C&F Financial (US:CFFI)2021-11-01 16:00Financial Performance - Consolidated net income for the third quarter of 2021 was $7.8 million, or $2.16 per share, a 13.1% increase compared to $6.9 million, or $1.86 per share, in the third quarter of 2020[174]. - Adjusted net income for the third quarter of 2021 was $7.7 million, or $2.13 per share, representing a 12.0% increase from $6.9 million, or $1.85 per share, in the same period of 2020[175]. - The annualized return on average equity (ROE) for the third quarter of 2021 was 15.66%, up from 15.47% in the third quarter of 2020[174]. - Adjusted net income for the three months ended September 30, 2021, was $7,827,000, compared to $6,918,000 for the same period in 2020, reflecting a year-over-year increase of approximately 13.2%[360]. - Adjusted earnings per share for the three months ended September 30, 2021, was $2.13, up from $1.85 in the same period of 2020, representing a growth of 15.1%[360]. - The annualized return on average assets (ROA) for the three months ended September 30, 2021, was 1.44%, up from 1.39% in the same period of 2020, showing a positive trend[360]. Loan Performance - Average loans outstanding in the community banking segment increased by 5.7% for the third quarter of 2021 compared to the same period in 2020[180]. - The mortgage banking segment's net income decreased by 53% for the third quarter of 2021, with mortgage loan originations down 33% compared to the same period in 2020[180]. - Total loans amounted to $1,486,010,000 with an interest yield of 5.91% for the three months ended September 30, 2021[202]. - Total loans reached $1,507,412 thousand, with a net increase of $66,469 thousand, representing a growth rate of 4.65%[205]. - Average loans decreased $58.4 million to $1.49 billion for Q3 2021, while increasing $76.1 million to $1.51 billion for the first nine months of 2021 compared to the same periods in 2020[212]. - Mortgage loan originations decreased by 33.0% in the third quarter of 2021 compared to the same period in 2020, totaling $358,251,000[254]. Interest Income and Margin - Net interest income for the third quarter of 2021 was $21,749,000, compared to $21,009,000 for the same period in 2020[200]. - The consolidated annualized net interest margin was 4.25% for the third quarter of 2021, down from 4.54% in the third quarter of 2020[180]. - The interest rate spread decreased to 4.06% in Q3 2021 from 4.25% in Q3 2020[200]. - The company anticipates continued growth in net interest income driven by lower deposit costs and higher loan balances[209]. - Annualized net interest margin decreased 29 basis points to 4.25 percent for Q3 2021 compared to Q3 2020, primarily due to growth in lower yielding securities and cash reserves outpacing loan growth[211]. Asset Quality and Loan Losses - The provision for loan losses was $430,000 for the third quarter of 2021, a decrease of $2.9 million compared to the same period in 2020[180]. - The allowance for loan losses was $39,215,000, an increase from $37,417,000 in the previous period[202]. - The allowance for loan losses is deemed adequate to absorb probable losses inherent in the loan portfolio, with management monitoring economic recovery challenges[259]. - Total provision for loan losses decreased to $110, down from $9,550 in the previous period, indicating a significant reduction in expected loan losses[264]. - The ratio of annualized net charge-offs to average total loans outstanding for Community Banking was 0.01%, consistent with the previous period[264]. - The ratio of annualized net charge-offs to average total loans outstanding for Consumer Finance improved to (0.08)%, compared to 1.56% in the prior period, indicating better performance[264]. Noninterest Income and Expenses - Total noninterest income decreased $4.9 million, or 28.9 percent, in Q3 2021 compared to Q3 2020, primarily due to lower gains on sales of loans and lower mortgage banking fee income[223]. - Total noninterest expenses decreased by $2.2 million, or 8.5%, in Q3 2021 compared to Q3 2020, primarily due to lower salaries and benefits expense and mortgage banking loan processing expenses[227]. - Total noninterest expenses increased by $4.2 million, or 6.0%, in the first nine months of 2021 compared to the same period in 2020, driven by higher salaries and benefits expense and increased mortgage banking loan processing expenses[228]. Capital and Liquidity - Total equity increased to $205.2 million at September 30, 2021, from $194.5 million at December 31, 2020[181]. - The Corporation's total risk-based capital ratio was 15.5% as of September 30, 2021, exceeding the minimum requirement of 8.0%[346]. - The Corporation's Tier 1 leverage ratio was 9.7% as of September 30, 2021, above the minimum requirement of 4.0%[346]. - The Corporation's liquidity management aims to ensure continuous availability of funds to meet customer credit needs and demands from depositors and creditors[337]. Strategic Initiatives and Future Outlook - The company is focused on expanding its product offerings and branch consolidations as part of its strategic initiatives[365]. - The company anticipates potential impacts from the COVID-19 pandemic on asset quality and loan loss provisions, which may affect future financial performance[363]. - Forward-looking statements are based on management's beliefs and expectations, with no assurance that actual results will differ materially from those expressed[367].