C&F Financial Corp. :CFFI-US: Earnings Analysis: Q3, 2017 By the Numbers : November 22, 2017

C&F Financial Corp. reports financial results for the quarter ended September 30, 2017.

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


  • Summary numbers: Revenues of USD 26.94 million, Net Earnings of USD 3.02 million.
  • Net interest income margins narrowed from 75.24% to 75.03% compared to the same period last year.
  • Net loan assets changed 5.47% compared to same period last year and 3.11% from previous period, total deposits changed 4.91% compared to same period last year and 1.28% from previous period.
  • Year-on-year change in operating cash flow of 32.39% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Earnings decline from worsening in operating margins as well as one-time items.

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):

2017-09-30 2017-06-30 2017-03-31 2016-12-31 2016-09-30
Relevant Numbers (Quarterly)
Revenues (mil) 26.94 27.37 25.9 26.25 27.17
Revenue Growth (%YOY) -0.86 -1.59 4.15 4.24 7.3
Earnings (mil) 3.02 4.14 2.73 3.15 3.14
Earnings Growth (%YOY) -4.04 -12.73 12.67 36.45 -9.58
Net Margin (%) 11.2 15.12 10.55 11.99 11.57
EPS 0.87 1.19 0.78 0.91 0.91
Return on Equity (%) 2.07 2.89 1.95 2.26 2.27
Return on Assets (%) 0.82 1.13 0.75 0.88 0.89

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Market Share Versus Profits

Revenues History
Earnings History

CFFI-US’s change in revenue this period compared to the same period last year of -0.86% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that CFFI-US is holding onto its market share. Also, for comparison purposes, revenues changed by -1.57% and earnings by -27.11% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Earnings Growth Analysis

CFFI-US’s year-on-year earnings decline has been driven by the drop in net interest income margins from 75.24% to 75.03%. This fall in earnings would have been worse were it not for improvements in loan loss provisions, which helped improve the net interest income after provisions margins from 57.12% to 58.57%. In addition, loan loss provisions as a percentage of net interest income were 21.94% this period and 24.09% 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 (Qtr YOY)
Total Deposits Growth Rate History (Qtr 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 7.80% to 7.77%. On an absolute basis, net loan assets changed 5.47% compared to the same period last year and 3.11% from the previous period. Total deposits changed 4.91% compared to the same period last year and 1.28% from the previous period.

Cash Versus Earnings – Sustainable Performance?

It is important to examine a company�s cash versus earnings numbers to gauge whether its performance is sustainable.

CFFI-US’s change in operating cash flow of 32.39% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Operating Cash Flow Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Cash Flow based Earnings, Likely Non-cash Earnings, Low Cash Flow Base, Likely Undeclared Earnings


The company’s decline in earnings has been influenced by the following factors: (1) Contraction of operating margins from 15.88% to 15.77% and (2) One-time items that contributed to a decrease in pretax margins from 15.88% to 15.77%

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

Access our Ratings and Scores for C&F Financial Corp.

Company Profile

C&F Financial Corp. is a bank holding company, which engages in the provision of banking services to individuals and businesses. It operates its business through the following segments: Retail Banking; Mortgage Banking; Consumer Finance; and Other. The Retail Banking segment provides checking and savings deposit accounts; and business, real estate, development, mortgage, home equity, and installment loans. The Mortgage Banking segment offers ancillary mortgage loan origination services for loan settlement and residential appraisals. The Consumer Finance segment comprises of automobile financing through lending programs that are designed to serve customers in the non-prime market who have limited access to traditional automobile financing. The Others segment includes a full-service brokerage firm that derives revenues from offering investment services and insurance products. The company was founded in March 1994 and is headquartered in West Point, VA.

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