CF Bankshares (US:CFBK)2026-03-12 17:02Credit Losses and Loan Performance - The Allowance for Credit Losses on Loans (ACL - Loans) totaled $17.7 million at December 31, 2025, an increase of $204,000, or 1.2%, from $17.5 million at December 31, 2024[63]. - Nonperforming loans increased by $282,000 in 2025 compared to 2024, primarily due to nine commercial loans totaling $2.7 million and two commercial real estate loans totaling $5.2 million becoming nonaccrual[58]. - The ratio of ACL - Loans to total loans was 1.01% at December 31, 2025, compared to 1.00% at December 31, 2024[63]. - The company recognized no interest income on nonaccrual loans in 2025, with an additional $1.4 million in potential interest income that could have been recognized if these loans had performed as expected[59]. - Net charge-offs for the year ended December 31, 2025, were $7.3 million, compared to $5.5 million in 2024, reflecting an increase in credit losses[65]. - The provision for credit losses on loans was $7.5 million for the year ended December 31, 2025, up from $6.1 million in 2024[65]. - The company continues to monitor credit quality and may need to increase the ACL - Loans based on future economic conditions and borrower performance[64]. Deposits and Liquidity - CFBank's total deposits at December 31, 2025, amounted to $1.761 billion, with interest-bearing deposits representing 83.96% of total deposits[88]. - Brokered deposits decreased by $20.4 million, or 4.9%, from $420.8 million at December 31, 2024, to $400.4 million at December 31, 2025[85]. - CFBank's average balance of interest-bearing checking accounts was $112.290 million in 2025, with an average interest rate of 4.32%[88]. - FHLB advances totaled $58.0 million at December 31, 2025, with eligibility to borrow up to $242.7 million based on collateral pledged[89]. - The Holding Company's available cash and cash equivalents totaled $522,000 at December 31, 2025, indicating adequate liquidity to meet operating needs[81]. - CFBank's certificate accounts of $250,000 or more totaled $463.6 million at December 31, 2025, with a weighted average rate of 4.06%[87]. - Customer balances in the CDARS and ICS reciprocal programs increased by $7.0 million, or 2.6%, from $271.7 million at December 31, 2024, to $278.7 million at December 31, 2025[85]. - The Holding Company had an outstanding balance of $43.0 million on its credit facility as of December 31, 2025[90]. - CFBank had $65.0 million of availability in unused lines of credit with two commercial banks at December 31, 2025[92]. Regulatory Environment - The Holding Company is regulated by the FRB under the Bank Holding Company Act and is subject to various disclosure and regulatory requirements[97]. - CFBank is primarily regulated by the OCC and is also subject to FDIC regulations, which insure deposits to the maximum extent permitted by law[98]. - The Dodd-Frank Act established the CFPB to regulate consumer financial products and services, ensuring fair and transparent markets[99]. - The Holding Company must act as a source of financial strength to its subsidiary banks and may be required to contribute additional capital if needed[103]. - The Holding Company became a registered bank holding company and elected financial holding company status, but decertified this status due to CFBank's "Needs to Improve" rating[106][109]. - National banks, including CFBank, must maintain 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%[120]. - CFBank is required to maintain a common equity tier 1 capital ratio of at least 6.5% to be considered "well-capitalized" as of December 31, 2025[130]. - The Holding Company qualifies for exemption from the FRB's consolidated risk-based capital and leverage rules under the Small Bank Holding Company Policy Statement[131]. - The Regulatory Relief Act eased restrictions on bank holding companies with consolidated assets of less than $100 billion, including the Company[112]. - The OCC has broad enforcement powers over national banks, including the ability to impose fines and appoint a conservator if certain conditions are met[117]. - CFBank's deposits are insured up to $250,000 per separately insured depositor by the FDIC, backed by the full faith and credit of the U.S. Government[132]. - The FDIC has established a designated reserve ratio (DRR) of 2.0%, with a restoration plan to return to a minimum DRR of 1.35% by September 30, 2028[133]. Taxation and Financial Performance - As of December 31, 2025, the Holding Company had a total of $522,000 in cash available for dividend payments[136]. - CFBank's CRA rating was "Needs to Improve" as of March 2023, primarily due to its legacy direct-to-consumer residential mortgage business[143]. - The Company strategically scaled down its residential mortgage business starting in 2021, focusing on regional market lending[143]. - Federal income tax laws provided deductions totaling $2.3 million for the Company's thrift bad debt reserves established before 1988[138]. - The Company is subject to federal income taxation and has deferred tax assets primarily composed of U.S. net operating losses and temporary book-to-tax differences[169]. Cybersecurity and Data Protection - CFBank is subject to regulatory guidelines for safeguarding customer information, ensuring the security and confidentiality of customer records[158]. - The Company has not detected significant data loss or material financial losses related to cybersecurity attacks, but risks and exposures are expected to remain high due to evolving threats and increased use of technology-based services[166]. - The Company expects ongoing state-level activity in privacy and cybersecurity regulations, continually monitoring developments in states where customers are located[165]. - The Company employs significant resources to manage cybersecurity controls, including preventative and detective tools to monitor suspicious activity[166]. Interest Rate and Economic Impact - Changes in market interest rates could materially affect net interest income, loan volume, asset quality, and overall profitability[373]. - The Company has a hedging policy allowing economic hedging activities, such as interest-rate swaps, up to a notional amount of 10% of total assets[369]. - Rising interest rates are generally associated with lower volumes of residential mortgage loan originations, while falling rates are associated with higher volumes[374]. - At December 31, 2025, CFBank's Economic Value of Equity (EVE) ratios range from 11.7% to 12.7% under interest rate shocks of +400 bps to -400 bps, all within acceptable ranges established by the Board of Directors[372].