Financial Performance - Consolidated net income increased by $1.7 million to $7.113 million for Q3 2025 compared to Q3 2024, and by $6.4 million to $20.275 million for the first nine months of 2025 compared to the same period in 2024[160]. - Community banking segment net income rose to $7.378 million in Q3 2025 from $5.337 million in Q3 2024, and to $19.939 million for the first nine months of 2025 from $13.920 million in the same period in 2024[159]. - The Corporation's net income attributable to C&F Financial Corporation was $7,138,000, an increase of 30.8% compared to $5,455,000 for the same quarter in 2024[295]. - Total interest income for the quarter was $38,783,000, up 7.3% from $36,131,000 in the prior year quarter[296]. - Net interest income for the quarter increased to $27,174,000, representing a 10.1% rise from $24,689,000 in the same quarter of 2024[296]. - Net interest income increased by $2.9 million to $21.2 million for Q3 2025 and by $7.4 million to $60.3 million for the first nine months of 2025, driven by higher average balances of earning assets and an increase in net interest margin[198]. Asset and Equity Growth - Total equity increased by $26.9 million to $253.9 million at September 30, 2025, compared to $227.0 million at December 31, 2024[163]. - Total assets of the company reached $2,691.3 million as of September 30, 2025, up from $2,526.7 million a year earlier, representing a growth of 6.5%[173]. - The average tangible common equity for the quarter was $218,504,000, an increase from $195,526,000 in the same quarter of 2024[295]. - Tangible book value per share increased to $70.15 as of September 30, 2025, up from $61.86 a year earlier[297]. Loan and Deposit Activity - Community banking segment loans grew by $91.4 million, or 8.4% annualized, compared to December 31, 2024[166]. - Deposits increased by $127.2 million, or 7.8% annualized, compared to December 31, 2024[166]. - Total loans reached $2,039.5 million in Q3 2025, compared to $1,932.7 million in Q3 2024, marking an increase of 5.5%[173]. - Average loans increased by $106.8 million (5.5%) to $2.04 billion for Q3 2025 and $134.8 million (7.2%) to $2.00 billion for the first nine months of 2025 compared to the same periods in 2024[180]. Interest Income and Margin - The consolidated annualized net interest margin was 4.24% for Q3 2025, up from 4.13% in Q3 2024[166]. - The net interest margin for Q3 2025 improved to 4.24%, an increase of 11 basis points from 4.13% in Q3 2024[178]. - The interest rate spread for Q3 2025 was 3.53%, compared to 3.37% in Q3 2024, indicating improved profitability[178]. Noninterest Income and Expenses - Total noninterest income increased by $72,000 (1.0%) for Q3 2025 and $2.7 million (11.3%) for the first nine months of 2025 compared to the same periods in 2024[188]. - Total noninterest expenses increased by $1.2 million (5.2%) for Q3 2025 and $3.4 million (4.9%) for the first nine months of 2025 compared to the same periods in 2024[191]. Credit Quality and Losses - The allowance for credit losses was $40.4 million in Q3 2025, slightly down from $40.9 million in Q3 2024[173]. - The allowance for credit losses at September 30, 2025, was $39.446 million, down from $40.771 million at September 30, 2024[227]. - The ratio of annualized net charge-offs to average loans for the consumer finance segment was 0.63% for Q3 2025, compared to 0.69% for Q3 2024[227]. - The corporation's net charge-offs for the consumer finance segment increased to $4.266 million in Q3 2025 from $4.135 million in Q3 2024[227]. Strategic Initiatives - The Corporation expanded into Southwest Virginia with the opening of a new loan production office in Roanoke in July 2025[166]. - The corporation plans to expand into Southwest Virginia, which is expected to enhance future operations and financial performance[298]. Risk Management - Interest rate risk management is a priority, with the corporation employing simulation analysis to assess potential impacts on net interest income from interest rate fluctuations[305]. - The Corporation's current interest rate exposure is deemed manageable and within established risk guidelines[315].

Core Viewpoint - C&F Financial Corporation reported strong earnings growth in Q3 2025, with significant increases in net income and earnings per share, indicating robust profitability and a positive outlook for future performance [2][13]. Financial Performance - Consolidated net income for Q3 2025 was $7.1 million, a 31.2% increase from $5.4 million in Q3 2024 [2]. - Earnings per share (EPS) rose 32.1% to $2.18 from $1.65 year-over-year [2]. - For the first nine months of 2025, net income grew 46% year-over-year to $20.3 million, with EPS climbing to $6.22 from $4.15 [2]. - Annualized return on average assets improved to 1.06% from 0.86%, and return on average equity rose to 11.6% from 9.74% [2]. Community Banking Segment Performance - The community banking segment reported net income of $7.4 million, up from $5.3 million a year ago, driven by higher interest income and a net reversal of credit loss provisions [3][4]. - Average loans increased 9% year-over-year to $1.54 billion, while average deposits rose 6.7% to $1.72 billion [3]. - The net interest margin improved to 4.24% from 4.13% in the prior year [4]. Mortgage Banking Segment Momentum - The mortgage banking segment posted net income of $641,000, nearly double the $351,000 reported a year earlier, supported by higher gains on loan sales [5]. - Loan originations totaled $167 million, up 6.4% year-over-year, with year-to-date originations surging 24.4% compared to the same period in 2024 [5]. Consumer Finance Segment Trends - The consumer finance segment saw a decline in net income to $231,000 from $311,000, attributed to higher provisions for credit losses [7]. - Average loan balances fell 3.6% year-over-year, while delinquent loans rose to 4% of total loans from 3.49% a year earlier [7]. Liquidity and Capital Position - Total assets reached $2.71 billion, up from $2.55 billion a year ago, and total deposits grew 7.6% year-over-year to $2.30 billion [9]. - The total risk-based capital ratio improved to 15.3% from 14.1% at the end of 2024, with a Tier 1 leverage ratio of 10.0% [10]. Management Commentary - Management emphasized the strength of the diversified business model, highlighting loan and deposit growth in community banking and increased mortgage activity [11]. - The company is focused on responsible growth, supported by strong liquidity and capital position [11]. Other Developments - C&F Financial expanded into Southwest Virginia with a new loan production office in Roanoke [12]. - Unrealized losses on securities available for sale decreased from $23.7 million at year-end 2024 to $12.9 million [12].

Core Viewpoint - Zacks Investment Research has initiated coverage of C&F Financial Corporation (CFFI) with an "Outperform" rating, emphasizing the company's strong earnings momentum, disciplined loan growth, and attractive valuation compared to peers [1] Financial Performance - In Q2 2025, C&F Financial reported net income of $7.8 million, a 54% year-over-year increase, with a return on equity of 14.7% [2] - The net interest margin expanded to 4.27%, driven by effective deposit cost management and improved asset yields, indicating operational efficiency and balance sheet strength [2] Loan Growth and Asset Quality - Year-over-year loan growth of 10.3% reflects steady demand in key Virginia markets, including Richmond, Charlottesville, and Fredericksburg [3] - Diversification across community banking, mortgage banking, and consumer finance provides multiple income streams [3] - Non-performing loans are at just 0.07% of total loans, with strong reserves covering 4.85% of the portfolio, indicating solid asset quality [3] Capital Position and Dividends - CFFI maintains a robust capital position with a Tier 1 leverage ratio of 10% and nearly $984 million in liquidity, supporting growth and dividend sustainability [4] - The bank's quarterly dividend of 46 cents per share, with a conservative payout ratio under 20%, allows for continued dividend growth [4] Valuation - CFFI trades at 0.93X tangible book value and 8.53X earnings, which is a discount to both regional and sector averages, suggesting meaningful upside potential [7] Market Positioning - The disciplined credit culture, strong capital base, and diversified business model position C&F Financial to withstand potential challenges, including rising charge-offs and competitive pressures in lending [6]

Financial Performance - Consolidated net income for Q3 2025 was $7.1 million, a 31.2% increase from $5.4 million in Q3 2024[1] - Consolidated net income for the first nine months of 2025 reached $20.3 million, up 46.0% from $13.9 million in the same period of 2024[1] - Net income for Q3 2025 was $7.1 million, up from $5.4 million in Q3 2024, reflecting a year-over-year increase of 31.3%[32] - Net income attributable to C&F Financial Corporation for the quarter was $7,075 million, an increase of 31.4% from $5,389 million in the same quarter of 2024[36] - The net income for the quarter ended September 30, 2025, is $7,113,000, representing an increase from $5,420,000 for the same quarter in 2024[40] Loan and Deposit Growth - Community banking segment loans grew by $91.4 million, or 8.4% annualized, compared to December 31, 2024[3] - Total loans increased to $2,039,506 million for the quarter ended September 30, 2025, up from $1,932,693 million in the same quarter of 2024, reflecting a growth of 5.5%[33] - Mortgage banking segment loan originations increased by $10.1 million, or 6.4%, to $167.0 million in Q3 2025 compared to Q3 2024[7] - Total interest-bearing deposits rose to $1,722,589 million for the quarter, compared to $1,596,894 million in the same quarter of 2024, an increase of 7.9%[33] - Deposits increased by $127.2 million, or 7.8% annualized, compared to December 31, 2024[3] Credit Quality - The community banking segment recorded a net reversal of provision for credit losses of $100,000 in Q3 2025, compared to a provision of $700,000 in Q3 2024[3] - The allowance for credit losses was $22.3 million at September 30, 2025, representing 4.81% of total loans[14] - The allowance for credit losses (ACL) to total loans ratio was 1.11% as of September 30, 2025, down from 1.20% at the end of 2024[36] Capital and Equity - Total consolidated equity increased by $26.9 million to $253.9 million as of September 30, 2025, compared to December 31, 2024, primarily due to net income and lower unrealized losses in securities[19] - C&F Bank was categorized as well capitalized under regulatory standards as of September 30, 2025, exceeding all required capital ratios[21] - As of September 30, 2025, the total risk-based capital ratio for C&F Financial Corporation is 15.3%, up from 14.1% as of December 31, 2024[38] - The Tier 1 risk-based capital ratio for C&F Bank is 13.7% as of September 30, 2025, up from 12.3% as of December 31, 2024[38] Income and Earnings Metrics - Interest income for Q3 2025 was $38.8 million, compared to $36.1 million in Q3 2024, marking a growth of 7.3%[32] - Net interest income for the quarter was $27,492 million, compared to $24,975 million for the same period last year, representing an increase of 10.1%[33] - The net interest margin improved to 4.24% for the quarter ended September 30, 2025, up from 4.13% in the prior year[33] - The annualized return on average assets increased to 1.06% for the quarter, compared to 0.86% in the prior year[36] - The annualized return on average tangible common equity for the quarter ended September 30, 2025, is 13.07%, compared to 11.16% for the same quarter in 2024[40] Dividends and Shareholder Returns - The Corporation declared a quarterly cash dividend of $0.46 per share, representing a payout ratio of 21.1% of earnings per share for Q3 2025[18] - The company declared dividends of $0.46 per share for the quarter, compared to $0.44 per share in the same quarter of the previous year[36] Asset Growth - Total assets reached $2.71 billion as of September 30, 2025, an increase from $2.56 billion at December 31, 2024[32] - Total assets increased to $2,691,263 million as of September 30, 2025, compared to $2,526,720 million a year earlier, reflecting a growth of 6.5%[33] Other Financial Metrics - The book value per share was $78.23 as of September 30, 2025, while the tangible book value per share was $70.15[23] - The book value per share increased to $78.23 as of September 30, 2025, from $70.00 as of December 31, 2024[43] - The tangible book value per share rose to $70.15 as of September 30, 2025, compared to $61.86 as of December 31, 2024[43] - The price to earnings ratio (ttm) decreased to 8.31 as of September 30, 2025, from 11.86 as of December 31, 2024[38]

Group 1 - The FDIC released its Quarterly Banking Profile for Q2, providing national averages for various profitability metrics [1] - The report highlights the performance of banks during the second quarter, reflecting trends in the financial sector [1] Group 2 - The article emphasizes the belief in the efficiency of financial markets, suggesting that most stocks reflect their real current value [1] - It points out that the best investment opportunities often lie in stocks that are less followed by average investors or those that do not accurately represent market opportunities [1]

[PART I - Financial Information](index=3&type=section&id=PART%20I%20-%20Financial%20Information) [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements for C&F Financial Corporation as of June 30, 2025, and for the three and six-month periods then ended, including balance sheets, statements of income, comprehensive income, equity, and cash flows, along with detailed notes [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets increased to $2.69 billion from $2.56 billion at year-end 2024, driven by growth in loans and securities, while total liabilities rose to $2.45 billion, primarily due to an increase in deposits and borrowings, and total equity grew to $240.9 million from $227.0 million Consolidated Balance Sheet Highlights (Unaudited) | (In thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$2,686,392** | **$2,563,374** | | Loans, net | $1,952,087 | $1,880,311 | | Securities—available for sale | $434,506 | $418,625 | | Total cash and cash equivalents | $80,195 | $65,586 | | **Total Liabilities** | **$2,445,476** | **$2,336,404** | | Total deposits | $2,256,314 | $2,170,860 | | Total borrowings (Short & Long-term) | $120,660 | $97,152 | | **Total Equity** | **$240,916** | **$226,970** | [Consolidated Statements of Income](index=5&type=section&id=Consolidated%20Statements%20of%20Income) For the second quarter of 2025, net income attributable to the Corporation was $7.7 million, or $2.37 per diluted share, a significant increase from $5.0 million, or $1.50 per diluted share, in Q2 2024, with six-month net income reaching $13.1 million, up from $8.4 million in the prior year period, driven by higher net interest income and noninterest income Financial Performance (Unaudited) | (In thousands, except per share) | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $26,508 | $23,828 | $51,518 | $46,986 | | Provision for Credit Losses | $2,100 | $2,550 | $5,100 | $6,050 | | Noninterest Income | $9,848 | $7,324 | $17,421 | $14,816 | | Noninterest Expenses | $24,630 | $22,373 | $47,689 | $45,523 | | **Net Income Attributable to C&F** | **$7,691** | **$5,007** | **$13,059** | **$8,408** | | **Net Income Per Share (diluted)** | **$2.37** | **$1.50** | **$4.03** | **$2.50** | [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash used in operating activities was $1.2 million, a shift from $2.6 million provided in the same period of 2024, with net cash used in investing activities increasing to $89.6 million, and net cash provided by financing activities reaching $105.4 million, resulting in a net increase in cash and cash equivalents of $14.6 million Six Months Ended June 30, (In thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(1,177) | $2,590 | | Net cash used in investing activities | $(89,612) | $(72,222) | | Net cash provided by financing activities | $105,398 | $39,139 | | **Net increase (decrease) in cash** | **$14,609** | **$(30,493)** | [Notes to Consolidated Interim Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Interim%20Financial%20Statements) The notes provide detailed information on the Corporation's accounting policies and business operations, including the composition of its securities and loan portfolios, activity in the allowance for credit losses, goodwill stability, segment performance, and derivative instrument usage, notably the issuance of $40.0 million in new subordinated notes and repurchase of $20.0 million of existing notes on June 6, 2025 - The Corporation operates through three main segments: C&F Bank (commercial banking), C&F Mortgage (mortgage banking), and C&F Finance (consumer finance for automobile, marine, and RV loans)[25](index=25&type=chunk)[26](index=26&type=chunk) - On June 6, 2025, the Corporation issued **$40.0 million** of 7.50% subordinated notes due 2035 and concurrently repurchased its **$20.0 million** of 4.875% subordinated notes due 2030[29](index=29&type=chunk) Loan Portfolio Composition (in thousands) | Loan Class | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Commercial real estate | $763,624 | $734,182 | | Commercial business | $110,932 | $104,947 | | Construction - commercial real estate | $141,314 | $132,717 | | Residential mortgage | $313,273 | $308,809 | | Consumer finance - automobiles | $397,365 | $398,651 | | **Total Loans (Gross)** | **$1,991,665** | **$1,920,398** | Allowance for Credit Losses Activity - Six Months Ended June 30, 2025 (in thousands) | Category | Commercial | Consumer | Consumer Finance | Total | | :--- | :--- | :--- | :--- | :--- | | Balance at Dec 31, 2024 | $13,347 | $4,032 | $22,708 | $40,087 | | Provision | $(324) | $174 | $5,300 | $5,150 | | Net Charge-offs | $3 | $(39) | $(5,623) | $(5,659) | | **Balance at June 30, 2025** | **$13,026** | **$4,167** | **$22,385** | **$39,578** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=51&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the significant increase in consolidated net income for Q2 and H1 2025, driven by strong performance in the community and mortgage banking segments, with key factors including loan growth, increased mortgage origination volume, and a higher net interest margin, covering detailed segment performance, asset quality trends, liquidity management, and capital resources, including a new subordinated debt issuance and an ongoing share repurchase program Financial Performance Highlights | (In thousands, except per share) | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Consolidated net income | $7,767 | $5,034 | $13,162 | $8,469 | | Earnings per share - diluted | $2.37 | $1.50 | $4.03 | $2.50 | | Annualized return on average assets | 1.18% | 0.82% | 1.01% | 0.69% | | Annualized return on average equity | 13.06% | 9.31% | 11.23% | 7.82% | - Key operational highlights for H1 2025 include **10.6% annualized loan growth** in the community banking segment, a **$85.5 million increase in deposits**, and a rise in the consolidated annualized net interest margin to **4.27%** for Q2 2025[163](index=163&type=chunk) [Results of Operations](index=56&type=section&id=Results%20of%20Operations) Net interest income (tax-equivalent) increased to $26.8 million in Q2 2025 from $24.1 million in Q2 2024, with the net interest margin expanding to 4.27%, driven by higher earning asset yields and balances, while noninterest income grew 34.5% led by mortgage banking gains, and noninterest expense rose 10.1%, mainly from deferred compensation liabilities and marketing initiatives Change in Net Interest Income (Tax-Equivalent) - Q2 2025 vs Q2 2024 | (In thousands) | Increase (Decrease) Due to Rate | Increase (Decrease) Due to Volume | Total Increase (Decrease) | | :--- | :--- | :--- | :--- | | Total interest income | $1,056 | $2,055 | $3,111 | | Total interest expense | $(441) | $856 | $415 | | **Change in net interest income** | **$1,497** | **$1,199** | **$2,696** | - Total noninterest income increased by **$2.5 million (34.5%)** in Q2 2025 compared to Q2 2024, primarily due to higher mortgage loan production volume, which led to increased gains on sales of loans and mortgage banking fee income[190](index=190&type=chunk) - Total noninterest expenses rose by **$2.3 million (10.1%)** in Q2 2025, mainly due to fluctuations in deferred compensation liabilities (offset in noninterest income) and higher marketing expenses from a strategic initiative started in late 2024[193](index=193&type=chunk) [Business Segments](index=63&type=section&id=Business%20Segments) In Q2 2025, the Community Banking segment's net income rose to $7.1 million from $4.6 million year-over-year, driven by higher net interest income and lower credit provisions, while the Mortgage Banking segment's net income increased to $985,000 from $376,000, fueled by a 46.2% rise in loan originations, and the Consumer Finance segment's net income fell to $539,000 from $894,000, impacted by higher credit provisions and lower interest income Net Income by Segment - Q2 2025 vs Q2 2024 (in thousands) | Segment | Q2 2025 Net Income | Q2 2024 Net Income | | :--- | :--- | :--- | | Community Banking | $7,116 | $4,571 | | Mortgage Banking | $985 | $376 | | Consumer Finance | $539 | $894 | - Mortgage loan originations increased **46.2%** to **$213.5 million** in Q2 2025 from **$146.0 million** in Q2 2024, despite elevated mortgage interest rates[209](index=209&type=chunk)[212](index=212&type=chunk) - The Consumer Finance segment's net charge-offs increased, leading to a higher provision for credit losses of **$2.4 million** in Q2 2025 compared to **$2.1 million** in Q2 2024[219](index=219&type=chunk) [Asset Quality](index=71&type=section&id=Asset%20Quality) Overall asset quality remains sound, with the consolidated allowance for credit losses (ACL) to total loans at 1.99% at June 30, 2025, down from 2.09% at year-end 2024, while nonaccrual loans increased to $1.8 million (0.09% of total loans) from $0.9 million (0.05%), and the Community Banking segment saw a net reversal of credit provisions, while the Consumer Finance segment's provision increased due to higher net charge-offs (2.42% annualized for H1 2025) Consolidated Credit Ratios | Ratio | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Nonaccrual loans to total loans | 0.09% | 0.05% | | ACL to total loans | 1.99% | 2.09% | | ACL to nonaccrual loans | 2,233.52% | 4,233.05% | - The Community Banking segment's nonaccrual loans increased to **$1.1 million** from **$333,000** at year-end 2024, mainly due to the downgrade of one residential mortgage relationship[252](index=252&type=chunk) - The Consumer Finance segment's annualized net charge-off rate was **2.42%** for the first six months of 2025, up from **2.21%** for the same period in 2024, due to an increase in delinquent loans and repossessions[254](index=254&type=chunk) [Financial Condition](index=80&type=section&id=Financial%20Condition) Total assets grew by $123.0 million to $2.7 billion in the first half of 2025, funded by an $85.5 million increase in deposits and a $23.5 million increase in borrowings, with loans held for investment increasing by $71.8 million, and the Corporation enhancing its capital structure by issuing $40.0 million in new subordinated debt and repurchasing $20.0 million of older notes, maintaining strong liquidity with $950.1 million in liquid assets and available funding significantly exceeding uninsured deposits - Total assets increased by **$123.0 million** since December 31, 2024, reaching **$2.7 billion**, primarily due to loan and deposit growth[259](index=259&type=chunk) - Deposits increased by **$85.5 million** in the first six months of 2025, with growth across noninterest-bearing demand, savings, and time deposit categories[279](index=279&type=chunk) - On June 6, 2025, the Corporation issued **$40.0 million** in new 7.50% fixed-to-floating rate subordinated notes and repurchased **$20.0 million** of existing 4.875% notes, strengthening its Tier 2 capital[283](index=283&type=chunk) - As of June 30, 2025, uninsured deposits were approximately **$677.7 million (30.0% of total deposits)**. Excluding secured municipal and intercompany deposits, the uninsured amount was **$536.1 million**, which was covered **1.77 times** by available liquidity of **$950.1 million**[289](index=289&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=97&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The Corporation's primary market risk is interest rate volatility, monitored through simulation analysis and Economic Value of Equity (EVE) analysis, with a hypothetical 100 basis point rise in rates projected to increase net interest income by 2.05% over 12 months, while a 100 basis point drop would decrease it by 3.63%, and EVE analysis showing sensitivity to both rising and falling rates, with a greater negative impact from falling rates compared to the prior year-end One-Year Net Interest Income Simulation as of June 30, 2025 | Assumed Market Interest Rate Shift | Percentage Change | | :--- | :--- | | -300 BP shock | (11.94)% | | -200 BP shock | (7.90)% | | -100 BP shock | (3.63)% | | +100 BP shock | 2.05% | | +200 BP shock | 4.10% | | +300 BP shock | 6.14% | Static EVE Change as of June 30, 2025 | Assumed Market Interest Rate Shift | Percentage Change | | :--- | :--- | | -300 BP shock | (10.92)% | | -200 BP shock | (5.24)% | | -100 BP shock | (1.45)% | | +100 BP shock | (0.08)% | | +200 BP shock | (0.50)% | | +300 BP shock | (1.17)% | - The Corporation uses interest rate swaps to manage interest rate risk, including cash flow hedges to convert variable-rate trust preferred notes to fixed rates, and back-to-back swaps with commercial loan customers[325](index=325&type=chunk) [Controls and Procedures](index=101&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the Corporation's disclosure controls and procedures and concluded they were effective as of June 30, 2025, with no material changes in the Corporation's internal control over financial reporting during the second quarter of 2025 - The CEO and CFO concluded that the Corporation's disclosure controls and procedures were effective as of June 30, 2025[328](index=328&type=chunk) - No material changes to internal control over financial reporting occurred during the quarter ended June 30, 2025[329](index=329&type=chunk) [PART II - Other Information](index=102&type=section&id=PART%20II%20-%20Other%20Information) [Legal Proceedings](index=102&type=section&id=Item%201.%20Legal%20Proceedings) As of June 30, 2025, the Corporation is not involved in any material pending or threatened legal proceedings outside of those occurring in the ordinary course of business - The Corporation is not involved in any material pending or threatened legal proceedings other than those in the ordinary course of business[331](index=331&type=chunk) [Risk Factors](index=102&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors disclosed in the Corporation's Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes in risk factors have occurred since the 2024 Annual Report on Form 10-K[332](index=332&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=102&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The Corporation has a share repurchase program authorizing up to $5.0 million in repurchases for 2025, with no shares repurchased under this program during the second quarter of 2025, and a total of 145 shares withheld to satisfy employee tax obligations upon vesting of restricted stock - The Board authorized a **$5.0 million** share repurchase program for 2025. No shares were repurchased under this program in Q2 2025[333](index=333&type=chunk) - During Q2 2025, **145 shares** were withheld from employees to satisfy tax withholding obligations related to vested restricted shares[335](index=335&type=chunk) [Other Information](index=102&type=section&id=Item%205.%20Other%20Information) During the second quarter of 2025, no directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement - No directors or officers adopted, modified, or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement in Q2 2025[336](index=336&type=chunk) [Exhibits](index=104&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the report, including the form of the new Subordinated Note, CEO/CFO certifications, and financial statements formatted in Inline XBRL - Key exhibits include the Form of Subordinated Note (4.1), CEO/CFO certifications (31.1, 31.2, 32), and Inline XBRL financial data (101)[338](index=338&type=chunk)

[Executive Summary and Financial Highlights](index=1&type=section&id=Executive%20Summary%20and%20Financial%20Highlights) [Overall Performance](index=1&type=section&id=Overall%20Performance) Consolidated net income for Q2 and 6M 2025 significantly increased, driven by community and mortgage banking segments Consolidated Net Income and Earnings Per Share | Metric | Q2 2025 | Q2 2024 | YoY Change (%) | 6M 2025 | 6M 2024 | YoY Change (%) | | :--------------------------------- | :------ | :------ | :------------- | :------ | :------ | :------------- | | Consolidated net income (Millions USD) | $7.767 | $5.034 | 54.3% | $13.162 | $8.469 | 55.4% | | Earnings per share - basic and diluted | $2.37 | $1.50 | 58.0% | $4.03 | $2.50 | 61.2% | | Annualized return on average assets | 1.18% | 0.82% | 0.36 pp | 1.01% | 0.69% | 0.32 pp | | Annualized return on average equity | 13.06% | 9.31% | 3.75 pp | 11.23% | 7.82% | 3.41 pp | | Annualized return on average tangible common equity | 14.70% | 10.72% | 3.98 pp | 12.72% | 9.01% | 3.71 pp | - President and CEO Tom Cherry highlighted impressive loan and deposit growth in community banking, increased loan originations in mortgage banking, and progress in operational efficiency and technology investments in the consumer finance segment[2](index=2&type=chunk) - The Corporation is optimistic about the second half of the year, anticipating continued organic loan and deposit growth and benefiting from recent strategic expansion into Southwest Virginia, including key markets like Roanoke, Lynchburg, Danville, Martinsville, and Blacksburg[3](index=3&type=chunk) [Key Operational Highlights](index=1&type=section&id=Key%20Operational%20Highlights) Operational highlights include strong community banking loan and deposit growth, increased mortgage originations, and improved net interest margin - Community banking segment loans grew **$76.7 million**, or **10.6% annualized**, compared to December 31, 2024, and **$143.4 million**, or **10.3%**, compared to June 30, 2024[4](index=4&type=chunk) - Consumer finance segment loans decreased **$5.4 million**, or **2.3% annualized**, compared to December 31, 2024, and **$17.0 million**, or **3.5%**, compared to June 30, 2024[4](index=4&type=chunk) - Deposits increased **$85.5 million**, or **7.9% annualized**, compared to December 31, 2024, and **$150.3 million**, or **7.1%**, compared to June 30, 2024[4](index=4&type=chunk) - Consolidated annualized net interest margin was **4.27%** for the second quarter of 2025, compared to **4.12%** for the second quarter of 2024 and **4.16%** in the first quarter of 2025[4](index=4&type=chunk) - Mortgage banking segment loan originations increased **$67.5 million**, or **46.2%**, to **$213.5 million** for the second quarter of 2025 compared to the second quarter of 2024, and increased **$99.8 million**, or **87.7%**, compared to the first quarter of 2025[8](index=8&type=chunk) [Segment Performance Review](index=2&type=section&id=Segment%20Performance%20Review) [Community Banking Segment](index=2&type=section&id=Community%20Banking%20Segment) The community banking segment saw substantial net income growth, driven by increased average loans and deposits, higher interest-earning asset yields, and a net reversal of provision for credit losses Community Banking Segment Performance (Millions USD) | Metric | Q2 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :--------------------------------- | :------ | :------ | :------ | :------ | | Net income | $7.1 | $4.6 | $12.6 | $8.6 | | Provision for credit losses | ($0.3) | $0.45 | ($0.2) | $0.95 | - Average loans increased **$139.6 million (10.3%)** for Q2 2025 and **$152.5 million (11.5%)** for 6M 2025 compared to the same periods in 2024, primarily due to growth in construction, construction real estate, and land acquisition and development[5](index=5&type=chunk) - Average deposits increased **$156.9 million (7.6%)** for Q2 2025 and **$144.4 million (7.0%)** for 6M 2025 compared to the same periods in 2024, mainly due to higher balances of time deposits, noninterest-bearing demand deposits, and saving and money market accounts[5](index=5&type=chunk) - Nonaccrual loans were **$1.1 million** at June 30, 2025, up from **$0.333 million** at December 31, 2024, primarily due to the downgrade of one residential mortgage relationship. The allowance for credit losses decreased to **1.12%** of total loans from **1.20%**[7](index=7&type=chunk)[9](index=9&type=chunk) [Mortgage Banking Segment](index=3&type=section&id=Mortgage%20Banking%20Segment) The mortgage banking segment reported significant net income and loan origination increases, despite sustained elevated mortgage interest rates, higher home prices, and low inventory Mortgage Banking Segment Performance (Millions USD) | Metric | Q2 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :--------------------------------- | :------ | :------ | :------ | :------ | | Net income | $0.985 | $0.376 | $1.4 | $0.67 | - Mortgage loan originations increased **46.2%** for Q2 2025 and **36.2%** for 6M 2025 compared to the same periods in 2024, reaching **$213.5 million** in Q2 2025 (comprised of **$197.2 million** home purchases and **$16.3 million** refinancings)[10](index=10&type=chunk) - The segment recorded a reversal of provision for indemnification losses of **$35,000** for Q2 2025 and **$60,000** for 6M 2025, compared to **$135,000** and **$275,000** in the same periods of 2024, with the decrease in reversals attributed to increased mortgage loan originations in 2025[11](index=11&type=chunk) [Consumer Finance Segment](index=3&type=section&id=Consumer%20Finance%20Segment) The consumer finance segment experienced a decrease in net income, primarily due to lower average loan balances and higher provision for credit losses driven by increased net charge-offs Consumer Finance Segment Performance (Millions USD) | Metric | Q2 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :--------------------------------- | :------ | :------ | :------ | :------ | | Net income | $0.539 | $0.894 | $0.765 | $0.831 | | Provision for credit losses | $2.4 | $2.1 | $5.3 | $5.1 | - Average loans decreased **$14.1 million (2.9%)** for Q2 2025 and **$11.2 million (2.4%)** for 6M 2025 compared to the same periods in 2024[12](index=12&type=chunk) - Net charge-offs at an annualized rate were **2.42%** of average total loans for 6M 2025, up from **2.21%** for 6M 2024, primarily due to an increase in delinquent loans, repossessions, and the average amount charged-off[15](index=15&type=chunk) - Total delinquent loans as a percentage of total loans was **3.81%** at June 30, 2025, compared to **3.90%** at December 31, 2024, and **3.51%** at June 30, 2024. Average payment deferrals of automobile loans increased to **1.73%** for Q2 2025 from **1.58%** in Q2 2024[15](index=15&type=chunk)[16](index=16&type=chunk) [Financial Management and Corporate Information](index=4&type=section&id=Financial%20Management%20and%20Corporate%20Information) [Liquidity](index=4&type=section&id=Liquidity) The Corporation maintains strong liquidity, with liquid assets and borrowing availability exceeding uninsured deposits - Uninsured deposits were approximately **$677.7 million (30.0% of total deposits)** at June 30, 2025. Excluding intercompany cash holdings and secured municipal deposits, uninsured amounts were **$536.1 million (23.8% of total deposits)**[17](index=17&type=chunk) - Liquid assets (**$373.7 million**) and borrowing availability (**$576.4 million**) at June 30, 2025, together exceeded uninsured deposits (excluding certain items) by **$414.0 million**[17](index=17&

Financial Performance - C&F Financial Corporation reported consolidated net income of $7.8 million for Q2 2025, a 54.3% increase from $5.0 million in Q2 2024 [1] - For the first six months of 2025, consolidated net income was $13.2 million, up 55.4% from $8.5 million in the same period of 2024 [1] - Earnings per share for Q2 2025 were $2.37, compared to $1.50 in Q2 2024, and for the first six months, it was $4.03 versus $2.50 in 2024 [1] Segment Performance - The community banking segment saw loans grow by $76.7 million (10.6% annualized) in Q2 2025 and $143.4 million (10.3%) compared to June 30, 2024 [4] - The mortgage banking segment reported net income of $985,000 for Q2 2025, up from $376,000 in Q2 2024, with loan originations increasing by $67.5 million (46.2%) [8][9] - The consumer finance segment's net income was $539,000 for Q2 2025, down from $894,000 in Q2 2024, with average loans decreasing by $14.1 million (2.9%) [11] Asset Quality and Credit Losses - The community banking segment recorded a net reversal of provision for credit losses of $300,000 in Q2 2025, compared to a provision of $450,000 in Q2 2024 [4][7] - The consumer finance segment had a provision for credit losses of $2.4 million in Q2 2025, up from $2.1 million in Q2 2024 [11] - Nonaccrual loans in the community banking segment increased to $1.1 million as of June 30, 2025, from $333,000 at December 31, 2024 [7] Liquidity and Capital - As of June 30, 2025, the Corporation's uninsured deposits were approximately $677.7 million, or 30.0% of total deposits [15] - Total equity increased by $13.9 million at June 30, 2025, compared to December 31, 2024, primarily due to net income and lower unrealized losses in securities [19] - The Corporation declared a quarterly cash dividend of 46 cents per share, representing a payout ratio of 19.4% for Q2 2025 [18] Market Position and Strategy - The Corporation is optimistic about continued organic loan and deposit growth, particularly following its expansion into Southwest Virginia [3] - The community banking segment's average loans increased by $139.6 million (10.3%) for Q2 2025, driven by growth in construction and real estate loans [5] - The Corporation's share repurchase program authorized up to $5.0 million of common stock, but no repurchases were made in Q2 2025 [22]

Core Insights - C&F Financial Corporation is expanding its commercial banking operations in Southwest Virginia, targeting key markets such as Roanoke, Lynchburg, Danville, Martinsville, and Blacksburg [1][2] Group 1: Leadership and Team - Matt Hubbard has been appointed as the Southwest Virginia Regional President, bringing over 15 years of commercial banking experience from Atlantic Union Bank [2] - Sally Siveroni, with a banking career starting in 1986, joins as Commercial Credit Officer, previously serving as Regional Credit Officer at Atlantic Union Bank [3] - James Little, a Commercial Banking Relationship Manager with 17 years of experience, also joins the team, emphasizing community involvement [3] Group 2: Strategic Positioning - This expansion positions C&F as a premier community bank in Virginia, enhancing its competitive strength and strategic vision [2] - The company operates 31 banking offices and five commercial loan offices across Virginia, offering a range of financial services [5]

Core Points - C&F Financial Corporation has declared a regular cash dividend of 46 cents per share, payable on July 1, 2025, to shareholders of record on June 13, 2025 [1] - The Board of Directors regularly reviews the cash dividend amount and payout ratio based on economic conditions, capital requirements, and expected future earnings [2] Company Overview - C&F Bank operates 31 banking offices and four commercial loan offices in eastern and central Virginia, offering full wealth management services through its subsidiary C&F Wealth Management, Inc. [3] - C&F Mortgage Corporation and its subsidiary C&F Select LLC provide mortgage loan origination services in Virginia and surrounding states [3] - C&F Finance Company is a regional finance company that purchases automobile, marine, and recreational vehicle loans primarily in the Mid-Atlantic, Midwest, and Southern United States [3]