C&F Financial (CFFI) - 2021 Q4 - Annual Report

Financial Performance - Consolidated net income for 2021 was $29.1 million, a 29.9% increase from $22.4 million in 2020, with earnings per share rising to $7.95 from $6.06[206] - Adjusted net income for 2021 was $30.0 million, up 33.8% from $22.4 million in 2020, with adjusted earnings per share increasing to $8.20 from $6.06[211] - Return on average equity (ROE) for 2021 was 14.77%, compared to 12.54% in 2020, while return on average assets (ROA) improved to 1.34% from 1.14%[206] - Dividends declared for 2021 were $1.58 per share, a 3.9% increase from $1.52 per share in 2020[218] - Total equity at December 31, 2021, was $211.0 million, up from $194.5 million at the end of 2020, with tier I capital ratio at 13.0%[217] Loan Performance - Average loans outstanding in the community banking segment increased by 4.4%, and in the consumer finance segment, it rose by 8.6%[213] - Total loans amounted to $1,505,303 thousand in 2021, with a net interest margin of 5.86%, down from 6.18% in 2020[244] - Average loans increased by $30.6 million to $1.51 billion for the year ended December 31, 2021, compared to 2020[251] - Total loans increased to $1,410,060 thousand in 2021 from $1,352,406 thousand in 2020, representing a growth of approximately 4.3%[361] - Total loans in the Consumer Finance Segment increased to $368,194,000 in 2021 from $312,252,000 in 2020, an increase of 17.95%[370] Noninterest Income and Expenses - Total noninterest income decreased by $5.4 million, or 10.0 percent, for the year ended December 31, 2021, compared to 2020[263] - Total noninterest expense decreased by $2.0 million, or 2.0 percent, for the year ended December 31, 2021, compared to 2020[268] - Total noninterest income for the community banking segment was $15.2 million in 2021, compared to $16.4 million in 2020, a decline of 7.2%[279] - The mortgage banking segment's total noninterest income was $31.6 million in 2021, down from $35.8 million in 2020, a decrease of 11.8%[295] Asset Quality and Allowance for Loan Losses - The estimated allowance for loan losses varied between $36 million and $41 million as of December 31, 2021, reflecting management's judgment on probable losses in the loan portfolio[230] - The allowance for loan losses was $94,270 thousand, reflecting a slight increase from $97,602 thousand in 2020[244] - The allowance for loan losses (ALL) increased to $40,157 thousand in 2021 from $39,156 thousand in 2020, reflecting a slight increase of 2.6%[361] - The ratio of nonaccrual loans to total loans improved to 0.21% in 2021 from 0.25% in 2020[361] - The consumer finance segment's allowance for loan losses increased by $1.3 million to $24.8 million at December 31, 2021, from $23.5 million at December 31, 2020[350] Segment Performance - The community banking segment generated $46,567 thousand in income, while the consumer finance segment contributed $37,803 thousand in income for 2021[244] - The community banking segment reported net income of $14.1 million for the year ended December 31, 2021, compared to $6.1 million in 2020, representing a 131.1% increase[277] - The mortgage banking segment reported net income of $7.7 million for 2021, down from $10.7 million in 2020, a decrease of 28.0%[294] - Net income for the consumer finance segment rose to $10.0 million in 2021, compared to $7.6 million in 2020, marking a 31.6% increase[310] Management Outlook and Strategy - Management's outlook for 2022 is positive, focusing on growing the loan portfolio and expanding digital services despite ongoing challenges[225] - C&F Mortgage anticipates continued investment in technology to enhance the digital application process and plans to grow its Lender Solutions division in 2022[226] - C&F Finance plans to diversify its business by generating higher quality automobile loan contracts and expanding its marine and RV lending business in 2022[227] COVID-19 Impact - The Corporation granted loan modifications related to COVID-19 on aggregate balances of $103.6 million since the pandemic began, with $7.2 million in loans still under modification as of December 31, 2021[386] - Management continues to monitor credit risk related to COVID-19 loan modifications, but cannot predict future borrower needs for further modifications[386]