Exhibit 99.1
C&F FINANCIAL CORPORATION
Thursday, April 30, 2009
| Contact: | Tom Cherry, Executive Vice President & CFO |
(804) 843-2360
C&F Financial Corporation
Announces First Quarter Earnings
West Point, Va., April 30, 2009—C&F Financial Corporation (NASDAQ: CFFI), the one-bank holding company for C&F Bank, today reported net income of $1.51 million for its first quarter ended March 31, 2009, compared with $1.43 million for the first quarter of 2008. Net income available to common shareholders for the first quarter of 2009 was $1.25 million, or 41 cents per common share assuming dilution, compared with $1.43 million or 46 cents per common share assuming dilution, for the first quarter of 2008. The difference between reported net income and net income available to common shareholders in the first quarter of 2009 is a result of the preferred stock dividends and amortization of the warrants, which are not available to common shareholders, related to the corporation’s participation in the Capital Purchase Program. The preferred stock and warrants were issued in the first quarter of 2009 and, therefore, did not impact the first quarter of 2008.
For the first quarter of 2009, on an annualized basis, the corporation’s return on average common equity was 7.60 percent and its return on average assets was 0.56 percent, compared to an 8.73 percent return on average common equity and a 0.73 percent return on average assets for the first quarter of 2008. The decline in these measures resulted from lower earnings available to common shareholders in the first quarter of 2009, coupled with asset growth.
“Our first quarter 2009 earnings of $1.5 million showed a slight improvement over the first quarter of 2008 as the lower interest rate environment this year has
C&F FINANCIAL CORPORATION
Thursday, April 30, 2009
| Contact: | Tom Cherry, Executive Vice President & CFO |
(804) 843-2360
spurred loan production at our mortgage company and resulted in a higher net interest margin at our finance company,” said Larry Dillon, president and chief executive officer of C&F Financial Corporation. “These favorable aspects of our first quarter performance offset the lower earnings at our retail bank, which were principally a result of the effect of margin compression on net interest income, lower fee income, higher expenses associated with nonaccrual loans and foreclosed properties for which loan loss provisions or write downs to fair market value were necessary, and higher assessments for FDIC deposit insurance. The decline in the net interest margin at the Bank was attributable to interest rate cuts by the Federal Reserve Bank throughout 2008, which reduced yields on the Bank’s adjustable-rate loans faster than interest rates declined on the Bank’s deposits, which are our largest source of funds. Unlike the Bank, our finance company’s net interest margin benefited from lower interest rates because its fixed-rate loan portfolio is partially funded by a line of credit indexed to the declining short-term interest rates. In addition, lower interest rates contributed to a 77 percent increase in our mortgage company’s loan originations during the first quarter of 2009 as compared to the first quarter of 2008.”
“Our provisions for loan losses for the first quarter of 2009 were $4.1 million, compared with $2.4 million for the first quarter of 2008,” said Dillon. “In addition, the provision for indemnification losses on loans made by our mortgage company increased to $640,000 in 2009 compared to $5,000 in 2008. Our first quarter 2009 provision for loan losses increased at each of our core business segments compared to the first quarter of 2008. These increases in loss provisions resulted from the continued deterioration of the housing markets and the general economic environment in the United States and our market areas since the first quarter of 2008. While we believe the current reserves in each of
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C&F FINANCIAL CORPORATION
Thursday, April 30, 2009
| Contact: | Tom Cherry, Executive Vice President & CFO |
(804) 843-2360
our business segments are adequate to provide for potential loan losses, we constantly monitor our credit risks and may increase reserves in the future based upon changes in our portfolios and general economic conditions.”
“The capital and liquidity positions of the corporation remain strong,” continued Dillon. “We previously announced our participation in the federal government’s Capital Purchase Program in the first quarter of 2009, which further strengthened our already well-capitalized position. It is our intent to responsibly deploy this capital to fund new loan demand in the communities we serve and to assist existing borrowers who may be experiencing difficulty in servicing their debt.”
“The corporation maintained its quarterly dividend at 31 cents per common share in the first quarter of 2009, which resulted in a dividend payout ratio of 76% based on net income available to common shareholders. Until we are able to return to more normal earnings levels, keeping our dividend at its current rate adds very little of our earnings to our capital, thereby limiting how fast we can grow. A more typical payout ratio would be in the 30 to 40 percent range,” concluded Dillon.
Retail Banking Segment. First quarter net income for C&F Bank was $139,000 in 2009 compared to $609,000 in 2008. The decline in 2009 earnings included the effects of (1) margin compression and competition for loans and deposits on net interest income, (2) a higher provision for loan losses attributable to an increase in nonperforming loans, most of which are secured by real estate, the continued slow down in the economy, and loan growth, (3) higher assessments for deposit insurance resulting from the FDIC’s implementation of its amended risk-based assessment system, and (4) higher nonaccrual loan and foreclosed properties expenses primarily resulting from the work-out of the commercial relationships mentioned below.
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C&F FINANCIAL CORPORATION
Thursday, April 30, 2009
| Contact: | Tom Cherry, Executive Vice President & CFO |
(804) 843-2360
The Bank’s nonperforming assets have increased to $19.80 million at March 31, 2009 and consist of $18.71 million of nonaccrual loans and $1.09 million of foreclosed properties. The largest components of the Bank’s nonaccrual loans are two commercial relationships aggregating $17.4 million, which are secured by residential real estate. Management believes the Bank has provided adequate loan loss reserves for these loans based on current appraisals of the collateral. The largest component of the Bank’s foreclosed properties is $977,000 of residential properties associated with one commercial relationship. These properties have been written down to their estimated fair value based upon current appraisals less selling costs. Additional properties securing nonaccrual loans totaling $426,000 associated with this relationship are expected to be conveyed to the Bank during the second quarter of 2009 and appropriate losses have been recognized.
Mortgage Banking Segment. First quarter net income for C&F Mortgage Corporation was $817,000 in 2009 compared to $284,000 in 2008. Earnings in 2009 included the effects of lower interest rates on loan origination volume, which increased 76.7 percent, and resulted in gains on sales of loans of $6.54 million in 2009 compared to $3.69 million in 2008. This increase in revenue was offset in part by (1) a 2009 provision for loan losses of $300,000, compared to $227,000 in 2008, (2) a 2009 provision for indemnification losses of $640,000, compared to $5,000 in 2008, and (3) an increase of $1.65 million in principally commission-based personnel costs associated with the increase in loan production. The increases in the indemnification and loan loss provisions
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C&F FINANCIAL CORPORATION
Thursday, April 30, 2009
| Contact: | Tom Cherry, Executive Vice President & CFO |
(804) 843-2360
resulted from increased nonperforming loans as a result of continued deterioration of the economy, especially the housing market together with higher unemployment.
Consumer Finance Segment. First quarter net income for C&F Finance Company was $725,000 in 2009 compared to $732,000 in 2008. The consumer finance segment has benefited from the approximate 6.4 percent growth in average consumer finance loans outstanding and the decline in its cost of borrowings in the first quarter of 2009, compared to the first quarter of 2008. However, C&F Finance Company has experienced higher loan charge-offs in 2009 compared to 2008, which in combination with loan growth, has resulted in a $3.10 million provision for loan losses in the first quarter of 2009, compared to $2.05 million in the first quarter of 2008. The higher provision for loan losses resulted in a $320,000 increase in the allowance for loan losses since December 31, 2008, which increased the ratio of the allowance for loan losses to total loans to 7.55 percent at March 31, 2009, compared to 7.31 percent at December 31, 2008. Consumer finance segment originations and charge-offs are directly affected by the increase in unemployment. In addition, the level of charge-offs is affected by the sales prices of repossessed automobiles, which decreased significantly throughout 2008, resulting in higher charge-offs per unit. While we believe our current allowance for loan losses is adequate to absorb probable losses in the loan portfolio, we may make adjustments to our reserve level in the future based upon changes in our portfolio and general economic conditions.
About C&F Financial Corporation. C&F Financial Corporation’s common stock is listed for trading on The Nasdaq Stock Market under the symbol CFFI. The common stock closed at a price of $14.51 per share on Wednesday, April 29,
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C&F FINANCIAL CORPORATION
Thursday, April 30, 2009
| Contact: | Tom Cherry, Executive Vice President & CFO |
(804) 843-2360
2009. At March 31, 2009, the book value of the corporation was $21.56 per common share, and the corporation declared a dividend of 31 cents per common share during the first quarter of 2009. The corporation’s market makers include Davenport & Company LLC, FTN Financial Securities Corporation, McKinnon & Company and Scott & Stringfellow, Inc.
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 20 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, Indiana and West Virginia through its offices in Richmond 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.Statements in this press release which express “belief,” “intention,” “expectation,” and similar expressions, identify forward-looking statements. These forward-looking statements are based on the beliefs of the corporation’s management, as well as assumptions made by, and information currently available to, the corporation’s management. These statements are inherently uncertain, and there can be no assurance that the underlying assumptions will prove to be accurate. Actual results could differ materially from those anticipated by such statements. Factors that could have a
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C&F FINANCIAL CORPORATION
Thursday, April 30, 2009
| Contact: | Tom Cherry, Executive Vice President & CFO |
(804) 843-2360
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 and business conditions, including unemployment levels, (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 the Federal Reserve Board, (6) the quality or composition of the loan or investment portfolios, (7) the level of net charge-offs on 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. Further, there can be no assurance that the actions taken by the U.S. Treasury and the Federal Reserve Bank will stabilize the U.S. financial system or alleviate the industry or economic factors that may adversely affect the corporation’s business and financial performance. 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)
| Balance Sheets | 3/31/09 | 12/31/08 | 3/31/08 | ||||||||
| (unaudited) | (unaudited) | ||||||||||
Interest-bearing deposits with other banks and federal funds sold | $ | — | $ | 161 | $ | 3,504 | |||||
Investment securities - available for sale at fair value | 107,994 | 100,603 | 87,302 | ||||||||
Loans held for sale, net | 62,867 | 37,042 | 29,896 | ||||||||
Loans, net: | |||||||||||
Retail Banking segment | 460,697 | 469,700 | 433,271 | ||||||||
Mortgage Banking segment | 3,025 | 3,540 | 5,283 | ||||||||
Consumer Finance segment | 158,360 | 159,777 | 153,712 | ||||||||
Federal Home Loan Bank stock | 3,887 | 5,284 | 4,345 | ||||||||
Total assets | 892,873 | 855,657 | 794,550 | ||||||||
Deposits | 581,614 | 550,725 | 533,989 | ||||||||
Borrowings | 199,009 | 219,460 | 176,668 | ||||||||
Shareholders’ equity | 85,572 | 64,857 | 66,075 | ||||||||
| For The Quarter Ended | |||||||||||
| Statements of Income | 3/31/09 | 3/31/08 | |||||||||
| (unaudited) | |||||||||||
Interest income | $ | 15,437 | $ | 15,904 | |||||||
Interest expense | 4,185 | 5,699 | |||||||||
Provision for loan losses: | |||||||||||
Retail Banking segment | 700 | 120 | |||||||||
Mortgage Banking segment | 300 | 227 | |||||||||
Consumer Finance segment | 3,100 | 2,050 | |||||||||
Other operating income: | |||||||||||
Gains on sales of loans | 6,543 | 3,685 | |||||||||
Other | 2,698 | 2,383 | |||||||||
Other operating expenses: | |||||||||||
Salaries and employee benefits | 8,916 | 7,585 | |||||||||
Other | 5,570 | 4,468 | |||||||||
Income tax expense | 399 | 395 | |||||||||
Net income | 1,508 | 1,428 | |||||||||
Net income available to common shareholders | 1,248 | 1,428 | |||||||||
Earnings per common share - assuming dilution | 0.41 | 0.46 | |||||||||
Earnings per common share - basic | 0.41 | 0.47 | |||||||||
| For The Quarter Ended | |||||||||||
| Segment Information | 3/31/09 | 3/31/08 | |||||||||
| (unaudited) | |||||||||||
Net income - Retail Banking | $ | 139 | $ | 609 | |||||||
Net income - Mortgage Banking | 817 | 284 | |||||||||
Net income - Consumer Finance | 725 | 732 | |||||||||
Net loss - Other and Eliminations | (173 | ) | (197 | ) | |||||||
Mortgage loan originations - Mortgage Banking | 318,897 | 180,475 | |||||||||
Mortgage loans sold - Mortgage Banking | 293,072 | 184,662 | |||||||||
| For The Quarter Ended | ||||||||||||
| Average Balances | 3/31/09 | 3/31/08 | ||||||||||
| (unaudited) | ||||||||||||
Interest-bearing deposits in other banks and federal funds sold | $ | 39 | $ | 1,642 | ||||||||
Investment securities - available for sale at fair value | 107,076 | 86,900 | ||||||||||
Loans held for sale | 60,643 | 27,729 | ||||||||||
Loans: | ||||||||||||
Retail Banking segment | 472,542 | 436,364 | ||||||||||
Mortgage Banking segment | 4,317 | 4,862 | ||||||||||
Consumer Finance segment | 171,440 | 161,182 | ||||||||||
Total earning assets | 816,057 | 718,679 | ||||||||||
Time, checking and savings deposits | 478,148 | 449,374 | ||||||||||
Borrowings | 211,474 | 169,993 | ||||||||||
Total interest-bearing liabilities | 689,622 | 619,367 | ||||||||||
Demand deposits | 81,373 | 79,906 | ||||||||||
Shareholders' equity | 82,743 | 65,442 | ||||||||||
| Asset Quality | 3/31/09 | 12/31/08 | 3/31/08 | |||||||||
| (unaudited) | (unaudited) | |||||||||||
| Retail and Mortgage Banking Segments | ||||||||||||
Nonaccrual loans*-Retail Banking | $ | 18,706 | $ | 17,222 | $ | 3,221 | ||||||
Nonaccrual loans*-Mortgage Banking | 1,551 | 1,460 | 1,749 | |||||||||
Real estate owned**-Retail Banking | 1,090 | 1,370 | 226 | |||||||||
Real estate owned**-Mortgage Banking | 581 | 596 | 450 | |||||||||
Total nonperforming assets | $ | 21,928 | $ | 20,648 | $ | 5,646 | ||||||
Accruing loans* past due for 90 days or more | $ | 1,650 | $ | 3,517 | $ | 774 | ||||||
Total loans*-Retail and Mortgage Banking segments | $ | 471,114 | $ | 480,438 | $ | 443,516 | ||||||
Allowance for loan losses-Retail and Mortgage Banking segments | $ | 7,392 | $ | 7,198 | $ | 4,962 | ||||||
Nonperforming assets to loans* and real estate owned | 4.64 | % | 4.28 | % | 1.27 | % | ||||||
Allowance for loan losses to loans* | 1.57 | % | 1.50 | % | 1.12 | % | ||||||
Allowance for loan losses to nonaccrual loans* | 36.49 | % | 38.53 | % | 99.84 | % | ||||||
| ||||||||||||
* 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 | $ | 663 | $ | 798 | $ | 958 | ||||||
Accruing loans past due for 90 days or more | $ | — | $ | — | $ | — | ||||||
Total loans | $ | 171,288 | $ | 172,385 | $ | 165,183 | ||||||
Allowance for loan losses | $ | 12,928 | $ | 12,608 | $ | 11,471 | ||||||
Nonaccrual consumer finance loans to total consumer finance loans | 0.39 | % | 0.46 | % | 0.58 | % | ||||||
Allowance for loan losses to total consumer finance loans | 7.55 | % | 7.31 | % | 6.94 | % | ||||||
| As Of and For The Quarter Ended | ||||||||
| Other Data and Ratios | 3/31/09 | 3/31/08 | ||||||
| (unaudited) | ||||||||
Annualized return on average assets | 0.56 | % | 0.73 | % | ||||
Annualized return on average common equity | 7.60 | % | 8.73 | % | ||||
Dividends declared per common share | $ | 0.31 | $ | 0.31 | ||||
Common shares purchased | — | 600 | ||||||
Average price of purchased common shares | $ | — | $ | 29.86 | ||||
Weighted average common shares outstanding - assuming dilution | 3,038,774 | 3,077,447 | ||||||
Weighted average common shares outstanding - basic | 3,038,774 | 3,021,978 | ||||||
Market value per common share at period end | $ | 14.45 | $ | 27.60 | ||||
Book value per common share at period end | $ | 21.56 | $ | 21.85 | ||||
Price to book value ratio at period end | 0.67 | 1.26 | ||||||
Price to earnings ratio at period end (ttm) | 10.86 | 10.91 | ||||||
