisions protecting the at-risk party. The Corporation believes that the credit risk inherent in these derivative contracts is not significant. Unrealized gains or losses recorded in other comprehensive income related to cash flow hedges are reclassified into earnings in the same period(s) during which the hedged interest payments affect earnings. When a designated hedging instrument is terminated and the hedged interest payments remain probable of occurring, any remaining unrecognized gain or loss in other comprehensive income is reclassified into earnings in the period(s) during which the forecasted interest payments affect earnings. Amounts reclassified into earnings and interest receivable or payable under designated interest rate swaps are reported in interest expense. The Corporation does not expect any unrealized losses related to cash flow hedges to be reclassified into earnings in the next twelve months. Loan swaps . The Bank also enters into interest rate swaps with certain qualifying commercial loan customers to meet their interest rate risk management needs. The Bank simultaneously enters into interest rate swaps with dealer counterparties, with identical notional amounts and offsetting terms. The net result of these interest rate swaps is that the customer pays a fixed rate of interest and the Corporation receives a floating rate. These back-to-back loan swaps are derivative financial instruments and are reported at fair value in “other assets” and “other liabilities” in the Consolidated Balance Sheets. Changes in the fair value of loan swaps are recorded in other noninterest expense and sum to zero because of the offsetting terms of swaps with borrowers and swaps with dealer counterparties. Mortgage banking . The mortgage banking segment enters into IRLCs with customers to originate loans for which the interest rates are determined (or “locked”) prior to funding. The mortgage banking segment is exposed to interest rate risk through fixed-rate IRLCs and mortgage loans from the time that interest rates are locked until the loans are sold in the secondary market. The mortgage banking segment mitigates this interest rate risk by either (1) entering into forward sales contracts with investors at the time that interest rates are locked for mortgage loans to be delivered on a best efforts basis or (2) entering into forward sales contracts for TBA securities until it can enter into forward sales contracts with investors for mortgage loans to be delivered on a mandatory basis. IRLCs, forward sales of loans and forward sales of TBA securities are derivative financial instruments and are reported at fair value in other assets and other liabilities in the Consolidated Balance Sheets. Changes in the fair value of mortgage banking derivatives are recorded as a component of gains on sales of loans. At March 31, 2020, the mortgage banking segment had $231.96 million of IRLCs and $108.67 million of unpaid principal on mortgage loans held for sale for which it managed interest rate risk using best-efforts forward sales contracts for $340.63 million in mortgage loans. Also at March 31, 2020, the mortgage banking segment had $13.25 million of IRLCs and $13.40 million of unpaid principal on mortgage loans held for sale for which it managed interest rate risk using forward sales of $14.50 million of TBA securities and mandatory-delivery forward sales contracts for $9.08 million in mortgage loans. At December 31, 2019, the mortgage banking segment had $63.35 million of IRLCs and $65.77 million of unpaid principal on mortgage loans held for sale for which it managed interest rate risk using best-efforts forward sales contracts for $129.12 million in mortgage loans. Also at December 31, 2019, the mortgage banking segment had $11.72 million of IRLCs and $21.98 million of unpaid principal on mortgage loans held for sale for which it managed interest rate risk using forward sales of $24.0 million of TBA securities and The following tables summarize key elements of the Corporation’s derivative instruments other than forward sales of mortgage loans. The fair values of forward sales of mortgage loans were not material to the consolidated financial statements of the Corporation at March 31, 2020 or December 31, 2019. March 31, 2020 Notional (Dollars in thousands) Amount Assets Liabilities Cash flow hedges: Interest rate swap contracts $ 25,000 $ — $ 2,119 Not designated as hedges: Customer-related interest rate swap contracts: Matched interest rate swaps with borrower 81,256 8,842 — Matched interest rate swaps with counterparty 81,256 — 8,842 Mortgage banking contracts: IRLCs 245,210 3,208 — Forward sales of TBA securities 14,500 — 374 December 31, 2019 Notional (Dollars in thousands) Amount Assets Liabilities Cash flow hedges: Interest rate swap contracts $ 25,000 $ — $ 145 Not designated as hedges: Customer-related interest rate swap contracts: Matched interest rate swaps with borrower 74,266 2,454 8 Matched interest rate swaps with counterparty 74,266 8 2,454 Mortgage banking contracts: IRLCs 75,073 1,083 — Forward sales of TBA securities 24,000 — 25 The Corporation is required to maintain cash collateral with dealer counterparties for derivative instruments in a loss position, subject to certain thresholds and offsets. At March 31, 2020 and at December 31, 2019, $10.79 million and $2.52 million, respectively, of cash collateral was maintained with dealer counterparties and was included in “Other assets” in the Consolidated Balance Sheets. |
Other Noninterest Expenses
Other Noninterest Expenses | 3 Months Ended |
Mar. 31, 2020 | |
Other Noninterest Expenses | |
Other Noninterest Expenses | NOTE 13: Other Noninterest Expenses The following table presents the significant components in the Consolidated Statements of Income line “Noninterest Expenses-Other.” Three Months Ended March 31, (Dollars in thousands) 2020 2019 Data processing fees $ 2,156 $ 1,921 Unrealized loss on nonqualified deferred compensation plan 1,983 — Professional fees 666 564 Marketing and advertising expenses 490 373 Travel and educational expenses 444 403 Telecommunication expenses 372 317 All other noninterest expenses 3,111 2,002 Total other noninterest expenses $ 9,222 $ 5,580 The table above includes merger related expenses for the three months ended March 31, 2020 of $888,000, of which $238,000 was included in data processing fees, $314,000 was included in |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Summary of Significant Accounting Policies | |
Principles of Consolidation | Principles of Consolidation: The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) for interim financial reporting and with applicable quarterly reporting regulations of the Securities and Exchange Commission (the SEC). They do not include all of the information and notes required by U.S. GAAP for complete financial statements. Therefore, these consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the C&F Financial Corporation Annual Report on Form 10-K for the year ended December 31, 2019. The unaudited consolidated financial statements include the accounts of C&F Financial Corporation (the Corporation) and its direct wholly-owned subsidiary, Citizens and Farmers Bank (the Bank or C&F Bank) and indirect subsidiaries that are wholly-owned or controlled. Subsidiaries that are less than wholly owned are fully consolidated if they are controlled by the Corporation or one of its subsidiaries, and the portion of any subsidiary not owned by the Corporation is reported as noncontrolling interest. All significant intercompany accounts and transactions have been eliminated in consolidation. In addition, the Corporation owns all of the common stock of C&F Financial Statutory Trust I, C&F Financial Statutory Trust II and Central Virginia Bankshares Statutory Trust I, all of which are unconsolidated subsidiaries. The subordinated debt owed to these trusts is reported as liabilities of the Corporation. The accounting and reporting policies of the Corporation conform to U.S. GAAP and to predominant practices within the banking industry. |
Nature of Operations | Nature of Operations: The Corporation is a bank holding company incorporated under the laws of the Commonwealth of Virginia. The Corporation owns all of the stock of its subsidiary, C&F Bank, which is an independent commercial bank chartered under the laws of the Commonwealth of Virginia. C&F Bank has five wholly-owned subsidiaries: C&F Mortgage Corporation (C&F Mortgage), C&F Finance Company (C&F Finance), C&F Wealth Management Corporation (C&F Wealth Management), C&F Insurance Services, Inc. and CVB Title Services, Inc., all incorporated under the laws of the Commonwealth of Virginia. C&F Mortgage, organized in September 1995, was formed to originate and sell residential mortgages and through its subsidiary, Certified Appraisals LLC, provides ancillary mortgage loan production services for residential appraisals. C&F Mortgage owns a 51 percent interest in C&F Select LLC, which was organized in January 2019 and is also engaged in the business of originating and selling residential mortgages. C&F Finance, acquired in September 2002, is a finance company purchasing automobile, marine and recreational vehicle (RV) loans through indirect lending programs. C&F Wealth Management, organized in April 1995, is a full-service brokerage firm offering a comprehensive range of wealth management services and insurance products through third-party service providers. C&F Insurance Services, Inc., was organized in July 1999, for the primary purpose of owning an equity interest in an independent insurance agency that operates in Virginia and North Carolina. CVB Title Services, Inc. was organized for the primary purpose of owning an equity interest in a full service title and settlement agency. Business segment data is presented in Note 10. |
Basis of Presentation | Basis of Presentation: The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses, impairment of loans and goodwill impairment. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, which are necessary for a fair presentation of the results of operations in these financial statements, have been made. The outbreak of the novel coronavirus and the resulting COVID-19 illness has caused a significant disruption in economic activity worldwide, and the Corporation expects that it will have a significant impact on businesses and consumers in its market areas and on its results of operations. It is unknown how long these conditions will last and what the ultimate financial impact will be to the Corporation. |
Business Combination | Business Combination: On January 1, 2020, the Corporation completed the acquisition of Peoples Bankshares, Incorporated (Peoples) and its banking subsidiary, Peoples Community Bank for an aggregate purchase price of $22.19 million of cash and stock. Additional information about the acquisition is presented in Note 2. |
Reclassification | Reclassification: Certain reclassifications have been made to the prior period financial statements to conform to the current period presentation. None of these reclassifications are considered material. |
Derivative Financial Instruments | Derivative Financial Instruments: The Corporation recognizes derivative financial instruments at fair value as either an other asset or other liability in the Consolidated Balance Sheets. The Corporation’s derivative financial instruments include (1) interest rate swaps that qualify and are designated as cash flow hedges on the Corporation’s trust preferred capital notes, (2) interest rate swaps with certain qualifying commercial loan customers and dealer counterparties and (3) interest rate contracts arising from mortgage banking activities, including interest rate lock commitments (IRLCs) on mortgage loans and related forward sales of mortgage loans and mortgage backed securities. The gain or loss on the Corporation’s cash flow hedges is reported as a component of other comprehensive income, net of deferred income taxes, and reclassified into earnings in the same period(s) during which the hedged transactions affect earnings. IRLCs, forward sales contracts and interest rate swaps with loan customers and dealer counterparties are not designated as hedging instruments, and therefore changes in the fair value of these instruments are reported as noninterest income or noninterest expense, as applicable. The Corporation’s derivative financial instruments are described more fully in Note 12. |
Share-Based Compensation | Share-Based Compensation: Share-based compensation expense, net of forfeitures, for the three months ended March 31, 2020 was $389,000 ($217,000 after tax) for restricted stock granted during 2015 through 2020. As of March 31, 2020, there was $3.73 million of total unrecognized compensation expense related to unvested restricted stock that will be recognized over the remaining requisite service periods. A summary of activity for restricted stock awards during the three months ended March 31, 2020 and 2019 is presented below: 2020 Weighted- Average Grant Date Shares Fair Value Unvested, December 31, 2019 142,020 $ 48.88 Granted 14,650 53.22 Vested (16,230) 39.97 Forfeited (620) 53.46 Unvested, March 31, 2020 139,820 50.39 2019 Weighted- Average Grant Date Shares Fair Value Unvested, December 31, 2018 139,455 $ 45.75 Granted 16,100 51.73 Vested (15,490) 41.31 Forfeited (70) 60.95 Unvested, March 31, 2019 139,995 46.92 |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements: On January 1, 2020, the Corporation adopted Accounting Standards Update (ASU) 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement.” These amendments modified the disclosure requirements in Topic 820 to add disclosures regarding changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements and the narrative description of measurement uncertainty. The applicable amendments of ASU 2018-13 were applied prospectively and did not have a material effect on the Corporation’s consolidated financial statements. |
Recent Significant Accounting Pronouncements | Recent Significant Accounting Pronouncements: In June 2016, the Financial Accounting Standards Board (FASB) issued ASU 2016-13, “ Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” as part of its project on financial instruments. Subsequently, this ASU was amended when the FASB issued ASU 2018-19, “ Codification Improvements to Topic 326, Financial Instruments – Credit Losses, ” ASU 2019-04, “ Codification Improvements to Topic 326, Financial Instruments – Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments ,” ASU 2019-05, “ Financial Instruments – Credit Losses (Topic 326): Targeted Transition Relief ,” ASU 2019-10, “ Financial Instruments—Credit losses (Topic 326), Derivatives and hedging (Topic 815), and Leases (Topic 842)—Effective dates, ” ASU 2019-11, “ Codification Improvements to Topic 326, Financial Instruments—Credit Losses, ” ASU 2020-02, “ Financial Instruments-Credit Losses (Topic 326) and Leases (Topic 842) ” and ASU 2020-03, “ Codification Improvements to Financial Instruments ” (collectively, ASC 326). ASC 326 introduces an approach based on expected losses to estimate credit losses on certain types of financial instruments. It also modifies the impairment model for available-for-sale debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination. The new standard will be effective for the Corporation beginning on January 1, 2023. Early adoption of the new standard is permitted. The amendments of ASC 326, upon adoption, will be applied on a modified retrospective basis, with the cumulative effect of adopting the new standard being recorded as an adjustment to opening retained earnings in the period of adoption. The Corporation has established a working group to prepare for and implement changes related to ASC 326 and has gathered historical loan loss data for purposes of evaluating appropriate portfolio segmentation and modeling methods under the standard. The Corporation has performed procedures to validate the historical loan loss data to ensure its suitability and reliability for purposes of developing an estimate of expected credit losses under ASC 326. The Corporation has engaged a vendor to assist in modeling expected lifetime losses under ASC 326, and is continuing to develop and refine an approach to estimating the allowance for credit losses. The adoption of ASC 326 will result in significant changes to the Corporation’s consolidated financial statements, which may include changes in the level of the allowance for credit losses that will be considered adequate, a reduction in total equity and regulatory capital of C&F Bank, differences in the timing of recognizing changes to the allowance for credit losses and expanded disclosures about the allowance for credit losses. The Corporation has not yet determined an estimate of the effect of these changes. The adoption of the standard will also result in significant changes in the Corporation’s internal control over financial reporting related to the allowance for credit losses. In August 2018, the FASB issued ASU 2018-14, “Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans.” These amendments modify the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. Certain disclosure requirements have been deleted while the following disclosure requirements have been added: the weighted-average interest crediting rates for cash balance plans and other plans with promised interest crediting rates and an explanation of the reasons for significant gains and losses related to changes in the benefit obligation for the period. The amendments also clarify the disclosure requirements regarding the projected benefit obligation (PBO) and fair value of plan assets for plans with PBOs in excess of plan assets and the accumulated benefit obligation (ABO) and fair value of plan assets for plans with ABOs in excess of plan assets. The amendments are effective for fiscal years ending after December 15, 2020. Early adoption is permitted. The Corporation does not expect the adoption of ASU 2018-14 to have a material effect on its consolidated financial statements. Other accounting standards that have been issued by the FASB or other standards-setting bodies are not currently expected to have a material effect on the Corporation’s financial position, results of operations or cash flows. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Summary of Significant Accounting Policies | |
Summary of activity for restricted stock awards | 2020 Weighted- Average Grant Date Shares Fair Value Unvested, December 31, 2019 142,020 $ 48.88 Granted 14,650 53.22 Vested (16,230) 39.97 Forfeited (620) 53.46 Unvested, March 31, 2020 139,820 50.39 2019 Weighted- Average Grant Date Shares Fair Value Unvested, December 31, 2018 139,455 $ 45.75 Granted 16,100 51.73 Vested (15,490) 41.31 Forfeited (70) 60.95 Unvested, March 31, 2019 139,995 46.92 |
Business Combination (Tables)
Business Combination (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Schedule of acquired loans | March 31, 2020 December 31, 2019 Acquired Loans - Acquired Loans - Acquired Loans - Acquired Loans - Purchased Purchased Acquired Loans - Purchased Purchased Acquired Loans - (Dollars in thousands) Credit Impaired Performing Total Credit Impaired Performing Total Outstanding principal balance $ 20,139 $ 128,098 $ 148,237 $ 6,262 $ 27,839 $ 34,101 Carrying amount Real estate – residential mortgage $ 3,195 $ 25,269 $ 28,464 $ 107 $ 7,035 $ 7,142 Real estate – construction 103 7,139 7,242 — — — Commercial, financial and agricultural 1 5,234 78,272 83,506 563 11,338 11,901 Equity lines 50 12,379 12,429 35 8,046 8,081 Consumer 637 2,469 3,106 — 3 3 Total acquired loans $ 9,219 $ 125,528 $ 134,747 $ 705 $ 26,422 $ 27,127 1 Includes acquired loans classified by the Corporation as commercial real estate lending and commercial business lending. |
Peoples Bankshares, Incorporated (Peoples) | |
Schedule of total consideration paid, the fair values of assets acquired and liabilities assumed, and the resulting goodwill | (Dollars in thousands) Purchase price: Cash paid $ 10,579 Common stock issued 11,612 Total purchase price $ 22,191 Identifiable assets acquired: Cash and cash equivalents $ 29,680 Securities available for sale 17,169 Loans 124,290 Accrued interest receivable 430 Corporate premises and equipment 3,105 Other real estate owned 281 Core deposit intangible asset 1,711 Bank-owned life insurance 3,591 Investment in small business investment company 1,493 Other receivables 5,234 Other assets 3,637 Total identifiable assets acquired 190,621 Identifiable liabilities assumed: Demand and savings deposits 94,798 Time deposits 77,018 Borrowings 4,245 Accrued interest payable 260 Salaries, benefits and deferred compensation 2,054 Other liabilities 747 Total identifiable liabilities assumed 179,122 Net identifiable assets assumed $ 11,499 Goodwill resulting from acquisition $ 10,692 |
Schedule of acquired loans | (Dollars in thousands) January 1, 2020 Contractual principal and interest due $ 20,239 Nonaccretable difference (7,679) Expected cash flows 12,560 Accretable yield (3,366) Purchase credit impaired loans - estimated fair value $ 9,194 |
Schedule of unaudited pro forma amounts | Unaudited Pro Forma Three Months Ended (Dollars in thousands, except per share amounts) March 31, 2019 Total revenues (net interest income plus nonintererest income) $ 28,655 Net income $ 4,289 Net income per share, basic and diluted $ 1.16 |
Securities (Tables)
Securities (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Securities | |
Summary of available for sale debt securities | March 31, 2020 Gross Gross Amortized Unrealized Unrealized (Dollars in thousands) Cost Gains Losses Fair Value U.S. government agencies and corporations $ 31,985 $ 57 $ — $ 32,042 Mortgage-backed securities 101,424 2,941 — 104,365 Obligations of states and political subdivisions 96,836 1,225 (44) 98,017 $ 230,245 $ 4,223 $ (44) $ 234,424 December 31, 2019 Gross Gross Amortized Unrealized Unrealized (Dollars in thousands) Cost Gains Losses Fair Value U.S. government agencies and corporations $ 21,454 $ 3 $ (17) $ 21,440 Mortgage-backed securities 85,649 979 (43) 86,585 Obligations of states and political subdivisions 80,656 1,111 (59) 81,708 $ 187,759 $ 2,093 $ (119) $ 189,733 |
Schedule of amortized cost and estimated fair value of securities, by the earlier of contractual maturity or expected maturity | March 31, 2020 Amortized (Dollars in thousands) Cost Fair Value Due in one year or less $ 50,438 $ 50,564 Due after one year through five years 144,867 148,251 Due after five years through ten years 32,550 33,111 Due after ten years 2,390 2,498 $ 230,245 $ 234,424 |
Schedule of gross realized gains and losses and the proceeds | Three Months Ended March 31, (Dollars in thousands) 2020 2019 Realized gains from sales, maturities and calls of securities: Gross realized gains $ 4 $ 4 Gross realized losses — — Net realized gains $ 4 $ 4 Proceeds from sales, maturities, calls and paydowns of securities $ 39,063 $ 15,657 |
Schedule of securities in an unrealized loss position | Securities in an unrealized loss position at March 31, 2020, by duration of the period of the unrealized loss, are shown below. Less Than 12 Months 12 Months or More Total Fair Unrealized Fair Unrealized Fair Unrealized (Dollars in thousands) Value Loss Value Loss Value Loss U.S. government agencies and corporations $ — $ — $ — $ — $ — $ — Mortgage-backed securities — — — — — — Obligations of states and political subdivisions 9,612 39 604 5 10,216 44 Total temporarily impaired securities $ 9,612 $ 39 $ 604 $ 5 $ 10,216 $ 44 Securities in an unrealized loss position at December 31, 2019, by duration of the period of the unrealized loss, are shown below. Less Than 12 Months 12 Months or More Total Fair Unrealized Fair Unrealized Fair Unrealized (Dollars in thousands) Value Loss Value Loss Value Loss U.S. government agencies and corporations $ 6,256 $ 11 $ 4,094 $ 6 $ 10,350 $ 17 Mortgage-backed securities 4,099 7 10,166 36 14,265 43 Obligations of states and political subdivisions 9,187 53 1,368 6 10,555 59 Total temporarily impaired securities $ 19,542 $ 71 $ 15,628 $ 48 $ 35,170 $ 119 |
Loans (Tables)
Loans (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Loans | |
Summary of major classifications of loans | March 31, December 31, (Dollars in thousands) 2020 2019 Real estate – residential mortgage $ 202,767 $ 181,295 Real estate – construction 1 65,937 54,246 Commercial, financial and agricultural 2 588,585 500,812 Equity lines 56,306 52,083 Consumer 16,283 13,756 Consumer finance 307,591 312,999 1,237,469 1,115,191 Less allowance for loan losses (33,298) (32,873) Loans, net $ 1,204,171 $ 1,082,318 1 Includes the Corporation’s real estate construction lending and consumer real estate lot lending. 2 Includes the Corporation’s commercial real estate lending, land acquisition and development lending, builder line lending and commercial business lending. |
Schedule of acquired loans | March 31, 2020 December 31, 2019 Acquired Loans - Acquired Loans - Acquired Loans - Acquired Loans - Purchased Purchased Acquired Loans - Purchased Purchased Acquired Loans - (Dollars in thousands) Credit Impaired Performing Total Credit Impaired Performing Total Outstanding principal balance $ 20,139 $ 128,098 $ 148,237 $ 6,262 $ 27,839 $ 34,101 Carrying amount Real estate – residential mortgage $ 3,195 $ 25,269 $ 28,464 $ 107 $ 7,035 $ 7,142 Real estate – construction 103 7,139 7,242 — — — Commercial, financial and agricultural 1 5,234 78,272 83,506 563 11,338 11,901 Equity lines 50 12,379 12,429 35 8,046 8,081 Consumer 637 2,469 3,106 — 3 3 Total acquired loans $ 9,219 $ 125,528 $ 134,747 $ 705 $ 26,422 $ 27,127 1 Includes acquired loans classified by the Corporation as commercial real estate lending and commercial business lending. |
Summary of change in the accretable yield of loans classified as purchased credit impaired (PCI) | Three Months Ended March 31, (Dollars in thousands) 2020 2019 Accretable yield, balance at beginning of period $ 4,721 $ 5,987 Acquisition of Peoples Bankshares, Incorporated 3,366 — Accretion (959) (469) Reclassification of nonaccretable difference due to improvement in expected cash flows 733 256 Other changes, net 57 162 Accretable yield, balance at end of period $ 7,918 $ 5,936 |
Schedule of loans on nonaccrual status | March 31, December 31, (Dollars in thousands) 2020 2019 Real estate – residential mortgage $ 931 $ 1,526 Commercial, financial and agricultural: Commercial business lending — 11 Equity lines 278 229 Consumer 699 118 Consumer finance 377 611 Total loans on nonaccrual status $ 2,285 $ 2,495 |
Schedule of past due status of loans | The past due status of loans as of March 31, 2020 was as follows: 90+ Days 30 - 59 Days 60 - 89 Days 90+ Days Total Past Due and (Dollars in thousands) Past Due Past Due Past Due Past Due PCI Current 1 Total Loans Accruing Real estate – residential mortgage $ 1,251 $ 179 $ 556 $ 1,986 $ 3,195 $ 197,586 $ 202,767 $ — Real estate – construction: Construction lending — — — — 103 50,644 50,747 — Consumer lot lending — — — — — 15,190 15,190 — Commercial, financial and agricultural: Commercial real estate lending — 677 — 677 5,234 397,312 403,223 — Land acquisition and development lending — — — — — 40,189 40,189 — Builder line lending — — — — — 25,026 25,026 — Commercial business lending 11 — — 11 — 120,136 120,147 — Equity lines 304 — 88 392 50 55,864 56,306 9 Consumer 5 — — 5 637 15,641 16,283 — Consumer finance 8,825 1,187 377 10,389 — 297,202 307,591 — Total $ 10,396 $ 2,043 $ 1,021 $ 13,460 $ 9,219 $ 1,214,790 $ 1,237,469 $ 9 1 For the purposes of the table above, “Current” includes loans that are 1-29 days past due. The table above includes nonaccrual loans that are current of $556,000, 30-59 days past due of $114,000, 60-89 days past due of $20,000 and 90+ days past due of $1.01 million, as well as nonaccrual loans that are PCI of $538,000. The past due status of loans as of December 31, 2019 was as follows: 90+ Days 30 - 59 Days 60 - 89 Days 90+ Days Total Past Due and (Dollars in thousands) Past Due Past Due Past Due Past Due PCI Current 1 Total Loans Accruing Real estate – residential mortgage $ 1,428 $ 161 $ 1,016 $ 2,605 $ 107 $ 178,583 $ 181,295 $ — Real estate – construction: Construction lending — — — — — 40,943 40,943 — Consumer lot lending — — — — — 13,303 13,303 — Commercial, financial and agricultural: Commercial real estate lending — — — — 563 325,991 326,554 — Land acquisition and development lending — — — — — 42,891 42,891 — Builder line lending — — — — — 26,373 26,373 — Commercial business lending 73 18 — 91 — 104,903 104,994 — Equity lines 229 56 223 508 35 51,540 52,083 109 Consumer 20 10 — 30 — 13,726 13,756 — Consumer finance 11,034 1,420 611 13,065 — 299,934 312,999 — Total $ 12,784 $ 1,665 $ 1,850 $ 16,299 $ 705 $ 1,098,187 $ 1,115,191 $ 109 1 For the purposes of the table above, “Current” includes loans that are 1-29 days past due. The table above includes nonaccrual loans that are current of $547,000, 30-59 days past due of $197,000, 60‑89 days past due of $10,000 and 90+ days past due of $1.74 million. |
Schedule of impaired loans | Impaired loans, which included TDRs of $4.17 million, and the related allowance at March 31, 2020 were as follows: Recorded Recorded Investment Investment Average Unpaid in Loans in Loans Balance- Interest Principal without with Related Impaired Income (Dollars in thousands) Balance Specific Reserve Specific Reserve Allowance Loans Recognized Real estate – residential mortgage $ 3,357 $ 1,313 $ 1,820 $ 47 $ 3,295 $ 31 Commercial, financial and agricultural: Commercial real estate lending 1,403 — 1,403 76 1,417 18 Equity lines 121 114 — — 121 — Consumer 130 — 119 108 119 — Total $ 5,011 $ 1,427 $ 3,342 $ 231 $ 4,952 $ 49 Impaired loans, which included TDRs of $4.35 million, and the related allowance at December 31, 2019 were as follows: Recorded Recorded Investment Investment Average Unpaid in Loans in Loans Balance- Interest Principal without with Related Impaired Income (Dollars in thousands) Balance Specific Reserve Specific Reserve Allowance Loans Recognized Real estate – residential mortgage $ 3,891 $ 2,192 $ 1,479 $ 72 $ 3,506 $ 155 Commercial, financial and agricultural: Commercial real estate lending 1,459 4 1,447 77 1,581 82 Equity lines 31 31 — — 32 2 Consumer 130 — 121 118 123 — Total $ 5,511 $ 2,227 $ 3,047 $ 267 $ 5,242 $ 239 |
Allowance for Loan Losses (Tabl
Allowance for Loan Losses (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Allowance for Loan Losses | |
Schedule of changes in the allowance for loan losses | The following table presents the changes in the allowance for loan losses by major classification during the three months ended March 31, 2020: Real Estate Commercial, Residential Real Estate Financial & Equity Consumer (Dollars in thousands) Mortgage Construction Agricultural Lines Consumer Finance Total Allowance for loan losses: Balance at December 31, 2019 $ 2,080 $ 681 $ 7,121 $ 733 $ 465 $ 21,793 $ 32,873 Provision (credited) charged to operations 60 90 831 37 (18) 1,650 2,650 Loans charged off (4) — (18) — (93) (3,426) (3,541) Recoveries of loans previously charged off 4 — 1 — 62 1,249 1,316 Balance at March 31, 2020 $ 2,140 $ 771 $ 7,935 $ 770 $ 416 $ 21,266 $ 33,298 The following table presents the changes in the allowance for loan losses by major classification during the three months ended March 31, 2019: Real Estate Commercial, Residential Real Estate Financial & Equity Consumer (Dollars in thousands) Mortgage Construction Agricultural Lines Consumer Finance Total Allowance for loan losses: Balance at December 31, 2018 $ 2,246 $ 727 $ 6,688 $ 1,106 $ 257 $ 22,999 $ 34,023 Provision (credited) charged to operations (47) 114 (25) (205) 163 2,395 2,395 Loans charged off — — — — (76) (3,890) (3,966) Recoveries of loans previously charged off 5 — 1 — 42 1,089 1,137 Balance at March 31, 2019 $ 2,204 $ 841 $ 6,664 $ 901 $ 386 $ 22,593 $ 33,589 |
Schedule of balance of the allowance for loan losses and the balance of loans by impairment methodology | The following table presents, as of March 31, 2020, the balance of the allowance for loan losses and the balance of loans by impairment methodology. Real Estate Commercial, Residential Real Estate Financial & Equity Consumer (Dollars in thousands) Mortgage Construction Agricultural Lines Consumer Finance Total Allowance balance attributable to loans: Individually evaluated for impairment $ 47 $ — $ 76 $ — $ 108 $ — $ 231 Collectively evaluated for impairment 2,093 771 7,859 770 308 21,266 33,067 Acquired loans - PCI — — — — — — — Total allowance $ 2,140 $ 771 $ 7,935 $ 770 $ 416 $ 21,266 $ 33,298 Loans: Individually evaluated for impairment $ 3,133 $ — $ 1,403 $ 114 $ 119 $ — $ 4,769 Collectively evaluated for impairment 196,439 65,834 581,948 56,142 15,527 307,591 1,223,481 Acquired loans - PCI 3,195 103 5,234 50 637 — 9,219 Total loans $ 202,767 $ 65,937 $ 588,585 $ 56,306 $ 16,283 $ 307,591 $ 1,237,469 The following table presents, as of December 31, 2019, the balance of the allowance for loan losses, the allowance by impairment methodology, total loans and loans by impairment methodology. Real Estate Commercial, Residential Real Estate Financial & Equity Consumer (Dollars in thousands) Mortgage Construction Agricultural Lines Consumer Finance Total Allowance balance attributable to loans: Individually evaluated for impairment $ 72 $ — $ 77 $ — $ 118 $ — $ 267 Collectively evaluated for impairment 2,008 681 7,044 733 347 21,793 32,606 Acquired loans - PCI — — — — — — — Total allowance $ 2,080 $ 681 $ 7,121 $ 733 $ 465 $ 21,793 $ 32,873 Loans: Individually evaluated for impairment $ 3,671 $ — $ 1,451 $ 31 $ 121 $ — $ 5,274 Collectively evaluated for impairment 177,517 54,246 498,798 52,017 13,635 312,999 1,109,212 Acquired loans - PCI 107 — 563 35 — — 705 Total loans $ 181,295 $ 54,246 $ 500,812 $ 52,083 $ 13,756 $ 312,999 $ 1,115,191 |
Schedule of loans by credit quality indicators | Loans by credit quality indicators as of March 31, 2020 were as follows: Special Substandard (Dollars in thousands) Pass Mention Substandard Nonaccrual Total 1 Real estate – residential mortgage $ 199,087 $ 1,396 $ 1,353 $ 931 $ 202,767 Real estate – construction: Construction lending 50,747 — — — 50,747 Consumer lot lending 15,190 — — — 15,190 Commercial, financial and agricultural: Commercial real estate lending 374,717 25,886 2,620 — 403,223 Land acquisition and development lending 31,778 8,411 — — 40,189 Builder line lending 24,749 277 — — 25,026 Commercial business lending 116,594 3,553 — — 120,147 Equity lines 55,907 97 24 278 56,306 Consumer 14,947 54 583 699 16,283 $ 883,716 $ 39,674 $ 4,580 $ 1,908 $ 929,878 1 At March 31, 2020, the Corporation did not have any loans classified as Doubtful or Loss. Included in the table above are loans purchased in connection with the acquisition of Peoples of $104.70 million pass rated, $1.33 million special mention, $3.11 million substandard and $583,000 substandard nonaccrual. Non- (Dollars in thousands) Performing Performing Total Consumer finance $ 307,214 $ 377 $ 307,591 Loans by credit quality indicators as of December 31, 2019 were as follows: Special Substandard (Dollars in thousands) Pass Mention Substandard Nonaccrual Total 1 Real estate – residential mortgage $ 177,049 $ 1,839 $ 881 $ 1,526 $ 181,295 Real estate – construction: Construction lending 40,943 — — — 40,943 Consumer lot lending 13,303 — — — 13,303 Commercial, financial and agricultural: Commercial real estate lending 323,218 3,266 70 — 326,554 Land acquisition and development lending 33,870 9,021 — — 42,891 Builder line lending 25,995 378 — — 26,373 Commercial business lending 104,291 692 — 11 104,994 Equity lines 51,662 181 11 229 52,083 Consumer 13,632 6 — 118 13,756 $ 783,963 $ 15,383 $ 962 $ 1,884 $ 802,192 1 At December 31, 2019, the Corporation did not have any loans classified as Doubtful or Loss. Non- (Dollars in thousands) Performing Performing Total Consumer finance $ 312,388 $ 611 $ 312,999 |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill and Other Intangible Assets | |
Schedule of changes in goodwill, by reporting unit | Retail Consumer (Dollars in thousands) Banking Finance Total Balance as of January 1, 2020 $ 3,702 $ 10,723 $ 14,425 Acquisition of Peoples Bankshares, Incorporated 10,692 — 10,692 Balance at March 31, 2020 $ 14,394 $ 10,723 $ 25,117 |
Schedule of gross carrying amounts and accumulated amortization of other intangible assets | March 31, December 31, 2020 2019 Gross Gross Carrying Accumulated Carrying Accumulated (Dollars in thousands) Amount Amortization Amount Amortization Amortized intangible assets: Core deposit intangibles $ 1,711 $ (43) $ — $ — Other intangibles 1,405 (533) 1,405 (493) Total $ 3,116 $ (576) $ 1,405 $ (493) |
Equity, Other Comprehensive I_2
Equity, Other Comprehensive Income and Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Equity, Other Comprehensive Income and Earnings Per Share | |
Schedule of the components of accumulated other comprehensive loss, net of deferred taxes | March 31, December 31, (Dollars in thousands) 2020 2019 Net unrealized gains on securities $ 3,302 $ 1,560 Net unrecognized losses on cash flow hedges (1,537) (69) Net unrecognized losses on defined benefit plan (3,720) (3,740) Total accumulated other comprehensive loss, net $ (1,955) $ (2,249) |
Schedule of components earnings per share calculations | Three Months Ended March 31, (Dollars in thousands) 2020 2019 Net income attributable to C&F Financial Corporation $ 3,578 $ 3,771 Weighted average shares outstanding — basic and diluted 3,644,614 3,484,592 |
Employee Benefit Plans (Tables)
Employee Benefit Plans (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Employee Benefit Plans | |
Schedule of net periodic benefit costs | Three Months Ended March 31, (Dollars in thousands) 2020 2019 Components of net periodic benefit cost: Service cost, included in salaries and employee benefits $ 386 $ 293 Other components of net periodic benefit cost: Interest cost 135 153 Expected return on plan assets (374) (330) Amortization of prior service credit (17) (17) Amortization of net obligation at transition — — Recognized net actuarial losses 42 42 Other components of net periodic benefit cost, included in other noninterest income (214) (152) Net periodic benefit cost $ 172 $ 141 |
Fair Value of Assets and Liab_2
Fair Value of Assets and Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value of Assets and Liabilities | |
Schedule of balances of financial assets and liabilities measured at fair value on a recurring basis | March 31, 2020 Fair Value Measurements Using Assets/Liabilities at (Dollars in thousands) Level 1 Level 2 Level 3 Fair Value Assets: Securities available for sale U.S. government agencies and corporations $ — $ 32,042 $ — $ 32,042 Mortgage-backed securities — 104,365 — 104,365 Obligations of states and political subdivisions — 98,017 — 98,017 Total securities available for sale — 234,424 — 234,424 Loans held for sale — 125,667 — 125,667 Derivatives IRLC — 3,208 — 3,208 Interest rate swaps on loans — 8,842 — 8,842 Total assets $ — $ 372,141 $ — $ 372,141 Liabilities: Derivatives Interest rate swaps on loans $ — $ 8,842 $ — $ 8,842 Cash flow hedges — 2,119 — 2,119 Forward sales of TBA securities — 374 — 374 Total liabilities $ — $ 11,335 $ — $ 11,335 December 31, 2019 Fair Value Measurements Using Assets/Liabilities at (Dollars in thousands) Level 1 Level 2 Level 3 Fair Value Assets: Securities available for sale U.S. government agencies and corporations $ — $ 21,440 $ — $ 21,440 Mortgage-backed securities — 86,585 — 86,585 Obligations of states and political subdivisions — 81,708 — 81,708 Total securities available for sale — 189,733 — 189,733 Loans held for sale — 90,500 — 90,500 Derivatives IRLC — 1,083 — 1,083 Interest rate swaps on loans — 2,462 — 2,462 Total assets $ — $ 283,778 $ — $ 283,778 Liabilities: Derivatives Interest rate swaps on loans $ — $ 2,462 $ — $ 2,462 Cash flow hedges — 145 — 145 Forward sales of TBA securities — 25 — 25 Total liabilities $ — $ 2,632 $ — $ 2,632 |
Schedule of balances of assets measured at fair value on a nonrecurring basis | March 31, 2020 Fair Value Measurements Using Assets at Fair (Dollars in thousands) Level 1 Level 2 Level 3 Value Other real estate owned, net $ — $ — $ 268 $ 268 Total $ — $ — $ 268 $ 268 December 31, 2019 Fair Value Measurements Using Assets at Fair (Dollars in thousands) Level 1 Level 2 Level 3 Value Impaired loans, net $ — $ — $ 102 $ 102 Other real estate owned, net — — 268 268 Total $ — $ — $ 370 $ 370 |
Schedule of quantitative information about Level 3 fair value measurements for financial assets measured at fair value on a nonrecurring basis | Fair Value Measurements at March 31, 2020 (Dollars in thousands) Fair Value Valuation Technique(s) Unobservable Inputs Range (Weighted Average) 1 Other real estate owned, net $ 268 Appraisals Discount to reflect current market conditions and estimated selling costs 33%-75% (45%) Total $ 268 1 The weighted average of unobservable inputs is calculated based on the relative asset fair values. |
Schedule of carrying amounts and estimated fair values of financial instruments | Carrying Fair Value Measurements at March 31, 2020 Using Total Fair (Dollars in thousands) Value Level 1 Level 2 Level 3 Value Financial assets: Cash and short-term investments $ 148,009 $ 148,009 $ — $ — $ 148,009 Securities available for sale 234,424 — 234,424 — 234,424 Loans, net 1,204,171 — — 1,199,524 1,199,524 Loans held for sale 125,667 — 125,667 — 125,667 Derivatives IRLC 3,208 — 3,208 — 3,208 Interest rate swaps on loans 8,842 — 8,842 — 8,842 Bank-owned life insurance 19,749 — 19,749 — 19,749 Accrued interest receivable 7,253 7,253 — — 7,253 Financial liabilities: Demand deposits 976,624 976,624 — — 976,624 Time deposits 507,750 — 514,744 — 514,744 Borrowings 159,934 — 162,855 — 162,855 Derivatives Cash flow hedges 2,119 — 2,119 — 2,119 Interest rate swaps on loans 8,842 — 8,842 — 8,842 Forward sales of TBA securities 374 — 374 — 374 Accrued interest payable 1,508 1,508 — — 1,508 Carrying Fair Value Measurements at December 31, 2019 Using Total Fair (Dollars in thousands) Value Level 1 Level 2 Level 3 Value Financial assets: Cash and short-term investments $ 165,433 $ 165,433 $ — $ — $ 165,433 Securities available for sale 189,733 — 189,733 — 189,733 Loans, net 1,082,318 — — 1,082,783 1,082,783 Loans held for sale 90,500 — 90,500 — 90,500 Derivatives IRLC 1,083 — 1,083 — 1,083 Interest rate swaps on loans 2,462 — 2,462 — 2,462 Bank-owned life insurance 16,044 — 16,044 — 16,044 Accrued interest receivable 6,776 6,776 — — 6,776 Financial liabilities: Demand deposits 869,194 869,194 — — 869,194 Time deposits 422,056 — 423,605 — 423,605 Borrowings 161,170 — 154,964 — 154,964 Derivatives Cash flow hedges 145 — 145 — 145 Interest rate swaps on loans 2,462 — 2,462 — 2,462 Forward sales of TBA securities 25 — 25 25 Accrued interest payable 1,291 1,291 — — 1,291 |
Business Segments (Tables)
Business Segments (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Business Segments | |
Schedule of segment reporting information, by segment | Three Months Ended March 31, 2020 Retail Mortgage Consumer (Dollars in thousands) Banking Banking Finance Other Eliminations Consolidated Revenues: Interest income $ 15,915 $ 661 $ 10,101 $ — $ (1,899) $ 24,778 Gains on sales of loans — 3,676 — — — 3,676 Other noninterest income 2,962 1,611 117 663 — 5,353 Total operating income 18,877 5,948 10,218 663 (1,899) 33,807 Expenses: Provision for loan losses 1,000 — 1,650 — — 2,650 Interest expense 3,144 305 2,286 339 (1,899) 4,175 Salaries and employee benefits 8,060 1,845 2,243 (1,331) — 10,817 Depreciation and amortization 807 72 46 43 — 968 Other noninterest expenses 5,329 1,651 1,341 2,260 — 10,581 Total operating expenses 18,340 3,873 7,566 1,311 (1,899) 29,191 Income (loss) before income taxes 537 2,075 2,652 (648) — 4,616 Income tax expense (benefit) (33) 532 722 (244) — 977 Net income (loss) $ 570 $ 1,543 $ 1,930 $ (404) $ — $ 3,639 Total assets $ 1,689,244 $ 140,084 $ 310,249 $ 19,242 $ (281,527) $ 1,877,292 Capital expenditures $ 752 $ 294 $ 502 $ — $ — $ 1,548 Three Months Ended March 31, 2019 Retail Mortgage Consumer (Dollars in thousands) Banking Banking Finance Other Eliminations Consolidated Revenues: Interest income $ 14,324 $ 350 $ 10,145 $ 2 $ (1,870) $ 22,951 Gains on sales of loans — 2,136 — — — 2,136 Other noninterest income 2,438 838 129 1,562 — 4,967 Total operating income 16,762 3,324 10,274 1,564 (1,870) 30,054 Expenses: Provision for loan losses — — 2,395 — — 2,395 Interest expense 2,175 163 2,551 285 (1,870) 3,304 Salaries and employee benefits 6,978 1,147 2,185 1,597 — 11,907 Depreciation and amortization 835 62 52 45 — 994 Other noninterest expenses 4,068 1,182 1,323 203 — 6,776 Total operating expenses 14,056 2,554 8,506 2,130 (1,870) 25,376 Income (loss) before income taxes 2,706 770 1,768 (566) — 4,678 Income tax expense (benefit) 416 203 483 (195) — 907 Net income (loss) $ 2,290 $ 567 $ 1,285 $ (371) $ — $ 3,771 Total assets $ 1,380,790 $ 53,642 $ 301,579 $ 6,836 $ (193,487) $ 1,549,360 Capital expenditures $ 721 $ 24 $ 8 $ — $ — $ 753 |
Derivative Financial Instrume_2
Derivative Financial Instruments (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Derivative Financial Instruments | |
Schedule of key elements of derivative instruments other than forward sales of mortgage loans | March 31, 2020 Notional (Dollars in thousands) Amount Assets Liabilities Cash flow hedges: Interest rate swap contracts $ 25,000 $ — $ 2,119 Not designated as hedges: Customer-related interest rate swap contracts: Matched interest rate swaps with borrower 81,256 8,842 — Matched interest rate swaps with counterparty 81,256 — 8,842 Mortgage banking contracts: IRLCs 245,210 3,208 — Forward sales of TBA securities 14,500 — 374 December 31, 2019 Notional (Dollars in thousands) Amount Assets Liabilities Cash flow hedges: Interest rate swap contracts $ 25,000 $ — $ 145 Not designated as hedges: Customer-related interest rate swap contracts: Matched interest rate swaps with borrower 74,266 2,454 8 Matched interest rate swaps with counterparty 74,266 8 2,454 Mortgage banking contracts: IRLCs 75,073 1,083 — Forward sales of TBA securities 24,000 — 25 |
Other Noninterest Expenses (Tab
Other Noninterest Expenses (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Other Noninterest Expenses | |
Schedule of other noninterest expense | Three Months Ended March 31, (Dollars in thousands) 2020 2019 Data processing fees $ 2,156 $ 1,921 Unrealized loss on nonqualified deferred compensation plan 1,983 — Professional fees 666 564 Marketing and advertising expenses 490 373 Travel and educational expenses 444 403 Telecommunication expenses 372 317 All other noninterest expenses 3,111 2,002 Total other noninterest expenses $ 9,222 $ 5,580 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Nature of Operations and Business Combination (Details) $ in Thousands | Jan. 01, 2020USD ($) | Mar. 31, 2020subsidiary |
Peoples Bankshares, Incorporated (Peoples) | ||
Nature of Operations | ||
Aggregate purchase price | $ | $ 22,191 | |
C&F Bank | ||
Nature of Operations | ||
Number of wholly owned subsidiaries | subsidiary | 5 | |
C&F Mortgage | C&F Select LLC | ||
Nature of Operations | ||
Interest owned (as a percent) | 51.00% |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Share-Based Compensation (Details) - Restricted Stock | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Share-based compensation | |
Compensation expense before tax | $ 389,000 |
Compensation expense after tax | 217,000 |
Unrecognized compensation expense | $ 3,730,000 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Restricted Stock Activity (Details) - $ / shares | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Shares | ||
Unvested, beginning of period (in shares) | 142,020 | |
Unvested, end of period (in shares) | 139,820 | |
Restricted Stock | ||
Shares | ||
Unvested, beginning of period (in shares) | 142,020 | 139,455 |
Granted (in shares) | 14,650 | 16,100 |
Vested (in shares) | (16,230) | (15,490) |
Forfeited | (620) | (70) |
Unvested, end of period (in shares) | 139,820 | 139,995 |
Weighted-Average Grant Date Fair Value | ||
Nonvested, beginning of period (in dollars per share) | $ 48.88 | $ 45.75 |
Granted (in dollars per share) | 53.22 | 51.73 |
Vested (in dollars per share) | 39.97 | 41.31 |
Forfeited (in dollars per share) | 53.46 | 60.95 |
Nonvested, end of period (in dollars per share) | $ 50.39 | $ 46.92 |
Business Combination - Consider
Business Combination - Consideration (Details) - Peoples Bankshares, Incorporated (Peoples) | Jan. 01, 2020USD ($)shares |
Business Combination | |
Shares received for each share of common stock | shares | 0.5366 |
Amount received for each share of common stock | $ | $ 27 |
Cash consideration paid | $ | $ 10,579,000 |
Common stock to shareholders of acquiree | shares | 209,871 |
Business Combination - Purchase
Business Combination - Purchase Price Allocation (Details) - USD ($) $ in Thousands | Jan. 01, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | [1] |
Identifiable liabilities assumed | ||||
Goodwill resulting from acquisition | $ 25,117 | $ 14,425 | ||
Peoples Bankshares, Incorporated (Peoples) | ||||
Purchase price | ||||
Cash | $ 10,579 | |||
Stock | 11,612 | |||
Total purchase price | 22,191 | |||
Identifiable assets acquired | ||||
Cash and cash equivalents | 29,680 | |||
Securities available for sale | 17,169 | |||
Loans | 124,290 | |||
Accrued interest receivable | 430 | |||
Corporate premises and equipment | 3,105 | |||
Other real estate owned | 281 | |||
Core deposit intangible asset | 1,711 | |||
Bank-owned life insurance | 3,591 | |||
Investment in small business investment company | 1,493 | |||
Other receivables | 5,234 | |||
Other assets | 3,637 | |||
Total identifiable assets acquired | 190,621 | |||
Identifiable liabilities assumed | ||||
Demand and savings deposits | 94,798 | |||
Time deposits | 77,018 | |||
Borrowings | 4,245 | |||
Accrued interest payable | 260 | |||
Salaries, benefits and deferred compensation | 2,054 | |||
Other liabilities | 747 | |||
Total identifiable liabilities assumed | 179,122 | |||
Net identifiable assets assumed | 11,499 | |||
Goodwill resulting from acquisition | $ 10,692 | |||
Amortization period (in years) | 15 years | |||
[1] | Derived from audited consolidated financial statements. |
Business Combination - Loans, C
Business Combination - Loans, Core Deposit Intangible and Deposits (Details) - USD ($) | Jan. 01, 2020 | Mar. 31, 2020 | Dec. 31, 2019 |
Business Combination | |||
Loans, allowance for loan losses | $ 33,298,000 | $ 32,873,000 | |
Information about PCI loans acquired | |||
Contractual principal and interest due | $ 20,239,000 | ||
Nonaccretable difference | (7,679,000) | ||
Expected cash flows | 12,560,000 | ||
Accretable yield | (3,366,000) | ||
Purchase credit impaired loans - estimated fair value | 9,194,000 | ||
Peoples Bankshares, Incorporated (Peoples) | |||
Business Combination | |||
Outstanding principal balance | 131,920,000 | ||
Estimated fair value of loans acquired | 124,290,000 | ||
Loans, allowance for loan losses | 2,870,000 | ||
Information about PCI loans acquired | |||
Core deposit intangible asset | $ 1,711,000 | ||
Percentage of CDI to non-maturity deposits | 1.80% | ||
Premium of deposits | $ 557,000 | ||
Amortization period | 2 years | ||
Peoples Bankshares, Incorporated (Peoples) | Minimum | |||
Information about PCI loans acquired | |||
Maturity of deposits | 3 months | ||
Peoples Bankshares, Incorporated (Peoples) | Maximum | |||
Information about PCI loans acquired | |||
Maturity of deposits | 5 years | ||
Peoples Bankshares, Incorporated (Peoples) | PCI Loans | |||
Business Combination | |||
Outstanding principal balance | $ 4,280,000 | ||
Estimated fair value of loans acquired | $ 635,000 |
Business Combination - Pro form
Business Combination - Pro forma (Details) $ / shares in Units, $ in Thousands | 3 Months Ended |
Mar. 31, 2019USD ($)$ / shares | |
Unaudited pro forma information | |
Total revenues (net interest income plus nonintererest income) | $ | $ 28,655 |
Net income | $ | $ 4,289 |
Net income per share, basic (in USD per share) | $ / shares | $ 1.16 |
Peoples Bankshares, Incorporated (Peoples) | |
Unaudited pro forma information | |
Net income per share, diluted (in USD per share) | $ / shares | $ 1.16 |
Business Combination - Merger r
Business Combination - Merger related costs (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Business Combination | ||
Merger related costs | $ 888,000 | $ 0 |
Peoples Bankshares, Incorporated (Peoples) | ||
Business Combination | ||
Aggregated merger related costs | 1,670,000 | |
Aggregated merger related costs, after Income Taxes | 1,440,000 | |
Merger related costs | 957,000 | $ 0 |
Merger related costs, after income taxes | $ 785,000 |
Securities - Available for sale
Securities - Available for sale Securities (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 | |
Debt Securities, Available-for-sale [Line Items] | |||
Amortized Cost | $ 230,245 | $ 187,759 | |
Gross Unrealized Gains | 4,223 | 2,093 | |
Gross Unrealized Losses | (44) | (119) | |
Fair Value | 234,424 | 189,733 | [1] |
U.S. government agencies and corporations | |||
Debt Securities, Available-for-sale [Line Items] | |||
Amortized Cost | 31,985 | 21,454 | |
Gross Unrealized Gains | 57 | 3 | |
Gross Unrealized Losses | (17) | ||
Fair Value | 32,042 | 21,440 | |
Mortgage-backed securities | |||
Debt Securities, Available-for-sale [Line Items] | |||
Amortized Cost | 101,424 | 85,649 | |
Gross Unrealized Gains | 2,941 | 979 | |
Gross Unrealized Losses | (43) | ||
Fair Value | 104,365 | 86,585 | |
Obligations of states and political subdivisions | |||
Debt Securities, Available-for-sale [Line Items] | |||
Amortized Cost | 96,836 | 80,656 | |
Gross Unrealized Gains | 1,225 | 1,111 | |
Gross Unrealized Losses | (44) | (59) | |
Fair Value | $ 98,017 | $ 81,708 | |
[1] | Derived from audited consolidated financial statements. |
Securities - Maturities and Rea
Securities - Maturities and Realized Gains and Losses (Details) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2020USD ($) | Mar. 31, 2019USD ($)security | Dec. 31, 2019USD ($) | ||
Amortized Cost | ||||
Due in one year or less | $ 50,438 | |||
Due after one year through five years | 144,867 | |||
Due after five years through ten years | 32,550 | |||
Due after ten years | 2,390 | |||
Amortized Cost | 230,245 | $ 187,759 | ||
Fair Value | ||||
Due in one year or less | 50,564 | |||
Due after one year through five years | 148,251 | |||
Due after five years through ten years | 33,111 | |||
Due after ten years | 2,498 | |||
Fair Value | 234,424 | $ 189,733 | [1] | |
Gross realized gains and losses on and the proceeds from sales, maturities and calls of securities | ||||
Proceeds related to sales of assets acquired | 8,004 | |||
Number of securities sales | security | 0 | |||
Gross realized gains | 4 | $ 4 | ||
Net realized gains | 4 | 4 | ||
Proceeds from sales, maturities, calls and paydowns of securities | 39,063 | $ 15,657 | ||
Peoples Bankshares, Incorporated (Peoples) | ||||
Gross realized gains and losses on and the proceeds from sales, maturities and calls of securities | ||||
Proceeds related to sales of assets acquired | $ 6,640 | |||
[1] | Derived from audited consolidated financial statements. |
Securities - Pledged as Collate
Securities - Pledged as Collateral (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 | |
Available for sale securities | |||
Amortized Cost | $ 230,245 | $ 187,759 | |
Fair Value | 234,424 | 189,733 | [1] |
Securities Pledged as Collateral | |||
Available for sale securities | |||
Amortized Cost | 119,520 | 126,220 | |
Fair Value | $ 122,740 | $ 127,470 | |
[1] | Derived from audited consolidated financial statements. |
Securities - Unrealized Loss Po
Securities - Unrealized Loss Positions (Details) | 3 Months Ended | |
Mar. 31, 2020USD ($)security | Dec. 31, 2019USD ($) | |
Fair value | ||
Less Than 12 Months, Fair Value | $ 9,612,000 | $ 19,542,000 |
12 Months or More, Fair Value | 604,000 | 15,628,000 |
Total Fair Value | 10,216,000 | 35,170,000 |
Unrealized Loss | ||
Less Than 12 Months, Unrealized Loss | 39,000 | 71,000 |
12 Months or More, Unrealized Loss | 5,000 | 48,000 |
Total Unrealized Loss | $ 44,000 | 119,000 |
Other information | ||
Number of positions considered temporarily impaired | security | 25 | |
Debt securities considered temporarily impaired | $ 10,216,000 | 35,170,000 |
Other than temporary impairment | 0 | |
U.S. government agencies and corporations | ||
Fair value | ||
Less Than 12 Months, Fair Value | 6,256,000 | |
12 Months or More, Fair Value | 4,094,000 | |
Total Fair Value | 10,350,000 | |
Unrealized Loss | ||
Less Than 12 Months, Unrealized Loss | 11,000 | |
12 Months or More, Unrealized Loss | 6,000 | |
Total Unrealized Loss | 17,000 | |
Other information | ||
Debt securities considered temporarily impaired | 10,350,000 | |
Mortgage-backed securities | ||
Fair value | ||
Less Than 12 Months, Fair Value | 4,099,000 | |
12 Months or More, Fair Value | 10,166,000 | |
Total Fair Value | 14,265,000 | |
Unrealized Loss | ||
Less Than 12 Months, Unrealized Loss | 7,000 | |
12 Months or More, Unrealized Loss | 36,000 | |
Total Unrealized Loss | 43,000 | |
Other information | ||
Debt securities considered temporarily impaired | 14,265,000 | |
Obligations of states and political subdivisions | ||
Fair value | ||
Less Than 12 Months, Fair Value | 9,612,000 | 9,187,000 |
12 Months or More, Fair Value | 604,000 | 1,368,000 |
Total Fair Value | 10,216,000 | 10,555,000 |
Unrealized Loss | ||
Less Than 12 Months, Unrealized Loss | 39,000 | 53,000 |
12 Months or More, Unrealized Loss | 5,000 | 6,000 |
Total Unrealized Loss | 44,000 | 59,000 |
Other information | ||
Debt securities considered temporarily impaired | $ 10,216,000 | $ 10,555,000 |
Securities - Restricted Stocks
Securities - Restricted Stocks and others (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2020 | Dec. 31, 2019 | [1] | |
Securities | |||
Investment in restricted stocks | $ 3,209,000 | $ 3,257,000 | |
Restricted stocks, other-than-temporary impairment | $ 0 | ||
[1] | Derived from audited consolidated financial statements. |
Loans - Major Classifications o
Loans - Major Classifications of Loans (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 | |
Loans | |||
Loans | $ 1,237,469 | $ 1,115,191 | |
Less allowance for loan losses | (33,298) | (32,873) | |
Loans, net | 1,204,171 | 1,082,318 | [1] |
Real estate - residential mortgage | |||
Loans | |||
Loans | 202,767 | 181,295 | |
Real estate - construction | |||
Loans | |||
Loans | 65,937 | 54,246 | |
Commercial, financial and agricultural | |||
Loans | |||
Loans | 588,585 | 500,812 | |
Equity lines | |||
Loans | |||
Loans | 56,306 | 52,083 | |
Consumer | |||
Loans | |||
Loans | 16,283 | 13,756 | |
Amount included related to demand deposit overdrafts | 227 | 449 | |
Consumer finance | |||
Loans | |||
Loans | $ 307,591 | $ 312,999 | |
[1] | Derived from audited consolidated financial statements. |
Loans - Loans Acquired (Details
Loans - Loans Acquired (Details) - CVBK - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Loans | ||
Outstanding principal balance | $ 148,237 | $ 34,101 |
Carrying amount | ||
Total acquired loans | 134,747 | 27,127 |
Real estate - residential mortgage | ||
Carrying amount | ||
Total acquired loans | 28,464 | 7,142 |
Real estate - construction | ||
Carrying amount | ||
Total acquired loans | 7,242 | |
Commercial, financial and agricultural | ||
Carrying amount | ||
Total acquired loans | 83,506 | 11,901 |
Equity lines | ||
Carrying amount | ||
Total acquired loans | 12,429 | 8,081 |
Consumer | ||
Carrying amount | ||
Total acquired loans | 3,106 | 3 |
PCI Loans | ||
Loans | ||
Outstanding principal balance | 20,139 | 6,262 |
Carrying amount | ||
Total acquired loans | 9,219 | 705 |
PCI Loans | Real estate - residential mortgage | ||
Carrying amount | ||
Total acquired loans | 3,195 | 107 |
PCI Loans | Real estate - construction | ||
Carrying amount | ||
Total acquired loans | 103 | |
PCI Loans | Commercial, financial and agricultural | ||
Carrying amount | ||
Total acquired loans | 5,234 | 563 |
PCI Loans | Equity lines | ||
Carrying amount | ||
Total acquired loans | 50 | 35 |
PCI Loans | Consumer | ||
Carrying amount | ||
Total acquired loans | 637 | |
Purchased Performing Loans | ||
Loans | ||
Outstanding principal balance | 128,098 | 27,839 |
Carrying amount | ||
Total acquired loans | 125,528 | 26,422 |
Purchased Performing Loans | Real estate - residential mortgage | ||
Carrying amount | ||
Total acquired loans | 25,269 | 7,035 |
Purchased Performing Loans | Real estate - construction | ||
Carrying amount | ||
Total acquired loans | 7,139 | |
Purchased Performing Loans | Commercial, financial and agricultural | ||
Carrying amount | ||
Total acquired loans | 78,272 | 11,338 |
Purchased Performing Loans | Equity lines | ||
Carrying amount | ||
Total acquired loans | 12,379 | 8,046 |
Purchased Performing Loans | Consumer | ||
Carrying amount | ||
Total acquired loans | $ 2,469 | $ 3 |
Loans - Change in Accretable Yi
Loans - Change in Accretable Yield (Details) - CVBK - PCI Loans - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Change in the accretable yield | ||
Accretable yield, balance at beginning of period | $ 4,721 | $ 5,987 |
Acquisition of Peoples Bankshares, Incorporated | 3,366 | |
Accretion | (959) | (469) |
Reclassification of nonaccreatable difference due to improvement in expected cash flows | 733 | 256 |
Other changes, net | 57 | 162 |
Accretable yield, balance at end of period | $ 7,918 | $ 5,936 |
Loans - Loans on Nonaccrual Sta
Loans - Loans on Nonaccrual Status (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Loans on nonaccrual status | ||
Loans on nonaccrual status | $ 2,285 | $ 2,495 |
Real estate - residential mortgage | ||
Loans on nonaccrual status | ||
Loans on nonaccrual status | 931 | 1,526 |
Commercial, financial and agricultural | Commercial business lending | ||
Loans on nonaccrual status | ||
Loans on nonaccrual status | 11 | |
Equity lines | ||
Loans on nonaccrual status | ||
Loans on nonaccrual status | 278 | 229 |
Consumer | ||
Loans on nonaccrual status | ||
Loans on nonaccrual status | 699 | 118 |
Consumer finance | ||
Loans on nonaccrual status | ||
Loans on nonaccrual status | $ 377 | $ 611 |
Loans - Past Due Status (Detail
Loans - Past Due Status (Details) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Loans on nonaccrual status | ||
Total Past Due | $ 13,460,000 | $ 16,299,000 |
Current | 1,214,790,000 | 1,098,187,000 |
Total Loans | 1,237,469,000 | 1,115,191,000 |
90+ days past due and accruing | 9,000 | 109,000 |
Additional disclosure for nonaccrual loans | ||
Current, nonaccrual status | 556,000 | 547,000 |
Nonaccrual loans, 30-59 days past due | 114,000 | 197,000 |
Nonaccrual loans, 60-89 days past due | 20,000 | 10,000 |
Nonaccrual loans, 90+ days past due | 1,010,000 | 1,740,000 |
Nonaccrual loans, PCI | 538,000 | |
PCI | ||
Loans on nonaccrual status | ||
PCI | 9,219,000 | 705,000 |
30-59 Days Past Due | ||
Loans on nonaccrual status | ||
Total Past Due | 10,396,000 | 12,784,000 |
60-89 Days Past Due | ||
Loans on nonaccrual status | ||
Total Past Due | 2,043,000 | 1,665,000 |
90+ Days Past Due | ||
Loans on nonaccrual status | ||
Total Past Due | 1,021,000 | 1,850,000 |
Real estate - residential mortgage | ||
Loans on nonaccrual status | ||
Total Past Due | 1,986,000 | 2,605,000 |
Current | 197,586,000 | 178,583,000 |
Total Loans | 202,767,000 | 181,295,000 |
Real estate - residential mortgage | PCI | ||
Loans on nonaccrual status | ||
PCI | 3,195,000 | 107,000 |
Real estate - residential mortgage | 30-59 Days Past Due | ||
Loans on nonaccrual status | ||
Total Past Due | 1,251,000 | 1,428,000 |
Real estate - residential mortgage | 60-89 Days Past Due | ||
Loans on nonaccrual status | ||
Total Past Due | 179,000 | 161,000 |
Real estate - residential mortgage | 90+ Days Past Due | ||
Loans on nonaccrual status | ||
Total Past Due | 556,000 | 1,016,000 |
Equity lines | ||
Loans on nonaccrual status | ||
Total Past Due | 392,000 | 508,000 |
Current | 55,864,000 | 51,540,000 |
Total Loans | 56,306,000 | 52,083,000 |
90+ days past due and accruing | 9,000 | 109,000 |
Equity lines | PCI | ||
Loans on nonaccrual status | ||
PCI | 50,000 | 35,000 |
Equity lines | 30-59 Days Past Due | ||
Loans on nonaccrual status | ||
Total Past Due | 304,000 | 229,000 |
Equity lines | 60-89 Days Past Due | ||
Loans on nonaccrual status | ||
Total Past Due | 56,000 | |
Equity lines | 90+ Days Past Due | ||
Loans on nonaccrual status | ||
Total Past Due | 88,000 | 223,000 |
Consumer | ||
Loans on nonaccrual status | ||
Total Past Due | 5,000 | 30,000 |
Current | 15,641,000 | 13,726,000 |
Total Loans | 16,283,000 | 13,756,000 |
Consumer | PCI | ||
Loans on nonaccrual status | ||
PCI | 637,000 | |
Consumer | 30-59 Days Past Due | ||
Loans on nonaccrual status | ||
Total Past Due | 5,000 | 20,000 |
Consumer | 60-89 Days Past Due | ||
Loans on nonaccrual status | ||
Total Past Due | 10,000 | |
Consumer finance | ||
Loans on nonaccrual status | ||
Total Past Due | 10,389,000 | 13,065,000 |
Current | 297,202,000 | 299,934,000 |
Total Loans | 307,591,000 | 312,999,000 |
Consumer finance | 30-59 Days Past Due | ||
Loans on nonaccrual status | ||
Total Past Due | 8,825,000 | 11,034,000 |
Consumer finance | 60-89 Days Past Due | ||
Loans on nonaccrual status | ||
Total Past Due | 1,187,000 | 1,420,000 |
Consumer finance | 90+ Days Past Due | ||
Loans on nonaccrual status | ||
Total Past Due | 377,000 | 611,000 |
Construction lending | Real estate - construction | ||
Loans on nonaccrual status | ||
Current | 50,644,000 | 40,943,000 |
Total Loans | 50,747,000 | 40,943,000 |
Construction lending | Real estate - construction | PCI | ||
Loans on nonaccrual status | ||
PCI | 103,000 | |
Consumer lot lending | Real estate - construction | ||
Loans on nonaccrual status | ||
Current | 15,190,000 | 13,303,000 |
Total Loans | 15,190,000 | 13,303,000 |
Commercial real estate lending | Commercial, financial and agricultural | ||
Loans on nonaccrual status | ||
Total Past Due | 677,000 | |
Current | 397,312,000 | 325,991,000 |
Total Loans | 403,223,000 | 326,554,000 |
Commercial real estate lending | Commercial, financial and agricultural | PCI | ||
Loans on nonaccrual status | ||
PCI | 5,234,000 | 563,000 |
Commercial real estate lending | Commercial, financial and agricultural | 60-89 Days Past Due | ||
Loans on nonaccrual status | ||
Total Past Due | 677,000 | |
Land acquisition and development lending | Commercial, financial and agricultural | ||
Loans on nonaccrual status | ||
Current | 40,189,000 | 42,891,000 |
Total Loans | 40,189,000 | 42,891,000 |
Builder line lending | Commercial, financial and agricultural | ||
Loans on nonaccrual status | ||
Current | 25,026,000 | 26,373,000 |
Total Loans | 25,026,000 | 26,373,000 |
Commercial business lending | Commercial, financial and agricultural | ||
Loans on nonaccrual status | ||
Total Past Due | 11,000 | 91,000 |
Current | 120,136,000 | 104,903,000 |
Total Loans | 120,147,000 | 104,994,000 |
Commercial business lending | Commercial, financial and agricultural | 30-59 Days Past Due | ||
Loans on nonaccrual status | ||
Total Past Due | $ 11,000 | 73,000 |
Commercial business lending | Commercial, financial and agricultural | 60-89 Days Past Due | ||
Loans on nonaccrual status | ||
Total Past Due | $ 18,000 |
Loans - Troubled Debt Restructu
Loans - Troubled Debt Restructurings (Details) | Apr. 30, 2020USD ($)loan | Mar. 31, 2020USD ($)loan | Mar. 31, 2019USD ($)loan |
Loan modifications classified as troubled debt restructurings | |||
Number of Loans | loan | 1 | 0 | |
Recorded Investment | $ 84,000 | ||
TDR payment default period | 12 months | ||
Period determining when a past due TDR becomes a subsequent default | 90 days | ||
Recorded Investment, TDR payment defaults | $ 0 | $ 0 | |
C&F Bank | Subsequent Events | |||
Loan modifications classified as troubled debt restructurings | |||
Outstanding principal | $ 70,000,000 | ||
C&F Bank | Minimum | Subsequent Events | |||
Loan modifications classified as troubled debt restructurings | |||
Number of loans | loan | 130 |
Loans - Impaired Loans (Details
Loans - Impaired Loans (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
Impaired loans | ||
Impaired loans, troubled debt restructurings | $ 4,170 | $ 4,350 |
Impaired loans, Unpaid Principal Balance | 5,011 | 5,511 |
Impaired loans, Recorded Investment in Loans without Specific Reserve | 1,427 | 2,227 |
Impaired loans, Recorded Investment in Loans with Specific Reserve | 3,342 | 3,047,000 |
Impaired loans, Related Allowance | 231 | 267 |
Impaired loans, Average Balance | 4,952 | 5,242 |
Impaired loans, Interest Income Recognized | 49 | 239 |
Real estate - residential mortgage | ||
Impaired loans | ||
Impaired loans, Unpaid Principal Balance | 3,357 | 3,891 |
Impaired loans, Recorded Investment in Loans without Specific Reserve | 1,313 | 2,192 |
Impaired loans, Recorded Investment in Loans with Specific Reserve | 1,820 | 1,479,000 |
Impaired loans, Related Allowance | 47 | 72 |
Impaired loans, Average Balance | 3,295 | 3,506 |
Impaired loans, Interest Income Recognized | 31 | 155 |
Commercial, financial and agricultural | Commercial real estate lending | ||
Impaired loans | ||
Impaired loans, Unpaid Principal Balance | 1,403 | 1,459 |
Impaired loans, Recorded Investment in Loans without Specific Reserve | 4 | |
Impaired loans, Recorded Investment in Loans with Specific Reserve | 1,403 | 1,447,000 |
Impaired loans, Related Allowance | 76 | 77 |
Impaired loans, Average Balance | 1,417 | 1,581 |
Impaired loans, Interest Income Recognized | 18 | 82 |
Equity lines | ||
Impaired loans | ||
Impaired loans, Unpaid Principal Balance | 121 | 31 |
Impaired loans, Recorded Investment in Loans without Specific Reserve | 114 | 31 |
Impaired loans, Average Balance | 121 | 32 |
Impaired loans, Interest Income Recognized | 2 | |
Consumer | ||
Impaired loans | ||
Impaired loans, Unpaid Principal Balance | 130 | 130 |
Impaired loans, Recorded Investment in Loans with Specific Reserve | 119 | 121,000 |
Impaired loans, Related Allowance | 108 | 118 |
Impaired loans, Average Balance | $ 119 | $ 123 |
Allowance for Loan Losses - Cha
Allowance for Loan Losses - Change in Allowance for Loan Losses (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Allowance balance attributable to loans: | ||
Balance at the beginning of period | $ 32,873 | $ 34,023 |
Provision charged to operations | 2,650 | 2,395 |
Loans charged off | (3,541) | (3,966) |
Recoveries of loans previously charged off | 1,316 | 1,137 |
Balance at the end of period | 33,298 | 33,589 |
Real estate - residential mortgage | ||
Allowance balance attributable to loans: | ||
Balance at the beginning of period | 2,080 | 2,246 |
Provision charged to operations | 60 | (47) |
Loans charged off | (4) | |
Recoveries of loans previously charged off | 4 | 5 |
Balance at the end of period | 2,140 | 2,204 |
Real estate - construction | ||
Allowance balance attributable to loans: | ||
Balance at the beginning of period | 681 | 727 |
Provision charged to operations | 90 | 114 |
Balance at the end of period | 771 | 841 |
Commercial, financial and agricultural | ||
Allowance balance attributable to loans: | ||
Balance at the beginning of period | 7,121 | 6,688 |
Provision charged to operations | 831 | (25) |
Loans charged off | (18) | |
Recoveries of loans previously charged off | 1 | 1 |
Balance at the end of period | 7,935 | 6,664 |
Equity lines | ||
Allowance balance attributable to loans: | ||
Balance at the beginning of period | 733 | 1,106 |
Provision charged to operations | 37 | (205) |
Balance at the end of period | 770 | 901 |
Consumer | ||
Allowance balance attributable to loans: | ||
Balance at the beginning of period | 465 | 257 |
Provision charged to operations | (18) | 163 |
Loans charged off | (93) | (76) |
Recoveries of loans previously charged off | 62 | 42 |
Balance at the end of period | 416 | 386 |
Consumer finance | ||
Allowance balance attributable to loans: | ||
Balance at the beginning of period | 21,793 | 22,999 |
Provision charged to operations | 1,650 | 2,395 |
Loans charged off | (3,426) | (3,890) |
Recoveries of loans previously charged off | 1,249 | 1,089 |
Balance at the end of period | $ 21,266 | $ 22,593 |
Allowance for Loan Losses - All
Allowance for Loan Losses - Allowance and Loans by Impairment Methodology (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2019 | Dec. 31, 2018 |
Allowance balance attributable to loans: | ||||
Individually evaluated for impairment | $ 231 | $ 267 | ||
Collectively evaluated for impairment | 33,067 | 32,606 | ||
Total allowance | 33,298 | 32,873 | $ 33,589 | $ 34,023 |
Loans: | ||||
Individually evaluated for impairment | 4,769 | 5,274 | ||
Collectively evaluated for impairment | 1,223,481 | 1,109,212 | ||
Acquired loans - PCI | 9,219 | 705 | ||
Total loans | 1,237,469 | 1,115,191 | ||
Real estate - residential mortgage | ||||
Allowance balance attributable to loans: | ||||
Individually evaluated for impairment | 47 | 72 | ||
Collectively evaluated for impairment | 2,093 | 2,008 | ||
Total allowance | 2,140 | 2,080 | 2,204 | 2,246 |
Loans: | ||||
Individually evaluated for impairment | 3,133 | 3,671 | ||
Collectively evaluated for impairment | 196,439 | 177,517 | ||
Acquired loans - PCI | 3,195 | 107 | ||
Total loans | 202,767 | 181,295 | ||
Real estate - construction | ||||
Allowance balance attributable to loans: | ||||
Collectively evaluated for impairment | 771 | 681 | ||
Total allowance | 771 | 681 | 841 | 727 |
Loans: | ||||
Collectively evaluated for impairment | 65,834 | 54,246 | ||
Acquired loans - PCI | 103 | |||
Total loans | 65,937 | 54,246 | ||
Commercial, financial and agricultural | ||||
Allowance balance attributable to loans: | ||||
Individually evaluated for impairment | 76 | 77 | ||
Collectively evaluated for impairment | 7,859 | 7,044 | ||
Total allowance | 7,935 | 7,121 | 6,664 | 6,688 |
Loans: | ||||
Individually evaluated for impairment | 1,403 | 1,451 | ||
Collectively evaluated for impairment | 581,948 | 498,798 | ||
Acquired loans - PCI | 5,234 | 563 | ||
Total loans | 588,585 | 500,812 | ||
Equity lines | ||||
Allowance balance attributable to loans: | ||||
Collectively evaluated for impairment | 770 | 733 | ||
Total allowance | 770 | 733 | 901 | 1,106 |
Loans: | ||||
Individually evaluated for impairment | 114 | 31 | ||
Collectively evaluated for impairment | 56,142 | 52,017 | ||
Acquired loans - PCI | 50 | 35 | ||
Total loans | 56,306 | 52,083 | ||
Consumer | ||||
Allowance balance attributable to loans: | ||||
Individually evaluated for impairment | 108 | 118 | ||
Collectively evaluated for impairment | 308 | 347 | ||
Total allowance | 416 | 465 | 386 | 257 |
Loans: | ||||
Individually evaluated for impairment | 119 | 121 | ||
Collectively evaluated for impairment | 15,527 | 13,635 | ||
Acquired loans - PCI | 637 | |||
Total loans | 16,283 | 13,756 | ||
Consumer finance | ||||
Allowance balance attributable to loans: | ||||
Collectively evaluated for impairment | 21,266 | 21,793 | ||
Total allowance | 21,266 | 21,793 | $ 22,593 | $ 22,999 |
Loans: | ||||
Collectively evaluated for impairment | 307,591 | 312,999 | ||
Total loans | $ 307,591 | $ 312,999 |
Allowance for Loan Losses - Cre
Allowance for Loan Losses - Credit Quality Indicators (Details) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Allowance for loan losses | ||
Loans, excluding consumer finance | $ 929,878,000 | $ 802,192,000 |
Pass | ||
Allowance for loan losses | ||
Loans, excluding consumer finance | 883,716,000 | 783,963,000 |
Special Mention | ||
Allowance for loan losses | ||
Loans, excluding consumer finance | 39,674,000 | 15,383,000 |
Substandard | ||
Allowance for loan losses | ||
Loans, excluding consumer finance | 4,580,000 | 962,000 |
Substandard Nonaccrual | ||
Allowance for loan losses | ||
Loans, excluding consumer finance | 1,908,000 | 1,884,000 |
Real estate - residential mortgage | ||
Allowance for loan losses | ||
Loans, excluding consumer finance | 202,767,000 | 181,295,000 |
Real estate - residential mortgage | Pass | ||
Allowance for loan losses | ||
Loans, excluding consumer finance | 199,087,000 | 177,049,000 |
Real estate - residential mortgage | Special Mention | ||
Allowance for loan losses | ||
Loans, excluding consumer finance | 1,396,000 | 1,839,000 |
Real estate - residential mortgage | Substandard | ||
Allowance for loan losses | ||
Loans, excluding consumer finance | 1,353,000 | 881,000 |
Real estate - residential mortgage | Substandard Nonaccrual | ||
Allowance for loan losses | ||
Loans, excluding consumer finance | 931,000 | 1,526,000 |
Real estate - construction | Construction lending | ||
Allowance for loan losses | ||
Loans, excluding consumer finance | 50,747,000 | 40,943,000 |
Real estate - construction | Construction lending | Pass | ||
Allowance for loan losses | ||
Loans, excluding consumer finance | 50,747,000 | 40,943,000 |
Real estate - construction | Consumer lot lending | ||
Allowance for loan losses | ||
Loans, excluding consumer finance | 15,190,000 | 13,303,000 |
Real estate - construction | Consumer lot lending | Pass | ||
Allowance for loan losses | ||
Loans, excluding consumer finance | 15,190,000 | 13,303,000 |
Commercial, financial and agricultural | Commercial real estate lending | ||
Allowance for loan losses | ||
Loans, excluding consumer finance | 403,223,000 | 326,554,000 |
Commercial, financial and agricultural | Commercial real estate lending | Pass | ||
Allowance for loan losses | ||
Loans, excluding consumer finance | 374,717,000 | 323,218,000 |
Commercial, financial and agricultural | Commercial real estate lending | Special Mention | ||
Allowance for loan losses | ||
Loans, excluding consumer finance | 25,886,000 | 3,266,000 |
Commercial, financial and agricultural | Commercial real estate lending | Substandard | ||
Allowance for loan losses | ||
Loans, excluding consumer finance | 2,620,000 | 70,000 |
Commercial, financial and agricultural | Land acquisition and development lending | ||
Allowance for loan losses | ||
Loans, excluding consumer finance | 40,189,000 | 42,891,000 |
Commercial, financial and agricultural | Land acquisition and development lending | Pass | ||
Allowance for loan losses | ||
Loans, excluding consumer finance | 31,778,000 | 33,870,000 |
Commercial, financial and agricultural | Land acquisition and development lending | Special Mention | ||
Allowance for loan losses | ||
Loans, excluding consumer finance | 8,411,000 | 9,021,000 |
Commercial, financial and agricultural | Builder line lending | ||
Allowance for loan losses | ||
Loans, excluding consumer finance | 25,026,000 | 26,373,000 |
Commercial, financial and agricultural | Builder line lending | Pass | ||
Allowance for loan losses | ||
Loans, excluding consumer finance | 24,749,000 | 25,995,000 |
Commercial, financial and agricultural | Builder line lending | Special Mention | ||
Allowance for loan losses | ||
Loans, excluding consumer finance | 277,000 | 378,000 |
Commercial, financial and agricultural | Commercial business lending | ||
Allowance for loan losses | ||
Loans, excluding consumer finance | 120,147,000 | 104,994,000 |
Commercial, financial and agricultural | Commercial business lending | Pass | ||
Allowance for loan losses | ||
Loans, excluding consumer finance | 116,594,000 | 104,291,000 |
Commercial, financial and agricultural | Commercial business lending | Special Mention | ||
Allowance for loan losses | ||
Loans, excluding consumer finance | 3,553,000 | 692,000 |
Commercial, financial and agricultural | Commercial business lending | Substandard Nonaccrual | ||
Allowance for loan losses | ||
Loans, excluding consumer finance | 11,000 | |
Equity lines | ||
Allowance for loan losses | ||
Loans, excluding consumer finance | 56,306,000 | 52,083,000 |
Equity lines | Pass | ||
Allowance for loan losses | ||
Loans, excluding consumer finance | 55,907,000 | 51,662,000 |
Equity lines | Special Mention | ||
Allowance for loan losses | ||
Loans, excluding consumer finance | 97,000 | 181,000 |
Equity lines | Substandard | ||
Allowance for loan losses | ||
Loans, excluding consumer finance | 24,000 | 11,000 |
Equity lines | Substandard Nonaccrual | ||
Allowance for loan losses | ||
Loans, excluding consumer finance | 278,000 | 229,000 |
Consumer | ||
Allowance for loan losses | ||
Loans, excluding consumer finance | 16,283,000 | 13,756,000 |
Consumer | Pass | ||
Allowance for loan losses | ||
Loans, excluding consumer finance | 14,947,000 | 13,632,000 |
Consumer | Special Mention | ||
Allowance for loan losses | ||
Loans, excluding consumer finance | 54,000 | 6,000 |
Consumer | Substandard | ||
Allowance for loan losses | ||
Loans, excluding consumer finance | 583,000 | |
Consumer | Substandard Nonaccrual | ||
Allowance for loan losses | ||
Loans, excluding consumer finance | 699,000 | $ 118,000 |
Peoples Bankshares, Incorporated (Peoples) | Pass | ||
Allowance for loan losses | ||
Loans, excluding consumer finance | 104,700,000 | |
Peoples Bankshares, Incorporated (Peoples) | Special Mention | ||
Allowance for loan losses | ||
Loans, excluding consumer finance | 1,330,000 | |
Peoples Bankshares, Incorporated (Peoples) | Substandard | ||
Allowance for loan losses | ||
Loans, excluding consumer finance | 3,110,000 | |
Peoples Bankshares, Incorporated (Peoples) | Substandard Nonaccrual | ||
Allowance for loan losses | ||
Loans, excluding consumer finance | $ 583,000 |
Allowance for Loan Losses - Loa
Allowance for Loan Losses - Loans by Credit Quality Indicators - Performing and Non-Performing (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Allowance for loan losses | ||
Loans | $ 1,237,469 | $ 1,115,191 |
Consumer finance | ||
Allowance for loan losses | ||
Loans | 307,591 | 312,999 |
Consumer finance | Performing | ||
Allowance for loan losses | ||
Loans | 307,214 | 312,388 |
Consumer finance | Non-Performing | ||
Allowance for loan losses | ||
Loans | $ 377 | $ 611 |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets - Goodwill (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020USD ($) | ||
Goodwill and Other Intangible Assets | ||
Goodwill | $ 25,117 | |
Changes in goodwill, by reporting unit | ||
Balance as of the beginning of the period | 14,425 | [1] |
Acquisition of Peoples Bankshares, Incorporated | 10,692 | |
Balance at the end of the period | 25,117 | |
Retail Banking | ||
Goodwill and Other Intangible Assets | ||
Goodwill | 14,394 | |
Changes in goodwill, by reporting unit | ||
Balance as of the beginning of the period | 3,702 | |
Acquisition of Peoples Bankshares, Incorporated | 10,692 | |
Balance at the end of the period | 14,394 | |
Consumer Finance | ||
Goodwill and Other Intangible Assets | ||
Goodwill | 10,723 | |
Changes in goodwill, by reporting unit | ||
Balance as of the beginning of the period | 10,723 | |
Balance at the end of the period | $ 10,723 | |
[1] | Derived from audited consolidated financial statements. |
Goodwill and Other Intangible_4
Goodwill and Other Intangible Assets - Other Intangible Assets (Details) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 | |
Other intangible assets | |||
Other intangible assets, net | $ 2,540,000 | $ 912,000 | [1] |
Gross carrying amounts and accumulated amortization | |||
Gross Carrying Amount | 3,116,000 | 1,405,000 | |
Accumulated Amortization | (576,000) | (493,000) | |
Core deposit intangible | |||
Gross carrying amounts and accumulated amortization | |||
Gross Carrying Amount | 1,711,000 | ||
Accumulated Amortization | (43,000) | ||
Other intangibles | |||
Gross carrying amounts and accumulated amortization | |||
Gross Carrying Amount | 1,405,000 | 1,405,000 | |
Accumulated Amortization | $ (533,000) | $ (493,000) | |
[1] | Derived from audited consolidated financial statements. |
Goodwill and Other Intangible_5
Goodwill and Other Intangible Assets - Amortization (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Goodwill and Other Intangible Assets | ||
Amortization of intangible assets | $ 83,000 | $ 78,000 |
Equity, Other Comprehensive I_3
Equity, Other Comprehensive Income and Earnings Per Share - Equity and Noncontrolling Interest (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Shareholders’ Equity | ||
Shares repurchased (in shares) | 8,963 | 32,407 |
Aggregate cost of Shares repurchased | $ 355,000 | $ 1,670,000 |
Number of shares withheld from employees to satisfy tax withholding obligations | 5,069 | 4,641 |
Issuance of noncontrolling interest | $ 490,000 | |
C&F Select LLC | ||
Shareholders’ Equity | ||
Ownership interest issued (as a percent) | 49.00% | |
Issuance of noncontrolling interest | $ 490,000 |
Equity, Other Comprehensive I_4
Equity, Other Comprehensive Income and Earnings Per Share - Accumulated Other Comprehensive Loss, Net (Details) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 | |
Equity, Other Comprehensive Income and Earnings Per Share | |||
Deferred taxes included in AOCI | $ 644,000 | $ 604,000 | |
Net unrealized gains on securities | 3,302,000 | 1,560,000 | |
Net unrecognized losses on cash flow hedges | (1,537,000) | (69,000) | |
Net unrecognized losses on defined benefit plan | (3,720,000) | (3,740,000) | |
Total accumulated other comprehensive loss, net | $ (1,955,000) | $ (2,249,000) | [1] |
[1] | Derived from audited consolidated financial statements. |
Equity, Other Comprehensive I_5
Equity, Other Comprehensive Income and Earnings Per Share - Earnings Per Share (EPS) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Components of earnings per share calculations | ||
Net income attributable to C&F Financial Corporation | $ 3,578 | $ 3,771 |
Weighted average shares outstanding—basic and diluted | 3,644,614 | 3,484,592 |
Employee Benefit Plans (Details
Employee Benefit Plans (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Components of net periodic benefit cost | ||
Service cost, included in salaries and employee benefits | $ 386 | $ 293 |
Other components of net periodic benefit cost: | ||
Interest cost | 135 | 153 |
Expected return on plan assets | (374) | (330) |
Amortization of prior service credit | (17) | (17) |
Recognized net actuarial losses | 42 | 42 |
Other components of net periodic benefit cost, included in other noninterest income | (214) | (152) |
Net periodic benefit cost | $ 172 | $ 141 |
Fair Value of Assets and Liab_3
Fair Value of Assets and Liabilities - Investments in small business investment companies (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Fair Value of Assets and Liabilities | |
Fair value of investment in small business investment companies | $ 1,560 |
Unrealized gains or losses | $ 0 |
Fair Value of Assets and Liab_4
Fair Value of Assets and Liabilities - Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 | |
Securities available for sale | |||
Securities available for sale | $ 234,424 | $ 189,733 | [1] |
Interest rate swaps on loans | Cash flow hedges | |||
Liabilities: | |||
Derivatives | 2,119 | 145 | |
Recurring | |||
Securities available for sale | |||
Securities available for sale | 234,424 | 189,733 | |
Loans held for sale | 125,667 | 90,500 | |
Total assets measured at fair value | 372,141 | 283,778 | |
Liabilities: | |||
Derivatives | 11,335 | 2,632 | |
Recurring | Cash flow hedges | |||
Liabilities: | |||
Derivatives | 2,119 | 145 | |
Recurring | IRLC | |||
Securities available for sale | |||
Derivatives | 3,208 | 1,083 | |
Recurring | Interest rate swaps on loans | |||
Securities available for sale | |||
Derivatives | 8,842 | 2,462 | |
Liabilities: | |||
Derivatives | 8,842 | 2,462 | |
Recurring | Forward sales of TBA securities | |||
Liabilities: | |||
Derivatives | 374 | 25 | |
Level 2 | Recurring | |||
Securities available for sale | |||
Securities available for sale | 234,424 | 189,733 | |
Loans held for sale | 125,667 | 90,500 | |
Total assets measured at fair value | 372,141 | 283,778 | |
Liabilities: | |||
Derivatives | 11,335 | 2,632 | |
Level 2 | Recurring | Cash flow hedges | |||
Liabilities: | |||
Derivatives | 2,119 | 145 | |
Level 2 | Recurring | IRLC | |||
Securities available for sale | |||
Derivatives | 3,208 | 1,083 | |
Level 2 | Recurring | Interest rate swaps on loans | |||
Securities available for sale | |||
Derivatives | 8,842 | 2,462 | |
Liabilities: | |||
Derivatives | 8,842 | 2,462 | |
Level 2 | Recurring | Forward sales of TBA securities | |||
Liabilities: | |||
Derivatives | 374 | 25 | |
U.S. government agencies and corporations | |||
Securities available for sale | |||
Securities available for sale | 32,042 | 21,440 | |
U.S. government agencies and corporations | Recurring | |||
Securities available for sale | |||
Securities available for sale | 32,042 | 21,440 | |
U.S. government agencies and corporations | Level 2 | Recurring | |||
Securities available for sale | |||
Securities available for sale | 32,042 | 21,440 | |
Mortgage-backed securities | |||
Securities available for sale | |||
Securities available for sale | 104,365 | 86,585 | |
Mortgage-backed securities | Recurring | |||
Securities available for sale | |||
Securities available for sale | 104,365 | 86,585 | |
Mortgage-backed securities | Level 2 | Recurring | |||
Securities available for sale | |||
Securities available for sale | 104,365 | 86,585 | |
Obligations of states and political subdivisions | |||
Securities available for sale | |||
Securities available for sale | 98,017 | 81,708 | |
Obligations of states and political subdivisions | Recurring | |||
Securities available for sale | |||
Securities available for sale | 98,017 | 81,708 | |
Obligations of states and political subdivisions | Level 2 | Recurring | |||
Securities available for sale | |||
Securities available for sale | $ 98,017 | $ 81,708 | |
[1] | Derived from audited consolidated financial statements. |
Fair Value of Assets and Liab_5
Fair Value of Assets and Liabilities - Financial Assets Measured at Fair Value on Non-Recurring Basis (Details) $ in Thousands | Mar. 31, 2020USD ($) | Dec. 31, 2019USD ($) |
Fair value assets and liabilities - Nonrecurring Basis | ||
Impaired loans measured for impairment using the fair value of the collateral | $ 0 | |
Nonrecurring | ||
Fair value assets and liabilities - Nonrecurring Basis | ||
Financial assets measured at fair value on a non-recurring basis | 268 | $ 370 |
Nonrecurring | Impaired loans, net | ||
Fair value assets and liabilities - Nonrecurring Basis | ||
Financial assets measured at fair value on a non-recurring basis | 102 | |
Nonrecurring | Other real estate owned, net | ||
Fair value assets and liabilities - Nonrecurring Basis | ||
Financial assets measured at fair value on a non-recurring basis | 268 | 268 |
Level 3 | Nonrecurring | ||
Fair value assets and liabilities - Nonrecurring Basis | ||
Financial assets measured at fair value on a non-recurring basis | $ 268 | 370 |
Other real estate owned, net, valuation technique | cffi:ValuationTechniqueAppraisalsMember | |
Other real estate owned, net, measurement input | us-gaap:MeasurementInputDiscountRateMember | |
Level 3 | Nonrecurring | Minimum | ||
Fair value assets and liabilities - Nonrecurring Basis | ||
Other real estate owned, input | 0.33 | |
Level 3 | Nonrecurring | Maximum | ||
Fair value assets and liabilities - Nonrecurring Basis | ||
Other real estate owned, input | 0.75 | |
Level 3 | Nonrecurring | Weighted Average | ||
Fair value assets and liabilities - Nonrecurring Basis | ||
Other real estate owned, input | 0.45 | |
Level 3 | Nonrecurring | Impaired loans, net | ||
Fair value assets and liabilities - Nonrecurring Basis | ||
Financial assets measured at fair value on a non-recurring basis | 102 | |
Level 3 | Nonrecurring | Other real estate owned, net | ||
Fair value assets and liabilities - Nonrecurring Basis | ||
Financial assets measured at fair value on a non-recurring basis | $ 268 | $ 268 |
Fair Value of Assets and Liab_6
Fair Value of Assets and Liabilities - Carrying Value and Estimated Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 | |
Assets: | |||
Securities available for sale | $ 234,424 | $ 189,733 | [1] |
Bank-owned life insurance | 19,749 | 16,044 | [1] |
Carrying Value | |||
Assets: | |||
Cash and short-term investments | 148,009 | 165,433 | |
Securities available for sale | 234,424 | 189,733 | |
Loans, net | 1,204,171 | 1,082,318 | |
Loans held for sale | 125,667 | 90,500 | |
Bank-owned life insurance | 19,749 | 16,044 | |
Accrued interest receivable | 7,253 | 6,776 | |
Financial liabilities: | |||
Demand deposits | 976,624 | 869,194 | |
Time deposits | 507,750 | 422,056 | |
Borrowings | 159,934 | 161,170 | |
Accrued interest payable | 1,508 | 1,291 | |
Total Fair Value | |||
Assets: | |||
Cash and short-term investments | 148,009 | 165,433 | |
Securities available for sale | 234,424 | 189,733 | |
Loans, net | 1,199,524 | 1,082,783 | |
Loans held for sale | 125,667 | 90,500 | |
Bank-owned life insurance | 19,749 | 16,044 | |
Accrued interest receivable | 7,253 | 6,776 | |
Financial liabilities: | |||
Demand deposits | 976,624 | 869,194 | |
Time deposits | 514,744 | 423,605 | |
Borrowings | 162,855 | 154,964 | |
Accrued interest payable | 1,508 | 1,291 | |
Total Fair Value | Level 1 | |||
Assets: | |||
Cash and short-term investments | 148,009 | 165,433 | |
Accrued interest receivable | 7,253 | 6,776 | |
Financial liabilities: | |||
Demand deposits | 976,624 | 869,194 | |
Accrued interest payable | 1,508 | 1,291 | |
Total Fair Value | Level 2 | |||
Assets: | |||
Securities available for sale | 234,424 | 189,733 | |
Loans held for sale | 125,667 | 90,500 | |
Bank-owned life insurance | 19,749 | 16,044 | |
Financial liabilities: | |||
Time deposits | 514,744 | 423,605 | |
Borrowings | 162,855 | 154,964 | |
Total Fair Value | Level 3 | |||
Assets: | |||
Loans, net | 1,199,524 | 1,082,783 | |
IRLC | Carrying Value | |||
Assets: | |||
Derivatives | 3,208 | 1,083 | |
IRLC | Total Fair Value | |||
Assets: | |||
Derivatives | 3,208 | 1,083 | |
IRLC | Total Fair Value | Level 2 | |||
Assets: | |||
Derivatives | 3,208 | 1,083 | |
Interest rate swaps on loans | Carrying Value | |||
Assets: | |||
Derivatives | 8,842 | 2,462 | |
Financial liabilities: | |||
Derivatives | 8,842 | 2,462 | |
Interest rate swaps on loans | Total Fair Value | |||
Assets: | |||
Derivatives | 8,842 | 2,462 | |
Financial liabilities: | |||
Derivatives | 8,842 | 2,462 | |
Interest rate swaps on loans | Total Fair Value | Level 2 | |||
Assets: | |||
Derivatives | 8,842 | 2,462 | |
Financial liabilities: | |||
Derivatives | 8,842 | 2,462 | |
Forward sales of TBA securities | Carrying Value | |||
Financial liabilities: | |||
Derivatives | 374 | 25 | |
Forward sales of TBA securities | Total Fair Value | |||
Financial liabilities: | |||
Derivatives | 374 | 25 | |
Forward sales of TBA securities | Total Fair Value | Level 2 | |||
Financial liabilities: | |||
Derivatives | 374 | 25 | |
Cash flow hedges | Carrying Value | |||
Financial liabilities: | |||
Derivatives | 2,119 | 145 | |
Cash flow hedges | Total Fair Value | |||
Financial liabilities: | |||
Derivatives | 2,119 | 145 | |
Cash flow hedges | Total Fair Value | Level 2 | |||
Financial liabilities: | |||
Derivatives | 2,119 | 145 | |
Cash flow hedges | Interest rate swaps on loans | |||
Financial liabilities: | |||
Derivatives | $ 2,119 | $ 145 | |
[1] | Derived from audited consolidated financial statements. |
Business Segments - Segment Rep
Business Segments - Segment Reporting (Details) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2020USD ($)segment | Mar. 31, 2019USD ($) | Dec. 31, 2019USD ($) | ||
Business Segments | ||||
Number of principal business segments | segment | 3 | |||
Revenues: | ||||
Interest income | $ 24,778 | $ 22,951 | ||
Gains on sales of loans | 3,676 | 2,136 | ||
Other noninterest income | 5,353 | 4,967 | ||
Total operating income | 33,807 | 30,054 | ||
Expenses: | ||||
Provision for loan losses | 2,650 | 2,395 | ||
Interest expense | 4,175 | 3,304 | ||
Salaries and employee benefits | 10,817 | 11,907 | ||
Depreciation and amortization | 968 | 994 | ||
Other noninterest expenses | 10,581 | 6,776 | ||
Total operating expenses | 29,191 | 25,376 | ||
Income (loss) before income taxes | 4,616 | 4,678 | ||
Income tax expense (benefit) | 977 | 907 | ||
Net income (loss) | 3,639 | 3,771 | ||
Total assets | 1,877,292 | 1,549,360 | $ 1,657,432 | [1] |
Goodwill | 25,117 | 14,425 | [1] | |
Capital expenditures | 1,548 | 753 | ||
Retail Banking | ||||
Expenses: | ||||
Goodwill | 14,394 | 3,702 | ||
Consumer Finance | ||||
Expenses: | ||||
Goodwill | 10,723 | $ 10,723 | ||
Operating Segments | Retail Banking | ||||
Revenues: | ||||
Interest income | 15,915 | 14,324 | ||
Other noninterest income | 2,962 | 2,438 | ||
Total operating income | 18,877 | 16,762 | ||
Expenses: | ||||
Provision for loan losses | 1,000 | |||
Interest expense | 3,144 | 2,175 | ||
Salaries and employee benefits | 8,060 | 6,978 | ||
Depreciation and amortization | 807 | 835 | ||
Other noninterest expenses | 5,329 | 4,068 | ||
Total operating expenses | 18,340 | 14,056 | ||
Income (loss) before income taxes | 537 | 2,706 | ||
Income tax expense (benefit) | (33) | 416 | ||
Net income (loss) | 570 | 2,290 | ||
Total assets | 1,689,244 | 1,380,790 | ||
Capital expenditures | 752 | 721 | ||
Operating Segments | Mortgage Banking | ||||
Revenues: | ||||
Interest income | 661 | 350 | ||
Gains on sales of loans | 3,676 | 2,136 | ||
Other noninterest income | 1,611 | 838 | ||
Total operating income | 5,948 | 3,324 | ||
Expenses: | ||||
Interest expense | 305 | 163 | ||
Salaries and employee benefits | 1,845 | 1,147 | ||
Depreciation and amortization | 72 | 62 | ||
Other noninterest expenses | 1,651 | 1,182 | ||
Total operating expenses | 3,873 | 2,554 | ||
Income (loss) before income taxes | 2,075 | 770 | ||
Income tax expense (benefit) | 532 | 203 | ||
Net income (loss) | 1,543 | 567 | ||
Total assets | 140,084 | 53,642 | ||
Capital expenditures | 294 | 24 | ||
Operating Segments | Consumer Finance | ||||
Revenues: | ||||
Interest income | 10,101 | 10,145 | ||
Other noninterest income | 117 | 129 | ||
Total operating income | 10,218 | 10,274 | ||
Expenses: | ||||
Provision for loan losses | 1,650 | 2,395 | ||
Interest expense | 2,286 | 2,551 | ||
Salaries and employee benefits | 2,243 | 2,185 | ||
Depreciation and amortization | 46 | 52 | ||
Other noninterest expenses | 1,341 | 1,323 | ||
Total operating expenses | 7,566 | 8,506 | ||
Income (loss) before income taxes | 2,652 | 1,768 | ||
Income tax expense (benefit) | 722 | 483 | ||
Net income (loss) | 1,930 | 1,285 | ||
Total assets | 310,249 | 301,579 | ||
Capital expenditures | 502 | 8 | ||
Operating Segments | Other | ||||
Revenues: | ||||
Interest income | 2 | |||
Other noninterest income | 663 | 1,562 | ||
Total operating income | 663 | 1,564 | ||
Expenses: | ||||
Interest expense | 339 | 285 | ||
Salaries and employee benefits | (1,331) | 1,597 | ||
Depreciation and amortization | 43 | 45 | ||
Other noninterest expenses | 2,260 | 203 | ||
Total operating expenses | 1,311 | 2,130 | ||
Income (loss) before income taxes | (648) | (566) | ||
Income tax expense (benefit) | (244) | (195) | ||
Net income (loss) | (404) | (371) | ||
Total assets | 19,242 | 6,836 | ||
Eliminations | ||||
Revenues: | ||||
Interest income | (1,899) | (1,870) | ||
Total operating income | (1,899) | (1,870) | ||
Expenses: | ||||
Interest expense | (1,899) | (1,870) | ||
Total operating expenses | (1,899) | (1,870) | ||
Total assets | $ (281,527) | $ (193,487) | ||
[1] | Derived from audited consolidated financial statements. |
Business Segments - Merger Rela
Business Segments - Merger Related Expenses and Segment Debt (Details) | 3 Months Ended | |
Mar. 31, 2020USD ($)item | Mar. 31, 2019USD ($) | |
Business Segments | ||
Merger related costs | $ 888,000 | $ 0 |
Mortgage Banking | ||
Business Segments | ||
Number of intersegment lines of credit | item | 2 | |
Mortgage Banking | FHLB Advances | Minimum | ||
Business Segments | ||
Variable rate, spread (as a percent) | 0.50% | |
Mortgage Banking | FHLB Advances | Maximum | ||
Business Segments | ||
Variable rate, spread (as a percent) | 1.75% | |
Consumer Finance | ||
Business Segments | ||
Floor variable rate (as a percent) | 3.00% | |
Consumer Finance | Minimum | ||
Business Segments | ||
Fixed rate (as a percent) | 2.00% | |
Consumer Finance | Maximum | ||
Business Segments | ||
Fixed rate (as a percent) | 8.00% | |
Consumer Finance | London Interbank Offered Rate (LIBOR) | Minimum | ||
Business Segments | ||
Variable rate, spread (as a percent) | 2.00% | |
Peoples Bankshares, Incorporated (Peoples) | ||
Business Segments | ||
Merger related costs | $ 957,000 | $ 0 |
Merger related costs, after income taxes | 785,000 | |
Aggregated merger related costs | 1,670,000 | |
Peoples Bankshares, Incorporated (Peoples) | Retail Banking | ||
Business Segments | ||
Merger related costs | 857,000 | |
Merger related costs, after income taxes | 685,000 | |
Peoples Bankshares, Incorporated (Peoples) | Retail Banking | Salaries and benefits expense | ||
Business Segments | ||
Merger related costs | 69,000 | |
Peoples Bankshares, Incorporated (Peoples) | Retail Banking | Other noninterest expense | ||
Business Segments | ||
Merger related costs | $ 788,000 |
Commitments and Contingent Li_2
Commitments and Contingent Liabilities - Loan Commitments and Standby letters of credit (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Standby Letters of Credit | ||
Commitments and Contingent Liabilities | ||
Face amount of asset | $ 17,610 | $ 16,600 |
Loan commitments | ||
Commitments and Contingent Liabilities | ||
Face amount of asset | $ 257,500 | $ 256,150 |
Commitments and Contingent Li_3
Commitments and Contingent Liabilities - Other (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Commitments and Contingent Liabilities | ||
Provision for indemnifications | $ 7,000 | $ 0 |
Mortgage Banking Segment | ||
Commitments and Contingent Liabilities | ||
Recourse period for early payment default, minimum | 90 days | |
Recourse period for early payment default, maximum | 1 year | |
Indemnification reserve for recourse provisions | ||
Commitments and Contingent Liabilities | ||
Allowance for indemnifications | $ 2,480,000 |
Derivatives Financial Instrumen
Derivatives Financial Instruments (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | |
Derivatives and other information | ||
Changes in fair value of loan swaps | $ 0 | |
Unpaid principal on mortgage loans held for sale | 5,011 | $ 5,511 |
Other assets | ||
Derivatives and other information | ||
Cash collateral | 10,790 | 2,520 |
Forward sales of TBA securities | Not designated as hedges | ||
Derivatives and other information | ||
Notional amount | 14,500 | 24,000 |
Derivative Liability | 374 | 25 |
Interest rate swaps on loans | Cash flow hedges | ||
Derivatives and other information | ||
Notional amount | 25,000 | 25,000 |
Derivative Liability | 2,119 | 145 |
Matched interest rate swap with borrower | Not designated as hedges | ||
Derivatives and other information | ||
Notional amount | 81,256 | 74,266 |
Derivative Asset | 8,842 | 2,454 |
Derivative Liability | 8 | |
Matched interest rate swap with counterparty | Not designated as hedges | ||
Derivatives and other information | ||
Notional amount | 81,256 | 74,266 |
Derivative Asset | 8 | |
Derivative Liability | 8,842 | 2,454 |
IRLC | Not designated as hedges | ||
Derivatives and other information | ||
Notional amount | 245,210 | 75,073 |
Derivative Asset | 3,208 | 1,083 |
Mortgage Banking Segment | ||
Derivatives and other information | ||
IRLCs | 13,250 | 11,720 |
Unpaid principal on mortgage loans held for sale | 13,400 | 21,980 |
Mortgage Banking Segment | Best-efforts forward sales contracts | ||
Derivatives and other information | ||
IRLCs | 231,960 | 63,350 |
Unpaid principal on mortgage loans held for sale | 108,670 | 65,770 |
Mortgage loans | 129,120 | |
Mortgage Banking Segment | Forward sales of TBA securities | ||
Derivatives and other information | ||
Mortgage loans | 14,500 | 24,000 |
Mortgage Banking Segment | Mandatory-delivery forward sales contracts | ||
Derivatives and other information | ||
Mortgage loans | 9,080 | $ 6,730 |
C&F Mortgage | Best-efforts forward sales contracts | ||
Derivatives and other information | ||
Mortgage loans | $ 340,630 |
Other Noninterest Expenses (Det
Other Noninterest Expenses (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Other Noninterest Expenses | ||
Data processing fees | $ 2,156,000 | $ 1,921,000 |
Unrealized loss on nonqualified deferred compensation plan | 1,983,000 | |
Professional fees | 666,000 | 564,000 |
Marketing and advertising expenses | 490,000 | 373,000 |
Travel and educational expenses | 444,000 | 403,000 |
Telecommunication expenses | 372,000 | 317,000 |
All other noninterest expenses | 3,111,000 | 2,002,000 |
Total Other Noninterest Expenses | 9,222,000 | 5,580,000 |
Merger related expenses | 888,000 | $ 0 |
Merger related data processing fees | 238,000 | |
Merger related professional fees | 314,000 | |
Merger related other noninterest expenses | $ 336,000 |