C&f Financial Corp. has a market cap of $60.3 million; its shares were traded at around $19.6 with a P/E ratio of 13.1 and P/S ratio of 0.6. The dividend yield of C&f Financial Corp. stocks is 5.1%. C&f Financial Corp. had an annual average earning growth of 0.5% over the past 5 years.
Highlight of Business Operations: Net income for the Corporation was $1.73 million for the three months ended March 31, 2010, compared with $1.51 million for the three months ended March 31, 2009. Net income available to common shareholders was $1.4 million, or $0.47 per common share assuming dilution for the three months ended March 31, 2010, compared with $1.2 million, or $0.41 per common share assuming dilution for the three months ended March 31, 2009. The difference between reported net income and net income available to common shareholders is a result of the Series A Preferred Stock dividends and amortization of the Warrant related to the Corporations participation in the Capital Purchase Program. Significant factors influencing the first quarter of 2010 earnings included (1) the positive effects of the sustained lower interest rate environment on net interest margin, (2) the positive effects of strong demand for new and used vehicle loans, (3) the continued negative effects of the downturn in the real estate markets on provisions for loan and indemnification losses and expenses associated with nonperforming loans secured by real estate, as well as real estate acquired through foreclosure, and (4) the negative effects of lower consumer spending on fee income. The extent to which these and other factors affected each of our business segments varied and is discussed in Principal Business Activities below.
Retail Banking: During the first quarter of 2010, the Bank recorded a net loss of $361,000 compared to net income of $139,000 in 2009. The Banks net interest income increased $880,000 quarter over quarter primarily as a result of lower rates paid on deposits and borrowings and the repricing of loans and establishment of interest rate floors on loans at renewal. This increase was offset by (1) a $450,000 increase in the provision for loan losses, (2) a $921,000 increase in write-downs and expenses associated with foreclosed properties, and (3) a decline in overdraft charges on deposit accounts resulting from lower consumer spending and heightened customer sensitivity to incurring these fees as economic conditions deteriorated.
The Banks nonperforming assets were $19.0 million at March 31, 2010, compared to $17.2 million at December 31, 2009. Nonperforming assets at March 31, 2010 included $8.1 million in nonaccrual loans and $10.9 million in foreclosed properties. Nonaccrual loans primarily consisted of six relationships totaling $6.8 million of loans secured by residential properties and commercial loans secured by non-residential properties. Specific reserves of $1.4 million have been established for these loans. Management believes it has provided adequate loan loss reserves for these loans based on the estimated fair values of the collateral. Foreclosed properties at March 31, 2010 primarily consisted of residential properties associated with five commercial relationships and a non-residential property associated with one commercial relationship. These properties have been written down to their estimated fair values less selling costs.
Mortgage Banking: First quarter net income for C&F Mortgage was $158,000 in 2010 compared to $817,000 in 2009. The decrease in net income was due to the quarter-over-quarter decline in loan origination volumes. Loan originations during the three months ended March 31, 2010 were $134.5 million compared to $318.9 million in the first quarter of 2009. Loan originations at C&F Mortgage for refinancings decreased to $33.6 million from $220.0 million in the first quarter of 2009 when customers took advantage of the low interest rate environment in 2009. Loans originated for new and resale home purchases increased to $100.9 million for the first quarter of 2010 compared to $98.9 million for the first quarter of 2009.
The higher loan origination volume in 2009 resulted primarily from the lower interest rate environment during the first quarter of 2009 compared to 2010. The resulting decline in revenue from gains on sales of loans during the first quarter of 2010 was partially offset by (1) a $1.48 million decrease in commission-based and profitability-based personnel costs associated with lower loan origination volume and a decline in profitability of C&F Mortgage, (2) a $300,000 decrease in the provision for loan losses, and (3) a $172,000 decrease in the provision for indemnification losses. While we mitigate the risk of loan repurchase and indemnification liability by underwriting to the purchasers guidelines, we cannot eliminate the possibility that a prolonged period of payment defaults and foreclosures will result in an increase in requests for repurchases or indemnifications and the need for additional loan loss and indemnification loss provisions in the future.
Capital Management. Total shareholders equity increased $1.2 million to $90.1 million at March 31, 2010, compared to $88.9 million at December 31, 2009. Earnings during the first quarter of 2010 gave rise to this growth.
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