C&F Financial (CFFI) - 2025 Q4 - Annual Report

Financial Performance - Consolidated net income for the year ended December 31, 2025, was $27.0 million, an increase from $19.9 million in 2024, with earnings per share rising to $8.29 from $6.01[196] - Total equity increased to $262.3 million at December 31, 2025, compared to $227.0 million at December 31, 2024, driven by net income and lower unrealized losses[200] - The Corporation declared dividends totaling $1.84 per share for 2025, compared to $1.76 per share in 2024[202] - The effective tax rate for 2025 was 18.4 percent, compared to 17.5 percent in 2024, primarily due to lower tax benefits from tax-exempt income[249] Loan and Deposit Growth - Community banking segment loans grew by $136.7 million, or 9.4%, while consumer finance segment loans decreased by $2.5 million, or less than 1%[203] - Total loans increased to $2,017,687 thousand in 2025, with a yield of 6.73%, up from $1,885,643 thousand and a yield of 6.75% in 2024[221] - Community banking segment loans increased by $136.7 million, or 9.4 percent, to $1.6 billion at December 31, 2025, while deposits rose by $174.9 million, or 8.1 percent, to $2.3 billion[254] - Total loans increased to $2.01 billion as of December 31, 2025, up from $1.88 billion in 2024, primarily driven by growth in commercial real estate, land acquisition, and equity lines[352] Interest Income and Margin - The consolidated net interest margin improved to 4.21% in 2025, up from 4.12% in 2024[203] - The Corporation's net interest income for 2025 was $107,445 thousand, an increase from $97,922 thousand in 2024, reflecting a net interest margin of 4.21% compared to 4.12% in the previous year[221] - Net interest income for 2025 increased to $107.4 million, up from $97.9 million in 2024, primarily due to higher average balances of earning assets and an increase in net interest margin[227] Asset and Liability Management - The Corporation's total assets reached $2,667,795 thousand in 2025, compared to $2,494,496 thousand in 2024, indicating growth in the asset base[221] - The Corporation's total liabilities increased to $2,424,762 thousand in 2025, up from $2,273,640 thousand in 2024[221] - The Corporation's equity rose to $243,033 thousand in 2025, compared to $220,856 thousand in 2024, reflecting a strengthening capital position[221] Credit Quality and Losses - The allowance for credit losses decreased to $39,677,000 as of December 31, 2025, from $40,087,000 in 2024, reflecting a provision charged to operations of $11,750,000[291] - The provision for credit losses for loans was $11,750,000 in 2025, down from $13,100,000 in 2024, indicating a reduction in expected credit losses[301] - The ratio of net charge-offs to average loans for consumer finance was 2.59% in 2025, compared to 2.62% in 2024, suggesting improved credit quality[291] - The community banking segment recorded $50,000 in net reversals in provision for credit losses for 2025, down from $1.7 million in 2024[316] Noninterest Income and Expenses - Total noninterest income increased by $4.1 million, or 13.4%, for the year ended December 31, 2025, compared to 2024, driven by higher mortgage loan production and gains on sales of loans[240] - Total noninterest expenses for the mortgage banking segment were $12.7 million for the year ended December 31, 2025, compared to $10.7 million in 2024, driven by higher variable expenses tied to mortgage loan origination volume[261] - Total noninterest expenses increased by $6.3 million, or 7.0 percent, for the year ended December 31, 2025, compared to 2024, primarily due to higher salaries and employee benefits and increased marketing expenses[246] Mortgage Banking Performance - Mortgage banking segment loan originations increased by $152.5 million, or 28.9%, during 2025[203] - The mortgage banking segment reported net income of $2.3 million for the year ended December 31, 2025, compared to $1.1 million for 2024, attributed to higher gains on sales of loans and increased mortgage banking fee income[261] - Total mortgage loan originations increased by 28.9% to $680,247 thousand for the year ended December 31, 2025, compared to $527,750 thousand in 2024[266] Consumer Finance Segment - Consumer finance segment net income was $1.4 million for the year ended December 31, 2025, down from $1.2 million in 2024[273] - Noninterest income in the consumer finance segment increased to $1,024 thousand in 2025 from $764 thousand in 2024[271] - Total noninterest expenses in the consumer finance segment decreased to $13,536 thousand in 2025 from $13,660 thousand in 2024[271] Market Conditions and Future Outlook - The Corporation anticipates that declining market interest rates could adversely affect its net interest margin in the short term, as assets typically reprice downward more quickly than deposits and borrowings[235] - The Federal Reserve Bank decreased the target federal funds interest rate from 5.50% at December 31, 2023, to 4.50% at December 31, 2024, and to 3.75% by December 31, 2025[227] - The Corporation is evaluating the adoption of AI technologies to improve efficiency and customer experience across all subsidiaries[212]