- Net Income: $5.0 million for Q2 2024, down from $6.4 million in Q2 2023.
- Earnings Per Share (EPS): $1.50 for Q2 2024, compared to $1.84 for Q2 2023.
- Annualized Return on Average Equity: 9.31% for Q2 2024, down from 12.51% in Q2 2023.
- Average Loans: Increased by $158.6 million (13.2%) for Q2 2024 compared to Q2 2023.
- Average Deposits: Increased by $95.1 million (4.8%) for Q2 2024 compared to Q2 2023.
- Net Interest Income (FTE): $24.1 million for Q2 2024, slightly down from $24.6 million in Q2 2023.
- Dividend: Quarterly cash dividend of $0.44 per share, representing a payout ratio of 29.3% for Q2 2024.
On July 24, 2024, C&F Financial Corp (CFFI, Financial) released its 8-K filing for the second quarter of 2024. C&F Financial Corp is an American bank holding company that offers a range of banking and financial services through its subsidiaries. The company operates in three main segments: Community Banking, Mortgage Banking, and Consumer Finance, with the Community Banking segment generating the most revenue.
Performance Overview
For the second quarter of 2024, C&F Financial Corp reported a consolidated net income of $5.0 million, a decrease from $6.4 million in the same period of 2023. For the first six months of 2024, the company reported a net income of $8.5 million, down from $12.9 million in the first half of 2023. The decline in net income is attributed to increased costs and a challenging interest rate environment.
Segment Analysis
Community Banking Segment: The community banking segment reported net income of $4.6 million for Q2 2024, down from $5.6 million in Q2 2023. The segment saw an increase in average loans by $158.6 million (13.2%) and average deposits by $95.1 million (4.8%) compared to the same period last year. However, the segment faced higher costs of interest-bearing deposits and increased provisions for credit losses.
Mortgage Banking Segment: The mortgage banking segment reported net income of $376,000 for Q2 2024, up from $346,000 in Q2 2023. Despite the increase, the segment faced a decline in mortgage loan originations due to elevated mortgage interest rates and higher home prices. Mortgage loan originations for Q2 2024 were $146.0 million, compared to $155.1 million in Q2 2023.
Consumer Finance Segment: The consumer finance segment reported net income of $894,000 for Q2 2024, down from $1.1 million in Q2 2023. The segment experienced higher net charge-offs and an increase in delinquent loans, which impacted its performance. Average loans increased slightly by $2.1 million (less than 1%) compared to Q2 2023.
Financial Highlights
| Metric | Q2 2024 | Q2 2023 | H1 2024 | H1 2023 |
|---|---|---|---|---|
| Net Income (000's) | $5,034 | $6,384 | $8,469 | $12,881 |
| Earnings per Share | $1.50 | $1.84 | $2.50 | $3.70 |
| Return on Average Equity | 9.31% | 12.51% | 7.82% | 12.69% |
| Return on Average Assets | 0.82% | 1.06% | 0.69% | 1.08% |
Key Metrics and Financial Position
Interest income for Q2 2024 was $34.3 million, up from $30.7 million in Q2 2023, while interest expense increased to $10.5 million from $6.4 million. The provision for credit losses in the community banking segment was $450,000, up from $600,000 in Q2 2023. The consumer finance segment's provision for credit losses increased to $2.1 million from $1.1 million in Q2 2023.
Noninterest income for Q2 2024 was $7.3 million, slightly down from $7.8 million in Q2 2023. Noninterest expenses were $22.4 million, compared to $22.5 million in Q2 2023. The company's total assets stood at $2.49 billion as of June 30, 2024, up from $2.44 billion at the end of 2023.
Liquidity and Capital
As of June 30, 2024, C&F Financial Corp's uninsured deposits were approximately $592.2 million, representing 28.1% of total deposits. The company's liquid assets totaled $272.9 million, with borrowing availability of $594.2 million. Total borrowings increased to $118.8 million from $109.5 million at the end of 2023.
The company declared a quarterly cash dividend of $0.44 per share for Q2 2024, representing a payout ratio of 29.3% of earnings per share. Total consolidated equity increased by $1.6 million compared to December 31, 2023, primarily due to net income, share repurchases, and dividends paid.
Management Commentary
“We are pleased with the increase in earnings for the second quarter compared to the first quarter of this year,” commented Tom Cherry, President and Chief Executive Officer of C&F Financial Corporation. “Our cost of deposits has continued to increase, however, our net interest margin increased slightly as well when compared to the first quarter of 2024. The community banking segment continues to show strong loan and deposit growth. Higher costs of borrowings persist at the consumer finance segment, which is also seeing net charge-offs return to levels similar to those pre-pandemic. The mortgage banking segment continues to weather the higher interest rate environment and remains profitable. Despite the challenging interest rate environment, asset quality, liquidity and capital remain strong.”
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