NOTE 2: Securities

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The Corporation’s debt securities, all of which are classified as available for sale, are summarized in the following tables. The Corporation has elected to exclude accrued interest receivable, totaling $2.68 million and $2.67 million at June 30, 2026 and December 31, 2025, respectively, from the amortized cost basis of securities.  

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The amortized cost and estimated fair value of securities at June 30, 2026, by the earlier of contractual maturity or expected maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to prepay obligations with or without call or prepayment penalties.

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The following table presents the gross realized gains and losses on and the proceeds from the sales, maturities and calls of securities. During the three and six months ended June 30, 2026, the Corporation received $69.2 million of proceeds related to sales of securities with a book value of $76.3 million, resulting in a pre-tax loss of $7.1 million.  There were no sales of securities during the three and six months ended June 30, 2025.  

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The Corporation pledges securities primarily to secure municipal deposits and lines of credit that provide liquidity to the Corporation and C&F Bank. Securities with an aggregate amortized cost of $120.85 million and an aggregate fair value of $118.50 million were pledged at June 30, 2026. Securities with an aggregate amortized cost of $138.43 million and an aggregate fair value of $130.88 million were pledged at December 31, 2025.

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Securities in an unrealized loss position at June 30, 2026, by duration of the period of the unrealized loss, are shown below.

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There were 336 debt securities with a fair value below the amortized cost basis, totaling $291.92 million of aggregate fair value as of June 30, 2026. The Corporation concluded that a credit loss did not exist in its securities portfolio at June 30, 2026, and no allowance for credit losses has been recognized based on the fact that as of June 30, 2026 (1) changes in fair value were caused primarily by fluctuations in interest rates or other market factors, such as changes in demand, (2) securities with unrealized losses had generally high credit quality, (3) the Corporation intends to hold these investments in debt securities to maturity and it is more-likely-than-not that the Corporation will not be required to sell these investments before a recovery of its investment, and (4) issuers have continued to make timely payments of principal and interest. Additionally, the Corporation’s mortgage-backed securities are entirely issued by either U.S. government agencies or U.S.

government-sponsored enterprises.  Collectively, these entities provide a guarantee, which is either explicitly or implicitly supported by the full faith and credit of the U.S. government, that investors in such mortgage-backed securities will receive timely principal and interest payments. 

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Securities in an unrealized loss position at December 31, 2025, by duration of the period of the unrealized loss, are shown below.

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The Corporation’s investment in restricted stock totaled $4.06 million at June 30, 2026 and $3.68 million at December 31, 2025 and consisted of Federal Home Loan Bank of Atlanta (FHLB) stock.  Restricted stock is generally viewed as a long-term investment, which is carried at cost because there is no market for the stock other than to be redeemed or repurchased by the FHLB. Therefore, when evaluating restricted stock for impairment, its value is based on the ultimate recoverability of the par value rather than by recognizing any temporary decline in value. The Corporation did not consider its investment in restricted stock to be impaired at June 30, 2026 and no impairment has been recognized.