EXHIBIT 99.1
C&F FINANCIAL CORPORATION
Tuesday, April 29, 2008
| Contact: | Tom Cherry, Executive Vice President & CFO (804) 843-2360 |
C&F Financial Corporation
Announces First Quarter Earnings
West Point, Va., April 29, 2008—C&F Financial Corporation (NASDAQ: CFFI), the one-bank holding company for C&F Bank, today reported net income of $1.43 million, or 47 cents per share assuming dilution, for its first quarter ended March 31, 2008, compared with $2.01 million, or 62 cents per share assuming dilution, for the first quarter of 2007.
For the first quarter of 2008, on an annualized basis, the corporation’s return on average equity was 8.73 percent and its return on average assets was 0.73 percent, compared with a 12.05 percent return on average equity and a 1.11 percent return on average assets for the first quarter of 2007. The decline in these measures resulted from lower earnings in the first quarter of 2008, coupled with asset growth.
“As expected, our first quarter 2008 results have been affected by the continued slowdown in the housing industry and the economy in general, the reduction in liquidity throughout the financial markets, the interest rate cuts by the Federal Reserve, operating expenses associated with the expansion of our retail banking network and interest expense associated with the issuance of additional trust preferred capital,” said Larry Dillon, president and chief executive officer of C&F Financial Corporation. “Lower earnings at our retail banking segment were principally a result of margin compression together with the effects of our growth initiatives, an increase in the provision for loan losses and higher interest cost associated with the issuance of an additional $10 million in trust preferred capital securities in December 2007. The combination of declining short-term interest rates and increased competition for deposits
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C&F FINANCIAL CORPORATION
Tuesday, April 29, 2008
| Contact: | Tom Cherry, Executive Vice President & CFO (804) 843-2360 |
has resulted in a pricing disparity between loans and deposits, which has lowered net interest margin at the retail banking segment. Absent further reductions in interest rates by the Federal Reserve Bank, as fixed-rate deposits mature over the next several months, they are expected to reprice at lower interest rates, which should reduce funding costs and relieve some pressure on the net interest margin. The Bank’s overall asset quality continues to be good. The Bank did not make any of the types of residential real estate loans that are plaguing the industry, and our land development and home construction loan customers currently appear to have the financial stability to meet their debt service obligations with the exception of one relationship, a portion of which has been placed on nonaccrual status. In light of the current economic environment the Bank will not be completely immune from some credit losses, and an increase in the provision for loan losses was prudent.”
“While the mortgage banking industry has experienced significant operational problems and losses, our mortgage banking segment has continued to contribute to our net income in 2008,” continued Dillon. “Loan originations at the Mortgage Company for the first quarter of 2008 declined a relatively modest 9.2 percent compared to the first quarter of 2007. In addition, we were fortunate to attract new mortgage origination talent in 2007 and our expectations are that these additions will benefit us in the long term. The Mortgage Company has been required to repurchase several loans as a result of documentation issues resulting in several nonaccrual loans and foreclosed properties at the end of the first quarter of 2008 for which a provision for loan losses or a write down to fair market value were recognized in the first quarter of 2008. Additional loan loss provisions may be needed in the future.”
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C&F FINANCIAL CORPORATION
Tuesday, April 29, 2008
| Contact: | Tom Cherry, Executive Vice President & CFO (804) 843-2360 |
“Whereas the retail banking segment has been negatively affected by the decline in short-term interest rates, our consumer finance segment has benefited from this trend, as well as by strong loan demand in the first quarter of 2008,” added Dillon. “The Finance Company’s fixed-rate loan portfolio is partially funded by a line of credit indexed to short-term interest rates. Therefore, its cost of funds has declined and its margins have increased during the first quarter of 2008. However, the Finance Company experienced higher loan charge-offs in the first quarter of 2008 compared to the same period in 2007, which in combination with loan growth, resulted in a higher provision for loan losses.”
Retail Banking Segment. First quarter net income for C&F Bank was $413,000 in 2008 compared to $933,000 in 2007. The decline in quarterly earnings for 2008 included (1) the effects of margin compression and competition for loans and deposits on net interest income, (2) a higher provision for loan losses attributable to loan growth and credit issues resulting from the general slow down in the economy, (3) the effects on operating expenses of the Peninsula and Richmond branch expansions, (4) higher operational and administrative personnel expenses to support growth and (5) higher debt service expense associated with the issuance of $10 million in trust preferred capital securities in late 2007. The increase in the Bank’s nonaccrual loans was attributable to one commercial real estate relationship. The Bank is closely monitoring this situation.
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C&F FINANCIAL CORPORATION
Tuesday, April 29, 2008
| Contact: | Tom Cherry, Executive Vice President & CFO (804) 843-2360 |
Mortgage Banking Segment. First quarter net income for C&F Mortgage Corporation was $284,000 in 2008 compared to $347,000 in 2007. The decline in quarterly earnings for 2008 included the effects of the downturn in the housing market on loan origination volume, which declined 9.2 percent, and a $227,000 provision for loan losses, which was recognized in connection with loan repurchases. In addition, C&F Mortgage had several foreclosed properties at March 31, 2008, which had been written down to their fair value less cost to sell at the date of foreclosure through charges to the allowance.
Consumer Finance Segment. First quarter net income for C&F Finance Company was $732,000 in 2008 compared to $729,000 in 2007. The modest quarterly earnings improvement in 2008 resulted from a 20 percent increase in average consumer finance loans outstanding and an increase in net interest margin, the benefits of which were largely offset by an increase in the provision for loan losses resulting from higher charge-offs and higher operating expenses to support growth. The higher provision for loan losses resulted in an increase in the allowance for loan losses since December 31, 2007, while the ratio of the allowance for loan losses to total loans declined 6 basis points. A decline in this ratio can occur during periods of loan growth, such as the first quarter of 2008, because the purchase of a contract does not necessarily simultaneously give rise to an allowance.
About C&F Financial Corporation. C&F Financial Corporation’s stock is listed for trading on The Nasdaq Stock Market under the symbol CFFI. The stock closed at a price of $28.53 per share on Monday, April 28, 2008. At March 31, 2008, the book value of the corporation was $21.85 per share, and the corporation declared a dividend of 31 cents per share during the first quarter of 2008. The corporation’s market makers include Advest, Inc., Davenport & Company LLC, FTN Financial Securities Corporation, McKinnon & Company and Scott & Stringfellow, Inc.
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C&F FINANCIAL CORPORATION
Tuesday, April 29, 2008
| Contact: | Tom Cherry, Executive Vice President & CFO (804) 843-2360 |
C&F Bank operates 18 retail bank branches located throughout the Hampton to Richmond corridor in Virginia and offers full investment services through its subsidiary C&F Investment Services, Inc. C&F Mortgage Corporation provides mortgage, title and appraisal services through 21 offices located in Virginia, Maryland, North Carolina, Delaware and New Jersey. C&F Finance Company provides automobile loans in Virginia, Tennessee, Maryland, North Carolina, Ohio, Kentucky and West Virginia through its offices in Richmond, Roanoke and Hampton, Virginia, in Nashville, Tennessee and in Towson, Maryland.
Additional information regarding the corporation’s products and services, as well as access to its filings with the Securities and Exchange Commission, are available on the corporation’s web site at http://www.cffc.com.
Forward-Looking Statements.The statements contained in this press release that are not historical facts may constitute “forward-looking statements” as defined by 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 corporation include, but are not limited to, changes in: (1) interest rates, (2) general economic conditions, (3) demand for loan products, (4) the legislative/regulatory climate, (5) monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and
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C&F FINANCIAL CORPORATION
Tuesday, April 29, 2008
| Contact: | Tom Cherry, Executive Vice President & CFO (804) 843-2360 |
the Federal Reserve Board, (6) the quality or composition of the loan or investment portfolios, (7) the level of net charge-offs on automobile loans, (8) deposit flows, (9) competition, (10) demand for financial services in the corporation’s market area, (11) technology, (12) reliance on third parties for key services, (13) the real estate market, (14) the corporation’s expansion and technology initiatives, and (15) accounting principles, policies and guidelines. These risks and uncertainties should be considered in evaluating the forward-looking statements contained herein, and readers are cautioned not to place undue reliance on such statements, which speak only as of date of this release.
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C&F Financial Corporation
Selected Financial Information
(in thousands, except for share and per share data)
| 3/31/08 | 12/31/07 | 3/31/07 | ||||||||
| (unaudited) | (unaudited) | |||||||||
Balance Sheets | ||||||||||
Interest-bearing deposits with other banks and federal funds sold | $ | 3,504 | $ | 1,148 | $ | 20,882 | ||||
Investment securities - available for sale at fair value | 87,302 | 81,255 | 67,388 | |||||||
Loans held for sale, net | 29,896 | 34,083 | 45,448 | |||||||
Loans, net: | ||||||||||
Retail Banking segment | 433,271 | 432,568 | 394,049 | |||||||
Mortgage Banking segment | 5,283 | 4,337 | 823 | |||||||
Consumer Finance segment | 153,712 | 148,976 | 128,391 | |||||||
Federal Home Loan Bank stock | 4,345 | 4,387 | 2,070 | |||||||
Total assets | 794,550 | 785,596 | 735,779 | |||||||
Deposits | 533,989 | 527,571 | 532,767 | |||||||
Borrowings | 176,668 | 176,047 | 117,103 | |||||||
Shareholders' equity | 66,075 | 65,224 | 65,015 | |||||||
| For The Quarter Ended | ||||||||||
| 3/31/08 | 3/31/07 | |||||||||
| (unaudited) | ||||||||||
Statements of Income | ||||||||||
Interest income | $ | 15,904 | $ | 15,299 | ||||||
Interest expense | 5,699 | 5,389 | ||||||||
Provision for loan losses: | ||||||||||
Retail Banking segment | 120 | — | ||||||||
Mortgage Banking segment | 227 | — | ||||||||
Consumer Finance segment | 2,050 | 1,400 | ||||||||
Other operating income: | ||||||||||
Gains on sales of loans | 3,685 | 3,628 | ||||||||
Other | 2,383 | 2,170 | ||||||||
Other operating expenses: | ||||||||||
Salaries and employee benefits | 7,585 | 7,302 | ||||||||
Other | 4,468 | 4,180 | ||||||||
Income tax expense | 395 | 815 | ||||||||
Net income | 1,428 | 2,011 | ||||||||
Earnings per common share - assuming dilution | 0.47 | 0.62 | ||||||||
Earnings per common share - basic | 0.48 | 0.65 | ||||||||
| For The Quarter Ended | ||||||||||
| 3/31/08 | 3/31/07 | |||||||||
| (unaudited) | ||||||||||
Segment Information | ||||||||||
Net income - Retail Banking | $ | 413 | $ | 933 | ||||||
Net income - Mortgage Banking | 284 | 347 | ||||||||
Net income - Consumer Finance | 732 | 729 | ||||||||
Net income - Other and Eliminations | (1 | ) | 2 | |||||||
Mortgage loan originations - Mortgage Banking | 180,475 | 198,658 | ||||||||
Mortgage loans sold - Mortgage Banking | 184,662 | 206,714 | ||||||||
| For The Quarter Ended | ||||||||||||
| 3/31/08 | 3/31/07 | |||||||||||
| (unaudited) | ||||||||||||
Average Balances | ||||||||||||
Investment securities - available for sale at fair value | $ | 86,900 | $ | 68,267 | ||||||||
Loans held for sale | 27,729 | 36,837 | ||||||||||
Loans: | ||||||||||||
Retail Banking segment | 436,364 | 395,147 | ||||||||||
Mortgage Banking segment | 4,862 | 651 | ||||||||||
Consumer Finance segment | 161,182 | 134,488 | ||||||||||
Interest-bearing deposits in other banks andfederal funds sold | 1,642 | 26,971 | ||||||||||
Total earning assets | 718,679 | 662,361 | ||||||||||
Time, checking and savings deposits | 449,374 | 446,518 | ||||||||||
Borrowings | 169,993 | 115,567 | ||||||||||
Total interest-bearing liabilities | 619,367 | 562,085 | ||||||||||
Demand deposits | 79,906 | 80,723 | ||||||||||
Shareholders' equity | 65,442 | 66,768 | ||||||||||
| 3/31/08 | 12/31/07 | 3/31/07 | ||||||||||
| (unaudited) | (unaudited) | |||||||||||
Asset Quality | ||||||||||||
Retail and Mortgage Banking Segments | ||||||||||||
Nonaccrual loans*-Retail Banking | $ | 3,221 | $ | 495 | $ | 815 | ||||||
Nonaccrual loans*-Mortgage Banking | 1,749 | 732 | — | |||||||||
Real estate owned**-Retail Banking | 226 | — | — | |||||||||
Real estate owned**-Mortgage Banking | 450 | — | — | |||||||||
Total nonperforming assets | $ | 5,646 | $ | 1,227 | $ | 815 | ||||||
Accruing loans* past due for 90 days or more | $ | 774 | $ | 578 | $ | 1,682 | ||||||
Total loans*-Retail and Mortgage Banking segments | $ | 443,516 | $ | 441,648 | $ | 399,179 | ||||||
Allowance for loan losses-Retail and Mortgage Banking segments | $ | 4,962 | $ | 4,743 | $ | 4,307 | ||||||
Nonperforming assets to loans* and real estate owned | 1.27 | % | 0.28 | % | 0.20 | % | ||||||
Allowance for loan losses to loans* | 1.12 | % | 1.07 | % | 1.08 | % | ||||||
Allowance for loan losses to nonaccrual loans* | 99.84 | % | 386.55 | % | 528.47 | % | ||||||
* Loans exclude Consumer Finance segment loans presented below. | ||||||||||||
** Real estate owned is recorded at its fair market value less cost to sell. | ||||||||||||
Consumer Finance Segment | ||||||||||||
Nonaccrual loans | $ | 958 | $ | 1,388 | $ | 662 | ||||||
Accruing loans past due for 90 days or more | $ | — | $ | — | $ | 10 | ||||||
Total loans | $ | 165,183 | $ | 160,196 | $ | 138,611 | ||||||
Allowance for loan losses | $ | 11,471 | $ | 11,220 | $ | 10,220 | ||||||
Nonaccrual consumer finance loans to total consumer finance loans | 0.58 | % | 0.87 | % | 0.48 | % | ||||||
Allowance for loan losses to total consumer finance loans | 6.94 | % | 7.00 | % | 7.37 | % | ||||||
| As Of and For The Quarter Ended | ||||||||
| 3/31/08 | 3/31/07 | |||||||
| (unaudited) | ||||||||
Other Data and Ratios | ||||||||
Annualized return on average assets | 0.73 | % | 1.11 | % | ||||
Annualized return on average equity | 8.73 | % | 12.05 | % | ||||
Dividends declared per share | $ | 0.31 | $ | 0.31 | ||||
Shares purchased | 600 | 105,900 | ||||||
Average price of purchased shares | $ | 29.86 | $ | 41.38 | ||||
Weighted average shares outstanding - assuming dilution | 3,039,287 | 3,242,081 | ||||||
Weighted average shares outstanding - basic | 2,982,273 | 3,105,461 | ||||||
Market value per share at period end | $ | 27.60 | $ | 43.95 | ||||
Book value per share at period end | $ | 21.85 | $ | 21.04 | ||||
Price to book value ratio at period end | 1.26 | 2.09 | ||||||
Price to earnings ratio at period end (ttm) | 10.91 | 12.38 | ||||||
