CFFI · C&F Financial Corporation

Community banking continued to provide a stable earnings base, supported by stable core deposits that form a solid foundation for the Corporation's liquidity position alongside a strong capital base. Management emphasizes that liquidity management ensures continuous availability of funds for customer credit needs, depositor demands, creditors, and investors. A portion of recent deposit growth related to the wind-down of a repurchase agreement program with commercial customers in Q3 2025, enhancing funding stability.

Consumer finance faced headwinds, with net charge-offs increasing due primarily to higher delinquent loans and repossessions. This credit deterioration pressured segment results, though overall earnings growth indicates offsets from other areas. Management's proactive approach to liquidity, through liquid asset management and liability funding generation, maintains sufficient resources to meet operational requirements and contractual obligations.

Cash flow patterns highlighted quarter-specific volatility. Net cash provided by operating activities swung to a $7.6 million use from a $3.2 million source in the prior year, reflecting the timing mismatches inherent in mortgage banking cycles where originations and sales fluctuate. After $322,000 in capital expenditures, free cash flow was -$7.9 million. These outflows were managed within a framework of robust liquidity, underscoring the Corporation's ability to navigate cyclical pressures. The Board continually assesses cash dividends and payout ratios considering economic conditions, capital levels, and expected earnings, balancing returns with growth needs.

Overall, these results affirm C&F Financial's foundational strengths in liquidity and capital, positioning the company to sustain operations through varying market conditions while delivering shareholder value.