C&F Financial Corp. :CFFI-US: Earnings Analysis: 2016 By the Numbers : January 31, 2017

C&F Financial Corp. reports financial results for the year ended December 31, 2016.

We analyze the earnings along side the following peers of C&F Financial Corp. – PNC Financial Services Group, Inc., M&T Bank Corporation, BB&T Corporation, Wells Fargo & Company, Ameris Bancorp, IBERIABANK Corporation and Capital One Financial Corporation (PNC-US, MTB-US, BBT-US, WFC-US, ABCB-US, IBKC-US and COF-US) that have also reported for this period.


  • Net interest income margins narrowed from 79.09% to 75.85% compared to the same period last year.
  • Net loan assets changed 10.89% compared to same period last year and 10.89% from previous period, total deposits changed 4.31% compared to same period last year and 4.31% from previous period.
  • Earnings grew despite decline in operating margins and pre-tax margins compared to same period last year.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income (See complete table at the end of this report):

2016 2015 2014 2013 2012
Relevant Numbers (Annual)
Revenues 106.1 99.07 97.54 93.81 100.36
Revenue Growth (YOY) N/A N/A N/A N/A N/A
Earnings 13.46 12.53 12.35 14.4 16.38
Earnings Growth (YOY) 7.41 1.49 -14.28 -12.09 26.25
Net Margin 12.69 12.65 12.66 15.35 16.32
EPS 3.89 3.68 3.59 4.18 4.86
Return on Equity 9.96 9.85 10.45 13.39 16.21
Return on Assets 0.94 0.91 0.93 1.25 1.71

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Earnings Growth Analysis

CFFI-US‘s earnings rose year-on-year. But this growth has not come as a result of improvement in net interest income margins or any loan loss improvement activities in its operations. Net interest income margins were 75.85% compared to 79.09% in the immediate last period. Net interest income after provisions margins were 58.84% this period compared to 63.43% in the previous period. In addition, loan loss provisions as a percentage of net interest income were 22.42% this period and 19.80% a year ago.

Net Interest Income Margin Versus Loan Loss Provisions Margin

Quadrant label definitions. Hover to know more

High Risk; High Reward Loans, Risky Loan Portfolio, Conservative Loan Portfolio, Safer Loan Portfolio
Net Interest Income Margin History
Loan Loss Provisions Margin History

Net Loans and Total Deposits

A financial institution’s core operations represented by Net Interest Income and Net Interest Income after Provisions are dependent on both the growth and quality of its deposits as well as the growth and quality of its loans. A firm could boost its interest income in the short-term by just increasing its loan assets with less concern about their quality – but this would eventually lead to greater loan loss provisions. Similarly a drive to increase deposits could result in higher interest expenses and eventually effect the firm’s equity. It is thus important to understand net interest income performance in context to loan loss provisions, loan assets and deposits.

Loan Assets Growth Rate History (HY YOY)
Total Deposits Growth Rate History (HY YOY)

The firm’s decline in net interest income margins came despite the relative increase in the level of net loan assets. In addition, total deposits as a percentage of equity went from 8.19% to 8.04%. On an absolute basis, net loan assets changed 10.89% compared to the same period last year and 10.89% from the previous period. Total deposits changed 4.31% compared to the same period last year and 4.31% from the previous period.


Despite a decline in operating’s margins as well as a decline in pretax margins, the company’s earnings rose.

EBIT Margin History
PreTax Margin History
EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables

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Company Profile

C&F Financial Corp. operates as a bank holding company. It provides banking services to individuals and businesses through its subsidiaries. The company operates its business through three segments: Retail Banking, Mortgage Banking and Consumer Finance. The Retail Banking segment provides a range of banking services to individuals and businesses. These services include various types of checking and savings deposit accounts, as well as business, real estate, development, mortgage, home equity and installment loans. The Mortgage Banking segment provides ancillary mortgage loan origination services for loan settlement and residential appraisals. The Consumer Finance segment provides automobile financing through lending programs that are designed to serve customers in the non-prime market who have limited access to traditional automobile financing. C&F Financial was founded in March 1994 and is headquartered in West Point, VA.

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