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C&F Financial Corporation Announces Second Quarter Earnings and Stock Repurchase Authorization.

Article Excerpt
WEST POINT, Va., July 25 /PRNewswire-FirstCall/ -- C&F Financial Corporation , the one-bank holding company for C&F Bank, today reported net income of $2.85 million, or 94 cents per share assuming dilution, for the first six months of 2008, compared with net income of $4.47 million, or $1.39 per share assuming dilution, for the first half of 2007. The corporation's net income was $1.42 million, or 47 cents per share assuming dilution, for the second quarter of 2008, compared with $2.46 million, or 77 cents per share assuming dilution, for the second quarter of 2007, and compared with $1.43 million, or 47 cents per share assuming dilution, for the first quarter of 2008.

The corporation's return on average equity and return on average assets, on an annualized basis, were 8.67 percent and 0.71 percent, respectively, for the first six months of 2008, compared to 13.69 percent and 1.23 percent, respectively, for the first six months of 2007. For the second quarter of 2008, on an annualized basis, the corporation's return on average equity was 8.61 percent and its return on average assets was 0.69 percent, compared with a 15.40 percent return on average equity and a 1.34 percent return on average assets for the second quarter of 2007. The decline in these measures resulted from lower earnings in 2008, coupled with asset growth.

"While we are disappointed that our financial results are not better, our company continues to be profitable, well-capitalized and well-positioned from a liquidity standpoint, even in this extremely challenging environment for financial institutions," said Larry Dillon, president and chief executive officer of C&F Financial Corporation. "Our results for the second quarter and the first half of 2008 were affected by a lower net interest margin attributable to the earlier interest rate cuts by the Federal Reserve Bank and the strong competition for deposits resulting from the reduction in liquidity throughout the financial markets. The combination of declining short-term interest rates and increased competition for deposits resulted in a pricing disparity between loans and deposits, which lowered net interest margin at the retail banking segment. However, as fixed-rate deposits matured during the second quarter of 2008, our funding costs stabilized and began to decline, which relieved some pressure on net interest margin. In addition, we have diverse sources of liquidity, which provide flexibility in managing our funds and responding to fluctuations in deposits."

"The 2008 earnings decline was also attributable to significantly higher provisions for loan losses...

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