C & F FINANCIAL CORP Income Taxes Disclosure
NOTE 13: Income Taxes
Principal components of income tax expense as reflected in the Consolidated Statements of Income are as follows:
Year Ended December 31, |
| |||||||||
(Dollars in thousands) | | 2025 | | 2024 | | 2023 |
| |||
Current taxes | $ | 5,926 | $ | 3,741 | $ | 4,832 | ||||
Deferred taxes |
| 154 |
| 474 |
| 586 | ||||
Total | $ | 6,080 | $ | 4,215 | $ | 5,418 | ||||
Income tax expense for the years ended December 31, 2025, 2024 and 2023 differed from the federal statutory rate applied to income before income taxes for the following reasons:
Year Ended December 31, |
| |||||||||||||||
2025 | 2024 | 2023 | ||||||||||||||
(Dollars in thousands) | Amount | Percent | Amount | Percent | Amount | Percent |
| |||||||||
Income tax at federal statutory rates | $ | 6,945 |
| 21.0 | % | $ | 5,068 |
| 21.0 | % | $ | 6,124 |
| 21.0 | % | |
State income taxes, net of federal income tax effect1 |
| 196 |
| 0.6 |
| 15 |
| 0.1 |
| 82 |
| 0.3 | ||||
Tax credits |
|
|
|
|
|
| ||||||||||
Investments in qualified housing projects | (88) | (0.3) | (87) | (0.4) | (75) | (0.3) | ||||||||||
Nontaxable or nondeductible items | ||||||||||||||||
Tax exempt interest income | (977) | (3.0) | (907) | (3.8) | (762) | (2.6) | ||||||||||
Disallowed interest expense |
| 251 |
| 0.8 |
| 281 |
| 1.2 | 180 |
| 0.6 | |||||
Other nontaxable or nondeductible items |
| (247) |
| (0.7) |
| (155) |
| (0.7) |
| (131) |
| (0.5) | ||||
$ | 6,080 |
| 18.4 | % | $ | 4,215 |
| 17.4 | % | $ | 5,418 |
| 18.5 | % | ||
| 1 | State income taxes in , in and in made up the majority (greater than 50 percent) of the tax effect in this category for the years ended December 31, 2025, 2024 and 2023, respectively. |
The Corporation’s net deferred income taxes totaled $14.04 million and $17.72 million at December 31, 2025 and 2024, respectively. The tax effects of each type of significant item that gave rise to deferred taxes are:
| December 31, |
| |||||
(Dollars in thousands) | 2025 | 2024 |
| ||||
Deferred tax assets | |||||||
Allowances for credit losses, reserve for unfunded commitments and OREO losses | $ | 10,087 | $ | 10,238 | |||
Net unrealized loss on securities available for sale | 2,714 | 6,298 | |||||
Nonqualified deferred compensation plan |
| 3,825 |
| 3,781 | |||
Lease liabilities | 2,192 | 2,216 | |||||
Fair value adjustments related to business combinations |
| 177 |
| 251 | |||
Share-based compensation |
| 757 |
| 736 | |||
Reserve for indemnification losses |
| 263 |
| 313 | |||
Accrued expenses | 589 | 521 | |||||
Other |
| 891 |
| 783 | |||
Deferred tax assets |
| 21,495 |
| 25,137 | |||
Deferred tax liabilities | |||||||
Goodwill and other intangible assets |
| (2,960) |
| (2,992) | |||
Right of use assets | (1,974) | (2,034) | |||||
Depreciation |
| (1,347) |
| (1,213) | |||
Defined benefit plan |
| (1,064) |
| (862) | |||
Cash flow hedges | (111) | (317) | |||||
Deferred tax liabilities |
| (7,456) |
| (7,418) | |||
Net deferred tax assets | $ | 14,039 | $ | 17,719 | |||
Income tax paid for the years ended December 31, 2025, 2024 and 2023 are set forth in the following table.
Year Ended December 31, | |||||||||
(Dollars in thousands) | | 2025 | | 2024 | | 2023 | |||
Federal | $ | 5,600 | $ | 500 | $ | 5,750 | |||
State and local: | |||||||||
Virginia | * | (500) | * | ||||||
Maryland | * | 10 | * | ||||||
West Virginia | * | (20) | * | ||||||
North Carolina | * | 13 | * | ||||||
Texas | * | (3) | * | ||||||
Other |
| 11 |
| — |
| 275 | |||
Total taxes paid | $ | 5,611 | $ | — | $ | 6,025 | |||
The Corporation files income tax returns in the U.S. federal jurisdiction and several states. With few exceptions, the Corporation is no longer subject to U.S. federal, state and local income tax examinations by tax authorities for years prior to 2022.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 3, 2026 | Showing above |
| 2024 | Feb 27, 2025 | |
| 2023 | Feb 27, 2024 | |
| 2022 | Feb 28, 2023 | |
| 2021 | Mar 1, 2022 | |
| 2020 | Mar 3, 2021 | |
| 2019 | Mar 3, 2020 | |
| 2018 | Feb 26, 2019 | |
| 2017 | Mar 8, 2018 | |
| 2016 | Mar 7, 2017 | |
| 2015 | Mar 4, 2016 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.