EXHIBIT 99.2
C&F FINANCIAL CORPORATION
Wednesday, July 23, 2003
| Contact: | Tom Cherry, Senior Vice President & CFO (804) 843-2360 |
C&F Financial Corporation Announces
Record 2nd Quarter Earnings and
Inclusion in the Russell 3000® Index
West Point, VA—C&F Financial Corporation (NASDAQ:CFFI), the one-bank holding company for Citizens and Farmers Bank (the Bank) of West Point, VA, reported record net income of $3,544,000, or $.94 per diluted share, for the quarter ended June 30, 2003 and $6,808,000, or $.1.81 per diluted share, for the six months ended June 30, 2003. For the second quarter of 2003, net income increased 53.6% and diluted earnings per share increased 46.9% over net income and diluted earnings per share, respectively, for the second quarter of 2002. For the six months ended June 30, 2003, net income increased 65.4% and diluted earnings per share increased 58.8% over net income and diluted earnings per share, respectively, for the first six months of 2002. The increase in net income and earnings per share for both the second quarter and the six months ended June 30, 2003 resulted from an increase in the earnings of the Mortgage Banking segment, the inclusion of the earnings of the Consumer Finance segment, which was acquired in September 2002, and an increase in the recurring earnings of the Retail Banking segment.
Net income for the Retail Banking segment was $1,202,000 and $2,494,000 for the second quarter and first six months, respectively, of 2003, as compared to $1,398,000 and $2,434,000 for the second quarter and the first six months, respectively, of 2002. Included in earnings for 2002 was a non-recurring insurance benefit of $277,000. Excluding this benefit, earnings for the Retail Banking segment increased approximately $81,000 for the quarter ended June 30, 2003 and $337,000 for the six months ended June 30, 2003. The increase in earnings is a result of higher average earning assets, principally funded by growth in deposits. The increase in average earning assets is a result of a
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EXHIBIT 99.2
C&F FINANCIAL CORPORATION
Wednesday, July 23, 2003
| Contact: | Tom Cherry, Senior Vice President & CFO (804) 843-2360 |
higher average balance of loans by the Retail Banking segment to the Mortgage Banking and the Consumer Finance segments, as well as an increase in loans to third party customers.
Earnings for the Mortgage Banking segment increased approximately $914,000 to $1,739,000 for the quarter ended June 30, 2003 and $1,547,000 to $3,084,000 for the six months ended June 30, 2003. The increase in earnings is a result of the continued low interest rate environment and strong demand for mortgage loans, as well as the October 2002 addition of a new loan production office in Fredericksburg, Virginia and an increase in loan officers at existing loan production offices.
On September 1, 2002, the Bank purchased Moore Loans, Inc. Moore Loans is a leading regional finance company providing automobile loans in Richmond, Roanoke and Hampton Roads, Virginia and portions of eastern Tennessee. Earnings for the Consumer Finance segment, consisting solely of Moore Loans, approximated $534,000 for the quarter ended June 30, 2003 and $1,105,000 for the six months ended June 30, 2003.
Total nonperforming assets and accruing loans past due for 90 days or more of the combined Retail and Mortgage Banking Segments have increased since year-end 2002. Real estate owned consists primarily of two commercial properties. For one of these properties, the Corporation is in active negotiations with a third-party purchaser. No additional loss is expected on this property. The increase in accruing loans past due for 90 days or more is primarily the result of a commercial loan approximating $2,500,000. Management is closely monitoring this relationship and believes that assets securing this loan along with the allocated loss allowance are adequate.
President and CEO, Larry Dillon stated, “We are extremely pleased with results for this quarter, which were accompanied by a 13% increase in the Corporation’s regular dividend to $.18 per share. While the growth in earnings
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EXHIBIT 99.2
C&F FINANCIAL CORPORATION
Wednesday, July 23, 2003
| Contact: | Tom Cherry, Senior Vice President & CFO (804) 843-2360 |
over the past several quarters has been primarily attributed to the Mortgage Banking and the Consumer Finance segments, we continue to focus on the Retail Banking segment as evidenced by the announcement of our expansion plans into the Peninsula and Hanover markets of Virginia. While the opening of new branches and loan production offices are dilutive to earnings in the short run, we are confident that these expansion plans are in the best interests of building shareholder value in the long-term.”
The Corporation’s annualized return on average equity (ROE) and annualized return on average assets (ROA) were 23.92% and 2.64%, respectively, for the quarter ended June 30, 2003 and 23.37% and 2.56% for the first six months of 2003, as compared to 19.44% and 2.26%, respectively, for the quarter ended June 30, 2002 and 17.63% and 2.03% for the first six months of 2002.
The Company also is proud to announce that it was formally included in the list of additions to the Russell 3000® Index by the Frank Russell Company on July 9, 2003. Annual reconstitution of the Russell indexes captures the 3,000 largest U.S. stocks as of the end of May, ranking them by market capitalization. Russell uses the list to calculate its Russell 3000®, Russell 2000® and Russell 1000® indexes. Russell indexes are widely used by managers of index funds and as benchmarks for both passive and active business strategies. Investment managers who oversee these funds purchase shares of member stocks according to the company’s weighting in the particular index.
C&F Financial Corporation’s stock trades on the Nasdaq Stock Market System under the symbol CFFI. The stock closed at a price of $39.70 per share on Tuesday, July 22, 2003, up 61.1% since year-end 2002. At June 30, 2003, the book value of the stock was $17.03 per share. The Corporation paid a cash dividend of $.16 per share during the second quarter of 2003 and declared a
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EXHIBIT 99.2
C&F FINANCIAL CORPORATION
Wednesday, July 23, 2003
| Contact: | Tom Cherry, Senior Vice President & CFO (804) 843-2360 |
cash dividend of $.18 perp share to be paid on July 1, 2003. The Corporation’s market makers include Advest, Inc., Davenport & Company, McKinnon & Company, Inc. and Scott & Stringfellow, Inc.
C&F Financial Corporation operates twelve retail bank branches located throughout the Williamsburg to Richmond corridor in Virginia through its Citizens and Farmers Bank subsidiary and its division, Citizens and Commerce Bank. The Corporation provides mortgage, title and appraisal services through C&F Mortgage Corporation’s eleven offices and offers full investment services through its subsidiary C&F Investment Services, Inc. Moore Loans provides automobile loans through its offices in Richmond, Roanoke and Hampton, Virginia.
The statements contained in this press release that are not historical facts constitute “forward-looking statements” as defined by the federal securities laws. These statements may address issues that involve estimates and assumptions made by management, risks and uncertainties, and actual results could differ materially from historical results or those anticipated by such statements. Factors that could have a material adverse effect on the operations and future prospects of the company include, but are not limited to, changes in: interest rates, general economic conditions, demand for residential mortgage loans, legislative/regulatory requirements, monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Board of Governors of the Federal Reserve System, the quality of the loan portfolio, competition, demand for financial services in the company’s market area and accounting principles and guidelines. These risks and uncertainties should be considered in evaluating the forward-looking statements, and readers are cautioned not to place undue reliance on such statements, which speak only as of their dates.
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EXHIBIT 99.2
Selected Financial Information
(dollars in thousands, except per share data)
Balance Sheets
| 6/30/03 | 12/31/02 | 6/30/02 | |||||||
Investment securities—available for sale at fair value | $ | 59,858 | $ | 60,629 | $ | 62,865 | |||
Loans held for sale | 99,049 | 107,227 | 47,657 | ||||||
Loans, net1 | 339,280 | 328,634 | 247,611 | ||||||
Federal Home Loan Bank stock | 2,072 | 2,760 | 1,690 | ||||||
Total assets | 554,366 | 551,922 | 413,348 | ||||||
Deposits | 402,742 | 383,533 | 346,354 | ||||||
Borrowings2 | 72,286 | 94,479 | 11,927 | ||||||
Shareholders’ equity | 61,327 | 56,233 | 48,809 | ||||||
Statements of Income
For The Quarter Ended | For The Six Months Ended | |||||||||||
| 6/30/03 | 6/30/02 | 6/30/03 | 6/30/02 | |||||||||
Interest income | $ | 9,916 | $ | 6,405 | $ | 19,454 | $ | 12,957 | ||||
Interest expense | 2,269 | 2,059 | 4,584 | 4,387 | ||||||||
Provision for loan losses3 | 843 | 125 | 1,381 | 200 | ||||||||
Other operating income | 8,095 | 4,981 | 14,939 | 9,062 | ||||||||
Other operating expenses | 9,565 | 6,069 | 18,246 | 11,789 | ||||||||
Income tax expense | 1,790 | 826 | 3,374 | 1,526 | ||||||||
Net income | 3,544 | 2,307 | 6,808 | 4,117 | ||||||||
Earnings per common share—assuming dilution | .94 | .64 | 1.81 | 1.14 | ||||||||
Earnings per common share—basic | .98 | .65 | 1.88 | 1.17 | ||||||||
Interest income on a taxable-equivalent basis | 10,216 | 6,724 | 20,064 | 13,579 | ||||||||
Segment Information
For The Quarter Ended | For The Six Months Ended | |||||||||||
| 6/30/03 | 6/30/02 | 6/30/03 | 6/30/02 | |||||||||
Net income—retail banking | $ | 1,202 | $ | 1,398 | $ | 2,494 | $ | 2,434 | ||||
Net income—mortgage banking | 1,739 | 825 | 3,084 | 1,537 | ||||||||
Net income—consumer finance | 534 | — | 1,105 | — | ||||||||
Net income—other | 69 | 84 | 125 | 146 | ||||||||
Mortgage loan originations—mortgage banking | 320,691 | 154,058 | 562,734 | 292,693 | ||||||||
Mortgage loans sold—mortgage banking | 310,976 | 157,338 | 570,912 | 314,299 | ||||||||
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EXHIBIT 99.2
Selected Data and Ratios
For The Quarter Ended | For The Six Months Ended | |||||||||||||||
| 6/30/03 | 6/30/02 | 6/30/03 | 6/30/02 | |||||||||||||
Book value per share | $ | 17.03 | $ | 13.79 | $ | 17.03 | $ | 13.79 | ||||||||
Dividends per share | $ | .18 | $ | .15 | $ | .34 | $ | .30 | ||||||||
Annualized return on average assets* | 2.64 | % | 2.26 | % | 2.56 | % | 2.03 | % | ||||||||
Annualized return on average equity* | 23.92 | % | 19.44 | % | 23.37 | % | 17.63 | % | ||||||||
Net interest margin (fully taxable basis)4 | 6.43 | % | 4.93 | % | 6.38 | % | 4.95 | % | ||||||||
| * | Includes a non-recurring insurance benefit of $277,000 received in the second quarter of 2002 |
Average Balances
For The Quarter Ended | For The Six Months Ended | |||||||||||
| 6/30/03 | 6/30/02 | 6/30/03 | 6/30/02 | |||||||||
Securities | $ | 58,733 | $ | 61,730 | $ | 58,882 | $ | 58,221 | ||||
Loans | 421,730 | 284,117 | 417,997 | 291,317 | ||||||||
Fed funs sold/ interest bearing deposits at other banks | 15,054 | 35,134 | 13,940 | 26,616 | ||||||||
Total earning assets | 495,517 | 380,981 | 490,819 | 376,154 | ||||||||
Time, checking and savings deposits | 335,995 | 299,015 | 333,157 | 295,384 | ||||||||
Borrowings | 73,494 | 10,514 | 73,904 | 11,763 | ||||||||
Total interest bearing liabilities | 409,489 | 309,529 | 407,061 | 307,147 | ||||||||
Demand deposits | 49,739 | 43,379 | 48,718 | 41,535 | ||||||||
Shareholders’ equity | 59,277 | 47,483 | 58,258 | 46,701 | ||||||||
Capital Ratios
| 6/30/03 | 12/31/02 | 6/30/02 | |||||||
Total Capital (to Risk-Weighted Assets) | |||||||||
Corporation | 13.0 | % | 12.5 | % | 15.2 | % | |||
Bank | 12.5 | 11.8 | 13.0 | ||||||
Tier 1 Capital (to Risk-Weighted Assets) | |||||||||
Corporation | 11.0 | 10.4 | 14.0 | ||||||
Bank | 10.4 | 9.7 | 11.8 | ||||||
Tier 1 Capital (to Average Tangible Assets) | |||||||||
Corporation | 9.5 | 8.8 | 11.4 | ||||||
Bank | 9.0 | 8.3 | 9.6 |
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EXHIBIT 99.2
Asset Quality
Retail and Mortgage Banking Segments
| 6/30/03 | 12/31/02 | 6/30/02 | ||||||||||
Non-accrual loans | $ | 2,053 | $ | 1,656 | $ | 1,679 | ||||||
Real estate owned | 702 | 703 | — | |||||||||
Total non-performing assets | $ | 2,755 | $ | 2,359 | $ | 1,679 | ||||||
Accruing loans past due for 90 days or more | $ | 3,093 | $ | 69 | $ | 672 | ||||||
Allowance for loan losses | $ | 4,068 | $ | 3,765 | $ | 3,874 | ||||||
Non-performing assets to loans* and real estate owned | 1.01 | % | 88 | % | 67 | % | ||||||
Allowance for loan losses to loans* and real estate owned | 1.50 | 1.40 | 1.54 | |||||||||
Allowance for loan losses to non-performing assets | 147.66 | 159.60 | 230.73 | |||||||||
*Loans above excludes consumer finance loans at Moore Loans.
Consumer Finance Segment
| 6/30/03 | 12/31/02 | 6/30/02 | |||||||||
Non-accrual loans | $ | 872 | $ | 688 | $ | — | |||||
Accruing loans past due for 90 days or more | 293 | 293 | — | ||||||||
Allowance for loan losses | 3,394 | 2,957 | — | ||||||||
Dealer reserves | 2,212 | 2,071 | — | ||||||||
Non-accrual consumer finance loans to total consumer finance loans | 1.15 | % | 1.02 | % | — | ||||||
Allowance for loan losses and dealer reserves to total consumer finance loans | 7.41 | 7.48 | — | ||||||||
Allowance for loan losses and dealer reserves to non-accrual consumer finance loans | 642.89 | 730.81 | — | ||||||||
Other Data and Ratios
| As Of and For the Six Months Ended | ||||||
| 6/30/03 | 6/30/02 | |||||
Shares repurchased | 80,000 | — | ||||
Average price of repurchased shares | $ | 28.13 | — | |||
Weighted average shares outstanding—diluted | 3,769,428 | 3,611,056 | ||||
Weighted average shares outstanding—basic | 3,613,992 | 3,531,734 | ||||
Market value per share at period end | $ | 39.00 | $ | 21.24 | ||
Price to book value ratio at period end | 2.29 | 1.54 | ||||
Price to earnings ratio at period end | 11.14 | 8.56 | ||||
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EXHIBIT 99.2
Notes to Selected Financial Data
| 1 | Included in loans as of June 2003 are approximately $72,214,000 in loans attributable to Moore Loans. |
| 2 | Included in borrowings as of June 2003 are $20,000,000 in advances from the Federal Home Loan Bank, $36,372,000 in draws on a revolving line of credit from a third party bank, $5,000,000 from a fixed rate loan from a third party bank and $3,750,000 in subordinated debt from the previous owners of Moore Loans. These borrowings were used for the purchase and to fund a portion of the loans outstanding at Moore Loans. |
| 3 | Included in the provision for loan losses is $618,000 for the quarter ended 6/30/03 and $1,081,000 for the six months ended 6/30/03 attributable to Moore Loans. |
| 4 | The increase in net interest margin is largely a result of the purchase of Moore Loans on September 1, 2002. The average yield on loans at Moore Loans for the second quarter of 2003 was 16.53% and 16.73% for the six months ended 6/30/03. |
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