Business Segments

12 Months Ended

Dec. 31, 2023

Business Segments

Business Segments

NOTE 20: Business Segments

The Corporation operates in a decentralized fashion in three business segments: community banking, mortgage banking and consumer finance. Beginning with the first quarter of 2021, the community banking segment comprises C&F Bank, C&F Wealth Management, C&F Insurance and CVB Title. Revenues from community banking operations consist primarily of net interest income related to investments in loans and securities and outstanding deposits and borrowings, fees earned on deposit accounts, debit card interchange activity, and net revenues from offering wealth management services and insurance products through third-party service providers. Through C&F Mortgage, mortgage banking operating revenues consist principally of gains on sales of loans in the secondary market, mortgage banking fee income related to loan originations, fees earned by providing mortgage loan origination functions to third-party lenders, and net interest income on mortgage loans held for sale. Revenues from consumer finance operations through C&F Finance consist primarily of net interest income earned on purchased retail installment sales contracts.

The standalone Corporation’s revenues and expenses are comprised primarily of interest expense associated with the Corporation’s trust preferred capital notes and subordinated debt, general corporate expenses, and changes in the value of the rabbi trust and deferred compensation liability related to its nonqualified deferred compensation plan.  The results of the Corporation, which includes funding and operating costs that are not allocated to the business segments, are included in the column labeled “Other” in the tables below.

	Year Ended December 31, 2023
	Community		Mortgage		Consumer
(Dollars in thousands)	Banking		Banking		Finance		Other		Eliminations		Consolidated
Interest income	$	98,387	$	1,695	$	47,264	$	—	$	(23,209)	$	124,137
Interest expense		24,184		612		22,826		2,246		(23,438)		26,430
Net interest income		74,203		1,083		24,438		(2,246)		229		97,707
Gain on sales of loans		—		5,845		—		—		(65)		5,780
Other noninterest income		16,465		4,353		962		2,257		(202)		23,835
Net revenue		90,668		11,281		25,400		11		(38)		127,322
Provision for loan losses		1,625		—		6,650		—		—		8,275
Noninterest expense		60,813		10,688		14,816		3,625		(59)		89,883
Income (loss) before taxes		28,230		593		3,934		(3,614)		21		29,164
Income tax expense (benefit)		5,302		128		1,055		(1,066)		(1)		5,418
Net income (loss)	$	22,928	$	465	$	2,879	$	(2,548)	$	22	$	23,746
Other data:
Capital expenditures	$	1,301	$	12	$	146	$	—	$	—	$	1,459
Depreciation and amortization	$	3,402	$	79	$	398	$	—	$	—	$	3,879

	Year Ended December 31, 2022
	Community		Mortgage		Consumer
(Dollars in thousands)	Banking		Banking		Finance		Other		Eliminations		Consolidated
Interest income	$	72,568	$	2,036	$	42,441	$	—	$	(15,691)	$	101,354
Interest expense		5,532		662		15,124		2,358		(15,786)		7,890
Net interest income		67,036		1,374		27,317		(2,358)		95		93,464
Gain on sales of loans		—		7,963		—		—		(465)		7,498
Other noninterest income		19,250		4,856		1,050		(3,230)		(212)		21,714
Net revenue		86,286		14,193		28,367		(5,588)		(582)		122,676
Provision for loan losses		(600)		32		3,740		—		—		3,172
Noninterest expense		56,718		12,580		15,284		(1,982)		(60)		82,540
Income (loss) before taxes		30,168		1,581		9,343		(3,606)		(522)		36,964
Income tax expense (benefit)		5,794		371		2,512		(973)		(109)		7,595
Net income (loss)	$	24,374	$	1,210	$	6,831	$	(2,633)	$	(413)	$	29,369
Other data:
Capital expenditures	$	3,265	$	66	$	17	$	—	$	—	$	3,348
Depreciation and amortization	$	3,720	$	226	$	410	$	—	$	—	$	4,356

	Year Ended December 31, 2021
	Community		Mortgage		Consumer
(Dollars in thousands)	Banking		Banking		Finance		Other		Eliminations		Consolidated
Interest income	$	62,402	$	3,845	$	37,803	$	—	$	(10,322)	$	93,728
Interest expense		5,693		1,157		9,503		2,349		(10,343)		8,359
Net interest income		56,709		2,688		28,300		(2,349)		21		85,369
Gain on sales of loans		—		22,370		—		—		(91)		22,279
Other noninterest income		15,208		9,192		1,046		2,207		(101)		27,552
Net revenue		71,917		34,250		29,346		(142)		(171)		135,200
Provision for credit losses		(200)		(45)		820		—		—		575
Noninterest expense		54,981		23,328		14,881		3,375		(22)		96,543
Income (loss) before taxes		17,136		10,967		13,645		(3,517)		(149)		38,082
Income tax expense (benefit)		3,051		3,284		3,685		(1,030)		(31)		8,959
Net income (loss)	$	14,085	$	7,683	$	9,960	$	(2,487)	$	(118)	$	29,123
Other data:
Capital expenditures	$	878	$	164	$	3,744	$	—	$	—	$	4,786
Depreciation and amortization	$	4,113	$	256	$	372	$	—	$	—	$	4,741

	Community		Mortgage		Consumer
(Dollars in thousands)	Banking		Banking		Finance		Other		Eliminations		Consolidated
Total assets at December 31, 2023	$	2,319,810	$	22,177	$	476,671	$	35,581	$	(415,741)	$	2,438,498
Total assets at December 31, 2022	$	2,206,299	$	24,500	$	479,864	$	43,241	$	(421,587)	$	2,332,317

The community banking segment extends two warehouse lines of credit to the mortgage banking segment, providing a portion of the funds needed to originate mortgage loans. The community banking segment charges the mortgage banking segment interest at the daily FHLB advance rate plus a spread ranging from 50 basis points to 175 basis points. The community banking segment also provides the consumer finance segment with a portion of the funds needed to purchase loan contracts by means of variable rate notes that carry interest at one-month term SOFR plus 211.5 basis points, with a floor of 3.5 percent and a ceiling of 6.0 percent, and fixed rate notes that carry interest at rates ranging from 3.3 percent to 5.1 percent. The community banking segment acquires certain residential real estate loans from the mortgage banking segment at prices similar to those paid by third-party investors. These transactions are eliminated to reach consolidated totals. In addition to unallocated expenses recorded by the holding company, certain overhead costs are incurred by the community banking segment and are not allocated to the mortgage banking and consumer finance segments.