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C & F FINANCIAL CORP

CFFI
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Business Summary

C & F Financial Corporation is a bank holding company incorporated in March 1994 under the laws of the Commonwealth of Virginia, owning all of the stock of Citizens and Farmers Bank (C & F Bank), an independent commercial bank originally opened on January 22, 1927. The Corporation operates three principal business segments: community banking through C & F Bank, C & F Wealth Management Corporation, C & F Insurance Services, Inc., and CVB Title Services, Inc.; mortgage banking through C & F Mortgage Corporation and its 51%-owned subsidiary C & F Select LLC; and consumer finance through C & F Finance Company. The community banking segment provides services at its main office in West Point, Virginia, and through a branch network of over 30 branches located throughout Virginia, managing its commercial lending portfolio primarily through offices in Charlottesville, Fredericksburg, Richmond, Roanoke, and Williamsburg, Virginia. The mortgage banking segment originates residential mortgage loans for sale to investors in the secondary market through offices in Virginia and surrounding states, and also has a division, Lender Solutions, that provides mortgage loan origination functions as a service to third party lenders. The consumer finance segment is a regional finance company purchasing automobile loans primarily in the Mid-Atlantic, Midwest and Southern United States, serving customers in both the prime and non-prime markets, and also holds a marine and recreational vehicle loan portfolio that is expected to run off over the next several years.

In the community banking segment, the Corporation competes with large national and regional financial institutions, savings associations, other independent community banks, credit unions, mutual funds, brokerage firms, insurance companies, and non-bank financial technology firms, emphasizing customer service, long-term customer relationships, and traditional and digital products. The mortgage banking segment competes with large national and regional banks, credit unions, smaller regional mortgage lenders, small local broker operations, and internet lending platforms, competing by attracting top sales and operations talent, expanding into new markets, and utilizing technology. The consumer finance segment operates in a highly fragmented automobile finance market competing with captive finance affiliates of major automotive manufacturers, banks, savings associations, credit unions, and independent finance companies, competing predominantly by providing a high level of dealer service, building strong dealer relationships, offering flexible loan terms, and quickly funding loans.

The Corporation generates revenue through three principal business segments: community banking, mortgage banking, and consumer finance. Community banking revenues consist primarily of interest earned on loans and investment securities, fees earned on deposit accounts and debit card interchange, net revenues from wealth management services and insurance products, and investment income from equity interests. Mortgage banking revenues consist principally of gains on sales of loans to investors in the secondary mortgage market, loan origination fee income, interest earned on mortgage loans held for sale, and mortgage lender services income through Lender Solutions. Consumer finance revenues consist principally of interest earned on automobile, marine and RV loans, with the consumer finance segment typically charging interest at higher rates than traditional financing sources due to serving customers with higher credit risk.

The community banking segment, comprising C & F Bank, C & F Wealth Management, C & F Insurance, and CVB Title, reported net income of $27.2 million for the year ended December 31, 2025, compared to $20.3 million for 2024, with assets totaling $2.7 billion at December 31, 2025. The mortgage banking segment, conducted through C & F Mortgage and its 51%-owned subsidiary C & F Select LLC, reported net income of $2.3 million for 2025, compared to $1.1 million for 2024, with assets of $51.3 million at December 31, 2025. The consumer finance segment, conducted through C & F Finance, reported net income of $1.2 million for 2025, compared to $1.4 million for 2024, with assets of $469.9 million at December 31, 2025. The consumer finance segment's lending portfolio includes marine and recreational vehicle loan contracts, which averaged less than $50,000 , and the third-party administrator of this program significantly decreased sales of those loans to outside parties during 2025, leading to the segment ending future purchases under the program, with the portfolio expected to run off over the next several years.

During the year ended December 31, 2025, the Corporation issued new subordinated notes with an aggregate principal amount of $40.0 million in the second quarter of 2025 and concurrently repurchased its previously issued subordinated notes with aggregate principal amount of $20.0 million . The Corporation expanded into Southwest Virginia with the opening of a new loan production office in Roanoke in the third quarter of 2025. The Corporation's Board of Directors authorized a program, effective January 1, 2025 through December 31, 2025, to repurchase up to $5.0 million of common stock, under which no repurchases were made during 2025. In December 2025, the Board authorized a new program, effective January 1, 2026 through December 31, 2026, to repurchase up to $5.0 million of common stock. For the year ended December 31, 2025, the Corporation declared dividends totaling $1.84 per share, compared to $1.76 per share for 2024. The Corporation employed 575 total employees at December 31, 2025, with 23 percent having been employed for at least 15 years.

Consolidated net income for the year ended December 31, 2025 was $27.0 million , compared to $19.9 million for 2024, with earnings per share of $8.29 compared to $6.01 in the prior year. Return on average assets was 1.01% for 2025 versus 0.80% for 2024, and return on average equity was 11.11% versus 9.02% . Return on average tangible common equity was 12.53% for 2025 compared to 10.37% for 2024. Total equity was $262.3 million at December 31, 2025, compared to $227.0 million at December 31, 2024. The Corporation's tier 1 risk-based capital ratio was 12.2% and total risk-based capital ratio was 15.2% at December 31, 2025, compared to 11.9% and 14.1% respectively at December 31, 2024. Book value per share was $80.64 and tangible book value per share was $72.60 at December 31, 2025, compared to $70.00 and $61.86 respectively at December 31, 2024.

Business Outlook

The Corporation's 2026 Outlook states that the current economic environment is challenging across all levels, market conditions are shifting quickly, and competition is intensifying, but management believes the strong capital position, history of profitability, and diverse income stream sources position the company well. The Corporation remains focused on maintaining a strong balance sheet, managing margins, maintaining strong liquidity and capital positions, and pursuing disciplined growth. Key strategic initiatives for 2026 include organically growing earning assets and deposits, implementing a three-year strategic marketing plan developed with an industry-leading marketing firm to increase visibility in metro markets including Richmond, Williamsburg, Fredericksburg, Charlottesville and now Roanoke, building and strengthening customer relationships through enhanced cross-selling efforts, making substantial investments in training, benefits, and career growth resources to attract and retain talent, and evaluating potential use cases across all subsidiaries for the prudent adoption of Artificial Intelligence including robotic process automation, generative and agentic AI, and machine learning tools.

For the community banking segment, C & F Bank delivered loan growth of 9.4% and deposit growth of 8.1% in 2025, and organically growing earning assets and deposits remain key strategic initiatives for 2026. The Corporation recruited a team of seasoned commercial bankers in Southwest Virginia, which positions the company to compete in key new markets. C & F Wealth Management increased assets under management during 2025 and will continue to provide personalized client service while benefiting from a much closer relationship with subsidiaries through internal referrals.

For the mortgage banking segment, earnings improved at C & F Mortgage during 2025 with loan originations increasing by 28.9% . The Corporation onboarded two new teams of mortgage originators during 2025 and plans to continue to drive growth through strategic partnerships and to increase revenues at Lender Solutions, a division that provides certain mortgage loan origination functions as a service to other financial institutions.

For the consumer finance segment, despite elevated funding costs, heightened competition and credit normalization toward pre-pandemic levels, C & F Finance remained profitable in 2025. In 2026, the Corporation will continue to closely monitor economic and industry conditions, focus on additional efficiencies and leverage investments in technology to continue pursuing growth in the loan portfolio.

The Corporation is evaluating potential use cases across all subsidiaries and departments for the prudent adoption of Artificial Intelligence including robotic process automation, generative and agentic AI, and machine learning tools, and continues to simplify processes, modernize tools, and improve customer experience from digital onboarding to faster, more transparent workflows. The Corporation has strengthened capabilities and resources to combat an ever-changing fraud threat environment, primarily with stronger leverage and refinement of tools and technology, as well as proactive education and communication with customers. Credit discipline remains a top priority in 2026, with active monitoring of industry concentrations and market trends, especially in the commercial real estate and consumer portfolios.

The Corporation's Board of Directors authorized a program, effective January 1, 2026 through December 31, 2026, to repurchase up to $5.0 million of the Corporation's common stock. The Corporation declared dividends totaling $1.84 per share for the year ended December 31, 2025, and the Board of Directors continually reviews the amount of cash dividends per share and the resulting dividend payout ratio in light of changes in economic conditions, current and future capital levels and requirements and expected future earnings.

The Corporation believes that the effects of declining market interest rates, if continued into 2026, could adversely affect its net interest margin in the short term as its assets typically reprice downward more quickly than its deposits and borrowings. The majority of the Corporation's time deposits have repriced within the past year; however, the Corporation anticipates further declines in the cost of deposits due to the most recent decreases in market interest rates in September, October and December 2025. The Corporation also believes any such adverse impacts could be somewhat mitigated by renewals of fixed rate loans originated during periods of lower interest rates and purchases of securities available for sale with higher interest rates. The ultimate effect of market factors, including monetary policy actions taken by the Federal Reserve, on the Corporation's net interest margin will also depend on other factors, including the Corporation's ability to grow loans at the community banking segment and consumer finance segment, to compete for deposits, and the extent of its reliance on borrowings.

The Corporation notes that the current economic environment is challenging across all levels, market conditions are shifting quickly, and competition is intensifying. The Corporation faces headwinds from the sustained elevated level of mortgage interest rates, higher home prices and low levels of inventory affecting mortgage loan originations, though loan originations increased 28.9% for 2025 compared to 2024. The consumer finance segment faces elevated funding costs, heightened competition and credit normalization toward pre-pandemic levels. The Corporation also faces risks from potential deterioration in economic conditions, including prolonged periods of inflation that may impact profitability by negatively impacting fixed costs and expenses, increasing funding costs and expenses related to talent acquisition and retention, and negatively impacting demand for products and services, as well as increasing default rates on loans.

Risk Factors

The Corporation faces material risks from its concentration of commercial real estate loans, which at December 31, 2025 represented 46% of the loan portfolio, including construction loans, which carry larger balances and greater financial and credit risk due to dependency on profitability and cash flows of businesses or projects. The consumer finance automobile loan portfolio, representing 20% of the loan portfolio at December 31, 2025, exposes the Corporation to higher credit risk from customers with limited access to traditional financing, with net charge-offs of 2.59% in 2025 and risks from fluctuations in used automobile wholesale values and repossession agency availability. The Corporation is subject to interest rate risk, as the Federal Open Market Committee reduced the target range for the federal funds rate by a total of 75 bps from September 2025 to December 2025, and if market rates decline further, net interest margin could be adversely affected in the short term as assets typically reprice downward more quickly than deposits and borrowings. The Corporation also faces risk from the allowance for credit losses being particularly sensitive to changes in the actual and forecasted national unemployment rate, and if economic conditions worsen, the Corporation may increase its provision for credit losses, which would reduce earnings.

Management Priorities

Management's message emphasizes that the Corporation's primary financial goals are to maximize earnings and deploy capital in profitable growth initiatives that will enhance long-term shareholder value, tracking three primary financial performance measures: return on average assets, return on average equity, and growth in earnings. Management states that the Corporation believes its strong capital position, history of profitability, and diverse income stream sources position it well for challenging times ahead, and that the Corporation's diversified business model, including community banking, mortgage banking, and consumer finance, provides a strong foundation in times of volatility. Key strategic priorities emphasized for the period ahead include organically growing earning assets and deposits, implementing a three-year strategic marketing plan to increase visibility in metro markets including Richmond, Williamsburg, Fredericksburg, Charlottesville and now Roanoke, building and strengthening customer relationships through enhanced cross-selling efforts, making substantial investments in training, benefits, and career growth resources to attract and retain talent and developing the next generation of leaders, evaluating potential use cases for the prudent adoption of Artificial Intelligence, and maintaining credit discipline with active monitoring of industry concentrations and market trends especially in commercial real estate and consumer portfolios.

View Source Annual Report on SEC.gov ↗

References

  1. [1] Item 7, MD&A — Business Segments, Community Banking
  2. [2] Item 7, MD&A — Business Segments, Community Banking
  3. [3] Item 1, Business — Community Banking
  4. [4] Item 7, MD&A — Business Segments, Mortgage Banking
  5. [5] Item 7, MD&A — Business Segments, Mortgage Banking
  6. [6] Item 1, Business — Mortgage Banking
  7. [7] Item 7, MD&A — Business Segments, Consumer Finance
  8. [8] Item 7, MD&A — Business Segments, Consumer Finance
  9. [9] Item 1, Business — Consumer Finance
  10. [10] Item 1, Business — Consumer Finance
  11. [11] Item 7, MD&A — Overview
  12. [12] Item 7, MD&A — Overview
  13. [13] Item 5, Market for Registrant's Common Equity — Issuer Purchases of Equity Securities
  14. [14] Item 5, Market for Registrant's Common Equity — Issuer Purchases of Equity Securities
  15. [15] Item 7, MD&A — Capital Management and Dividends
  16. [16] Item 7, MD&A — Capital Management and Dividends
  17. [17] Item 1, Business — Human Capital Resources
  18. [18] Item 1, Business — Human Capital Resources
  19. [19] Item 7, MD&A — Overview
  20. [20] Item 7, MD&A — Overview
  21. [21] Item 7, MD&A — Overview
  22. [22] Item 7, MD&A — Overview
  23. [23] Item 7, MD&A — Overview, Table 1
  24. [24] Item 7, MD&A — Overview, Table 1
  25. [25] Item 7, MD&A — Overview, Table 1
  26. [26] Item 7, MD&A — Overview, Table 1
  27. [27] Item 7, MD&A — Overview, Table 1
  28. [28] Item 7, MD&A — Overview, Table 1
  29. [29] Item 7, MD&A — Capital Management and Dividends
  30. [30] Item 7, MD&A — Capital Management and Dividends
  31. [31] Item 7, MD&A — Capital Management and Dividends
  32. [32] Item 7, MD&A — Capital Management and Dividends
  33. [33] Item 7, MD&A — Capital Management and Dividends
  34. [34] Item 7, MD&A — Capital Management and Dividends
  35. [35] Item 7, MD&A — Capital Management and Dividends
  36. [36] Item 7, MD&A — Capital Management and Dividends
  37. [37] Item 7, MD&A — Capital Management and Dividends
  38. [38] Item 7, MD&A — Capital Management and Dividends
  39. [39] Item 7, MD&A — 2026 Outlook
  40. [40] Item 7, MD&A — 2026 Outlook
  41. [41] Item 7, MD&A — 2026 Outlook
  42. [42] Item 5, Market for Registrant's Common Equity — Issuer Purchases of Equity Securities
  43. [43] Item 7, MD&A — Capital Management and Dividends
  44. [44] Item 7, MD&A — Business Segments, Mortgage Banking
  45. [45] Item 1A, Risk Factors — Concentration of commercial real estate loans
  46. [46] Item 1A, Risk Factors — Concentration of consumer finance automobile loans
  47. [47] Item 7, MD&A — Asset Quality, Table 10
  48. [48] Item 7, MD&A — Net Interest Income and Noninterest Income
  49. [49] Item 7, MD&A — Net Interest Income, Table 2
  50. [50] Item 7, MD&A — Noninterest Income, Table 4
  51. [51] Item 7, MD&A — Net Interest Income and Noninterest Income
  52. [52] Item 7, MD&A — Net Interest Income, Table 2
  53. [53] Item 7, MD&A — Noninterest Income, Table 4
  54. [54] Item 7, MD&A — Overview
  55. [55] Item 7, MD&A — Overview
  56. [56] Item 7, MD&A — Overview
  57. [57] Item 7, MD&A — Overview
  58. [58] Item 7, MD&A — Net Interest Income, Table 2
  59. [59] Item 7, MD&A — Net Interest Income, Table 2
  60. [60] Item 7, MD&A — Asset Quality, Table 10
  61. [61] Item 7, MD&A — Asset Quality, Table 10
  62. [62] Item 7, MD&A — Business Segments, Community Banking
  63. [63] Item 7, MD&A — Business Segments, Consumer Finance
  64. [64] Item 7, MD&A — Noninterest Income, Table 4
  65. [65] Item 7, MD&A — Noninterest Income, Table 4
  66. [66] Item 7, MD&A — Noninterest Expense, Table 5
  67. [67] Item 7, MD&A — Noninterest Expense, Table 5
  68. [68] Item 7, MD&A — Income Taxes
  69. [69] Item 7, MD&A — Income Taxes
  70. [70] Item 7, MD&A — Income Taxes
  71. [71] Item 7, MD&A — Income Taxes
  72. [72] Item 7, MD&A — Business Segments, Community Banking, Table 6
  73. [73] Item 7, MD&A — Business Segments, Mortgage Banking, Table 7
  74. [74] Item 7, MD&A — Business Segments, Consumer Finance, Table 9
  75. [75] Item 7, MD&A — Asset Quality, Table 10
  76. [76] Item 7, MD&A — Asset Quality, Table 10

Analysis on 6/21/2026