C&F Financial's Net Interest Margin Widens to 4.53%

The Tip Desk · October 26, 2026 · 4 min read

The Virginia community-bank holding company reported $8.3 million of third-quarter net income, or $2.55 a share, as the FTE margin expanded 12 bps from the second quarter.

C&F Financial Corporation (CFFI), the holding company for C&F Bank, reported consolidated net income of $8.3 million for the third quarter of 2026, or $2.55 a share, up 16.1% from $7.1 million a year earlier.

Third-quarter net income was below second-quarter net income of $8.6 million, or $2.63 a share. Annualized return on average assets was 1.18%, and annualized return on average equity was 11.86%.

Consolidated annualized net interest margin on a fully taxable-equivalent basis was 4.53% in the third quarter, up 12 bps from 4.41% in the second quarter and 29 bps above 4.24% a year earlier. President and Chief Executive Officer Tom Cherry said growth in community banking loans and a stronger net interest margin drove the results.

Community banking loans grew $102.8 million, or 8.6% annualized, versus December 31, 2025, after $24.1 million, or 6.1% annualized, growth in the first quarter. Year-over-year growth was $148.1 million, or 9.6%. Average loans increased $133.0 million, or 8.6%, versus the third quarter of 2025, due primarily to commercial real estate and land acquisition and development. Average deposits increased $99.1 million, or 4.4%.

The community banking segment reported net income of $8.9 million for the third quarter, compared with $7.4 million a year earlier, citing higher interest income from higher average loan and securities balances and higher average rates, due primarily to an increase in market interest rates and the Portfolio Restructuring. In that restructuring, the segment sold $72.6 million in book value of securities with a weighted average yield of 1.40% and purchased about $67.8 million of securities with a weighted average yield of 4.70%. Average costs of interest-bearing deposits were lower versus 2025 due primarily to lower rates on time deposits.

The segment recorded no provision for credit losses in the third quarter, compared with a net reversal of $100,000 a year earlier. Nonaccrual loans were $1.1 million at both September 30, 2026 and December 31, 2025. The allowance for credit losses was $17.8 million at September 30, 2026, and the allowance-to-loans ratio was 1.05%.

Mortgage banking net income was $266,000 for the third quarter, versus $641,000 a year earlier, due primarily to lower gains on sales of loans from lower margins, partially offset by higher mortgage lender services fee income. Originations were $172.8 million, up 3.4% year over year. Refinancings decreased 22.7% versus the third quarter of 2025 as rates rose. Mortgage lender services fee income increased to $907,000 from $768,000 a year earlier.

Consumer finance net income was $303,000 for the third quarter, versus $231,000 a year earlier, due primarily to lower provision for credit losses on a smaller loan balance and lower interest expense on intercompany borrowings, partially offset by lower interest income. Average loans decreased $10.0 million, or 2.2%, versus 2025 as marine and recreational vehicle loans ran off after the segment ended purchases under that program in the third quarter of 2025. Consumer finance net charge-offs were at an annualized rate of 2.63% of average total loans for the third quarter.

Total delinquent loans as a percentage of total loans was 3.39% at September 30, 2026, versus 4.38% at December 31, 2025. Average monthly automobile payment deferrals were 2.05% of average auto loans in the third quarter, versus 1.40% in the second quarter.

The Corporation declared a quarterly cash dividend of 48 cents a share in the third quarter, a payout ratio of 18.8% of third-quarter earnings per share. Total borrowings increased to $138.1 million at September 30, 2026 from $113.3 million at December 31, 2025, due primarily to FHLB advances used to help fund loan growth. Uninsured deposits were approximately $720.4 million, or 30.6% of total deposits.

C&F Bank was categorized as well capitalized under the FDIC’s prompt corrective action framework at September 30, 2026.