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What changed in C & F FINANCIAL CORP's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of C & F FINANCIAL CORP's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+376 added−351 removedSource: 10-K (2025-02-27) vs 10-K (2024-02-27)

Top changes in C & F FINANCIAL CORP's 2024 10-K

376 paragraphs added · 351 removed · 300 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

53 edited+19 added−12 removed142 unchanged
Biggest changeThe specific impacts of regulatory reforms, including but not limited to the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act), which was enacted in 2010, or 9 Table of Contents the Economic Growth, Regulatory Relief and Consumer Protection Act (the EGRRCPA), which was enacted in 2018, cannot yet be fully predicted and will depend to a large extent on the specific regulations that are likely to be adopted in the future. ​ Regulation of the Corporation ​ As a bank holding company, the Corporation is subject to the Bank Holding Company Act of 1956 (the BHCA) and regulation and supervision by the Federal Reserve Board.
Biggest changeThe specific impacts of regulatory reforms cannot yet be fully predicted 9 Table of Contents and will depend to a large extent on the specific regulations that are likely to be adopted in the future.
The Corporation expects that its trust preferred securities will be included in the Corporation’s regulatory capital as Tier 1 capital instruments until their maturity. ​ As of December 31, 2023, the Bank met all capital adequacy requirements under the Basel III Final Rules, including the capital conservation buffer. ​ In July 2023, the Federal Reserve Board and the FDIC issued proposed rules to implement the final components of the Basel III agreement, often known as the “Basel III endgame.” These proposed rules contain provisions that apply to banks with $100 billion or more in total assets and that will significantly alter how those banks calculate risk-based assets.
The Corporation expects that its trust preferred securities will be included in the Corporation’s regulatory capital as Tier 1 capital instruments until their maturity. ​ As of December 31, 2024, the Bank met all capital adequacy requirements under the Basel III Final Rules, including the capital conservation buffer. ​ In July 2023, the Federal Reserve Board and the FDIC issued proposed rules to implement the final components of the Basel III agreement, often known as the “Basel III endgame.” These proposed rules contain provisions that apply to banks with $100 billion or more in total assets and that will significantly alter how those banks calculate risk-based assets.
As required by the EGRRCPA, qualifying banks with less than $10 billion in consolidated assets to elect to be subject to a 9% leverage ratio applied using less complex leverage calculations (the Community Bank Leverage Ratio Framework or CBLRF).
As required by the EGRRCPA, qualifying banks with less than $10 billion in consolidated assets can elect to be subject to a 9% leverage ratio applied using less complex leverage calculations (the Community Bank Leverage Ratio Framework or CBLRF).
In June 2019, consistent with the provisions of the EGRRCPA, the federal banking agencies issued a final rule to permit insured depository institutions with total assets of less than $5 billion that do not engage in certain complex or international activities to file the most streamlined version of the quarterly call report, and to reduce data reportable on certain streamlined call report submissions. ​ In December 2018, consistent with the provisions of the EGRRCPA, the federal banking agencies jointly adopted final rules that permit banks with up to $3 billion in total assets, that received a composite CAMELS rating of “1” or “2,” and that meet certain other criteria (including not having undergone any change in control during the previous 12-month period, and not being subject to a formal enforcement proceeding or order), to qualify for an 18-month on-site examination cycle. ​ 19 Table of Contents Effect of Governmental Monetary Policies.
In June 2019, consistent with the provisions of the EGRRCPA, the federal banking agencies issued a final rule to permit insured depository institutions with total assets of less than $5 billion that do not engage in certain complex or international activities to file the most streamlined version of the quarterly call report, and to reduce data reportable on certain streamlined call report submissions. ​ In December 2018, consistent with the provisions of the EGRRCPA, the federal banking agencies jointly adopted final rules that permit banks with up to $3 billion in total assets, that received a composite CAMELS rating of “1” or “2,” and that meet certain other criteria (including not having undergone any change in control during the previous 12-month period, and not being subject to a formal enforcement proceeding or order), to qualify for an 18-month on-site examination cycle. ​ Effect of Governmental Monetary Policies.
Many of these competitors also have long-standing relationships with automobile dealerships and may offer dealerships or their customers other forms of financing, including dealer floor plan financing and leasing, which we do not. ​ Over the past several years, a number of financial institutions and other lenders have increased focus on operations in the non-prime automobile finance markets resulting in intensified competition for loans and qualified personnel.
Many of these competitors also have long-standing relationships with automobile dealerships and may offer dealerships or their customers other forms of financing, including dealer floor plan financing and leasing, which we do not. ​ Over the past several years, a number of financial institutions and other lenders have increased focus on operations in the automobile finance markets resulting in intensified competition for loans and qualified personnel.
To establish C&F Finance as one of the principal financing sources for the dealers it serves, we compete predominantly by providing a high level of dealer service, building strong dealer relationships, offering flexible loan terms and quickly funding loans purchased from dealers. ​ No material part of C&F Finance’s business is dependent upon any single dealer relationship, and the loss of any single dealer relationship would not have a materially adverse effect upon C&F Finance’s business. ​ Regulation and Supervision ​ General ​ Bank holding companies, banks and their affiliates are extensively regulated under both federal and state law.
To 8 Table of Contents establish C&F Finance as one of the principal financing sources for the dealers it serves, we compete predominantly by providing a high level of dealer service, building strong dealer relationships, offering flexible loan terms and quickly funding loans purchased from dealers. ​ No material part of C&F Finance’s business is dependent upon any single dealer relationship, and the loss of any single dealer relationship would not have a materially adverse effect upon C&F Finance’s business. ​ Regulation and Supervision ​ General ​ Bank holding companies, banks and their affiliates are extensively regulated under both federal and state law.
In connection with making mortgage loans, the Bank is subject to rules and regulations that, among other things, establish standards for loan origination, prohibit discrimination, provide for inspections and appraisals of property, require credit reports on prospective borrowers, in some cases restrict certain loan features and fix maximum interest rates and fees, require the disclosure of certain basic information to mortgagors concerning credit and settlement costs, limit payment for settlement services to the reasonable value of the services rendered and require the maintenance and disclosure of information regarding the disposition of mortgage applications based on race, gender, geographical distribution and income level.
In connection with making mortgage loans, the Bank is subject to rules and regulations that, among other things, establish standards for loan origination, prohibit discrimination, provide for 15 Table of Contents inspections and appraisals of property, require credit reports on prospective borrowers, in some cases restrict certain loan features and fix maximum interest rates and fees, require the disclosure of certain basic information to mortgagors concerning credit and settlement costs, limit payment for settlement services to the reasonable value of the services rendered and require the maintenance and disclosure of information regarding the disposition of mortgage applications based on race, gender, geographical distribution and income level.
As of December 31, 2023, the Corporation and C&F Finance were not subject to supervision by the CFPB. ​ Certain federal regulatory agencies, and in particular, the CFPB, the Federal Trade Commission, and the Federal Reserve Board, as well as certain state agencies, have recently become more active in investigating the products, services and operations of banks and other finance companies engaged in auto finance activities.
As of December 31, 2024, the Corporation and C&F Finance were not subject to supervision by the CFPB. ​ Certain federal regulatory agencies, and in particular, the CFPB, the Federal Trade Commission, and the Federal Reserve Board, as well as certain state agencies, have recently become more active in investigating the products, services and operations of banks and other finance companies engaged in auto finance activities.
An insured depository institution which is less than adequately capitalized must adopt an acceptable capital restoration plan, is subject to increased regulatory oversight and is increasingly restricted in the scope of its permissible activities. As of December 31, 2023, the Bank was considered “well capitalized.” ​ Incentive Compensation.
An insured depository institution which is less than adequately capitalized must adopt an acceptable capital restoration plan, is subject to increased regulatory oversight and is increasingly restricted in the scope of its permissible activities. As of December 31, 2024, the Bank was considered “well capitalized.” ​ Incentive Compensation.
Increased competition has come from out-of-state banks through their acquisition of Virginia-based banks and interstate branching, and expansion of community and regional banks into our service areas. ​ 7 Table of Contents The banking business in Virginia, and specifically in the Bank’s primary service areas of eastern and central Virginia, is highly competitive for both loans and deposits, and is dominated by a relatively small number of large banks with many offices operating over a wide geographic area.
Increased competition has come from out-of-state banks through their acquisition of Virginia-based banks and interstate branching, and expansion of community and regional banks into our service areas. ​ The banking business in Virginia, and specifically in the Bank’s primary service areas of eastern and central Virginia, is highly competitive for both loans and deposits, and is dominated by a relatively small number of large banks with many offices operating over a wide geographic area.
C&F Finance also generally adheres to the principles of the FDCPA, which prohibits certain debt collectors from contacting borrowers during certain times and at certain places, from using threatening practices and from making false implications when attempting to collect a debt. ​ The CFPB has the authority to issue and enforce regulations under many federal consumer protection laws, including (subject to certain statutory limitations) TILA, ECOA, FDCPA, FCRA and EFTA.
C&F Finance also generally adheres to the principles of the 16 Table of Contents FDCPA, which prohibits certain debt collectors from contacting borrowers during certain times and at certain places, from using threatening practices and from making false implications when attempting to collect a debt. ​ The CFPB has the authority to issue and enforce regulations under many federal consumer protection laws, including (subject to certain statutory limitations) TILA, ECOA, FDCPA, FCRA and EFTA.
Certain exceptions may apply to the requirement to deliver an annual privacy notice based on how a financial institution limits sharing of nonpublic personal information and whether the institution’s disclosure practices or policies have changed in certain ways since the last privacy notice that was delivered. ​ 17 Table of Contents The Corporation is also subject to various laws and regulations that attempt to combat money laundering and terrorist financing.
Certain exceptions may apply to the requirement to deliver an annual privacy notice based on how a financial institution limits sharing of nonpublic personal information and whether the institution’s disclosure practices or policies have changed in certain ways since the last privacy notice that was delivered. ​ The Corporation is also subject to various laws and regulations that attempt to combat money laundering and terrorist financing.
As of December 31, 2023, the Bank has not elected to apply the CBLRF, 11 Table of Contents but the Bank continues to assess the potential impact of opting in to CBLRF as part of its ongoing capital management and planning processes. ​ Small Bank Holding Company.
As of December 31, 2024, the Bank has not elected to apply the CBLRF, 11 Table of Contents but the Bank continues to assess the potential impact of opting in to CBLRF as part of its ongoing capital management and planning processes. ​ Small Bank Holding Company.
At December 31, 2023, 26 percent of our employees have been employed by the Corporation or its subsidiaries for at least 15 years. ​ Competition ​ Community Banking ​ In the Bank’s market area, we compete with large national and regional financial institutions, savings associations and other independent community banks, as well as credit unions, mutual funds, brokerage firms, insurance companies and other lending and deposit platforms offered by non-bank financial technology firms, including those that only operate digitally.
At December 31, 2024, 28 percent of our employees have been employed by the Corporation or its subsidiaries for at least 15 years. ​ Competition ​ Community Banking ​ In the Bank’s market area, we compete with large national and regional financial institutions, savings associations and other independent community banks, as well as credit unions, mutual funds, brokerage firms, insurance companies and other lending and deposit platforms offered by non-bank financial technology firms, including those that only operate digitally.
These branches provide a wide range of banking services to individuals and businesses. These services include various types of checking and savings deposit accounts, as well as business, real estate, development, mortgage, home equity and installment loans.
These branches provide a wide range of banking services to individuals and businesses, including various types of checking and savings deposit accounts, as well as business, real estate, development, mortgage, home equity and installment loans.
C&F Finance generally purchases automobile retail installment sales contracts from manufacturer-franchised dealerships with used-car operations and 6 Table of Contents through selected independent dealerships. C&F Finance selects these dealers based on the types of vehicles sold. Specifically, C&F Finance prefers to finance later model, low mileage used vehicles because the value of new vehicles typically depreciates rapidly.
C&F Finance generally purchases automobile retail installment sales contracts from manufacturer-franchised dealerships with used-car operations and through selected independent dealerships. C&F Finance selects these dealers based on the types of vehicles sold. Specifically, C&F Finance prefers to finance later model, low mileage used vehicles because the value of new vehicles typically depreciates rapidly.
“Covered transactions” are defined to include a loan or extension of credit to an affiliate, a purchase of or investment in securities issued by an affiliate, a purchase of assets from an affiliate, the acceptance of securities issued by an affiliate as collateral for a loan or extension of credit to any person or company, 13 Table of Contents the issuance of a guarantee, acceptance or letter of credit on behalf of an affiliate, securities borrowing or lending transactions with an affiliate that creates a credit exposure to such affiliate, or a derivatives transaction with an affiliate that creates a credit exposure to such affiliate.
“Covered transactions” are defined to include a loan or extension of credit to an affiliate, a purchase of or investment in securities issued by an affiliate, a purchase of assets from an affiliate, the acceptance of securities issued by an affiliate as collateral for a loan or extension of credit to any person or company, the issuance of a guarantee, acceptance or letter of credit on behalf of an affiliate, securities borrowing or lending transactions with an affiliate that creates a credit exposure to such affiliate, or a derivatives transaction with an affiliate that creates a credit exposure to such affiliate.
In addition, regulatory positions taken by the CFPB and administrative and legal precedents established by CFPB 14 Table of Contents enforcement activities, including in connection with supervision of larger bank holding companies and banks, could influence how the Federal Reserve Board and FDIC apply consumer protection laws and regulations to financial institutions that are not directly supervised by the CFPB.
In addition, regulatory positions taken by the CFPB and administrative and legal precedents established by CFPB enforcement activities, including in connection with supervision of larger bank holding companies and banks, could influence how the Federal Reserve Board and FDIC apply consumer protection laws and regulations to financial institutions that are not directly supervised by the CFPB.
The EGRRCPA, and final rules adopted to implement the EGRRCPA, exempt all banks with less than $10 billion in assets (including their holding companies and affiliates) from the Volcker Rule, provided that the institution has total trading assets and liabilities of 5 percent or less of total assets, subject to certain limited exceptions.
The EGRRCPA, and final rules adopted to implement the EGRRCPA, exempt all 19 Table of Contents banks with less than $10 billion in assets (including their holding companies and affiliates) from the Volcker Rule, provided that the institution has total trading assets and liabilities of 5 percent or less of total assets, subject to certain limited exceptions.
Those rules and regulations, among other things, establish standards for loan origination, prohibit discrimination, provide for inspections and appraisals of property, require credit reports on prospective borrowers and, in some cases, restrict certain loan features and fix maximum interest rates and fees. ​ 15 Table of Contents Consumer Financing Regulation .
Those rules and regulations, among other things, establish standards for loan origination, prohibit discrimination, provide for inspections and appraisals of property, require credit reports on prospective borrowers and, in some cases, restrict certain loan features and fix maximum interest rates and fees. ​ Consumer Financing Regulation .
We compete by emphasizing customer service, establishing long-term customer relationships, building customer loyalty and providing traditional and digital products and services to address the specific needs of our customers. Our relationships with customers depend on, among other things, our ability to attract and retain talented community bankers.
We compete by emphasizing customer service, establishing long-term customer relationships, building customer loyalty and providing traditional and digital products and services to address the specific needs of our customers. Our relationships with customers depend on, 7 Table of Contents among other things, our ability to attract and retain talented community bankers.
The Bank also offers ATMs, internet and mobile banking, peer-to-peer payment capabilities and debit cards, as well as safe 5 Table of Contents deposit box rentals, notary public, electronic transfer and other customary bank services to its customers. C&F Bank manages its commercial lending portfolio primarily through commercial lending offices located in Charlottesville, Fredericksburg, Richmond and Williamsburg, Virginia.
The Bank also offers ATMs, internet and mobile banking, peer-to-peer payment capabilities and debit cards, as well as safe deposit box rentals, notary public, electronic transfer and other customary bank services to its customers. C&F Bank manages its commercial lending portfolio primarily through commercial lending offices located in Charlottesville, Fredericksburg, Richmond and Williamsburg, Virginia.
C&F Wealth Management, which was organized in April 1995, is a full-service brokerage firm offering a comprehensive range of wealth management services and insurance products through third-party service providers primarily at C&F Bank branch locations.
C&F Wealth Management, which was organized 5 Table of Contents in April 1995, is a full-service brokerage firm offering a comprehensive range of wealth management services and insurance products through third-party service providers primarily at C&F Bank branch locations.
These contracts are also purchased on an indirect basis through a referral program administered by a third party and are for prime loans made to individuals with higher credit scores and therefore typically priced at rates lower than C&F Finance’s automobile loans, and average less than $50,000.
These contracts are also purchased on an indirect basis through a referral program administered by a third party and are for prime loans made to individuals with higher credit scores and therefore typically priced at rates 6 Table of Contents lower than C&F Finance’s automobile loans, and average less than $50,000.
We have created career paths for specific positions that are designed to encourage an employee’s advancement and growth within our organization, and we aim to provide employees with the skills and opportunities they need to achieve their career goals and become leaders in our businesses. ​ At December 31, 2023, we employed 594 total employees.
We have created career paths for specific positions that are designed to encourage an employee’s advancement and growth within our organization, and we aim to provide employees with the skills and opportunities they need to achieve their career goals and become leaders in our businesses. ​ At December 31, 2024, we employed 545 total employees.
The proposed rules outline factors to be considered when analyzing whether compensation is excessive and whether an incentive-based compensation arrangement encourages inappropriate risks that could lead to material loss to the covered financial institution, and establishes minimum requirements that incentive-based compensation arrangements must meet to be considered to not encourage inappropriate risks and to appropriately balance risk and reward.
The proposed rules outline factors to be considered when analyzing 17 Table of Contents whether compensation is excessive and whether an incentive-based compensation arrangement encourages inappropriate risks that could lead to material loss to the covered financial institution, and establishes minimum requirements that incentive-based compensation arrangements must meet to be considered to not encourage inappropriate risks and to appropriately balance risk and reward.
Community banking revenues and operations are not materially affected by seasonal factors; however, municipal deposits tend to increase with tax collections primarily in the fourth quarter of each year and decline with spending thereafter. At December 31, 2023, assets of the community banking segment totaled $2.3 billion.
Community banking revenues and operations are not materially affected by seasonal factors; however, municipal deposits tend to increase with tax collections primarily in the fourth quarter of each year and decline with spending thereafter. At December 31, 2024, assets of the community banking segment totaled $2.4 billion.
At December 31, 2023, total base assessment rates for institutions that have been insured for at least five years range from 1.5 to 30 basis points applying to banks with less than $10 billion in assets. ​ The Dodd-Frank Act transferred to the FDIC increased discretion with regard to managing the required amount of reserves for the DIF, or the “designated reserve ratio.” The FDIA requires that the FDIC consider the appropriate level for the designated reserve ratio on at least an annual basis.
At December 31, 2024, total base assessment rates for institutions that have been insured for at least five years range from 2.5 to 32 basis points applying to banks with less than $10 billion in assets. ​ The Dodd-Frank Act transferred to the FDIC increased discretion with regard to managing the required amount of reserves for the DIF, or the “designated reserve ratio.” The FDIA requires that the FDIC consider the appropriate level for the designated reserve ratio on at least an annual basis.
If the Corporation or the Bank fails to meet the expectations 18 Table of Contents set forth in this regulatory guidance, the Corporation or the Bank could be subject to various regulatory actions and any remediation efforts may require significant resources of the Corporation or the Bank.
If the Corporation or the Bank fails to meet the expectations set forth in this regulatory guidance, the Corporation or the Bank could be subject to various regulatory actions and any remediation efforts may require significant resources of the Corporation or the Bank.
In addition to automobile financing, beginning in 2018, C&F Finance expanded its lending portfolio to include marine and RV loan contracts.
In addition to automobile financing, C&F Finance expanded its lending portfolio to include marine and RV loan contracts.
Reporting companies subject to the CTA will be required to provide specific information with respect to beneficial owner(s) (as defined in the CTA) as well as satisfy initial filing obligations (for newly-formed reporting companies) and submit subsequent reports when updates are required.
Reporting companies subject to the CTA will be required to provide specific information with respect to beneficial owner(s) (as defined in the CTA) as well as satisfy initial filing obligations 18 Table of Contents (for newly-formed reporting companies) and submit subsequent reports when updates are required.
These challenges may be compounded by sustained lower mortgage industry volume as a result of interest rates having risen substantially compared to periods prior to 2022, and decreased inventory of homes for sale. ​ To operate profitably in this high interest rate and competitive and regulatory environment, mortgage companies must have a high level of operational and risk management skills and be able to attract and retain top mortgage origination talent.
These challenges may be compounded by lower mortgage industry volume as a result of the sustained level of mortgage interest rates and decreased inventory of homes for sale. ​ To operate profitably in this high interest rate and competitive and regulatory environment, mortgage companies must have a high level of operational and risk management skills and be able to attract and retain top mortgage origination talent.
For the year ended December 31, 2023, net income for this segment totaled $22.9 million. ​ Mortgage Banking ​ We conduct mortgage banking activities through C&F Mortgage, which was organized in September 1995, and its 51%-owned subsidiary, C&F Select LLC, which was organized in January 2019.
For the year ended December 31, 2024, net income for this segment totaled $20.3 million. ​ Mortgage Banking ​ We conduct mortgage banking activities through C&F Mortgage, which was organized in September 1995, and its 51%-owned subsidiary, C&F Select LLC, which was organized in January 2019.
The automobile finance market is highly fragmented and is served by a variety of financial entities, including the captive finance affiliates of major automotive manufacturers, banks, savings associations, credit unions and independent finance companies. Many of these competitors have substantially 8 Table of Contents greater financial resources and lower costs of funds than our finance subsidiary.
The automobile finance market is highly fragmented and is served by a variety of financial entities, including the captive finance affiliates of major automotive manufacturers, banks, savings associations, credit unions and independent finance companies. Many of these competitors have substantially greater financial resources and lower costs of funds than C&F Finance.
Each FHLB makes loans to members in accordance with policies and procedures established by the Board of Directors of the FHLB. As a member, the Bank must purchase and maintain stock in the FHLB. At December 31, 2023, the Bank owned $2.9 million of FHLB stock. ​ Consumer Protection.
Each FHLB makes loans to members in accordance with policies and procedures established by the Board of Directors of the FHLB. As a member, the Bank must purchase and maintain stock in the FHLB. At December 31, 2024, the Bank owned $3.6 million of FHLB stock. ​ Consumer Protection.
However, seasonal trends may be disrupted by cyclical and other economic factors that affect the residential real estate market. At December 31, 2023, assets of the mortgage banking segment totaled $22.2 million. For the year ended December 31, 2023, net income for this segment totaled $465,000. ​ Consumer Finance ​ We conduct consumer finance activities through C&F Finance.
However, seasonal trends may be disrupted by cyclical and other economic factors that affect the residential real estate market. At December 31, 2024, assets of the mortgage banking segment totaled $29.8 million. For the year ended December 31, 2024, net income for this segment totaled $1.1 million. ​ Consumer Finance ​ We conduct consumer finance activities through C&F Finance.
In addition, the rule requires a bank service provider to notify affected banking organization customers as soon as possible when the provider determines that it has experienced a computer-security incident that has materially affected or is reasonably likely to materially affect banking organization customers for four or more hours. The rule became effective on May 1, 2022. ​ Stress Testing.
In addition, the rule requires a bank service provider to notify affected banking organization customers as soon as possible when the provider determines that it has experienced a computer-security incident that has materially affected or is reasonably likely to materially affect banking organization customers for four or more hours.
At December 31, 2023, assets of the consumer finance segment totaled $476.7 million. For the year ended December 31, 2023, net income for this segment totaled $2.9 million. ​ Human Capital Resources ​ The Corporation and its subsidiaries foster a culture of respect, teamwork, ownership, responsibility, initiative, integrity, and service.
At December 31, 2024, assets of the consumer finance segment totaled $472.7 million. For the year ended December 31, 2024, net income for this segment totaled $1.4 million. ​ Human Capital Resources ​ The Corporation and its subsidiaries foster a culture of respect, teamwork, ownership, responsibility, initiative, integrity, and service.
The impact of such changes on the Bank or its financial condition and results of operations cannot be determined at this time, but the Bank will continue to monitor developments related to this proposed rule and the CFPB’s broader policy agenda. ​ Mortgage Banking Regulation.
The impact of this proposed rule, or changes in the broader market for overdraft products and services due to this rule, on the Bank or its financial condition and results of operations cannot be determined at this time, but the Bank will continue to monitor developments related to this proposed rule and the CFPB’s broader policy agenda. ​ Mortgage Banking Regulation.
In reviewing applications seeking approval of merger and acquisition transactions, the bank regulatory agencies will consider, among other things, the competitive effect and public benefits of the transactions, the financial condition, managerial resources, capital position and any asset concentrations (including commercial real estate loan concentrations) of the constituent organizations and the combined organization, the risks to the stability of the U.S. banking or financial system, the applicant's performance record under the Community Reinvestment Act (CRA) and fair housing initiatives, the data security and cybersecurity infrastructure of the constituent organizations and the combined organization, the applicant’s risk management programs and processes, and the applicant’s compliance with and the effectiveness of the subject organizations in combating money laundering activities and complying with Bank Secrecy Act requirements. ​ Certain Transactions by Insured Banks with their Affiliates .
In reviewing applications seeking approval of merger and acquisition transactions, the bank regulatory agencies will consider, among other things, the competitive effect and public benefits of the transactions, the financial condition, managerial resources, capital position and any asset concentrations (including commercial real estate loan concentrations) of the constituent organizations and the combined organization, the risks to the stability of the U.S. banking or financial system, the applicant's performance record under the Community Reinvestment Act (CRA), fair lending laws, and fair housing initiatives, the data security and cybersecurity infrastructure of the constituent organizations and the combined organization, the applicant’s risk management programs and processes, and the applicant’s compliance with and the effectiveness of the subject organizations in combating money laundering activities and complying with Bank Secrecy Act requirements. ​ The federal regulatory framework applicable to bank mergers has recently received significant attention and been the subject of numerous proposals to update or revise such framework.
The West Virginia office is located in Keyser. C&F Select LLC provides mortgage loan origination services through two locations in Richmond, Virginia. The mortgage banking segment offers a wide variety of residential mortgage loans, which are originated for sale to investors in the secondary mortgage market. The mortgage banking segment does not securitize loans.
C&F Mortgage and C&F Select LLC provide mortgage loan origination services through offices located in Virginia and the surrounding states. The mortgage banking segment offers a wide variety of residential mortgage loans, which are originated for sale to investors in the secondary mortgage market. The mortgage banking segment does not securitize loans.
We consider relations with our employees to be excellent. We strive for our workforce to reflect the diversity of the customers and communities we serve. Our selection and promotion processes are without bias and include the active recruitment of minorities and women.
We consider relations with our employees to be excellent. We strive for our workforce to reflect the diversity of the customers and communities we serve. Our selection and promotion processes are without bias. We also aim for our employees to develop their careers in our businesses.
The scope of the laws and regulations, and the intensity of the supervision to which the Corporation and its subsidiaries are subject, have increased in recent years, initially in response to the 2008 financial crisis, and more recently in light of other factors, including continued turmoil and stress in the financial markets, technological factors, market changes, increased scrutiny of proposed bank mergers and acquisitions by federal and state bank regulators, and regulatory initiatives related to social policy goals, including the elimination of certain fees charged by financial insitutions.
The scope of the laws and regulations, and the intensity of the supervision to which the Corporation and its subsidiaries are subject, have increased in recent years, initially in response to the 2008 financial crisis, and more recently in light of other factors, including continued turmoil and stress in the financial markets, technological factors, market changes, increased scrutiny of proposed bank mergers and acquisitions by federal and state bank regulators, and regulatory initiatives related to social policy goals, including the elimination of certain fees charged by financial institutions. ​ Proposals to change the laws, regulations, and policies governing the banking industry are frequently raised at both the state and federal levels, and we expect that the new presidential administration will seek to implement a regulatory reform agenda that is significantly different than the agenda and policies of the previous administration, which we expect may significantly impact the rulemaking, supervision, examination, and enforcement priorities of the federal banking agencies.
The federal banking agencies have adopted guidelines for establishing information security standards and cybersecurity programs for implementing safeguards under the supervision of a financial institution’s board of directors. These guidelines, along with related regulatory materials, increasingly focus on risk management and processes related to information technology and the use of third parties in the provision of financial products and services.
These guidelines, along with related regulatory materials, increasingly focus on risk management and processes related to information technology and the use of third parties in the provision of financial products and services.
The federal banking agencies have broad powers under current federal law to take prompt corrective action to resolve problems of insured depository institutions.
The Corporation and the Bank continue to monitor the status of those proposed rules and FDIC action and statements with respect thereto. ​ Other Regulations ​ Prompt Corrective Action. The federal banking agencies have broad powers under current federal law to take prompt corrective action to resolve problems of insured depository institutions.
The Corporation’s SEC filings also are available through our website at http://www.cffc.com under “Investor Relations/Financial Documents/SEC Filings” as of the day they are filed with the SEC. Copies of documents also can be obtained free of charge by writing to the Corporation’s secretary at 3600 La Grange Parkway, Toano, VA 23168 or by calling 804-843-2360. ​ ​ ​
The Corporation’s SEC filings also are available through our website at http://www.cffc.com under “Investor Relations/Financial Documents/SEC Filings” as of the day they are filed with the SEC.
The Bank is evaluating the expected impact of the modernized CRA regulations, but currently does not anticipate any material impact to its business, operations or financial condition due to the modified CRA regulations. ​ Federal Home Loan Bank of Atlanta.
The Bank is evaluating the expected impact of the modernized CRA regulations, but currently does not anticipate any material impact to its business, operations or financial condition due to the modified CRA regulations. ​ 14 Table of Contents The legality of the modernized CRA regulations is being challenged and a preliminary injunction against enforcing new rules implementing the modified CRA regulations has been granted.
The federal banking agencies have implemented stress testing requirements for certain large or risky financial institutions, including bank holding companies and state-chartered banks.
The rule became effective on May 1, 2022. ​ With increased focus on cybersecurity, we are continuing to monitor legislative, regulatory and supervisory developments related thereto. We had no material cybersecurity incidents in 2024. ​ Stress Testing. The federal banking agencies have implemented stress testing requirements for certain large or risky financial institutions, including bank holding companies and state-chartered banks.
The rules became effective on April 1, 2021 and, to date, there has been no material impact to either the Corporation or the Bank from the rules. 16 Table of Contents ​ Other Regulations ​ Prompt Corrective Action.
The rules became effective on April 1, 2021 and, to date, there has been no material impact to either the Corporation or the Bank from the rules. ​ In July 2024, the FDIC proposed significant revisions to the brokered deposit regulations, including significant expansions to the definition of “deposit broker,” and significantly narrowing the primary purpose exception to “deposit broker” status.
Although the proposed rules would apply only to bank holding companies and banks with $50 billion or more in total consolidated assets, these rules could influence the federal banking agencies’ expectations and supervisory requirements for information security standards and cybersecurity programs of smaller financial institutions, such as the Corporation and the Bank. ​ On November 18, 2021, the federal bank regulatory agencies issued a final rule to improve the sharing of information about cybersecurity incidents that may affect the U.S. banking system.
In addition, all federal and state banking agencies continue to increase focus on cybersecurity programs and risks as part of regular supervisory exams. ​ On November 18, 2021, the federal bank regulatory agencies issued a final rule to improve the sharing of information about cybersecurity incidents that may affect the U.S. banking system.
Regulatory enforcement and fines have also increased across the banking and financial services sector. ​ The Corporation continues to experience ongoing regulatory reform and these regulatory changes could have a significant effect on how we conduct business.
Subsequent to that presidential memorandum, the presidential administration has taken actions that have reduced available staffing at certain regulatory agencies, and reduced the current regulatory and enforcement activities of certain regulatory agencies, among other substantive impacts. ​ The Corporation continues to experience ongoing regulatory reform and these regulatory changes could have a significant effect on how we conduct business.
Thereafter, on September 29, 2022, FinCEN issued the final rule (the Reporting Rule) to implement the beneficial ownership reporting requirements of the CTA, which was effective January 1, 2024. The Corporation and its subsidiaries are exempt from reporting requirements under the Reporting Rule.
Non-compliance with FinCEN regulations promulgated under the CTA may result in civil fines as well as criminal penalties. ​ On September 29, 2022, FinCEN issued the final rule (the Reporting Rule) to implement the beneficial ownership reporting requirements of the CTA, which was effective January 1, 2024, and would have required reporting of beneficial ownership for entities that were formed or first registered prior to 2024 by January 1, 2025.
Subsequent rulemaking is expected to revise the existing customer due diligence requirements that apply to the Bank and its subsidiaries and many other financial institutions, to ensure consistency between these requirements and the beneficial ownership reporting rules. ​ The Corporation will continue to monitor regulatory developments related to the CTA, including future FinCEN rulemakings, and will continue to assess the ultimate impact of the CTA on the Corporation and the Bank. ​ Cybersecurity.
Pending further court action, beneficial ownership information reporting obligations are back in effect and a majority of companies must now report by March 21, 2025. ​ The Corporation will continue to monitor regulatory developments related to the CTA, including future FinCEN rulemakings, and will continue to assess the ultimate impact of the CTA on the Corporation and the Bank.
Removed
C&F Bank provides community banking services at its main office in West Point, Virginia, and 30 Virginia branches located one each in the counties of Albemarle, Goochland, Hanover, King George, Middlesex, Powhatan, Stafford and York and the towns and cities of Charlottesville, Fredericksburg, Hampton, Montross, Newport News, Richmond, Warsaw and Williamsburg, two each in the counties of Cumberland, James City and New Kent, and four each in the counties of Chesterfield and Henrico.
Added
C&F Bank provides community banking services at its main office in West Point, Virginia, and through its branch network of over 30 branches located in eastern and central Virginia.
Removed
C&F Mortgage provides mortgage loan origination services through 11 locations in Virginia and one each in Maryland, North Carolina, and West Virginia. The Virginia offices are located one each in Charlottesville, Chesapeake, Fredericksburg, Glen Allen, Mechanicsville, Midlothian, Richmond, Virginia Beach, Waynesboro, Williamsburg, and Yorktown. The North Carolina office is located in Gastonia. The Maryland office is located in Clarksville.
Added
C&F Finance is a regional finance company purchasing automobile, marine and recreational vehicle (RV) loans primarily in the Mid-Atlantic, Midwest and Southern United States.
Removed
C&F Finance is a regional finance company purchasing automobile, marine and recreational vehicle (RV) loans throughout Virginia and in portions of Alabama, Colorado, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Maryland, Minnesota, Missouri, New Jersey, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Texas and West Virginia through its headquarters in Henrico, Virginia.
Added
On January 20, 2025, the President issued a presidential memorandum titled “Regulatory Freeze Pending Review” that directs federal agencies to (1) not propose or issue any rules until they are reviewed and approved by a department or agency head appointed by the President, (2) immediately withdraw any unpublished rules to allow for the review by a department or agency head as described above, and (3) consider postponing for 60 days from the date of the executive order the effective date for any rules that have been published in the Federal Register, or any rules that have been issued but have not taken effect, to allow for review of any questions of fact, law, or policy.
Removed
At December 31, 2023, women represented 69 percent of our employees, and racial and ethnic minorities represented 20 percent of our employees. We also aim for our employees to develop their careers in our businesses.
Added
Further, a change in the manner in which laws, regulations and regulatory guidance are interpreted by regulatory agencies or courts may have a material impact on our business, operations and earnings. ​ Regulation of the Corporation ​ As a bank holding company, the Corporation is subject to the Bank Holding Company Act of 1956 (the BHCA) and regulation and supervision by the Federal Reserve Board.
Removed
If the rules are adopted as proposed, they will restrict the manner in which executive compensation is structured. ​ In October 2022, the SEC adopted a final rule directing national securities exchanges and associations, including Nasdaq, the exchange on which the Corporation’s common stock is listed, to implement listing standards that require listed companies to adopt policies mandating the recovery or “clawback” of excess incentive compensation earned by a current or former executive officer during the three fiscal years preceding the date the listed company is required to prepare an accounting restatement, including to correct an error that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period.
Added
In March 2022, the FDIC proposed a Request for Information, seeking information and comments regarding the regulatory framework that applies to merger transactions involving one or more insured depository institutions.
Removed
In February 2023, Nasdaq posted its initial rule filing with the SEC to implement this directive and the Nasdaq's listing standards pursuant to the SEC's rule became effective on October 2, 2023.
Added
In September 2024, the FDIC finalized a new FDIC Statement of Policy on Bank Merger Transactions (the 2024 Policy Statement), which outlines factors that the FDIC will consider when evaluating a proposed bank merger transaction.
Removed
The Corporation updated its previous compensation recovery policy to comply with the new Nasdaq listing standards and the policy is included as Exhibit 97 to this Annual Report on Form 10-K. ​ Confidentiality and Required Disclosures of Customer Information. The Corporation is subject to various laws and regulations that address the privacy of nonpublic personal financial information of consumers.
Added
In January 2025, the Acting Chairman of the FDIC issued a statement that indicated the FDIC would begin the process of replacing the 2024 Policy Statement. The Federal Reserve did not release a new bank or bank holding company merger policy statement.
Removed
Non-compliance with FinCEN regulations promulgated under the CTA may result in civil fines as well as criminal penalties. ​ In December 2021, FinCEN proposed the first of the three sets of rules that it will issue.
Added
Following the presidential inauguration, the FDIC has indicated that it is considering further updates to the bank merger approval process and further revisions to the 2024 Policy Statement. ​ 13 Table of Contents Also in September 2024, the U.S.
Removed
On December 21, 2023, FinCEN issued a final rule (the Access Rule) implementing the access and safeguard provisions of the CTA, which prescribes the circumstances under which beneficial ownership information reported to FinCEN may be disclosed to authorized recipients and how it must be protected.
Added
Department of Justice withdrew its 1995 Bank Merger Guidelines and announced that it will instead evaluate the competitive impact of bank mergers using its 2023 Merger Guidelines that apply across all industries.
Removed
Under the Access Rule, the Bank and its subsidiaries may access beneficial ownership information for reporting companies whose consent they have obtained for such disclosures.
Added
Compared to the 1995 Bank Merger Guidelines, the 2023 Merger Guidelines set forth more stringent market concentration limits and add several largely qualitative bases on which the Department of Justice may challenge a merger.
Removed
In addition, all federal and state banking agencies continue to increase focus on cybersecurity programs and risks as part of regular supervisory exams. ​ In October 2016, the federal banking agencies issued proposed rules on enhanced cybersecurity risk-management and resilience standards that would apply to very large financial institutions and to services provided by third parties to these institutions.
Added
The effect of these changes remains uncertain, but these changes may make it more difficult, costly or otherwise onerous to obtain regulatory approval for an acquisition. ​ Certain Transactions by Insured Banks with their Affiliates .
Removed
The comment period for these proposed rules has closed and a final rule has not been published.
Added
In addition, the updated CRA regulations may be impacted by the presidential memorandum entitled “Regulatory Freeze Pending Review” described above. ​ Federal Home Loan Bank of Atlanta.
Added
This proposed rule may be impacted by the presidential memorandum entitled “Regulatory Freeze Pending Review” described above and may be subject to challenge in the U.S. Congress.
Added
The comment period on those proposed rules has closed. In January 2025, the Acting Chairman of the FDIC issued a statement indicating that the FDIC may focus on withdrawing those proposed rules during 2025, and these proposed rules may also be subject to the presidential memorandum entitled “Regulatory Freeze Pending Review” described above.
Added
In May 2024, the FDIC and three other federal bank regulatory agencies re-proposed the regulatory text of the 2016 proposed rules and requested comment on specific alternatives, given the passage of time since the 2016 proposed rule was issued, as well as additional supervisory experience, changes in industry practice, and other developments.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

51 edited+17 added−2 removed87 unchanged
Biggest changeIf the Bank is unable to pay dividends to the Corporation, the Corporation may not be able to service its outstanding borrowings and other debt, pay its other obligations or pay a cash dividend to the holders of the Corporation’s common stock, and the Corporation’s business, financial condition and results of operations may be materially adversely affected. ​ ​ General Risk Factors ​ We rely heavily on our management team and the unexpected loss of key officers may adversely affect our operations. ​ We believe that our growth and future success will depend in large part on the skills of our executive officers.
Biggest changeIf the Bank is unable to pay dividends to the Corporation, the Corporation may not be able to service its outstanding borrowings and other debt, pay its other obligations or pay a cash dividend to the holders of the Corporation’s common stock, and the Corporation’s business, financial condition and results of operations may be materially adversely affected. ​ Our common stock price may be volatile, which could result in losses to our investors. ​ Our common stock price has been volatile in the past, and several factors could cause the price to fluctuate in the future.
A deterioration in economic conditions, in particular a prolonged economic slowdown within our geographic region or a broader disruption in the economy, possibly as a result of a pandemic or other widespread public health emergency, acts of terrorism or outbreak of domestic or international hostilities (including the ongoing military conflicts between Russia and Ukraine and in the Middle East), could result in the following consequences, any of which could hurt our business materially: an increase in loan delinquencies; an increase in problem assets and foreclosures; a decline in demand for our products and services; a deterioration in the value of collateral for loans made by our various business segments; and changes in the fair value of financial instruments held by the Corporation or its subsidiaries. ​ Our earnings are significantly affected by the fiscal and monetary policies of the federal government and its agencies. ​ The policies of the Federal Reserve affect us significantly.
Any deterioration in economic conditions, in particular a prolonged economic slowdown within our geographic region or a broader disruption in the economy, possibly as a result of a pandemic or other widespread public health emergency, acts of terrorism or outbreak of domestic or international hostilities (including the ongoing military conflicts between Russia and Ukraine and in the Middle East), could result in the following consequences, any of which could hurt our business materially: an increase in loan delinquencies; an increase in problem assets and foreclosures; a decline in demand for our products and services; a deterioration in the value of collateral for loans made by our various business segments; and changes in the fair value of financial instruments held by the Corporation or its subsidiaries. ​ Our earnings are significantly affected by the fiscal and monetary policies of the federal government and its agencies. ​ The policies of the Federal Reserve affect us significantly.
Failure to adapt to or comply with regulatory requirements or investor or stakeholder expectations and standards could negatively impact the Corporation’s reputation, ability to do business with certain partners, and stock price. New government regulations could also result in new or more stringent forms of ESG oversight and expanding mandatory and voluntary reporting, diligence, and disclosure.
Failure to adapt to or comply with regulatory requirements or investor or stakeholder expectations and standards could negatively impact the Corporation’s reputation, ability to do business with certain partners, and stock price. Government regulations could also result in new or more stringent forms of ESG oversight and expanding mandatory and voluntary reporting, diligence, and disclosure.
If the Corporation is forced to sell debt securities in an unrealized loss position for liquidity or other needs or determines that there is credit loss with respect to any of the corporation’s debt securities, the corporation may be forced to recognize those losses or an impairment charge in net income. ​ Weakness in the secondary residential mortgage loan markets or demand for mortgage loans may adversely affect income from C&F Mortgage. ​ Our mortgage banking segment has historically provided a significant portion of our noninterest income by generating gains on sales of mortgage loans that we originate.
If the Corporation is forced to sell debt securities in an unrealized loss position for liquidity or other needs or it determines that there is credit loss with respect to any of the Corporation’s debt securities, the Corporation may be forced to recognize those losses or an impairment charge in net income. ​ Weakness in the secondary residential mortgage loan markets or demand for mortgage loans may adversely affect income from C&F Mortgage. ​ Our mortgage banking segment has historically provided a significant portion of our noninterest income by generating gains on sales of mortgage loans that we originate.
If market rates continue to rise, or remain elevated for an extended period of time, we may experience more competitive pressures to increase the rates we pay on deposits, which may result in a decrease in our net interest income, a change in the mix of noninterest and interest-bearing accounts, reduced demand for loans or increases in the rate of default on existing loans.
If market rates rise, or remain elevated for an extended period of time, we may experience more competitive pressures to increase the rates we pay on deposits, which may result in a decrease in our net interest income, a change in the mix of noninterest and interest-bearing accounts, reduced demand for loans or increases in the rate of default on existing loans.
These systems and procedures include but are not limited to (i) regular penetration testing of our network, (ii) regular employee training programs on sound security practices and awareness of security threats, (iii) deployment of tools to monitor our network including intrusion prevention and detection systems, electronic mail spam filters, anti-virus, anti-malware, anti-ransomware, resource logging and patch management, (iv) multifactor authentication for customers 26 Table of Contents using treasury management tools and employees who access our network from outside of our premises, and (v) enforcement of security policies and procedures for the additions and maintenance of user access and rights to resources.
These systems and procedures include but are not limited to (i) regular penetration testing of our network, (ii) regular employee training programs on sound security practices and awareness of security threats, (iii) deployment of tools to monitor our network including intrusion prevention and detection systems, electronic mail spam filters, anti-virus, anti-malware, anti-ransomware, resource logging and patch management, (iv) multifactor authentication for customers using treasury management tools and employees who access our network from outside of our premises, and (v) enforcement of security policies and procedures for the additions and maintenance of user access and rights to resources.
In addition, the Corporation could experience further net interest margin compression if it is unable to maintain its current level of loans outstanding by continuing to originate new loans or if it experiences a decrease in deposit balances, which would require the Corporation to seek funding from other sources at relatively higher rates of interest.
Additionally, the Corporation could experience further net interest margin compression if it is unable to maintain its current level of loans outstanding by continuing to originate new loans or if it experiences a decrease in deposit balances, which would require the Corporation to seek funding from other sources at relatively higher rates of interest.
If our risk management program has flaws or gaps, or if our risk management controls do not function effectively, our results of operations, financial condition or business may be adversely affected. ​ We are subject to security and operational risks, including cybersecurity risks and cybersecurity attacks, relating to our use of technology that could damage our reputation and our business. ​ In the ordinary course of business, the Corporation collects and stores sensitive data, including proprietary business information and personally identifiable information of our customers and employees, in systems and on networks, including those hosted by third-party vendors.
If our risk management program has flaws or gaps, or if our risk management controls do not function effectively, our results of operations, financial condition or business may be adversely affected. 26 Table of Contents We are subject to security and operational risks, including cybersecurity risks and cybersecurity attacks, relating to our use of technology that could damage our reputation and our business. ​ In the ordinary course of business, the Corporation collects and stores sensitive data, including proprietary business information and personally identifiable information of our customers and employees, in systems and on networks, including those hosted by third-party vendors.
ESG-related costs, including with respect to compliance with any additional regulatory or disclosure requirements or expectations, could adversely impact our results of operations. 28 Table of Contents ​ Risks Related to Owning the Corporation’s Common Stock ​ The trading volume of our common stock may not provide adequate volume for investors, and future sales of our common stock by shareholders or the perception that those sales could occur may cause our common stock price to decline. ​ Although our common stock is listed for trading on NASDAQ Global Select Market, the trading volume in our common stock may be lower than that of other larger financial institutions.
ESG-related costs, including with respect to compliance with any additional regulatory or disclosure requirements or expectations, could adversely impact our results of operations. ​ Risks Related to Owning the Corporation’s Common Stock ​ The trading volume of our common stock may not provide adequate volume for investors, and future sales of our common stock by shareholders or the perception that those sales could occur may cause our common stock price to decline. ​ Although our common stock is listed for trading on NASDAQ Global Select Market, the trading volume in our common stock may be lower than that of other larger financial institutions.
Prolonged periods of inflation may impact our profitability by negatively impacting our fixed costs and expenses, including increasing funding costs and expense related to talent acquisition and retention, and negatively impacting the demand for our products and services. Additionally, inflation may lead to a decrease in consumer and client’s purchasing power and increase default rates on our loans.
Prolonged periods of inflation may impact our profitability by negatively impacting our fixed costs and expenses, including increasing funding costs and expenses related to talent acquisition and retention, and negatively impacting the demand for our products and services. Additionally, inflation may lead to a decrease in consumer and client’s purchasing power and an increase in default rates on our loans.
Any such required additional provisions for credit losses or charge-offs could have a material adverse effect on our financial condition and results of operations. ​ On January 1, 2023, we adopted Accounting Standards Codification (ASC) Topic 326, “Financial Instruments—Credit Losses” (ASC 326), which replaces existing accounting principles for the recognition of loan losses based on losses that have been incurred with a requirement to record an allowance for credit losses that represents expected credit losses over the lifetime of all loans in the Corporation’s portfolio.
Any such required additional provisions for credit losses or charge-offs could have a material adverse effect on our financial condition and results of operations. ​ On January 1, 2023, we adopted Accounting Standards Codification (ASC) Topic 326, “Financial Instruments—Credit Losses” (ASC 326), which replaced the accounting principles for the recognition of loan losses based on losses that have been incurred with a requirement to record an allowance for credit losses that represents expected credit losses over the lifetime of all loans in the Corporation’s portfolio.
These factors could materially and adversely affect the Company’s business, financial condition, liquidity, results of operations, and capital position, and could cause the Company’s actual results to differ materially from its historical results or the results contemplated by the forward-looking statements contained in this Annual Report on Form 10-K, in which case the trading price of the Company’s common stock could decline. 20 Table of Contents ​ Risk Factors Related to our Lending Activities and Economic Conditions ​ Our business is subject to various lending and other economic risks that could adversely affect our results of operations and financial condition. ​ Deterioration in economic conditions could adversely affect our business.
These factors could materially and adversely affect the Company’s business, financial condition, liquidity, results of operations, and capital position, and could cause the Company’s actual results to differ materially from its historical results or the results contemplated by the forward-looking statements contained in this Annual Report on Form 10-K, in which case the trading price of the Company’s common stock could decline. ​ Risk Factors Related to our Lending Activities and Economic Conditions ​ Our business is subject to various lending and other economic risks that could adversely affect our results of operations and financial condition. ​ Deterioration in economic conditions could adversely affect our business.
While we manage the higher risk inherent in loans made to these borrowers through our underwriting criteria for installment sales contracts we purchase and collection methods, we cannot guarantee that these criteria or methods will ultimately provide adequate protection against these risks. 23 Table of Contents ​ ​ Risk Factors Related to our Industry and Financial Markets ​ Our business, financial condition, and results of operations could be adversely affected by developments impacting the financial services industry, such as bank failures or concerns involving liquidity.
While we manage the higher risk inherent in loans made to these borrowers through our underwriting criteria for installment sales contracts we purchase and collection methods, we cannot guarantee that these criteria or methods will ultimately provide adequate protection against these risks. ​ ​ Risk Factors Related to our Industry and Financial Markets ​ Our business, financial condition, and results of operations could be adversely affected by developments impacting the financial services industry, such as bank failures or concerns involving liquidity.
Accordingly, use of such third parties creates an unavoidable inherent risk to our businesses’ operations. ​ Our business is technology dependent, and an inability to successfully implement technological improvements may adversely affect our ability to be competitive and our results of operations and financial condition. ​ The financial services industry is undergoing rapid technological changes with frequent introductions of new technology-driven products, systems and services, which may require substantial initial investment to be implemented, including the cost of modifying or adapting existing products, systems and services.
Accordingly, use of such third parties creates an unavoidable inherent risk to our businesses’ operations. 27 Table of Contents Our business is technology dependent, and an inability to successfully implement technological improvements may adversely affect our ability to be competitive and our results of operations and financial condition. ​ The financial services industry is undergoing rapid technological changes with frequent introductions of new technology-driven products, systems and services, which may require substantial initial investment to be implemented, including the cost of modifying or adapting existing products, systems and services.
Our inability to identify, recruit and retain talented personnel to manage our operations effectively and in a timely manner could limit our growth or impair our ability to implement our business strategy effectively and efficiently, which could materially adversely affect our business. ​ 29 Table of Contents The Corporation or any of its subsidiaries is a defendant from time to time in a variety of litigation and other actions. ​ The Corporation or any of its subsidiaries may be involved from time to time in a variety of litigation arising out of its business, and the Corporation operates in a legal and regulatory environment that exposes it to potential significant litigation risk.
Our inability to identify, recruit and retain talented personnel to manage our operations effectively and in a timely manner could limit our growth or impair our ability to implement our business strategy effectively and efficiently, which could materially adversely affect our business. ​ The Corporation or any of its subsidiaries is a defendant from time to time in a variety of litigation and other actions. ​ The Corporation or any of its subsidiaries may be involved from time to time in a variety of litigation arising out of its business, and the Corporation operates in a legal and regulatory environment that exposes it to potential significant litigation risk.
Events in the financial services industry, including bank closures, cause general uncertainty and concern regarding the adequacy of liquidity of the financial services industry generally.
Events in the financial services industry, including bank closures, can cause general uncertainty and concern regarding the adequacy of liquidity of the financial services industry generally.
However, because the techniques used to obtain unauthorized access, or to disable or degrade systems change frequently and are often not recognized until launched against a target, even with all reasonable security efforts, the Corporation may be unable to anticipate these techniques or to implement adequate protective measures. ​ Certain key applications, including our core data processing beginning in 2024, are outsourced to third party providers.
However, because the techniques used to obtain unauthorized access, or to disable or degrade systems change frequently and are often not recognized until launched against a target, even with all reasonable security efforts, the Corporation may be unable to anticipate these techniques or to implement adequate protective measures. ​ Certain key applications, including our core data processing are outsourced to third party providers.
It is possible that significant or unexpected changes in interest rates may take place in the future, and we cannot always accurately predict the nature or magnitude of such changes or how such changes may affect our business or results of operations. ​ 24 Table of Contents The Corporation’s investment portfolio consists of fixed income debt securities, classified as available for sale, whose market values fluctuate with changes in interest rates.
It is possible that significant or unexpected changes in interest rates may take place in the future, and we cannot always accurately predict the nature or magnitude of such changes or how such changes may affect our business or results of operations. ​ The Corporation’s investment portfolio consists of fixed income debt securities, classified as available for sale, whose market values fluctuate with changes in interest rates.
While the adoption of ASC 326 does not affect ultimate loan performance or cash flows of the Corporation from making loans, recognizing an 22 Table of Contents allowance based on expected credit losses may create volatility in the level of our allowance for credit losses and our results of operations, including based on volatility in economic forecasts and our expectations of loan performance in future periods, as actual results may differ materially from our estimates.
While the adoption of ASC 326 does not affect ultimate loan performance or cash flows of the Corporation from making loans, recognizing an allowance based on expected credit losses may create volatility in the level of our allowance for credit losses and our results of operations, including based on volatility in economic forecasts and our expectations of loan performance in future periods, as actual results may differ materially from our estimates.
Events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions, transactional counterparties or other companies in the financial services industry, or the financial services industry generally, or concerns or rumors about any events of these kinds or other similar events, have in the past and may in the future lead to erosion of customer confidence in the banking system, deposit volatility, liquidity issues, stock price volatility, and other adverse developments.
Events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions, transactional counterparties or other companies in the financial services industry, or the financial services industry generally, or concerns or rumors about any events of these kinds or other similar events, have in the past and may in the future lead to erosion of customer confidence in the banking system, deposit volatility, liquidity issues, stock price volatility, increased regulatory scrutiny, and other adverse developments.
Because any estimate of credit losses is necessarily subjective and the accuracy of any estimate depends on the outcome of future events that are not within our control, we face the risk that charge-offs in future periods will exceed our allowance for credit losses and that additional provision for credit losses will be required, which would have an adverse effect on the Corporation’s net income.
Because any estimate of credit losses is necessarily subjective and the accuracy of any estimate depends on the outcome of future events that are not within our control, we face the risk that charge-offs in future periods will exceed our allowance for credit losses and that additional provision for credit losses will be required, which would have an adverse 22 Table of Contents effect on the Corporation’s net income.
The limitations and restrictions imposed by the CFPB may produce significant, material effects on our business, financial condition and results of operations. ​ Increased scrutiny and evolving expectations from customers, regulators, investors, and other stakeholders with respect to environmental, social and governance (ESG) practices may impose additional costs on the Corporation or expose it to new or additional risks.
The limitations and restrictions imposed by the CFPB may produce significant, material effects on our business, financial condition and results of operations. 29 Table of Contents Increased scrutiny and evolving expectations from customers, regulators, investors, and other stakeholders with respect to environmental, social and governance (ESG) practices may impose additional costs on the Corporation or expose it to new or additional risks.
General market declines or market volatility in the future, especially in the financial institutions sector, could adversely affect the price of our common stock, and the current market price may not be indicative of future market prices. ​ Future issuances of our common stock could adversely affect the market price of our common stock and could be dilutive. ​ We may issue additional shares of common stock or securities that are convertible into or exchangeable for, or that represent the right to receive, shares of our common stock.
General market declines or market volatility in the future, especially in the financial institutions sector, could adversely affect the price of our common stock, and the current market price may not be indicative of future market prices. 30 Table of Contents Future issuances of our common stock could adversely affect the market price of our common stock and could be dilutive. ​ We may issue additional shares of common stock or securities that are convertible into or exchangeable for, or that represent the right to receive, shares of our common stock.
Additionally, banks and other financial institutions with larger capitalization and financial intermediaries not subject to bank regulatory restrictions have larger 25 Table of Contents lending limits and are thereby able to serve the credit needs of larger clients. These institutions may be able to offer the same loan products and services that we offer at more competitive rates and prices.
Additionally, banks and other financial institutions with larger capitalization and financial intermediaries not subject to bank regulatory restrictions have larger lending limits and are thereby able to serve the credit needs of larger clients. These institutions may be able to offer the same loan products and services that we offer at more competitive rates and prices.
However, a deterioration in economic or other conditions in the localities in which these institutions do business in could adversely affect their financial condition and results of operations, and therefore adversely affect the value of our investment.
However, a deterioration in economic or other conditions in the localities in which these institutions do business in could adversely affect their financial condition and results of operations, and therefore adversely affect the value of our investments.
If we are unable to access funding sufficient to support our business operations and growth strategies or are unable to access such funding on attractive terms, we may not be able to implement our business strategies which may negatively affect our financial performance. ​ Consumers may increasingly decide not to use banks to complete their financial transactions, which could have a material adverse impact on our financial condition and operations. ​ Technology and other changes are allowing parties to complete financial transactions through alternative methods that historically have involved banks.
If we are unable to access funding sufficient to support our business operations and growth strategies or are unable to access such funding on attractive terms, we may not be able to implement our business strategies which may negatively affect our financial performance. ​ 25 Table of Contents Consumers may increasingly decide not to use banks to complete their financial transactions, which could have a material adverse impact on our financial condition and operations. ​ Technology and other changes are allowing parties to complete financial transactions through alternative methods that historically have involved banks.
Changes in interest rates will affect our net interest margin in diverse ways, including the pricing of loans and deposits, the levels of prepayments and asset quality. We are unable to predict actual fluctuations of market interest rates because many factors influencing interest rates, including changes in economic conditions, are beyond our control.
Changes in interest rates will affect our net interest margin in diverse ways, including the pricing 24 Table of Contents of loans and deposits, the levels of prepayments and asset quality. We are unable to predict actual fluctuations of market interest rates because many factors influencing interest rates, including changes in economic conditions, are beyond our control.
The following discussion highlights the risks that we believe are material to the Company, but the following discussion does not necessarily include all risks that we may face, and an investor in the Company’s common stock should not interpret the disclosure of a risk in the following discussion to state or imply that the risk has not already materialized.
The following discussion highlights the risks that we believe are material to the Company, but the following discussion does not necessarily include all risks that we may face, and an investor in the Company’s securities should not interpret the disclosure of a risk in the following discussion to state or imply that the risk has not already materialized.
Additional provision for indemnification losses or additional obligations arising from prepayments would have an adverse effect on the Corporation’s net income. ​ Our level of credit risk is higher due to the concentration of our loan portfolio in commercial real estate loans and in consumer finance automobile loans. ​ At December 31, 2023, 38.4 percent of our loan portfolio consisted of commercial real estate loans, which includes loans secured by apartment complexes, retail properties, and office and warehouse properties.
Additional provision for indemnification losses or additional obligations arising from prepayments would have an adverse effect on the Corporation’s net income. ​ Our level of credit risk is higher due to the concentration of our loan portfolio in commercial real estate loans and in consumer finance automobile loans. ​ At December 31, 2024, 55 percent of our loan portfolio consisted of commercial real estate loans, which includes loans secured by apartment complexes, retail properties, and office and warehouse properties.
The Federal Reserve regulates the supply of money and credit in the United States. Its policies directly and indirectly influence the rate of interest earned on loans and paid on borrowings and interest-bearing deposits and can also affect the value of financial instruments we hold. Those policies determine to a significant extent our cost of funds for lending and investing.
The Federal Reserve regulates the supply of money and credit in the U.S. Its policies directly and indirectly influence the rate of interest earned on loans and paid on borrowings and interest-bearing deposits and can also affect the value of financial instruments we hold. Those policies determine to a significant extent our cost of funds for lending and investing.
ITEM 1A. RISK FACTOR S ​ Investments in the Company’s common stock involve risk. In addition to the other information set forth in this Annual Report on Form 10-K, including the information addressed under “Cautionary Statement Regarding Forward-Looking Statements,” investors in the Company’s common stock should carefully consider the risk factors discussed below.
ITEM 1A. RISK FACTOR S ​ Investments in the Company’s securities involve risks. In addition to the other information set forth in this Annual Report on Form 10-K, including the information addressed under “Cautionary Statement Regarding Forward-Looking Statements,” investors in the Company’s securities should carefully consider the risk factors discussed below.
Our business is directly affected by general economic and market conditions; broad trends in industry and finance; legislative and regulatory changes; changes in governmental monetary and fiscal policies; and inflation, all of which are beyond our control.
Our business is directly affected by general economic and market conditions; broad trends in industry and finance; legislative and regulatory changes; changes in governmental monetary and fiscal policies, including trade policies and tariffs; and inflation, all of which are beyond our control.
In particular, in the current higher interest rate environment, our originations of mortgage loans decreased, resulting in fewer loans available to be sold to investors, which has resulted in a decrease in noninterest income that may continue into future periods, and which may occur during other periods of rising interest rates.
In particular, in the current higher interest rate environment (when compared to 2020 to 2022), our originations of mortgage loans decreased, resulting in fewer loans available to be sold to investors, which has resulted in a decrease in noninterest income that may continue into future periods, and which may occur during other periods of rising interest rates.
As a result of increases in market interest rates during 2022 and 2023, the market value of the Corporation’s investment portfolio declined significantly.
As a result of increases in market interest rates during 2022 and 2023, the market value of the Corporation’s investment portfolio declined significantly during those periods.
In addition, establishing systems and processes to achieve compliance with these laws and regulations may increase our costs and/or limit our ability to pursue certain business opportunities. ​ Laws and regulations, and any interpretations and applications with respect thereto, generally are intended to benefit consumers, borrowers and depositors, but not stockholders.
In addition, establishing systems and processes to achieve compliance with these laws and regulations may increase our costs and/or limit our ability to pursue certain business opportunities. ​ 28 Table of Contents Laws and regulations, and any interpretations and applications with respect thereto, generally are intended to benefit consumers, borrowers and depositors, but not stockholders.
To combat rising inflation, beginning in March 2022, the Federal Reserve has raised its benchmark federal funds interest rate at the fastest pace in over 40 years, increasing 425 basis points during 2022 and an additional 100 basis points in 2023.
To combat rising inflation, beginning in March 2022, the Federal Reserve began raising its benchmark federal funds interest rate at the fastest pace in over 40 years, increasing 425 basis points during 2022 and an additional 100 basis points in 2023.
Our lending and deposit activities are directly affected by, and our financial success depends on, economic conditions within these markets, as well as conditions in the industries on which those markets are economically dependent.
Our lending and deposit activities are directly affected by, and our financial success 21 Table of Contents depends on, economic conditions within these markets, as well as conditions in the industries on which those markets are economically dependent.
Additionally, the majority of the debt securities in which we have invested are in an unrealized loss position as of December 31, 2023, due primarily to increases in interest rates after we purchased those debt securities.
Additionally, the majority of the debt securities in which we have invested remained in an unrealized loss position as of December 31, 2024, due primarily to increases in interest rates after we purchased those debt securities.
Alternatively, an expansion of the money supply could make it easier for a borrower to obtain a loan from another financial institution at a lower interest rate, resulting in a payoff of that borrower’s higher rate loan with us, and which could have an adverse effect on our financial condition and results of operations. ​ Adverse changes in economic conditions in our market areas or adverse conditions in an industry on which a local market in which we do business is dependent could adversely affect our results of operations and financial condition. ​ We provide full-service banking and other financial services throughout eastern and central Virginia, mortgage banking in Virginia, Maryland, North Carolina, and West Virginia, and consumer finance activities throughout 21 states.
Alternatively, an expansion of the money supply could make it easier for a borrower to obtain a loan from another financial institution at a lower interest rate, resulting in a payoff of that borrower’s higher rate loan with us, and which could have an adverse effect on our financial condition and results of operations. ​ Adverse changes in economic conditions in our market areas or adverse conditions in an industry on which a local market in which we do business is dependent could adversely affect our results of operations and financial condition. ​ We provide full-service banking and other financial services throughout eastern and central Virginia, mortgage banking in Virginia and the surrounding states, and consumer finance activities primarily throughout the Mid-Atlantic, Midwest and Southern United States.
Conversely, if market interest rates decline, or if the Federal Reserve lowers the target federal funds rate, such lower rates could limit our interest rate spread and may adversely affect our business forecasts. If market interest rates were to fall, yields on loans and investments may fall.
Conversely, if market interest rates continue to decline, or if the Federal Reserve lowers the target federal funds rate further, such lower rates could limit our interest rate spread and cause yields on loans and investments to fall, which may not be fully offset by lower rates paid on deposits and adversely affect our business forecasts.
In evaluating the level of the allowance 21 Table of Contents for credit losses, we consider a range of possible assumptions and outcomes, however, current economic conditions and forecasts can change and future events are inherently difficult to predict.
The allowance for credit losses is inherently subjective because it requires estimates that are susceptible to significant revision as more information becomes available. In evaluating the level of the allowance for credit losses, we consider a range of possible assumptions and outcomes, however, current economic conditions and forecasts can change and future events are inherently difficult to predict.
As a result of this uncertainty, we face the potential for deposit outflows, increased borrowing and funding costs, and increased competition for liquidity, any of which could have a material adverse impact on our financial performance or financial condition. ​ We are subject to interest rate risk and fluctuations in interest rates may negatively affect our financial performance. ​ Our profitability depends in substantial part on our net interest margin, which is the difference between the interest earned on loans, securities and other interest-earning assets, and interest paid on deposits and borrowings divided by total interest-earning assets.
We are subject to interest rate risk and fluctuations in interest rates may negatively affect our financial performance. ​ Our profitability depends in substantial part on our net interest margin, which is the difference between the interest earned on loans, securities and other interest-earning assets, and interest paid on deposits and borrowings divided by total interest-earning assets.
The legislative and regulatory environment is beyond our control, may change rapidly and unpredictably and may negatively influence our revenues, costs, earnings, and capital levels.
The legislative and regulatory environment is beyond our control, may change rapidly and unpredictably and may negatively influence our revenues, costs, earnings, and capital levels. Our success depends on our ability to maintain compliance with both existing and new laws and regulations.
Either of these outcomes could have a material adverse impact on our financial condition and results of operations. ​ ​ 27 Table of Contents Risks Related to the Regulation of the Corporation ​ Compliance with laws, regulations and supervisory guidance, both new and existing, may adversely affect our business, financial condition and results of operations. ​ We are subject to numerous laws, regulations and supervision from both federal and state agencies.
Any of these risks could expose us to liability or adverse legal or regulatory consequences and harm our reputation and the public perception of our business or the effectiveness of our security measures. ​ Risks Related to the Regulation of the Corporation ​ Compliance with laws, regulations and supervisory guidance, both new and existing, may adversely affect our business, financial condition and results of operations. ​ We are subject to numerous laws, regulations and supervision from both federal and state agencies.
Business, of this Annual Report on Form 10-K for a more detailed description of the certain regulatory requirements applicable to the Corporation. ​ The CFPB may increase our regulatory compliance burden and could affect the consumer financial products and services that we offer. ​ The CFPB significantly influences consumer financial laws, regulation and policy through rulemaking related to enforcement of the Dodd-Frank Act’s prohibitions against unfair, deceptive and abusive consumer finance products or practices, which are directly affecting the business operations of financial institutions offering consumer financial products or services, including the Corporation.
Additionally, comprehensive changes to the federal government could be materially adverse to the regional and local economies where we conduct business and to our customers, which, in turn, could be materially adverse to our business, financial condition and results of operations. ​ The CFPB may increase our regulatory compliance burden and could affect the consumer financial products and services that we offer. ​ The CFPB significantly influences consumer financial laws, regulation and policy through rulemaking related to enforcement of the Dodd-Frank Act’s prohibitions against unfair, deceptive and abusive consumer finance products or practices, which are directly affecting the business operations of financial institutions offering consumer financial products or services, including the Corporation.
Should the ultimate judgments or settlements and/or costs incurred in any litigation exceed any applicable insurance coverage, they could have a material adverse effect on the Corporation’s financial condition and results of operation for any period. ​ Our common stock price may be volatile, which could result in losses to our investors. ​ Our common stock price has been volatile in the past, and several factors could cause the price to fluctuate in the future.
Should the ultimate judgments or settlements and/or costs incurred in any litigation exceed any applicable insurance coverage, they could have a material adverse effect on the Corporation’s financial condition and results of operation for any period. ​ ITEM 1B. UNRESOLVED STAFF COMMENT S ​ The Corporation has no unresolved comments from the SEC staff. ​
Our success depends on our ability to maintain compliance with both existing and new laws and regulations. ​ Future legislation, regulation and government policy, particularly following changes in political leadership and policymakers in the federal government, could affect the banking industry as a whole, including the Corporation’s business and results of operations, in ways that are difficult to predict.
Further, the financial services industry has recently faced more aggressive enforcement of laws at federal, state and local levels, particularly in connection with practices that they deem to harm consumers or the financial system more generally. ​ Future legislation, regulation and government policy, particularly following changes in political leadership and policymakers in the federal government, could affect the banking industry as a whole, including the Corporation’s business and results of operations, in ways that are difficult to predict.
As a regulated financial institution and a publicly traded company, we are facing increasing scrutiny from customers, regulators, investors, and other stakeholders related to ESG practices and disclosure.
As a regulated financial institution and a publicly traded company, we may face increasing scrutiny from customers, regulators, investors, and other stakeholders related to ESG practices and disclosure. Investor advocacy groups, investment funds, and influential investors are increasingly focused on these practices, especially as they relate to climate risk, hiring practices, diversity, health and safety and human rights.
In addition to other risks associated with the ownership of real estate, the repayment of these loans may be dependent upon the profitability and cash flows of the business or project.
The repayment of these loans may be dependent upon the profitability and cash flows of the business or project and therefore, events beyond our control, such as a downturn in the local economy, could adversely affect the performance of the commercial real estate loan portfolio.
As a result, events beyond our control, such as a downturn in the local economy, could adversely affect the performance of the commercial real estate loan portfolio. ​ At December 31, 2023, 23.0 percent of our loan portfolio consisted of consumer finance automobile loans, primarily for customers who have limited access to traditional automobile financing due to increased credit risk.
Banking regulators may also require us to maintain higher levels of capital due to our commercial real estate lending activity than we would otherwise be expected to maintain, which could adversely affect our business, financial condition, and results of operations. ​ At December 31, 2024, 21 percent of our loan portfolio consisted of consumer finance automobile loans, which includes loans to customers who have limited access to traditional automobile financing due to increased credit risk.
Accordingly, our shareholders bear the risk that future issuances of our securities will reduce the market price of the common stock and dilute their stock holdings in the Corporation. ​ ITEM 1B. UNRESOLVED STAFF COMMENT S ​ The Corporation has no unresolved comments from the SEC staff. ​ ​
Accordingly, our shareholders bear the risk that future issuances of our securities will reduce the market price of the common stock and dilute their stock holdings in the Corporation. ​ General Risk Factors ​ We rely heavily on our management team and the unexpected loss of key officers may adversely affect our operations. ​ We believe that our growth and future success will depend in large part on the skills of our executive officers.
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The allowance for credit losses is inherently subjective because it requires estimates that are susceptible to significant revision as more information becomes available.
Added
In addition, banking regulators 23 Table of Contents examine commercial real estate lending activity with heightened scrutiny due to these reasons and may require banks with higher levels of commercial real estate loans to implement more stringent underwriting, internal controls, risk management policies, and portfolio stress testing.
Removed
Investor advocacy groups, investment funds, and influential investors are increasingly focused on these practices, especially as they relate to climate risk, hiring practices, the diversity of the work force, and racial and social justice issues.
Added
As a result of this uncertainty, we face the potential for deposit outflows, increased borrowing and funding costs, and increased competition for liquidity, any of which could have a material adverse impact on our financial performance or financial condition.
Added
Although the Federal Reserve lowered the target range by 50 basis points in September 2024 and 25 basis points in both November and December 2024, the inflationary outlook in the U.S. remains uncertain and the Corporation cannot predict the timing or magnitude of future Federal Reserve monetary policy actions.
Added
Either of these outcomes could have a material adverse impact on our financial condition and results of operations. ​ The development and use of Artificial Intelligence (“AI”) presents risks and challenges that may adversely impact our business. ​ We or our third-party vendors, clients or counterparties may develop or incorporate AI technology in certain business processes, services, or products.
Added
The development and use of AI presents several potential risks and challenges to our business.
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The legal and regulatory environment relating to AI is uncertain and rapidly evolving in the U.S. and internationally, and includes regulatory schemes targeted specifically at AI as well as provisions in intellectual property, privacy, consumer protection, employment, and other laws applicable to the use of AI.
Added
These evolving laws and regulations could require changes in our implementation of AI technology and increase our compliance costs and the risk of non-compliance.
Added
AI models, particularly generative AI models, may produce output or take action that is incorrect, that reflects biases included in the data on which they are trained, that results in the release of private, confidential, or proprietary information, that infringes on the intellectual property rights of others, or that is otherwise harmful.
Added
In addition, the complexity of many AI models makes it difficult to understand why they are generating particular outputs.
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This limited transparency increases the challenges associated with assessing the proper operation of AI models, understanding and monitoring the capabilities of the AI models, reducing erroneous output, eliminating bias, and complying with regulations that require documentation or explanation of the basis on which decisions are made.
Added
Further, we may rely on AI models developed by third parties, and, to that extent, would be dependent in part on the manner in which those third parties develop and train their models, including risks arising from the inclusion of any unauthorized material in the training data for their models and the effectiveness of the steps these third parties have taken to limit the risks associated with the output of their models, matters over which we may have limited visibility.
Added
Business, of this Annual Report on Form 10-K for a more detailed description of the certain regulatory requirements applicable to the Corporation. ​ The financial services industry may be subject to new or changing legislation, regulation, and government policy, which could affect the banking industry and the broader economy. ​ At this time, it is difficult to predict the legislative and regulatory changes that will result from the combination of the new presidential administration and both Houses of Congress having majority memberships from the same political party.
Added
It appears that the new presidential administration will seek to implement a regulatory reform agenda that is significantly different than that of the previous administration, impacting the rulemaking, supervision, examination and enforcement priorities of the federal banking agencies.
Added
Furthermore, the change in presidential administration has, and is expected to continue to, result in certain changes in the leadership and senior staffs of the federal banking agencies. Such changes are likely to impact the rulemaking, supervision, examination and enforcement priorities and policies of the agencies.
Added
In addition, changes in key personnel at the agencies that regulate such banking organizations, including the federal banking agencies, may result in differing interpretations of existing rules and guidelines and potentially different enforcement priorities.
Added
The potential impact of any changes in agency personnel, policies, priorities, regulations and interpretations on the financial services sector, including us, cannot be predicted. ​ The new presidential administration and Congress also may cause broader economic changes due to changes in governing ideology and governing style, as well as changes to the size, scope and operations of the federal government.
Added
These changes could have varied effects on the economy that are difficult to predict. For example, changes in trade and fiscal policy could affect broader patterns of trade and economic growth.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeManagement is responsible for ensuring that such third parties use suitable information security controls when providing services to us. As part of the oversight of third-party service providers, management will determine whether cybersecurity risks are identified, measured, mitigated, monitored, and reported by such third parties. ​ ​
Biggest changeManagement is responsible for ensuring that such third parties use suitable information security controls when providing services to us. As part of the oversight of third-party service providers, management will determine whether cybersecurity risks are identified, measured, mitigated, monitored, and reported by such third parties. ​ ​ ​ ​ 32 Table of Contents
To help carry out their responsibilities, Directors, management, and all employees are periodically trained to understand IT activities and risks, including cybersecurity risks. Management, via the Systems and IT Steering Committee and ISO, or combination, provides a status report to the Board of Directors at least annually, with more frequently communications as necessary.
To help carry out their responsibilities, Directors, management, and all employees are periodically trained to understand IT activities and risks, including cybersecurity risks. Management, via the Systems and IT Steering Committee and ISO, or combination, provides a status report to the Board of Directors at least annually, with more frequent communications as necessary.
The Corporation’s IT department consists of the Chief Information Officer (CIO), who has over 40 years of experience in the IT field, including 14 with the Corporation, and other key personnel who have years of experience and various certifications related to assessing and managing cybersecurity risk.
The Corporation’s IT department consists of the Chief Information Officer (CIO), who has over 40 years of experience in the IT field, including 15 with the Corporation, and other key personnel who have years of experience and various certifications related to assessing and managing cybersecurity risk.
The ISP is developed and maintained utilizing the Federal Financial Institutions Examination Council (FFIEC) Information Technology Examination Handbook and represents the standards, policies, procedures, and guidelines defining the Corporation’s security requirements and related activities, which includes risk management and risk assessment practices.
The ISP is developed and maintained utilizing the Federal Financial Institutions Examination Council (FFIEC) Information 31 Table of Contents Technology Examination Handbook and represents the standards, policies, procedures, and guidelines defining the Corporation’s security requirements and related activities, which includes risk management and risk assessment practices.
The Corporation believes that risk management is a component of overall governance and that IT risk management is a component of overall risk management. 30 Table of Contents ​ The Corporation recognizes that our overall security culture contributes to the effectiveness of our ISP.
The Corporation believes that risk management is a component of overall governance and that IT risk management is a component of overall risk management. ​ The Corporation recognizes that our overall security culture contributes to the effectiveness of our ISP.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeIn addition, the mortgage banking segment has 16 loan production offices, of which four in Virginia are located in C&F Bank branches and 12 are leased from nonaffiliates, including nine in Virginia, one in Maryland, one in North Carolina, and one in West Virginia. 31 Table of Contents ​ The consumer finance segment’s headquarters and its loan and administrative functions and staff are located in Henrico, Virginia, in offices that are owned by C&F Finance. ​ All of the Corporation’s properties are in good operating condition and are adequate for the Corporation’s present and anticipated future needs. ​
Biggest changeIn addition, the mortgage banking segment has 16 loan production offices, of which four in Virginia are located in C&F Bank branches and 12 are leased from nonaffiliates, including 10 in Virginia, one in North Carolina, and one in West Virginia. ​ The consumer finance segment’s headquarters and its loan and administrative functions and staff are located in Henrico, Virginia, in offices that are owned by C&F Finance. ​ All of the Corporation’s properties are in good operating condition and are adequate for the Corporation’s present and anticipated future needs. ​
Of the 32 locations used as bank branches or commercial lending offices, 26 are owned by the community banking segment and six are leased from nonaffiliates. ​ The mortgage banking segment’s main administrative office and a loan production office are located in Midlothian, Virginia, in a building owned by C&F Bank that also houses a branch of C&F Bank.
Of the 32 locations used as bank branches or commercial lending offices, 25 are owned by the community banking segment and seven are leased from nonaffiliates. ​ The mortgage banking segment’s main administrative office and a loan production office are located in Midlothian, Virginia, in a building owned by C&F Bank that also houses a branch of C&F Bank.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeMcKernon (67) President and Chief Executive Officer, C&F Mortgage ​ President and Chief Executive Officer of C&F Mortgage since 1995; Director of C&F Bank since 1998 ​ ​ ​ S. Dustin Crone (55) President and Chief Executive Officer, C&F Finance ​ Chief Executive Officer of C&F Finance since 2020; President of C&F Finance since 2010 ​ ​ ​ John A.
Biggest changeDustin Crone (56) President and Chief Executive Officer, C&F Finance ​ Chief Executive Officer of C&F Finance since 2020; President of C&F Finance since 2010 ​ ​ ​ John A.
Cherry (55) President and Chief Executive Officer ​ Chief Executive Officer of the Corporation and C&F Bank since 2019; President of the Corporation and C&F Bank since 2014; Director of the Corporation and C&F Bank since 2015; Secretary of the Corporation and C&F Bank from 2002 to 2018; Chief Financial Officer of the Corporation and C&F Bank from 2004 to 2016 ​ Larry G.
Cherry (56) President and Chief Executive Officer ​ Chief Executive Officer of the Corporation and C&F Bank since 2019; President of the Corporation and C&F Bank since 2014; Director of the Corporation and C&F Bank since 2015; Secretary of the Corporation and C&F Bank from 2002 to 2018; Chief Financial Officer of the Corporation and C&F Bank from 2004 to 2016 ​ Larry G.
Dillon (71) Executive Chairman ​ Chairman of the Board of Directors of the Corporation and C&F Bank since 1989; Chief Executive Officer of the Corporation and C&F Bank from 1989 to 2018; President of the Corporation and C&F Bank from 1989 to 2014 ​ Jason E.
Dillon (72) Executive Chairman ​ Chairman of the Board of Directors of the Corporation and C&F Bank since 1989; Chief Executive Officer of the Corporation and C&F Bank from 1989 to 2018; President of the Corporation and C&F Bank from 1989 to 2014 ​ Jason E.
ITEM 4. MINE SAFETY DISCLOSURE S ​ None. ​ INFORMATION ABOUT OUR EXECUTIVE OFFICERS ​ ​ ​ ​ ​ Name (Age) Present Position Business Experience During Past Five Years ​ Thomas F.
ITEM 4. MINE SAFETY DISCLOSURE S ​ None. ​ 33 Table of Contents INFORMATION ABOUT OUR EXECUTIVE OFFICERS ​ ​ ​ ​ ​ Name (Age) Present Position Business Experience During Past Five Years ​ Thomas F.
Long (44) Executive Vice President, Chief Financial Officer and Secretary ​ Executive Vice President and Chief Financial Officer of the Corporation and C&F Bank since 2020; Senior Vice President and Chief Financial Officer of the Corporation and C&F Bank from 2016 to 2020; Secretary of the Corporation and C&F Bank since 2019 ​ ​ ​ Bryan E.
Long (45) Executive Vice President, Chief Financial Officer and Secretary ​ Executive Vice President and Chief Financial Officer of the Corporation and C&F Bank since 2020; Senior Vice President and Chief Financial Officer of the Corporation and C&F Bank from 2016 to 2020; Secretary of the Corporation and C&F Bank since 2019 ​ ​ ​ Mark A.
Seaman, III (66) Executive Vice President and Chief Credit Officer, C&F Bank ​ Executive Vice President and Chief Credit Officer of C&F Bank since 2011 ​ ​ 32 Table of Contents PART I I ​
Seaman, III (67) Executive Vice President and Chief Credit Officer, C&F Bank ​ Executive Vice President and Chief Credit Officer of C&F Bank since 2011 ​ ​ PART I I ​
Added
Fox (59) President and Chief Executive Officer, C&F Mortgage ​ President and Chief Executive Officer of C&F Mortgage beginning January 1, 2025; Executive Vice President, Chief Operating Officer of C&F Mortgage from 2005 to 2024, Chief Financial Officer of C&F Mortgage from 1995 to 2005 ​ ​ ​ S.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe following financial institutions were included in the 2023 Peer Group: ​ ​ ​ ​ ​ ​ ACNB Corporation ​ Fidelity D & D Bancorp, Inc. ​ Ohio Valley Banc Corp. American National Bankshares Inc. ​ First Community Bankshares, Inc. ​ Old Point Financial Corporation AmeriServ Financial, Inc. ​ First Community Corporation ​ Orrstown Financial Services, Inc.
Biggest changePerformance of the 2023 Peer Group is presented on a weighted basis according to each peer financial institution’s market capitalization as of December 31, 2019. ​ The following financial institutions were included in the 2023 Peer Group: ​ ​ ​ ​ ​ ​ ACNB Corporation ​ Fidelity D & D Bancorp, Inc. ​ Ohio Valley Banc Corp.
Repurchases under the 2024 Repurchase Program may be made through privately negotiated transactions or open market transactions, including pursuant to a trading plan in accordance with Rule 10b5-1 and/or Rule 10b-18 under the Securities Exchange Act of 1934, as amended, and shares repurchased will be returned to the status of authorized and unissued shares of common stock.
Repurchases under the 2025 Repurchase Program may be made through privately negotiated transactions or open market transactions, including pursuant to a trading plan in accordance with Rule 10b5-1 and/or Rule 10b-18 under the Securities Exchange Act of 1934, as amended, and shares repurchased will be returned to the status of authorized and unissued shares of common stock.
The 2023 Peer Group consists of entities that meet the following criteria: (i) publicly-traded commercial financial institution headquartered in Virginia, Maryland, North Carolina, West Virginia, South Carolina, Tennessee, Pennsylvania, New Jersey, Ohio, Indiana, Georgia, Florida, and Alabama (excluding certain large metropolitan areas that are not similar to the economic markets served by the Corporation) and (ii) total assets as of December 31, 2022 of between $1.2 billion and $5.0 billion.
The 2023 Peer Group consisted of entities that met the following criteria: (i) publicly-traded commercial financial institution headquartered in Virginia, Maryland, North Carolina, West Virginia, South Carolina, Tennessee, Pennsylvania, New Jersey, Ohio, Indiana, Georgia, Florida and Alabama (excluding certain large metropolitan areas that are not similar to the economic markets served by the Corporation) and (ii) total assets as of December 31, 2022 of between $1.2 billion and $5.0 billion.
As of that date, the closing price of our common stock on the NASDAQ Global Select Stock Market was $54.00. ​ ​ Payment of dividends is at the discretion of the Corporation’s Board of Directors and is subject to various federal and state regulatory limitations. For further information regarding payment of dividends refer to Item 1.
As of that date, the closing price of our common stock on the NASDAQ Global Select Stock Market was $76.29. ​ Payment of dividends is at the discretion of the Corporation’s Board of Directors and is subject to various federal and state regulatory limitations. For further information regarding payment of dividends refer to Item 1.
“Business,” under the heading “Regulation and Supervision–­­Limits on Dividends.” In making its decision on the payment of dividends on the Corporation’s common stock, the Corporation’s Board of Directors considers operating results, financial condition, capital adequacy, regulatory requirements, shareholder returns, and other factors. ​ Issuer Purchases of Equity Securities ​ The Corporation’s Board of Directors authorized a program, effective December 1, 2022, to repurchase up to $10.0 million of the Corporation’s common stock through December 31, 2023 (the 2022 Repurchase Program).
“Business,” under the heading “Regulation and Supervision–­­Limits on Dividends.” In making its decision on the payment of dividends on the Corporation’s common stock, the Corporation’s Board of Directors considers operating results, financial condition, capital adequacy, regulatory requirements, shareholder returns, and other factors. ​ 34 Table of Contents Issuer Purchases of Equity Securities ​ The Corporation’s Board of Directors authorized a program, effective January 1, 2024 through December 31, 2024, to repurchase up to $10.0 million of the Corporation’s common stock (the 2024 Repurchase Program).
The 2022 Peer Group consisted of 23 publicly-traded commercial financial institutions with a median asset size of $2.2 billion based on total assets as of December 31, 2021.
The 2023 Peer Group consisted of 53 publicly-traded commercial financial institutions with a median asset size of $2.2 billion based on total assets as of December 31, 2022.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES ​ The Corporation’s common stock is listed for trading on the NASDAQ Global Select Market of the NASDAQ Stock Market under the symbol “CFFI.” As of February 26, 2024 there were approximately 3,000 shareholders of our common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES ​ The Corporation’s common stock is listed for trading on the NASDAQ Global Select Market of the NASDAQ Stock Market under the symbol “CFFI.” As of February 24, 2025, there were approximately 2,500 shareholders of our common stock.
The timing, number and purchase price of shares repurchased under repurchase programs, if any, will be determined by management in its discretion and will depend on a number of factors, including the market price of the shares, general market and economic conditions, applicable legal requirements and other conditions, and there is no assurance that the Corporation will purchase any shares under repurchase programs. ​ The following table summarizes repurchases of the Corporation’s common stock that occurred during the three months ended December 31, 2023. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Maximum Number ​ ​ ​ ​ ​ ​ ​ ​ ​ (or Approximate ​ ​ ​ ​ ​ ​ ​ Total Number of ​ Dollar Value) of ​ ​ ​ ​ ​ ​ ​ Shares Purchased as ​ Shares that May Yet ​ ​ ​ ​ ​ ​ ​ Part of Publicly ​ Be Purchased ​ ​ Total Number of ​ Average Price Paid ​ Announced Plans or ​ Under the Plans or ​ ​ Shares Purchased 1 ​ per Share ​ Programs ​ Programs October 1, 2023 - October 31, 2023 ​ 10,500 ​ $ 55.19 ​ 10,500 ​ $ 3,116,078 ​ November 1, 2023 - November 30, 2023 ​ 9,000 ​ $ 56.24 ​ 9,000 ​ $ 2,609,899 ​ December 1, 2023 - December 31, 2023 ​ 5,274 ​ $ 58.78 ​ 1,000 ​ $ — ​ Total 24,774 ​ $ 56.34 20,500 ​ ​ ​ ​ 1 During the three months ended December 31, 2023, 4,274 shares were withheld upon the vesting of restricted shares granted to employees of the Corporation and its subsidiaries in order to satisfy tax withholding obligations. ​ 33 Table of Contents The following graph compares the yearly cumulative total shareholder return on the common stock of the Corporation with the yearly cumulative total shareholder return on stock included in (1) the NASDAQ Composite Index and (2) a group of peer commercial financial institutions identified by the Corporation for 2023 (the 2023 Peer Group) and for 2022 (the 2022 Peer Group).
The timing, number and purchase price of shares repurchased under repurchase programs, if any, will be determined by management in its discretion and will depend on a number of factors, including the market price of the shares, general market and economic conditions, applicable legal requirements and other conditions, and there is no assurance that the Corporation will purchase any shares under repurchase programs. ​ The following table summarizes repurchases of the Corporation’s common stock that occurred during the three months ended December 31, 2024. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Maximum Number ​ ​ ​ ​ ​ ​ ​ ​ ​ (or Approximate ​ ​ ​ ​ ​ ​ ​ Total Number of ​ Dollar Value) of ​ ​ ​ ​ ​ ​ ​ Shares Purchased as ​ Shares that May Yet ​ ​ ​ ​ ​ ​ ​ Part of Publicly ​ Be Purchased ​ ​ Total Number of ​ Average Price Paid ​ Announced Plans or ​ Under the Plans or ​ ​ Shares Purchased 1 ​ per Share ​ Programs ​ Programs October 1, 2024 - October 31, 2024 ​ 9,629 ​ $ 60.86 ​ 9,600 ​ $ 2,146,531 ​ November 1, 2024 - November 30, 2024 ​ 1,500 ​ $ 62.89 ​ 1,500 ​ $ 2,052,191 ​ December 1, 2024 - December 31, 2024 ​ 4,592 ​ $ 71.95 ​ — ​ $ — ​ Total 15,721 ​ $ 64.29 11,100 ​ ​ ​ ​ 1 During the three months ended December 31, 2024, 4,621 shares were withheld upon the vesting of restricted shares granted to employees of the Corporation and its subsidiaries in order to satisfy tax withholding obligations. ​ ​ 35 Table of Contents Five-Year Stock Performance ​ The following graph compares the yearly cumulative total shareholder return on the common stock of the Corporation with the yearly cumulative total shareholder return on stock included in (1) the NASDAQ Composite Index and (2) a group of peer commercial financial institutions identified by the Corporation for 2024 (the 2024 Peer Group) and for 2023 (the 2023 Peer Group).
As of December 31, 2023, the Corporation made aggregate common stock repurchases of 135,327 shares for an aggregate amount repurchased of $7.5 million under the 2022 Repurchase Program. ​ The Corporation’s Board of Directors authorized a program, effective January 1, 2024, to repurchase up to $10.0 million of the Corporation’s common stock through December 31, 2024 (the 2024 Repurchase Program).
As of December 31, 2024, the Corporation made aggregate common stock repurchases of 160,694 shares, or $7.9 million, under the 2024 Repurchase Program. ​ 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 the Corporation’s common stock (the 2025 Repurchase Program).
Carter Bankshares, Inc. ​ FNCB Bancorp, Inc. ​ Princeton Bancorp, Inc. CB Financial Services, Inc. ​ Franklin Financial Services Corporation ​ Richmond Mutual Bancorporation, Inc. CF Bankshares Inc. ​ FVCBankcorp, Inc. ​ River Financial Corporation Citizens & Northern Corporation ​ HomeTrust Bancshares, Inc. ​ SB Financial Group, Inc.
CB Financial Services, Inc. ​ First United Corporation ​ Peoples Financial Services Corp. CF Bankshares Inc. ​ Franklin Financial Services Corporation ​ Primis Financial Corp. Citizens & Northern Corp. ​ FVCBankcorp, Inc. ​ Princeton Bancorp, Inc. Citizens Financial Services, Inc. ​ HomeTrust Bancshares, Inc. ​ Richmond Mutual Bancorporation, Inc.
First United Corporation ​ The Community Financial Corporation FVCBankcorp, Inc. ​ Virginia National Bankshares Corporation HomeTrust Bancshares, Inc. ​ ​ ​ The graph below assumes $100 invested on December 31, 2018 in the Corporation, the NASDAQ Composite Index and the Peer Group, and shows the total return on such an investment as of December 31, 2023, assuming reinvestment of dividends.
The graph assumes $100 invested on December 31, 2019 in the Corporation, the NASDAQ Composite Index and the Peer Group, and shows the total return on such an investment as of December 31, 2024, assuming reinvestment of dividends.
The 2023 Peer Group consisted of 53 publicly-traded commercial financial institutions with a median asset size of $2.2 billion based on total assets as of December 31, 2022. Performance of the 2023 Peer Group is presented on a weighted basis according to each peer financial institution’s market capitalization as of December 31, 2018.
The 2024 Peer Group consisted of 48 publicly-traded commercial financial institutions with a median asset size of $2.2 billion based on total assets as of December 31, 2023.
Performance of the 2022 Peer Group is presented on a weighted basis according to each peer financial institution’s market capitalization as of December 31, 2018. ​ 34 Table of Contents The following financial institutions were included in the 2022 Peer Group: ​ ​ ​ ​ American National Bankshares Inc. ​ Limestone Bancorp, Inc.
Performance of the 2024 Peer Group is presented on a weighted basis according to each peer financial institution’s market capitalization as of December 31, 2019. 36 Table of Contents The following financial institutions were included in the 2024 Peer Group: ​ ​ ​ ​ ​ ​ ACNB Corporation ​ First Bank ​ Norwood Financial Corp.
Citizens Financial Services, Inc. ​ John Marshall Bancorp, Inc. ​ Security Federal Corporation Civista Bancshares, Inc. ​ LCNB Corp. ​ SmartFinancial, Inc. Codorus Valley Bancorp, Inc. ​ MainStreet Bancshares, Inc. ​ Southern First Bancshares, Inc. Colony Bankcorp, Inc. ​ Mid Penn Bancorp, Inc. ​ Southern States Bancshares, Inc.
CF Bankshares Inc. ​ FVCBankcorp, Inc. ​ River Financial Corporation Citizens & Northern Corporation ​ HomeTrust Bancshares, Inc. ​ SB Financial Group, Inc. Citizens Financial Services, Inc. ​ John Marshall Bancorp, Inc. ​ Security Federal Corporation Civista Bancshares, Inc. ​ LCNB Corp. ​ SmartFinancial, Inc. Codorus Valley Bancorp, Inc. ​ MainStreet Bancshares, Inc. ​ Southern First Bancshares, Inc.
Eagle Financial Services, Inc. ​ Middlefield Banc Corp. ​ Summit Financial Group, Inc. F & M Bank Corp. ​ National Bankshares, Inc. ​ Virginia National Bankshares Corporation Farmers & Merchants Bancorp, Inc. ​ Norwood Financial Corp. ​ ​ ​ Previously, the Corporation reported a different group of peer companies.
Farmers & Merchants Bancorp, Inc. ​ Middlefield Banc Corp. ​ Southern States Bancshares, Inc. Fidelity D & D Bancorp, Inc. ​ National Bankshares, Inc. ​ Virginia National Bankshares Corporation ​ Previously, the Corporation reported a different group of peer companies.
Blue Ridge Bankshares, Inc. ​ First Financial Corporation ​ Penns Woods Bancorp, Inc. Burke & Herbert Financial Services Corp. ​ First National Corporation ​ Peoples Bancorp of North Carolina, Inc. Capital City Bank Group, Inc. ​ First Savings Financial Group, Inc. ​ Peoples Financial Services Corp. CapStar Financial Holdings, Inc. ​ First United Corporation ​ Primis Financial Corp.
AmeriServ Financial, Inc. ​ First Community Bankshares, Inc. ​ Ohio Valley Banc Corp. Blue Ridge Bankshares, Inc. ​ First Community Corporation ​ Old Point Financial Corporation Capital City Bank Group, Inc. ​ First National Corporation ​ Penns Woods Bancorp, Inc. Carter Bankshares, Inc. ​ First Savings Financial Group, Inc. ​ Peoples Bancorp of North Carolina, Inc.
In 2023, the Corporation changed the composition of the peer group used to evaluate financial performance of the Corporation primarily by expanding the geography included in the peer group.
In 2024, the Corporation changed the composition of the peer group used to evaluate financial performance of the Corporation primarily to reflect consolidation within the banking industry.
Blue Ridge Bankshares, Inc. ​ MainStreet Bancshares, Inc. CapStar Financial Holdings, Inc. ​ National Bankshares, Inc. Carter Bankshares, Inc. ​ Old Point Financial Corporation Eagle Financial Services, Inc. ​ Peoples Bancorp of North Carolina, Inc. F & M Bank Corp. ​ Primis Financial Corp. First Community Bankshares, Inc. ​ Shore Bancshares, Inc. First Community Corporation ​ Southern First Bancshares, Inc.
American National Bankshares Inc. ​ First Community Bankshares, Inc. ​ Old Point Financial Corporation AmeriServ Financial, Inc. ​ First Community Corporation ​ Orrstown Financial Services, Inc. Blue Ridge Bankshares, Inc. ​ First Financial Corporation ​ Penns Woods Bancorp, Inc. Burke & Herbert Financial Services Corp. ​ First National Corporation ​ Peoples Bancorp of North Carolina, Inc.
Removed
The 2022 Repurchase Program expired on December 31, 2023.
Added
There can be no assurance that the Corporation’s stock performance in the future will continue with the same or similar trends depicted in the graph below. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Period Ending Index 12/31/2019 12/31/2020 12/31/2021 12/31/2022 ​ 12/31/2023 12/31/2024 C&F Financial Corporation ​ ​ 100.00 ​ ​ 70.12 ​ ​ 99.74 ​ ​ 117.17 ​ ​ 141.41 ​ ​ 152.50 NASDAQ Composite Index ​ ​ 100.00 ​ ​ 144.92 ​ ​ 177.06 ​ ​ 119.45 ​ ​ 172.77 ​ ​ 223.87 2024 Peer Group ​ ​ 100.00 ​ ​ 77.82 ​ ​ 105.22 ​ ​ 104.82 ​ ​ 102.58 ​ ​ 113.87 2023 Peer Group ​ ​ 100.00 ​ ​ 77.91 ​ ​ 103.83 ​ ​ 104.87 ​ ​ 103.95 ​ ​ 114.02 ​ The 2024 Peer Group consists of entities that meet the following criteria: (i) publicly-traded commercial financial institution headquartered in Virginia, Maryland, North Carolina, South Carolina, Tennessee, Pennsylvania, New Jersey, Ohio, Indiana, Georgia, Florida, and Alabama (excluding certain large metropolitan areas that are not similar to the economic markets served by the Corporation) and (ii) total assets as of December 31, 2023 of between $1.2 billion and $5.0 billion.
Removed
The expansion of the geography of the peer group was based on a determination that the primary factors affecting competition, financial performance, and access to capital for the Corporation and its peers are generally not unique to the state(s) or local area in which they operate, and the quality of comparisons of the Corporation’s financial performance are improved by including a broader set of companies in the peer group.
Added
Civista Bancshares, Inc. ​ John Marshall Bancorp, Inc. ​ River Financial Corporation Colony Bankcorp, Inc. ​ LCNB Corp. ​ SB Financial Group, Inc. Eagle Financial Services, Inc. ​ LINKBANCORP Inc. ​ Security Federal Corporation ESSA Bancorp Inc. ​ MainStreet Bancshares, Inc. ​ SmartFinancial, Inc. F & M Bank Corp. ​ MetroCity Bankshares, Inc. ​ Southern First Bancshares, Inc.
Removed
The 2022 Peer Group consisted of entities that met the following criteria: (i) publicly-traded commercial financial institution headquartered in Virginia, Kentucky, Maryland, North Carolina, South Carolina, Tennessee and West Virginia and (ii) total assets as of December 31, 2021 of between $1.0 billion and $4.5 billion.
Added
Capital City Bank Group, Inc. ​ First Savings Financial Group, Inc. ​ Peoples Financial Services Corp. CapStar Financial Holdings, Inc. ​ First United Corporation ​ Primis Financial Corp. Carter Bankshares, Inc. ​ FNCB Bancorp, Inc. ​ Princeton Bancorp, Inc. CB Financial Services, Inc. ​ Franklin Financial Services Corporation ​ Richmond Mutual Bancorporation, Inc.
Removed
First National Corporation ​ Summit Financial Group, Inc.
Added
Colony Bankcorp, Inc. ​ Mid Penn Bancorp, Inc. ​ Southern States Bancshares, Inc. Eagle Financial Services, Inc. ​ Middlefield Banc Corp. ​ Summit Financial Group, Inc. F & M Bank Corp. ​ National Bankshares, Inc. ​ Virginia National Bankshares Corporation Farmers & Merchants Bancorp, Inc. ​ Norwood Financial Corp. ​ ​ ​ ​ ​ ​ ​ ​ ITEM 6.
Removed
There can be no assurance that the Corporation’s stock performance in the future will continue with the same or similar trends depicted in the graph below. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Period Ending Index 12/31/2018 12/31/2019 12/31/2020 12/31/2021 ​ 12/31/2022 12/31/2023 C&F Financial Corporation ​ ​ 100.00 ​ ​ 107.02 ​ ​ 75.04 ​ ​ 106.74 ​ ​ 125.40 ​ ​ 151.34 NASDAQ Composite Index ​ ​ 100.00 ​ ​ 136.69 ​ ​ 198.10 ​ ​ 242.03 ​ ​ 163.28 ​ ​ 236.17 2023 Peer Group ​ ​ 100.00 ​ ​ 117.55 ​ ​ 91.59 ​ ​ 122.05 ​ ​ 123.28 ​ ​ 122.19 2022 Peer Group ​ ​ 100.00 ​ ​ 123.12 ​ ​ 91.42 ​ ​ 130.95 ​ ​ 124.01 ​ ​ 124.34 ​ ​ ​ ​ ​ ​ ITEM 6.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

1 edited+0 added−0 removed0 unchanged
Biggest changeITEM 6. RESERVED ​ 35 ​ ​ ​ ​ ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ​ 36 ​ ​ ​ ​ ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK ​ 76 ​ ​ ​ ​ ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA ​ 79 ​ ​ ​ ​
Biggest changeITEM 6. RESERVED ​ 37 ​ ​ ​ ​ ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ​ 38 ​ ​ ​ ​ ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK ​ 79 ​ ​ ​ ​ ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA ​ 82 ​ ​ ​ ​

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

157 edited+35 added−32 removed139 unchanged
Biggest changeTABLE 10: Allowance for Credit Losses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer ​ ​ ​ ​ (Dollars in thousands) ​ Commercial ​ Consumer 1 ​ Finance ​ Total ​ Balance at December 31, 2022 ​ $ 11,219 ​ $ 3,330 ​ $ 25,969 ​ $ 40,518 ​ Impact of ASC 326 adoption on non-PCD loans ​ ​ (617) ​ ​ 98 ​ ​ 406 ​ ​ (113) ​ Impact of ASC 326 adoption on PCD loans ​ ​ 595 ​ ​ 9 ​ ​ — ​ ​ 604 ​ Provision charged to operations ​ ​ 978 ​ ​ 498 ​ ​ 6,650 ​ ​ 8,126 ​ Loans charged off ​ ​ (16) ​ ​ (356) ​ ​ (13,743) ​ ​ (14,115) ​ Recoveries of loans previously charged off ​ ​ 156 ​ ​ 179 ​ ​ 4,296 ​ ​ 4,631 ​ Balance at December 31, 2023 ​ $ 12,315 ​ $ 3,758 ​ $ 23,578 ​ $ 39,651 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average loans ​ $ 879,608 ​ $ 336,727 ​ $ 473,885 ​ $ 1,690,220 ​ Ratio of net (recoveries) charge-offs to average loans ​ ​ (0.02) % ​ 0.05 % ​ 1.99 % ​ 0.56 % 1 Consumer loans includes provision, charge-offs and recoveries related to demand deposit overdrafts. 53 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Real Estate ​ ​ Commercial, ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Residential ​ Real Estate ​ Financial & ​ Equity ​ ​ ​ ​ Consumer ​ ​ ​ ​ (Dollars in thousands) ​ Mortgage ​ Construction ​ Agricultural ​ Lines ​ Consumer 1 ​ Finance ​ Total ​ For the year ended December 31, 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at beginning of period ​ $ 2,914 ​ $ 975 ​ $ 10,696 ​ $ 687 ​ $ 371 ​ $ 23,513 ​ $ 39,156 ​ Provision charged to operations ​ (279) ​ ​ (119) ​ ​ 385 ​ ​ (95) ​ ​ (137) ​ ​ 820 ​ ​ 575 ​ Loans charged off ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ (184) ​ ​ (4,381) ​ ​ (4,565) ​ Recoveries of loans previously charged off ​ 25 ​ ​ — ​ ​ 4 ​ ​ 1 ​ ​ 122 ​ ​ 4,839 ​ ​ 4,991 ​ Balance at end of period ​ $ 2,660 ​ $ 856 ​ $ 11,085 ​ $ 593 ​ $ 172 ​ $ 24,791 ​ $ 40,157 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average loans ​ $ 215,745 ​ $ 60,951 ​ $ 717,717 ​ $ 44,320 ​ $ 8,842 ​ $ 334,565 ​ $ 1,382,140 ​ Ratio of net (recoveries) charge-offs to average loans ​ ​ (0.01) % ​ — % ​ (0.01) % ​ (0.01) % ​ 0.70 % ​ (0.14) % ​ (0.03) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at beginning of period ​ $ 2,660 ​ $ 856 ​ $ 11,085 ​ $ 593 ​ $ 172 ​ $ 24,791 ​ $ 40,157 ​ Provision charged to operations ​ (54) ​ ​ (68) ​ ​ (534) ​ ​ (98) ​ ​ 186 ​ ​ 3,740 ​ ​ 3,172 ​ Loans charged off ​ (2) ​ ​ — ​ ​ (140) ​ ​ — ​ ​ (260) ​ ​ (7,016) ​ ​ (7,418) ​ Recoveries of loans previously charged off ​ 18 ​ ​ — ​ ​ 20 ​ ​ 2 ​ ​ 113 ​ ​ 4,454 ​ ​ 4,607 ​ Balance at end of period ​ $ 2,622 ​ $ 788 ​ $ 10,431 ​ $ 497 ​ $ 211 ​ $ 25,969 ​ $ 40,518 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average loans ​ $ 230,895 ​ $ 75,605 ​ $ 730,291 ​ $ 41,299 ​ $ 8,207 ​ $ 431,470 ​ $ 1,517,767 ​ Ratio of net (recoveries) charge-offs to average loans ​ ​ (0.01) % ​ — % ​ 0.02 % ​ — % ​ 1.79 % ​ 0.59 % ​ 0.19 % 1 Consumer loans includes provision, charge-offs and recoveries related to demand deposit overdrafts. ​ For further information regarding the adequacy of our allowance for credit losses, refer to “Nonperforming Assets” and the accompanying disclosure below within this Item 7. ​ The allocation of the allowance for credit losses and the ratio of corresponding outstanding loan balances to total loans are as follows as of the dates indicated.
Biggest changeTABLE 10: Allowance for Credit Losses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer ​ ​ ​ ​ (Dollars in thousands) ​ Commercial ​ Consumer 1 ​ Finance ​ Total ​ For the year ended December 31, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at December 31, 2023 ​ $ 12,315 ​ $ 3,758 ​ $ 23,578 ​ $ 39,651 ​ Provision charged to operations ​ ​ 1,058 ​ ​ 442 ​ ​ 11,600 ​ ​ 13,100 ​ Loans charged off ​ ​ (63) ​ ​ (377) ​ ​ (16,723) ​ ​ (17,163) ​ Recoveries of loans previously charged off ​ ​ 37 ​ ​ 209 ​ ​ 4,253 ​ ​ 4,499 ​ Balance at December 31, 2024 ​ $ 13,347 ​ $ 4,032 ​ $ 22,708 ​ $ 40,087 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average loans 2 ​ $ 1,010,121 ​ $ 371,375 ​ $ 476,775 ​ $ 1,858,271 ​ Ratio of net charge-offs to average loans ​ ​ 0.00 % ​ 0.05 % ​ 2.62 % ​ 0.68 % 1 Consumer loans includes provision, charge-offs and recoveries related to demand deposit overdrafts. 2 Average loans does not include loans held for sale at the mortgage banking segment. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer ​ ​ ​ ​ (Dollars in thousands) ​ Commercial ​ Consumer 1 ​ Finance ​ Total ​ For the year ended December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at December 31, 2022 ​ $ 11,219 ​ $ 3,330 ​ $ 25,969 ​ $ 40,518 ​ Impact of ASC 326 adoption on non-PCD loans ​ ​ (617) ​ ​ 98 ​ ​ 406 ​ ​ (113) ​ Impact of ASC 326 adoption on PCD loans ​ ​ 595 ​ ​ 9 ​ ​ — ​ ​ 604 ​ Provision charged to operations ​ ​ 978 ​ ​ 498 ​ ​ 6,650 ​ ​ 8,126 ​ Loans charged off ​ ​ (16) ​ ​ (356) ​ ​ (13,743) ​ ​ (14,115) ​ Recoveries of loans previously charged off ​ ​ 156 ​ ​ 179 ​ ​ 4,296 ​ ​ 4,631 ​ Balance at December 31, 2023 ​ $ 12,315 ​ $ 3,758 ​ $ 23,578 ​ $ 39,651 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average loans 2 ​ $ 879,608 ​ $ 336,727 ​ $ 473,885 ​ $ 1,690,220 ​ Ratio of net (recoveries) charge-offs to average loans ​ ​ (0.02) % ​ 0.05 % ​ 1.99 % ​ 0.56 % 1 Consumer loans includes provision, charge-offs and recoveries related to demand deposit overdrafts. 2 Average loans does not include loans held for sale at the mortgage banking segment. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Real Estate ​ ​ Commercial, ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Residential ​ Real Estate ​ Financial & ​ Equity ​ ​ ​ ​ Consumer ​ ​ ​ ​ (Dollars in thousands) ​ Mortgage ​ Construction ​ Agricultural ​ Lines ​ Consumer 1 ​ Finance ​ Total ​ For the year ended December 31, 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at December 31, 2021 ​ $ 2,660 ​ $ 856 ​ $ 11,085 ​ $ 593 ​ $ 172 ​ $ 24,791 ​ $ 40,157 ​ Provision charged to operations ​ (54) ​ ​ (68) ​ ​ (534) ​ ​ (98) ​ ​ 186 ​ ​ 3,740 ​ ​ 3,172 ​ Loans charged off ​ (2) ​ ​ — ​ ​ (140) ​ ​ — ​ ​ (260) ​ ​ (7,016) ​ ​ (7,418) ​ Recoveries of loans previously charged off ​ 18 ​ ​ — ​ ​ 20 ​ ​ 2 ​ ​ 113 ​ ​ 4,454 ​ ​ 4,607 ​ Balance at December 31, 2022 ​ $ 2,622 ​ $ 788 ​ $ 10,431 ​ $ 497 ​ $ 211 ​ $ 25,969 ​ $ 40,518 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average loans 2 ​ $ 230,895 ​ $ 75,605 ​ $ 730,291 ​ $ 41,299 ​ $ 8,207 ​ $ 431,470 ​ $ 1,517,767 ​ Ratio of net (recoveries) charge-offs to average loans ​ ​ (0.01) % ​ — % ​ 0.02 % ​ — % ​ 1.79 % ​ 0.59 % ​ 0.19 % 1 Consumer loans includes provision, charge-offs and recoveries related to demand deposit overdrafts. 2 Average loans does not include loans held for sale at the mortgage banking segment. ​ For further information regarding the adequacy of our allowance for credit losses, refer to “Nonperforming Assets” and the accompanying disclosure below within this Item 7. ​ 56 Table of Contents The allocation of the allowance for credit losses and the ratio of corresponding outstanding loan balances to total loans are as follows as of the dates indicated. ​ TABLE 11: Allocation of Allowance for Credit Losses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ December 31, ​ (Dollars in thousands) 2024 2023 Allocation of allowance for credit losses: ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ $ 13,347 ​ ​ $ 12,315 ​ Consumer ​ 4,032 ​ ​ 3,758 ​ Consumer Finance ​ 22,708 ​ ​ 23,578 ​ Total allowance for credit losses ​ $ 40,087 ​ ​ $ 39,651 ​ Ratio of loans to total period-end loans: ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ 55 % ​ 52 % Consumer ​ 20 ​ ​ 21 ​ Consumer Finance ​ 25 ​ ​ 27 ​ ​ ​ 100 % ​ 100 % ​ ​ ​ Loans are required to be measured at amortized cost and to be presented at the net amount expected to be collected.
During the years ended December 31, 2023 and 2022, the Corporation repurchased 127,364 shares, or $7.1 million, of its common stock and 7,963 shares, or $454,000, of its common stock under the 2022 Repurchase Program, respectively. ​ In December 2023, the Board of Directors authorized a program, effective January 1, 2024, to repurchase up to $10.0 million of the Corporation’s common stock through December 31, 2024 (the 2024 Repurchase Program).
During the years ended December 31, 2023 and 2022, the Corporation repurchased 127,364 shares, or $7.1 million, and 7,963 shares, or $454,000, of its common stock under the 2022 Repurchase Program, respectively. ​ In December 2023, the Board of Directors authorized a program, effective January 1, 2024 through December 31, 2024, to repurchase up to $10.0 million of the Corporation’s common stock (the 2024 Repurchase Program).
If factors influencing the consumer finance segment result in higher net charge-off ratios in future periods, the consumer finance segment may need to increase the level of its allowance for credit losses through additional provisions for credit losses, which could negatively affect future earnings of the consumer finance segment. ​ FINANCIAL CONDITION ​ SUMMARY ​ A financial institution’s primary sources of revenue are generated by its earning assets and sales of financial assets, while its major expenses are produced by the funding of those assets with interest-bearing liabilities, provisions for loan losses and compensation to employees.
If factors influencing the consumer finance segment result in higher net charge-off ratios in future periods, the consumer finance segment may need to increase the level of its allowance for credit losses through additional provisions for credit losses, which could negatively affect future earnings of the consumer finance segment. ​ FINANCIAL CONDITION ​ SUMMARY ​ A financial institution’s primary sources of revenue are generated by its earning assets and sales of financial assets, while its major expenses are produced by the funding of those assets with interest-bearing liabilities, provisions for credit losses and compensation to employees.
Currently, home equity lines of credit are offered with adjustable rates of interest that are generally priced at a spread to the prime lending rate. Home equity lines of credit are made on an open-end, revolving basis. Home equity lines of credit generally do not present as much risk to the Bank as other types of consumer loans.
Currently, home equity lines of credit are offered with adjustable rates of interest that are generally priced at a spread to the prime lending rate. Home equity lines of credit are made on an open-end, revolving basis. Home equity lines of credit generally do not present as much risk as other types of consumer loans.
With the consumer finance segment’s implementation of a scorecard model for purchasing loan contracts, the credit-worthiness of borrowers at origination has improved for automobile loans purchased and the level of credit losses experienced has decreased relative to long-term historical averages. We cannot provide any assurance that the consumer finance segment’s net charge-off ratio will not increase in future periods.
With the consumer finance segment’s scorecard model for purchasing loan contracts, the credit-worthiness of borrowers at origination has improved for automobile loans purchased and the level of credit losses experienced has decreased relative to long-term historical averages. We cannot provide any assurance that the consumer finance segment’s net charge-off ratio will not increase in future periods.
“Financial Statements and Supplementary Data” under the heading “Note 1: Summary of Significant Accounting Policies.” ​ RESULTS OF OPERATIONS ​ NET INTEREST INCOME ​ The following table shows the average balance sheets, the amounts of interest earned on earning assets, with related yields, and interest expense on interest-bearing liabilities, with related rates, for each of the years ended December 31, 2023, 2022 and 2021.
“Financial Statements and Supplementary Data” under the heading “Note 1: Summary of Significant Accounting Policies.” ​ RESULTS OF OPERATIONS ​ NET INTEREST INCOME ​ The following table shows the average balance sheets, the amounts of interest earned on earning assets, with related yields, and interest expense on interest-bearing liabilities, with related rates, for each of the years ended December 31, 2024, 2023 and 2022.
The mortgage banking segment has procedures in place to evaluate the credit risk of investors and does not expect any counterparty to fail to meet its obligations. ​ The Corporation’s derivative financial instruments include (1) interest rate swaps that qualify and are designated as cash flow hedges on the Corporation’s trust preferred capital notes, (2) interest rate swaps with certain qualifying 69 Table of Contents commercial loan customers and dealer counterparties and (3) interest rate contracts arising from mortgage banking activities, including interest rate lock commitments (IRLCs) on mortgage loans and related forward sales of mortgage loans and mortgage backed securities.
The mortgage banking segment has procedures in place to evaluate the credit risk of investors and does not expect any counterparty to fail to meet its obligations. ​ The Corporation’s derivative financial instruments include (1) interest rate swaps that qualify and are designated as cash flow hedges on the Corporation’s trust preferred capital notes, (2) interest rate swaps with certain qualifying commercial loan customers and dealer counterparties and (3) interest rate contracts arising from mortgage banking activities, including interest rate lock commitments (IRLCs) on mortgage loans and related forward sales of mortgage loans and mortgage backed securities.
For larger projects where unit absorption or leasing is a concern, we may also obtain a feasibility study or other acceptable information from the borrower or other sources about the likely disposition of the property following the completion of construction. ​ Construction loans for nonresidential projects and multi-unit residential projects are generally larger and involve a greater degree of risk to the Bank than residential mortgage loans.
For larger projects where unit absorption or leasing is a concern, we may also obtain a feasibility study or other acceptable information from the borrower or other sources about the likely disposition of the property following the completion of construction. ​ Construction loans for nonresidential projects and multi-unit residential projects are generally larger and involve a greater degree of risk than residential mortgage loans.
Unrealized gains and losses on investments held in the Corporation’s rabbi trust are offset by changes in deferred compensation liabilities, recorded in salaries and employee benefits expense. ​ Discussion of noninterest income for the year ended December 31, 2021 has been omitted as such discussion was provided in Part II, Item 7.
Unrealized gains and losses on investments held in the Corporation’s rabbi trust are offset by changes in deferred compensation liabilities, recorded in salaries and employee benefits expense. ​ Discussion of noninterest income for the year ended December 31, 2022 has been omitted as such discussion was provided in Part II, Item 7.
The Corporation also invests in the debt securities of corporate issuers, primarily financial institutions, that the Corporation views as having a strong financial position and earnings potential. 66 Table of Contents Table 22 presents additional information pertaining to the composition of the securities portfolio at amortized cost, by the earlier of contractual maturity or expected maturity.
The Corporation also invests in the debt securities of corporate issuers, primarily financial institutions, that the Corporation views as having a strong financial position and earnings potential. Table 22 presents additional information pertaining to the composition of the securities portfolio at amortized cost, by the earlier of contractual maturity or expected maturity.
In the last evaluation of goodwill at the community banking segment and the consumer finance segment, which was the annual evaluation in the fourth quarter of 2023, the Corporation concluded that no impairment existed based on an assessment of qualitative factors. ​ For further information concerning accounting policies, refer to Item 8.
In the last evaluation of goodwill at the community banking segment and the consumer finance segment, which was the annual evaluation in the fourth quarter of 2024, the Corporation concluded that no impairment existed based on an assessment of qualitative factors. ​ For further information concerning accounting policies, refer to Item 8.
Long-term borrowings consist of subordinated notes which rank junior to all future senior indebtedness of the Corporation and are structurally subordinated to all existing and future debt and liabilities of the Corporation and its subsidiaries. ​ Trust I, Trust II and CVBK Trust I are wholly-owned non-operating subsidiaries of the Corporation, formed for the purpose of issuing trust preferred capital securities.
Long-term borrowings consist of FHLB advances and subordinated notes which rank junior to all future senior indebtedness of the Corporation and are structurally subordinated to all existing and future debt and liabilities of the Corporation and its subsidiaries. ​ Trust I, Trust II and CVBK Trust I are wholly-owned non-operating subsidiaries of the Corporation, formed for the purpose of issuing trust preferred capital securities.
Management believes that the level of the allowance for credit losses is adequate to reflect the net amount expected to be collected. ​ Discussion of the community banking segment for the year ended December 31, 2021 has been omitted as such discussion was provided in Part II, Item 7.
Management believes that the level of the allowance for credit losses is adequate to reflect the net amount expected to be collected. ​ Discussion of the community banking segment for the year ended December 31, 2022 has been omitted as such discussion was provided in Part II, Item 7.
Management believes that the indemnification reserve is sufficient to absorb losses related to loans that have been sold in the secondary market. ​ Discussion of the mortgage banking segment for the year ended December 31, 2021 has been omitted as such discussion was provided in Part II, Item 7.
Management believes that the indemnification reserve is sufficient to absorb losses related to loans that have been sold in the secondary market. ​ Discussion of the mortgage banking segment for the year ended December 31, 2022 has been omitted as such discussion was provided in Part II, Item 7.
In addition, there is risk associated with the value of collateral other than real estate which may depreciate over time and cannot be appraised with as much precision. ● Consumer loans are comprised primarily of residential mortgage loans and home equity lines secured by residential real estate and carry risks associated with the continued credit-worthiness of the borrower and changes in the value of the collateral. ● Consumer finance loans are comprised of indirect financing for purchases of automobiles and marine and RVs and carry risks associated with the continued credit-worthiness of the borrower and changes in the value of the collateral, which are typically rapidly-depreciating vehicles.
In addition, there is risk associated with the value 53 Table of Contents of collateral other than real estate which may depreciate over time and cannot be appraised with as much precision. ● Consumer loans are comprised primarily of residential mortgage loans and home equity lines secured by residential real estate and carry risks associated with the continued credit-worthiness of the borrower and changes in the value of the collateral. ● Consumer finance loans are comprised of indirect financing for purchases of automobiles and marine and RVs and carry risks associated with the continued credit-worthiness of the borrower and changes in the value of the collateral, which are typically rapidly-depreciating vehicles.
Actual indemnification payments may differ materially from management’s estimates, which may result in additional provision for indemnification losses in future periods. There were no payments made in 2023, 2022 or 2021. ​ Risks also arise from the possible inability of investors to meet the terms of their contracts.
Actual indemnification payments may differ materially from management’s estimates, which may result in additional provision for indemnification losses in future periods. There were no payments made in 2024, 2023 or 2022. ​ Risks also arise from the possible inability of investors to meet the terms of their contracts.
The consumer finance segment’s portfolio has shifted over time towards loans with higher credit quality at origination, relative to its historical loan portfolio, which has resulted in a decrease in both the interest rates charged and level of credit losses experienced. ​ 65 Table of Contents As mentioned above, certain automobile loans are purchased simultaneously with entering into a contract that provides partial protection against loan losses through an embedded credit enhancement.
The consumer finance segment’s portfolio has shifted over time towards loans with higher credit quality at origination, relative to its historical loan portfolio, which has resulted in a decrease in both the interest rates charged and level of credit losses experienced. ​ As mentioned above, certain automobile loans are purchased simultaneously with entering into a contract that provides partial protection against loan losses through an embedded credit enhancement.
We will make both land acquisition and development loans to residential builders, experienced developers and others in strong financial condition to provide additional construction and mortgage lending opportunities for the Bank. ​ We underwrite and process land acquisition and development loans in much the same manner as commercial construction loans and commercial real estate loans.
We will make both land acquisition and development loans to residential builders, experienced developers and others in strong financial condition to provide additional construction and mortgage lending opportunities for the Corporation. ​ We underwrite and process land acquisition and development loans in much the same manner as commercial construction loans and commercial real estate loans.
Because these loans are usually larger in amount and involve more risk than consumer lot loans, we carefully evaluate the borrower’s assumptions and projections about market conditions and absorption rates in the community in which the property is located and the borrower’s ability to carry the loan if the borrower’s assumptions prove inaccurate. ​ Builder Lines ​ The community banking segment offers builder lines of credit to residential home builders to support their land and lot inventory needs.
Because these loans are usually larger in amount and involve more risk than consumer lot loans, we carefully evaluate the borrower’s assumptions and projections about market conditions and absorption rates in the community in which the property is located and the borrower’s ability to carry the loan if the borrower’s assumptions prove inaccurate. ​ 66 Table of Contents Builder Lines ​ The community banking segment offers builder lines of credit to residential home builders to support their land and lot inventory needs.
The significant components of the Corporation’s Consolidated Balance Sheets are discussed below. ​ 60 Table of Contents LOAN PORTFOLIO ​ General ​ Through the community banking segment, we engage in a wide range of lending activities, primarily in the community banking segment’s market area, which include the origination of commercial real estate loans, commercial business loans, commercial and consumer real estate construction loans, land acquisition and development loans, builder lines, residential mortgage loans, equity lines, and other consumer loans.
The significant components of the Corporation’s Consolidated Balance Sheets are discussed below. ​ LOAN PORTFOLIO ​ General ​ Through the community banking segment, we engage in a wide range of lending activities, primarily in the community banking segment’s market area, which include the origination of commercial real estate loans, commercial business loans, commercial and consumer real estate construction loans, land acquisition and development loans, builder lines, residential mortgage loans, equity lines, and other consumer loans.
Generally, our maximum loan-to-value ratio for non- 63 Table of Contents residential projects and multi-unit residential projects is 80 percent; however, this maximum can be waived for particularly strong borrowers on an exception basis. ​ The community banking segment makes loans to individuals for the purpose of acquiring an unimproved building site for the construction of a residence that generally will be occupied by the borrower.
Generally, our maximum loan-to-value ratio for non-residential projects and multi-unit residential projects is 80 percent; however, this maximum can be waived for particularly strong borrowers on an exception basis. ​ The community banking segment makes loans to individuals for the purpose of acquiring an unimproved building site for the construction of a residence that generally will be occupied by the borrower.
Because the consumer finance segment serves customers who are unable to meet the credit standards imposed by most traditional automobile financing sources, we expect the consumer finance segment to sustain a higher level of credit losses in the automobile portfolio than traditional financing sources.
Because the consumer finance segment serves some customers who are unable to meet the credit standards imposed by traditional automobile financing sources, we expect the consumer finance segment to sustain a higher level of credit losses in the automobile portfolio than traditional financing sources.
This program provides flexible pricing structures for our larger borrowers who wish to pay a fixed rate of interest, while preserving a floating rate for the Bank, which protects C&F Bank from exposure to rising interest rates. ​ Loans secured by commercial real estate are generally larger and involve a greater degree of risk than residential mortgage loans.
This program provides flexible pricing structures for our larger borrowers who wish to pay a fixed rate of interest, while preserving a floating rate for the Bank, which protects the Corporation from exposure to rising interest rates. ​ Loans secured by commercial real estate are generally larger and involve a greater degree of risk than residential mortgage loans.
The timing, number and purchase price of shares repurchased under the program will be determined by management in its discretion and will depend on a number of factors, including the market price of the shares, general market and economic conditions, applicable legal requirements and other conditions, and there is no assurance that the Corporation will purchase any shares under the 2024 Repurchase Program. ​ On January 1, 2023, we adopted ASC 326.
The timing, number and purchase price of shares repurchased under the program will be determined by management in its discretion and will depend on a number of factors, including the market price of the shares, general market and economic conditions, applicable legal requirements and other conditions, and there is no assurance that the Corporation will purchase any shares under the 2025 Repurchase Program. ​ On January 1, 2023, the Corporation adopted ASC 326.
The Corporation’s consolidated effective tax rate for the year ended December 31, 2023 was lower compared to the year ended December 31, 2022 due primarily to lower state income taxes in 2023 as a greater share of income before taxes was earned at C&F Bank, which is not subject to state income tax but rather state franchise tax, which is included in noninterest expense, tax benefits of tax-exempt interest income that was higher as a percentage of pre-tax income in 2023 compared to 2022 and an increase in the tax benefit in 2023, compared to 2022, related to the appreciation of vested equity awards since the time they were granted. ​ 45 Table of Contents Discussion of income taxes for the year ended December 31, 2021 has been omitted as such discussion was provided in Part II, Item 7.
The Corporation’s consolidated effective tax rate for the year ended December 31, 2024 was lower compared to the year ended December 31, 2023 due primarily to tax benefits of tax-exempt income that was higher as a percentage of pre-tax income in 2024 compared to 2023, lower state income taxes in 2024 as a greater share of income before taxes was earned at C&F Bank, which is not subject to state income tax but rather state franchise tax, which is included in noninterest expense, and an increase in the tax benefit in 2024, compared to 2023, related to the appreciation of vested equity awards since the time they were granted. ​ 47 Table of Contents Discussion of income taxes for the year ended December 31, 2022 has been omitted as such discussion was provided in Part II, Item 7.
This review of individual loans is limited to those loans that have specific risk characteristics not shared by other loans or that may result in significant losses to the Corporation, while all other loans, which may include delinquent loans and loans classified as special mention or substandard, are evaluated collectively in pools that share 51 Table of Contents common risk characteristics.
This review of individual loans is limited to those loans that have specific risk characteristics not shared by other loans or that may result in significant losses to the Corporation, while all other loans, which may include delinquent loans and loans classified as special mention or substandard, are evaluated collectively in pools that share common risk characteristics.
“Financial Statements and Supplementary Data” under the heading “Note 11: Borrowings.” ​ 68 Table of Contents OFF-BALANCE-SHEET ARRANGEMENTS ​ To meet the financing needs of customers, the Corporation is a party, in the normal course of business, to financial instruments with off-balance-sheet risk. These financial instruments include commitments to extend credit, commitments to sell loans and standby letters of credit.
“Financial Statements and Supplementary Data” under the heading “Note 11: Borrowings.” ​ OFF-BALANCE-SHEET ARRANGEMENTS ​ To meet the financing needs of customers, the Corporation is a party, in the normal course of business, to financial instruments with off-balance-sheet risk. These financial instruments include commitments to extend credit, commitments to sell loans and standby letters of credit.
If loan performance deteriorates resulting in elevated delinquencies or net charge-offs, the provision for credit losses may increase in future periods. ​ Discussion of the consumer finance segment for the year ended December 31, 2021 has been omitted as such discussion was provided in Part II, Item 7.
If loan performance deteriorates resulting in further elevated delinquencies or net charge-offs, the provision for credit losses may increase in future periods. ​ Discussion of the consumer finance segment for the year ended December 31, 2022 has been omitted as such discussion was provided in Part II, Item 7.
The Corporation obtains FICO Scores in the credit reports provided by the car dealers that accept the consumer auto loan application, which may have been generated 52 Table of Contents by any of the three major credit reporting bureaus, and also independently obtains a credit report on the borrower directly from Experian or Transunion.
The Corporation obtains FICO Scores in the credit reports provided by the car dealers that accept the consumer auto loan application, which may have been generated by any of the three major credit reporting bureaus, and also independently obtains a credit report on the borrower directly from Experian or Transunion.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations,” under the heading “Income Taxes” in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2022 , which was filed with the SEC on February 28, 2023, and is incorporated herein by reference. ​ BUSINESS SEGMENTS ​ The Corporation operates in a decentralized manner in three business segments: community banking, mortgage banking and consumer finance.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations,” under the heading “Income Taxes” in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2023 , which was filed with the SEC on February 27, 2024, and is incorporated herein by reference. ​ BUSINESS SEGMENTS ​ The Corporation operates in a decentralized manner in three business segments: community banking, mortgage banking and consumer finance.
The allowance for credit losses includes an estimate of losses incurred on loans subject to these credit enhancements, but does not include the portion of the loss that would be borne by C&F Finance's credit protection counterparty ​ Indirect Marine and Recreational Vehicles ​ In addition to purchasing automobile contracts through a dealer network, the consumer finance segment purchases marine and RV contracts, also on an indirect basis, through a third party provider in 2018.
The allowance for credit losses includes an estimate of losses incurred on loans subject to these credit enhancements, but does not include the portion of the loss that would be borne by the credit protection counterparty. ​ Indirect Marine and Recreational Vehicles ​ In addition to purchasing automobile contracts through a dealer network, the consumer finance segment purchases marine and RV contracts, also on an indirect basis, through a third party provider.
The possibility of loss is extremely high. ​ ● Loss rated loans are not considered collectible under normal circumstances and there is no realistic expectation for any future payment on the loan. Loss rated loans are fully charged off. ​ Allowance for Credit Losses Methodology – Consumer Finance.
The possibility of loss is extremely high. 54 Table of Contents ​ ● Loss rated loans are not considered collectible under normal circumstances and there is no realistic expectation for any future payment on the loan. Loss rated loans are fully charged off. ​ Allowance for Credit Losses Methodology – Consumer Finance.
Changes in economic conditions may also affect consumer demand for used automobiles and values of automobiles securing outstanding loans, due to changes in demand or changes in levels of inventory of used automobiles, which may directly affect the amount of a loss incurred by the consumer finance segment in the event of default.
Changes in economic conditions may also affect consumer demand for used automobiles and values of automobiles 61 Table of Contents securing outstanding loans, due to changes in demand or changes in levels of inventory of used automobiles, which may directly affect the amount of a loss incurred by the consumer finance segment in the event of default.
The disclosure below reflects the Corporation’s consolidated capital as determined under regulations that apply to bank holding companies that are not small bank holding companies and minimum capital requirements that would apply to the Corporation if it were not a small bank holding company. ​ At December 31, 2023 and 2022, the Corporation’s CET1 to total risk-weighted assets ratio was 11.3 percent and 11.4 percent, respectively; the Corporation’s Tier 1 capital to risk-weighted assets ratio was 12.6 percent and 12.8 percent, respectively; the Corporation’s total capital to risk-weighted assets ratio was 14.8 percent and 15.4 percent, respectively; and the Corporation’s Tier 1 leverage ratio was 10.1 percent and 9.9 percent, respectively.
The disclosure below reflects the Corporation’s consolidated capital as determined under regulations that apply to bank holding companies that are not small bank holding companies and minimum capital requirements that would apply to the Corporation if it were not a small bank holding company. ​ At December 31, 2024 and 2023, the Corporation’s CET1 to total risk-weighted assets ratio was 10.7 percent and 11.3 percent, respectively; the Corporation’s Tier 1 capital to risk-weighted assets ratio was 11.9 percent and 12.6 percent, respectively; the Corporation’s total capital to risk-weighted assets ratio was 14.1 percent and 14.8 percent, respectively; and the Corporation’s Tier 1 leverage ratio was 9.8 percent and 10.1 percent, respectively.
The Bank also makes construction loans for office and warehouse facilities and other nonresidential projects, generally limited to borrowers that present other business opportunities for the community banking segment. ​ The amounts, interest rates and terms for construction loans vary, depending upon market conditions, the size and complexity of the project, and the financial strength of the borrower and any guarantors of the loan.
The community banking segment also makes construction loans for office and warehouse facilities and other nonresidential projects, generally limited to borrowers that present other business opportunities for the community banking segment. ​ 65 Table of Contents The amounts, interest rates and terms for construction loans vary, depending upon market conditions, the size and complexity of the project, and the financial strength of the borrower and any guarantors of the loan.
The Bank offers fixed and variable interest rates on construction loans. We do not generally finance the construction of commercial real estate projects built on a speculative basis. For residential builder loans, we limit the number of models and/or speculative units allowed depending on market conditions, the builder’s financial strength and track record and other factors.
The community banking segment offers fixed and variable interest rates on construction loans. We do not generally finance the construction of commercial real estate projects built on a speculative basis. For residential builder loans, we limit the number of models and/or speculative units allowed depending on market conditions, the builder’s financial strength and track record and other factors.
Amounts include $20.0 million and $35.0 million of certain unsecured federal funds agreements and repurchase lines of credit, respectively, at December 31, 2023 that subsequently terminated in January 2024 when the corresponding third-party ended all federal funds agreements and repurchase lines of credit with all financial institutions. ​ Other than with respect to the terminated federal funds agreements and repurchase lines of credit, we have no reason to believe the remaining arrangements will not be renewed at maturity.
Amounts include $20.0 million and $35.0 million of certain unsecured federal funds agreements and repurchase lines of credit, respectively, at December 31, 2023 that subsequently terminated in January 2024 when the corresponding third-party ended all federal funds agreements and repurchase lines of credit with all financial institutions. ​ We have no reason to believe these arrangements will not be renewed at maturity.
Borrowers generally have limited to no prior credit difficulties or have shown extensive creditworthiness over a recent period of time. ​ ● Fairly Good and Fair credit rated borrowers are approaching or slightly below the average FICO Score of consumers but typically have a credit profile acceptable to most lenders.
Borrowers generally have limited to no prior credit difficulties or have shown extensive creditworthiness over a recent period of time. ​ ● Fairly Good (625-669) and Fair (580-624) credit rated borrowers are approaching or slightly below the average FICO Score of consumers but typically have a credit profile acceptable to most lenders.
Vehicles that are not redeemed within the prescribed waiting period before C&F Finance has the legal right to sell the repossessed vehicle then become available-for-sale at the end of that period and are reclassified from loans to other assets and are recorded initially at fair value less estimated costs to sell.
Vehicles that are not redeemed within the prescribed waiting period before the Corporation has the legal right to sell the repossessed vehicle then become available-for-sale at the end of that period and are reclassified from loans to other assets and are recorded initially at fair value less estimated costs to sell.
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 levels and requirements and expected future earnings.
The Board of Directors 39 Table of Contents 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 levels and requirements and expected future earnings.
“Financial Statements and Supplementary Data” under the headings “Note 9: Leases,” “Note 11: Borrowings,” and “Note 18: Commitments and Contingent Liabilities.” ​ As a result of the Corporation’s management of liquid assets and the ability to generate liquidity through liability funding, management believes that the Corporation maintains overall liquidity sufficient to satisfy its operational requirements and contractual obligations. ​ CAPITAL RESOURCES ​ Total equity was $217.5 million as of December 31, 2023, compared with $196.2 million as of December 31, 2022.
“Financial Statements and Supplementary Data” under the headings “Note 9: Leases,” “Note 11: Borrowings,” and “Note 18: Commitments and Contingent Liabilities.” ​ As a result of the Corporation’s management of liquid assets and the ability to generate liquidity through liability funding, management believes that the Corporation maintains overall liquidity sufficient to satisfy its operational requirements and contractual obligations. ​ CAPITAL RESOURCES ​ Total equity was $227.0 million as of December 31, 2024, compared with $217.5 million as of December 31, 2023.
Effective management of these sources and uses of funds is essential in attaining a financial institution’s maximum profitability while maintaining an acceptable level of risk. ​ At December 31, 2023, the Corporation had total assets of $2.44 billion compared to $2.33 billion at December 31, 2022.
Effective management of these sources and uses of funds is essential in attaining a financial institution’s maximum profitability while maintaining an acceptable level of risk. ​ At December 31, 2024, the Corporation had total assets of $2.56 billion compared to $2.44 billion at December 31, 2023.
The guidelines for non-conforming conventional loans are based on the requirements of private investors and information provided by third-party investors. The guidelines used by C&F Mortgage to originate FHA-insured, USDA-guaranteed and VA-guaranteed loans comply with the criteria established by HUD, the USDA, the VA and/or the applicable third party investor.
The guidelines for non-conforming conventional loans are based on the requirements of private investors and information provided by third-party investors. The guidelines used by the mortgage banking segment to originate FHA-insured, USDA-guaranteed and VA-guaranteed loans comply with the criteria established by HUD, the USDA, the VA and/or the applicable third party investor.
The Corporation’s funding sources, including capacity, amount outstanding and amount available at December 31, 2023 are presented in Table 24.
The Corporation’s funding sources, including capacity, amount outstanding and amount available at December 31, 2024 are presented in Table 24.
For further information concerning the Corporation’s expected timing of such payments as of December 31, 2023, refer to Item 8.
For further information concerning the Corporation’s expected timing of such payments as of December 31, 2024, refer to Item 8.
In making its decision on the payment of dividends on the Corporation’s common stock, the Corporation’s Board of Directors considers operating results, financial condition, capital adequacy, regulatory requirements, shareholder returns, and other factors. ​ In November 2021, the Board of Directors of the Corporation authorized a program, effective December 1, 2021, to repurchase up to $10.0 million of the Corporation’s common stock through November 2022 (the 2021 Repurchase Program).
In making its decision on the payment of dividends on the Corporation’s common stock, the Corporation’s Board of Directors considers operating results, financial condition, capital adequacy, regulatory requirements, shareholder returns, growth expectations and other factors. ​ In November 2022, the Board of Directors of the Corporation authorized a program, effective December 1, 2022 through December 31, 2023, to repurchase up to $10.0 million of the Corporation’s common stock (the 2022 Repurchase Program).
The release of indemnification reserves was due primarily to improvement in the mortgage banking segment’s assessment of borrower payment performance and other factors affecting expected losses on mortgage loans sold in the secondary market, such as time since origination. The balance of the allowance at December 31, 2023 and 2022 was $1.8 million and $2.4 million, respectively.
The release of indemnification reserves was due primarily to improvement in the mortgage banking segment’s assessment of borrower payment performance and other factors affecting expected losses on mortgage loans sold in the secondary market, such as time since origination. The balance of the allowance at December 31, 2024 and 2023 was $1.3 million and $1.8 million, respectively.
During the years ended December 31, 2023, 2022 and 2021, the mortgage banking segment reversed $585,000 and $858,000 and $104,000, respectively. The mortgage banking segment increased reserves for indemnification losses during 2020 based on widespread forbearance on mortgage loans and economic uncertainty related to the COVID-19 pandemic.
During the years ended December 31, 2024, 2023 and 2022, the mortgage banking segment reversed $460,000 and $585,000 and $858,000, respectively. The mortgage banking segment increased reserves for indemnification losses during 2020 based on widespread forbearance on mortgage loans and economic uncertainty related to the COVID-19 pandemic.
Management’s judgment in determining the level of the allowance is based on evaluations of historical loan losses, current conditions and reasonable and supportable forecasts relevant to the collectability of loans.
Management’s judgment in determining the level of the 41 Table of Contents allowance is based on evaluations of historical loan losses, current conditions and reasonable and supportable forecasts relevant to the collectability of loans.
Management believes that the level of the allowance for credit losses is adequate to reflect the net amount expected to be collected. ​ Nonaccrual loans at the consumer finance segment decreased to $892,000 at December 31, 2023 from $925,000 at December 31, 2022.
Management believes that the level of the allowance for credit losses is adequate to reflect the net amount expected to be collected. ​ Nonaccrual loans at the consumer finance segment decreased to $614,000 at December 31, 2024 from $892,000 at December 31, 2023.
However, the consumer finance segment generally purchases these contracts with interest at higher rates than those charged by traditional financing sources. These higher rates should more than offset the increase in the provision for loan losses for this segment of the Corporation’s loan portfolio.
However, in those cases, the consumer finance segment purchases these contracts with interest rates higher than those charged by traditional financing sources. These higher rates should more than offset the increase in the provision for credit losses for this segment of the Corporation’s loan portfolio.
Additional sources of liquidity available to the Corporation include cash flows from operations, loan payments and payoffs, deposit growth, maturities, calls and sales of securities, the issuance of brokered certificates of deposit and the capacity to borrow additional funds. ​ Liquid assets, which include cash and due from banks, interest-bearing deposits at other banks, federal funds sold and nonpledged securities available for sale, totaled $338.8 million at December 31, 2023.
Additional sources of liquidity available to the Corporation include cash flows from operations, loan payments and payoffs, deposit growth, maturities, calls and sales of securities, the issuance of brokered certificates of deposit and the capacity to borrow additional funds. ​ Liquid assets, which include cash and due from banks, interest-bearing deposits at other banks, federal funds sold and nonpledged securities available for sale, totaled $288.1 million at December 31, 2024.
At December 31, 2023 and 2022, all securities in the Corporation’s investment portfolio were classified as available for sale. ​ Table 21 sets forth the composition of the Corporation’s securities available for sale in dollar amounts at fair value and as a percentage of the Corporation’s total securities available for sale at the dates indicated. ​ TABLE 21: Securities Available for Sale ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 ​ December 31, 2022 (Dollars in thousands) Amount Percent Amount Percent U.S.
At December 31, 2024 and 2023, all debt securities in the Corporation’s investment portfolio were classified as available for sale. ​ 68 Table of Contents Table 21 sets forth the composition of the Corporation’s securities available for sale in dollar amounts at fair value and as a percentage of the Corporation’s total securities available for sale at the dates indicated. ​ TABLE 21: Securities Available for Sale ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2024 ​ December 31, 2023 (Dollars in thousands) Amount Percent Amount Percent U.S.
The average amounts deferred on a monthly basis during 2023 were 1.87 percent of average automobile loans outstanding, compared to 1.47 percent during 2022 and 1.74 percent during 2021. ​ The consumer finance segment is an indirect lender that provides automobile financing through lending programs that are designed to serve customers in both the prime and “non-prime” markets, including those who may have limited access to traditional automobile financing due to having experienced prior credit difficulties.
The average amounts deferred of automobile loans on a monthly basis, which are not included in delinquent loans, during 2024 were 1.80 percent of average automobile loans outstanding, compared to 1.87 percent during 2023 and 1.47 percent during 2022. ​ The consumer finance segment is an indirect lender that provides automobile financing through lending programs that are designed to serve customers in both the prime and “non-prime” markets, including those who may have limited access to traditional automobile financing due to having experienced prior credit difficulties.
Repurchases under the 2024 Repurchase Program may be made through privately negotiated transactions or open market transactions, including pursuant to a trading plan in accordance with Rule 10b5-1 and/or Rule 10b-18 under the Securities Exchange Act of 1934, as amended, and shares repurchased will be returned to the status of authorized and unissued shares of common stock. ​ At December 31, 2023, the book value per share of the Corporation’s common stock was $64.28, and tangible book value per share, a non-GAAP measure, was $56.40, compared to $56.27 and $48.54, respectively, at December 31, 2022.
Repurchases under the 2025 Repurchase Program may be made through privately negotiated transactions or open market transactions, including pursuant to a trading plan in accordance with Rule 10b5-1 and/or Rule 10b-18 under the Securities Exchange Act of 1934, as amended, and shares repurchased will be returned to the status of authorized and unissued shares of common stock. ​ At December 31, 2024, the book value per share of the Corporation’s common stock was $70.00, and tangible book value per share, a non-GAAP measure, was $61.86, compared to $64.28 and $56.40 respectively, at December 31, 2023.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations,” under the heading “Noninterest Expense” in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2022 , which was filed with the SEC on February 28, 2023, and is incorporated herein by reference. ​ INCOME TAXES ​ Income tax expense on 2023 earnings was $5.4 million, resulting in an effective tax rate of 18.6 percent, compared with $7.6 million, or 20.6 percent, in 2022.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations,” under the heading “Noninterest Expense” in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2023 , which was filed with the SEC on February 27, 2024, and is incorporated herein by reference. ​ INCOME TAXES ​ Income tax expense on 2024 earnings was $4.2 million, resulting in an effective tax rate of 17.5 percent, compared with $5.4 million, or 18.6 percent, in 2023.
These ratios at December 31, 2023 and 2022 include $25.0 million of trust preferred capital securities in tier 1 capital of the Corporation and $20.0 million and $24 million, respectively, of subordinated notes in Tier 2 capital. The Corporation repaid $4.0 million of subordinated notes during 2023.
These ratios at December 31, 2024 and 2023 include $25.0 million of trust preferred capital securities in tier 1 capital of the Corporation and $20.0 million of subordinated notes in Tier 2 capital. The Corporation repaid $4.0 million of subordinated notes during 2023.
Consumer finance segment personnel with credit authority review the transaction and determine whether to approve or deny the purchase of the contract.
Consumer finance segment personnel with credit authority 67 Table of Contents review the transaction and determine whether to approve or deny the purchase of the contract.
Additionally, all applicable regulatory capital ratios of C&F Bank were in excess of mandated minimum requirements at December 31, 2023 and 2022. ​ In addition to the regulatory risk-based capital requirements, the Bank must maintain a capital conservation buffer of additional capital of 2.5 percent of risk-weighted assets as required by the Basel III Final Rule.
All regulatory capital ratios of the Bank were in excess of mandated minimum requirements at December 31, 2024 and 2023. ​ In addition to the regulatory risk-based capital requirements, the Bank must maintain a capital conservation buffer of additional capital of 2.5 percent of risk-weighted assets as required by the Basel III Final Rule.
The Corporation’s internal policy limits brokered deposits to 20 percent of total deposits, representing approximately $388.2 million of additional net availability for additional brokered deposits as of December 31, 2023. ​ In the ordinary course of business, the Corporation has entered into contractual obligations and has made other commitments to make future payments.
The Corporation’s internal policy limits brokered deposits to 20 percent of total deposits, representing approximately $409.1 million of additional net availability for additional brokered deposits as of December 31, 2024. ​ In the ordinary course of business, the Corporation has entered into contractual obligations and has made other commitments to make future payments.
The Bank offers various types of residential first mortgage loans in addition to traditional long-term, fixed-rate loans. The majority of such loans include 10, 15 and 30 year amortizing mortgage loans with fixed rates of interest. Second mortgage loans are offered with fixed and adjustable 64 Table of Contents rates.
Various types of residential first mortgage loans in addition to traditional long-term, fixed-rate loans are offered. The majority of such loans include 10, 15 and 30 year amortizing mortgage loans with fixed rates of interest. Second mortgage loans are offered with fixed and adjustable rates.
C&F Finance pursues collection of deficiencies, as allowed by state law, when it deems such action to be appropriate. ​ Table 15 summarizes the Corporation’s credit ratios on a consolidated basis and Table 16 summarizes nonperforming assets by principal business segment as of December 31, 2023 and 2022.
The Corporation pursues collection of deficiencies, as allowed by state law, when it deems such action to be appropriate. ​ Table 15 summarizes the Corporation’s credit ratios on a consolidated basis and Table 16 summarizes nonperforming assets by principal business segment as of December 31, 2024 and 2023.
Depending on our liquidity levels, our capital position, conditions in the capital markets, our business operations and initiatives, and other factors, we may from time to time consider the issuance of debt, equity or other securities or other possible capital market transactions, the proceeds of which could provide additional liquidity for our operations. ​ Time deposits maturing in less than one year and in more than one year totaled $631.3 million and $41.9 million, respectively, at December 31, 2023. ​ Uninsured deposits represent an estimate of amounts above the FDIC insurance coverage limit of $250,000.
Depending on our liquidity levels, our capital position, conditions in the capital markets, our business operations and initiatives, and other factors, we may from time to time consider the issuance of debt, equity or other securities or other possible capital market transactions, the proceeds of which could provide additional liquidity for our operations. ​ Time deposits maturing in less than one year and in more than one year totaled $705.7 million and $112.6 million, respectively, at December 31, 2024. ​ Uninsured deposits represent an estimate of amounts above the FDIC insurance coverage limit of $250,000.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations,” under the heading “Overview” in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2022 , which was filed with the SEC on February 28, 2023, and is incorporated herein by reference. ​ Capital Management and Dividends ​ Total equity was $217.5 million at December 31, 2023, compared to $196.2 million at December 31, 2022.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations,” under the heading “Overview” in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2023 , which was filed with the SEC on February 27, 2024, and is incorporated herein by reference. ​ Capital Management and Dividends ​ Total equity was $227.0 million at December 31, 2024, compared to $217.5 million at December 31, 2023.
The following table presents the Corporation’s reserve for unfunded commitments for the periods indicated. ​ TABLE 12: Reserve for Unfunded Commitments ​ ​ ​ ​ ​ ​ (Dollars in thousands) December 31, 2023 Balance at December 31, 2022 ​ $ — Impact of ASC 326 adoption ​ 1,501 Provision charged to operations ​ 149 Balance at December 31, 2023 ​ $ 1,650 ​ ​ The allowance for credit losses on loans and available for sale debt securities and the reserve for unfunded commitments are established through a provision for credit losses charged against earnings.
The following table presents the Corporation’s reserve for unfunded commitments for the periods indicated. ​ TABLE 12: Reserve for Unfunded Commitments ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, (Dollars in thousands) 2024 ​ 2023 Balance at the beginning of year ​ $ 1,650 ​ $ — Impact of ASC 326 adoption ​ — ​ 1,501 Provision charged to operations ​ 150 ​ 149 Balance at the end of year ​ $ 1,800 ​ $ 1,650 ​ ​ The allowance for credit losses on loans and available for sale debt securities and the reserve for unfunded commitments are established through a provision for credit losses charged against earnings.
Amounts reported for the year ended December 31, 2023 are in accordance with ASC 326, whereas amounts reported for periods prior to January 1, 2023 are presented in accordance with the previously applicable GAAP.
Amounts reported for the year ended December 31, 2024 and 2023 are in accordance with ASC 326, whereas amounts reported for the period prior to January 1, 2023 are presented in accordance with the previously applicable GAAP.
The shorter terms and generally higher interest rates on consumer loans help the Bank maintain a profitable spread between its average loan yield and its cost of funds.
The shorter terms and generally higher interest rates on consumer loans help the community banking segment maintain a profitable spread between its average loan yield and its cost of funds.
Total risk-weighted assets at December 31, 2023 for the Corporation were $1.95 billion and for the Bank were $1.92 billion. Total risk-weighted assets at December 31, 2022 for the Corporation were $1.82 billion and for the Bank were $1.80 billion.
Total risk-weighted assets at December 31, 2023 for the Corporation were $1.95 billion and for the Bank were $1.92 billion.
For further information regarding non-GAAP measures, including the impact of the above items on each year, refer to “Use of Certain Non-GAAP Financial Measures” and the accompanying disclosure below within this Item 7. ​ Consolidated net income and earnings per share were $23.7 million and $6.92, respectively, for the year ended December 31, 2023, compared to $29.4 million and $8.29, respectively, for the year ended December 31, 2022.
For further information regarding non-GAAP measures, including the impact of the above items on each year, refer to “Use of Certain Non-GAAP Financial Measures” and the accompanying disclosure below within this Item 7. ​ Consolidated net income and earnings per share were $19.9 million and $6.01, respectively, for the year ended December 31, 2024, compared to $23.7 million and $6.92, respectively, for the year ended December 31, 2023.
The conventional loans that C&F Mortgage originates that have loan-to-value ratios greater than 80 percent at origination are generally insured by private mortgage insurance. ​ Commercial Real Estate ​ The community banking segment’s commercial real estate loans are primarily secured by the value of real property.
The conventional loans that the mortgage banking segment originates that have loan-to-value ratios greater than 80 percent at origination are generally insured by private mortgage insurance. ​ 64 Table of Contents Commercial Real Estate ​ The community banking segment’s commercial real estate loans are primarily secured by the value of real property.
For these loans, C&F Finance recognizes the cost of the credit enhancement as an adjustment of yield on loans, and, in the event of default, any claims against the credit protection reduce the amount of loss recognized by C&F Finance.
For these loans, the consumer finance segment recognizes the cost of the credit enhancement as an adjustment of yield on loans, and, in the event of default, any claims against the credit protection reduce the amount of loss recognized.
The total amount of unused loan commitments at the Bank was $413.9 million at December 31, 2023, compared to $394.8 million at December 31, 2022. ​ Standby letters of credit are written conditional commitments issued by the Bank to guarantee the performance of a customer to a third party.
The total amount of unused loan commitments at the Bank was $469.8 million at December 31, 2024, compared to $413.5 million at December 31, 2023. ​ Standby letters of credit are written conditional commitments issued by the Bank to guarantee the performance of a customer to a third party.
The characteristics of these credit ratings are as follows: ​ ● Very Good and Good credit rated borrowers are near or above the average FICO Score of consumers.
The characteristics of these credit ratings and our thresholds are as follows: ​ ● Very Good (>739) and Good (670-739) credit rated borrowers are near or above the average FICO Score of consumers.
At December 31, 2023, repossessed vehicles at fair value less estimated costs to sell included in other assets totaled $646,000, compared to $352,000 at December 31, 2022.
At December 31, 2024, repossessed vehicles at fair value less estimated costs to sell included in other assets totaled $779,000, compared to $646,000 at December 31, 2023.
The total contract amount of standby letters of credit was $7.9 million at December 31, 2023, compared to $16.3 million at December 31, 2022. ​ The mortgage banking segment sells the majority of the residential mortgage loans it originates to third-party investors.
The total contract amount of standby letters of credit was $18.8 million at December 31, 2024, compared to $7.9 million at December 31, 2023. ​ The mortgage banking segment sells the majority of the residential mortgage loans it originates to third-party investors.
The Corporation and the Bank exceeded these ratios at December 31, 2023 and 2022. ​ The Corporation's capital resources are impacted by its share repurchase programs. During the year ended December 31, 2023, the Corporation repurchased $7.1 million of its common stock under the 2022 Repurchase Program, which expired December 31, 2023.
The Corporation and the Bank exceeded these ratios at December 31, 2024 and 2023. 74 Table of Contents The Corporation's capital resources are impacted by its share repurchase programs. During the year ended December 31, 2024, the Corporation repurchased $7.9 million of its common stock under the 2024 Repurchase Program, which expired December 31, 2024.
The release of indemnification reserves in 2022 and 2023 was due primarily to improvement in the mortgage banking segment’s assessment of borrower payment performance and other factors affecting expected losses on mortgage loans sold in the secondary market, such as time since origination.
The release of indemnification reserves in 2024 and 2023 was due primarily to improvement in the mortgage banking segment’s assessment of borrower payment performance, lower volume of mortgage loan originations in recent years and other factors affecting expected losses on mortgage loans sold in the secondary market, such as time since origination.
The increase was attributable primarily to increases in loans held for investment and interest-bearing deposits in other banks, partially offset by a decrease in available for sale securities and was funded by growth in deposits and short-term borrowings.
The increase was attributable primarily to increases in loans held for investment, partially offset by a decrease in available for sale securities and was funded by growth in deposits and long-term borrowings.
The effect of these factors on the Corporation’s net interest margin will depend on a number of factors, including the Corporation’s ability to grow loans at the community banking segment and consumer finance segment, to compete for deposits, and to the extent of its reliance on borrowings.
The ultimate effect of these factors 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 and consumer finance segments, to compete for deposits, and the extent of its reliance on borrowings.
During 2023, the Corporation declared common stock dividends of $1.76 per share, compared to $1.64 per share declared in 2022 and $1.58 per share declared in 2021. ​ The assessment of capital adequacy depends on such factors as asset quality, liquidity, earnings performance, and changing competitive conditions and economic forces.
During both 2024 and 2023, the Corporation declared common stock dividends of $1.76 per share, compared to $1.64 per share declared in 2022. ​ The assessment of capital adequacy depends on such factors as asset quality, liquidity, earnings performance, and changing competitive conditions and economic forces. We regularly review the adequacy of the Corporation’s and the Bank’s capital.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe resulting percentage change in net present value in various rate scenarios is an indication of the longer term repricing risk and options embedded in the balance sheet. ​ The EVE analysis results are presented in the table below. ​ Static EVE Change (dollars in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Hypothetical Change in EVE ​ ​ ​ as of ​ ​ ​ December 31, 2023 ​ ​ ​ December 31, 2022 ​ Assumed Market Interest Rate Shift Dollars Percentage ​ ​ Dollars ​ Percentage ​ -300 BP shock ​ $ (28,719) ​ (7.51) % ​ ​ $ (76,481) ​ (17.76) % -200 BP shock ​ ​ (10,881) ​ (2.85) ​ ​ ​ ​ (42,156) ​ (9.79) ​ -100 BP shock ​ ​ (1,397) ​ (0.37) ​ ​ ​ ​ (17,553) ​ (4.08) ​ +100 BP shock ​ ​ (1,945) ​ (0.51) ​ ​ ​ ​ 10,547 ​ 2.45 ​ +200 BP shock ​ ​ (5,012) ​ (1.31) ​ ​ ​ ​ 18,038 ​ 4.19 ​ +300 BP shock ​ ​ (11,062) ​ (2.89) ​ ​ ​ ​ 22,632 ​ 5.25 ​ ​ 77 Table of Contents These results as of December 31, 2023 indicate that the EVE would decrease assuming an immediate downward shift in market interest rates of 100 BP to 300 BP, and would decrease if rates immediately shifted upward 100 BP to 300 BP.
Biggest changeThe resulting percentage change in net present value in various rate scenarios is an indication of the longer term repricing risk and options embedded in the balance sheet. ​ The EVE analysis results are presented in the table below. ​ Static EVE Change (dollars in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Hypothetical Change in EVE ​ ​ ​ as of ​ ​ ​ December 31, 2024 ​ ​ December 31, 2023 ​ Assumed Market Interest Rate Shift Dollars Percentage ​ Dollars ​ Percentage ​ -300 BP shock ​ $ (25,260) ​ (6.49) % ​ $ (28,719) ​ (7.51) % -200 BP shock ​ ​ (9,335) ​ (2.40) ​ ​ ​ (10,881) ​ (2.85) ​ -100 BP shock ​ ​ 270 ​ 0.07 ​ ​ ​ (1,397) ​ (0.37) ​ +100 BP shock ​ ​ (6,771) ​ (1.74) ​ ​ ​ (1,945) ​ (0.51) ​ +200 BP shock ​ ​ (13,022) ​ (3.34) ​ ​ ​ (5,012) ​ (1.31) ​ +300 BP shock ​ ​ (20,439) ​ (5.25) ​ ​ ​ (11,062) ​ (2.89) ​ ​ These results as of December 31, 2024 indicate that the EVE would decrease assuming an immediate downward shift in market interest rates of 200 BP to 300 BP, would increase if rates shifted downward 100 BP and would decrease if rates immediately shifted upward 100 BP to 300 BP.
The cash flow hedges effectively modify the Corporation’s exposure to interest rate risk associated with the Corporation’s trust preferred capital notes by converting variable rates of interest on the trust preferred capital notes to fixed rates of interest for periods ending between June 2024 and June 2029.
The cash flow hedges effectively modify the Corporation’s exposure to interest rate risk associated with the Corporation’s trust preferred capital notes by converting variable rates of interest on the trust preferred capital notes to fixed rates of interest for periods ending between June 2026 and June 2029.
The simulation analysis results show the Corporation is less asset sensitive as of December 31, 2023 compared to the results as of December 31, 2022 due primarily to shifts in the mix of earnings assets and in the mix of deposit. ​ The EVE analysis provides information on the risk inherent in the balance sheet that might not be taken into account in the simulation analysis due to the shorter time horizon used in that analysis.
The simulation analysis results show the Corporation is less asset sensitive as of December 31, 2024, compared to the results as of December 31, 2023 due primarily to shifts in the mix of earnings assets and in the mix of deposits. ​ The EVE analysis provides information on the risk inherent in the balance sheet that might not be taken into account in the simulation analysis due to the shorter time horizon used in that analysis.
These assumptions include loan prepayments, time deposit 76 Table of Contents early withdrawals, the sensitivity of deposit repricing to changes in market rates, withdrawal behavior of non-maturing deposits, and other factors that management deems significant. ​ The simulation analysis results, based on a measurement date balance sheet as of December 31, 2023 and December 31, 2022 for hypothetical changes in net interest income over the next twelve months are presented in the table below. ​ One-Year Net Interest Income Simulation (dollars in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Hypothetical Change in Net ​ ​ ​ Interest Income ​ ​ ​ Over the Next Twelve Months ​ ​ ​ as of ​ ​ ​ December 31, 2023 ​ ​ December 31, 2022 ​ Assumed Market Interest Rate Shift Dollars Percentage ​ ​ Dollars Percentage -300 BP shock ​ $ (8,372) ​ (8.22) % ​ ​ $ (10,597) ​ (9.16) % -200 BP shock ​ ​ (5,137) ​ (5.04) ​ ​ ​ ​ (6,143) ​ (5.31) ​ -100 BP shock ​ ​ (2,352) ​ (2.31) ​ ​ ​ ​ (2,864) ​ (2.48) ​ +100 BP shock ​ ​ 1,081 ​ 1.06 ​ ​ ​ ​ 1,403 ​ 1.21 ​ +200 BP shock ​ ​ 2,094 ​ 2.06 ​ ​ ​ ​ 2,747 ​ 2.37 ​ +300 BP shock ​ ​ 3,013 ​ 2.96 ​ ​ ​ ​ 4,021 ​ 3.48 ​ ​ ​ These results indicate that the Corporation would expect net interest income to decrease over the next twelve months assuming an immediate downward shift in market interest rates of 100 BP to 300 BP and to increase if rates shifted upward to the same degree.
These assumptions include loan prepayments, time deposit 79 Table of Contents early withdrawals, the sensitivity of deposit repricing to changes in market rates, withdrawal behavior of non-maturing deposits, and other factors that management deems significant. ​ The simulation analysis results, based on a measurement date balance sheet as of December 31, 2024 and December 31, 2023 for hypothetical changes in net interest income over the next twelve months are presented in the table below. ​ One-Year Net Interest Income Simulation (dollars in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Hypothetical Change in Net ​ ​ ​ Interest Income ​ ​ ​ Over the Next Twelve Months ​ ​ ​ as of ​ ​ ​ December 31, 2024 ​ December 31, 2023 ​ Assumed Market Interest Rate Shift Dollars Percentage ​ Dollars Percentage -300 BP shock ​ $ (7,568) ​ (6.66) % ​ $ (8,372) ​ (8.22) % -200 BP shock ​ ​ (4,687) ​ (4.12) ​ ​ ​ (5,137) ​ (5.04) ​ -100 BP shock ​ ​ (2,040) ​ (1.79) ​ ​ ​ (2,352) ​ (2.31) ​ +100 BP shock ​ ​ 228 ​ 0.20 ​ ​ ​ 1,081 ​ 1.06 ​ +200 BP shock ​ ​ 511 ​ 0.45 ​ ​ ​ 2,094 ​ 2.06 ​ +300 BP shock ​ ​ 764 ​ 0.67 ​ ​ ​ 3,013 ​ 2.96 ​ ​ ​ These results indicate that the Corporation would expect net interest income to decrease over the next twelve months assuming an immediate downward shift in market interest rates of 100 BP to 300 BP and to increase if rates shifted upward to the same degree.
The mortgage banking segment then mitigates interest rate risk on these IRLCs and loans held for sale by (1) entering into forward sales contracts with investors at the time that interest rates are locked for loans to be delivered on a best efforts basis or (2) entering into forward sales contracts for unspecified mortgage backed securities (TBA securities) until it can enter into forward sales contracts with investors for loans to be delivered on a mandatory basis.
The mortgage banking segment then mitigates interest rate risk on these IRLCs and loans held for sale by entering into forward sales contracts with investors at the time that interest rates are locked for loans to be delivered on a best efforts basis.
IRLCs, forward sales of loans and forward sales of TBA securities are derivative financial instruments. ​ We believe that our current interest rate exposure is manageable and does not indicate any significant exposure to interest rate changes. ​ 78 Table of Contents
IRLCs are derivative financial instruments. ​ We believe that our current interest rate exposure is manageable and within our current interest rate risk guidelines. ​ 81 Table of Contents
As of December 31, 2023, the Corporation’s EVE is less asset sensitive compared to its position as of December 31, 2022 due primarily to the composition of its Consolidated Balance Sheets and the characteristics and assumptions of certain loans and deposit accounts. ​ Certain shortcomings are inherent in the methodology used in the above interest rate risk analyses.
As of December 31, 2024, the Corporation’s EVE is more sensitive to increases in rates and less sensitive to decreases in rates compared to its position as of December 31, 2023 80 Table of Contents due primarily to shifts in the mix of earning assets and in the mix of deposits and borrowings, which impacted the overall duration of both assets and liabilities. ​ Certain shortcomings are inherent in the methodology used in the above interest rate risk analyses.

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