C&F Financial Corp. (CFFI, Financial) filed Quarterly Report for the period ended 2012-06-30.
C&f Financial Corporation has a market cap of $127.7 million; its shares were traded at around $40.58 with a P/E ratio of 9.3 and P/S ratio of 1.5. The dividend yield of C&f Financial Corporation stocks is 2.6%.
Mortgage Banking: C&F Mortgage Corporation reported net income of $419,000 for the second quarter of 2012, compared to $232,000 for the second quarter of 2011. For the first six months of 2012, C&F Mortgage Corporation reported net income of $837,000, compared to $569,000 for the first six months of 2011. Factors contributing to the improvements in financial results for the three months and six months ended June 30, 2012, relative to the same periods of 2011, were (1) higher gains on sales of loans and ancillary loan production fees, (2) higher interest income on loans held for sale and (3) lower legal and consulting fees. Loan origination volume increased to $206.7 million in the second quarter of 2012, a 38.7 percent increase as compared to $149.0 million in the second quarter of 2011, and to $379.9 million in the first half of 2012, a 39.1 percent increase as compared to $273.1 million in the first half of 2011. For the second quarter of 2012, the amount of loan originations for refinancings and home purchases were $55.8 million and $150.9 million, respectively, compared to $21.5 million and $127.5 million, respectively, for the second quarter of 2011. For the first half of 2012, the amount of loan originations for refinancings and home purchases were $135.5 million and $244.5 million, respectively, compared to $60.1 million and $213.0 million, respectively, for the first half of 2011. The increases in loan originations are a result of the continued low interest rate environment that has led to increased mortgage borrowing and refinancing activity. These increases have led to correspondingly higher sales volume, which increased to $191.2 million for the second quarter of 2012, compared to $134.7 million during the second quarter of 2011, and which increased to $370.8 million for the first half of 2012, compared to $297.8 million during the first half of 2011. In connection with the higher sales volumes in 2012, the mortgage banking segment incurred higher production and income based compensation expense.
Net interest income, on a taxable-equivalent basis, for the three months ended June 30, 2012 was $17.1 million, compared to $16.0 million for the three months ended June 30, 2011. Net interest income, on a taxable-equivalent basis, for the first half of 2012 was $33.7 million, compared to $31.2 million for the first half of 2011. The higher net interest income during the second quarter of 2012, as compared to the same period of 2011, resulted from a 16 basis point increase in net interest margin to 7.87 percent, coupled with a 4.3 percent increase in average earning assets. The higher net interest income during the first half of 2012, as compared to the same period of 2011, resulted from a 20 basis point increase in net interest margin to 7.75 percent, coupled with a 4.1 percent increase in average earning assets. The increases in net interest margin for the three and six months ended June 30, 2012, compared to the same periods in 2011, were principally a result of decreases in the rates paid on savings and time deposits, partially offset by lower yields on loans and municipal securities. The decreases in rates paid on time and savings deposits were primarily a result of the sustained low interest rate environment, and the repricing of higher rate certificates of deposit as they matured to lower rates. In addition, the mix in interest-bearing deposits has shifted to shorter-term deposit accounts. The decreases in the yields on loans resulted primarily from higher average loans held for sale at the Mortgage Banking segment, which typically are lower yielding than loans held for investment. The increases in average loans held for sale offset the favorable effects of a changes in the mix of loans held for investment, namely increases in higher yielding average loans at the Consumer Finance segment and declines in lower yielding average loans at the Retail Banking segment resulted in higher yields on loans held for investment. The decline in the yields on securities resulted from calls and maturities of higher-yielding securities and purchases of municipal securities with lower yields in the current low interest rate environment.
Income tax expense for the second quarter of 2012 totaled $2.0 million, resulting in an effective tax rate of 31.9 percent, compared to $1.3 million and 29.9 percent for the second quarter of 2011. Income tax expense for the first half of 2012 totaled $3.7 million, resulting in an effective tax rate of 31.7 percent, compared to $2.6 million and 30.1 percent for the first half of 2011. The increases in the effective tax rates during the second quarter and first half of 2012 were a result of higher pre-tax earnings at the non-bank business segments, which are not exempt from state income taxes and do not generate tax-exempt income.
Nonperforming assets of the combined Retail Banking and Mortgage Banking segments totaled $16.6 million at June 30, 2012, compared to $16.7 million at December 31, 2011. Nonperforming assets at June 30, 2012 included $10.9 million of nonaccrual loans at the Retail Banking segment, compared to $10.0 million at December 31, 2011, and $5.2 million of foreclosed, or OREO, properties, compared to $6.1 million at December 31, 2011. Nonaccrual loans primarily consisted of loans for residential real estate secured by residential properties and commercial loans secured by non-residential properties. The increase in nonaccrual loans from December 31, 2011 to June 30, 2012 was attributable to one $2.8 million commercial relationship secured by undeveloped residential property, which had been classified as substandard at December 31, 2011 and was placed on substandard nonaccrual status during the first quarter of 2012. The increase in nonaccrual loans attributable to this relationship was partially offset by loan pay-offs, charge-offs and transfers to foreclosed properties. Specific reserves of $2.7 million have been established for nonaccrual loans. We believe we have provided adequate loan loss reserves based on current appraisals or evaluations of the collateral. In some cases, appraisals have been adjusted to reflect current trends including sales prices, expenses, absorption periods and other current relevant factors. OREO properties at June 30, 2012 primarily consisted of residential and non-residential properties associated with commercial relationships. These properties have been written down to their estimated fair values less cost to sell. The decline in OREO properties since December 31, 2011 resulted from sales during the first half of 2012 as the Corporation continues to focus efforts on disposing of OREO property, offset in part by transfers from loans to OREO.
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C&f Financial Corporation has a market cap of $127.7 million; its shares were traded at around $40.58 with a P/E ratio of 9.3 and P/S ratio of 1.5. The dividend yield of C&f Financial Corporation stocks is 2.6%.
Highlight of Business Operations:
Net income for the Corporation was $4.2 million for the three months ended June 30, 2012, compared with $3.1 million for the three months ended June 30, 2011. Net income for the Corporation was $8.0 million for the first six months of 2012, compared with $6.1 million for the first six months of 2011. Net income available to common shareholders was $4.0 million, or $1.22 per common share assuming dilution, for the three months ended June 30, 2012, compared with $2.8 million, or $0.88 per common share assuming dilution, for the three months ended June 30, 2012. Net income available to common shareholders was $7.7 million, or $2.33 per common share assuming dilution for the first half of 2012, compared with $5.5 million, or $1.73 per common share assuming dilution for the first half of 2011. The difference between reported net income and net income available to common shareholders is a result of the Preferred Stock dividends and amortization of the Warrant related to the Corporation s participation in the CPP. The Corporation s earnings for the second quarter and first half of 2012 were primarily a result of the strong earnings in the Consumer Finance segment, which continues to benefit from (1) sustained loan growth and (2) the low funding costs on its variable-rate borrowings. The Mortgage Banking segment benefited from (1) higher gains on loans sold as a result of higher loan production and correspondingly higher sales volume during 2012 and (2) lower legal and consulting expenses. The Retail Banking segment benefited from the effects of (1) the continued low interest rate environment on the cost of deposits, (2) lower provisions for loan losses, (3) higher interchange activity fee income and (4) lower expenses associated with FDIC deposit insurance and foreclosed properties.Mortgage Banking: C&F Mortgage Corporation reported net income of $419,000 for the second quarter of 2012, compared to $232,000 for the second quarter of 2011. For the first six months of 2012, C&F Mortgage Corporation reported net income of $837,000, compared to $569,000 for the first six months of 2011. Factors contributing to the improvements in financial results for the three months and six months ended June 30, 2012, relative to the same periods of 2011, were (1) higher gains on sales of loans and ancillary loan production fees, (2) higher interest income on loans held for sale and (3) lower legal and consulting fees. Loan origination volume increased to $206.7 million in the second quarter of 2012, a 38.7 percent increase as compared to $149.0 million in the second quarter of 2011, and to $379.9 million in the first half of 2012, a 39.1 percent increase as compared to $273.1 million in the first half of 2011. For the second quarter of 2012, the amount of loan originations for refinancings and home purchases were $55.8 million and $150.9 million, respectively, compared to $21.5 million and $127.5 million, respectively, for the second quarter of 2011. For the first half of 2012, the amount of loan originations for refinancings and home purchases were $135.5 million and $244.5 million, respectively, compared to $60.1 million and $213.0 million, respectively, for the first half of 2011. The increases in loan originations are a result of the continued low interest rate environment that has led to increased mortgage borrowing and refinancing activity. These increases have led to correspondingly higher sales volume, which increased to $191.2 million for the second quarter of 2012, compared to $134.7 million during the second quarter of 2011, and which increased to $370.8 million for the first half of 2012, compared to $297.8 million during the first half of 2011. In connection with the higher sales volumes in 2012, the mortgage banking segment incurred higher production and income based compensation expense.
Net interest income, on a taxable-equivalent basis, for the three months ended June 30, 2012 was $17.1 million, compared to $16.0 million for the three months ended June 30, 2011. Net interest income, on a taxable-equivalent basis, for the first half of 2012 was $33.7 million, compared to $31.2 million for the first half of 2011. The higher net interest income during the second quarter of 2012, as compared to the same period of 2011, resulted from a 16 basis point increase in net interest margin to 7.87 percent, coupled with a 4.3 percent increase in average earning assets. The higher net interest income during the first half of 2012, as compared to the same period of 2011, resulted from a 20 basis point increase in net interest margin to 7.75 percent, coupled with a 4.1 percent increase in average earning assets. The increases in net interest margin for the three and six months ended June 30, 2012, compared to the same periods in 2011, were principally a result of decreases in the rates paid on savings and time deposits, partially offset by lower yields on loans and municipal securities. The decreases in rates paid on time and savings deposits were primarily a result of the sustained low interest rate environment, and the repricing of higher rate certificates of deposit as they matured to lower rates. In addition, the mix in interest-bearing deposits has shifted to shorter-term deposit accounts. The decreases in the yields on loans resulted primarily from higher average loans held for sale at the Mortgage Banking segment, which typically are lower yielding than loans held for investment. The increases in average loans held for sale offset the favorable effects of a changes in the mix of loans held for investment, namely increases in higher yielding average loans at the Consumer Finance segment and declines in lower yielding average loans at the Retail Banking segment resulted in higher yields on loans held for investment. The decline in the yields on securities resulted from calls and maturities of higher-yielding securities and purchases of municipal securities with lower yields in the current low interest rate environment.
Income tax expense for the second quarter of 2012 totaled $2.0 million, resulting in an effective tax rate of 31.9 percent, compared to $1.3 million and 29.9 percent for the second quarter of 2011. Income tax expense for the first half of 2012 totaled $3.7 million, resulting in an effective tax rate of 31.7 percent, compared to $2.6 million and 30.1 percent for the first half of 2011. The increases in the effective tax rates during the second quarter and first half of 2012 were a result of higher pre-tax earnings at the non-bank business segments, which are not exempt from state income taxes and do not generate tax-exempt income.
Nonperforming assets of the combined Retail Banking and Mortgage Banking segments totaled $16.6 million at June 30, 2012, compared to $16.7 million at December 31, 2011. Nonperforming assets at June 30, 2012 included $10.9 million of nonaccrual loans at the Retail Banking segment, compared to $10.0 million at December 31, 2011, and $5.2 million of foreclosed, or OREO, properties, compared to $6.1 million at December 31, 2011. Nonaccrual loans primarily consisted of loans for residential real estate secured by residential properties and commercial loans secured by non-residential properties. The increase in nonaccrual loans from December 31, 2011 to June 30, 2012 was attributable to one $2.8 million commercial relationship secured by undeveloped residential property, which had been classified as substandard at December 31, 2011 and was placed on substandard nonaccrual status during the first quarter of 2012. The increase in nonaccrual loans attributable to this relationship was partially offset by loan pay-offs, charge-offs and transfers to foreclosed properties. Specific reserves of $2.7 million have been established for nonaccrual loans. We believe we have provided adequate loan loss reserves based on current appraisals or evaluations of the collateral. In some cases, appraisals have been adjusted to reflect current trends including sales prices, expenses, absorption periods and other current relevant factors. OREO properties at June 30, 2012 primarily consisted of residential and non-residential properties associated with commercial relationships. These properties have been written down to their estimated fair values less cost to sell. The decline in OREO properties since December 31, 2011 resulted from sales during the first half of 2012 as the Corporation continues to focus efforts on disposing of OREO property, offset in part by transfers from loans to OREO.
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