DEF: C&F Financial Corporation Announces 2025 Annual Meeting and Executive Compensation Details

C&F Financial Corporation invites shareholders to the 2025 Annual Meeting and provides details on executive compensation, director nominations, and financial performance.

Summary

• C&F Financial Corporation will hold its 2025 Annual Meeting of Shareholders on April 15, 2025.
• Shareholders will vote on the election of four Class II directors, executive compensation, the frequency of future executive compensation votes, and the ratification of the independent accounting firm.
• The Corporation reported a net income of $19.9 million and earnings per share of $6.01 for 2024, compared to $23.7 million and $6.92 in 2023.
• Return on average equity (ROE) was 9.02 percent and return on average assets (ROA) was 0.80 percent for 2024.
• Adjusted net income was $20.0 million and adjusted earnings per share were $6.03, excluding branch consolidation charges.
• Executive compensation includes base salary, short-term cash incentives, and long-term equity incentives, aligning with shareholder interests and company performance.
• In 2024, 45 percent of the CEO's total direct compensation was incentive-based, tied to the Corporation's performance relative to a peer group.
• The Board recommends shareholders vote for the election of directors, approval of executive compensation, a one-year frequency for future executive compensation votes, and ratification of the accounting firm.

Sentiment

Score: 6

Explanation: The document presents a mix of positive and negative financial results, with a decrease in net income offset by ongoing commitments to corporate responsibility and competitive executive compensation practices. The sentiment is neutral to slightly positive.

Positives

• The Corporation has a diversified business strategy through its three business segments: Community banking, Mortgage banking and Consumer finance.
• The Corporation is committed to corporate responsibility, including access to banking, community investment, and employee wellness.
• The Board is composed of experienced members with diverse skills and backgrounds.
• The Corporation has stock ownership guidelines for executives and directors to align their interests with shareholders.
• The Corporation has clawback policies in place to recoup incentive compensation in the event of financial restatements.

Negatives

• Consolidated net income decreased 16.1 percent for 2024 compared to 2023.
• Segment net income decreased at the community banking segment and the consumer finance segment compared to the prior year.
• The Corporation paid compensation that was not deductible to the Corporation to Mr. Cherry of $247,000 and to Mr. McKernon of $393,000.

Risks

• The Corporation faces risks related to cybersecurity threats, requiring ongoing monitoring and training.
• The Corporation's performance is subject to economic conditions and competition in the financial services industry.
• Changes in interest rates and regulations could impact the Corporation's profitability and operations.

Future Outlook

The Corporation anticipates the next say-on-pay vote will occur at the 2026 Annual Meeting of Shareholders and the next say-when-on-pay proposal will occur at the 2031 Annual Meeting of Shareholders.

Management Comments

• Larry G. Dillon, Executive Chairman, and Thomas F. Cherry, President and Chief Executive Officer, express appreciation for shareholders' loyalty and support.
• The Board believes the Corporations executive compensation is competitive, focused on pay for performance principles, and aligned with the long-term interests of shareholders.

Industry Context

The document benchmarks executive compensation against a peer group of publicly-traded commercial financial institutions, reflecting industry standards for compensation and performance evaluation.

Comparison to Industry Standards

• The document compares C&F Financial Corporation's performance to a peer group of 48 publicly-traded commercial financial institutions with assets between $1.2 billion and $5.0 billion.
• The peer group includes companies like ACNB Corporation, First Community Bankshares, Inc., and Southern First Bancshares, Inc.
• Executive compensation is benchmarked against this peer group to ensure competitiveness.
• The 2023 Review used a peer group analysis of 26 publicly-traded commercial financial institutions headquartered in Virginia, Maryland, North Carolina, Pennsylvania, South Carolina, Tennessee and West Virginia, ranging in asset size from approximately 50 percent to 200 percent of the Corporations size and having similar loan portfolio composition to the Corporation.

Management Changes

Related Party Transactions

• During 2024, there were transactions between the Corporations banking subsidiary and certain members of the Compensation Committee or their associates, all consisting of extensions of credit by the Bank in the ordinary course of business.
• As of December 31, 2024, the total maximum extensions of credit (including used and unused lines of credit) to policy-making officers, directors and their associates amounted to $2.1 million, or 0.9 percent of total year-end capital.

Stakeholder Impact

• Shareholders are invited to participate in the Annual Meeting and vote on key proposals.
• Employees are supported through wellness programs and development opportunities.
• Customers benefit from access to banking and financial products and services.
• Communities are supported through financial investments and employee volunteerism.

Next Steps

• Shareholders are encouraged to vote by proxy before the Annual Meeting.
• The Board will consider the outcome of the advisory vote on executive compensation when making future compensation decisions.
• The Audit Committee will continue to oversee the Corporation's financial reporting process and the work of the independent accounting firm.

Key Dates