C&F Financial Corp (CFFI, Financial) released its 8-K filing on October 29, 2024, reporting a decrease in net income for both the third quarter and the first nine months of 2024 compared to the same periods in 2023. The company, an American bank holding company, provides a range of banking and financial services through its subsidiaries, focusing on Community Banking, Mortgage Banking, and Consumer Finance.
Financial Performance and Challenges
For the third quarter of 2024, C&F Financial Corp reported a consolidated net income of $5.4 million, down from $5.8 million in the third quarter of 2023. For the first nine months of 2024, net income was $13.9 million, a decline from $18.7 million in the same period of the previous year. This decline is significant as it reflects the challenges faced by the company in maintaining profitability amidst a higher interest rate environment and competitive market conditions.
Key Financial Achievements
Despite the decline in net income, C&F Financial Corp achieved growth in loans and deposits. Average loans increased by 15.2% for the third quarter and 13.2% for the first nine months of 2024, driven by growth in construction, commercial real estate, and residential mortgage segments. Average deposits also saw an increase of 6.8% for the third quarter and 5.1% for the first nine months of 2024, primarily due to higher time deposits.
Income Statement and Balance Sheet Insights
Interest income for the third quarter of 2024 was $36.1 million, up from $31.7 million in the same quarter of 2023. However, interest expenses also rose significantly to $11.4 million from $7.2 million, impacting net interest income. The provision for credit losses increased in both the Community Banking and Consumer Finance segments, reflecting the growth in the loan portfolio and changes in credit quality.
| Financial Metric | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 |
|---|---|---|---|---|
| Net Income (000's) | $5,420 | $5,777 | $13,889 | $18,658 |
| Earnings per Share | $1.65 | $1.71 | $4.15 | $5.41 |
| Return on Average Equity | 9.74% | 11.28% | 8.47% | 12.22% |
Segment Performance
The Community Banking segment reported net income of $5.3 million for Q3 2024, down from $5.7 million in Q3 2023. The Mortgage Banking segment showed improvement with a net income of $351,000 compared to a net loss of $5,000 in the previous year. The Consumer Finance segment, however, experienced a decline in net income to $311,000 from $682,000 in Q3 2023.
“We are pleased with our results from the third quarter,” commented Tom Cherry, President and Chief Executive Officer of C&F Financial Corporation. “Both loans and deposits demonstrated solid growth, and the community banking segment showed increased earnings when compared to the previous quarter. Despite market and industry challenges, the consumer finance and mortgage banking segments remained profitable.”
Analysis and Outlook
C&F Financial Corp's performance in the third quarter and first nine months of 2024 highlights the challenges of navigating a high-interest rate environment and competitive pressures. The company's ability to grow its loan and deposit base is a positive indicator, but the increased interest expenses and provisions for credit losses pose challenges to profitability. The company's focus on maintaining strong asset quality, liquidity, and capital positions will be crucial in sustaining its financial health.
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Explore the complete 8-K earnings release (here) from C&F Financial Corp for further details.
