C&F Financial Corporation Announces Record First Quarter Net Income

     C&F Financial Corporation Announces Record First Quarter Net Income

PR Newswire

WEST POINT, Va., April 25, 2013

WEST POINT, Va., April 25, 2013 /PRNewswire/ --C&F Financial Corporation
(NASDAQ: CFFI), the one-bank holding company for C&F Bank, today reported net
income of $4.0 million for the first quarter of 2013, compared with $3.8
million for the first quarter of 2012, a 6.00 percent increase. Net income
available to common shareholders for the first quarter of 2013 was $4.0
million, or $1.19 per common share assuming dilution, compared with $3.6
million, or $1.11 per common share assuming dilution, for the first quarter of
2012.

For the first quarter of 2013, the corporation's return on average common
equity and return on average assets, on an annualized basis, were 15.46
percent and 1.64 percent, respectively, compared to 16.73 percent and 1.60
percent, respectively, for the first quarter of 2012.

"We are very pleased to report net income of $4.0 million for the
corporation's first quarter of 2013," said Larry Dillon, president and chief
executive officer of C&F Financial Corporation. "All three of our major
business segments were profitable in the first quarter of 2013. As compared to
the same period in 2012, net income increased $389,000 to $696,000 at the
retail banking segment and $128,000 to $546,000 at the mortgage banking
segment. Although the consumer finance segment's net income declined
slightly, it still reported strong results with net income of $3.1 million for
the first quarter of 2013, compared to $3.3 million for the first quarter of
2012."

"The retail banking segment's net income benefited from (1) the effects of the
continued low interest rate environment on the cost of deposits, (2) lower
loan loss provision expense, (3) increased overdraft protection fees, and (4)
lower expenses due to the disposition of foreclosed properties," said Dillon.
"Offsetting these benefits was a decline in the retail banking segment's loans
to nonaffiliates resulting from weak loan demand in our markets in the current
economic environment and increased competition for loans in our markets. As
announced earlier this month, Gail Letts, former President and Chief Executive
Officer of the Central Virginia Region of Suntrust Bank, has been named C&F
Bank's new Richmond Regional President. With the addition of Gail, we are
taking steps to create a high-performing team to grow the Bank's commercial
and small business loan portfolios, diversify our loan portfolio, and expand
our deposit base in the Richmond markets."

"The retail banking segment's nonperforming assets at March 31, 2013 declined
$6.0 million, or 34 percent, since December 31, 2012. The decline was
primarily a result of the sale of notes relating to one commercial
relationship. While this note sale resulted in a $2.1 million charge-off, it
will reduce both time and expenses associated with our largest problem asset.
Loss reserves that had previously been recorded for this relationship were
adequate to cover the charge-off. The Bank's allowance for loan losses as a
percentage of total loans was 2.84 percent at March 31, 2013 compared to 3.38
percent at December 31, 2012."

"The mortgage banking segment's net income primarily benefited from an
increase in gains on sales of loans and ancillary fees resulting from higher
loan production and loan sales during the first quarter of 2013, compared to
the same period of 2012. As a result of higher loan production and increased
income, the mortgage banking segment incurred higher production-based and
income-based compensation expenses. Higher non-production personnel costs
have also been incurred in order to manage the increasingly complex regulatory
environment in which the mortgage banking segment operates."

"The consumer finance segment's net income for the first quarter of 2013
continued to benefit from loan growth and the low funding costs on its
variable-rate borrowings. The consumer finance segment's average loans
outstanding increased 12.8 percent during the first quarter of 2013, compared
to the first quarter of 2012. These benefits were offset by an increase in the
loan loss provision primarily resulting from higher charge-offs during the
first quarter of 2013, compared to the same period in 2012. This increase in
charge-offs was a result of the continued weak economic and employment
conditions and a decline in the resale value of repossessed vehicles. The
consumer finance segment's earnings during the first quarter of 2013 were
further affected by (1) a decline in average loan yields in response to loan
pricing strategies used by competitors to grow market share in automobile
financing, and (2) increased personnel expenses incurred to support loan
growth and segment expansion into new markets."

"Given the corporation's strong financial performance for the first quarter of
2013, as well as the initiatives that are underway for growing the Bank's
commercial and small business loan portfolios, we are excited about the
remainder of 2013," concluded Dillon.

Retail Banking Segment. C&F Bank's net income was $696,000 for the first
quarter of 2013, compared to net income of $307,000 for the first quarter of
2012.

The improvement in net income for the first quarter of 2013 resulted from (1)
the effects of the continued low interest rate environment on the cost of
deposits, (2) lower loan loss provision expense, (3) increased overdraft
protection fees, and (4) lower foreclosed properties expenses due to the
disposition of foreclosed properties. Partially offsetting these positive
factors were the negative effects of the following: (1) a decrease in average
loans to nonaffiliates to $393.7 million for the first quarter of 2013 from
$400.7 million for the first quarter of 2012, resulting from weak loan demand
in the Bank's markets in the current economic environment and intensified
competition for loans in the Bank's markets and (2) higher data processing
expenses related to expanding the banking services offered to customers and
improving operational efficiency.

The Bank's nonperforming assets were $11.7 million at March 31, 2013, compared
to $17.7 million at December 31, 2012. Nonperforming assets at March 31, 2013
included $6.4 million in nonaccrual loans, compared to $11.5 million at
December 31, 2012, and $5.3 million in foreclosed properties, compared to $6.2
million at December 31, 2012. Troubled debt restructurings were $6.9 million
at March 31, 2013, of which $4.7 million were included in nonaccrual loans, as
compared to $16.5 million of troubled debt restructurings at December 31,
2012, of which $9.8 million were included in nonaccrual loans. The decrease
in nonaccrual loans and troubled debt restructurings was primarily a result of
the sale of notes relating to one commercial relationship, $5.2 million of
which was a troubled debt restructuring on nonaccrual status at December 31,
2012. This note sale resulted in a $2.1 million charge-off, which reduced the
Bank's allowance for loan losses as a percentage of total loans to 2.84
percent at March 31, 2013 from 3.38 percent at December 31, 2012. Loss
reserves that had previously been recorded for this relationship were adequate
to cover the charge-off. Management believes it has provided adequate loan
loss reserves for the retail banking segment's loans. Foreclosed properties
at March 31, 2013 consist of both residential and non-residential properties.
These properties are evaluated regularly and have been written down to their
estimated fair values less selling costs.

Mortgage Banking Segment. C&F Mortgage Corporation's net income was $546,000
for the first quarter of 2013, compared to $418,000 for the first quarter of
2012.

The increase in net income for first quarter of 2013 resulted from increased
gains on sales of loans and ancillary loan production fees. Loan origination
volume increased to $178.2 million in the first quarter of 2013, compared to
$173.3 million in the first quarter of 2012, and loan sales volume increased
to $205.5 million in the first quarter of 2013, a 14.4 percent increase
compared to $179.6 million in the first quarter of 2012. In connection with
the increased originations and net income in the first quarter of 2013, the
mortgage banking segment incurred higher production-based and income-based
compensation expenses. Higher non-production personnel costs have also been
incurred in order to manage the increasingly complex regulatory environment in
which the mortgage banking segment operates.

Consumer Finance Segment. C&F Finance Company's net income was $3.1 million
for the first quarter of 2013, compared to $3.3 million for the first quarter
of 2012.

Average loans outstanding during the first quarter of 2013 increased $31.8
million, or 12.79 percent, compared to the first quarter of 2012.
Additionally, the consumer finance segment continued to benefit from the low
funding costs related to its variable-rate borrowings. Offsetting these items
were (1) increases in net charge-offs as a result of economic and employment
conditions and lower resale prices of repossessed automobiles, which resulted
in an $850,000 increase in the provision for loan losses during the first
quarter of 2013, (2) a decline in average loan yields in response to loan
pricing strategies used by competitors to grow market share in automobile
financing, and (3) an increase in personnel expenses incurred to support loan
growth and segment expansion into new markets.

The allowance for loan losses as a percentage of consumer finance loans at
March 31, 2013 was 7.97 percent, compared to 7.96 percent at December 31,
2012. Management believes that the current allowance for loan losses is
adequate to absorb probable losses in the consumer finance loan portfolio.

Capital and Dividends. The corporation's capital and liquidity positions
remain strong. The corporation declared a quarterly cash dividend of 29 cents
per common share during the first quarter of 2013. The Board of Directors of
the corporation continues to review the dividend payout ratio, which was 23.6
percent of net income available to common shareholders during the first
quarter of 2013, in light of changes in economic conditions, capital levels
and expected future levels of earnings.

About C&F Financial Corporation. C&F Financial Corporation's common stock is
listed for trading on The Nasdaq Stock Market under the symbol CFFI. The
common stock closed at a price of $39.87 per share on April 24, 2013. At
March 31, 2013, the book value of the corporation was $32.10 per common share.
The corporation's market makers include Davenport & Company LLC, McKinnon &
Company, Inc. and Scott & Stringfellow, Inc.

C&F Bank operates 18 retail bank branches located throughout the Hampton to
Richmond corridor in Virginia and offers full investment services through its
subsidiary C&F Investment Services, Inc. C&F Mortgage Corporation provides
mortgage, title and appraisal services through 18 offices located in Virginia,
Maryland, North Carolina, Delaware and New Jersey. C&F Finance Company
provides automobile loans in Virginia, Tennessee, Maryland, North Carolina,
Georgia, Ohio, Kentucky, Indiana, Alabama, Missouri, Illinois, Texas and West
Virginia through its offices in Richmond and Hampton, Virginia, in Nashville,
Tennessee and in Hunt Valley, Maryland.

Additional information regarding the corporation's products and services, as
well as access to its filings with the Securities and Exchange Commission, are
available on the corporation's web site at http://www.cffc.com.

Use of Certain Non-GAAP Financial Measures. The accounting and reporting
policies of the corporation conform to generally accepted accounting
principles ("GAAP") in the United States and prevailing practices in the
banking industry. However, certain non-GAAP measures are used by management to
supplement the evaluation of the corporation's performance. These include the
following fully-taxable equivalent ("FTE") measures: interest income on
loans-FTE, interest income on securities-FTE, total interest income-FTE and
net interest income-FTE, and the adjusted annualized net charge-off ratio for
the combined Retail Banking and Mortgage Banking segments.

Management believes that FTE measures provide users of the corporation's
financial information a presentation of the performance of interest earning
assets on a basis that is comparable within the banking industry. Management
reviews interest income of the corporation on an FTE basis. In this non-GAAP
presentation, interest income is adjusted to reflect tax-exempt interest
income on an equivalent before-tax basis. This measure ensures the
comparability of net interest income arising from both taxable and tax-exempt
sources.

Management believes that the presentation of the adjusted annualized net
charge-off ratio for the combined Retail Banking and Mortgage Banking segments
that excludes the effect of a significant nonrecurring charge-off recognized
in a single accounting period permits a comparison of asset quality related to
ongoing business operations, and it is on this basis that management
internally assesses the corporation's performance and establishes goals for
the future.

These non-GAAP financial measures should not be considered an alternative to
GAAP-basis financial statements, and other bank holding companies may define
or calculate these or similar measures differently. A reconciliation of the
non-GAAP financial measures used by the corporation to evaluate and measure
the corporation's performance to the most directly comparable GAAP financial
measures is presented below.

Forward-Looking Statements. Statements in this press release which express
"belief," "intention," "expectation," "potential" and similar expressions,
identify forward-looking statements. These forward-looking statements are
based on the beliefs of the corporation's management, as well as assumptions
made by, and information currently available to, the corporation's management.
These statements are inherently uncertain, and there can be no assurance that
the underlying assumptions will prove to be accurate. Actual results could
differ materially from those anticipated by such statements. Forward-looking
statements in this release include, without limitation, statements regarding
expected future financial performance, strategic business initiatives, asset
quality and future actions to manage asset quality, adequacy of reserves for
loan losses and capital levels. Factors that could have a material adverse
effect on the operations and future prospects of the corporation include, but
are not limited to, changes in: (1) interest rates, (2) general business
conditions, as well as conditions within the financial markets, (3) general
economic conditions, including unemployment levels, (4) the
legislative/regulatory climate, including the Dodd-Frank Wall Street Reform
and Consumer Protection Act and regulations promulgated thereunder, (5)
monetary and fiscal policies of the U.S. Government, including policies of the
Treasury and the Federal Reserve Board, (6) the value of securities held in
the corporation's investment portfolios, (7) the quality or composition of the
loan portfolios and the value of the collateral securing those loans, (8) the
inventory level and pricing of used automobiles, (9) the level of net
charge-offs on loans and the adequacy of our allowance for loan losses, (10)
the level of indemnification losses related to mortgage loans sold, (11)
demand for loan products, (12) deposit flows, (13) the strength of the
corporation's counterparties, (14) competition from both banks and non-banks,
(15) demand for financial services in the corporation's market area, (16)
technology, (17) reliance on third parties for key services, (18) the
commercial and residential real estate markets, (19) demand in the secondary
residential mortgage loan markets, (20) the corporation's expansion and
technology initiatives, and (21) accounting principles, policies and
guidelines. These risks and uncertainties should be considered in evaluating
the forward-looking statements contained herein, and readers are cautioned not
to place undue reliance on any forward-looking statements, which speak only as
of date of this release.



C&F Financial Corporation
Selected Financial Information
(in thousands, except for share and per share data)
Financial Condition                 3/31/13        12/31/12     3/31/12
                                    (unaudited)                 (unaudited)
Interest-bearing deposits
with other banks and
       federal funds sold           $  64,535    $  17,541  $  20,116
Investment securities -
available for sale, at              150,521        152,817      143,868
fair value
Loans held for sale, net            45,432         72,727       63,756
Loans, net:
       Retail Banking               380,457        382,284      391,794
       segment
       Mortgage Banking             2,348          1,947        2,047
       segment
       Consumer Finance             258,390        256,052      232,228
       segment
Federal Home Loan Bank              3,525          3,744        3,767
stock
Total assets                        993,377        977,018      945,471
Deposits                            696,464        686,184      660,554
Repurchase Agreements               18,612         14,139       9,798
Borrowings                          148,607        148,607      148,607
Shareholders' equity                104,914        102,197      99,469
                                                   For The
                                                   Quarter Ended
Results of Operations                              3/31/13      3/31/12
                                                   (unaudited)
Interest income                                    $  19,123  $  18,756
Interest expense                                   2,148        2,839
Provision for loan losses:
       Retail Banking                              400          750
       segment
       Mortgage Banking                            30           75
       segment
       Consumer Finance                            2,750        1,900
       segment
Other operating income:
       Gains on sales of                           4,797        4,103
       loans
       Other                                       3,397        3,280
Other operating expenses:
       Salaries and                                10,165       9,742
       employee benefits
       Other                                       5,960        5,315
Income tax expense                                 1,858        1,738
Net income                                         4,006        3,780
Net income available to                            4,006        3,634
common shareholders
Earnings per common share                          1.19         1.11
- assuming dilution
Earnings per common share                          1.23         1.14
- basic
Fully-taxable equivalent
(FTE) amounts*
       Interest income on                          17,829       17,490
       loans-FTE
       Interest income on                          1,870        1,884
       securities-FTE
       Total interest                              19,722       19,382
       income-FTE
       Net interest                                17,574       16,543
       income-FTE
       Assuming a tax rate of 34%. For more information about these non-GAAP
*      financial measures, please see "Use of Non-GAAP Financial Measures" and
       "Reconciliation of Certain Non-GAAP Financial Measures."
                                                   For The
                                                   Quarter Ended
Segment Information                                3/31/13      3/31/12
                                                   (unaudited)
Net income - Retail                                $    696 $    307
Banking
Net income - Mortgage                              546          418
Banking
Net income - Consumer                              3,050        3,264
Finance
Net loss - Other and                               (286)        (209)
Eliminations
Mortgage loan originations                         178,174      173,296
- Mortgage Banking
Mortgage loans sold -                              205,469      179,602
Mortgage Banking
                                                   For The
                                                   Quarter Ended
Average Balances                                   3/31/13      3/31/12
                                                   (unaudited)
Interest-bearing deposits
in other banks and
       federal funds sold                          $  41,032  $  15,383
Investment securities -
available for sale, at                             144,197      136,193
amortized cost
Loans held for sale                                52,607       59,421
Loans:
       Retail Banking                              393,706      400,725
       segment
       Mortgage Banking                            2,635        2,606
       segment
       Consumer Finance                            280,496      248,699
       segment
FHLB stock                                         3,727        3,767
Total earning assets                               918,400      866,794
Total assets                                       978,221      925,723
Time, checking and savings                         580,342      551,172
deposits
Borrowings                                         163,985      159,017
Total interest-bearing                             744,327      710,189
liabilities
Demand deposits                                    104,837      94,394
Shareholders' equity                               103,642      98,513
Asset Quality                       3/31/13        12/31/12     3/31/12
                                    (unaudited)                 (unaudited)
Retail and Mortgage
Banking Segments
Nonaccrual loans* - Retail          $   6,354    $  11,461  $  13,428
Banking
Nonaccrual loans -                  -              -            621
Mortgage Banking
Real estate owned**-                5,297          6,236        5,209
Retail Banking
Real estate owned -                 -              -            -
Mortgage Banking
       Total nonperforming          $  11,651    $  17,697  $  19,258
       assets
Accruing loans past due             $     362  $       $      
for 90 days or more                                 -         2
Troubled debt                       $   6,941   $  16,492  $  16,712
restructurings*
Total loans - Retail                $ 391,571     $ 395,664   $ 405,955
Banking segments
Total loans - Mortgage              $   2,771   $   2,340 $   2,602
Banking segments
Allowance for loan losses           $  11,114    $  13,381  $  14,161
- Retail Banking segments
Allowance for loan losses                          $    
- Mortgage Banking                  $     423  393          $     555
segments
Nonperforming assets to
loans and real estate               2.92%          4.38%        4.65%
owned
Allowance for loan losses to loans
- combined Retail Banking and
Mortgage
Banking segments                    2.93%          3.46%        3.60%
Allowance for loan losses to
nonaccrual loans - combined Retail
Banking and
Mortgage Banking segments           181.57%        120.18%      104.75%
Annualized net charge-offs to
average loans - combined Retail
Banking and
Mortgage Banking                    2.69%          0.72%        0.24%
segments***
*      Nonaccrual loans include nonaccrual troubled debt restructurings of
       $4.66 million at 3/31/13 and $9.80 million at 12/31/12.
**     Real estate owned is recorded at its estimated fair market value less
       cost to sell.
       The annualized net charge-off ratio of 2.69% for the quarter ended
***    3/31/13 includes a $2.1 million charge-off for one commercial
       relationship. This ratio is 0.62% excluding the $2.1 million
       charge-off. For more information about this non-GAAP financial measure,
       please see "Use of Non-GAAP Financial Measures" and "Reconciliation of
       Certain Non-GAAP Financial Measures."
Consumer Finance Segment
Nonaccrual loans                    $    675   $    655 $    375
Accruing loans past due             $        $       $      
for 90 days or more                 -               -          -
Total loans                         $ 280,774     $ 278,186   $ 252,269
Allowance for loan losses           $  22,384    $  22,133  $  20,041
Nonaccrual consumer finance
loans to total consumer finance     0.24%          0.24%        0.15%
loans
Allowance for loan losses
to total consumer finance           7.97%          7.96%        7.94%
loans
Annualized net charge-offs to
average total consumer finance      3.57%          2.76%        2.26%
loans
                                                   As Of and For The
                                                   Quarter Ended
Other Data and Ratios                              3/31/13      3/31/12
                                                   (unaudited)
Annualized return on                               1.64%        1.60%
average assets
Annualized return on                               15.46%       16.73%
average common equity
Annualized net interest                            7.75%        7.63%
margin
Dividends declared per                             $    0.29 $    0.26
common share
Weighted average common shares                     3,371,277    3,264,975
outstanding - assuming dilution
Weighted average common                            3,266,712    3,190,518
shares outstanding - basic
Market value per common                            $   40.95  $   29.76
share at period end
Book value per common                              $   32.10  $   27.97
share at period end
Price to book value ratio                          1.28         1.06
at period end
Price to earnings ratio at                         8.29         7.50
period end (ttm)



   C&F Financial Corporation
   Reconciliation of Certain Non-GAAP Financial Measures
   (in thousands)
                         For The Quarter Ended
                         3/31/13                           3/31/12
                         (unaudited)                       (unaudited)
                         Reported  FTE Adj.*     FTE       Reported  FTE Adj.*   FTE
   Interest              $        $        $        $        $       $ 
   income on             17,819   10           17,829   17,476    14       17,490
   loans
   Interest
   income on             1,281     589           1,870     1,272     612         1,884
   securities
   Total
   interest              19,123    599           19,722    18,756    626         19,382
   income
   Net Interest          16,975    599           17,574    15,917    626         16,543
   income
                         For The Quarter Ended
                         3/31/13                           3/31/12
                         (unaudited)                       (unaudited)
                                   Commercial                        Commercial
                         Reported  Loan          Adjusted  Reported  Loan        Adjusted
                                   Charge-off**                      Charge-off
   Average
   Retail                $         $        $         $         $       $
   Banking               393,706   -          393,706  400,725    -      400,725
   segment
   loans
   Average
   Mortgage              2,635     -             2,635     2,606     -           2,606
   Banking
   segment loans
   Average
   combined
   Retail        (A)     $         $        $         $         $       $
   Banking               396,341   -          396,341  403,331    -      403,331
   and Mortgage
   Banking loans
   Net                   $       $           $      $      $       $   
   charge-offs           2,667     (2,056)      611      239        -      239
   Annualization         4         4             4         4         4           4
   Factor
   Annualized            $        $           $       $      $       $   
   net           (B)     10,668   (8,224)      2,444     956        -      956
   charge-offs
   Annualized
   net
   charge-offs   (B)/(A) 2.69%                   0.62%     0.24%                 0.24%
   to
   average loans
*  Assuming a tax rate of 34%. For more information about these non-GAAP financial
   measures, please see "Use of Non-GAAP Financial Measures."
** This charge-off occurred in connection with the sale of notes relating to one
   commercial relationship, as described in this release.



SOURCE C&F Financial Corporation

Website: http://www.cffc.com
Contact: Tom Cherry, Executive Vice President & CFO, (804) 843-2360