CF Bankshares (US:CFBK)2025-08-08 13:37PART I. Financial Information Item 1. Financial Statements Presents unaudited consolidated financial statements for CF Bankshares Inc. and its subsidiary CFBank, National Association, for periods ended June 30, 2025, and December 31, 2024 Consolidated Balance Sheets Details assets, liabilities, and stockholders' equity for CF Bankshares Inc. and its subsidiary as of June 30, 2025, and December 31, 2024 Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 (unaudited) | December 31, 2024 | | :---------------------------------------------------------------- | :-------------------------- | :------------------ | | ASSETS | | | | Cash and cash equivalents | $275,684 | $235,272 | | Loans and leases, net | $1,754,808 | $1,722,019 | | Total assets | $2,133,537 | $2,065,523 | | LIABILITIES | | | | Total deposits | $1,809,848 | $1,755,795 | | FHLB advances and other debt | $100,947 | $92,680 | | Total liabilities | $1,956,514 | $1,897,086 | | STOCKHOLDERS' EQUITY | | | | Total stockholders' equity | $177,023 | $168,437 | - Total assets increased by $68.0 million (3.3%) from December 31, 2024, to June 30, 2025, primarily driven by increases in cash and cash equivalents and net loans and leases6 - Total stockholders' equity increased by $8.6 million (5.1%) from December 31, 2024, to June 30, 20256 Consolidated Statements of Income The Consolidated Statements of Income detail the Company's revenues, expenses, and net income for the three and six months ended June 30, 2025, and 2024 Income Statement Highlights (in thousands) | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net interest income | $14,001 | $11,367 | $26,910 | $22,651 | | Provision for credit losses | $1,427 | $3,561 | $2,009 | $4,798 | | Noninterest income | $1,580 | $1,218 | $2,786 | $2,123 | | Noninterest expense | $7,754 | $7,092 | $15,708 | $14,279 | | Net income | $5,035 | $1,695 | $9,465 | $4,765 | | Net income attributable to common stockholders | $4,880 | $1,641 | $9,173 | $4,644 | | Basic EPS | $0.77 | $0.26 | $1.46 | $0.74 | | Diluted EPS | $0.77 | $0.26 | $1.45 | $0.74 | - Net income for the three months ended June 30, 2025, increased significantly to $5.0 million ($0.77 diluted EPS) from $1.7 million ($0.26 diluted EPS) in the prior year, driven by higher net interest income and lower provision for credit losses8 - For the six months ended June 30, 2025, net income more than doubled to $9.5 million ($1.45 diluted EPS) from $4.8 million ($0.74 diluted EPS) in the same period last year8 Consolidated Statements of Comprehensive Income The Consolidated Statements of Comprehensive Income present net income and other comprehensive income (loss) components, primarily unrealized gains/losses on available-for-sale securities, for the three and six months ended June 30, 2025, and 2024 Comprehensive Income Highlights (in thousands) | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------------------------------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net income | $5,035 | $1,695 | $9,465 | $4,765 | | Unrealized holding gains arising during the period related to securities available for sale, net of tax | $158 | $44 | $236 | $53 | | Comprehensive income | $5,193 | $1,739 | $9,701 | $4,818 | - Comprehensive income for the three months ended June 30, 2025, was $5.2 million, up from $1.7 million in the prior year, reflecting increased net income and unrealized gains on available-for-sale securities10 Consolidated Statements of Changes in Stockholders' Equity This statement outlines the changes in each component of stockholders' equity for the three and six months ended June 30, 2025, and 2024, including net income, other comprehensive income, stock-based compensation, treasury stock transactions, and dividends Stockholders' Equity Changes (in thousands) | Metric (in thousands) | Balance at January 1, 2025 | Balance at June 30, 2025 | | :-------------------------------- | :------------------------- | :----------------------- | | Voting Common Stock | $55 | $60 | | Non-Voting Common Stock | $13 | $9 | | Additional Paid-In Capital | $92,225 | $92,928 | | Retained Earnings | $88,290 | $96,846 | | Accumulated Other Comprehensive Loss | ($1,803) | ($1,567) | | Treasury Stock | ($10,343) | ($11,253) | | Total Stockholders' Equity | $168,437 | $177,023 | - Total stockholders' equity increased by $8.6 million to $177.0 million at June 30, 2025, from $168.4 million at January 1, 2025, primarily due to net income and restricted stock expense, partially offset by cash dividends and treasury stock purchases13 - The Company declared cash dividends of $0.14 per common share and $14.00 per Series D preferred stock for the six months ended June 30, 202513 Consolidated Statements of Cash Flows The Consolidated Statements of Cash Flows provide a breakdown of cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2025, and 2024 Cash Flow Highlights (in thousands) | Metric (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | | Net cash from operating activities | $10,162 | $2,820 | | Net cash (used by) from investing activities | ($28,370) | $933 | | Net cash from (used by) financing activities | $58,620 | ($23,573) | | Net change in cash and cash equivalents | $40,412 | ($19,820) | | Ending cash and cash equivalents | $275,684 | $241,775 | - Net cash from operating activities significantly increased to $10.2 million for the six months ended June 30, 2025, from $2.8 million in the prior year17 - Net cash from financing activities showed a substantial inflow of $58.6 million in 2025, a reversal from a $23.6 million outflow in 2024, primarily due to a net change in deposits and FHLB advances17 Notes to Consolidated Financial Statements These notes provide detailed information and explanations regarding the accounting policies, financial instruments, and other significant items presented in the consolidated financial statements NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This note outlines the basis of presentation for the financial statements, key accounting policies for loans, allowances for credit losses, foreclosed assets, tax credits, and recent accounting pronouncements - The Company adopted ASU No. 2023-07, "Segment Reporting," effective January 1, 2024, and determined all business activities meet aggregation criteria, operating as a single segment373841 - 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 quality26 - Foreclosed assets at June 30, 2025, consisted of one single-family residential property valued at $524 thousand, with no foreclosed assets at December 31, 202429 NOTE 2 – REVENUE RECOGNITION This note describes the Company's revenue recognition policies, primarily focusing on noninterest income from contracts with customers, such as service charges on deposit accounts - The majority of the Company's revenue is from financial instruments (loans, securities, derivatives) rather than contracts with customers48 - Revenue from contracts with customers, recognized within Noninterest income, includes service charges on deposit accounts, recognized when performance obligations are completed (e.g., monthly maintenance or transaction completion)49 NOTE 3 – SECURITIES This note provides details on the Company's available-for-sale securities portfolio, including amortized cost, fair value, and unrealized gains and losses Securities Portfolio Summary (in thousands) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Total Amortized Cost | $10,980 | $10,965 | | Total Fair Value | $8,996 | $8,683 | | Gross Unrealized Losses | $1,984 | $2,283 | - At June 30, 2025, 88.9% of available-for-sale securities were reported at less than historical cost, with unrealized losses primarily due to changes in market interest rates, not credit quality5657 - Fair value of securities pledged as collateral for public deposits was $746 thousand at June 30, 202553 NOTE 4 – LOANS AND LEASES This note details the composition of the loan and lease portfolio, the methodology for the allowance for credit losses, and information on credit quality indicators such as nonaccrual loans, past due loans, and risk classifications Loan and Lease Portfolio Composition (in thousands) | Loan Type (in thousands) | June 30, 2025 | December 31, 2024 | | :----------------------- | :------------ | :---------------- | | Commercial | $421,809 | $418,804 | | Single-family residential | $437,659 | $465,517 | | Multi-family residential | $156,634 | $150,434 | | Commercial Real Estate | $506,621 | $460,064 | | Construction | $204,835 | $202,166 | | Home equity lines of credit | $42,805 | $39,520 | | Other Consumer | $3,567 | $2,988 | | Subtotal | $1,773,930 | $1,739,493 | | Less: ACL – Loans | ($19,122) | ($17,474) | | Loans and leases, net | $1,754,808 | $1,722,019 | - The Allowance for Credit Losses on Loans (ACL – Loans) increased by $1.6 million (9.4%) to $19.1 million at June 30, 2025, from $17.5 million at December 31, 20246971 - Nonaccrual loans increased to $16.6 million at June 30, 2025, from $14.5 million at December 31, 2024, primarily due to a commercial loan and a commercial real estate loan becoming nonaccrual7578 NOTE 5 – LEASES This note describes the Company's operating lease arrangements, including right-of-use assets, lease liabilities, and associated costs - All of the Company's leases are classified as operating leases, with a weighted-average remaining lease term of 8.4 years and a weighted-average discount rate of 7.51% at June 30, 2025100101 Operating Lease Costs (in thousands) | Operating Lease Costs (in thousands) | 3 Months Ended June 30, 2025 | 6 Months Ended June 30, 2025 | | :----------------------------------- | :--------------------------- | :--------------------------- | | Operating lease costs | $165 | $327 | | Variable lease costs | $198 | $397 | NOTE 6 – FAIR VALUE This note provides information on fair value measurements, categorizing financial instruments into Level 1, 2, or 3 based on the observability of inputs used in valuation techniques, and details assets and liabilities measured at fair value on both recurring and non-recurring bases Fair Value Measurements (in thousands) | Financial Assets (in thousands) | June 30, 2025 (Level 2) | December 31, 2024 (Level 2) | | :------------------------------ | :---------------------- | :-------------------------- | | Securities available for sale | $8,996 | $8,683 | | Loans held for sale | $1,613 | $2,623 | | Derivative assets | $3,585 | $3,730 | | Financial Liabilities (in thousands) | | | | Derivative liabilities | $3,585 | $3,730 | - The Company had no assets or liabilities measured at fair value using Level 1 or Level 3 inputs on a recurring basis at June 30, 2025, or December 31, 2024110 - Collateral dependent impaired commercial loans were measured at fair value on a non-recurring basis using Level 3 inputs, totaling $1.1 million at June 30, 2025111114 NOTE 7 – SUBORDINATED DEBENTURES This note details the Company's subordinated debentures, including the 2003 trust preferred securities and the 2018 fixed-to-floating rate subordinated notes, outlining their terms, interest rates, and balances - The 2003 subordinated debentures, with a balance of $5.2 million, reset quarterly to SOFR plus 3.112% (7.41% at June 30, 2025) and mature on December 30, 2033121 - The 2018 fixed-to-floating rate subordinated notes, with a balance of $9.9 million (net of unamortized debt issuance costs), reset quarterly to SOFR plus 4.402% (8.70% at June 30, 2025) and mature on December 30, 2028123 NOTE 8 – FHLB ADVANCES AND OTHER DEBT This note provides information on FHLB advances and other debt, including maturities, interest rates, and collateral pledged FHLB Advances and Other Debt (in thousands) | Debt Type (in thousands) | June 30, 2025 | December 31, 2024 | | :----------------------- | :------------ | :---------------- | | FHLB fixed rate advances | $58,000 | $58,000 | | Holding Company credit facility | $42,947 | $34,680 | | Total | $100,947 | $92,680 | - FHLB advances and other debt increased by $8.3 million (8.9%) to $100.9 million at June 30, 2025, primarily due to a $10 million increase in the Holding Company's credit facility124131 - CFBank had $65.0 million in unused lines of credit at two commercial banks at June 30, 2025130 NOTE 9 – STOCK-BASED COMPENSATION This note details the Company's stock-based compensation plan, including restricted stock awards and associated compensation costs Stock-Based Compensation Costs (in thousands) | Metric (in thousands) | 3 Months Ended June 30, 2025 | 6 Months Ended June 30, 2025 | | :-------------------- | :--------------------------- | :--------------------------- | | Total compensation cost | $401 | $704 | | Total income tax effect | $84 | $148 | - The 2019 Equity Incentive Plan was amended to increase authorized shares from 300,000 to 500,000, with 119,237 shares remaining available at June 30, 2025134 - Unrecognized compensation cost related to nonvested restricted stock awards was $2.8 million at June 30, 2025138 NOTE 10 – REGULATORY CAPITAL MATTERS This note outlines CFBank's regulatory capital requirements under Basel III Capital Rules, including minimum ratios for Common Equity Tier 1, Tier 1, Total Capital, and Leverage Ratio, and discusses dividend restrictions Regulatory Capital Ratios | Capital Ratio | Actual Ratio (June 30, 2025) | Minimum Required (Basel III) | Well Capitalized Standard | | :------------------------------------ | :--------------------------- | :--------------------------- | :------------------------ | | Total Capital to risk weighted assets | 14.69% | 10.50% | 10.00% | | Tier 1 Capital to risk weighted assets | 13.45% | 8.50% | 8.00% | | Common equity tier 1 capital to risk-weighted assets | 13.45% | 7.00% | 6.50% | | Tier 1 Capital to adjusted total assets (Leverage Ratio) | 11.20% | 4.00% | 5.00% | - CFBank exceeded all minimum and well-capitalized regulatory capital ratios at June 30, 2025148 - The Holding Company's ability to pay dividends is dependent on its liquidity, receipt of dividends from CFBank, and compliance with various legal and regulatory policies, including timely interest payments on subordinated debentures151 NOTE 11 – DERIVATIVE INSTRUMENTS This note describes the Company's use of interest-rate swaps for asset/liability management and mortgage banking derivatives, including rate lock commitments and forward loan sales commitments - CFBank uses interest-rate swaps to manage interest rate risk, with a combined notional amount of $98.6 million at June 30, 2025154 Derivative Instrument Details (in thousands) | Derivative Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Notional amount (in thousands) | $98,561 | $92,818 | | Weighted average pay rate | 5.44% | 5.45% | | Weighted average receive rate | 6.41% | 6.93% | | Weighted average maturity (years) | 9.0 | 8.6 | | Fair value of derivative asset (in thousands) | $3,585 | $3,730 | | Fair value of derivative liability (in thousands) | ($3,585) | ($3,730) | - Mortgage banking derivatives, including rate lock commitments, are economically hedged with forward loan sales contracts; the fair value of these commitments was immaterial159 NOTE 12 – INCOME TAXES This note provides details on the Company's deferred tax assets, net operating loss carryforwards, and effective tax rates, explaining the components that create differences from the federal statutory tax rate Deferred Tax Assets (in thousands) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Deferred tax asset | $4,420 | $4,177 | | Unrecognized tax benefits | $0 | $0 | Effective Tax Rates | Effective Tax Rate | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Statutory tax rate | 21.0% | 21.0% | 21.0% | 21.0% | | Effective tax rate | 21.3% | 12.3% | 21.0% | 16.4% | - The Company had net operating loss carryforwards of $21.8 million at June 30, 2025, with $20.5 million expected to expire unutilized due to Section 382 ownership change limitations164 NOTE 13 – ACCUMULATED OTHER COMPREHENSIVE LOSS This note summarizes the changes in accumulated other comprehensive loss, primarily driven by unrealized gains and losses on available-for-sale securities Accumulated Other Comprehensive Loss (in thousands) | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Accumulated other comprehensive loss, beginning of period | ($1,725) | ($2,281) | ($1,803) | ($2,290) | | Other comprehensive gain before reclassifications | $158 | $44 | $236 | $53 | | Accumulated other comprehensive loss, end of period | ($1,567) | ($2,237) | ($1,567) | ($2,237) | - The accumulated other comprehensive loss improved from ($1.8 million) at the beginning of 2025 to ($1.6 million) at June 30, 2025, due to other comprehensive gains167 NOTE 14 – PREFERRED STOCK This note describes the Series D Preferred Stock, including its issuance, conversion features, and dividend participation rights - 2,000 shares of Series D Preferred Stock were outstanding at June 30, 2025, and December 31, 2024168 - Each share of Series D Preferred Stock is convertible into 100 shares of Non-Voting Common Stock (upon shareholder approval) or Voting Common Stock (under certain conditions), and participates pro rata in dividends with common shareholders169 NOTE 15 – TAX CREDIT INVESTMENTS This note provides information on the Company's investments in Low Income Housing Tax Credits (LIHTC) and Historic Tax Credits (HTC), including investment amounts, unfunded commitments, and amortization expense Tax Credit Investments (in thousands) | Investment Type (in thousands) | Investment (June 30, 2025) | Unfunded Commitment (June 30, 2025) | | :----------------------------- | :------------------------- | :---------------------------------- | | LIHTC | $20,255 | $9,987 | | HTC | $1,743 | $1,573 | | Total | $21,998 | $11,560 | Tax Credit Amortization Expense (in thousands) | Amortization Expense (in thousands) | 3 Months Ended June 30, 2025 | 6 Months Ended June 30, 2025 | | :---------------------------------- | :--------------------------- | :--------------------------- | | LIHTC | $442 | $884 | | HTC | ($30) | $210 | | Total | $412 | $1,094 | NOTE 16 – SUBSEQUENT EVENT This note discloses a cash dividend declared by the Board of Directors subsequent to the reporting period - On July 1, 2025, the Board of Directors declared a cash dividend of $0.08 per common share and $8.00 per Series D Preferred Stock, paid on July 21, 2025173 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the Company's financial condition, results of operations, liquidity, and capital resources for the three and six months ended June 30, 2025, compared to the same periods in 2024 FORWARD LOOKING STATEMENTS This subsection provides a cautionary statement regarding forward-looking statements, emphasizing that actual results may differ materially due to various risks and uncertainties - Forward-looking statements are identified by terms like "estimate," "strategy," "may," "believe," "anticipate," "expect," "predict," "will," "intend," "plan," and "targeted"175 - The Company cautions that assumptions underlying forward-looking statements almost always vary from actual results, and differences can be material176 Business Overview This section describes CF Bankshares Inc. as a financial holding company operating CFBank, National Association, focusing on commercial, retail, and mortgage lending services for closely held businesses and entrepreneurs in Ohio and Indiana - CFBank focuses on serving closely held businesses and entrepreneurs with comprehensive Commercial, Retail, and Mortgage Lending services178 - The principal market area for deposits and loans includes counties in Ohio (Franklin, Delaware, Cuyahoga, Summit, Hamilton) and Marion County, Indiana179 General This general overview explains that net income is primarily driven by net interest income, influenced by interest rates, loan demand, nonperforming assets, and deposit flows, and also affected by credit loss provisions, noninterest income, operating expenses, and taxes - Net income is primarily dependent on net interest income, which is the difference between interest income on loans and securities and interest expense on deposits and borrowed funds181 - Operating results are significantly affected by economic conditions, market interest rates, real estate values, government policies, and regulatory actions182 Financial Condition This section analyzes the Company's financial condition, highlighting changes in key balance sheet items such as assets, cash, securities, loans, allowance for credit losses, deposits, and debt - Total assets increased by $68.0 million (3.3%) to $2.13 billion at June 30, 2025, from $2.07 billion at December 31, 2024184 - Cash and cash equivalents increased by $40.4 million (17.2%) to $275.7 million at June 30, 2025, driven by deposit growth and FHLB advances185 - Net loans and leases increased by $32.8 million (1.9%) to $1.75 billion, primarily due to growth in commercial and multi-family real estate loans, partially offset by a decrease in single-family residential loans due to portfolio sales187 - The allowance for credit losses on loans (ACL – Loans) increased by $1.6 million (9.4%) to $19.1 million, with the ratio of ACL – Loans to total loans rising to 1.08% from 1.00%188 - Nonperforming loans increased by $1.6 million to $16.6 million, representing 0.94% of total loans at June 30, 2025193 - Total deposits increased by $54.1 million (3.1%) to $1.81 billion, with increases in both interest-bearing and noninterest-bearing accounts204 - FHLB advances and other debt increased by $8.3 million (8.9%) to $100.9 million, mainly due to a $10 million increase in the Holding Company's credit facility207 - Stockholders' equity increased by $8.6 million (5.1%) to $177.0 million, primarily attributed to net income212 Comparison of the Results of Operations for the Three Months Ended June 30, 2025 and 2024 This section compares the Company's financial performance for the three months ended June 30, 2025, against the same period in 2024, detailing changes in net income, net interest income, provision for credit losses, noninterest income, noninterest expense, and income tax expense - Net income for Q2 2025 was $5.0 million ($0.77 diluted EPS), a significant increase from $1.7 million ($0.26 diluted EPS) in Q2 2024215 - Net interest income increased by $2.6 million (23.2%) to $14.0 million, driven by a decrease in interest expense and an increase in interest income217 - Provision for credit losses decreased by $2.2 million to $1.4 million, with net charge-offs totaling $51,000 compared to $2.1 million in Q2 2024221 - Noninterest income increased by $362,000 (29.7%) to $1.6 million, primarily due to higher swap fee income and gains on residential mortgage loan sales223 - Noninterest expense increased by $662,000 (9.3%) to $7.8 million, mainly due to higher salaries and employee benefits and professional fees224 Comparison of the Results of Operations for the Six Months Ended June 30, 2025 and 2024 This section compares the Company's financial performance for the six months ended June 30, 2025, against the same period in 2024, detailing changes in net income, net interest income, provision for credit losses, noninterest income, noninterest expense, and income tax expense - Net income for H1 2025 was $9.5 million ($1.45 diluted EPS), up from $4.8 million ($0.74 diluted EPS) in H1 2024228 - Net interest income increased by $4.2 million (18.8%) to $26.9 million, driven by a decrease in interest expense and an increase in interest income230233 - Provision for credit losses decreased by $2.8 million to $2.0 million, with net charge-offs totaling $74,000 compared to $2.1 million in H1 2024236 - Noninterest income increased by $663,000 (31.2%) to $2.8 million, primarily due to higher other noninterest income, service charges, and swap fee income237 - Noninterest expense increased by $1.4 million (10.0%) to $15.7 million, mainly due to higher salaries and employee benefits and professional fees238 Average Balances, Interest Rates and Yields This section presents tables detailing the average balances, interest earned/paid, and yields/rates for interest-earning assets and interest-bearing liabilities for the three and six months ended June 30, 2025, and 2024 Key Metrics for Average Balances, Interest Rates and Yields (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | | :------------------------------------------------ | :--------------------------- | :--------------------------- | | Total interest-earning assets (average balance, in thousands) | $1,977,780 | $1,901,269 | | Total interest-earning assets (average yield) | 6.13% | 6.16% | | Total interest-bearing liabilities (average balance, in thousands) | $1,572,157 | $1,570,778 | | Total interest-bearing liabilities (average rate) | 4.16% | 4.57% | | Net interest margin | 2.83% | 2.39% | Key Metrics for Average Balances, Interest Rates and Yields (in thousands) | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------------ | :--------------------------- | :--------------------------- | | Total interest-earning assets (average balance, in thousands) | $1,965,544 | $1,907,066 | | Total interest-earning assets (average yield) | 6.05% | 6.12% | | Total interest-bearing liabilities (average balance, in thousands) | $1,572,445 | $1,574,950 | | Total interest-bearing liabilities (average rate) | 4.15% | 4.54% | | Net interest margin | 2.74% | 2.37% | Rate/Volume Analysis of Net Interest Income This analysis breaks down the changes in interest income and interest expense into components attributable to changes in interest rates and changes in volume for major interest-earning assets and interest-bearing liabilities Change in Net Interest Income (in thousands) | Change in Net Interest Income (in thousands) | 3 Months Ended June 30, 2025 vs 2024 | 6 Months Ended June 30, 2025 vs 2024 | | :------------------------------------------- | :----------------------------------- | :----------------------------------- | | Due to Rate | $1,525 | $2,816 | | Due to Volume | $1,109 | $1,443 | | Net Change | $2,634 | $4,259 | - For the three months ended June 30, 2025, the net interest income increase of $2.6 million was primarily driven by a $1.5 million increase due to rate changes and a $1.1 million increase due to volume changes249 - For the six months ended June 30, 2025, the net interest income increase of $4.3 million was primarily driven by a $2.8 million increase due to rate changes and a $1.4 million increase due to volume changes249 Critical Accounting Policies This section affirms that there have been no significant changes to the Company's critical accounting policies and estimates as disclosed in its latest Annual Report on Form 10-K - The Company's financial accounting policies align with U.S. GAAP and banking industry practices, with critical policies requiring management's subjective judgments and estimates250 - No significant changes to critical accounting policies and estimates occurred during the six months ended June 30, 2025251 Liquidity and Capital Resources This section discusses the Company's liquidity management, sources of funds, borrowing capacity, and capital planning, including dividend payment conditions and regulatory considerations - Total cash available from liquid assets and borrowing capacity increased to $659.2 million at June 30, 2025, from $616.6 million at December 31, 2024257 Liquidity Source (in thousands) | Liquidity Source (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------------------------ | :------------ | :---------------- | | Cash, unpledged securities and deposits | $281,594 | $237,863 | | Additional borrowing capacity at the FHLB | $173,699 | $186,303 | | Additional borrowing capacity at the FRB | $138,940 | $127,424 | | Unused commercial bank lines of credit | $65,000 | $65,000 | | Total | $659,233 | $616,590 | - The Holding Company's ability to pay dividends is contingent on its liquidity, dividends from CFBank, and compliance with debt payment obligations and regulatory policies270272 Item 3. Quantitative and Qualitative Disclosures About Market Risk This section states that there has been no material change in the Company's market risk from the information previously disclosed in its Annual Report on Form 10-K - No material change in the Company's market risk was identified as of June 30, 2025, compared to the Annual Report on Form 10-K for December 31, 2024274 Item 4. Controls and Procedures This section confirms the effectiveness of the Company's disclosure controls and procedures and reports no material changes in internal control over financial reporting during the second quarter of 2025 - The Company's disclosure controls and procedures were effective as of June 30, 2025276 - No material changes in internal control over financial reporting occurred during the second quarter of 2025277 PART II. Other Information Item 1. Legal Proceedings This section states that the Company is involved in routine legal proceedings but does not anticipate any material adverse effects on its financial condition or results of operations - The Company is not a party to any pending legal proceeding that management believes would have a material adverse effect on its financial condition or results of operations281 Item 1A. Risk Factors This section refers to the Company's Annual Report on Form 10-K for a detailed discussion of risk factors and confirms no material changes to those risks - There were no material changes to the risk factors presented in the Company's Annual Report on Form 10-K for the year ended December 31, 2024282 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section provides information on the Company's purchases of common stock, including shares surrendered for tax payments and shares repurchased under a publicly announced program Common Stock Purchases | Period | Total common shares purchased | Average price paid per common share | | :-------------------------------- | :---------------------------- | :---------------------------------- | | April 1, 2025 through April 30, 2025 | 1,502 | $20.26 | | May 1, 2025 through May 31, 2025 | 25,787 | $23.92 | | June 1, 2025 through June 30, 2025 | 6,351 | $23.41 | | Total | 33,640 | $23.66 | - The Board of Directors authorized a new stock repurchase program on February 4, 2025, to repurchase up to 325,000 shares by January 31, 2026283 Item 3. Defaults Upon Senior Securities This item is marked as not applicable, indicating no defaults upon senior securities Item 4. Mine Safety Disclosures This item is marked as not applicable, indicating no mine safety disclosures Item 5. Other Information This section confirms no other material information to report and no Rule 10b5-1 trading arrangements adopted or terminated by directors or officers during the quarter - No director or officer adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter ended June 30, 2025288 Item 6. Exhibits This section lists all exhibits filed as part of the Form 10-Q, including certificates of incorporation, bylaws, and certifications Signatures