PART I. Financial Information [Item 1. Financial Statements](index=2&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements of CF Bankshares Inc. and its subsidiary, including balance sheets, income statements, comprehensive income, equity changes, cash flows, and detailed explanatory notes [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Total assets, liabilities, and stockholders' equity increased from December 31, 2024, to March 31, 2025, primarily driven by growth in loans and deposits | Metric | March 31, 2025 (unaudited) (in thousands) | December 31, 2024 (in thousands) | | :----------------------------------- | :-------------------------- | :------------------ | | Total assets | $2,094,681 | $2,065,523 | | Total deposits | $1,783,689 | $1,755,795 | | Total liabilities | $1,921,999 | $1,897,086 | | Total stockholders' equity | $172,682 | $168,437 | | Loans and leases, net | $1,750,139 | $1,722,019 | | Cash and cash equivalents | $240,986 | $235,272 | [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) Net income significantly increased for the three months ended March 31, 2025, driven by higher net interest income and lower provision for credit losses, despite increased noninterest expense | Metric | Three months ended March 31, 2025 (in thousands) | Three months ended March 31, 2024 (in thousands) | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Net income | $4,430 | $3,070 | | Net income attributable to common stockholders | $4,294 | $3,013 | | Basic earnings per common share | $0.68 | $0.48 | | Diluted earnings per common share | $0.68 | $0.47 | | Net interest income | $12,909 | $11,284 | | Provision for credit losses | $582 | $1,237 | | Noninterest income | $1,206 | $905 | | Noninterest expense | $7,954 | $7,187 | | Income tax expense | $1,149 | $695 | [Consolidated Statements of Comprehensive Income](index=6&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Comprehensive income increased significantly year-over-year, driven by higher net income and larger unrealized holding gains on available-for-sale securities | Metric | Three months ended March 31, 2025 (in thousands) | Three months ended March 31, 2024 (in thousands) | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Net income | $4,430 | $3,070 | | Unrealized holding gains (net of tax) | $78 | $9 | | Comprehensive income | $4,508 | $3,079 | [Consolidated Statements of Changes in Stockholders' Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) Stockholders' equity increased from January 1, 2025, to March 31, 2025, primarily due to net income and restricted stock expense, partially offset by dividends and treasury share acquisitions | Metric | January 1, 2025 (in thousands) | March 31, 2025 (in thousands) | | :----------------------------------- | :-------------- | :------------- | | Total Stockholders' Equity | $168,437 | $172,682 | **Key Changes (Three months ended March 31, 2025):** * Net income: $4,430 (in thousands) * Other comprehensive income: $78 (in thousands) * Restricted stock expense, net of forfeitures: $303 (in thousands) * Acquisition of treasury shares: $(113) (in thousands) * Cash dividends declared on common stock: $(439) (in thousands) * Cash dividends declared on Series D preferred stock: $(14) (in thousands) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash inflow from operating and financing activities, offset by outflow from investing, led to an overall increase in cash and cash equivalents for the three months ended March 31, 2025 | Cash Flow Activity | Three months ended March 31, 2025 (in thousands) | Three months ended March 31, 2024 (in thousands) | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash from (used by) operating activities | $2,206 | $(1,161) | | Net cash used by investing activities | $(22,928) | $(1,782) | | Net cash from (used by) financing activities | $26,436 | $(21,760) | | Net change in cash and cash equivalents | $5,714 | $(24,703) | | Ending cash and cash equivalents | $240,986 | $236,892 | [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) These notes provide detailed explanations and disclosures for the consolidated financial statements, covering accounting policies, financial instruments, debt, equity, regulatory capital, income taxes, and subsequent events [NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=10&type=section&id=NOTE%201%20%E2%80%93%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines the basis of financial statement presentation, key accounting policies for loans, ACL, foreclosed assets, and tax credit investments, including new accounting standard adoptions - The consolidated financial statements are prepared in accordance with U.S. GAAP and SEC instructions for Form 10-Q, with interim period condensations[18](index=18&type=chunk) - The Company adopted ASU 2023-07 'Segment Reporting' as of January 1, 2024, determining all business activities meet aggregation criteria for a single operating segment[35](index=35&type=chunk) - The Company did not record an allowance for credit losses on available-for-sale securities as unrealized losses were due to interest rate changes, not credit quality, and there was no intent or requirement to sell[24](index=24&type=chunk)[55](index=55&type=chunk) [NOTE 2 – REVENUE RECOGNITION](index=15&type=section&id=NOTE%202%20%E2%80%93%20REVENUE%20RECOGNITION) This note clarifies revenue recognition practices, distinguishing between revenue from financial instruments (majority) and contracts with customers (recognized in noninterest income upon performance completion) - The majority of revenue is generated from financial instruments (loans, letters of credit, derivatives, investment securities, mortgage activities)[46](index=46&type=chunk) - Revenue from contracts with customers, such as service charges on deposit accounts, is recognized within Noninterest income upon completion of performance obligations (e.g., monthly for account maintenance or upon transaction completion)[47](index=47&type=chunk) [NOTE 3 – SECURITIES](index=16&type=section&id=NOTE%203%20%E2%80%93%20SECURITIES) The available-for-sale securities portfolio, primarily corporate debt and U.S. Treasury securities, held significant unrealized losses attributed to market interest rates, not credit quality, thus no impairment was recognized | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :----------------------------------- | :------------- | :---------------- | | Total Securities available for sale (Fair Value) | $8,793 | $8,683 | | Corporate debt (Fair Value) | $7,800 | $7,700 | | U.S. Treasury (Fair Value) | $993 | $983 | | Total Amortized Cost | $10,977 | $10,965 | | Total Gross Unrealized Losses | $2,184 | $2,283 | - At March 31, 2025, **88.7%** of available-for-sale securities were reported at less than historical cost, with unrealized losses primarily in one Corporate debt security, attributed to changes in market conditions (interest rates) and not credit quality[54](index=54&type=chunk)[55](index=55&type=chunk) [NOTE 4 – LOANS AND LEASES](index=17&type=section&id=NOTE%204%20%E2%80%93%20LOANS%20AND%20LEASES) The loan and lease portfolio and ACL increased slightly, with minor changes in nonaccrual and past due loans, as the Company categorizes loans into risk categories for credit quality monitoring | Loan Portfolio Segment | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :----------------------------------- | :------------- | :---------------- | | Commercial | $414,685 | $418,804 | | Real estate: Single-family residential | $441,595 | $465,517 | | Real estate: Multi-family residential | $143,337 | $150,434 | | Real estate: Commercial | $514,833 | $460,064 | | Real estate: Construction | $208,577 | $202,166 | | Consumer: Home equity lines of credit | $41,994 | $39,520 | | Consumer: Other | $2,921 | $2,988 | | Less: ACL – Loans | $(17,803) | $(17,474) | | Loans and leases, net | $1,750,139 | $1,722,019 | | ACL Activity | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Balances, January 1 | $17,474 | $16,865 | | Provision (reversal) for credit losses | $352 | $1,317 | | Recoveries on loans | $71 | $16 | | Loans charged off | $(94) | $0 | | Balances, March 31 | $17,803 | $18,198 | | Nonaccrual Loans | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :----------------------------------- | :------------- | :---------------- | | Total nonaccrual loans | $14,494 | $14,538 | | Nonaccrual Loans with no Allowance for Credit Losses | $1,831 | $1,797 | | Past Due Loans (Total Past Due) | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :----------------------------------- | :------------- | :---------------- | | Total Past Due | $11,422 | $12,473 | | 90 Days or more Past Due | $9,682 | $7,778 | - The Company categorizes loans into risk categories (Special Mention, Substandard, Doubtful) based on borrower's ability to service debt, financial information, payment history, and economic trends[80](index=80&type=chunk)[81](index=81&type=chunk)[82](index=82&type=chunk)[84](index=84&type=chunk)[87](index=87&type=chunk) - Consumer and Single-family residential loans are classified as 'performing' or 'nonperforming' based on payment performance[81](index=81&type=chunk) [NOTE 5 – LEASES](index=27&type=section&id=NOTE%205%20%E2%80%93%20LEASES) All leases are operating leases, recognized as ROU assets and liabilities, with a weighted-average remaining lease term of 8.6 years and a discount rate of 7.49% as of March 31, 2025 - All leases are classified as operating leases, with ROU assets and lease liabilities recognized on the balance sheet[94](index=94&type=chunk) | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :----------------------------------- | :------------- | :---------------- | | Operating lease right-of-use assets | $5,925 | $6,087 | | Operating lease liabilities | $6,083 | $6,229 | | Weighted-average remaining lease term | 8.6 years | 8.8 years | | Weighted-average discount rate | 7.49% | 7.47% | | Operating lease costs (3 months ended March 31, 2025) | $162 | $180 | [NOTE 6 - FAIR VALUE](index=28&type=section&id=NOTE%206%20-%20FAIR%20VALUE) This note details fair value measurements, categorizing inputs into Level 1, 2, and 3, with recurring measurements for securities, loans held for sale, and derivatives primarily using Level 2 observable inputs - Fair value measurements are categorized into Level 1 (quoted prices in active markets), Level 2 (significant other observable inputs), and Level 3 (significant unobservable inputs)[99](index=99&type=chunk)[100](index=100&type=chunk) | Financial Assets (Fair Value at March 31, 2025) (in thousands) | Level 2 | | :----------------------------------- | :------ | | Securities available for sale | $8,793 | | Loans held for sale | $3,505 | | Derivative assets | $3,352 | | Financial Liabilities (Fair Value at March 31, 2025) (in thousands) | Level 2 | | :----------------------------------- | :------ | | Derivative liabilities | $3,352 | - The Company elected the fair value option for loans held for sale, believing fair value is the best indicator of their resolution[106](index=106&type=chunk) - No such loans were 90 days or more past due[106](index=106&type=chunk) [NOTE 7 – SUBORDINATED DEBENTURES](index=31&type=section&id=NOTE%207%20%E2%80%93%20SUBORDINATED%20DEBENTURES) The Company holds two types of subordinated debentures: 2003 variable-rate and 2018 fixed-to-floating rate notes, both long-term liabilities with specific maturity and redemption terms - The 2003 subordinated debentures (balance **$5,155 thousand**) have a variable interest rate, resetting quarterly to three-month SOFR plus **3.112%** (**7.41%** at March 31, 2025)[111](index=111&type=chunk)[113](index=113&type=chunk) - The 2018 fixed-to-floating rate subordinated notes (balance **$9,854 thousand** net of costs) initially bore **7.00%** interest, converting to three-month SOFR plus **4.402%** (**8.70%** at March 31, 2025) after December 30, 2023[114](index=114&type=chunk)[117](index=117&type=chunk) [NOTE 8 – FHLB ADVANCES AND OTHER DEBT](index=32&type=section&id=NOTE%208%20%E2%80%93%20FHLB%20ADVANCES%20AND%20OTHER%20DEBT) FHLB advances consist of fixed-rate advances, and the Holding Company's $35 million credit facility converted to a 10-year term note with its fixed interest rate reset to 6.00% effective April 30, 2025 | Debt Type | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :----------------------------------- | :------------- | :---------------- | | Total FHLB fixed rate advances | $58,000 | $58,000 | | Holding Company credit facility | $34,689 | $34,680 | | Total FHLB advances and other debt | $92,689 | $92,680 | - The Holding Company's **$35 million** credit facility converted to a 10-year term note in May 2024[119](index=119&type=chunk) - Effective April 30, 2025, its fixed interest rate was reset to **6.00%** until May 21, 2026, then converting to a floating rate equal to PRIME[119](index=119&type=chunk) - CFBank had **$65 million** in unused lines of credit at two commercial banks at March 31, 2025, with no outstanding borrowings[120](index=120&type=chunk) [NOTE 9 – STOCK-BASED COMPENSATION](index=34&type=section&id=NOTE%209%20%E2%80%93%20STOCK-BASED%20COMPENSATION) Stock-based compensation expense increased for the three months ended March 31, 2025, under the 2019 Equity Incentive Plan, with a significant number of restricted stock shares granted | Metric | Three months ended March 31, 2025 (in thousands) | Three months ended March 31, 2024 (in thousands) | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Total compensation cost | $303 | $233 | | Income tax effect | $64 | $49 | - **79,425** shares of restricted stock were granted under the 2019 Plan during the three months ended March 31, 2025, compared to **7,068** shares in the prior year[126](index=126&type=chunk) - Unrecognized compensation cost related to nonvested restricted stock awards was **$3,078 thousand** at March 31, 2025, up from **$1,303 thousand** at March 31, 2024[127](index=127&type=chunk) [NOTE 10 – REGULATORY CAPITAL MATTERS](index=36&type=section&id=NOTE%2010%20%E2%80%93%20REGULATORY%20CAPITAL%20MATTERS) CFBank maintains capital levels well above Basel III minimums for 'well capitalized' status, with dividend payments subject to regulatory and debt agreement restrictions | Capital Ratio (March 31, 2025) | Actual Ratio | Minimum Required (Basel III) | To Be Well Capitalized | | :----------------------------------- | :----------- | :--------------------------- | :--------------------- | | Total Capital to risk weighted assets | 13.76% | 10.50% | 10.00% | | Tier 1 (Core) Capital to risk weighted assets | 12.59% | 8.50% | 8.00% | | Common equity tier 1 capital to risk-weighted assets | 12.59% | 7.00% | 6.50% | | Tier 1 (Core) Capital to adjusted total assets (Leverage Ratio) | 10.55% | 4.00% | 5.00% | - CFBank's capital ratios at March 31, 2025, significantly exceed the minimums required to be considered 'well capitalized' under applicable regulatory capital standards[136](index=136&type=chunk) - Dividend payments by the Holding Company are dependent on its liquidity, receipt of dividends from CFBank, and compliance with various legal, regulatory, and debt agreement conditions, including current interest payments on subordinated debentures[139](index=139&type=chunk) [NOTE 11 – DERIVATIVE INSTRUMENTS](index=37&type=section&id=NOTE%2011%20%E2%80%93%20DERIVATIVE%20INSTRUMENTS) CFBank uses interest-rate swaps for asset/liability management and mortgage banking derivatives for hedging, with swaps resulting in net zero fair value change and mortgage derivatives not designated in hedge relationships - CFBank uses interest-rate swaps to manage interest rate risk, entering into offsetting swaps with customers and dealer counterparties[141](index=141&type=chunk) - The net change in fair value of these swaps is zero in noninterest income[141](index=141&type=chunk) | Metric (Interest-Rate Swaps) | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :----------------------------------- | :------------- | :---------------- | | Notional amount | $91,835 | $92,818 | | Weighted average pay rate | 5.46% | 5.45% | | Weighted average receive rate | 6.74% | 6.93% | | Weighted average maturity | 8.5 years | 8.6 years | | Fair value of derivative asset | $3,352 | $3,730 | | Fair value of derivative liability | $(3,352) | $(3,730) | - Mortgage banking derivatives, including rate lock commitments, are used to economically hedge interest rate risk and are not designated in hedge relationships[147](index=147&type=chunk) - The fair value of these commitments was immaterial[147](index=147&type=chunk) [NOTE 12 – INCOME TAXES](index=38&type=section&id=NOTE%2012%20%E2%80%93%20INCOME%20TAXES) The Company recorded a deferred tax asset with no valuation allowance, and the effective tax rate increased to 20.6% for the three months ended March 31, 2025, influenced by tax credit investments | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :----------------------------------- | :------------- | :---------------- | | Deferred tax asset | $4,173 | $4,177 | | Effective Tax Rate | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Effective tax rate | 20.6% | 18.5% | - The Company has net operating loss carryforwards of **$21,764 thousand**, with **$20,520 thousand** expected to expire unutilized due to Section 382 ownership change limitations[152](index=152&type=chunk) - The increase in effective tax rate for Q1 2025 was primarily due to a **1.6%** increase from tax credit investments, partially offset by restricted stock and tax-exempt earnings[155](index=155&type=chunk) [NOTE 13- ACCUMULATED OTHER COMPREHENSIVE LOSS](index=40&type=section&id=NOTE%2013-%20ACCUMULATED%20OTHER%20COMPREHENSIVE%20LOSS) Accumulated other comprehensive loss improved for the three months ended March 31, 2025, primarily due to unrealized holding gains on available-for-sale securities | Metric | March 31, 2025 (in thousands) | March 31, 2024 (in thousands) | | :----------------------------------- | :------------- | :------------- | | Accumulated other comprehensive loss, beginning of period | $(1,803) | $(2,290) | | Other comprehensive gain before reclassifications | $78 | $9 | | Accumulated other comprehensive loss, end of period | $(1,725) | $(2,281) | [NOTE 14- PREFERRED STOCK](index=40&type=section&id=NOTE%2014-%20PREFERRED%20STOCK) The Company has Series D Preferred Stock outstanding, convertible into common stock under certain conditions, and participating pro rata with common shareholders in dividends on an as-converted basis - **2,000** shares of Series D Preferred Stock were outstanding at March 31, 2025, and December 31, 2024[157](index=157&type=chunk) - Series D Preferred Stock is convertible into **100** shares of Non-Voting Common Stock (upon shareholder approval) or Voting Common Stock (upon holder request, subject to ownership limits, or transfer to non-affiliate)[158](index=158&type=chunk) - Holders of Series D Preferred Stock participate pro rata with common shareholders in dividends on an as-converted basis and have no liquidation preferences[158](index=158&type=chunk) [NOTE 15- TAX CREDIT INVESTMENTS](index=40&type=section&id=NOTE%2015-%20TAX%20CREDIT%20INVESTMENTS) The Company invests in LIHTC and HTC for returns and CRA goals, with stable total investments, decreased unfunded commitments, and increased amortization expense and recognized tax credits | Investment Type | Investment (March 31, 2025) (in thousands) | Unfunded Commitment (March 31, 2025) (in thousands) | Investment (December 31, 2024) (in thousands) | Unfunded Commitment (December 31, 2024) (in thousands) | | :----------------------------------- | :-------------------------- | :----------------------------------- | :-------------------------- | :----------------------------------- | | Low Income Housing Tax Credit (LIHTC) | $20,139 | $9,814 | $20,139 | $10,767 | | Historic Tax Credit (HTC) | $1,953 | $1,573 | $1,953 | $1,573 | | Total | $22,092 | $11,387 | $22,092 | $12,340 | | Metric | Three months ended March 31, 2025 (in thousands) | Three months ended March 31, 2024 (in thousands) | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Total Amortization expense | $682 | $353 | | Total Tax credits recognized | $448 | $355 | [NOTE 16- SUBSEQUENT EVENTS](index=41&type=section&id=NOTE%2016-%20SUBSEQUENT%20EVENTS) Subsequent to the reporting period, the Board declared cash dividends, and the Company secured a new $10 million revolving line of credit and amended its existing $35 million credit facility with revised interest rates - On April 2, 2025, a cash dividend of **$0.07** per common share and **$7.00** per Series D Preferred Stock share was declared, paid on April 22, 2025[163](index=163&type=chunk) - On April 30, 2025, the Company entered into a new **$10 million** revolving line of credit, maturing April 30, 2027, with a fixed rate of **6.00%** until May 21, 2026, then converting to PRIME[164](index=164&type=chunk) - Effective April 30, 2025, the existing **$35 million** credit facility's fixed rate was reset to **6.00%** until May 21, 2026, then converting to PRIME[165](index=165&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=35&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on financial condition and results, analyzing balance sheet and income statement changes, liquidity, and capital resources, highlighting net income growth, loan and deposit increases, and stable capital [Forward-Looking Statements](index=42&type=section&id=FORWARD%20LOOKING%20STATEMENTS) This cautionary statement emphasizes that forward-looking statements are subject to material risks and uncertainties, and the Company undertakes no obligation to update them - Forward-looking statements are identified by terms like 'estimate,' 'believe,' 'anticipate,' and 'expect,' and are not guarantees of performance[168](index=168&type=chunk) - Assumptions underlying forward-looking statements almost always vary from actual results, and differences can be material[169](index=169&type=chunk) - The Company undertakes no obligation to publicly release revisions to forward-looking statements, except as required by law[169](index=169&type=chunk) [Business Overview](index=42&type=section&id=Business%20Overview) CF Bankshares Inc., through CFBank, National Association, serves closely held businesses and entrepreneurs with commercial, retail, and mortgage lending services, primarily in Ohio and Indiana, making performance dependent on Ohio's economy - CF Bankshares Inc. is a financial holding company, and its wholly-owned subsidiary, CFBank, National Association, converted to a national bank in December 2016[170](index=170&type=chunk) - CFBank focuses on providing commercial loans and equipment leases, commercial and residential real estate loans, treasury management, residential mortgage lending, and full-service commercial and retail banking to closely held businesses and entrepreneurs[171](index=171&type=chunk) - The principal market area for deposits and loans includes Franklin, Delaware, Cuyahoga, Summit, and Hamilton counties in Ohio, and Marion County in Indiana, making the Company's performance largely dependent on Ohio's economic conditions[172](index=172&type=chunk) [General Financial Overview](index=43&type=section&id=General) Net income is primarily driven by net interest income, influenced by interest rates, loan demand, and deposit flows, and also affected by credit loss provisions, loan fees, operating expenses, and taxes, all subject to economic and regulatory conditions - Net income is primarily dependent on net interest income, which is the difference between interest earned on loans/securities and interest paid on deposits/borrowed funds[174](index=174&type=chunk) - Net income is also affected by provisions for credit losses, loan fee income, service charges, gains on loan sales, operating expenses, and taxes[175](index=175&type=chunk) - Results are significantly influenced by general economic and competitive conditions, market interest rates, real estate values, government policies, and regulatory actions, which can materially impact the business[175](index=175&type=chunk) [Financial Condition](index=43&type=section&id=Financial%20Condition) Total assets increased by **1.4% to $2.09 billion** at March 31, 2025, driven by a **1.6%** rise in net loans and leases and deposits, while ACL on loans increased slightly, and nonperforming and past due loans decreased | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (%) | | :----------------------------------- | :------------- | :---------------- | :--------- | | Total assets | $2,094,681 | $2,065,523 | 1.4% | | Cash and cash equivalents | $240,986 | $235,272 | 2.4% | | Loans held for sale | $3,505 | $2,623 | 33.6% | | Net loans and leases | $1,750,139 | $1,722,019 | 1.6% | | Allowance for Credit Losses on Loans | $17,803 | $17,474 | 1.9% | | Nonperforming loans | $14,600 | $15,084 | -3.2% | | Total past due loans | $11,400 | $12,500 | -8.8% | | Total deposits | $1,783,689 | $1,755,795 | 1.6% | | FHLB advances and other debt | $92,689 | $92,680 | 0.0% | | Stockholders' equity | $172,700 | $168,400 | 2.5% | - The increase in net loans and leases was primarily driven by a **$47.7 million** increase in commercial real estate loans and a **$6.4 million** increase in construction loans, partially offset by a **$23.9 million** decrease in single-family residential loans due to portfolio sales[180](index=180&type=chunk) - Nonperforming loans decreased by **$484 thousand**, primarily due to the transfer of a **$524 thousand** single-family residential loan to foreclosed assets[186](index=186&type=chunk) - Interest-only commercial lines of credit constituted **31.9%** of the commercial portfolio, and interest-only home equity lines of credit were **97.8%** of total home equity lines of credit at March 31, 2025[193](index=193&type=chunk) [Results of Operations](index=49&type=section&id=Comparison%20of%20the%20Results%20of%20Operations%20for%20the%20Three%20Months%20Ended%20March%2031,%202025%20and%202024.) Net income increased significantly by **42.9% to $4.4 million** for the three months ended March 31, 2025, driven by a **14.4%** increase in net interest income and a **53.1%** decrease in provision for credit losses, partially offset by higher noninterest expenses | Metric | Three months ended March 31, 2025 (in thousands) | Three months ended March 31, 2024 (in thousands) | Change ($) (in thousands) | Change (%) | | :----------------------------------- | :-------------------------------- | :-------------------------------- | :--------- | :--------- | | Net income | $4,400 | $3,100 | $1,300 | 42.9% | | Diluted EPS | $0.68 | $0.47 | $0.21 | 44.7% | | Net interest income | $12,900 | $11,300 | $1,600 | 14.4% | | Interest income | $29,200 | $29,100 | $100 | 0.4% | | Interest expense | $16,300 | $17,800 | $(1,500) | -8.5% | | Provision for credit losses | $582 | $1,237 | $(655) | -53.1% | | Noninterest income | $1,200 | $905 | $295 | 32.6% | | Noninterest expense | $8,000 | $7,200 | $800 | 11.1% | | Income tax expense | $1,100 | $695 | $405 | 58.3% | | Effective tax rate | 20.6% | 18.5% | 2.1% | 11.4% | - The decrease in interest expense was primarily due to a **42bps** decrease in the average rate of interest-bearing deposits, partially offset by a **0.8%** increase in average interest-bearing deposits[213](index=213&type=chunk) - Net charge-offs for the quarter ended March 31, 2025, totaled **$23 thousand**, compared to net recoveries of **$16 thousand** for the same period in 2024[214](index=214&type=chunk) - The increase in noninterest expense was mainly driven by a **$675 thousand** increase in salaries and employee benefits, related to higher expense accruals for staff incentives and deferred compensation[217](index=217&type=chunk)[219](index=219&type=chunk) [Average Balances, Interest Rates and Yields](index=52&type=section&id=Average%20Balances,%20Interest%20Rates%20and%20Yields) The net interest margin improved to **2.64%** for Q1 2025, up from **2.36%** in the prior year, primarily due to a decrease in the average cost of funds on interest-bearing liabilities | Metric | Q1 2025 Average Balance (in thousands) | Q1 2025 Average Yield/Rate | Q1 2024 Average Balance (in thousands) | Q1 2024 Average Yield/Rate | | :----------------------------------- | :---------------------- | :------------------------- | :---------------------- | :------------------------- | | Total interest-earning assets | $1,953,172 | 5.97% | $1,912,866 | 6.07% | | Total interest-bearing liabilities | $1,572,735 | 4.14% | $1,579,121 | 4.51% | | Net interest income/interest rate spread | | 1.83% | | 1.56% | | Net interest margin | | 2.64% | | 2.36% | | Change in Net Interest Income (Q1 2025 vs. Q1 2024) (in thousands) | Due to Rate | Due to Volume | Net Change | | :----------------------------------- | :---------- | :------------ | :--------- | | Interest-earning assets | $(482) | $596 | $114 | | Interest-bearing liabilities | $(1,944) | $433 | $(1,511) | | Net change in net interest income | $1,462 | $163 | $1,625 | [Critical Accounting Policies](index=53&type=section&id=Critical%20Accounting%20Policies) No significant changes occurred in the Company's critical accounting policies and estimates during the three months ended March 31, 2025, as disclosed in its 2024 Annual Report on Form 10-K - No significant changes occurred in the Company's critical accounting policies and estimates during the three months ended March 31, 2025[231](index=231&type=chunk) [Liquidity and Capital Resources](index=53&type=section&id=Liquidity%20and%20Capital%20Resources) The Company maintains sufficient liquidity through deposits, loan amortizations, securities, and borrowing capacities, though CFBank's FHLB and FRB borrowing capacity decreased, while dividend payments are subject to regulatory and debt restrictions - Management believes both the Holding Company and CFBank have sufficient liquidity to meet daily operating needs and strategic planning[234](index=234&type=chunk) | Liquid Assets and Borrowing Capacity | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :----------------------------------- | :------------- | :---------------- | | Cash, unpledged securities and deposits | $243,679 | $237,863 | | Additional borrowing capacity at the FHLB | $162,387 | $186,303 | | Additional borrowing capacity at the FRB | $125,302 | $127,424 | | Unused commercial bank lines of credit | $65,000 | $65,000 | | Total | $596,368 | $616,590 | - CFBank's additional borrowing capacity with the FHLB decreased by **$23.9 million** (**12.8%**) due to a decline in pledged collateral, primarily single-family residential loans[238](index=238&type=chunk) - The Holding Company's ability to pay common stock dividends is contingent on its cash and liquidity, receipt of dividends from CFBank, and adherence to regulatory and debt agreement terms, including current interest payments on subordinated debentures[250](index=250&type=chunk)[252](index=252&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=58&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Management believes there has been no material change in the Company's market risk as of March 31, 2025, compared to the 2024 Annual Report on Form 10-K - No material change in the Company's market risk from the information contained in the 2024 Annual Report on Form 10-K[254](index=254&type=chunk) [Item 4. Controls and Procedures](index=59&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes in internal control over financial reporting during Q1 2025 - Disclosure controls and procedures were effective as of and for the quarter ended March 31, 2025[256](index=256&type=chunk) - No material changes in internal control over financial reporting occurred in the first quarter of 2025[257](index=257&type=chunk) PART II. Other Information [Item 1. Legal Proceedings](index=47&type=section&id=Item%201.%20Legal%20Proceedings) The Company is involved in ordinary course legal proceedings, but management does not anticipate any material adverse effect on financial condition or results of operations - The Company is subject to claims and lawsuits arising in the ordinary course of business[260](index=260&type=chunk) - Management does not anticipate any material adverse effect on financial condition or results of operations from the disposition or ultimate resolution of these legal proceedings[261](index=261&type=chunk) [Item 1A. Risk Factors](index=47&type=section&id=Item%201A.%20Risk%20Factors) No material changes occurred to the Company's risk factors as presented in its 2024 Annual Report on Form 10-K - No material changes to the risk factors presented in the Company's Annual Report on Form 10-K for the year ended December 31, 2024[262](index=262&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=47&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q1 2025, the Company purchased **4,581** common shares at an average price of **$24.58** per share, surrendered for tax payments upon restricted stock vesting | Period | Total number of common shares purchased | Average price paid per common share | | :----------------------------------- | :------------------------------------ | :---------------------------------- | | January 1, 2025 through January 31, 2025 | 1,525 | $23.98 | | February 1, 2025 through February 28, 2025 | 2,765 | $24.99 | | March 1, 2025 through March 31, 2025 | 291 | $23.85 | | Total | 4,581 | $24.58 | - The purchased shares represent common stock surrendered to the Company for the payment of taxes upon the vesting of restricted stock[263](index=263&type=chunk) [Item 3. Defaults Upon Senior Securities](index=47&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is not applicable to the Company for the reporting period - Not applicable[264](index=264&type=chunk) [Item 4. Mine Safety Disclosures](index=47&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the Company for the reporting period - Not applicable[265](index=265&type=chunk) [Item 5. Other Information](index=47&type=section&id=Item%205.%20Other%20Information) Timothy T. O'Dell, CEO, President, and Director, adopted a Rule 10b5-1(c) trading plan on March 17, 2025, for the sale of up to **75,000** common shares - Timothy T. O'Dell, CEO, President, and Director, adopted a Rule 10b5-1(c) trading plan on March 17, 2025[268](index=268&type=chunk) - The trading plan provides for the sale of up to **75,000** shares of common stock and will terminate on March 17, 2026, or when all shares are sold[268](index=268&type=chunk)[269](index=269&type=chunk) [Item 6. Exhibits](index=49&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including amendments to the Certificate of Incorporation, Bylaws, and various certifications - The report includes exhibits such as the Certificate of Incorporation, its amendments, Bylaws, and various certifications (Rule 13a-14(a) and Section 1350 Certifications)[271](index=271&type=chunk) [Signatures](index=50&type=section&id=Signatures) The report is signed by Timothy T. O'Dell, President and CEO, and Kevin J. Beerman, EVP and CFO, on May 12, 2025 - The report is signed by Timothy T. O'Dell, President and Chief Executive Officer, and Kevin J. Beerman, Executive Vice President and Chief Financial Officer, on May 12, 2025[275](index=275&type=chunk)

[First Quarter 2025 Highlights](index=1&type=section&id=First%20Quarter%202025%20Highlights) The company reported strong Q1 2025 results, featuring significant year-over-year profit growth and continued expansion in net interest margin | Metric | Q1 2025 Value | YoY Change | | :--- | :--- | :--- | | Net Income | $4.4 million | +44% | | Diluted EPS | $0.68 | +45% ($0.47 in Q1 2024) | | Pre-Provision, Pre-Tax Net Revenue (PPNR) | $6.2 million | +24% ($5.0M in Q1 2024) | | Return on Average Equity (ROE) | 10.37% | N/A | | Return on Average Assets (ROA) | 0.86% | N/A | | Book Value Per Share | $25.86 | N/A | - **Net Interest Margin (NIM) increased by 7 bps** compared to the prior quarter and 28 bps compared to Q1 2024, marking the fourth consecutive quarter of NIM expansion[6](index=6&type=chunk) - Noninterest bearing (NIB) deposit balances **grew by $18 million**, a 7% increase during the quarter, reflecting a positive trajectory in growing core deposits[4](index=4&type=chunk)[6](index=6&type=chunk) - The company executed its strategy of contracting its residential loan portfolio by **selling two portfolios totaling $18.1 million**, redeploying proceeds into higher-yielding commercial loans[6](index=6&type=chunk) - Recent developments include the appointment of Matt Tuohey as Market President for Northeast Ohio, a cash dividend declaration of $0.07 per common share, and securing a new **$10 million revolving line of credit** for potential Tier 1 capital injection[6](index=6&type=chunk) [Management Commentary](index=1&type=section&id=CEO%20and%20Board%20Chair%20Commentary) Management highlights a solid Q1 performance, strategic success in commercial banking, and effective talent acquisition as key drivers for future growth [Q1 Performance and Outlook](index=1&type=section&id=Q1%20Performance%20Sets%20Base%20to%20Build%20Upon) Management views Q1's strong net income and deposit growth as a solid foundation, anticipating further cost reductions - Q1 Net Income of **$4.4 million**, which included a $600k provision expense, is considered a solid base for 2025 performance[4](index=4&type=chunk) - The company is pleased with the **7% quarterly growth in NIB deposits**[4](index=4&type=chunk) - Management expects future opportunities to lower the Cost of Funds and Deposit costs, with potential **Fed rate reductions providing additional momentum**[5](index=5&type=chunk) [Commercial Banking Strategy](index=2&type=section&id=Leaning%20Into%20Growing%20the%20Commercial%20Bank%20Franchise) The commercial banking group achieved significant loan growth by strategically reallocating capital from residential mortgages - The Commercial Banking division generated **over $50 million in net loan growth** in Q1 2025[7](index=7&type=chunk) - The strategy of shrinking the residential mortgage portfolio to fund growth in commercial lending **yielded the intended results** during the quarter[8](index=8&type=chunk) - The bank has implemented **interest rate floors** into some floating-rate loans to help sustain or support margins[8](index=8&type=chunk) [Talent Acquisition](index=2&type=section&id=Adding%20Top%20Talent%20Sets%20the%20Stage%20for%20Quality%20Growth) Successful recruitment of experienced commercial bankers is expanding the bank's presence and setting the stage for quality growth - CFBank is attracting **experienced Commercial Bankers from Regional Banks**, drawn by its entrepreneurial business approach[9](index=9&type=chunk) - This recruitment success is expanding the Commercial Banking teams and presence in **all 5 regional metro markets** served by the bank[10](index=10&type=chunk) [Financial Performance Analysis](index=2&type=section&id=Financial%20Performance%20Analysis) This section details the company's income statement performance, including analysis of net interest income, noninterest items, and taxes [Overview of Results](index=2&type=section&id=Overview%20of%20Results) Net income was $4.4 million, or $0.68 per diluted share, a 44% increase compared to $3.1 million in Q1 2024 | Metric ($ in millions) | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Net Income | $4.4 | $4.4 | $3.1 | | Diluted EPS | $0.68 | $0.68 | $0.47 | | PPNR | $6.2 | $6.5 | $5.0 | [Net Interest Income and Net Interest Margin (NIM)](index=2&type=section&id=Net%20Interest%20Income%20and%20Net%20Interest%20Margin) Net interest income grew 14.4% year-over-year to $12.9 million, driven by lower interest expense and a 28 basis point expansion in NIM | Metric | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Net Interest Income | $12.9M | $12.5M | $11.3M | | Net Interest Margin (NIM) | 2.64% | 2.57% | 2.36% | - The QoQ increase in net interest income was primarily due to a **$1.2 million decrease in interest expense**, driven by a 26 bps drop in the cost of funds on interest-bearing liabilities[13](index=13&type=chunk) - The YoY increase was driven by a **$1.5 million decrease in interest expense**, attributed to a 37 bps decline in the average cost of funds[14](index=14&type=chunk) [Noninterest Income](index=2&type=section&id=Noninterest%20Income) Noninterest income totaled $1.2 million, decreasing 16.6% sequentially but increasing 33.3% year-over-year - Noninterest income decreased by $240,000 (16.6%) compared to Q4 2024, primarily due to a **$103,000 loss on a security sale** and an $18,000 loss on commercial loan sales[15](index=15&type=chunk) - Compared to Q1 2024, noninterest income increased by $301,000 (33.3%), mainly from a **$457,000 increase in other noninterest income**[16](index=16&type=chunk) | Notional Amount of Loans Sold (in thousands) | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Amount | $27,277 | $15,670 | $9,037 | [Noninterest Expense](index=4&type=section&id=Noninterest%20Expense) Noninterest expense was $8.0 million, rising both sequentially and year-over-year primarily due to higher salaries and benefits - Noninterest expense increased by $521,000 (7.0%) QoQ, mainly due to a **$628,000 increase in salaries and benefits**, which included a $234,000 seasonal increase in payroll taxes[18](index=18&type=chunk) - YoY, noninterest expense rose by $767,000 (10.7%), also driven by a **$675,000 increase in salaries and benefits** related to higher incentive accruals[19](index=19&type=chunk) [Income Tax Expense](index=4&type=section&id=Income%20Tax%20Expense) Income tax expense was $1.1 million, resulting in an effective tax rate of 20.6% for the quarter | Metric | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Income Tax Expense | $1.1M | $748k | $695k | | Effective Tax Rate | 20.6% | 14.5% | 18.5% | [Balance Sheet and Asset Quality](index=4&type=section&id=Balance%20Sheet%20and%20Asset%20Quality) The analysis covers the company's balance sheet composition, including loan growth, stable asset quality, deposit trends, and capital adequacy [Loans and Loans Held For Sale](index=4&type=section&id=Loans%20and%20Loans%20Held%20For%20Sale) Net loans and leases grew by $28.1 million to $1.8 billion, driven by commercial real estate and construction lending - Net loans and leases **increased by 1.6%** from December 31, 2024, to $1.8 billion[21](index=21&type=chunk) - Loan growth was led by a **$47.7 million increase in commercial real estate** and a $6.4 million increase in construction loans[21](index=21&type=chunk) - The decrease in single-family residential loans was primarily due to the **sale of two loan portfolios totaling $18.1 million**[21](index=21&type=chunk) [Asset Quality](index=4&type=section&id=Asset%20Quality) Asset quality remained stable with nonaccrual loans steady at $14.5 million and minimal net charge-offs | Asset Quality Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Nonaccrual loans | $14.5M (0.82% of loans) | $14.5M (0.87% of loans) | | Allowance for credit losses (ACL) | $17.8M | $17.5M | | ACL to total loans ratio | 1.01% | 1.00% | - **Provision for credit losses expense was $582,000** for Q1 2025, a decrease from $1.4 million in Q4 2024 and $1.2 million in Q1 2024[26](index=26&type=chunk) - **Net charge-offs for Q1 2025 were only $23,000**[26](index=26&type=chunk) [Deposits](index=5&type=section&id=Deposits) Total deposits increased by $27.9 million, driven by a significant $18.1 million rise in noninterest-bearing balances - Total deposits **grew 1.6% QoQ to $1.78 billion** at March 31, 2025[27](index=27&type=chunk) - The increase was primarily due to an **$18.1 million rise in noninterest-bearing accounts**[27](index=27&type=chunk) - Approximately **31.1% of deposit balances exceeded the FDIC insurance limit**, up from 29.8% at the end of the prior quarter[28](index=28&type=chunk) [Borrowings](index=5&type=section&id=Borrowings) FHLB advances and other debt remained stable at $92.7 million as of March 31, 2025 - FHLB advances and other debt totaled **$92.7 million** at March 31, 2025, consistent with the balance at December 31, 2024[29](index=29&type=chunk) [Capital](index=5&type=section&id=Capital) Stockholders' equity increased by $4.3 million to $172.7 million, and all regulatory capital ratios remained strong - Stockholders' equity **grew by 2.5% during the quarter to $172.7 million**, mainly due to retained earnings[30](index=30&type=chunk) | Regulatory Capital Ratios (CFBank) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Tier 1 leverage ratio | 10.55% | 10.33% | | Common equity tier 1 capital ratio | 12.59% | 12.45% | | Total risk-based capital ratio | 13.76% | 13.60% | [Financial Statements & Data](index=7&type=section&id=Financial%20Statements%20%26%20Data) This section presents the core consolidated financial statements and supplementary data tables for detailed analysis [Consolidated Statements of Income](index=7&type=section&id=Consolidated%20Statements%20of%20Income) The company's net income increased 44% year-over-year, driven by a 14% rise in net interest income | ($ in thousands) | 3 Months Ended Mar 31, 2025 | 3 Months Ended Mar 31, 2024 | % Change | | :--- | :--- | :--- | :--- | | Net interest income | $12,909 | $11,284 | 14% | | Provision for credit losses | $582 | $1,237 | -53% | | Noninterest income | $1,206 | $905 | 33% | | Noninterest expense | $7,954 | $7,187 | 11% | | **Net income** | **$4,430** | **$3,070** | **44%** | [Consolidated Statements of Financial Condition](index=8&type=section&id=Consolidated%20Statements%20of%20Financial%20Condition) Total assets stood at $2.09 billion, supported by $1.78 billion in deposits and $172.7 million in stockholders' equity | ($ in thousands) | Mar 31, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | **Total assets** | **$2,094,681** | **$2,065,523** | | Loans and leases, net | $1,750,139 | $1,722,019 | | **Total deposits** | **$1,783,689** | **$1,755,795** | | **Total liabilities** | **$1,921,999** | **$1,897,086** | | **Stockholders' equity** | **$172,682** | **$168,437** | [Average Balance Sheet and Yield Analysis](index=9&type=section&id=Average%20Balance%20Sheet%20and%20Yield%20Analysis) The net interest margin expanded to 2.64% in Q1 2025, continuing its upward trend from prior quarters | For Three Months Ended | Mar 31, 2025 | Dec 31, 2024 | Mar 31, 2024 | | :--- | :--- | :--- | :--- | | Avg. Yield on Interest-Earning Assets | 5.97% | 6.16% | 6.07% | | Avg. Rate on Interest-Bearing Liabilities | 4.14% | 4.40% | 4.51% | | Net Interest Rate Spread | 1.83% | 1.76% | 1.56% | | **Net Interest Margin** | **2.64%** | **2.57%** | **2.36%** | [Consolidated Financial Highlights](index=10&type=section&id=Consolidated%20Financial%20Highlights) Key financial metrics show consistent quarterly improvement in net interest margin and steady growth in book value per share - The financial highlights table shows a consistent quarterly improvement in **Net Interest Margin, from 2.36% in Q1 2024 to 2.64% in Q1 2025**[40](index=40&type=chunk) - **Book value per common share has steadily increased** over the past five quarters, reaching $25.86 at March 31, 2025[40](index=40&type=chunk) [Appendix](index=6&type=section&id=Appendix) The appendix includes non-GAAP reconciliations, company information, and forward-looking statement disclaimers [Use of Non-GAAP Financial Measures](index=6&type=section&id=USE%20OF%20NON-GAAP%20FINANCIAL%20MEASURES) The company uses Pre-Provision, Pre-Tax Net Revenue (PPNR) to better show ongoing operational performance GAAP to Non-GAAP Reconciliation (PPNR) | ($ in thousands) | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Net income | $4,430 | $4,417 | $3,070 | | Add: Provision for credit losses | $582 | $1,381 | $1,237 | | Add: Income tax expense | $1,149 | $748 | $695 | | **Pre-provision, pre-tax net revenue** | **$6,161** | **$6,546** | **$5,002** | [About CF Bankshares Inc. and CFBank](index=6&type=section&id=About%20CF%20Bankshares%20Inc.%20and%20CFBank) CF Bankshares Inc. is the holding company for CFBank, a boutique Commercial bank operating in Ohio and Indiana - CFBank is a boutique Commercial bank operating in **Columbus, Cleveland, Cincinnati, Akron (OH), and Indianapolis (IN)**[32](index=32&type=chunk) - The bank focuses on providing commercial, retail, and mortgage lending services to **closely held businesses and entrepreneurs**, differentiating itself with individualized service and direct access to decision-makers[33](index=33&type=chunk) [Forward-Looking Statements](index=6&type=section&id=FORWARD%20LOOKING%20STATEMENTS) This section cautions that the press release contains forward-looking statements subject to various risks and uncertainties - The press release contains forward-looking statements regarding projections, plans, and future economic performance, which are **subject to risks and uncertainties**[34](index=34&type=chunk) - The company **undertakes no obligation to update forward-looking statements**, which speak only as of the date of the release[35](index=35&type=chunk)

Credit Losses and Loan Performance - The Allowance for Credit Losses on Loans (ACL - Loans) totaled $17.5 million at December 31, 2024, reflecting an increase of $609,000, or 3.6%, from $16.9 million at December 31, 2023[65]. - The ratio of ACL - Loans to total loans was 1.00% at December 31, 2024, compared to 0.99% at December 31, 2023[65]. - Nonperforming loans increased by $9.3 million in 2024, primarily due to three commercial loans totaling $11.3 million becoming nonaccrual[59]. - The company recognized no interest income on nonaccrual loans in 2024, with an estimated additional interest income of approximately $1.2 million if these loans had performed as per their contractual terms[60]. - The net charge-offs for the year ended December 31, 2024, were $5.5 million, with a provision for credit losses on loans amounting to $6.1 million[65]. - The ACL - Loans to nonperforming loans ratio was 116.13% at December 31, 2024, down from 294.74% at December 31, 2023[67]. Securities and Investments - The securities available for sale portfolio totaled $8.7 million at December 31, 2024, with all U.S. Treasury securities guaranteed by the U.S. government[74]. - The amortized cost of corporate debt securities was $9.98 million at December 31, 2024, with a fair value of $7.7 million[77]. - The company modified one commercial loan with an amortized cost basis of $4.3 million, representing 1% of commercial loans, due to the borrower's financial difficulty[62]. Deposits and Borrowings - CFBank's total average deposits reached $1.694 billion in 2024, an increase from $1.624 billion in 2023, reflecting a growth of 4.3%[88]. - Money market accounts constituted 40.6% of average deposit balances in 2024, while certificates of deposit accounted for 38.5%[88]. - Brokered deposits totaled $420.8 million at December 31, 2024, a decrease of $19.6 million, or 4.4%, from $440.4 million at December 31, 2023[86]. - CFBank had $58.0 million in FHLB advances at December 31, 2024, with a borrowing capacity of up to $244.6 million based on collateral pledged[89]. - The Holding Company's available cash and cash equivalents totaled $1.0 million at December 31, 2024, indicating adequate liquidity to meet operating needs[82]. - Average interest-bearing deposits amounted to $1.454 billion in 2024, with a weighted average interest rate of 4.62%[88]. - CFBank's certificate accounts exceeding the FDIC insured limit of $250,000 totaled $464.0 million at December 31, 2024[87]. - The Holding Company had an outstanding balance of $34.7 million on a $35.0 million credit facility as of December 31, 2024[90]. - Customer balances in the CDARS and ICS reciprocal programs increased by $33.9 million, or 14.3%, to $271.7 million at December 31, 2024[86]. Employment and Corporate Structure - CFBank employed 102 full-time employees as of December 31, 2024[94]. - The Holding Company became a financial holding company effective December 1, 2016, allowing it to engage in a broader range of financial activities[105]. Capital Requirements and Regulatory Compliance - The Basel III Capital Rules require a minimum common equity tier 1 capital ratio of 4.5%, a minimum Tier 1 capital ratio of 6.0%, and a minimum total capital ratio of 8.0%[116]. - As of December 31, 2024, the Company believes it met the requirements to be deemed "well-capitalized" with a common equity tier I capital ratio of at least 6.5%[127]. - The Economic Growth, Regulatory Relief and Consumer Protection Act eased restrictions for bank holding companies with consolidated assets of less than $100 billion, including the Company[110]. - The FRB's Small Bank Holding Company Policy Statement now allows qualifying bank holding companies with total consolidated assets up to $3 billion to be exempt from certain capital rules[128]. - The Company is subject to regular examinations by the FRB and must file reports as required, ensuring compliance with extensive regulations[102]. - The FRB has the authority to require a financial holding company to contribute additional capital to an undercapitalized subsidiary bank[103]. - The Company is prohibited from engaging in certain tying arrangements in connection with extensions of credit or services[109]. - The federal banking agencies have established a system of prompt corrective action based on five capital level categories for insured depository institutions[126]. - The Holding Company qualifies under the FRB's Small Bank Holding Company Policy Statement for exemption from consolidated risk-based capital and leverage rules[128]. Insurance and Ratings - CFBank's deposits are insured up to $250,000 per separately insured depositor by the FDIC[129]. - The FDIC's designated reserve ratio (DRR) was 1.26% as of September 30, 2022, and increased to 1.21% as of June 30, 2024[130]. - The FDIC plans to restore the DRR to 1.35% by September 30, 2028, following a restoration plan[130]. - CFBank's CRA rating is "Needs to Improve," primarily due to its legacy direct-to-consumer residential mortgage business[143]. - The OCC's evaluation covering 2020 through 2022 led to the "Needs to Improve" rating, with the next evaluation expected in 2026[143]. Taxation and Financial Regulations - Federal income tax laws provided deductions totaling $2.3 million for the Company's thrift bad debt reserves established before 1988[136]. - The reserve requirement ratio for depository institutions remained at 0% as of December 31, 2024, in response to the COVID-19 pandemic[137]. - The Dodd-Frank Act requires federal banking agencies to issue rules related to incentive-based compensation, with no final rule adopted yet[150]. - The FRB, OCC, and FDIC issued guidance in June 2010 to ensure incentive compensation policies do not encourage excessive risk-taking[151]. - CFBank's net operating loss carryforwards at year-end 2023 amount to $21.9 million, expiring between 2024 and 2032, with a limitation of $163,000 per year due to an ownership change[171]. Interest Rate Risk and Economic Value - The economic value of equity (EVE) ratio at December 31, 2024, is projected to be 10.9% under current interest rates, with potential fluctuations ranging from 9.4% to 12.9% based on interest rate changes of +400 bps to -400 bps[378]. - CFBank's clawback policy for incentive compensation payments was adopted effective November 29, 2023, in compliance with SEC regulations[154]. - The company has not detected significant data loss or material financial losses related to cybersecurity attacks, but risks remain high due to evolving threats[166]. - CFBank's hedging policy allows for economic hedging activities, such as interest-rate swaps, up to a notional amount of 10% of total assets[374]. - The company is subject to various state taxation regulations, including the Ohio Financial Institutions Tax and the Indiana Financial Institution Tax[175][176]. - Federal income tax laws provided additional deductions totaling $2.3 million for thrift bad debt reserves established before 1988[172]. - CFBank's management actively monitors interest rate risk to limit adverse impacts on net interest income and capital[375]. - The company is required to disclose material cybersecurity incidents within four business days of determination, as per SEC rules adopted in July 2023[163]. - CFBank's cybersecurity controls include multiple layers of security to protect against threats, although the risk of cyber attacks is increasing[159]. Mortgage Loan Origination - Residential mortgage loan origination volumes are negatively impacted by rising interest rates, leading to lower loan originations[380]. - The company originates various types of mortgage loans, including commercial and residential, many of which have adjustable interest rates[381]. - Adjustable-rate loans may lead to increased delinquencies and defaults in a rising interest rate environment due to higher payment requirements[381]. - Cash flows are influenced by market interest rate changes, with prepayment rates declining in rising interest rate environments[382].

Financial Performance - Net income for Q4 2024 was $4.4 million ($0.68 per diluted common share), and for the full year 2024, it was $13.4 million ($2.06 per diluted common share) [4] - Pre-provision, pre-tax net revenue (PPNR) for Q4 2024 was $6.5 million, a 12% increase from Q3 2024, and total PPNR for the year was $22.9 million [4][12] - Net interest income for Q4 2024 increased by $1.0 million (9.4%) compared to Q3 2024, totaling $12.5 million [13] - Noninterest income for Q4 2024 rose by $413,000 (40%) compared to Q4 2023, driven by a 60% increase in customer fees for the full year 2024 [4][18] - Net interest income for the three months ended December 31, 2024, was $12.5 million, a 7% increase from $11.8 million in the same period of 2023 [43] - Noninterest income for the three months ended December 31, 2024, was $1.4 million, a 40% increase from $1.0 million in the same period of 2023 [43] - Net income attributable to common stockholders was $4.3 million for the three months ended December 31, 2024, a 1% increase from $4.2 million in the same period of 2023 [43] - Net income for Q4 2024 was $4,417,000, compared to $4,205,000 in Q3 2024 [49] Deposits and Assets - Total deposits reached $1.76 billion as of December 31, 2024, reflecting a 0.6% increase from $1.75 billion at September 30, 2024, and a 0.7% increase from $1.74 billion at December 31, 2023 [32] - Noninterest-bearing account balances increased by $15.9 million compared to September 30, 2024, while interest-bearing accounts decreased by $5.7 million [32] - Total assets as of December 31, 2024, amounted to $2,065,523,000, a slight increase from $2,064,306,000 on September 30, 2024 [45] - Total deposits increased to $1,755,795,000 from $1,745,576,000, marking a growth of 0.57% quarter-over-quarter [46] Loans and Credit Quality - Nonaccrual loans were $14.5 million (0.84% of total loans) at December 31, 2024, a decrease from $14.6 million at September 30, 2024 [28] - The allowance for credit losses on loans and leases was $17.5 million at December 31, 2024, representing 1.00% of total loans and leases [30] - Provision for credit losses on loans increased by 228% year-over-year, totaling $6.1 million for the year ended December 31, 2024 [43] - Nonperforming loans increased to $14,719,000 in Q4 2024 from $14,597,000 in Q3 2024 [49] - The allowance for credit losses on loans and leases was $17,474,000, compared to $16,780,000 in the previous quarter, reflecting an increase of 4.14% [45] Equity and Dividends - Stockholders' equity rose to $168.4 million at December 31, 2024, a 2.7% increase from $164.0 million at September 30, 2024, and an 8.4% increase from $155.4 million at December 31, 2023 [37] - The company declared a cash dividend of $0.07 per share on common stock, paid on January 27, 2025 [3] Future Outlook - The company anticipates a more stabilized operating environment and strong business opportunities for 2025 [10] Interest Rates and Margins - The net interest margin (NIM) for Q4 2024 was 2.57%, an increase of 16 basis points from the previous quarter [15] - The average yield on loans and leases was 6.31% for the quarter ended December 31, 2024, compared to 6.39% in the previous quarter [47] - Interest-earning assets totaled $1,945,165,000, generating interest income of $29,992,000, resulting in a yield of 6.16% [47] Debt and Liabilities - FHLB advances and other debt decreased to $92.7 million at December 31, 2024, a 14.7% decrease from $108.7 million at September 30, 2024 [34] - Total liabilities decreased slightly to $1,897,086,000 from $1,900,303,000, a decline of 0.11% [46]

Core Insights - CF Bankshares Inc. reported a net income of $4.4 million for Q4 2024, reflecting a stable performance despite a challenging operating environment characterized by elevated interest rates [4][10][12] - The company experienced a 12% increase in pre-provision, pre-tax net revenue (PPNR) to $6.5 million in Q4 2024 compared to the previous quarter [6][10] - Noninterest income for Q4 2024 rose by 40% year-over-year, driven by increased customer fees and cash management services [17][10] Financial Performance - Net income for the full year 2024 was $13.4 million, down from $16.9 million in 2023, with diluted earnings per share of $2.06 [12][10] - Net interest income for Q4 2024 increased by $1 million (9.4%) to $12.5 million compared to Q3 2024 [13][10] - The net interest margin (NIM) expanded by 16 basis points to 2.57% in Q4 2024, marking the third consecutive quarter of NIM growth [14][10] Deposits and Loans - Total deposits reached $1.76 billion at the end of Q4 2024, reflecting a 0.6% increase from the previous quarter [32][10] - Noninterest-bearing deposits grew by $38 million (16%) during 2024, attributed to a strategic focus on commercial treasury management [7][10] - Net loans and leases totaled $1.7 billion, with a slight increase of 0.3% from the prior quarter [24][10] Asset Quality - Nonaccrual loans were $14.5 million, representing 0.84% of total loans, a slight decrease from the previous quarter but an increase from $5.7 million a year earlier [28][10] - The allowance for credit losses on loans and leases was $17.5 million, equating to 1.00% of total loans [30][10] Capital and Equity - Stockholders' equity increased to $168.4 million at the end of Q4 2024, up 2.7% from the previous quarter and 8.4% year-over-year [36][10] - The company declared a cash dividend of $0.07 per share on common stock and $7.00 per share on Series D Preferred Stock [3][10]

Financial Performance - Net income for Q3 2024 was $4.2 million, or $0.65 per diluted share, compared to $4.0 million, or $0.62 per diluted share in Q3 2023, reflecting a positive trend[205]. - Noninterest income for Q3 2024 totaled $1.6 million, an increase of $305,000, or 23.4%, compared to $1.3 million in Q3 2023[211]. - Noninterest expense increased by $466,000, or 6.9%, to $7.2 million in Q3 2024, driven by higher salaries and employee benefits[211]. - Net interest income decreased by $207,000, or 1.8%, to $11.5 million in Q3 2024, primarily due to a $2.0 million increase in interest expense[206]. - Provision for credit losses decreased to $558,000 in Q3 2024 from $1.2 million in Q3 2023, while net charge-offs increased to $3.3 million from $126,000[208]. - Noninterest income totaled $3.7 million for the nine months ended September 30, 2024, an increase of $731,000, or 24.4%, compared to $3.0 million in 2023, mainly from service charges on deposit accounts[219]. - Noninterest expense decreased to $21.5 million for the nine months ended September 30, 2024, down $119,000, or 0.6%, from $21.6 million in 2023, primarily due to a decrease in salaries and employee benefits[219]. - Income tax expense was $2.0 million for the nine months ended September 30, 2024, a decrease of $1.1 million compared to $3.1 million in 2023, with an effective tax rate of approximately 18.3%[221]. Asset and Loan Management - Total assets increased by $7.9 million, or 0.4%, to $2.07 billion as of September 30, 2024, compared to $2.06 billion at December 31, 2023[180]. - Net loans and leases rose by $22.9 million, or 1.4%, totaling $1.72 billion as of September 30, 2024, driven by increases in multi-family loans and commercial real estate loans[182]. - Loans held for sale surged by $3.4 million, or 183.4%, reaching $5.2 million as of September 30, 2024, due to higher volumes of loans to be sold[182]. - Total past due loans increased by $5.7 million, totaling $7.7 million at September 30, 2024, representing 0.4% of the loan portfolio[191]. - Nonperforming loans increased by $8.9 million to $14.6 million as of September 30, 2024, resulting in a ratio of 0.84% to total loans, up from 0.33% at December 31, 2023[188]. - Total criticized and classified loans rose by $6.2 million, or 46.9%, during the nine months ended September 30, 2024[190]. - The allowance for credit losses on loans decreased by $85,000, or 0.5%, totaling $16.8 million as of September 30, 2024, with a ratio of 0.97% to total loans[183]. Deposits and Funding - Total deposits reached $1.75 billion at September 30, 2024, a slight increase of $1.5 million, or 0.1%, from $1.74 billion at December 31, 2023[196]. - Approximately 30.2% of deposit balances exceeded the FDIC insurance limit of $250,000 as of September 30, 2024, up from 29.2% at December 31, 2023[197]. - Brokered deposits decreased by $14.7 million, or 3.3%, to $425.7 million at September 30, 2024, while customer balances in CDARS and ICS programs increased by $16.6 million, or 7.0%[198]. - Cash, unpledged securities, and deposits in other financial institutions decreased by $26.1 million, or 10.0%, to $235.9 million at September 30, 2024, compared to $262.0 million at December 31, 2023[237]. - CFBank maintains $65.0 million in unused lines of credit with two commercial banks as of September 30, 2024[240]. Interest Income and Expense - Interest income increased by $1.8 million, or 6.5%, to $30.0 million in Q3 2024, attributed to a 27bps increase in average yield on loans and leases[207]. - Net interest income for the nine months ended September 30, 2024, totaled $34.1 million, a decrease of $1.8 million, or 4.9%, compared to $35.9 million for the same period in 2023[215]. - Interest income increased to $88.4 million for the nine months ended September 30, 2024, up $9.8 million, or 12.5%, from $78.6 million in 2023, primarily due to a 40bps increase in average yield on loans and leases[217]. - Interest expense rose to $54.3 million for the nine months ended September 30, 2024, an increase of $11.6 million, or 27.2%, compared to $42.7 million in 2023, driven by an 82bps increase in the average rate of interest-bearing deposits[218]. - The net interest margin for the nine months ended September 30, 2024, was 2.38%, a decrease of 27bps from 2.65% in 2023[215]. Regulatory and Compliance - CFBank's primary federal regulator, the OCC, rated its Community Reinvestment Act performance as "Needs to Improve" due to legacy issues from its residential mortgage business[176]. - The company strategically scaled down its residential mortgage business starting in 2021, focusing on lending in regional markets[176]. - CFBank has not engaged in subprime lending or used option adjustable-rate mortgage products, mitigating certain risks associated with lending[192]. - The ability to pay dividends on common stock is dependent on cash and liquidity available at the Holding Company level, as well as dividends received from CFBank[247]. - Banking regulations limit the amount of dividends that can be paid to the Holding Company by CFBank without prior regulatory approval[248]. Legal and Risk Management - The Holding Company and CFBank may be involved in various legal proceedings in the normal course of business, but no pending legal proceedings are believed to have a material adverse effect on financial condition[255]. - Management believes there has been no material change in the Company's market risk as of September 30, 2024[251]. - Disclosure controls and procedures were effective as of the quarter ended September 30, 2024[253].

Financial Performance - Net income for Q3 2024 was $4.2 million, or $0.65 per diluted common share, compared to $1.7 million in Q2 2024 and $4.0 million in Q3 2023[2][11]. - Net income attributable to common stockholders was $4.065 million for the three months ended September 30, 2024, a 1% increase from $4.031 million in the same period of 2023[39]. - Net income for the quarter was $4,205,000, a substantial increase from $1,695,000 in the prior quarter, representing a growth of 147%[44]. - Net income for the three months ended September 30, 2024, was $4,205 million, an increase from $4,031 million for the same period in 2023, representing a growth of 4.3%[46]. - For the nine months ended September 30, 2024, net income totaled $8,970 million, down from $12,702 million for the same period in 2023, a decline of 29.0%[46]. Income and Revenue - Net interest income totaled $11.5 million for Q3 2024, a slight increase of $93,000, or 0.8%, from the prior quarter[13]. - Noninterest income for Q3 2024 was $1.6 million, an increase of $388,000, or 31.9%, compared to the prior quarter[16]. - Total interest income for the three months ended September 30, 2024, was $29.996 million, a 6% increase compared to $28.166 million in the same period of 2023[39]. - Noninterest income increased by 23% to $1.606 million for the three months ended September 30, 2024, compared to $1.301 million in the same period of 2023[39]. - Noninterest income rose to $1,606,000, up from $1,218,000 in the previous quarter, marking a growth of 32%[44]. Asset and Deposit Growth - Total assets increased to $2,064,306 thousand as of September 30, 2024, compared to $1,992,452 thousand a year earlier, reflecting a growth of approximately 3.6%[40]. - Total deposits reached $1.75 billion as of September 30, 2024, reflecting a 2.9% increase from $1.70 billion at June 30, 2024[30]. - Total deposits rose to $1,745,576 thousand, up from $1,684,993 thousand a year ago, representing an increase of about 3.6%[41]. - Noninterest-bearing deposits grew by $40 million, or 18%, during the quarter, contributing to a total core deposit increase of $57 million compared to June 30, 2024[3][7]. - Noninterest-bearing deposits increased to $257,715 thousand from $214,334 thousand year-over-year, reflecting a growth of approximately 20.2%[41]. Loan Performance - Commercial loans increased by $35 million during the quarter, with total loans and leases (gross) increasing by $27 million[3]. - Nonaccrual loans increased to $14.6 million, or 0.84% of total loans, up from $10.9 million at June 30, 2024[26]. - The allowance for credit losses on loans and leases was $16.8 million, with a ratio of 0.97% to total loans and leases as of September 30, 2024[28]. - Provision for credit losses on loans was $786,000 for the three months ended September 30, 2024, a significant increase of 278% from $1.198 million in the same period of 2023[39]. - Nonperforming loans increased to $14,597,000, up from $10,909,000 in the previous quarter, resulting in a nonperforming loans to total loans ratio of 0.84%[44]. Capital and Equity - Stockholders' equity increased to $164.0 million, up 2.8% from $159.6 million at June 30, 2024, and up 5.6% from $155.4 million at December 31, 2023[33]. - The company reported a total stockholders' equity of $164,003 thousand, up from $151,270 thousand a year earlier, reflecting an increase of about 8.4%[41]. - The average stockholders' equity for the nine months ended September 30, 2024, was $159,875 million, compared to $145,820 million for the same period in 2023, reflecting an increase of 9.0%[46]. Efficiency and Ratios - Return on Average Equity (ROE) was 10.38% and Return on Average Assets (ROA) was 0.84% for Q3 2024[3]. - The efficiency ratio improved to 55.30% from 56.35% in the previous quarter, indicating better cost management[44]. - Tier 1 capital leverage ratio improved to 10.36% from 10.11% in the previous quarter, indicating a stronger capital position[44]. Other Financial Metrics - The percentage of deposit balances exceeding the FDIC insurance limit of $250,000 was approximately 30.2% as of September 30, 2024, up from 28.6% at June 30, 2024[31]. - FHLB advances and other debt decreased to $108.7 million, a 20.8% decrease from $137.2 million at June 30, 2024[32]. - The company achieved a compound annual growth rate (CAGR) in excess of 20% since its recapitalization in 2012[35]. - Average assets increased to $2,000,421 million for the three months ended September 30, 2024, compared to $1,957,019 million for the same period in 2023, showing a growth of 2.2%[46]. - Provision for credit losses decreased significantly to $558,000 from $3,561,000 in the prior quarter, indicating improved asset quality[44].

Financial Performance - Net income for Q2 2024 was $1.7 million, or $0.26 per diluted share, down from $4.2 million, or $0.66 per diluted share in Q2 2023, primarily due to increased provision for credit losses and decreased net interest income[171]. - Net interest income for Q2 2024 totaled $11.4 million, a decrease of $119,000, or 1.0%, compared to $11.5 million in Q2 2023, driven by a $3.2 million, or 21.8%, increase in interest expense[172]. - Interest income increased to $29.3 million in Q2 2024, up $3.1 million, or 11.8%, from $26.2 million in Q2 2023, attributed to a 42bps increase in average yield on loans and leases[173]. - Noninterest income for Q2 2024 was $1.2 million, an increase of $240,000, or 24.5%, compared to $978,000 in Q2 2023, mainly due to higher service charges on deposit accounts[177]. - Noninterest expense decreased by $81,000, or 1.1%, to $7.1 million in Q2 2024, primarily due to a reduction in salaries and employee benefits[178]. - Net interest income for the six months ended June 30, 2024, totaled $22.7 million, a decrease of $1.5 million, or 6.5%, compared to $24.2 million for the same period in 2023[181]. - Noninterest income for the six months ended June 30, 2024, totaled $2.1 million, an increase of $426,000, or 25.1%, compared to $1.7 million in 2023, mainly from increased service charges on deposit accounts[185]. - Noninterest expense decreased to $14.3 million for the six months ended June 30, 2024, down $585,000, or 3.9%, from $14.9 million in 2023, primarily due to a reduction in salaries and employee benefits[185]. - Income tax expense was $932,000 for the six months ended June 30, 2024, a decrease of $1.2 million compared to $2.1 million in 2023, with an effective tax rate of approximately 16.4%[186]. Asset and Liability Management - Total assets decreased by $18.0 million, or 0.9%, to $2.0 billion as of June 30, 2024, from $2.1 billion at December 31, 2023[150]. - Cash and cash equivalents decreased by $19.8 million, or 7.6%, totaling $241.8 million at June 30, 2024[150]. - Total deposits decreased by $47.6 million, or 2.7%, to $1.7 billion at June 30, 2024, mainly due to declines in both interest-bearing and noninterest-bearing account balances[164]. - FHLB advances and other debt rose to $137.2 million at June 30, 2024, an increase of $27.2 million, or 24.7%, compared to $110.0 million at December 31, 2023[165]. - Total interest-bearing liabilities increased to $1,574,950 thousand as of June 30, 2024, from $1,463,754 thousand at the end of 2023, marking an increase of 7.6%[191]. - Total assets as of June 30, 2024, were $1.997 billion, an increase from $1.909 billion in 2023[189]. - Total assets increased to $2,000,785 thousand as of June 30, 2024, compared to $1,867,082 thousand at the end of 2023, reflecting a growth of 7.1%[191]. - Cash, unpledged securities, and deposits in other financial institutions decreased by $19.3 million, or 7.4%, to $242.7 million at June 30, 2024, compared to $262.0 million at December 31, 2023[201]. Credit Quality - The allowance for credit losses on loans increased by $2.4 million, or 14.3%, totaling $19.3 million at June 30, 2024[152]. - Nonperforming loans increased by $5.2 million, totaling $10.9 million at June 30, 2024, with a ratio of 0.64% of total loans[157]. - Total criticized and classified loans increased by $4.9 million, or 37.3%, during the six months ended June 30, 2024[159]. - Total past due loans increased by $5.6 million, totaling $7.6 million at June 30, 2024, representing 0.4% of the loan portfolio[160]. - Individually evaluated loans increased by $5.7 million, or 163.9%, totaling $9.2 million at June 30, 2024[155]. - The ratio of the allowance for credit losses to total loans was 1.13% at June 30, 2024, compared to 0.99% at December 31, 2023[152]. - Provision for credit losses for Q2 2024 was $3.6 million, a significant increase from $12,000 in Q2 2023, primarily due to reserves on two commercial loan participations totaling $3.1 million[174]. - Provision for credit losses was $4.8 million for the six months ended June 30, 2024, reflecting an increase of $4.5 million compared to $249,000 in 2023, primarily due to reserves on individually evaluated commercial loans[184]. Interest Rate and Yield - Interest expense rose to $35.7 million for the six months ended June 30, 2024, an increase of $9.5 million, or 36.5%, compared to $26.2 million in 2023, driven by a 102bps increase in the average rate of interest-bearing deposits[183]. - Average yield on loans and leases increased to 6.19% for the six months ended June 30, 2024, compared to 5.73% for the same period in 2023[191]. - The net interest margin decreased to 2.37% for the six months ended June 30, 2024, down 35bps from 2.72% in 2023[182]. - Average interest-earning assets increased to $1.9 billion for the three months ended June 30, 2024, with a yield of 6.16% compared to 5.76% in 2023[189]. Liquidity and Capital - Stockholders' equity increased by $4.2 million, or 2.7%, to $159.6 million at June 30, 2024, primarily due to net income, partially offset by dividend payments[169]. - The Holding Company had adequate funds and sources of liquidity as of June 30, 2024, to meet current and anticipated operating needs[204]. - The ability to pay dividends on common stock is dependent on cash and liquidity available at the Holding Company level, as well as dividends received from CFBank[208]. - Banking regulations limit the amount of dividends that can be paid to the Holding Company by CFBank without prior regulatory approval[209]. - Annual debt service on subordinated debentures is approximately $435,000, with an interest rate of 8.41% as of June 30, 2024[206]. - The Company has $10 million of fixed-to-floating rate subordinated notes with an annual debt service of $970,000, and an interest rate of 9.73% as of June 30, 2024[206]. - The Holding Company has a $35.0 million credit facility with an outstanding balance of $34.7 million, bearing interest at a fixed rate of 3.85% until May 21, 2026[207]. Regulatory and Compliance - Federal income tax laws provided deductions totaling $2.3 million for thrift bad debt reserves established before 1988[210]. - There has been no material change in the Company's market risk as of June 30, 2024, compared to the previous year[212]. - The Company maintains effective disclosure controls and procedures as of June 30, 2024[214]. - The Holding Company and CFBank may be involved in various legal proceedings, but none are expected to have a material adverse effect on financial condition or results of operations[216].

Financial Performance - Net income for Q2 2024 was $1.7 million, or $0.26 per diluted common share, impacted by $3.1 million in additional specific reserves on loan participations[2] - Return on Average Equity (ROE) was 4.23% and Return on Average Assets (ROA) was 0.34% for Q2 2024[2] - Net income attributable to common stockholders decreased by 61% to $1,641,000 for the three months ended June 30, 2024, compared to $4,223,000 in 2023[31] - Net income for Q2 2024 was $1,695,000, down from $3,070,000 in Q1 2024[35] - Basic earnings per common share fell to $0.26 for the three months ended June 30, 2024, down from $0.66 in 2023[31] - Adjusted diluted earnings per share (EPS) of $0.65 for the three months ended June 30, 2024[38] Revenue and Income Sources - Service charge income increased by $244,000 (64%) compared to Q2 2023, and year-to-date income from service charges is up $499,000 (73%) compared to the first half of 2023[3] - Net interest income for Q2 2024 was $11.4 million, a slight increase of $83,000 (0.7%) from the prior quarter[9] - Noninterest income for Q2 2024 totaled $1.2 million, an increase of $313,000 (34.6%) compared to the prior quarter[12] - Total interest income increased by 12% to $29,315,000 for the three months ended June 30, 2024, compared to $26,225,000 in 2023[31] - Noninterest income rose by 25% to $1,218,000 for the three months ended June 30, 2024, from $978,000 in 2023[31] Loan and Credit Quality - New commercial loan production totaled $16.8 million during Q2 2024, with expanding loan and business pipelines in major regional markets[3] - Nonaccrual loans increased to $10.9 million, or 0.64% of total loans, as of June 30, 2024, reflecting an increase from $7.9 million at March 31, 2024[20] - The allowance for credit losses on loans and leases totaled $19.3 million, representing 1.13% of total loans and leases as of June 30, 2024[21] - Provision for credit losses expense increased to $3.6 million for the quarter ended June 30, 2024, compared to $1.2 million for the prior quarter and $12,000 for the same quarter last year[22] - The company reported net charge-offs of $2.1 million for the quarter ended June 30, 2024, compared to net recoveries of $16,000 for the prior quarter[22] - Provision for credit losses on loans surged by 2112% to $4,512,000 for the six months ended June 30, 2024, from $204,000 in 2023[31] - Nonperforming loans increased to $10,909,000, representing 0.64% of total loans, up from 0.46% in Q1 2024[35] Assets and Liabilities - Total assets remained stable at $2,040,634,000 as of June 30, 2024, compared to $2,039,473,000 on March 31, 2024[32] - Total liabilities were reported at $1,837,171 thousand, with total equity of $160,205 thousand, resulting in total assets of $1,997,376 thousand[34] - Total deposits decreased by $26.6 million, or 1.5%, to $1.7 billion at June 30, 2024, compared to the previous quarter, primarily due to a $19.1 million decrease in noninterest-bearing account balances[23] - Total deposits decreased to $1,696,476,000 as of June 30, 2024, from $1,723,070,000 on March 31, 2024[33] - FHLB advances and other debt increased by $26.2 million, or 23.6%, to $137.2 million at June 30, 2024, compared to $111.0 million at March 31, 2024[24] Equity and Dividends - Stockholders' equity rose to $159.6 million at June 30, 2024, an increase of $1.6 million, or 1.0%, from the previous quarter, primarily attributed to net income[25] - The company declared a cash dividend of $0.06 per share on common stock, paid on July 19, 2024[4] - Dividends declared per share remained stable at $0.06 for both Q2 2024 and Q1 2024[35] Operational Efficiency - Efficiency ratio decreased to 56.35% in Q2 2024 from 58.96% in Q1 2024[35] - The company utilizes non-GAAP financial measures to provide a greater understanding of ongoing operations and enhance comparability of results with prior periods[26] Growth and Recognition - CFBank achieved a compound annual growth rate (CAGR) in excess of 20% since its recapitalization in 2012[27] - CFBank was recognized as one of Piper Sandler's "Bank & Thrift Sm-All Stars" for 2023, placing it among the top 10% of small-cap banks in the U.S.[29] Future Outlook - The company remains optimistic about business opportunities for the second half of 2024, supported by strong fundamentals and increased business activities[7]

Financial Performance - Net income for Q2 2024 was $1.7 million, or $0.26 per diluted common share, down from $4.2 million, or $0.66 per diluted common share in Q2 2023 [2][5] - Pre-provision, pre-tax net revenue (PPNR) for Q2 2024 was $5.5 million, compared to $5.3 million in Q2 2023 [2][5] - Return on Average Equity (ROE) was 4.23% and Return on Average Assets (ROA) was 0.34% for Q2 2024 [2] Adjusted Performance Metrics - Adjusted ROA would have been 0.89% and Adjusted ROE would have been 10.25% if excluding the impact of additional specific reserves [2] - Adjusted earnings per diluted common share would have been $0.65 [2] Revenue and Income Sources - Net interest income totaled $11.4 million for Q2 2024, a slight increase of 0.7% from the previous quarter [6] - Noninterest income for Q2 2024 was $1.2 million, up 34.6% from the prior quarter, primarily due to a $244,000 increase in service charges on deposit accounts [7] Loan and Asset Quality - Net loans and leases totaled $1.7 billion at June 30, 2024, a decrease of 0.5% from the prior quarter [10] - Nonaccrual loans increased to $10.9 million, or 0.64% of total loans, reflecting a rise from $7.9 million at March 31, 2024 [12] Capital and Dividends - Stockholders' equity increased to $159.6 million at June 30, 2024, up 1.0% from the previous quarter [17] - A cash dividend of $0.06 per share was declared on July 1, 2024, and paid on July 19, 2024 [3] Market and Business Outlook - The company remains optimistic about business opportunities in the second half of 2024, citing strong commercial loan generation and an expanding loan pipeline [4] - The leadership team has successfully attracted quality new business and banking talent, enhancing the company's service offerings [4]