TOANO, Va., May 23, 2024 (GLOBE NEWSWIRE) -- The board of directors of C&F Financial Corporation (NASDAQ:CFFI) (the Corporation) has declared a regular cash dividend of 44 cents per share, which is payable July 1, 2024 to shareholders of record on June 14, 2024. The Board of Directors of the Corporation 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 requirements, and expected future ear ...

TOANO, Va., May 23, 2024 (GLOBE NEWSWIRE) -- The board of directors of C&F Financial Corporation (NASDAQ:CFFI) (the Corporation) has declared a regular cash dividend of 44 cents per share, which is payable July 1, 2024 to shareholders of record on June 14, 2024. The Board of Directors of the Corporation 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 requirements, and expected future ear ...

The community banking segment reported net income of $4.0 million for the first quarter of 2024 compared to $6.4 million for the same period in 2023 due primarily to: 41 | --- | --- | --- | --- | --- | |---------------------------------------------------------------------|-------|---------------------------------|-------------|--------------------------| | (Dollars in thousands) \nInterest income | $ | Three Months \n2024 \n281 | Ended \n$ | March 31, \n2023 \n296 | | Interest expense | | 44 | | 62 | | Net ...

Key highlights for the first quarter of 2024 are as follows. ● higher interest expense due primarily to higher rates on deposits and higher balances of interestbearing deposits; and ● higher salaries and employee benefits expense, which have generally increased in line with employment market conditions; partially offset by: ● higher interest income resulting from the effects of rising interest rates on asset yields and higher average balances of loans, offset in part by lower average balances of securities. ...

TOANO, Va., April 19, 2024 (GLOBE NEWSWIRE) -- C&F Financial Corporation (the Corporation) (NASDAQ:CFFI), the holding company for C&F Bank, today reported consolidated net income of $3.4 million for the first quarter of 2024, compared to $6.5 million for the first quarter of 2023. The following table presents selected financial performance highlights for the periods indicated:   For The Quarter Ended Consolidated Financial Highlights (unaudited) 3/31/2024  3/31/2023 Consolidated net income (000's) $3,435  $ ...

PART I [Business Overview](index=5&type=section&id=ITEM%201.%20BUSINESS) C&F Financial Corporation operates three segments: Community Banking, Mortgage Banking, and Consumer Finance, providing diverse financial services - The Corporation operates through three principal business segments: community banking, mortgage banking, and consumer finance[46](index=46&type=chunk) Segment Financial Highlights (Year Ended Dec 31, 2023) | Segment | Total Assets | Net Income | | :--- | :--- | :--- | | Community Banking | $2.3 billion | $22.9 million | | Mortgage Banking | $22.2 million | $465,000 | | Consumer Finance | $476.7 million | $2.9 million | [Business Segments](index=7&type=section&id=Business%20Segments) Community Banking offers full services in Virginia; Mortgage Banking originates diverse residential loans; Consumer Finance provides auto, marine, RV financing - The Community Banking segment offers a wide range of services including checking/savings accounts, various loans, and wealth management, primarily serving eastern and central Virginia[23](index=23&type=chunk)[544](index=544&type=chunk) - The Mortgage Banking segment originates a variety of residential mortgage loans (Conventional, FHA, USDA, VA) through **14** locations across Virginia, Maryland, North Carolina, and West Virginia, which are then sold into the secondary market[48](index=48&type=chunk) - The Consumer Finance segment is an indirect lender providing financing for automobiles, marine, and RVs across **21** states, serving both prime and non-prime borrowers[569](index=569&type=chunk)[570](index=570&type=chunk) [Human Capital Resources](index=11&type=section&id=Human%20Capital%20Resources) The Corporation employed 594 people as of December 31, 2023, focusing on talent acquisition, retention, and a diverse workforce - The company's strategic priorities include acquiring and retaining strong talent through competitive compensation, comprehensive wellness programs, and internal career development paths[50](index=50&type=chunk) - As of December 31, **2023**, the company had **594** employees, with **69%** being women and **20%** being racial and ethnic minorities[571](index=571&type=chunk) [Competition](index=11&type=section&id=Competition) The Corporation faces intense competition across all segments, competing with diverse financial institutions by leveraging customer service, talent, and technology - The Community Banking segment competes against large national and regional banks, as well as non-bank entities, by focusing on customer service, long-term relationships, and tailored products[27](index=27&type=chunk)[548](index=548&type=chunk)[549](index=549&type=chunk) - The Mortgage Banking segment operates in a highly competitive and regulated environment, competing by attracting top talent, expanding into strategic markets, and using technology to improve efficiency[28](index=28&type=chunk)[53](index=53&type=chunk)[550](index=550&type=chunk) - The Consumer Finance segment competes with captive finance affiliates of major auto manufacturers and other financial institutions by focusing on strong dealer service, flexible terms, and quick funding[55](index=55&type=chunk)[74](index=74&type=chunk)[551](index=551&type=chunk) [Regulation and Supervision](index=15&type=section&id=Regulation%20and%20Supervision) The Corporation and its subsidiaries are extensively regulated by federal and state authorities, adhering to capital adequacy and consumer protection laws, with the Bank rated 'well capitalized' - The Corporation is subject to extensive regulation from federal and state agencies, including the Federal Reserve Board and the FDIC, which impacts operations, capital, and dividends[32](index=32&type=chunk)[553](index=553&type=chunk) - As a bank holding company with under **$3** billion in assets, the Corporation is treated as a small bank holding company and is exempt from minimum consolidated regulatory capital ratios, though C&F Bank remains subject to these requirements[63](index=63&type=chunk) - C&F Bank met all capital adequacy requirements under Basel III rules, including the capital conservation buffer, and was considered "**well capitalized**" as of December 31, **2023**[60](index=60&type=chunk)[72](index=72&type=chunk) - The Consumer Financial Protection Bureau (CFPB) has significant rulemaking authority over consumer financial laws, which indirectly and directly affects the Corporation's products and services, particularly regarding overdraft products and mortgage lending rules[68](index=68&type=chunk)[116](index=116&type=chunk) [Risk Factors](index=36&type=page&id=ITEM%201A.%20RISK%20FACTORS) The Corporation faces significant risks from economic conditions, interest rate fluctuations, intense competition, cybersecurity threats, and evolving regulatory landscapes impacting operations - The business is highly sensitive to general economic conditions, Federal Reserve monetary policies, and local market health, which can impact loan demand, credit quality, and profitability[98](index=98&type=chunk)[128](index=128&type=chunk)[129](index=129&type=chunk) - A significant portion of the loan portfolio is concentrated in commercial real estate (**38.4%**) and consumer finance automobile loans (**23.0%**), which carry higher credit risk, especially during economic downturns[103](index=103&type=chunk)[134](index=134&type=chunk)[620](index=620&type=chunk) - The Corporation is subject to cybersecurity risks, including data breaches and system failures, and relies heavily on third-party vendors for key infrastructure like data processing, creating operational vulnerabilities[627](index=627&type=chunk)[630](index=630&type=chunk) - Changes in laws and regulations, particularly from the CFPB, can significantly affect business operations, increase compliance costs, and limit revenue from certain consumer financial products[144](index=144&type=chunk)[145](index=145&type=chunk) [Unresolved Staff Comments](index=55&type=section&id=ITEM%201B.%20UNRESOLVED%20STAFF%20COMMENTS) The Corporation has no unresolved comments from the SEC staff - The Corporation has no unresolved comments from the SEC staff[159](index=159&type=chunk) [Cybersecurity](index=55&type=section&id=ITEM%201C.%20CYBERSECURITY) Cybersecurity risk is managed through a comprehensive Information Security Program, overseen by the Board, with no material adverse incidents reported to date - Cybersecurity is managed through a comprehensive Information Security Program (ISP) based on FFIEC guidelines, with oversight from the Board of Directors and Audit Committee[160](index=160&type=chunk)[217](index=217&type=chunk) - The Corporation uses third-party tools for penetration testing and vulnerability scanning to measure information security risks and evaluate its overall cybersecurity preparedness[187](index=187&type=chunk) - To date, the Corporation has not experienced any cybersecurity incidents that have materially and adversely affected its business, financial condition, or results of operations[162](index=162&type=chunk) [Properties](index=57&type=section&id=ITEM%202.%20PROPERTIES) The Corporation and its subsidiaries own and lease various properties for operations, including 26 owned community banking branches and an owned consumer finance headquarters - The community banking segment operates from **32** locations, **26** of which are owned and **6** are leased[219](index=219&type=chunk) - The mortgage banking segment has **16** loan production offices, with **12** being leased from nonaffiliates[189](index=189&type=chunk) - The consumer finance segment's headquarters and administrative offices are located in a property owned by C&F Finance[165](index=165&type=chunk) [Legal Proceedings](index=59&type=section&id=ITEM%203.%20LEGAL%20PROCEEDINGS) The Corporation is involved in ordinary course litigation, but management anticipates no material adverse effect on its financial condition - The Corporation is not currently involved in any legal proceedings that are expected to have a material adverse effect on its financial condition[166](index=166&type=chunk) [Mine Safety Disclosures](index=59&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to the Corporation - Not applicable[192](index=192&type=chunk) PART II [Market for Common Equity and Related Matters](index=61&type=section&id=ITEM%205.%20MARKET%20FOR%20REGISTRANT%27S%20COMMON%20EQUITY%2C%20RELATED%20STOCKHOLDER%20MATTERS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) The Corporation's common stock trades on NASDAQ (CFFI), with an active $10.0 million share repurchase program for 2024, and its shareholder return has outperformed peers - The Corporation's common stock is listed on the NASDAQ Global Select Market under the symbol "**CFFI**"[195](index=195&type=chunk) - A new share repurchase program was authorized for **2024**, allowing for the buyback of up to **$10.0** million of common stock through December 31, **2024**[223](index=223&type=chunk) Issuer Purchases of Equity Securities (Q4 2023) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Oct 2023 | 10,500 | $55.19 | | Nov 2023 | 9,000 | $56.24 | | Dec 2023 | 5,274 | $58.78 | | **Total** | **24,774** | **$56.34** | Cumulative Total Shareholder Return (Base $100 at 12/31/2018) | Index | 12/31/2022 | 12/31/2023 | | :--- | :--- | :--- | | C&F Financial Corporation | 125.40 | 151.34 | | NASDAQ Composite Index | 163.28 | 236.17 | | 2023 Peer Group | 123.28 | 122.19 | | 2022 Peer Group | 124.01 | 124.34 | [Management's Discussion and Analysis (MD&A)](index=65&type=section&id=ITEM%207.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) In 2023, net income declined to $23.7 million due to lower segment earnings, despite net interest income growth and strong capital ratios, with assets reaching $2.44 billion [Overview](index=65&type=section&id=OVERVIEW) Consolidated net income for 2023 decreased to $23.7 million, primarily due to lower segment earnings, while total equity increased to $217.5 million Financial Performance Highlights | Metric | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | **Consolidated Net Income** | $23,746 | $29,369 | $29,123 | | **EPS (basic and diluted)** | $6.92 | $8.29 | $7.95 | | **Return on Average Equity** | 11.68% | 14.84% | 14.77% | | **Return on Average Assets** | 0.99% | 1.27% | 1.34% | - The decrease in **2023** net income was primarily due to lower earnings at all three business segments: Community Banking, Mortgage Banking, and Consumer Finance[209](index=209&type=chunk) - Key factors affecting **2023** results included **9.8%** growth in community banking loans, a **28.5%** decrease in mortgage banking originations, and the adoption of the CECL methodology for credit losses[264](index=264&type=chunk) [Results of Operations](index=73&type=section&id=RESULTS%20OF%20OPERATIONS) Net interest income increased to $98.7 million in 2023, driven by higher earning assets and margin, while noninterest expense rose due to compensation and FDIC costs - Taxable-equivalent net interest income increased to **$98.7** million in **2023**, up from **$94.0** million in **2022**, due to growth in average earning assets and a slight increase in net interest margin to **4.31%**[249](index=249&type=chunk) - Noninterest income increased slightly by **1.4%** to **$29.6** million in **2023**, driven by higher mortgage lender services income and debit card interchange income, partially offset by lower gains on sales of loans[257](index=257&type=chunk) - Noninterest expense increased by **8.9%** to **$89.9** million in **2023**, primarily due to higher compensation at the community banking segment and increased FDIC insurance expenses[288](index=288&type=chunk) [Financial Condition](index=103&type=section&id=FINANCIAL%20CONDITION) Total assets grew to $2.44 billion in 2023, driven by loan growth and funded by increased deposits, with a shift towards higher-yielding time deposits - Total assets increased to **$2.44** billion at December 31, **2023**, from **$2.33** billion at the end of **2022**[395](index=395&type=chunk) Balance Sheet Highlights (in thousands) | Account | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Total Loans, net | $1,702,488 | $1,595,200 | | Securities Available for Sale | $462,444 | $512,591 | | Total Deposits | $2,066,130 | $2,003,860 | | Total Borrowings | $109,539 | $92,084 | | Total Equity | $217,516 | $196,233 | - Total deposits grew by **$62.3** million, with a significant shift from non-time deposits to time deposits as customers sought higher yields[479](index=479&type=chunk) - Time deposits increased by **$291.9** million, while noninterest-bearing demand deposits decreased by **$55.8** million[453](index=453&type=chunk) [Liquidity and Capital Resources](index=122&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) The Corporation maintains strong liquidity with $833.9 million in liquid assets, and both the Corporation and Bank exceed 'well capitalized' regulatory requirements - The Corporation's liquid assets and borrowing availability totaled **$833.9** million at year-end **2023**, which exceeded uninsured deposits (excluding secured municipal and intercompany deposits) by **$429.8** million[493](index=493&type=chunk)[512](index=512&type=chunk) - Total equity increased by **$21.3** million to **$217.5** million at December 31, **2023**, driven by net income and a decrease in unrealized losses on securities[235](index=235&type=chunk)[495](index=495&type=chunk) Consolidated Capital Ratios | Ratio | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | CET1 to Risk-Weighted Assets | 11.3% | 11.4% | | Tier 1 to Risk-Weighted Assets | 12.6% | 12.8% | | Total Capital to Risk-Weighted Assets | 14.8% | 15.4% | | Tier 1 Leverage Ratio | 10.1% | 9.9% | [Quantitative and Qualitative Disclosures About Market Risk](index=130&type=section&id=ITEM%207A.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The Corporation's primary market risk is interest rate volatility, monitored via NII simulation and EVE analysis, with interest rate swaps used for risk management - The Corporation's primary market risk is interest rate volatility, which affects net interest income and the market value of its financial instruments[40](index=40&type=chunk) One-Year Net Interest Income Simulation (as of Dec 31, 2023) | Rate Shift | Change in NII ($ thousands) | Change in NII (%) | | :--- | :--- | :--- | | +300 BP | $3,013 | 2.96% | | +200 BP | $2,094 | 2.06% | | +100 BP | $1,081 | 1.06% | | -100 BP | $(2,352) | (2.31)% | | -200 BP | $(5,137) | (5.04)% | | -300 BP | $(8,372) | (8.22)% | Static Economic Value of Equity (EVE) Change (as of Dec 31, 2023) | Rate Shift | Change in EVE ($ thousands) | Change in EVE (%) | | :--- | :--- | :--- | | +300 BP | $(11,062) | (2.89)% | | +200 BP | $(5,012) | (1.31)% | | +100 BP | $(1,945) | (0.51)% | | -100 BP | $(1,397) | (0.37)% | | -200 BP | $(10,881) | (2.85)% | | -300 BP | $(28,719) | (7.51)% | - The Corporation uses interest rate swaps to manage interest rate risk, including converting variable-rate trust preferred capital notes to fixed rates and offering fixed-rate options to commercial borrowers while retaining variable-rate exposure[149](index=149&type=chunk) [Financial Statements and Supplementary Data](index=135&type=section&id=ITEM%208.%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA) This section presents the audited consolidated financial statements for C&F Financial Corporation and its subsidiaries for 2021-2023, including balance sheets, income statements, and cash flows Consolidated Balance Sheet Highlights (in thousands) | Account | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Total Assets | $2,438,498 | $2,332,317 | | Loans, net | $1,702,488 | $1,595,200 | | Total Deposits | $2,066,130 | $2,003,860 | | Total Liabilities | $2,220,982 | $2,136,084 | | Total Equity | $217,516 | $196,233 | Consolidated Income Statement Highlights (in thousands) | Account | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Net Interest Income | $97,707 | $93,464 | $85,369 | | Provision for Credit Losses | $8,275 | $3,172 | $575 | | Noninterest Income | $29,615 | $29,212 | $49,831 | | Noninterest Expenses | $89,883 | $82,540 | $96,543 | | Net Income | $23,746 | $29,369 | $29,123 | | EPS (basic & diluted) | $6.92 | $8.29 | $7.95 | [Controls and Procedures](index=214&type=section&id=ITEM%209A.%20CONTROLS%20AND%20PROCEDURES) Management concluded disclosure controls and internal control over financial reporting were effective as of December 31, 2023, with an unqualified auditor opinion - Management concluded that the Corporation's disclosure controls and procedures were effective as of December 31, **2023**[798](index=798&type=chunk) - Based on the COSO framework, management assessed the Corporation's internal control over financial reporting as effective as of December 31, **2023**[800](index=800&type=chunk) - The independent auditor, Yount, Hyde & Barbour, P.C., provided an unqualified opinion on the effectiveness of the Corporation's internal control over financial reporting as of December 31, **2023**[801](index=801&type=chunk)[804](index=804&type=chunk) PART III [Directors, Executive Compensation, and Corporate Governance](index=217&type=section&id=ITEM%2010%2C%2011%2C%2012%2C%2013%2C%2014) This section incorporates by reference information from the 2024 Proxy Statement, covering directors, executive compensation, security ownership, and corporate governance - Information regarding directors, executive compensation, security ownership, and corporate governance is incorporated by reference from the company's **2024** Proxy Statement[815](index=815&type=chunk)[820](index=820&type=chunk)[824](index=824&type=chunk) - The Corporation has adopted a Code of Business Conduct and Ethics applicable to all directors, executives, and employees, which is available on its website[816](index=816&type=chunk) PART IV [Exhibits and Financial Statement Schedules](index=220&type=section&id=ITEM%2015.%20EXHIBITS%2C%20FINANCIAL%20STATEMENT%20SCHEDULES) This section lists all exhibits filed with the Form 10-K, including corporate governance documents, material contracts, and required certifications - Lists all exhibits filed with the Form 10-K, including corporate governance documents, material contracts, and required certifications[830](index=830&type=chunk)[831](index=831&type=chunk)[833](index=833&type=chunk) - Includes CEO and CFO certifications pursuant to Sarbanes-Oxley Act rules (Rule **13a-14(a)** and **18** U.S.C. Section **1350**)[835](index=835&type=chunk)

TOANO, Va., Jan. 24, 2024 (GLOBE NEWSWIRE) -- C&F Financial Corporation (the Corporation) (NASDAQ:CFFI), the holding company for C&F Bank, today reported consolidated net income of $23.7 million for the year ended December 31, 2023, compared to $29.4 million for the year ended December 31, 2022. Included in net income for the year ended December 31, 2022 were the effects of real estate disposal activity related to branch consolidation and a change in accounting policy election related to the fair value of c ...

[PART I - Financial Information](index=3&type=section&id=PART%20I%20-%20Financial%20Information) [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents C&F Financial Corporation's unaudited consolidated financial statements, including balance sheets, income, equity, and cash flow statements, along with notes detailing the adoption of ASC 326 (CECL) [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) As of September 30, 2023, total assets increased to $2.42 billion from $2.33 billion at year-end 2022, driven by loan growth, with liabilities also growing to $2.22 billion primarily due to increased deposits and short-term borrowings Consolidated Balance Sheet Highlights (in thousands of dollars) | Account | September 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Total Assets** | **$2,421,705** | **$2,332,317** | | Loans, net | $1,677,481 | $1,595,200 | | Securities—available for sale | $460,653 | $512,591 | | **Total Liabilities** | **$2,221,325** | **$2,136,084** | | Total deposits | $2,028,429 | $2,003,860 | | Short-term borrowings | $95,660 | $36,592 | | **Total Equity** | **$200,380** | **$196,233** | [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) For the nine months ended September 30, 2023, net income attributable to the Corporation was $18.5 million, a slight decrease from the prior-year period, driven by increased interest expense outpacing income growth and a higher provision for credit losses Income Statement Highlights (in thousands of dollars, except per share data) | Metric | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | Net Interest Income | $73,765 | $67,487 | | Provision for credit losses | $5,800 | $1,402 | | Noninterest Income | $21,226 | $18,521 | | Noninterest Expenses | $66,224 | $60,399 | | **Net Income Attributable to C&F** | **$18,536** | **$18,851** | | **Net income per share - diluted** | **$5.41** | **$5.34** | [Consolidated Statements of Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Equity) Total equity increased from $196.2 million at year-end 2022 to $200.4 million at September 30, 2023, primarily due to net income, partially offset by ASC 326 adoption, dividends, stock repurchases, and other comprehensive loss - Key changes in equity for the nine months ended Sep 30, 2023 include a **$1.1 million** reduction from adopting the new ASC 326 accounting standard, **$18.7 million** in net income, **$6.4 million** in common stock repurchases, and **$4.5 million** in cash dividends declared[486](index=486&type=chunk) - The company declared cash dividends of **$0.44 per share** in Q3 2023 and **$1.32 per share** for the first nine months of 2023[56](index=56&type=chunk)[486](index=486&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the nine months ended September 30, 2023, net cash provided by operating activities was $21.8 million, while investing activities used $46.7 million, and financing activities provided $68.7 million, resulting in a net increase in cash and cash equivalents of $43.9 million Cash Flow Summary (Nine Months Ended Sep 30, in thousands of dollars) | Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $21,837 | $69,025 | | Net cash used in investing activities | ($46,658) | ($337,205) | | Net cash provided by financing activities | $68,672 | $99,883 | | **Net increase (decrease) in cash** | **$43,851** | **($168,297)** | [Notes to Consolidated Interim Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Interim%20Financial%20Statements) The notes detail accounting policies and financial data, including the adoption of ASC 326 (CECL) which decreased opening retained earnings by $1.1 million, and provide insights into securities, loan portfolios, credit loss methodology, segment performance, fair value, and derivatives - The Corporation adopted ASC 326 (CECL) on January 1, 2023, on a modified retrospective basis, resulting in a decrease to opening retained earnings of **$1.1 million** and an increase in the allowance for credit losses[64](index=64&type=chunk)[65](index=65&type=chunk) Impact of ASC 326 Adoption (in thousands of dollars) | Account | Impact of ASC 326 | As Reported Jan 1, 2023 | | :--- | :--- | :--- | | Allowance for credit losses | $491 | $41,009 | | Reserve for credit losses on unfunded commitments | $1,501 | $1,501 | | Net deferred tax asset | $316 | $22,330 | | Total equity | ($1,072) | $195,161 | - The Corporation operates in three business segments: community banking, mortgage banking, and consumer finance, with Community Banking being the largest contributor to net income (**$17.7 million**) for the nine months ended Sep 30, 2023[48](index=48&type=chunk)[54](index=54&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=53&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the Corporation's financial performance and condition, highlighting a slight net income decrease driven by consumer finance and mortgage banking segments, offset by community banking growth, while maintaining strong capital [Overview](index=53&type=section&id=Overview) Consolidated net income for the first nine months of 2023 was $18.7 million, down from $19.1 million in the prior-year period, primarily due to lower earnings from consumer finance and mortgage banking segments, despite loan growth in community banking and stable net interest margin in Q3 2023 Financial Performance Highlights (in thousands of dollars, except percentages and per share data) | Metric | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | Net Income | $18,658 | $19,063 | | Earnings per share | $5.41 | $5.34 | | Annualized ROA | 1.04% | 1.10% | | Annualized ROE | 12.22% | 12.63% | - The decrease in net income was primarily due to lower earnings from the consumer finance and mortgage banking segments, partially offset by higher net income from the community banking segment[249](index=249&type=chunk) - The Corporation repurchased **$5.8 million** of its common stock in the first nine months of 2023 under its share repurchase program[224](index=224&type=chunk) [Results of Operations](index=57&type=section&id=Results%20of%20Operations) Net interest income for the first nine months of 2023 increased to $74.5 million (tax-equivalent), driven by higher earning asset balances and a 22 basis point increase in net interest margin to 4.37%, while noninterest income rose to $21.2 million and noninterest expense increased to $66.2 million - Net interest margin (NIM) on a tax-equivalent basis was **4.29%** for Q3 2023, down from **4.37%** in Q3 2022, but stable with Q2 2023, and increased to **4.37%** from **4.15%** year-over-year for the first nine months[289](index=289&type=chunk)[208](index=208&type=chunk) - Noninterest income increased by **$2.7 million** for the first nine months of 2023 compared to 2022, primarily due to fluctuations in unrealized gains/losses on the rabbi trust, which are offset by changes in deferred compensation liabilities within noninterest expense[297](index=297&type=chunk)[268](index=268&type=chunk) - Noninterest expense increased by **$5.8 million (9.6%)** for the first nine months of 2023, driven by higher compensation, benefits, and increased FDIC assessment expenses[269](index=269&type=chunk)[300](index=300&type=chunk) [Asset Quality](index=72&type=section&id=Asset%20Quality) The Allowance for Credit Losses (ACL) was $40.2 million, or 2.34% of total loans, at September 30, 2023, with nonaccrual loans remaining low, though the consumer finance segment saw an increase in net charge-offs to an annualized 1.75% Credit Quality Ratios | Ratio | September 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | ACL to total loans | 2.34% | 2.48% | | Nonaccrual loans to total loans | 0.08% | 0.07% | | ACL to nonaccrual loans | 2,925.00% | 3,407.74% | - The consumer finance segment's annualized net charge-off ratio increased to **1.75%** for the first nine months of 2023, compared to **0.19%** for the same period in 2022, due to higher delinquencies and challenges in repossessing collateral[395](index=395&type=chunk) - The allowance for credit losses methodology is based on CECL (ASC 326) as of 2023, utilizing forecasts of the national unemployment rate for commercial and consumer loans, and historical loss experience for consumer finance loans[283](index=283&type=chunk)[346](index=346&type=chunk) [Financial Condition](index=84&type=section&id=Financial%20Condition) Total assets grew to $2.4 billion, driven by an $82.5 million increase in net loans, while the securities portfolio decreased, and deposits grew by $24.6 million with a shift towards higher-cost time deposits, all while maintaining strong liquidity and capital ratios - Total loans increased to **$1.72 billion** at Sep 30, 2023, from **$1.64 billion** at Dec 31, 2022, primarily from growth in commercial real estate and residential mortgage lending[372](index=372&type=chunk) - Deposits increased by **$24.6 million**, with a notable shift as noninterest-bearing and savings deposits decreased by a combined **$191.4 million**, while time deposits increased by **$216.0 million**[378](index=378&type=chunk) - The Corporation and the Bank exceeded all regulatory capital requirements to be considered well-capitalized, with the Corporation's Tier 1 risk-based capital ratio at **12.5%** and the Bank's at **12.7%** as of September 30, 2023[386](index=386&type=chunk)[445](index=445&type=chunk) [Item 3. 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, managed through simulation and EVE analysis, indicating asset sensitivity where net interest income is expected to increase in a rising rate environment and decrease in a falling rate environment, with interest rate swaps used to manage certain exposures One-Year Net Interest Income Simulation (as of Sep 30, 2023, in thousands of dollars) | Rate Shock | Change in NII (thousands of dollars) | Change in NII (%) | | :--- | :--- | :--- | | +300 BP | $2,384 | 2.26% | | +200 BP | $1,636 | 1.55% | | +100 BP | $809 | 0.77% | | -100 BP | ($1,940) | (1.84)% | | -200 BP | ($4,267) | (4.04)% | | -300 BP | ($6,948) | (6.58)% | - The simulation analysis indicates the Corporation is less asset sensitive as of September 30, 2023, compared to December 31, 2022, due to shifts in the mix of earning assets and deposits[432](index=432&type=chunk) - The Corporation uses interest rate swaps as cash flow hedges to convert variable-rate interest on trust preferred capital notes to fixed rates, mitigating interest rate risk[435](index=435&type=chunk) [Item 4. Controls and Procedures](index=102&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the Corporation's disclosure controls and procedures were effective as of September 30, 2023, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the Corporation's disclosure controls and procedures were effective as of September 30, 2023[438](index=438&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[474](index=474&type=chunk) [PART II - Other Information](index=102&type=section&id=PART%20II%20-%20Other%20Information) [Item 1A. Risk Factors](index=102&type=section&id=Item%201A.%20Risk%20Factors) The report highlights a key risk factor concerning developments in the financial services industry, such as bank failures and liquidity concerns, which could adversely impact the Corporation's financial condition and performance - A key risk is the potential adverse impact from developments in the financial services industry, including bank failures, which could lead to deposit outflows, higher funding costs, and increased competition for liquidity[439](index=439&type=chunk)[467](index=467&type=chunk) - There have been no other material changes in risk factors from those disclosed in the Annual Report on Form 10-K for the year ended December 31, 2022, other than the one specified[475](index=475&type=chunk) [Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities](index=104&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%2C%20Use%20of%20Proceeds%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The Corporation has a share repurchase program authorized to buy back up to $10.0 million of its common stock through December 31, 2023, having repurchased 23,856 shares for approximately $1.3 million during Q3 2023 Issuer Purchases of Equity Securities (Q3 2023) | Period | Total Shares Purchased | Average Price Paid per Share | Shares Purchased as Part of Program | | :--- | :--- | :--- | :--- | | Jul 2023 | 10,036 | $54.58 | 10,000 | | Aug 2023 | 7,711 | $55.53 | 6,334 | | Sep 2023 | 7,522 | $54.33 | 7,522 | | **Total Q3** | **25,269** | **$54.80** | **23,856** | - The Board authorized a **$10.0 million** share repurchase program effective December 1, 2022, through December 31, 2023, with approximately **$3.7 million** remaining available for repurchases as of September 30, 2023[468](index=468&type=chunk)[193](index=193&type=chunk) [Item 6. Exhibits](index=105&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including the Articles of Incorporation, Bylaws, CEO/CFO certifications, and the financial statements formatted in Inline XBRL - Key exhibits filed include CEO and CFO certifications (**31.1, 31.2, 32**) and the financial statements in Inline XBRL format (**101, 104**)[470](index=470&type=chunk)[479](index=479&type=chunk) [Signatures](index=106&type=section&id=Signatures) The report is duly signed and authorized by Thomas F Cherry, President and Chief Executive Officer, and Jason E Long, Executive Vice President and Chief Financial Officer, on November 7, 2023 - The Form 10-Q was signed on November 7, 2023, by the company's Principal Executive Officer (Thomas F Cherry) and Principal Financial and Accounting Officer (Jason E Long)[482](index=482&type=chunk)

Interest Income and Loans - Net interest income for the community banking segment increased by $2.9 million to $18.5 million for Q2 2023 and increased by $8.4 million to $37.9 million for the first six months of 2023 compared to the same periods in 2022[309]. - Average loans outstanding in the consumer finance segment increased by $58.7 million, or 14.1%, for Q2 2023 and increased by $76.3 million, or 19.1%, for the first six months of 2023 compared to the same periods in 2022[316]. - Average loan yields were higher for Q2 2023 compared to Q2 2022, primarily due to rising interest rates, while average costs of interest-bearing liabilities also increased[309]. - The community banking segment expects loan yields to continue to rise, but the impact on net interest margin is expected to be outpaced by rising deposit costs for the remainder of 2023[309]. - Total loans grew from $1,160,454,000 on December 31, 2022, to $1,211,962,000 on June 30, 2023, reflecting a significant increase in commercial real estate and residential mortgage lending[370][379]. - Total loans increased to $1,686,990,000 as of June 30, 2023, compared to $1,635,718,000 at December 31, 2022, reflecting growth in the loan portfolio[397]. Mortgage Banking Performance - Total mortgage loan originations for Q2 2023 were $155.1 million, down from $211.1 million in Q2 2022, and for the first six months of 2023 were $270.9 million, down from $401.0 million in the same period in 2022[313]. - Mortgage loan originations decreased by 26.5% in Q2 2023 compared to Q2 2022, and by 32.4% for the first six months of 2023 compared to the same period in 2022[344]. - Mortgage banking segment reported net income of $346,000 for Q2 2023, down from $782,000 in Q2 2022, primarily due to lower mortgage loan originations[341]. - Total noninterest income for the mortgage banking segment was $3,196,000 for Q2 2023, down from $4,039,000 in Q2 2022[341]. - The provision for credit losses in the mortgage banking segment was $0 for Q2 2023, compared to $10,000 in Q2 2022[341]. Credit Losses and Provisions - The community banking segment recorded a provision for credit losses of $600,000 for Q2 2023 and $1.1 million for the first six months of 2023, compared to no provision for Q2 2022 and a net reversal of $700,000 for the first six months of 2022[310]. - The allowance for credit losses on loans is based on evaluations of historical loan losses, current conditions, and reasonable forecasts relevant to collectability[319]. - As of June 30, 2023, the allowance for credit losses was $40,528 million, with a provision charged to operations of $1,401 million for the quarter[330]. - The provision for credit losses increased to $1,100,000 for the three months ended June 30, 2023, compared to $520,000 for the same period in 2022, reflecting increased net charge-offs due to rising delinquent loans[348]. - The total amount of nonaccrual loans in the community banking segment rose to $520,000 at June 30, 2023, from $115,000 at December 31, 2022, indicating increased credit challenges[402]. Financial Ratios and Capital - The total risk-based capital ratio was 14.9% as of June 30, 2023, exceeding the minimum requirement of 8.0%[419]. - The Tier 1 leverage ratio was 9.9% as of June 30, 2023, above the regulatory minimum of 4.0%[419]. - The Common Equity Tier 1 capital ratio was 12.8% as of June 30, 2023, surpassing the minimum requirement of 4.5%[419]. - The allowance for credit losses (ACL) totaled $40,528,000 as of June 30, 2023, with the consumer finance segment accounting for $25,187,000 of this total[391]. - The ACL to total loans ratio was 5.30% as of June 30, 2023, slightly down from 5.47% at the end of 2022[372]. Income and Expenses - Net income for the three months ended June 30, 2023, was $1,070,000, down 51.2% from $2,195,000 in the same period last year[347]. - Noninterest income was $5,000 for the three months ended June 30, 2023, a significant decrease from $49,000 in the same period last year[347]. - Total noninterest expenses were $3,514,000 for the three months ended June 30, 2023, a slight decrease of 3.6% from $3,645,000 in the same period in 2022[347]. - Net income for the three months ended June 30, 2023, was $6,384,000, compared to $6,783,000 for the same period in 2022, representing a decrease of approximately 5.9%[426]. Liquidity and Deposits - Liquidity, including liquid assets, totaled $349.4 million at June 30, 2023, an increase from $325.7 million at December 31, 2022[415]. - The Corporation's uninsured deposits were approximately $565.9 million, representing 28.3% of total deposits as of June 30, 2023[416]. - Deposits decreased by $6.4 million to $2.00 billion at June 30, 2023, with noninterest-bearing demand deposits decreasing by $18.7 million[441]. - The Corporation's capacity and amount available for funding increased by $190.6 million and $98.3 million, respectively, from December 31, 2022[415]. Interest Rate Risk Management - The Corporation's interest rate swaps are used to manage exposure to interest rate risk, converting variable rates to fixed rates for periods ending between June 2024 and June 2029[469]. - The methodology for interest rate risk analysis has inherent shortcomings, as it relies on assumptions that may not accurately reflect actual market responses[491]. - The company mitigates interest rate risk by entering into forward sales contracts with investors at the time interest rates are locked for loans[492]. - The mortgage banking segment utilizes Interest Rate Lock Commitments (IRLCs) to manage interest rate risk associated with loans prior to funding[492]. Economic Conditions and Projections - The Corporation expects net interest income to decrease by 4.56% over the next twelve months if market interest rates shift downward by 200 basis points[433]. - A 200 basis point downward shift in market interest rates would decrease the net interest income by $5.08 million (4.56%) as of June 30, 2023[467]. - The EVE analysis indicates a 7.29% decrease in economic value of equity with a 200 basis point downward shift in interest rates[488].

FORM 10-Q or C&F FINANCIAL CORPORATION (Exact name of registrant as specified in its charter) N/A (Former name, former address and former fiscal year, if changed since last report) Large accelerated filer ☐ Accelerated filer ☒ Non-accelerated filer ☐ Smaller reporting company ☒ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pur ...