false
--12-31
Q1
2024
0001070680
Yes
Yes
http://fasb.org/us-gaap/2023#OtherAssets
http://fasb.org/us-gaap/2023#OtherAssets
http://fasb.org/us-gaap/2023#NoninterestIncomeOtherOperatingIncome
http://fasb.org/us-gaap/2023#NoninterestIncomeOtherOperatingIncome
http://fasb.org/us-gaap/2023#OtherLiabilities
http://fasb.org/us-gaap/2023#OtherLiabilities
2032-12-31
2024-01-01
0001070680
cfbk:NonVotingCommonStock1Member
2024-01-01
2024-03-31
0001070680
us-gaap:CommonStockMember
2023-01-01
2023-03-31
0001070680
cfbk:NonVotingCommonStock1Member
2023-01-01
2023-03-31
0001070680
us-gaap:CommonStockMember
2024-01-01
2024-03-31
0001070680
us-gaap:TreasuryStockCommonMember
2024-03-31
0001070680
us-gaap:RetainedEarningsMember
2024-03-31
0001070680
us-gaap:CommonStockMember
2024-03-31
0001070680
us-gaap:AdditionalPaidInCapitalMember
2024-03-31
0001070680
us-gaap:AccumulatedOtherComprehensiveIncomeMember
2024-03-31
0001070680
cfbk:NonVotingCommonStock1Member
2024-03-31
0001070680
srt:CumulativeEffectPeriodOfAdoptionAdjustedBalanceMember
us-gaap:TreasuryStockCommonMember
2023-12-31
0001070680
srt:CumulativeEffectPeriodOfAdoptionAdjustedBalanceMember
us-gaap:RetainedEarningsMember
2023-12-31
0001070680
srt:CumulativeEffectPeriodOfAdoptionAdjustedBalanceMember
us-gaap:CommonStockMember
2023-12-31
0001070680
srt:CumulativeEffectPeriodOfAdoptionAdjustedBalanceMember
us-gaap:AdditionalPaidInCapitalMember
2023-12-31
0001070680
srt:CumulativeEffectPeriodOfAdoptionAdjustedBalanceMember
us-gaap:AccumulatedOtherComprehensiveIncomeMember
2023-12-31
0001070680
srt:CumulativeEffectPeriodOfAdoptionAdjustedBalanceMember
cfbk:NonVotingCommonStock1Member
2023-12-31
0001070680
srt:CumulativeEffectPeriodOfAdoptionAdjustedBalanceMember
2023-12-31
0001070680
us-gaap:TreasuryStockCommonMember
2023-03-31
0001070680
us-gaap:RetainedEarningsMember
2023-03-31
0001070680
us-gaap:CommonStockMember
2023-03-31
0001070680
us-gaap:AdditionalPaidInCapitalMember
2023-03-31
0001070680
us-gaap:AccumulatedOtherComprehensiveIncomeMember
2023-03-31
0001070680
cfbk:NonVotingCommonStock1Member
2023-03-31
0001070680
srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember
us-gaap:RetainedEarningsMember
2022-12-31
0001070680
srt:CumulativeEffectPeriodOfAdoptionAdjustedBalanceMember
us-gaap:TreasuryStockCommonMember
2022-12-31
0001070680
srt:CumulativeEffectPeriodOfAdoptionAdjustedBalanceMember
us-gaap:RetainedEarningsMember
2022-12-31
0001070680
srt:CumulativeEffectPeriodOfAdoptionAdjustedBalanceMember
us-gaap:CommonStockMember
2022-12-31
0001070680
srt:CumulativeEffectPeriodOfAdoptionAdjustedBalanceMember
us-gaap:AdditionalPaidInCapitalMember
2022-12-31
0001070680
srt:CumulativeEffectPeriodOfAdoptionAdjustedBalanceMember
us-gaap:AccumulatedOtherComprehensiveIncomeMember
2022-12-31
0001070680
srt:CumulativeEffectPeriodOfAdoptionAdjustedBalanceMember
cfbk:NonVotingCommonStock1Member
2022-12-31
0001070680
us-gaap:TreasuryStockCommonMember
2022-12-31
0001070680
us-gaap:RetainedEarningsMember
2022-12-31
0001070680
us-gaap:CommonStockMember
2022-12-31
0001070680
us-gaap:AdditionalPaidInCapitalMember
2022-12-31
0001070680
us-gaap:AccumulatedOtherComprehensiveIncomeMember
2022-12-31
0001070680
cfbk:NonVotingCommonStock1Member
2022-12-31
0001070680
us-gaap:EmployeeStockOptionMember
2023-01-01
2023-03-31
0001070680
cfbk:TwoThousandNineteenEquityIncentivePlanMember
2024-03-31
0001070680
cfbk:TwoThousandNineteenEquityIncentivePlanMember
2019-05-29
0001070680
us-gaap:RestrictedStockMember
2023-12-31
0001070680
us-gaap:RestrictedStockMember
2024-01-01
2024-03-31
0001070680
us-gaap:RestrictedStockMember
2023-01-01
2023-03-31
0001070680
srt:MinimumMember
us-gaap:RestrictedStockMember
2024-01-01
2024-03-31
0001070680
srt:MinimumMember
us-gaap:EmployeeStockOptionMember
2024-01-01
2024-03-31
0001070680
srt:MaximumMember
us-gaap:RestrictedStockMember
2024-01-01
2024-03-31
0001070680
srt:MaximumMember
us-gaap:EmployeeStockOptionMember
2024-01-01
2024-03-31
0001070680
us-gaap:DepositsMember
2024-03-31
0001070680
us-gaap:FederalHomeLoanBankAdvancesMember
2023-12-31
0001070680
us-gaap:DepositsMember
2023-12-31
0001070680
us-gaap:ConsumerPortfolioSegmentMember
cfbk:OtherFinancingReceivableMember
2024-01-01
2024-03-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
us-gaap:ConstructionLoansMember
2024-01-01
2024-03-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
cfbk:ResidentialMultiFamilyMember
2024-01-01
2024-03-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
cfbk:CommercialLoansMember
2024-01-01
2024-03-31
0001070680
us-gaap:ConsumerPortfolioSegmentMember
us-gaap:HomeEquityMember
2023-01-01
2023-03-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
us-gaap:ConstructionLoansMember
2023-01-01
2023-03-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
cfbk:ResidentialMultiFamilyMember
2023-01-01
2023-03-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
cfbk:CommercialLoansMember
2023-01-01
2023-03-31
0001070680
2012-01-01
2012-12-31
0001070680
us-gaap:PrivatePlacementMember
2003-12-31
0001070680
us-gaap:AccumulatedOtherComprehensiveIncomeMember
2024-01-01
2024-03-31
0001070680
us-gaap:AccumulatedOtherComprehensiveIncomeMember
2023-01-01
2023-03-31
0001070680
us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember
2024-01-01
2024-03-31
0001070680
us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember
2023-01-01
2023-03-31
0001070680
srt:MinimumMember
2024-01-01
2024-03-31
0001070680
srt:MaximumMember
2024-01-01
2024-03-31
0001070680
us-gaap:ConsumerPortfolioSegmentMember
cfbk:OtherFinancingReceivableMember
us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember
2024-03-31
0001070680
us-gaap:ConsumerPortfolioSegmentMember
cfbk:OtherFinancingReceivableMember
us-gaap:FinancingReceivables60To89DaysPastDueMember
2024-03-31
0001070680
us-gaap:ConsumerPortfolioSegmentMember
cfbk:OtherFinancingReceivableMember
us-gaap:FinancialAssetPastDueMember
2024-03-31
0001070680
us-gaap:ConsumerPortfolioSegmentMember
cfbk:OtherFinancingReceivableMember
us-gaap:FinancialAssetNotPastDueMember
2024-03-31
0001070680
us-gaap:ConsumerPortfolioSegmentMember
cfbk:OriginatedForPortfolioMember
us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember
2024-03-31
0001070680
us-gaap:ConsumerPortfolioSegmentMember
cfbk:OriginatedForPortfolioMember
us-gaap:FinancingReceivables60To89DaysPastDueMember
2024-03-31
0001070680
us-gaap:ConsumerPortfolioSegmentMember
cfbk:OriginatedForPortfolioMember
us-gaap:FinancingReceivables30To59DaysPastDueMember
2024-03-31
0001070680
us-gaap:ConsumerPortfolioSegmentMember
cfbk:OriginatedForPortfolioMember
us-gaap:FinancialAssetPastDueMember
2024-03-31
0001070680
us-gaap:ConsumerPortfolioSegmentMember
cfbk:OriginatedForPortfolioMember
us-gaap:FinancialAssetNotPastDueMember
2024-03-31
0001070680
us-gaap:CollateralPledgedMember
us-gaap:CommercialPortfolioSegmentMember
cfbk:OtherFinancingReceivableMember
2024-03-31
0001070680
us-gaap:CollateralPledgedMember
cfbk:RealEstatePortfolioSegmentMember
cfbk:ResidentialSingleFamilyMember
2024-03-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
us-gaap:ConstructionLoansMember
us-gaap:FinancialAssetNotPastDueMember
2024-03-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
cfbk:ResidentialSingleFamilyMember
us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember
2024-03-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
cfbk:ResidentialSingleFamilyMember
us-gaap:FinancialAssetPastDueMember
2024-03-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
cfbk:ResidentialSingleFamilyMember
us-gaap:FinancialAssetNotPastDueMember
2024-03-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
cfbk:ResidentialMultiFamilyMember
us-gaap:FinancialAssetNotPastDueMember
2024-03-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
cfbk:OwnerOccupiedMember
us-gaap:FinancialAssetNotPastDueMember
2024-03-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
cfbk:NonOwnerOccupiedMember
us-gaap:FinancialAssetNotPastDueMember
2024-03-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
cfbk:LandLoansMember
us-gaap:FinancialAssetNotPastDueMember
2024-03-31
0001070680
us-gaap:CommercialPortfolioSegmentMember
us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember
2024-03-31
0001070680
us-gaap:CommercialPortfolioSegmentMember
us-gaap:FinancingReceivables30To59DaysPastDueMember
2024-03-31
0001070680
us-gaap:CommercialPortfolioSegmentMember
us-gaap:FinancialAssetPastDueMember
2024-03-31
0001070680
us-gaap:CommercialPortfolioSegmentMember
us-gaap:FinancialAssetNotPastDueMember
2024-03-31
0001070680
us-gaap:CommercialPortfolioSegmentMember
cfbk:CommercialLeasesMember
2024-03-31
0001070680
us-gaap:CollateralPledgedMember
cfbk:RealEstatePortfolioSegmentMember
2024-03-31
0001070680
us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember
2024-03-31
0001070680
us-gaap:FinancingReceivables60To89DaysPastDueMember
2024-03-31
0001070680
us-gaap:FinancingReceivables30To59DaysPastDueMember
2024-03-31
0001070680
us-gaap:FinancialAssetPastDueMember
2024-03-31
0001070680
us-gaap:FinancialAssetNotPastDueMember
2024-03-31
0001070680
us-gaap:ConsumerPortfolioSegmentMember
cfbk:OtherFinancingReceivableMember
us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember
2023-12-31
0001070680
us-gaap:ConsumerPortfolioSegmentMember
cfbk:OtherFinancingReceivableMember
us-gaap:FinancialAssetPastDueMember
2023-12-31
0001070680
us-gaap:ConsumerPortfolioSegmentMember
cfbk:OtherFinancingReceivableMember
us-gaap:FinancialAssetNotPastDueMember
2023-12-31
0001070680
us-gaap:ConsumerPortfolioSegmentMember
cfbk:OriginatedForPortfolioMember
us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember
2023-12-31
0001070680
us-gaap:ConsumerPortfolioSegmentMember
cfbk:OriginatedForPortfolioMember
us-gaap:FinancingReceivables30To59DaysPastDueMember
2023-12-31
0001070680
us-gaap:ConsumerPortfolioSegmentMember
cfbk:OriginatedForPortfolioMember
us-gaap:FinancialAssetPastDueMember
2023-12-31
0001070680
us-gaap:ConsumerPortfolioSegmentMember
cfbk:OriginatedForPortfolioMember
us-gaap:FinancialAssetNotPastDueMember
2023-12-31
0001070680
us-gaap:CollateralPledgedMember
us-gaap:CommercialPortfolioSegmentMember
cfbk:OtherFinancingReceivableMember
2023-12-31
0001070680
us-gaap:CollateralPledgedMember
cfbk:RealEstatePortfolioSegmentMember
cfbk:ResidentialSingleFamilyMember
2023-12-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
us-gaap:ConstructionLoansMember
us-gaap:FinancialAssetNotPastDueMember
2023-12-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
cfbk:ResidentialSingleFamilyMember
us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember
2023-12-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
cfbk:ResidentialSingleFamilyMember
us-gaap:FinancingReceivables60To89DaysPastDueMember
2023-12-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
cfbk:ResidentialSingleFamilyMember
us-gaap:FinancingReceivables30To59DaysPastDueMember
2023-12-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
cfbk:ResidentialSingleFamilyMember
us-gaap:FinancialAssetPastDueMember
2023-12-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
cfbk:ResidentialSingleFamilyMember
us-gaap:FinancialAssetNotPastDueMember
2023-12-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
cfbk:ResidentialMultiFamilyMember
us-gaap:FinancialAssetNotPastDueMember
2023-12-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
cfbk:OwnerOccupiedMember
us-gaap:FinancialAssetNotPastDueMember
2023-12-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
cfbk:NonOwnerOccupiedMember
us-gaap:FinancialAssetNotPastDueMember
2023-12-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
cfbk:LandLoansMember
us-gaap:FinancialAssetNotPastDueMember
2023-12-31
0001070680
us-gaap:CommercialPortfolioSegmentMember
us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember
2023-12-31
0001070680
us-gaap:CommercialPortfolioSegmentMember
us-gaap:FinancingReceivables30To59DaysPastDueMember
2023-12-31
0001070680
us-gaap:CommercialPortfolioSegmentMember
us-gaap:FinancialAssetPastDueMember
2023-12-31
0001070680
us-gaap:CommercialPortfolioSegmentMember
us-gaap:FinancialAssetNotPastDueMember
2023-12-31
0001070680
us-gaap:CommercialPortfolioSegmentMember
cfbk:CommercialLeasesMember
2023-12-31
0001070680
us-gaap:CollateralPledgedMember
cfbk:RealEstatePortfolioSegmentMember
2023-12-31
0001070680
us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember
2023-12-31
0001070680
us-gaap:FinancingReceivables60To89DaysPastDueMember
2023-12-31
0001070680
us-gaap:FinancingReceivables30To59DaysPastDueMember
2023-12-31
0001070680
us-gaap:FinancialAssetPastDueMember
2023-12-31
0001070680
us-gaap:FinancialAssetNotPastDueMember
2023-12-31
0001070680
cfbk:HoldingCompanyCreditFacilityMember
2023-12-31
0001070680
us-gaap:LineOfCreditMember
cfbk:CommercialBankTwoMember
2024-03-31
0001070680
us-gaap:LineOfCreditMember
cfbk:CommercialBankOneMember
2024-03-31
0001070680
us-gaap:RevolvingCreditFacilityMember
cfbk:ThirdPartyBankMember
2021-05-21
2021-05-21
0001070680
us-gaap:RevolvingCreditFacilityMember
cfbk:ThirdPartyBankMember
2024-03-31
0001070680
us-gaap:LineOfCreditMember
cfbk:CommercialBankOneAndTwoMember
2024-03-31
0001070680
us-gaap:LineOfCreditMember
cfbk:CommercialBankOneAndTwoMember
2023-12-31
0001070680
cfbk:FixedToFloatingRateSubordinatedNotesMember
us-gaap:SubordinatedDebtMember
us-gaap:PrivatePlacementMember
2024-03-31
0001070680
cfbk:FixedToFloatingRateSubordinatedNotesMember
us-gaap:SubordinatedDebtMember
us-gaap:PrivatePlacementMember
2021-12-31
0001070680
us-gaap:NonperformingFinancingReceivableMember
us-gaap:ConsumerPortfolioSegmentMember
us-gaap:HomeEquityMember
2024-03-31
0001070680
us-gaap:NonperformingFinancingReceivableMember
us-gaap:ConsumerPortfolioSegmentMember
us-gaap:HomeEquityMember
2023-12-31
0001070680
us-gaap:NonperformingFinancingReceivableMember
us-gaap:ConsumerPortfolioSegmentMember
cfbk:OtherFinancingReceivableMember
2023-12-31
0001070680
us-gaap:PerformingFinancingReceivableMember
us-gaap:ConsumerPortfolioSegmentMember
us-gaap:HomeEquityMember
2024-03-31
0001070680
us-gaap:NonperformingFinancingReceivableMember
us-gaap:ConsumerPortfolioSegmentMember
cfbk:OtherFinancingReceivableMember
2024-03-31
0001070680
us-gaap:PerformingFinancingReceivableMember
us-gaap:ConsumerPortfolioSegmentMember
us-gaap:HomeEquityMember
2023-12-31
0001070680
us-gaap:ConsumerPortfolioSegmentMember
cfbk:OtherFinancingReceivableMember
cfbk:FinancialAssetNotGreaterThan90DaysPastDueMember
2024-03-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
cfbk:ResidentialSingleFamilyMember
cfbk:FinancialAssetNotGreaterThan90DaysPastDueMember
2024-03-31
0001070680
us-gaap:CommercialPortfolioSegmentMember
cfbk:FinancialAssetNotGreaterThan90DaysPastDueMember
2024-03-31
0001070680
cfbk:FinancialAssetNotGreaterThan90DaysPastDueMember
2024-03-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
cfbk:ResidentialSingleFamilyMember
cfbk:FinancialAssetNotGreaterThan90DaysPastDueMember
2023-12-31
0001070680
us-gaap:CommercialPortfolioSegmentMember
cfbk:FinancialAssetNotGreaterThan90DaysPastDueMember
2023-12-31
0001070680
cfbk:FinancialAssetNotGreaterThan90DaysPastDueMember
2023-12-31
0001070680
us-gaap:CommercialPortfolioSegmentMember
us-gaap:DoubtfulMember
2024-03-31
0001070680
us-gaap:CommercialPortfolioSegmentMember
us-gaap:SubstandardMember
2024-03-31
0001070680
us-gaap:CommercialPortfolioSegmentMember
us-gaap:SubstandardMember
2023-12-31
0001070680
us-gaap:CommercialPortfolioSegmentMember
us-gaap:DoubtfulMember
2023-12-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
us-gaap:ConstructionLoansMember
us-gaap:PassMember
2023-12-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
us-gaap:ConstructionLoansMember
us-gaap:PassMember
2024-03-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
cfbk:OwnerOccupiedMember
us-gaap:SpecialMentionMember
2023-12-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
cfbk:NonOwnerOccupiedMember
us-gaap:SpecialMentionMember
2023-12-31
0001070680
us-gaap:CommercialPortfolioSegmentMember
us-gaap:SpecialMentionMember
2023-12-31
0001070680
us-gaap:PerformingFinancingReceivableMember
us-gaap:ConsumerPortfolioSegmentMember
cfbk:OtherFinancingReceivableMember
2024-03-31
0001070680
us-gaap:PerformingFinancingReceivableMember
cfbk:RealEstatePortfolioSegmentMember
cfbk:ResidentialSingleFamilyMember
2024-03-31
0001070680
us-gaap:NonperformingFinancingReceivableMember
cfbk:RealEstatePortfolioSegmentMember
cfbk:ResidentialSingleFamilyMember
2024-03-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
cfbk:ResidentialMultiFamilyMember
us-gaap:PassMember
2024-03-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
cfbk:OwnerOccupiedMember
us-gaap:SpecialMentionMember
2024-03-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
cfbk:OwnerOccupiedMember
us-gaap:PassMember
2024-03-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
cfbk:NonOwnerOccupiedMember
us-gaap:SpecialMentionMember
2024-03-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
cfbk:NonOwnerOccupiedMember
us-gaap:PassMember
2024-03-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
cfbk:LandLoansMember
us-gaap:PassMember
2024-03-31
0001070680
us-gaap:CommercialPortfolioSegmentMember
us-gaap:SpecialMentionMember
2024-03-31
0001070680
us-gaap:CommercialPortfolioSegmentMember
us-gaap:PassMember
2024-03-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
cfbk:OwnerOccupiedMember
2024-03-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
cfbk:NonOwnerOccupiedMember
2024-03-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
cfbk:LandLoansMember
2024-03-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
2024-03-31
0001070680
us-gaap:PerformingFinancingReceivableMember
us-gaap:ConsumerPortfolioSegmentMember
cfbk:OtherFinancingReceivableMember
2023-12-31
0001070680
us-gaap:PerformingFinancingReceivableMember
cfbk:RealEstatePortfolioSegmentMember
cfbk:ResidentialSingleFamilyMember
2023-12-31
0001070680
us-gaap:NonperformingFinancingReceivableMember
cfbk:RealEstatePortfolioSegmentMember
cfbk:ResidentialSingleFamilyMember
2023-12-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
cfbk:ResidentialMultiFamilyMember
us-gaap:PassMember
2023-12-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
cfbk:OwnerOccupiedMember
us-gaap:PassMember
2023-12-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
cfbk:NonOwnerOccupiedMember
us-gaap:PassMember
2023-12-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
cfbk:LandLoansMember
us-gaap:PassMember
2023-12-31
0001070680
us-gaap:CommercialPortfolioSegmentMember
us-gaap:PassMember
2023-12-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
cfbk:OwnerOccupiedMember
2023-12-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
cfbk:NonOwnerOccupiedMember
2023-12-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
cfbk:LandLoansMember
2023-12-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
2023-12-31
0001070680
us-gaap:CollateralPledgedMember
2024-01-01
2024-03-31
0001070680
us-gaap:ConsumerPortfolioSegmentMember
cfbk:OtherFinancingReceivableMember
2023-01-01
2023-03-31
0001070680
us-gaap:CollateralPledgedMember
2023-01-01
2023-03-31
0001070680
us-gaap:ConsumerPortfolioSegmentMember
us-gaap:HomeEquityMember
2024-01-01
2024-03-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
cfbk:ResidentialSingleFamilyMember
2024-01-01
2024-03-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
cfbk:ResidentialSingleFamilyMember
2023-01-01
2023-03-31
0001070680
us-gaap:ConsumerPortfolioSegmentMember
us-gaap:HomeEquityMember
2024-03-31
0001070680
us-gaap:ConsumerPortfolioSegmentMember
cfbk:OtherFinancingReceivableMember
2024-03-31
0001070680
us-gaap:CollateralPledgedMember
us-gaap:CommercialPortfolioSegmentMember
2024-03-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
us-gaap:ConstructionLoansMember
2024-03-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
cfbk:ResidentialSingleFamilyMember
2024-03-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
cfbk:ResidentialMultiFamilyMember
2024-03-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
cfbk:CommercialLoansMember
2024-03-31
0001070680
us-gaap:CommercialPortfolioSegmentMember
2024-03-31
0001070680
us-gaap:CollateralPledgedMember
2024-03-31
0001070680
us-gaap:ConsumerPortfolioSegmentMember
us-gaap:HomeEquityMember
2023-12-31
0001070680
us-gaap:ConsumerPortfolioSegmentMember
cfbk:OtherFinancingReceivableMember
2023-12-31
0001070680
us-gaap:CollateralPledgedMember
us-gaap:CommercialPortfolioSegmentMember
2023-12-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
us-gaap:ConstructionLoansMember
2023-12-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
cfbk:ResidentialSingleFamilyMember
2023-12-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
cfbk:ResidentialMultiFamilyMember
2023-12-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
cfbk:CommercialLoansMember
2023-12-31
0001070680
us-gaap:CommercialPortfolioSegmentMember
2023-12-31
0001070680
us-gaap:CollateralPledgedMember
2023-12-31
0001070680
us-gaap:ConsumerPortfolioSegmentMember
us-gaap:HomeEquityMember
2023-03-31
0001070680
us-gaap:ConsumerPortfolioSegmentMember
cfbk:OtherFinancingReceivableMember
2023-03-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
us-gaap:ConstructionLoansMember
2023-03-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
cfbk:ResidentialSingleFamilyMember
2023-03-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
cfbk:ResidentialMultiFamilyMember
2023-03-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
cfbk:CommercialLoansMember
2023-03-31
0001070680
us-gaap:CommercialPortfolioSegmentMember
2023-03-31
0001070680
srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember
us-gaap:ConsumerPortfolioSegmentMember
us-gaap:HomeEquityMember
2022-12-31
0001070680
srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember
us-gaap:ConsumerPortfolioSegmentMember
cfbk:OtherFinancingReceivableMember
2022-12-31
0001070680
srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember
cfbk:RealEstatePortfolioSegmentMember
us-gaap:ConstructionLoansMember
2022-12-31
0001070680
srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember
cfbk:RealEstatePortfolioSegmentMember
cfbk:ResidentialSingleFamilyMember
2022-12-31
0001070680
srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember
cfbk:RealEstatePortfolioSegmentMember
cfbk:ResidentialMultiFamilyMember
2022-12-31
0001070680
srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember
cfbk:RealEstatePortfolioSegmentMember
cfbk:CommercialLoansMember
2022-12-31
0001070680
srt:CumulativeEffectPeriodOfAdoptionAdjustedBalanceMember
us-gaap:ConsumerPortfolioSegmentMember
us-gaap:HomeEquityMember
2022-12-31
0001070680
srt:CumulativeEffectPeriodOfAdoptionAdjustedBalanceMember
us-gaap:ConsumerPortfolioSegmentMember
cfbk:OtherFinancingReceivableMember
2022-12-31
0001070680
srt:CumulativeEffectPeriodOfAdoptionAdjustedBalanceMember
cfbk:RealEstatePortfolioSegmentMember
us-gaap:ConstructionLoansMember
2022-12-31
0001070680
srt:CumulativeEffectPeriodOfAdoptionAdjustedBalanceMember
cfbk:RealEstatePortfolioSegmentMember
cfbk:ResidentialSingleFamilyMember
2022-12-31
0001070680
srt:CumulativeEffectPeriodOfAdoptionAdjustedBalanceMember
cfbk:RealEstatePortfolioSegmentMember
cfbk:ResidentialMultiFamilyMember
2022-12-31
0001070680
srt:CumulativeEffectPeriodOfAdoptionAdjustedBalanceMember
cfbk:RealEstatePortfolioSegmentMember
cfbk:CommercialLoansMember
2022-12-31
0001070680
us-gaap:ConsumerPortfolioSegmentMember
us-gaap:HomeEquityMember
2022-12-31
0001070680
us-gaap:ConsumerPortfolioSegmentMember
cfbk:OtherFinancingReceivableMember
2022-12-31
0001070680
srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember
us-gaap:CommercialPortfolioSegmentMember
2022-12-31
0001070680
srt:CumulativeEffectPeriodOfAdoptionAdjustedBalanceMember
us-gaap:CommercialPortfolioSegmentMember
2022-12-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
us-gaap:ConstructionLoansMember
2022-12-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
cfbk:ResidentialSingleFamilyMember
2022-12-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
cfbk:ResidentialMultiFamilyMember
2022-12-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
cfbk:CommercialLoansMember
2022-12-31
0001070680
us-gaap:CommercialPortfolioSegmentMember
2022-12-31
0001070680
srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember
2022-12-31
0001070680
srt:CumulativeEffectPeriodOfAdoptionAdjustedBalanceMember
2022-12-31
0001070680
us-gaap:LoansReceivableMember
us-gaap:FairValueInputsLevel3Member
us-gaap:FairValueMeasurementsNonrecurringMember
us-gaap:CommercialPortfolioSegmentMember
2023-12-31
0001070680
us-gaap:LoansReceivableMember
us-gaap:FairValueInputsLevel3Member
us-gaap:FairValueMeasurementsNonrecurringMember
2023-12-31
0001070680
us-gaap:RestrictedStockMember
2024-03-31
0001070680
us-gaap:RestrictedStockMember
2023-03-31
0001070680
us-gaap:RetainedEarningsMember
2024-01-01
2024-03-31
0001070680
us-gaap:RetainedEarningsMember
2023-01-01
2023-03-31
0001070680
us-gaap:InterestRateLockCommitmentsMember
2024-03-31
0001070680
us-gaap:InterestRateContractMember
2024-03-31
0001070680
us-gaap:InterestRateLockCommitmentsMember
2023-12-31
0001070680
us-gaap:InterestRateContractMember
2023-12-31
0001070680
us-gaap:RevolvingCreditFacilityMember
cfbk:ThirdPartyBankMember
2024-01-01
2024-03-31
0001070680
cfbk:FixedToFloatingRateSubordinatedNotesMember
us-gaap:SubordinatedDebtMember
us-gaap:PrivatePlacementMember
2018-12-01
2018-12-31
0001070680
us-gaap:RevolvingCreditFacilityMember
cfbk:ThirdPartyBankMember
2021-05-21
0001070680
cfbk:FixedToFloatingRateSubordinatedNotesMember
us-gaap:SubordinatedDebtMember
us-gaap:PrivatePlacementMember
2018-12-31
0001070680
cfbk:SubordinatedDebenturesMaturingOnDecember302033Member
us-gaap:SubordinatedDebtMember
2023-12-31
0001070680
us-gaap:SubordinatedDebtMember
us-gaap:SecuredOvernightFinancingRateSofrOvernightIndexSwapRateMember
2024-01-01
2024-03-31
0001070680
cfbk:SubordinatedDebenturesMaturingOnDecember302033Member
us-gaap:SubordinatedDebtMember
2024-01-01
2024-03-31
0001070680
us-gaap:RevolvingCreditFacilityMember
us-gaap:InterestRateFloorMember
cfbk:ThirdPartyBankMember
us-gaap:PrimeRateMember
2021-05-21
2021-05-21
0001070680
cfbk:FixedToFloatingRateSubordinatedNotesMember
us-gaap:SubordinatedDebtMember
us-gaap:PrivatePlacementMember
us-gaap:SecuredOvernightFinancingRateSofrOvernightIndexSwapRateMember
2018-12-01
2018-12-31
0001070680
us-gaap:SeriesDPreferredStockMember
2024-02-06
0001070680
us-gaap:SeriesDPreferredStockMember
2024-03-31
0001070680
us-gaap:NonvotingCommonStockMember
2024-03-31
0001070680
us-gaap:SeriesDPreferredStockMember
2023-12-31
0001070680
us-gaap:NonvotingCommonStockMember
2023-12-31
0001070680
us-gaap:CommonStockMember
2023-12-31
0001070680
2003-12-31
0001070680
2023-03-31
0001070680
2022-12-31
0001070680
us-gaap:USTreasurySecuritiesMember
us-gaap:FairValueInputsLevel2Member
us-gaap:FairValueMeasurementsRecurringMember
2024-03-31
0001070680
us-gaap:MortgageBackedSecuritiesIssuedByUSGovernmentSponsoredEnterprisesMember
us-gaap:FairValueInputsLevel2Member
us-gaap:FairValueMeasurementsRecurringMember
2024-03-31
0001070680
us-gaap:CorporateDebtSecuritiesMember
us-gaap:FairValueInputsLevel2Member
us-gaap:FairValueMeasurementsRecurringMember
2024-03-31
0001070680
us-gaap:FairValueInputsLevel2Member
us-gaap:FairValueMeasurementsRecurringMember
2024-03-31
0001070680
us-gaap:USTreasurySecuritiesMember
us-gaap:FairValueInputsLevel2Member
us-gaap:FairValueMeasurementsRecurringMember
2023-12-31
0001070680
us-gaap:MortgageBackedSecuritiesIssuedByUSGovernmentSponsoredEnterprisesMember
us-gaap:FairValueInputsLevel2Member
us-gaap:FairValueMeasurementsRecurringMember
2023-12-31
0001070680
us-gaap:CorporateDebtSecuritiesMember
us-gaap:FairValueInputsLevel2Member
us-gaap:FairValueMeasurementsRecurringMember
2023-12-31
0001070680
us-gaap:FairValueInputsLevel2Member
us-gaap:FairValueMeasurementsRecurringMember
2023-12-31
0001070680
us-gaap:MortgageBackedSecuritiesIssuedByUSGovernmentSponsoredEnterprisesMember
2024-03-31
0001070680
srt:MaximumMember
us-gaap:MortgageBackedSecuritiesIssuedByUSGovernmentSponsoredEnterprisesMember
2024-03-31
0001070680
us-gaap:USTreasurySecuritiesMember
2024-03-31
0001070680
us-gaap:CorporateDebtSecuritiesMember
2024-03-31
0001070680
srt:MaximumMember
us-gaap:MortgageBackedSecuritiesIssuedByUSGovernmentSponsoredEnterprisesMember
2023-12-31
0001070680
us-gaap:USTreasurySecuritiesMember
2023-12-31
0001070680
us-gaap:MortgageBackedSecuritiesIssuedByUSGovernmentSponsoredEnterprisesMember
2023-12-31
0001070680
us-gaap:CorporateDebtSecuritiesMember
2023-12-31
0001070680
us-gaap:FairValueInputsLevel1Member
us-gaap:FairValueMeasurementsRecurringMember
2024-03-31
0001070680
us-gaap:FairValueMeasurementsNonrecurringMember
2024-03-31
0001070680
us-gaap:FairValueInputsLevel1Member
us-gaap:FairValueMeasurementsRecurringMember
2023-12-31
0001070680
cfbk:LowIncomeHousingTaxCreditMember
2024-03-31
0001070680
cfbk:HistoricTaxCreditMember
2024-03-31
0001070680
cfbk:LowIncomeHousingTaxCreditMember
2023-12-31
0001070680
cfbk:HistoricTaxCreditMember
2023-12-31
0001070680
cfbk:LowIncomeHousingTaxCreditMember
2024-01-01
2024-03-31
0001070680
cfbk:LowIncomeHousingTaxCreditMember
2023-01-01
2023-03-31
0001070680
us-gaap:FederalHomeLoanBankAdvancesMember
2024-03-31
0001070680
us-gaap:FederalHomeLoanBankAdvancesMember
2023-12-31
0001070680
us-gaap:AdditionalPaidInCapitalMember
2024-01-01
2024-03-31
0001070680
us-gaap:AdditionalPaidInCapitalMember
2023-01-01
2023-03-31
0001070680
us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember
2024-03-31
0001070680
us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember
2023-12-31
0001070680
us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember
2023-03-31
0001070680
us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember
2022-12-31
0001070680
us-gaap:NonvotingCommonStockMember
2024-05-13
0001070680
us-gaap:CommonStockMember
2024-05-13
0001070680
cfbk:HoldingCompanyCreditFacilityMember
2024-03-31
0001070680
us-gaap:TreasuryStockCommonMember
2024-01-01
2024-03-31
0001070680
us-gaap:TreasuryStockCommonMember
2023-01-01
2023-03-31
0001070680
us-gaap:EmployeeStockOptionMember
2024-01-01
2024-03-31
0001070680
us-gaap:USTreasurySecuritiesMember
2024-01-01
2024-03-31
0001070680
us-gaap:MortgageBackedSecuritiesIssuedByUSGovernmentSponsoredEnterprisesMember
2024-01-01
2024-03-31
0001070680
us-gaap:CorporateDebtSecuritiesMember
2024-01-01
2024-03-31
0001070680
us-gaap:USTreasurySecuritiesMember
2023-01-01
2023-12-31
0001070680
us-gaap:MortgageBackedSecuritiesIssuedByUSGovernmentSponsoredEnterprisesMember
2023-01-01
2023-12-31
0001070680
us-gaap:CorporateDebtSecuritiesMember
2023-01-01
2023-12-31
0001070680
cfbk:SubordinatedDebenturesMaturingOnDecember302033Member
us-gaap:SubordinatedDebtMember
2024-03-31
0001070680
srt:MinimumMember
us-gaap:InterestRateLockCommitmentsMember
2024-01-01
2024-03-31
0001070680
srt:MaximumMember
us-gaap:InterestRateLockCommitmentsMember
2024-01-01
2024-03-31
0001070680
us-gaap:CommonStockMember
2024-03-31
0001070680
us-gaap:FairValueMeasurementsNonrecurringMember
us-gaap:CommercialPortfolioSegmentMember
us-gaap:MeasurementInputComparabilityAdjustmentMember
us-gaap:IncomeApproachValuationTechniqueMember
2023-12-31
0001070680
us-gaap:CommercialPortfolioSegmentMember
2024-01-01
2024-03-31
0001070680
us-gaap:CommercialPortfolioSegmentMember
2023-01-01
2023-03-31
0001070680
us-gaap:ConsumerPortfolioSegmentMember
cfbk:OtherFinancingReceivableMember
2023-01-01
2023-12-31
0001070680
cfbk:RealEstatePortfolioSegmentMember
2023-01-01
2023-12-31
0001070680
2023-01-01
2023-12-31
0001070680
us-gaap:InterestRateSwapMember
2024-03-31
0001070680
us-gaap:InterestRateSwapMember
2023-12-31
0001070680
us-gaap:SubordinatedDebtMember
2024-03-31
0001070680
us-gaap:SubordinatedDebtMember
2024-01-01
2024-03-31
0001070680
cfbk:BaselIiiFullyPhasedInMember
2024-03-31
0001070680
cfbk:BaselIiiFullyPhasedInMember
2023-12-31
0001070680
2019-01-01
0001070680
2024-03-31
0001070680
2023-12-31
0001070680
2024-01-01
2024-03-31
0001070680
2023-01-01
2023-03-31
0001070680
us-gaap:FairValueInputsLevel3Member
2024-03-31
0001070680
us-gaap:FairValueInputsLevel2Member
2024-03-31
0001070680
us-gaap:FairValueInputsLevel1Member
2024-03-31
0001070680
us-gaap:EstimateOfFairValueFairValueDisclosureMember
2024-03-31
0001070680
us-gaap:CarryingReportedAmountFairValueDisclosureMember
2024-03-31
0001070680
us-gaap:FairValueInputsLevel3Member
2023-12-31
0001070680
us-gaap:FairValueInputsLevel2Member
2023-12-31
0001070680
us-gaap:FairValueInputsLevel1Member
2023-12-31
0001070680
us-gaap:EstimateOfFairValueFairValueDisclosureMember
2023-12-31
0001070680
us-gaap:CarryingReportedAmountFairValueDisclosureMember
2023-12-31
cfbk:security
iso4217:USD
xbrli:shares
cfbk:loan
xbrli:shares
xbrli:pure
iso4217:USD
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
10-Q
(Mark one)
[
X
] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended
March 31, 2024
Or
[ ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to______________
Commission File Number
0-25045
CF BANKSHARES INC.
(Exact name of registrant as specified in its charter)
Delaware 34-1877137
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
4960 E. Dublin Granville Road, Suite #400
,
Columbus
,
Ohio
43081
(Address of principal executive offices) (Zip Code)
(
614
)
334-7979
(Registrant's telephone number, including area code)
______________
N/A
________________________
(Former name, former address and former fiscal year, if changed since last
report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
(Voting) Common Stock, $.01 par value CFBK The
NASDAQ
Capital Market
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes
[X]
No [ ]
Indicate by check mark whether the registrant has submitted electronically
every Interactive Data File required to be submitted pursuant to Rule 405 of
Regulation S-T ((s)232.405 of this chapter) during the preceding 12 months (or
for such shorter period that the registrant was required to submit such files).
Yes
[X]
No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, a smaller reporting company, or an
emerging growth company. See the definitions of "large accelerated filer,"
"accelerated filer," "smaller reporting company," and "emerging growth
company" in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer [ ] Accelerated Filer [ ]
Non-accelerated Filer
[X] Smaller Reporting Company
[X]
Emerging Growth Company
[ ]
If an emerging growth company, indicate by check mark if the registrant has
elected not to use the extended transition period for complying with any new
or revised financial accounting standards provided pursuant to Section 13(a)
of the Exchange Act. [ ]
Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act).
Yes [ ] No
[X]
As of May 13, 2024, there were
5,125,421
shares of the registrant's (Voting) Common Stock outstanding and
1,260,700
shares of the registrant's Non-Voting Common Stock outstanding.
-------------------------------------------------------------------------------
Table of Contents
CF BANKSHARES INC.
IND
EX
PART I. Financial Information Page
Item 1. Financial Statements 3
Consolidated Balance Sheets as of March 31, 2024 (unaudited) and December 31, 2023 3
Consolidated 4
Statements of Income for the three months ended March 31, 2024 and 2023 (unaudited)
Consolidated Statements of Comprehensive Income for the three months ended March 31, 2024 and 2023 (unaudited) 5
Consolidated Statements of Changes in Stockholders' Equity for the three months ended March 31, 2024 and 2023 (unaudited) 6
Consolidated 7
Statements of Cash Flows for the t
hree
months ended March 31, 2024 and 2023 (unaudited)
Notes to Consolidated Financial Statements (three months ended March 31, 2024 and 2023 9
(
unaudited))
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 36
Item 3. Quantitative and Qualitative Disclosures About Market Risk 46
Item 4. Controls and Procedures 47
PART II. Other Information 48
Item 1. Legal Proceedings 48
Item 1A. Risk Factors 48
Item 2. Unregistered Sales of Equity Securities 48
and
Use of Proceeds
Item 3. Defaults Upon Senior Securities 48
Item 4. Mine Safety Disclosures 48
Item 5. Other Information 48
Item 6. Exhibits 49
Signatures 50
-------------------------------------------------------------------------------
Table of Contents
CF BANKSHARES INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands except per share data)
March 31, December 31,
2024 2023
(unaudited)
ASSETS
Cash and cash equivalents $ 236,892 $ 261,595
Interest-bearing deposits in other financial institutions 100 100
Securities available for sale 7,597 8,092
Equity securities 5,000 5,000
Loans held for sale, at fair value 2,241 1,849
Loans and leases, net of allowance of $ 1,695,731 1,694,133
18,198
and $
16,865
, respectively
FHLB and FRB stock 8,491 8,482
Premises and equipment, net 3,685 3,812
Operating lease right-of-use assets 5,041 5,221
Bank owned life insurance 26,470 26,266
Accrued interest receivable and other assets 48,225 44,065
Total assets $ 2,039,473 $ 2,058,615
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Noninterest bearing $ 236,841 $ 235,916
Interest bearing 1,486,229 1,508,141
Total deposits 1,723,070 1,744,057
FHLB advances and other debt 111,004 109,995
Advances by borrowers for taxes and insurance 1,093 2,179
Operating lease liabilities 5,127 5,302
Accrued interest payable and other liabilities 26,209 26,747
Subordinated debentures 14,971 14,961
Total liabilities 1,881,474 1,903,241
Commitments and contingent liabilities - -
Stockholders' equity
Common stock, $
0.01
par value;
shares authorized:
9,090,909
, including
1,260,700
shares of non-voting common stock
Voting common stock, $ 55 57
0.01
par value; shares issued:
5,473,026
at March 31, 2024 and
5,665,958
at December 31, 2023
Non-voting common stock, $
0.01
par value;
shares issued: 13 13
1,260,700
at March 31, 2024 and December 31, 2023
Series D preferred stock, $
0.01
par value;
5,000
shares authorized;
2,000 - -
shares issued at March 31, 2024 and
0
shares issued at December 31, 2023
Additional paid-in capital 91,303 91,068
Retained earnings 79,201 76,517
Accumulated other comprehensive loss ( (
2,281 2,290
) )
Treasury stock, at cost; ( (
395,611 10,292 9,991
shares of voting common stock at March 31, 2024 and ) )
381,098
shares of voting common stock at December 31, 2023
Total stockholders' equity 157,999 155,374
Total liabilities and stockholders' equity $ 2,039,473 $ 2,058,615
See accompanying notes to unaudited consolidated financial statements.
3
-------------------------------------------------------------------------------
Table of Contents
CF BANKSHARES INC.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands except per share data)
(Unaudited)
Three months ended
March 31,
2024 2023
Interest and dividend income
Loans and leases, including fees $ 26,010 $ 22,338
Securities 129 215
FHLB and FRB stock dividends 165 121
Federal funds sold and other 2,782 1,502
29,086 24,176
Interest expense
Deposits 16,650 10,419
FHLB advances and other debt 785 742
Subordinated debentures 367 282
17,802 11,443
Net interest income 11,284 12,733
Provision for credit losses
Provision for credit losses-loans 1,317 267
Provision for credit losses-unfunded commitments ( (
80 30
) )
1,237 237
Net interest income after provision for credit losses 10,047 12,496
Noninterest income
Service charges on deposit accounts 559 304
Net gains (losses) on sales of residential mortgage loans 90 (
3
)
Net gains on sales of commercial loans 167 -
Swap fee income - 30
Earnings on bank owned life insurance 204 150
Other ( 238
115
)
905 719
Noninterest expense
Salaries and employee benefits 3,508 3,986
Occupancy and equipment 434 381
Data processing 615 549
Franchise and other taxes 286 299
Professional fees 663 606
Director fees 125 170
Postage, printing and supplies 44 55
Advertising and marketing 14 183
Telephone 51 64
Loan expenses 447 172
Depreciation 130 133
FDIC premiums 600 503
Regulatory assessment 65 58
Other insurance 56 47
Other 149 485
7,187 7,691
Income before incomes taxes 3,765 5,524
Income tax expense 695 1,076
Net income $ 3,070 $ 4,448
Earnings allocated to participating securities (Series D preferred stock) ( -
57
)
Net income attributable to common stockholders $ 3,013 $ 4,448
Earnings per common share:
Basic $ 0.48 $ 0.69
Diluted $ 0.47 $ 0.68
See accompanying notes to unaudited consolidated financial statements.
4
-------------------------------------------------------------------------------
Table of Contents
CF BANKSHARES INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in thousands except per share data)
(Unaudited)
Three months ended
March 31,
2024 2023
Net income $ 3,070 $ 4,448
Other comprehensive
income (loss):
Unrealized holding gains (losses) arising during the period 9 (
related to securities available for sale, net of tax of $ 216
2 )
and ($
57
)
Other comprehensive 9 (
income (loss), net of tax 216
)
Comprehensive income $ 3,079 $ 4,232
See accompanying notes to unaudited consolidated financial statements.
5
-------------------------------------------------------------------------------
Table of Contents
CF BANKSHARES INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(Dollars in thousands except per share data)
(Unaudited)
Three months Voting Non-Voting Series D Additional Retained Accumulated Treasury Total
ended Common Common Preferred Paid-In Earnings Other Stock Stockholders'
March 31, Stock Stock Stock Capital Comprehensive Equity
2024 Loss
Balance 57 13 - 91,068 76,517 ( ( 155,374
at 2,290 9,991
January ) )
1, 2024
Net - - - - 3,070 - - 3,070
income
Other - - - - - 9 - 9
comprehensive
income
Issuance - - - - - - - -
of
7,068
stock based
incentive plan
shares, net of
forfeitures
Restricted - - - 233 - - - 233
stock expense,
net of
forfeitures
Acquisition - - - - - - ( (
of 122 122
5,663 ) )
treasury shares
surrendered upon vesting
of restricted stock
for payment of taxes
Purchase - - - - - - ( (
of 179 179
8,850 ) )
treasury
shares
Conversion ( - - 2 - - - -
of 2
200,000 )
shares of
voting
common
stock to
2,000
shares of
Series D
Preferred
Stock
Cash dividends - - - - ( - - (
declared 386 386
on common ) )
stock ($
0.06
per
share)
Balance $ 55 $ 13 $ - $ 91,303 $ 79,201 $ ( $ ( $ 157,999
at 2,281 10,292
March 31, ) )
2024
Three months Voting Non-Voting Additional Retained Accumulated Treasury Total
ended Common Common Paid-In Earnings Other Stock Stockholders'
March 31, Stock Stock Capital Comprehensive Equity
2023 Loss
Balance $ 56 $ 13 $ 89,813 $ 61,095 $ ( $ ( $ 139,248
at 2,037 9,692
December ) )
31, 2022
Cumulative - - - ( - - (
effect 39 39
of ASC 326 ) )
adoption
Balance 56 13 89,813 61,056 ( ( 139,209
at 2,037 9,692
January ) )
1, 2023
Net - - - 4,448 - - 4,448
income
Other - - - - ( - (
comprehensive 216 216
loss ) )
Issuance 1 - ( - - - -
of 1
58,784 )
stock based
incentive plan
shares, net of
forfeitures
Restricted - - 283 - - - 283
stock expense,
net of
forfeitures
Acquisition - - - - - ( (
of 71 71
3,447 ) )
treasury shares
surrendered upon vesting
of restricted stock
for payment of taxes
Cash dividends - - - ( - - (
declared 320 320
on common ) )
stock ($
0.05
per
share)
Balance $ 57 $ 13 $ 90,095 $ 65,184 $ ( $ ( $ 143,333
at 2,253 9,763
March 31, ) )
2023
See accompanying notes to unaudited consolidated financial statements.
6
-------------------------------------------------------------------------------
Table of Contents
CF BANKSHARES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands, except per share data)
(Unaudited)
Three months ended March 31,
2024 2023
Net Income $ 3,070 $ 4,448
Adjustments to reconcile net income to
net cash from operating activities:
Provision for 1,237 237
credit losses
Depreciation 130 133
Accretion, net ( (
272 205
) )
Deferred income tax ( 141
(benefit) expense 277
)
Originations of ( (
loans held for sale 9,037 1,991
) )
Proceeds from sale of 8,734 1,977
loans held for sale
Net (gains) losses on sales ( 3
of residential mortgage loans 90
)
Net gains on sales ( -
of commercial loans 167
)
Loss on disposal of - 28
premises and equipment
Earnings on bank ( (
owned life insurance 204 150
) )
Stock-based 233 283
compensation expense
Net change in:
Accrued interest receivable 1,015 1,024
and other assets
Operating lease 180 124
right-of-use asset
Operating lease ( (
liability 175 133
) )
Accrued interest payable ( (
and other liabilities 5,538 140
) )
Net cash (used by) from ( 5,779
operating activities 1,161
)
Cash flows used by
investing activities:
Available-for-sale
securities:
Maturities, 503 504
prepayments and calls
Loan and lease originations ( (
and payments, net 6,384 43,837
) )
Proceeds from the sale 4,011 -
of commercial loans
Additions to premises ( (
and equipment 3 501
) )
Purchase of FRB ( (
and FHLB stock 9 1,261
) )
Other adjustments 100 130
Net cash used by ( (
investing activities 1,782 44,965
) )
Cash flows from
financing activities:
Net change in deposits ( 75,919
20,987
)
Proceeds from FHLB 1,000 37,015
advances and other debt
Repayments on FHLB - (
advances and other debt 9,515
)
Net change in advances by ( (
borrowers for taxes and insurance 1,086 1,381
) )
Cash dividends paid ( (
on common stock 386 320
) )
Acquisition of treasury shares surrendered upon vesting of restricted stock ( (
for payment of taxes and exercise of stock options for exercise proceeds 122 71
) )
Purchase of ( -
treasury shares 179
)
Net cash (used by) from ( 101,647
financing activities 21,760
)
Net change in cash ( 62,461
and cash equivalents 24,703
)
Beginning cash and 261,595 151,787
cash equivalents
Ending cash and $ 236,892 $ 214,248
cash equivalents
See accompanying notes to unaudited consolidated financial statements.
7
-------------------------------------------------------------------------------
Table of Contents
CF BANKSHARES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands, except per share data)
(Unaudited)
Three months ended March 31,
2024 2023
Supplemental cash flow information:
Interest paid $ 17,150 $ 10,621
Supplemental noncash disclosures:
Investment payable on limited partnerships $ 5,000 -
Initial recognition of operating lease asset - $ 4,267
Right-of-use asset obtained in exchange for new operating lease liability - $ 4,267
See accompanying notes to unaudited consolidated financial statements.
8
-------------------------------------------------------------------------------
Table of Contents
CF BANKSHARES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(Dollars in thousands, except per share data)
NO
TE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
:
The consolidated financial statements consist of CF Bankshares Inc. (the
"Holding Company") and its wholly-owned subsidiary, CFBank, National
Association ("CFBank"). The Holding Company and CFBank are sometimes
collectively referred to herein as the "Company." Intercompany transactions
and balances are eliminated in consolidation. The accompanying unaudited
interim consolidated financial statements have been prepared pursuant to the
rules and regulations of the Securities and Exchange Commission (the "SEC")
and in compliance with U.S. generally accepted accounting principles ("GAAP").
Because this report is based on an interim period, certain information and
footnote disclosures normally included in financial statements prepared in
accordance with GAAP have been condensed or omitted.
In the opinion of the management of the Company, the accompanying unaudited
interim consolidated financial statements include all adjustments necessary
for a fair presentation of the Company's financial condition and the results
of operations for the periods presented. These adjustments are of a normal
recurring nature, unless otherwise disclosed in this Form 10-Q. The financial
performance reported for the Company for the three months ended March 31, 2024
is not necessarily indicative of the results that may be expected for the full
year. This information should be read in conjunction with the Company's latest
Annual Report to Stockholders and Annual Report on Form 10-K on file with the
SEC. Reference is made to the accounting policies of the Company described in
Note 1 to the Audited Consolidated Financial Statements contained in the
Company's 2023 Annual Report to Stockholders included in the Company's Annual
Report on Form 10-K for the year ended December 31, 2023 (referred to herein
as the "2023 Audited Financial Statements"). The Company has consistently
followed those policies in preparing this Form 10-Q.
Loans and Leases:
Loans and leases that management has the intent and ability to hold for the
foreseeable future or until maturity or payoff are reported at the principal
balance outstanding, adjusted for purchase premiums and discounts, deferred
loan fees and costs and an allowance for credit losses on loans and leases.
Interest income is accrued on the unpaid principal balance. Loan origination
fees, net of certain direct origination costs, are deferred and recognized in
interest income using the level yield method without anticipating prepayments.
The accrual of interest income on all classes of loans, except other consumer
loans, is discontinued and the loan is placed on nonaccrual status at the time
the loan is 90 days delinquent unless the loan is well-secured and in process
of collection. Other consumer loans are typically charged off no later than 90
days past due. Past due status is based on the contractual terms of the loan
for all classes of loans. In all cases, loans are placed on nonaccrual or
charged-off at an earlier date if collection of principal or interest is
considered doubtful. Nonaccrual loans and loans past due 90 days still on
accrual include both smaller balance homogeneous loans that are collectively
evaluated for impairment and individually classified impaired loans.
Commercial, multi-family residential real estate loans and commercial real
estate loans placed on nonaccrual status are individually classified as
impaired loans.
All interest accrued but not received for each loan placed on nonaccrual
status is reversed against interest income in the period in which it is placed
on nonaccrual status. Interest received on such loans is accounted for on the
cash-basis or cost recovery method, until qualifying for return to accrual
status. Loans are considered for return to accrual status provided all the
principal and interest amounts that are contractually due are brought current,
there is a current and well documented credit analysis, there is reasonable
assurance of repayment of principal and interest, and the customer has
demonstrated sustained, amortizing payment performance of at least six months.
9
-------------------------------------------------------------------------------
Table of Contents
CF BANKSHARES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(Dollars in thousands, except per share data)
Allowance for credit losses on investment securities available for sale:
For investment securities available for sale in an unrealized loss position,
the Company first assesses whether it intends to sell, or it is more likely
than not that it will be required to sell, the security before recovery of its
amortized cost basis. If either of the criteria regarding intent or
requirement to sell is met, the security's amortized cost basis is written
down to fair value through income. For investment securities available for
sale that do not meet the aforementioned criteria, the Company evaluates
whether the decline in fair value has resulted from credit losses or other
factors. In making this assessment, the Company considers the extent to which
fair value is less than amortized cost, any changes to the rating of the
security by a rating agency, and adverse conditions specifically related to
the security, among other factors. If this assessment indicates that a credit
loss exists, the present value of cash flows expected to be collected from the
security are compared to the amortized cost basis of the security. If the
present value of cash flows expected to be collected is less than the
amortized cost basis, a credit loss exists and an allowance for credit losses
is recorded, limited to the amount that the fair value is less than the
amortized cost basis. Unrealized losses that have not been recorded through an
allowance for credit losses are recognized in other comprehensive income.
Adjustments to the allowance for credit losses are reported in the income
statement as a component of the provision for credit loss. The Company has
made the accounting policy election to exclude accrued interest receivable on
investment securities available for sale from the estimate of credit losses.
Investment securities available for sale are charged off against the allowance
or, in the absence of any allowance, written down through the income statement
when deemed uncollectible or when either of the aforementioned criteria
regarding intent or requirement to sell is met. The Company did not record an
allowance for credit losses on its investment securities available for sale as
the unrealized losses were attributable to changes in interest rates, not
credit quality
Allowance for Credit Losses - Loans and Leases ("ACL - Loans"):
The ACL - Loans is a valuation account that is deducted from the loans'
amortized cost basis to present the net amount expected to be collected on
loans over the contractual term. Loans and leases are collectively referred to
as loans for the purpose of discussing the allowance for credit losses. Loans
are charged off against the allowance when the uncollectibility of the loan is
confirmed. Expected recoveries do not exceed the aggregate of amounts
previously charged off and expected to be charged off. Adjustments to the ACL-
Loans are reported in the income statement as a component of provision for
credit loss. The Company has made the accounting policy election to exclude
accrued interest receivable on loans from the estimate of credit losses.
Further information regarding the policies and methodology used to estimate
the ACL - Loans is detailed in Note 4 -
Loans and Leases
to the Consolidated Financial Statements.
Allowance for Credit Losses - Off-Balance Sheet Credit Exposures:
The allowance for credit losses on off-balance sheet credit exposures is a
liability account representing expected credit losses over the contractual
period for which the Company is exposed to credit risk resulting from a
contractual obligation to extend credit. No allowance is recognized if the
Company has the unconditional right to cancel the obligation. Off-balance
sheet credit exposures primarily consist of amounts available under
outstanding lines of credit and letters of credit. For the period of exposure,
the estimate of expected credit losses considers both the likelihood that
funding will occur and the amount expected to be funded over the estimated
remaining life of the commitment or other off-balance sheet exposure. The
likelihood and expected amount of funding are based on historical utilization
rates. The amount of the allowance represents management's best estimate of
expected credit losses on commitments expected to be funded over the
contractual life of the commitment. The allowance for off-balance sheet credit
exposures is adjusted through the income statement as a component of provision
for credit loss.
Joint Ventures:
The Holding Company has contributed funds into a series of joint ventures for
the purpose of allocating excess liquidity into higher earning assets while
diversifying its revenue sources. The joint ventures are engaged in shorter
term operating activities related to single family real estate developments.
Income is recognized based on a rate of return on the outstanding investment
balance. As units are sold, the Holding Company receives an additional
incentive payment.
Low Income Housing Tax Credits (LIHTC):
CFBank has invested in low income housing tax credits through funds that
assist corporations in investing in limited partnerships and limited liability
companies that own, develop and operate low income residential rental
properties for purposes of qualifying for the LIHTC. These investments are
accounted for under the proportional amortization method which recognizes the
amortization of the investment in proportion to the tax credit and other tax
benefits received.
Investment in Real Estate Entity:
CFBank made an equity investment as a non-managing member in the real estate
entity that owns and operates the building that houses the Company's
headquarters. Upon applying Accounting Standards Codification ("ASC") 810, the
Company determined that CFBank is not the primary beneficiary of the real
estate entity, a variable interest entity. Therefore, the real estate entity
is not consolidated in the Company's financial statements and is instead
accounted for using the equity method of accounting. As a result, the
investment of $
1.2
million is shown in Accrued interest receivable and other assets on the
Consolidated Balance Sheets. The maximum exposure to loss related to this
investment was $
1.2
million at March 31, 2024.
10
-------------------------------------------------------------------------------
Table of Contents
CF BANKSHARES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(Dollars in thousands, except per share data)
Earnings Per Common Share:
The two-class method is used in the calculation of basic and diluted earnings
per share. Under the two-class method, earnings available to common
stockholders for the period are allocated between common stockholders and
participating securities (Series D Preferred Stock) according to dividends
declared (or accumulated) and participation rights in undistributed earnings.
There were no anti-dilutive securities during the three months ended March 31,
2024 and 2023. The factors used in the earnings per share computation follow:
Three months ended
March 31,
2024 2023
(unaudited)
Basic
Net income $ 3,070 $ 4,448
Earnings allocated to participating securities ( -
57
)
Net income allocated to common shareholders $ 3,013 $ 4,448
Weighted average common shares outstanding including unvested share-based payment awards 6,418,671 6,535,946
Less: Unvested share-based payment awards-2019 Plan ( (
88,773 133,090
) )
Average shares 6,329,898 6,402,856
Basic earnings per common share $ 0.48 $ 0.69
Diluted
Net income allocated to common shareholders $ 3,013 $ 4,448
Add: Earnings allocated to participating securities 57 -
Net income $ 3,070 $ 4,448
Weighted average common shares outstanding for basic earnings per common share 6,329,898 6,402,856
Add: Dilutive effects of assumed exercises of stock options - 6,752
Add: Dilutive effects of assumed preferred stock conversion 120,879 -
Add: Dilutive effects of unvested share-based payment awards-2019 Plan 27,400 133,090
Average shares and dilutive potential common shares 6,478,177 6,542,698
Diluted earnings per common share $ 0.47 $ 0.68
Dividend Restrictions:
Banking regulations require us to maintain certain capital levels and may
limit the dividends paid by CFBank to the Holding Company or by the Holding
Company to stockholders. The ability of the Holding Company to pay dividends
on its common stock is dependent upon the amount of cash and liquidity
available at the Holding Company level, as well as the receipt of dividends
and other distributions from CFBank to the extent necessary to fund such
dividends. The Holding Company is a legal entity that is separate and distinct
from CFBank, which has no obligation to make any dividends or other funds
available for the payment of dividends by the Holding Company. The Holding
Company also is subject to various legal and regulatory policies and
guidelines impacting the Holding Company's ability to pay dividends on its
stock. In addition, the Holding Company's ability to pay dividends on its
stock is conditioned upon the payment, on a current basis, of quarterly
interest payments on the subordinated debentures underlying the Company's
trust preferred securities. Finally, under the terms of the Holding Company's
fixed-to-floating rate subordinated notes, the Holding Company's ability to
pay dividends on its stock is conditioned upon the Holding Company continuing
to make required principal and interest payments, and not incurring an event
of default, with respect to the subordinated notes.
Recent and Future Accounting Pronouncements and Developments:
In March 2022, the FASB issued ASU 2022-02 "Financial Instruments - Credit
Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures."
This ASU eliminated the accounting guidance on troubled debt restructurings
("TDRs") for creditors in ASC 310-40 and required entities to evaluate all
receivable modifications under ASC 310-20 to determine whether a modification
made to a borrower results in a new loan or a continuation of the existing
loan. The amended guidance added enhanced disclosures for creditors with
respect to loan refinancings and restructurings for borrowers experiencing
financial difficulty. The amended guidance also required disclosure of current
period gross charge-offs by year of origination within the vintage disclosures
required by ASC 326. The Company adopted ASU 2022-02 on January 1, 2023. The
adoption of ASU 2022-02 did not have a material impact to our Consolidated
Financial Statements.
11
-------------------------------------------------------------------------------
Table of Contents
CF BANKSHARES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(Dollars in thousands, except per share data)
In March 2020, the FASB issued ASU No. 2020-04, "Reference Rate Reform (Topic
848): Facilitation of the Effects of Reference Rate Reform on Financial
Reporting". The amendments in this update provide optional guidance for a
limited period of time to ease the potential burden in accounting for (or
recognizing the effects of) reference rate reform on financial reporting. They
provide optional expedients and exceptions for applying generally accepted
accounting principles to contracts, hedging relationships, and other
transactions affected by reference rate reform if certain criteria are met. As
subsequently amended, this update is effective December 31, 2024. The adoption
of ASU No. 2020-04 did not have a material impact on our Consolidated
Financial Statements.
In March 2023, the FASB issued ASU No. 2023-02, "Investments - Equity Method
and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit
Structures Using Proportional Amortization Method". The ASU is intended to
improve the accounting and disclosures for investments in tax credit
structures. It allows reporting entities to elect to adopt for qualifying tax
equity investments using the proportional amortization method, regardless of
the program giving rise to the related income tax credits. For public business
entities, the amendments were effective for fiscal years beginning after
December 15, 2023, including interim periods within those fiscal years. The
adoption of ASU No. 2023-02 did not have a material impact on our Consolidated
Financial Statements.
Future Accounting Matters:
In August 2023, FASB issued ASU 2023-05, "Business Combinations - Joint
Venture Formations (Subtopic 805-60): Recognition and Initial Measurement".
The amendments in this ASU require that a joint venture, upon formation, apply
a new basis of accounting and initially measure assets and liabilities at fair
value, with exceptions to fair value measurement that are consistent with the
business combinations guidance. This ASU will be effective prospectively for
all joint venture formations with a formation date on or after January 1,
2025. Early adoption is permitted. The Company is currently evaluating the
impact of the ASU on the Company's Consolidated Financial Statements.
In November 2023, the FASB issued ASU 2023-07, "Segment Reporting (Topic 280):
Improvements to Reportable Segment Disclosures." The amendments in this ASU
apply to all public entities that are required to report segment information
in accordance with FASB ASC Topic 280, Segment Reporting. The amendments in
the ASU are intended to improve reportable segment disclosure requirements
primarily through enhanced disclosures about significant segment expenses. The
amendments require that a public entity disclose, on an annual and interim
basis, significant segment expenses that are regularly provided to the chief
operating decision maker ("CODM") and included within each reported measure of
segment profit or loss. Public entities are required to disclose, on an annual
and interim basis, an amount for other segment items by reportable segment and
a description of its composition. In addition, public entities must provide
all annual disclosures about a reportable segment's profit or loss and assets
currently required by FASB ASC Topic 280, Segment Reporting, in interim
periods. The amendments clarify that if the CODM uses more than one measure of
a segment's profit or loss in assessing segment performance and deciding how
to allocate resources, a public entity may report one or more of those
additional measures of segment profit. However, at least one of the reported
segment profit or loss measures (or the single reported measure, if only one
is disclosed) should be the measure that is most consistent with the
measurement principles used in measuring the corresponding amounts in the
public entity's consolidated financial statements. The amendments require that
a public entity disclose the title and position of the CODM and an explanation
of how the CODM uses the reported measure(s) of segment profit or loss in
assessing segment performance and deciding how to allocate resources. Finally,
the amendments require that a public entity that has a single reportable
segment provide all the disclosures required by the amendments in the ASU and
all existing segment disclosures in ASC Topic 280. The ASU is effective for
fiscal years beginning after December 15, 2023, and interim periods within
fiscal years beginning after December 15, 2024. Early adoption is permitted. A
public entity should apply the amendments retrospectively to all prior periods
presented in the financial statements. Upon transition, the segment expense
categories and amounts disclosed in the prior periods should be based on the
significant segment expense categories identified and disclosed in the period
of adoption. The adoption of this ASU is not expected to have a material
impact on the Company's Consolidated Financial Statements and disclosures as
the Company has one operating segment.
In December 2023, FASB issued ASU No. 2023-09, "Income Taxes (Topic 740):
Improvements to Income Tax Disclosures". The FASB issued ASU 2023-09 to
address investor requests for more transparency about income tax information
through improvements to income tax disclosures primarily related to the rate
reconciliation and income taxes paid information. ASU 2023-09 is to be applied
on a prospective basis and is effective for annual periods beginning after
December 15, 2024 with early adoption permitted. ASU 2023-09 will impact
income tax disclosures, and the Company does not expect a material impact to
the Company's Consolidated Financial Statements.
General Litigation
The
Company is subject to claims and lawsuits that arise primarily in the ordinary
course of business. In the opinion of management, the disposition or ultimate
resolution of such claims and lawsuits is not anticipated to have a material
adverse effect on the consolidated financial position, results of operations
and cash flows of the Company.
12
-------------------------------------------------------------------------------
Table of Contents
CF BANKSHARES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(Dollars in thousands, except per share data)
NOTE 2 - REVENUE RECOGNITION
GAAP requires reporting information about the nature, amount, timing and
uncertainty of revenue and cash flows arising from the entity's contracts to
provide goods or services to customers. The core principle requires an entity
to recognize revenue to depict the transfer of goods or services to customers
in an amount that reflects the consideration that it expects to be entitled to
receive in exchange for those goods or services recognized as performance
obligations are satisfied.
The majority of our revenue-generating transactions are not from contracts
with customers, including revenue generated from financial instruments, such
as our loans, letters of credit, derivatives and investment securities, as
well as revenue generated from our mortgage activities related to net gains on
sale of loans.
All of the Company's revenue from contracts with customers is recognized
within Noninterest income. Descriptions of revenue-generating activities which
are presented in our Consolidated Statements of Income as components of
Noninterest income are as follows:
Service charges on deposit accounts - these represent general service fees for
monthly account maintenance and activity, or transaction-based fees, and
consist of transaction-based revenue, time-based revenue (service period),
item-based revenue or some other individual attribute-based revenue. Revenue
is recognized when our performance obligation is completed which is generally
monthly for account maintenance services or when a transaction has been
completed (such as a wire transfer). Payments for such performance obligations
are generally received at the time the performance obligations are satisfied.
NOTE 3 - SECURITIES
The following tables summarize the amortized cost and fair value of the
Company's available-for-sale securities portfolio at March 31, 2024 and
December 31, 2023 and the corresponding amounts of unrealized gains and losses
recognized in accumulated other comprehensive loss:
Amortized Cost Gross Unrealized Gross Unrealized Fair Value
Gains Losses
March 31, 2024
(unaudited)
Corporate $ 9,981 $ - $ 2,881 $ 7,100
debt
Issued by U.S. government-sponsored
entities and agencies:
U.S. 501 - 6 495
Treasury
Mortgage-backed 2 - - 2
securities - residential
(1)
Total $ 10,484 $ - $ 2,887 $ 7,597
(1)
Unrealized loss is less than $
1
resulting in rounding to zero.
Amortized Cost Gross Unrealized Gross Unrealized Fair Value
Gains Losses
December
31, 2023
Corporate $ 9,980 $ - $ 2,880 $ 7,100
debt
Issued by U.S. government-sponsored
entities and agencies:
U.S. 1,007 - 19 988
Treasury
Mortgage-backed 4 - - 4
securities - residential
(1)
Total $ 10,991 $ - $ 2,899 $ 8,092
(1)
Unrealized loss is less than $
1
resulting in rounding to zero.
There was
no
impairment recognized in accumulated other comprehensive loss for securities
available for sale at March 31, 2024 or March 31, 2023.
There were
no
sales of securities during the three months ended March 31, 2024 and 2023.
13
-------------------------------------------------------------------------------
Table of Contents
CF BANKSHARES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(Dollars in thousands, except per share data)
The amortized cost and fair value of debt securities at March 31, 2024 and
December 31, 2023 are shown in the table below by contractual maturity.
Expected maturities may differ from contractual maturities if borrowers have
the right to call or prepay obligations with or without call or prepayment
penalties. Securities not due at a single maturity date are shown separately.
March 31, 2024 December 31, 2023
(unaudited)
Amortized Cost Fair Value Amortized Cost Fair Value
Due in one year or less $ 501 $ 495 $ 1,007 $ 988
Due from one to five years - - - -
Due from five to ten years 9,981 7,100 9,980 7,100
Mortgage-backed securities - residential 2 2 4 4
Total $ 10,484 $ 7,597 $ 10,991 $ 8,092
Fair value of securities pledged as collateral was as follows:
March 31, 2024 December 31, 2023
(unaudited)
Pledged as collateral for:
FHLB advances $ - $ 497
Public deposits 496 492
Total $ 496 $ 989
At March 31, 2024 and December 31, 2023, there were
no
holdings of securities of any one issuer in an amount greater than
10
% of stockholders' equity.
The following table summarizes securities with unrealized losses at March 31,
2024 and December 31, 2023, aggregated by major security type and length of
time in a continuous unrealized loss position.
March 31, 2024 Less than 12 Months or More Total
(unaudited) 12 Months
Description Fair Value Unrealized Fair Value Unrealized Fair Value Unrealized
of Securities Loss Loss Loss
Corporate $ - $ - $ 7,100 $ 2,881 $ 7,100 $ 2,881
debt
Issued by U.S. government-sponsored
entities and agencies:
U.S. - - 496 6 496 6
Treasury
Mortgage-backed - - 1 - 1 -
securities - residential
(1)
Total temporarily $ - $ - $ 7,597 $ 2,887 $ 7,597 $ 2,887
impaired
(1)
Unrealized loss is less than $
1
resulting in rounding to zero.
14
-------------------------------------------------------------------------------
Table of Contents
CF BANKSHARES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(Dollars in thousands, except per share data)
December 31, 2023 Less than 12 Months or More Total
12 Months
Description Fair Value Unrealized Fair Value Unrealized Fair Value Unrealized
of Securities Loss Loss Loss
Corporate $ - $ - $ 7,100 $ 2,880 $ 7,100 $ 2,880
debt
Issued by U.S. government-sponsored
entities and agencies:
U.S. - - $ 988 19 988 19
Treasury
Mortgage-backed 1 - 3 - 4 -
securities - residential
(1)
Total temporarily $ 1 $ - $ 8,091 $ 2,899 $ 8,092 $ 2,899
impaired
(1)
Unrealized loss is less than $
1
resulting in rounding to zero.
The unrealized losses at March 31, 2024 were related to
one
corporate debt security,
one
Mortgage-backed security and
one
U.S. Treasury. The unrealized losses at December 31, 2023 were related to
one
Corporate debt security,
one
Mortgage-backed security and
two
U.S. Treasuries.
Because the decline in fair value was attributable to changes in market
conditions, and not credit quality, and because the Company did not have the
intent to sell these securities and it was likely that it would not be
required to sell these securities before their anticipated recovery, the
Company has not recorded an allowance for credit losses at March 31, 2024 and
December 31, 2023.
NOTE 4 - LOANS AND LEASES
The following table presents the recorded investment in loans and leases by
portfolio segment. The recorded investment in loans and leases includes the
principal balance outstanding adjusted for purchase premiums and discounts,
and deferred loan fees and costs.
March 31, 2024 December 31, 2023
(unaudited)
Commercial $ 430,549 $ 439,895
(1)
Real estate:
Single-family residential 475,181 478,224
Multi-family residential 128,779 130,778
Commercial 461,826 433,026
Construction 178,398 190,722
Consumer:
Home equity lines of credit 36,079 35,960
Other 3,117 2,393
Subtotal 1,713,929 1,710,998
Less: ACL - Loans ( (
18,198 16,865
) )
Loans and leases, net $ 1,695,731 $ 1,694,133
(1)
Includes $
11,892
and $
13,497
of commercial leases at March 31, 2024 and December 31, 2023, respectively.
Allowance for Credit Losses on Loans (ACL - Loans)
The ACL - Loans is a valuation account that is deducted from the amortized
cost basis of loans and leases to present the net amount expected to be
collected on loans over the contractual term. The ACL - Loans is adjusted by
the provision for credit losses, which is reported in earnings, and reduced by
charge offs for loans, net of recoveries. Provision for credit losses on loans
reflects the totality of actions taken on all loans for a particular period
including any necessary increases or decreases in the allowance related to
changes in credit loss expectations associated with specific loans or pools of
loans. Loans are charged off against the allowance when the uncollectibility
of the loan is confirmed. Expected recoveries do not exceed the aggregate of
amounts previously charged off and expected to be charged off.
15
-------------------------------------------------------------------------------
Table of Contents
CF BANKSHARES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(Dollars in thousands, except per share data)
The ACL - Loans represents the Company's best estimate of current expected
credit losses (CECL) on loans using relevant available information, from
internal and external sources, related to past events, current conditions, and
reasonable and supportable forecasts. Historical credit loss experience
provides the basis for the estimation of expected credit losses. The CECL
calculation is performed and evaluated quarterly and losses are estimated over
the expected life of the loan. The level of the ACL - Loans is believed to be
adequate to absorb all expected future losses inherent in the loan portfolio
at the measurement date.
In calculating the ACL - Loans, the loan portfolio was pooled into loan
segments with similar risk characteristics. Common characteristics include the
type or purpose of the loan, underlying collateral and historical/expected
credit loss patterns. In developing the loan segments, the Company analyzed
the degree of correlation in how loans within each portfolio respond when
subjected to varying economic conditions and scenarios as well as other
portfolio stress factors.
The expected credit losses are measured over the life of each loan segment
utilizing the average charge-off methodology combined with economic forecast
models to estimate the current expected credit loss inherent in the loan
portfolio. This approach is also leveraged to estimate the expected credit
losses associated with unfunded loan commitments incorporating expected
utilization rates.
The Company sub-segmented certain commercial portfolios by risk level where
appropriate. The Company utilized a one-year reasonable and supportable
economic forecast period.
The Company qualitatively adjusts model results for risk factors that are not
inherently considered in the historical losses, but are nonetheless relevant
in assessing the expected credit losses within the loan portfolio. These
adjustments may increase or decrease the estimate of expected credit losses
based upon the assessed level of risk for each qualitative factor. The various
risks that may be considered in making qualitative adjustments include, among
other things, the impact of (i) changes in economic conditions, (ii) changes
in the nature and volume of the loan portfolio, (iii) changes in the
existence, growth and effect of any concentrations in credit, (iv) changes in
lending policies and procedures, including changes in underwriting standards
and practices for collections, write-offs, and recoveries, (v) changes in the
quality of the credit review function, (vi) changes in the experience, ability
and depth of lending management and staff, (vii) changes in the volume and
severity of past due and adversely classified loans and the volume of
non-accrual loans, (viii) changes in the value of underlying collateral for
collateral-dependent loans, and (ix) other environmental factors such as
regulatory, legal and technological considerations, as well as competition.
In some cases, management may determine that an individual loan exhibits
unique risk characteristics which differentiate the loan from other loans
within the loan segments. In such cases, the loans are evaluated for expected
credit losses on an individual basis and excluded from the collective
evaluation. Specific reserves in the allowance for credit losses are
determined by analyzing the borrower's ability to repay amounts owed,
collateral deficiencies, the relative risk grade of the loan and economic
conditions affecting the borrower's industry, among other things. A loan is
considered to be collateral dependent when, based upon management's
assessment, the borrower is experiencing financial difficulty and repayment is
expected to be provided substantially through the operation or sale of the
collateral. In such cases, expected credit losses are based on the fair value
of the collateral at the measurement date, adjusted for estimated selling
costs if satisfaction of the loan depends on the sale of the collateral. The
fair value of collateral supporting collateral dependent loans is evaluated on
a quarterly basis.
The following tables present the activity in the ACL - Loans by portfolio
segment for the three months ended March 31, 2024 and 2023 (unaudited).
Three Months Ended March
31, 2024 (unaudited)
Real Consumer
Estate
Commercial Single-family Multi-family Commercial Construction Home equity Other Total
lines of credit
Allowance for
credit losses
Balances, $ 5,884 3,371 1,231 4,105 1,707 334 233 16,865
January 1, 2024
Provision of 1,628 ( ( 193 ( ( 57 1,317
credit losses 48 84 428 1
) ) ) )
Recoveries 6 8 - - - 2 - 16
on loans
Loans - - - - - - - -
charged off
Balances, March $ 7,518 $ 3,331 $ 1,147 $ 4,298 $ 1,279 $ 335 $ 290 $ 18,198
31, 2024
16
-------------------------------------------------------------------------------
Table of Contents
CF BANKSHARES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(Dollars in thousands, except per share data)
Three Months Ended March
31, 2023 (unaudited)
Real Consumer
Estate
Commercial Single-family Multi-family Commercial Construction Home Other Total
equity
lines of
credit
Allowance
for
credit
losses
Balances, $ 4,764 $ 3,914 $ 997 $ 3,384 $ 2,644 $ 333 $ 26 $ 16,062
December
31, 2022
Impact of 877 ( 66 726 ( ( 28 (
adoption 958 1,019 129 409
of ASC ) ) ) )
326
Balances, 5,641 2,956 1,063 4,110 1,625 204 54 15,653
January 1, 2023
Post-ASC 326
adoption
Provision ( 235 ( 13 54 127 54 267
of 198 18
credit ) )
losses
Recoveries - 3 - - - - - 3
on
loans
Loans ( - - - - - ( (
charged 5 3 8
off ) ) )
Balances, $ 5,438 $ 3,194 $ 1,045 $ 4,123 $ 1,679 $ 331 $ 105 $ 15,915
March
31,
2023
Determining fair value for collateral dependent loans requires obtaining a
current independent appraisal of the collateral and applying a discount
factor, which includes selling costs if applicable, to the value. The fair
value of real estate is generally based on appraisals by qualified licensed
appraisers. The appraisers typically determine the value of the real estate by
utilizing an income or market valuation approach. If an appraisal is not
available, the fair value may be determined by using a cash flow analysis. The
fair value of other collateral such as business assets is typically
ascertained by assessing, either singularly or some combination of, asset
appraisals, accounts receivable aging reports, inventory listings and or
customer financial statements. Both appraised values and values based on
borrower's financial information are discounted as considered appropriate
based on age and quality of the information and current market conditions.
The tables below present the amortized cost basis of collateral dependent
loans by loan class and their respective collateral types, which are
individually evaluated to determine expected credit losses.
March 31, 2024 (unaudited)
Residential Real Estate Other Total Allowance on Collateral Dependent Loans
Commercial $ - $ 3,434 $ 3,434 $ 2,099
Real estate:
Single-family residential 89 - 89 -
Total $ 89 $ 3,434 $ 3,523 $ 2,099
December 31, 2023
Residential Real Estate Other Total Allowance on Collateral Dependent Loans
Commercial $ - $ 449 $ 449 $ 44
Real estate:
Single-family residential 90 - 90 -
Total $ 90 $ 449 $ 539 $ 44
17
-------------------------------------------------------------------------------
Table of Contents
CF BANKSHARES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(Dollars in thousands, except per share data)
The following table presents the recorded investment in non-accrual loans by
class of loans at March 31, 2024 (unaudited):
Non-Accrual Loans Non-Accrual loans with no Allowance for Credit Losses
Commercial $ 6,603 $ 235
Real estate:
Single-family residential 995 995
Consumer:
Home equity lines of credit: 16 16
Other consumer 281 281
Total nonaccrual loans $ 7,895 $ 1,527
The following table presents the recorded investment in non-accrual loans by
class of loans at December 31, 2023.
Non-Accrual Loans Non-Accrual loans with no Allowance for Credit Losses
Commercial $ 5,048 $ 1,658
Real estate:
Single-family residential 627 627
Consumer:
Home equity lines of credit: 17 17
Other consumer 30 30
Total nonaccrual loans $ 5,722 $ 2,332
Nonaccrual loans include both smaller balance single-family mortgage loans,
consumer loans and commercial leases that are collectively evaluated for
impairment and individually classified impaired loans. There were
no
loans 90 days or more past due and still accruing interest at March 31, 2024
or December 31, 2023.
The following table presents the aging of the recorded investment in past due
loans and leases by class of loans as of March 31, 2024 (unaudited):
30 - 59 Days 60 - 89 Days 90 Days or Total Loans Not Nonaccrual Loans Not 90
Past Due Past Due more Past Due Past Due Past Due days or more Past Due
Commercial $ 376 $ - $ 3,669 $ 4,045 $ 426,504 $ 2,934
Real
estate:
Single-family - - 936 936 474,245 59
residential
Multi-family - - - - 128,779 -
residential
Commercial:
Non-owner - - - - 249,688 -
occupied
Owner - - - - 195,858 -
occupied
Land - - - - 16,280 -
Construction - - - - 178,398 -
Consumer:
Home equity lines 4 80 16 100 35,979 -
of credit:
Other - 251 30 281 2,836 251
Total $ 380 $ 331 $ 4,651 $ 5,362 $ 1,708,567 $ 3,244
18
-------------------------------------------------------------------------------
Table of Contents
CF BANKSHARES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(Dollars in thousands, except per share data)
The following table presents the aging of the recorded investment in past due
loans and leases by class of loans as of December 31, 2023:
30 - 59 Days 60 - 89 Days 90 Days or Total Loans Not Nonaccrual Loans Not 90
Past Due Past Due more Past Due Past Due Past Due days or more Past Due
Commercial $ 98 $ - $ 622 $ 720 $ 439,175 $ 4,426
Real
estate:
Single-family 165 372 563 1,100 477,124 64
residential
Multi-family - - - - 130,778 -
residential
Commercial:
Non-owner - - - - 228,548 -
occupied
Owner - - - - 183,773 -
occupied
Land - - - - 20,705 -
Construction - - - - 190,722 -
Consumer:
Home equity lines
of credit:
Originated for 97 - 17 114 35,846 -
portfolio
Purchased for - - - - - -
portfolio
Other - - 30 30 2,363 -
Total $ 360 $ 372 $ 1,232 $ 1,964 $ 1,709,034 $ 4,490
Loan Modifications:
The Company adopted ASU 2022-02 during the first quarter of 2023. This
amendment eliminated the TDR recognition and measurement guidance and,
instead, required that an entity evaluate (consistent with the accounting for
other loan modifications) whether the modification represents a new loan or a
continuation of an existing loans. The amendments also enhanced existing
disclosure requirements and introduced new requirements related to certain
modifications of receivables made to borrowers experiencing financial
difficulty.
During the three months ended March 31, 2024 and March 31, 2023, the Company did
no
t modify any loans to borrowers experiencing financial difficulties.
Credit Quality Indicators:
The Company categorizes loans into risk categories based on relevant
information about the ability of borrowers to service their debt, such as
current financial information, historical payment experience, credit
documentation, public information and current economic trends, among other
factors. Management analyzes loans individually by classifying the loans as to
credit risk. This analysis includes commercial, commercial real estate and
multi-family residential real estate loans. Internal loan reviews for these
loan types are performed at least annually, and more often for loans with
higher credit risk. Adjustments to loan risk ratings are made based on the
reviews and at any time information is received that may affect risk ratings.
The following definitions are used for risk ratings:
Special Mention
. Loans classified as special mention have a potential weakness that deserves
management's close attention. If left uncorrected, these potential weaknesses
may result in deterioration of the repayment prospects for the loan or of
CFBank's credit position at some future date.
Substandard
. Loans classified as substandard are inadequately protected by the current
net worth and paying capacity of the obligor or of the collateral pledged, if
any. Loans so classified have a well-defined weakness or weaknesses that
jeopardize the liquidation of the debt. They are characterized by the distinct
possibility that there will be some loss if the deficiencies are not corrected.
Doubtful
. Loans classified as doubtful have all the weaknesses inherent in those
classified as substandard, with the added characteristic that the weaknesses
make collection or liquidation in full, on the basis of currently existing
facts, conditions and values, highly questionable and improbable.
19
-------------------------------------------------------------------------------
Table of Contents
CF BANKSHARES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(Dollars in thousands, except per share data)
Loans not meeting the criteria to be classified into one of the above
categories are considered to be "not rated" or "pass-rated" loans. Loans
listed as not rated are primarily groups of homogeneous loans. Past due
information is the primary credit indicator for groups of homogenous loans.
Loans listed as pass-rated loans are loans that are subject to internal loan
reviews and are determined not to meet the criteria required to be classified
as special mention, substandard or doubtful.
The following table summarizes the risk grading of the Company's loan
portfolio by loan class and by year of origination for the years indicated
as of March 31, 2024. Consumer and Single-family residential loans are not
risk graded. For purposes of this disclosure, those loans are classified in
the following manner: loans that are 89 days or less past due and accruing are
"performing" loans and loans greater than 89 days past due or in nonaccrual
are "nonperforming" loans.
Term Loans
(amortized cost
basis by
origination year)
(unaudited) 2024 2023 2022 2021 2020 Prior Revolving Revolving Total
loans loans
amortized converted
cost basis to term
Commercial
Pass $ 5,747 $ 32,481 $ 85,273 $ 87,262 $ 44,919 $ 12,724 $ 148,832 $ 484 $ 417,722
Special - - - 2,800 - 84 - - 2,884
Mention
Substandard - - 385 7,560 - - 50 1,500 9,495
Doubtful - - 448 - - - - - 448
Total 5,747 32,481 86,106 97,622 44,919 12,808 148,882 1,984 430,549
Commercial
Real
estate
loans:
Single-family
residential
Payment
performance
Performing 3,575 40,235 129,604 230,204 45,000 25,568 - - 474,186
Nonperforming - - 372 - - 623 - - 995
Total 3,575 40,235 129,976 230,204 45,000 26,191 - - 475,181
Single-family
residential
loans
Multi-family
residential
Pass - 24,833 8,750 52,209 7,283 35,704 - - 128,779
Total - 24,833 8,750 52,209 7,283 35,704 - - 128,779
Multi-family
residential
loans
Commercial:
Non-owner
occupied
Pass 11,136 54,975 33,976 69,310 14,866 64,920 - - 249,183
Special - - - - - 505 - - 505
Mention
Total 11,136 54,975 33,976 69,310 14,866 65,425 - - 249,688
Non-owner
occupied
loans
Owner
occupied
Pass 3,488 22,404 63,456 49,091 19,570 37,170 - - 195,179
Special - - - - - 679 - - 679
Mention
Total 3,488 22,404 63,456 49,091 19,570 37,849 - - 195,858
Owner
occupied
loans
Land
Pass 2,791 5,646 1,564 5,723 - 556 - - 16,280
Total 2,791 5,646 1,564 5,723 - 556 - - 16,280
Land
loans
Construction
Pass 5,776 37,213 71,024 60,755 3,630 - - - 178,398
Total 5,776 37,213 71,024 60,755 3,630 - - - 178,398
Construction
loans
Total 26,766 185,306 308,746 467,292 90,349 165,725 - - 1,244,184
Real
Estate
loans
Consumer:
Home equity
lines
of
credit:
Payment
performance
Performing - - - - - - 33,377 2,686 36,063
Nonperforming - - - - - - - 16 16
Total Home - - - - - - 33,377 2,702 36,079
equity
lines of
credit
Other
Payment -
performance
Performing - - - - 10 211 2,615 - 2,836
Nonperforming - - - - - - 281 - 281
Total - - - - 10 211 2,896 - 3,117
Other
consumer
loans
Total $ 32,513 $ 217,787 $ 394,852 $ 564,914 $ 135,278 $ 178,744 $ 185,155 $ 4,686 $ 1,713,929
loans
Total current $ - $ - $ - $ - $ - $ - $ - $ - $ -
period
gross
charge-offs
20
-------------------------------------------------------------------------------
Table of Contents
CF BANKSHARES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(Dollars in thousands, except per share data)
The following table summarizes the risk grading of the Company's loan
portfolio by loan class and by year of origination for the years indicated
as of December 31, 2023. Consumer and Single-family residential loans are not
risk graded. For purposes of this disclosure, those loans are classified in
the following manner: loans that are 89 days or less past due and accruing are
"performing" loans and loans greater than 89 days past due or in nonaccrual
are "nonperforming" loans.
Term Loans
(amortized cost
basis by
origination year)
2023 2022 2021 2020 2019 Prior Revolving Revolving Total
loans loans
amortized converted
cost basis to term
Commercial
Pass $ 32,965 $ 86,433 $ 90,297 $ 45,670 $ 3,189 $ 9,888 $ 159,065 $ 1,078 $ 428,585
Special - - 2,807 - 84 - - - 2,891
Mention
Substandard - 384 7,537 - - - 50 - 7,971
Doubtful - 448 - - - - - - 448
Total 32,965 87,265 100,641 45,670 3,273 9,888 159,115 1,078 439,895
Commercial
Current - 564 211 - - - - - 775
period
gross
charge-offs
Real
estate
loans:
Single-family
residential
Payment
performance
Performing 42,655 131,416 231,379 45,785 9,584 16,778 - - 477,597
Nonperforming - - - - - 627 - - 627
Total 42,655 131,416 231,379 45,785 9,584 17,405 - - 478,224
Single-family
residential
loans
Multi-family
residential
Pass 24,839 8,776 53,815 7,311 15,772 20,265 - - 130,778
Total 24,839 8,776 53,815 7,311 15,772 20,265 - - 130,778
Multi-family
residential
loans
Commercial:
Non-owner
occupied
Pass 57,092 27,068 61,990 15,085 20,101 45,725 982 - 228,043
Special - - - - 505 - - - 505
Mention
Total 57,092 27,068 61,990 15,085 20,606 45,725 982 - 228,548
Non-owner
occupied
loans
Owner
occupied
Pass 20,353 55,169 50,210 19,775 18,751 18,768 68 - 183,094
Special - - - - 679 - - - 679
Mention
Total 20,353 55,169 50,210 19,775 19,430 18,768 68 - 183,773
Owner
occupied
loans
Land
Pass 7,932 6,037 6,177 - 149 410 - - 20,705
Total 7,932 6,037 6,177 - 149 410 - - 20,705
Land
loans
Construction
Pass 31,739 78,602 61,435 4,174 - - 14,772 - 190,722
Total 31,739 78,602 61,435 4,174 - - 14,772 - 190,722
Construction
loans
Total 184,610 307,068 465,006 92,130 65,541 102,573 15,822 - 1,232,750
Real
Estate
loans
Consumer:
Home equity
lines
of
credit:
Payment
performance
Performing - - - - - - 33,510 2,433 35,943
Nonperforming - - - - - - - 17 17
Total Home - - - - - - 33,510 2,450 35,960
equity
lines of
credit
Other
Payment
performance
Performing - - - 12 - 216 2,135 - 2,363
Nonperforming - - - - - - - 30 30
Total - - - 12 - 216 2,135 30 2,393
Other
consumer
loans
Current - - - - - 3 - - 3
period
gross
charge-offs
Total $ 217,575 $ 394,333 $ 565,647 $ 137,812 $ 68,814 $ 112,677 $ 210,582 $ 3,558 $ 1,710,998
loans
Total current $ - $ 564 $ 211 $ - $ - $ 3 $ - $ - $ 778
period
gross
charge-offs
21
-------------------------------------------------------------------------------
Table of Contents
CF BANKSHARES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(Dollars in thousands, except per share data)
Direct Financing Leases:
The following lists the components of the net investment in direct financing
leases:
March 31, 2024 December 31, 2023
(unaudited)
Total minimum lease payments to be received $ 12,587 $ 14,343
Less: Unearned income ( (
709 863
) )
Plus: Indirect initial costs 14 17
Net investment in direct financing leases $ 11,892 $ 13,497
The following summarizes the future minimum lease payments receivable in
fiscal year 2024 and in subsequent fiscal years:
2024, excluding the three months ended March 31, 2024 $ 4,277
2025 5,015
2026 2,703
2027 543
2028 49
Thereafter -
Total future minimum payments $ 12,587
NOTE 5 - LEASES
A lease is defined as a contract, or part of a contract, that conveys the
right to control the use of identified property, plant or equipment for a
period of time in exchange for consideration.
The leases in which the Company is the lessee are comprised of real estate
property for branches and offices and for equipment with terms extending
through
2034
. All of our leases are classified as operating leases. Operating lease
agreements are required to be recognized on the Consolidated Balance Sheets as
a right-of-use ("ROU") asset and a corresponding operating lease liability.
The Company does not have any leases classified as finance leases.
The calculated amount of the ROU assets and lease liabilities are impacted by
the length of the lease term and the discount rate used to present value the
minimum lease payments. The Company's lease agreements often include one or
more options to renew at the Company's discretion which were considered, as
applicable, in the calculation of the ROU assets and lease liabilities. If, at
lease inception, the Company considers the exercising of a renewal option to
be reasonably certain, the Company will include the extended term in the
calculation of the ROU asset and lease liability. The Company uses the
discount rate implicit in the lease whenever this rate is readily
determinable. As this rate is not readily determinable in our operating
leases, the Company utilizes its incremental borrowing rate at lease
inception, on a collateralized basis, over a similar term. At March 31, 2024,
the weighted-average remaining lease term for the Company's operating leases
was
8.8
years and the weighted-average discount rate was
7.24
%. At December 31, 2023, the weighted-average remaining lease term for the
Company's operating leases was
8.9
years and the weighted-average discount rate was
7.21
%.
The Company's operating lease costs were $
180
for the three months ended March 31, 2024 and $
124
for the three months ended March 31, 2023. The variable lease costs totaled $
191
for the three months ended March 31, 2024 and $
164
for the three months ended March 31, 2023. As the Company elected not to
separate lease and non-lease components for all classes of underlying assets
and instead to account for them as a single lease component, the variable
lease cost primarily represents variable payments such as common area
maintenance and utilities.
22
-------------------------------------------------------------------------------
Table of Contents
CF BANKSHARES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(Dollars in thousands, except per share data)
Future minimum operating lease payments as of March 31, 2024 are as follows:
2024, excluding the three months ended March 31, 2024 $ 765
2025 820
2026 737
2027 687
2028 700
Thereafter 3,407
Total future minimum rental commitments 7,116
Less - amounts representing interest (
1,989
)
Total operating lease liabilities $ 5,127
NOTE 6 - FAIR VALUE
Fair value is the exchange price that would be received for an asset or paid
to transfer a liability in the principal or most advantageous market for the
asset or liability in an orderly transaction between market participants on
the measurement date. There are three levels of inputs that may be used to
measure fair values:
Level 1 - Quoted prices (unadjusted) for identical assets or liabilities in
active markets that the entity has the ability to access as of the measurement
date.
Level 2 - Significant other observable inputs other than Level 1 prices such
as quoted prices for similar assets or liabilities, quoted prices in markets
that are not active, or other inputs that are observable or can be
corroborated by observable market data.
Level 3 - Significant unobservable inputs that reflect a company's own
assumptions about the assumptions that market participants would use in
pricing an asset or liability.
The Company used the following methods and significant assumptions to estimate
the fair value of each type of asset and liability:
Securities available for sale
:
The fair value of securities available for sale is determined using pricing
models that vary based on asset class and include available trade, bid and
other market information or matrix pricing, which is a mathematical technique
widely used in the industry to value debt securities without relying
exclusively on quoted prices for the specific securities but rather by relying
on the securities' relationship to other benchmark quoted securities (Level 2).
Derivatives
:
The fair value of derivatives, which includes interest rate lock commitments
and interest rate swaps, is based on valuation models using observable market
data as of the measurement date (Level 2).
TBA mortgage - backed securities:
To mitigate the effect of the interest rate risk inherent in providing rate
lock commitments to borrowers, the Company enters into either a forward sales
contract to sell loans to investors when using best efforts or a trade of
"to-be-announced (TBA)" mortgage-backed securities for mandatory delivery. The
forward sales contracts lock in a price for the sale of loans with similar
characteristics to the specific rate lock commitments based on a valuation
model using observable market data for pricing commitments (Level 2).
Impaired loans:
The fair value of collateral dependent impaired loans with specific reserves
in the ACL - Loans is generally based on recent real estate appraisals. These
appraisals may utilize a single valuation approach or a combination of
approaches including comparable sales and the income approach. Adjustments are
routinely made in the appraisal process by the appraisers to adjust for
differences between the comparable sales and income data available. Such
adjustments are usually significant and typically result in a Level 3
classification of the inputs for determining fair value.
23
-------------------------------------------------------------------------------
Table of Contents
CF BANKSHARES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(Dollars in thousands, except per share data)
Appraisals for collateral-dependent impaired loans are performed by certified
general appraisers (for commercial properties) or certified residential
appraisers (for residential properties) whose qualifications and licenses have
been reviewed and verified by a third-party appraisal management company
approved by the Board of Directors annually. Once received, the loan officer
or a member of the credit department reviews the assumptions and approaches
utilized in the appraisal as well as the overall resulting fair value in
comparison with independent data sources such as recent market data or
industry-wide statistics. Appraisals are updated as needed based on facts and
circumstances associated with the individual properties. Real estate
appraisals typically incorporate measures such as recent sales prices for
comparable properties. Appraisers may make adjustments to the sales prices of
the comparable properties as deemed appropriate based on the age, condition or
general characteristics of the subject property. Management applies an
additional discount to real estate appraised values, typically to reflect
changes in market conditions since the date of the appraisal if warranted and
to cover disposition costs (including selling expenses) based on the intended
disposition method of the property. Non-real estate collateral may be valued
using an appraisal, net book value per the borrower's financial statements, or
aging reports, adjusted or discounted based on management's historical
knowledge, changes in market conditions from the time of the valuation, and
management's expertise and knowledge of the client and client's business,
resulting in a Level 3 fair value classification. Impaired loans are evaluated
on a quarterly basis for additional impairment and adjusted accordingly.
Loans held for sale:
Loans held for sale are carried at fair value, as determined by outstanding
commitments from third party investors (Level 2).
Assets and liabilities measured at fair value on a recurring basis, including
financial assets and liabilities for which the Company has elected the fair
value option, are summarized below:
Fair Value Measurements at
March 31, 2024 using Significant
Other Observable Inputs
(Level 2)
(unaudited)
Financial Assets:
Securities available for sale:
Corporate debt $ 7,100
Issued by U.S. government-sponsored entities and agencies:
U.S. Treasury 495
Mortgage-backed securities - residential 2
Total securities available for sale $ 7,597
Loans held for sale $ 2,241
Derivative assets $ 4,161
Financial Liabilities:
Derivative liabilities $ 4,161
24
-------------------------------------------------------------------------------
Table of Contents
CF BANKSHARES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(Dollars in thousands, except per share data)
Fair Value Measurements at
December 31, 2023 using Significant
Other Observable Inputs
(Level 2)
Financial Assets:
Securities available for sale:
Corporate debt $ 7,100
Issued by U.S. government-sponsored entities and agencies:
U.S. Treasury 988
Mortgage-backed securities - residential 4
Total securities available for sale $ 8,092
Loans held for sale $ 1,849
Derivative assets $ 4,710
Financial Liabilities:
Derivative liabilities $ 4,710
The Company had
no
assets or liabilities measured at fair value on a recurring basis that were
measured using Level 1 or Level 3 inputs at March 31, 2024 or December 31,
2023. There were
no
transfers of assets or liabilities measured at fair value between levels
during the periods ended March 31, 2024 and December 31, 2023.
There were
no
assets or liabilities measured at fair value on a non-recurring basis at March
31, 2024. Assets and liabilities measured at fair value on a non-recurring
basis at December 31, 2023 are summarized below:
Fair Value Measurements at December 31, 2023 Using
Significant Unobservable Inputs (Level 3)
Impaired loans:
Commercial $ 403
Total impaired loans $ 403
There were
no
write-downs of impaired collateral dependent loans during the three months
ended March 31, 2024 or 2023.
The following table presents quantitative information about Level 3 fair value
measurements for financial instruments measured at fair value on a
non-recurring basis at December 31, 2023:
Fair Value Valuation Unobservable (Range) Weighted
Technique(s) Inputs Average
Impaired
loans:
Commercial $ 403 Comparable Adjustment for differences between the 10.43
sales approach stated value and net realizable value %
Financial Instruments Recorded Using Fair Value Option
The Company has elected the fair value option for loans held for sale. These
loans are intended for sale and the Company believes that the fair value is
the best indicator of the resolution of these loans. Interest income is
recorded based on the contractual terms of the loan and in accordance with the
Company's policy on loans held for investment.
No
ne of these loans were 90 days or more past due or on nonaccrual as of March
31, 2024 or December 31, 2023.
25
-------------------------------------------------------------------------------
Table of Contents
CF BANKSHARES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(Dollars in thousands, except per share data)
As of March 31, 2024 and December 31, 2023, the aggregate fair value,
contractual balance and gain or loss on loans held for sale were as follows:
March 31, 2024 December 31, 2023
(unaudited)
Aggregate fair value $ 2,241 $ 1,849
Contractual balance 2,241 1,849
Gain (loss) $ - $ -
The total amount of gains and losses from changes in fair value included in
earnings for the three months ended March 31, 2024 and 2023 for loans held for
sale were:
Three months ended March 31,
2024 2023
(unaudited)
Interest income $ 28 $ 3
Interest expense - -
Change in fair value - -
Total change in fair value $ 28 $ 3
The carrying amounts and estimated fair values of financial instruments at
March 31, 2024 were as follows:
Fair Value Measurements at March 31, 2024 Using:
Carrying
(unaudited) Value Level 1 Level 2 Level 3 Total
Financial assets
Cash and cash equivalents $ 236,892 $ 236,892 $ - $ - $ 236,892
Interest-bearing deposits in other financial institutions 100 100 - - 100
Securities available for sale 7,597 - 7,597 - 7,597
Equity securities 5,000 - 5,000 - 5,000
Loans held for sale 2,241 - 2,241 - 2,241
Loans and leases, net 1,695,731 - - 1,661,501 1,661,501
FHLB and FRB stock 8,491 n/a n/a n/a n/a
Accrued interest receivable 9,198 320 186 8,692 9,198
Derivative assets 4,161 - 4,161 - 4,161
Financial liabilities
Deposits $ ( $ ( $ ( $ - $ (
1,723,070 1,064,255 654,738 1,718,993
) ) ) )
FHLB advances and other borrowings ( - ( - (
111,004 108,839 108,839
) ) )
Advances by borrowers for taxes and insurance ( - - ( (
1,093 1,093 1,093
) ) )
Subordinated debentures ( - ( - (
14,971 17,249 17,249
) ) )
Accrued interest payable ( - ( - (
3,332 3,332 3,332
) ) )
Derivative liabilities ( - ( - (
4,161 4,161 4,161
) ) )
26
-------------------------------------------------------------------------------
Table of Contents
CF BANKSHARES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(Dollars in thousands, except per share data)
The carrying amounts and estimated fair values of financial instruments at
December 31, 2023 were as follows:
Fair Value Measurements at December 31, 2023 Using:
Carrying
Value Level 1 Level 2 Level 3 Total
Financial assets
Cash and cash equivalents $ 261,595 $ 261,595 $ - $ - $ 261,595
Interest-bearing deposits in other financial institutions 100 100 - - 100
Securities available for sale 8,092 - 8,092 - 8,092
Equity securities 5,000 - 5,000 - 5,000
Loans held for sale 1,849 - 1,849 - 1,849
Loans and leases, net 1,694,133 - - 1,670,885 1,670,885
FHLB and FRB stock 8,482 n/a n/a n/a n/a
Accrued interest receivable 9,210 171 125 8,914 9,210
Derivative assets 4,710 - 4,710 - 4,710
Financial liabilities
Deposits $ ( $ ( $ ( $ - $ (
1,744,057 1,080,605 659,492 1,740,097
) ) ) )
FHLB advances and other borrowings ( - ( - (
109,995 108,294 108,294
) ) )
Advances by borrowers for taxes and insurance ( - - ( (
2,179 2,179 2,179
) ) )
Subordinated debentures ( - ( - (
14,961 17,345 17,345
) ) )
Accrued interest payable ( - ( - (
2,680 2,680 2,680
) ) )
Derivative liabilities ( - ( - (
4,710 4,710 4,710
) ) )
NOTE 7 - SUBORDINATED DEBENTURES
2003 Subordinated debentures:
In December 2003, Central Federal Capital Trust I, a trust formed by the
Holding Company, closed a pooled private offering of
5,000
trust preferred securities with a liquidation amount of $
1
per security. The Holding Company issued $
5,155
of subordinated debentures to the trust in exchange for ownership of all of
the common stock of the trust and the proceeds of the preferred securities
sold by the trust
. The Holding Company is not considered the primary beneficiary of this trust
(which is classified as a variable interest entity); therefore, the trust is
not consolidated in the Company's financial statements, but rather the
subordinated debentures are shown as a liability. The Holding Company's
investment in the common stock of the trust was $
155
and is included in other
assets.
The Holding Company may redeem the subordinated debentures, in whole or in
part, in a principal amount with integral multiples of $
1
, at
100
% of the principal amount, plus accrued and unpaid interest. The subordinated
debentures mature on
December 30, 2033
. The subordinated debentures are also redeemable in whole or in part from
time to time, upon the occurrence of specific events defined within the trust
indenture. There are
no
required principal payments on the subordinated debentures over the next
five years
. The Holding Company has the option to defer interest payments on the
subordinated debentures for a period not to exceed five consecutive years.
Prior to July 1, 2023, the subordinated debentures had a variable rate of
interest, which reset quarterly, equal to the three-month London Interbank
Offered Rate (LIBOR) plus
2.85
%. Effective July 1, 2023, the rate of interest on the subordinated debentures
resets quarterly to the three-month Secured Overnight Financing Rate (SOFR)
plus
3.112
%, which was
8.41
% at March 31, 2024 and
8.44
% at December 31, 2023.
2018 Fixed-to-floating rate subordinated notes:
In December 2018, the Holding Company entered into subordinated note purchase
agreements with certain qualified institutional buyers and completed a private
placement of $
10
million of fixed-to-floating rate subordinated notes with a maturity date of
December 30, 2028
. After payment of approximately $
388
of debt issuance costs, the Holding Company's net proceeds were approximately $
9,612
.
The subordinated notes initially bore interest at
7.00
%, from and including December 20, 2018, to but excluding December 30, 2023,
payable semi-annually in arrears on June 30 and December 30 of each year. From
and including December 30, 2023, to but excluding
27
-------------------------------------------------------------------------------
Table of Contents
CF BANKSHARES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(Dollars in thousands, except per share data)
December 30, 2028 or the earlier redemption of the notes, the interest rate
resets quarterly to an interest rate equal to the then current three-month
SOFR (but not less than zero) plus
4.402
%, payable quarterly in arrears on March 30, June 30, September 30, and
December 30 of each year. The Holding Company may, at its option, redeem the
notes beginning on December 30, 2023 and on any scheduled interest payment
date thereafter. At March 31, 2024, the balance of the subordinated notes, net
of unamortized debt issuance costs, was $
9,816
.
NOTE 8 - FHLB ADVANCES AND OTHER DEBT
Federal Home Loan Bank ("FHLB") advances and other debt were as follows:
Weighted
Average Rate March 31, 2024 December 31, 2023
(unaudited)
FHLB fixed rate advances:
Maturities:
2024 1.46 $ 18,500 $ 18,500
%
2026 1.45 16,000 16,000
%
2027 3.88 12,500 12,500
%
2028 1.69 17,000 17,000
%
2029 3.94 12,500 12,500
%
Total FHLB fixed rate advances $ 76,500 $ 76,500
Variable rate other debt:
Holding Company credit facility 3.85 34,504 33,495
%
Total $ 111,004 $ 109,995
Each FHLB advance is payable at its maturity date, with a prepayment penalty
for fixed-rate advances.
The Holding Company has a $
35,000
credit facility with a third-party bank. The credit facility is revolving until
May 21, 2024
, at which time any then-outstanding balance will be converted to a
10
-year term note on a graduated
10
-year amortization. Borrowings on the credit facility bear interest at a fixed
rate of
3.85
% until May 21, 2026, and the interest rate then converts to a floating rate
equal to PRIME with a floor of
3.25
%.
The purpose of the credit facility is to provide an additional source of
liquidity for the Holding Company and to provide funds for the Holding Company
to downstream as additional capital to CFBank to support growth. At March 31,
2024, the Company had an outstanding balance, net of unamortized debt issuance
costs, of
$
34,504
on the facility.
At March 31, 2024, CFBank had availability in unused lines of credit at two
commercial banks in amounts of $
50,000
and
$
15,000
. There were
no
outstanding borrowings on either line at March 31, 2024 and December 31, 2023.
Interest on any principal amounts outstanding from time to time under these
lines accrues daily at a variable rate based on the commercial bank's cost of
funds and current market returns.
There were no outstanding borrowings with the Federal Reserve Bank ("FRB") at
March 31, 2024 and December 31, 2023.
NOTE 9 - STOCK-BASED COMPENSATION
The Company has a stock-based compensation plan, as described below, under
which awards are outstanding or may be granted in the future. Total
compensation cost that has been charged against income for the plan totaled $
233
for the three months ended March 31, 2024 and $
283
for the three months ended March 31, 2023. The total income tax effect was $
49
for the three months ended March 31, 2024 and $
59
for the three months ended March 31, 2023.
The Company's 2019 Equity Incentive Plan (the "2019 Plan") was approved by
stockholders on May 29, 2019 and replaced the Company's 2009 Equity
Compensation Plan (the "2009" Plan"). The 2019 Plan, authorizes up to
300,000
shares (plus any shares that are subject to grants under the 2009 Plan and
that are later forfeited or expire), to be awarded pursuant to stock options,
stock appreciation rights, restricted stock or restricted stock units. There
were
69,262
shares remaining
available for awards under the 2019 Plan
at March 31, 2024.
28
-------------------------------------------------------------------------------
Table of Contents
CF BANKSHARES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(Dollars in thousands, except per share data)
Stock Options:
The Plans permit the grant of stock options to directors, officers and
employees of the Holding Company and CFBank. Option awards are granted with an
exercise price equal to the market price of the Company's common stock on the
date of grant, generally have vesting periods ranging from
one year
to
three years
, and are exercisable for
ten years
from the date of grant. Unvested stock options immediately vest upon a change
of control.
The fair value of each option award is estimated on the date of grant using a
closed form option valuation (Black-Scholes) model that uses the assumptions
noted in the table below. Expected volatilities are based on historical
volatilities of the Company's common stock. The Company uses historical data
to estimate option exercise and post-vesting termination behavior. Employee
and management options are tracked separately. The expected term of options
granted is based on historical data and represents the period of time that
options granted are expected to be outstanding, which takes into account that
the options are not transferable. The risk-free interest rate for the expected
term of the option is based on the U.S. Treasury yield curve in effect at the
time of the grant.
There were
no
options outstanding at March 31, 2024.
There were
no
options granted during the three months ended March 31, 2024 and March 31,
2023. There were
no
options exercised during the three months ended March 31, 2024 and March 31,
2023.
Restricted Stock Awards:
The 2019 Plan also permits the grant of restricted stock awards to directors,
officers and employees. Compensation is recognized over the vesting period of
the awards based on the fair value of the stock at grant date. The fair value
of the stock is determined using the closing share price on the date of grant
and shares generally have vesting periods of
one year
to
three years
. There were
7,068
shares of restricted stock granted under the 2019 Plan during the three months
ended March 31, 2024. There were
58,784
shares of restricted stock granted during the three months ended March 31, 2023.
A summary of changes in the Company's nonvested restricted stock awards as of
March 31, 2024 follows (unaudited):
Nonvested Shares Shares Weighted Average Grant-Date Fair Value
Nonvested at January 1, 2024 119,026 $ 19.99
Granted 7,068 21.85
Vested ( 19.36
47,908
)
Forfeited - -
Nonvested at March 31, 2024 78,186 $ 20.55
As of March 31, 2024 and 2023, the unrecognized compensation cost related to
nonvested restricted stock awards granted under the 2019 Plan was $
1,303
and $
2,337
, respectively.
There were no shares of restricted stock forfeited during the three month
period ended March 31, 2024, and
2,170
shares of restricted stock forfeited during the three months ended March 31,
2023. There were
47,908
shares of restricted stock that vested during the three months ended March 31,
2024, and
31,177
shares of restricted stock that vested during the three months ended March 31,
2023.
NOTE 10 - REGULATORY CAPITAL MATTERS
CFBank is subject to regulatory capital requirements administered by federal
banking agencies. Prompt corrective action regulations involve quantitative
measures of assets, liabilities, and certain off balance-sheet items
calculated under regulatory accounting practices. Capital amounts and
classifications are also subject to qualitative judgments by regulators.
Failure to meet capital requirements can initiate regulatory action.
Prompt corrective action regulations provide five classifications for banking
organizations: well capitalized, adequately capitalized, undercapitalized,
significantly undercapitalized, and critically undercapitalized, although
these terms are not used to represent overall financial condition. If a
banking organization is classified as adequately capitalized, regulatory
approval is required to accept brokered deposits. If a banking organization is
classified as undercapitalized, capital distributions are limited, as is asset
growth and expansion, and capital restoration plans are required.
29
-------------------------------------------------------------------------------
Table of Contents
CF BANKSHARES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(Dollars in thousands, except per share data)
In July 2013, the Holding Company's primary federal regulator, the Board of
Governors of the Federal Reserve System (the "Federal Reserve"), published
final rules (the "Basel III Capital Rules") establishing a new comprehensive
capital framework for U.S. banking organizations. The rules implement the
Basel Committee's December 2010 framework known as "Basel III" for
strengthening international capital standards as well as certain provisions of
the Dodd-Frank Act. In order to avoid limitations on capital distributions,
such as dividend payments and certain bonus payments to executive officers,
the Basel III Capital Rules require insured financial institutions to hold a
capital conservation buffer of common equity tier 1 capital above the minimum
risk-based capital requirements. The capital conservation buffer consists of
an additional amount of common equity equal to 2.5% of risk-weighted assets.
Quantitative measures established by the Basel III Capital Rules to ensure
capital adequacy require the maintenance of minimum amounts and ratios of
Common Equity Tier 1 capital, Tier 1 capital and Total capital, as defined in
the regulations, to risk-weighted assets, and of Tier 1 capital to adjusted
quarterly average assets ("Leverage Ratio").
The Basel III Capital Rules require CFBank to maintain: 1) a minimum ratio of
Common Equity Tier 1 capital to risk-weighted assets of
4.5
%, plus a
2.5
% "capital conservation buffer" (resulting in a minimum ratio of Common Equity
Tier 1 capital to risk-weighted assets of
7.0
%); 2) a minimum ratio of Tier 1 capital to risk-weighted assets of
6.0
%, plus the capital conservation buffer (resulting in a minimum Tier 1 capital
ratio of
8.5
%); 3) a minimum ratio of Total capital to risk-weighted assets of
8.0
%, plus the capital conservation buffer (resulting in a minimum Total capital
ratio of
10.5
%); and 4) a minimum Leverage Ratio of
4.0
%.
The capital conservation buffer is designed to absorb losses during periods of
economic stress. Failure to maintain the minimum Common Equity Tier 1 capital
ratio plus the capital conservation buffer will result in potential
restrictions on a banking institution's ability to pay dividends, repurchase
stock and/or pay discretionary compensation to its employees.
The following tables present actual and required capital ratios as of March
31, 2024 and December 31, 2023 for CFBank under the Basel III Capital Rules.
Capital levels required to be considered well capitalized are based upon
prompt corrective action regulations, as amended to reflect the changes under
the Basel III Capital Rules.
Actual Minimum Capital To Be Well Capitalized
Required-Basel III Under Applicable
Regulatory Capital
Standards
Amount Ratio Amount Ratio Amount Ratio
March 31,
2024
Total Capital to $ 220,286 13.50 $ 171,336 10.50 $ 163,177 10.00
risk weighted assets % % %
Tier 1 (Core) Capital 200,847 12.31 138,700 8.50 130,541 8.00
to risk weighted assets % % %
Common equity tier 1 capital 200,847 12.31 114,224 7.00 106,065 6.50
to risk-weighted assets % % %
Tier 1 (Core) Capital to adjusted 200,847 10.05 79,936 4.00 99,920 5.00
total assets (Leverage ratio) % % %
Actual Minimum Capital To Be Well Capitalized
Required-Basel III Under Applicable
Regulatory Capital
Standards
Amount Ratio Amount Ratio Amount Ratio
December
31, 2023
Total Capital to $ 215,164 13.30 $ 169,909 10.50 $ 161,818 10.00
risk weighted assets % % %
Tier 1 (Core) Capital 196,977 12.17 137,546 8.50 129,455 8.00
to risk weighted assets % % %
Common equity tier 1 capital 196,977 12.17 113,273 7.00 105,182 6.50
to risk-weighted assets % % %
Tier 1 (Core) Capital to adjusted 196,977 9.76 80,727 4.00 100,908 5.00
total assets (Leverage ratio) % % %
30
-------------------------------------------------------------------------------
Table of Contents
CF BANKSHARES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(Dollars in thousands, except per share data)
CFBank converted from a mutual to a stock institution in 1998, and a
"liquidation account" was established in the amount of $
14,300
, which was the net worth reported in the conversion prospectus.
The liquidation account represents a calculated amount for the purposes
described below, and it does not represent actual funds included in the
Consolidated Financial Statements of the Company.
Eligible depositors who have maintained their accounts, less annual reductions
to the extent they have reduced their deposits, would be entitled to a
priority distribution from this account if CFBank liquidated and its assets
exceeded its liabilities. Dividends may not reduce CFBank's stockholder's
equity below the required liquidation account balance.
Dividend Restrictions:
Banking regulations require us to maintain certain capital levels and may
limit the dividends paid by CFBank to the Holding Company or by the Holding
Company to stockholders. The ability of the Holding Company to pay dividends
on its stock is dependent upon the amount of cash and liquidity available at
the Holding Company level, as well as the receipt of dividends and other
distributions from CFBank to the extent necessary to fund such dividends. The
Holding Company is a legal entity that is separate and distinct from CFBank,
which has no obligation to make any dividends or other funds available for the
payment of dividends by the Holding Company. The Holding Company also is
subject to various legal and regulatory policies and guidelines impacting the
Holding Company's ability to pay dividends on its stock. In addition, the
Holding Company's ability to pay dividends on its stock is conditioned upon
the payment, on a current basis, of quarterly interest payments on the
subordinated debentures underlying the Company's trust preferred securities.
Finally, under the terms of the Holding Company's fixed-to-floating rate
subordinated debt, the Holding Company's ability to pay dividends on its stock
is conditioned upon the Holding Company continuing to make required principal
and interest payments, and not incurring an event of default, with respect to
the subordinated debt.
Additionally, CFBank does not intend to make distributions to the Holding
Company that would result in a recapture of any portion of its thrift bad debt
reserve as discussed in Note 12 -
Income Taxes
.
NOTE 11 - DERIVATIVE INSTRUMENTS
Interest-rate swaps:
The Bank enters into interest rate swaps with certain qualifying commercial
loan customers to meet their interest rate risk management needs. The Bank
simultaneously enters into interest rate swaps with dealer counterparties,
with identical notional amounts and offsetting terms. The net result of these
interest rate swaps is that the customer pays a fixed rate of interest and the
Bank receives a floating rate. These back-to-back loan swaps are derivative
financial instruments and are reported at fair value in "accrued interest
receivable and
other assets
" and "accrued interest payable and
other liabilities
" in the Consolidated Balance Sheets. Changes in the fair value of loan swaps
are recorded in
other noninterest income
and sum to zero because of the offsetting terms of swaps with borrowers and
swaps with dealer counterparties.
CFBank utilizes interest-rate swaps as part of its asset/liability management
strategy to help manage its interest rate risk position, and does not use
derivatives for trading purposes. The notional amount of the interest-rate
swaps does not represent amounts exchanged by the parties. The amount
exchanged is determined by reference to the notional amount and the other
terms of the individual interest-rate swap agreements. CFBank was party to
interest-rate swaps with a combined notional amount of $
81,327
at March 31, 2024 and $
81,858
at December 31, 2023.
The counterparty to CFBank's interest-rate swaps is exposed to credit risk
whenever the interest-rate swaps are in a liability position. At March 31,
2024, CFBank
had $
3,431
in cash pledged as
collateral for these derivatives. Should the liability increase beyond the
collateral value, CFBank will be required to pledge additional collateral.
Additionally, CFBank's interest-rate swap instruments contain provisions that
require CFBank to remain well capitalized under regulatory capital standards
and to comply with certain other regulatory requirements. The interest-rate
swaps may be called by the counterparty if CFBank fails to maintain
well-capitalized status under regulatory capital standards or becomes subject
to certain adverse regulatory events such as a regulatory cease and desist
order. As of March 31, 2024 CFBank was well-capitalized under regulatory
capital standards and was not subject to any adverse regulatory events
specified in CFBank's interest-rate swap instruments.
31
-------------------------------------------------------------------------------
Table of Contents
CF BANKSHARES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(Dollars in thousands, except per share data)
Summary information about the derivative instruments is as follows:
March 31, 2024 December 31, 2023
(unaudited)
Notional amount $ 81,327 $ 81,858
Weighted average pay rate on interest-rate swaps 5.37 5.36
% %
Weighted average receive rate on interest-rate swaps 7.79 7.80
% %
Weighted average maturity (years) 8.0 8.2
Fair value of derivative asset $ 4,161 $ 4,710
Fair value of derivative liability ( (
4,161 4,710
) )
Mortgage banking derivatives:
Mortgage banking activities include two types of commitments: rate lock
commitments and forward loan sales commitments. Rate lock commitments are
loans in our pipeline that have an interest rate locked with the customer. The
commitments are generally for periods
of
30
to
60
days and are at market rates. In order to mitigate the effect of the interest
rate risk inherent in providing rate lock commitments, we economically hedge
our commitments by entering into a forward loan sales contract under best
efforts. Commitments to fund certain mortgage loans (interest rate locks) to
be sold into the secondary market are considered derivatives. These mortgage
banking derivatives are not designated in hedge relationships. The Company had
$
7,947
of interest lock commitments related to residential mortgage loans at March
31, 2024 and $
5,345
of interest rate lock commitments related to residential mortgage loans at
December 31, 2023. The fair value of these interest lock commitments was
immaterial at March 31, 2024 and December 31, 2023.
The following table reflects the amount and market value of mortgage banking
derivatives included in the Consolidated Balance Sheets as of the period end
(in thousands):
March 31, 2024 December 31, 2023
(unaudited)
Notional Amount Fair Value Notional Amount Fair Value
Assets (Liabilities):
Interest rate commitments $ 7,947 $ - $ 5,345 $ -
The following table represents the notional amount of loans sold during the
three months ended March 31, 2024 and 2023 (unaudited):
Three Months ended
March 31,
2024 2023
Notional amount of loans sold $ 9,037 $ 1,991
The following table represents the gain (loss) recognized on mortgage
activities for the three months ended March 31, 2024 and 2023 (unaudited):
Three Months ended
March 31,
2024 2023
Gain (loss) on loans sold 90 (
3
)
Gain (loss) from change in fair value of loans held-for-sale - -
$ 90 $ (
3
)
32
-------------------------------------------------------------------------------
Table of Contents
CF BANKSHARES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(Dollars in thousands, except per share data)
NOTE 12 - INCOME TAXES
At March 31, 2024 and December 31, 2023, the Company had a deferred tax asset
recorded in the amount of approximately $
4,219
and $
3,942
, respectively. At March 31, 2024 and December 31, 2023, the Company had
no
unrecognized tax benefits recorded. The Company is subject to U.S. federal
income tax and is no longer subject to federal examination for years prior to
2020.
Our deferred tax assets are composed of U.S. net operating losses ("NOLs"),
and other temporary book to tax differences. When determining the amount of
deferred tax assets that are more-likely-than-not to be realized, and
therefore recorded as a benefit, the Company conducts a regular assessment of
all available information. This information includes, but is not limited to,
taxable income in prior periods, projected future income and projected future
reversals of deferred tax items. Based on these criteria, the Company
determined as of March 31, 2024 that
no
valuation allowance was required against the net deferred tax asset.
In 2012, the Company completed a recapitalization program pursuant to which
the Holding Company sold $
22,500
in common stock, which improved the capital levels of CFBank and provided
working capital for the Holding Company. The result of the change in stock
ownership associated with the stock offering, however, was that the Company
incurred an ownership change within the guidelines of Section 382 of the
Internal Revenue Code of 1986. At March 31, 2024, the Company had net
operating loss carryforwards of $
21,927
, which expire at various dates from
2024
to
2032
. As a result of the ownership change, the Company's ability to utilize
carryforwards that arose before the 2012 stock offering closed is limited to $
163
per year. Due to this limitation, management determined it is more likely than
not that $
20,520
of net operating loss carryforwards will expire unutilized. As required by ASC
740, the Company reduced the carrying value of deferred tax assets, and the
corresponding valuation allowance, by the $
6,977
tax effect of this lost realizability.
Federal income tax laws provided additional deductions, totaling $
2,250
, for thrift bad debt reserves established before 1988. ASC 740 does not
require a deferred tax liability to be recorded on this amount, which
otherwise would have totaled $
473
at March 31, 2024. However, if CFBank were wholly or partially liquidated or
otherwise ceases to be a bank, or if tax laws were to change, this amount
would have to be recaptured and a tax liability recorded. Additionally, any
distributions in excess of CFBank's current or accumulated earnings and
profits would reduce amounts allocated to its bad debt reserve and create a
tax liability for CFBank.
The Company records income tax expense based on the federal statutory rate
adjusted for the effect of low income housing credits, bank owned life
insurance, dividends on equity securities and other miscellaneous items.
The effective tax rate was approximately
18.5
% for the three months ended March 31, 2024 and
19.5
% for the three months ended March 31, 2023, which management believes were
reasonable estimates for the effective tax rates for such periods.
The following table summarizes the major components creating differences
between income taxes at the federal statutory tax rate and the effective tax
rate recorded in the Consolidated Statements of Income for the three months
ended March 31, 2024 and 2023:
For the three months ended
March 31,
2024 2023
(unaudited)
Statutory tax rate 21.0 21.0
% %
Increase (decrease) resulting from:
Restricted stock ( (
0.5 0.3
%) %)
Tax exempt earnings on bank owned life insurance ( (
1.1 0.6
%) %)
Dividends on equity securities ( (
0.3 0.2
%) %)
Low income housing credits ( (
0.7 0.5
%) %)
Other, net 0.1 0.1
% %
Effective tax rate 18.5 19.5
% %
33
-------------------------------------------------------------------------------
Table of Contents
CF BANKSHARES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(Dollars in thousands, except per share data)
NOTE 13- ACCUMULATED OTHER COMPREHENSIVE LOSS
The following table summarizes the changes within each classification of
accumulated other comprehensive loss, net of tax, for the three months ended
March 31, 2024 and 2023 and summarizes the significant amounts reclassified
out of each component of accumulated other comprehensive loss:
Changes in Accumulated Other Comprehensive Loss by Component
(1)
Three months ended
March 31,
2024 2023
(unaudited)
Unrealized Gains and (Losses) on Available-for-Sale Securities
Accumulated other comprehensive loss, beginning of period $ ( $ (
2,290 2,037
) )
Other comprehensive gain (loss) before reclassifications 9 (
(2) 216
)
Net current-period other comprehensive gain (loss) 9 (
216
)
Accumulated other comprehensive loss, end of period $ ( $ (
2,281 2,253
) )
(1)
All amounts are net of tax. Amounts in parentheses indicate a reduction of
other comprehensive income.
(2)
There were
no
am
ounts reclassified out of other comprehensive income for the three months
ended March 31, 2024 and 2023.
NOTE 14- PREFERRED STOCK
Series D Preferred Stock:
On February 6, 2024, the Company issued an aggregate of
2,000
shares of its newly-designated series of non-voting convertible perpetual
preferred stock, series D, par value $
0.01
per share (the "Series D Preferred Stock") to an existing stockholder of the
Company in exchange for
200,000
shares of (Voting) Common Stock.
Each share of Series D Preferred Stock will be convertible either (i)
automatically into
100
shares of the Company's Non-Voting Common Stock if and when the Company's
shareholders approve an amendment to the Company's Certificate of
Incorporation to increase the number of authorized shares of Non-Voting Common
Stock to permit the conversion of all outstanding shares of Series D Preferred
Stock into shares of Non-Voting Common Stock (which shareholder approval and
amendment the Company may, but is not obligated, to seek); (ii) unless
previously converted into shares of Non-Voting Common Stock, into
100
shares of (Voting) Common Stock at the request of the holder, provided that
upon such conversion the holder, together with all affiliates of the holder,
will not own or control in aggregate more than
9.9
% of the outstanding (Voting) Common Stock (or of any class of voting
securities issued by the Company); or (iii) unless previously converted into
shares of Non-Voting Common Stock, into
100
shares of (Voting) Common Stock upon transfer of such shares of Series D
Preferred Stock to a non-affiliate of the holder in specified permitted
transactions. The holders of Series D Preferred Stock are not entitled to any
liquidation preferences. The holders of Series D Preferred Stock participate
with common shareholders pro rata in dividends on an as-converted basis.
NOTE 15- OTHER ASSETS HELD FOR SALE
During the third quarter of 2022, the Company began marketing its Worthington
headquarters building for sale as it prepared to move its headquarters to
Columbus, Ohio. On October 20, 2022, the Company entered into a contract to
sell the building for $
2,010
. As a result, impairment expense of
$
542
was recorded during September 2022 to adjust the building and land value to
the offered price, less costs to sell and the associated assets were
transferred to other assets held for sale on the Consolidated Balance Sheet.
The sale of the building was completed in May 2023.
34
-------------------------------------------------------------------------------
Table of Contents
CF BANKSHARES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(Dollars in thousands, except per share data)
NOTE 16- TAX CREDIT INVESTMENTS
The Company has investments in various limited partnerships that sponsor
affordable housing projects and federal historic projects. The purpose of the
investments is to earn an adequate return of capital through the receipt of
tax credits and to assist the Company in achieving goals associated with the
Community Reinvestment Act. These investments are included in other assets on
the Consolidated Balance Sheet, with any unfunded commitments included in
other liabilities. The investments are amortized as a component of income tax
expense.
The following table summarizes the Company's tax credit investments as of
March 31, 2024 and December 31, 2023.
March 31, 2024 December 31, 2023
Investment Type Investment Unfunded Investment Unfunded
Commitment Commitment
Low Income Housing Tax Credit (LIHTC) $ 20,225 $ 12,226 $ 15,578 $ 10,539
Historic Tax Credit (HTC) 2,025 1,573 2,025 1,573
Total $ 22,250 $ 13,799 $ 17,603 $ 12,112
The following table summarizes the amortization expense and tax credits
recognized for the Company's tax credit investments for the three months ended
March 31, 2024 and 2023, respectively:
Three Months Ended March 31,
Amortization expense 2024 2023
LIHTC $ 353 $ 130
HTC - -
Total $ 353 $ 130
Tax credits recognized
LIHTC $ 355 $ 130
HTC - -
Total $ 355 $ 130
35
-------------------------------------------------------------------------------
Table of Contents
CF BANKSHARES INC.
PART 1. Item 2
MANAGEMENT DISCUSSION AND ANALYSIS
FO
RWARD LOOKING STATEMENTS
This Quarterly Report on Form 10-Q and other reports and materials we have
filed or may file with the Securities and Exchange Commission ("SEC") contain
or may contain forward-looking statements within the meaning of the safe
harbor provisions of the U.S. Private Securities Reform Act of 1995, which are
made in good faith by us. Forward-looking statements include, but are not
limited to: (1) projections of revenues, income or loss, earnings or loss per
common share, capital structure and other financial items; (2) plans and
objectives of the management or Boards of Directors of CF Bankshares Inc. (the
"Holding Company") or CFBank, National Association ("CFBank" and, together
with the Holding Company, the "Company"); (3) statements regarding future
events, actions or economic performance; and (4) statements of assumptions
underlying such statements. Words such as "estimate," "strategy," "may,"
"believe," "anticipate," "expect," "predict," "will," "intend," "plan,"
"targeted," and the negative of these terms, or similar expressions, are
intended to identify forward-looking statements, but are not the exclusive
means of identifying such statements. Various risks and uncertainties may
cause actual results to differ materially from those indicated by our
forward-looking statements, including, without limitation, those risks
detailed from time to time in our reports filed with the SEC, including those
identified in "Item 1A. Risk Factors" of Part I of our Annual Report on Form
10-K filed with SEC for the year ended December 31, 2023.
Forward-looking statements are not guarantees of performance or results. A
forward-looking statement may include a statement of the assumptions or bases
underlying the forward-looking statement. We believe that we have chosen these
assumptions or bases in good faith and that they are reasonable. We caution
you, however, that assumptions or bases almost always vary from actual
results, and the differences between assumptions or bases and actual results
can be material. The forward-looking statements included in this quarterly
report speak only as of the date of the report. We undertake no obligation to
publicly release revisions to any forward-looking statements to reflect events
or circumstances after the date of such statements, except to the extent
required by law.
Business Overview
The Holding Company is a financial holding company that owns 100% of the stock
of CFBank, which was formed in Ohio in 1892 and converted from a federal
savings association to a national bank on December 1, 2016. Prior to December
1, 2016, the Holding Company was a registered savings and loan holding
company. Effective as of December 1, 2016 and in conjunction with the
conversion of CFBank to a national bank, the Holding Company became a
registered bank holding company and elected financial holding status with the
Federal Reserve Board (the "Federal Reserve"). Effective as of July 27, 2020,
the Company changed its name from Central Federal Corporation to CF Bankshares
Inc.
CFBank focuses on serving the financial needs of closely held businesses and
entrepreneurs, by providing comprehensive Commercial, Retail, and Mortgage
Lending services presence. In all regional markets, CFBank provides commercial
loans and equipment leases, commercial and residential real estate loans and
treasury management depository services, residential mortgage lending, and
full-service commercial and retail banking services and products. CFBank seeks
to differentiate itself from its competitors by providing individualized
service coupled with direct customer access to decision-makers, and ease of
doing business. We believe that CFBank matches the sophistication of much
larger banks, without the bureaucracy. CFBank also offers its clients the
convenience of online banking, mobile banking and remote deposit capabilities.
Most of our deposits and loans come from our market area. Our principal market
area for deposits and loans includes the following counties in Ohio and
Indiana: Franklin County, Ohio through our offices in Columbus, Ohio; Delaware
County, Ohio through our Polaris office in Columbus, Ohio; Cuyahoga County,
Ohio through our office in Woodmere, Ohio and our Ohio City office in
Cleveland, Ohio; Summit County, Ohio through our office in Fairlawn, Ohio;
Hamilton County, Ohio through our offices in Blue Ash, Ohio and our Red Bank
office in Cincinnati, Ohio; and Marion County, Indiana through our office in
Indianapolis. Because of CFBank's concentration of business activities in
Ohio, the Company's financial condition and results of operations depend in
large part upon economic conditions in Ohio.
Recent Regulatory Developments.
In March 2024, CFBank's primary federal regulator, the OCC, publicly released
its Community Reinvestment Act (CRA) rating of "Needs to Improve" for CFBank
as a result of the OCC's regularly scheduled evaluation covering 2020 through
2022. The Company believes that the "Needs to Improve" rating was primarily
attributable to CFBank's legacy direct-to-consumer residential mortgage
business. Beginning in 2021, CFBank strategically scaled down its residential
mortgage business and exited the direct-to-consumer mortgage business in favor
of lending in our regional markets. The Company believes that this change in
our residential mortgage business and focus, together with changes in our
branch network and other actions taken since 2021, have remediated these
legacy issues. While CFBank's CRA rating remains "Needs to Improve," the
Company is subject to additional requirements and conditions with respect to
certain activities, including acquisitions of and mergers with other financial
institutions and commencement of new activities. CFBank's next CRA evaluation
is expected to commence in 2026.
36
-------------------------------------------------------------------------------
Table of Contents
CF BANKSHARES INC.
PART 1. Item 2
MANAGEMENT DISCUSSION AND ANALYSIS
General
Our net income is dependent primarily on net interest income, which is the
difference between the interest income earned on loans and securities and our
cost of funds, consisting of interest paid on deposits and borrowed funds. Net
interest income is affected by regulatory, economic and competitive factors
that influence interest rates, loan demand, the level of nonperforming assets
and deposit flows.
Net income is also affected by, among other things, provisions for credit
losses, loan fee income, service charges, gains on loan sales, operating
expenses, and taxes. Operating expenses principally consist of employee
compensation and benefits, occupancy, advertising and marketing, data
processing, professional fees, FDIC insurance premiums and other general and
administrative expenses. Our results of operations are significantly affected
by general economic and competitive conditions, changes in market interest
rates and real estate values, government policies and actions of regulatory
authorities. Our regulators have extensive discretion in their supervisory and
enforcement activities, including the authority to impose restrictions on our
operations, to classify our assets and to require us to increase the level of
our allowance for credit losses on loans and leases. Any change in such
regulation and oversight, whether in the form of regulatory policy,
regulations, legislation or supervisory action, may have a material impact on
our business, financial condition, results of operations and/or cash flows.
Management's discussion and analysis represents a review of our consolidated
financial condition and results of operations for the periods presented. This
review should be read in conjunction with our Consolidated Financial
Statements and related Notes included in this Quarterly Report on Form 10-Q.
Financial Condition
General.
Assets totaled $2.0 billion at March 31, 2024 and decreased $19.1 million, or
0.9%, from $2.1 billion at December 31, 2023. The decrease was primarily due
to a $24.7 million decrease in cash and cash equivalents.
Cash and cash equivalents
.
Cash and cash equivalents totaled $236.9 million at March 31, 2024, and
decreased $24.7 million, or 9.4%, from $261.6 million at December 31, 2023.
The decrease in cash and cash equivalents was primarily attributed to a
decrease in net deposit balances, partially offset by increases in net loan
balances.
Securities.
Securities available for sale totaled $7.6 million at March 31, 2024, and
decreased $495,000, or 6.1%, compared to $8.1 million at December 31, 2023.
The decrease was due to principal maturities.
Loans held for sale.
Loans held for sale totaled $2.2 million at March 31, 2024, and increased
$392,000, or 21.2%, from $1.8 million at December 31, 2023.
Loans and Leases.
Net loans and leases totaled $1.7 billion at March 31, 2024, and increased
$1.6 million, or 0.1%, from $1.7 billion at December 31, 2023.
The increase in net loans and leases from December 31, 2023 was primarily due
to a $28.8 million increase in commercial real estate loan balances, partially
offset by a $12.3 million decrease in construction loan balances, a $9.3
million decrease in commercial loan balances, a $3.0 million decrease in
single-family residential loan balances, and a $2.0 million decrease in
multi-family loan balances. The increases in the aforementioned loan balances
were primarily related to increased sales activity and new relationships. The
decrease in construction loan balances was primarily related to loans that
were converted to permanent loans upon the completion of construction.
Allowance for Credit Losses on Loans.
The allowance for credit losses on loans ("ACL - Loans") totaled $18.2 million
at March 31, 2024, and increased $1.3 million, or 7.9%, from $16.9 million at
December 31, 2023. The increase in the ACL - Loans is due to $1.3 million in
loan provision expense coupled with $16,000 in recoveries on charged off loans
during the three months ended March 31, 2024. The increase in the ACL - Loans
was primarily driven by reserves placed on an individually evaluated loan,
which was also placed on nonaccrual status during the quarter ended March 31,
2024. The ratio of the ACL - Loans to total loans was 1.06% at March 31, 2024,
compared to 0.99% at December 31, 2023.
The ACL - Loans is a valuation account that is deducted from the loans'
amortized cost basis to present the net amount expected to be collected on
loans over the contractual term. Loans are charged off against the allowance
when the uncollectibility of the loan is confirmed. Expected recoveries do not
exceed the aggregate of amounts previously charged off and expected to be
charged off. Adjustments to the ACL- Loans are reported in the income
statement as a component of provision for credit loss. The Company has made
the accounting policy election to exclude accrued interest receivable on loans
from the estimate of credit losses. Further information regarding the policies
and methodology used to estimate the ACL - Loans is detailed in Note 1 -
Summary of Significant Accounting Policies
and Note 4 -
Loans and Leases
to the Consolidated Financial Statements included in this Quarterly Report on
Form 10-Q
.
37
-------------------------------------------------------------------------------
Table of Contents
CF BANKSHARES INC.
PART 1. Item 2
MANAGEMENT DISCUSSION AND ANALYSIS
Individually evaluated loans totaled $6.4 million at March 31, 2024, and
increased $2.9 million, or 85.0%, from $3.5 million at December 31, 2023. The
increase was primarily due to two newly identified commercial loans during the
first quarter 2024 totaling $3.0 million, partially offset by principal
payments. The amount of the
ACL - Loans
specifically calculated for individually evaluated loans totaled $2.7 million
at March 31, 2024 and $697,000 at December 31, 2023.
The reserve on individually evaluated loans is based on management's estimate
of the present value of estimated future cash flows using the loan's effective
rate or the fair value of collateral, if repayment is expected solely from the
collateral. On at least a quarterly basis, management reviews each
individually evaluated loan to determine whether it should have a reserve or
partial charge-off. Management relies on appraisals or internal evaluations to
help make this determination. Determination of whether to use an updated
appraisal or internal evaluation is based on factors including, but not
limited to, the age of the loan and the most recent appraisal, condition of
the property and whether we expect the collateral to go through the
foreclosure or liquidation process. Management considers the need for a
downward adjustment to the valuation based on current market conditions and on
management's analysis, judgment and experience. The amount ultimately
charged-off for these loans may be different from the reserve, as the ultimate
liquidation of the collateral and/or projected cash flows may be different
from management's estimates
.
Nonperforming loans, which include nonaccrual loans and loans at least 90 days
past due but still accruing interest, totaled $7.9 million at March 31, 2024,
and increased $2.2 million from $5.7 million at December 31, 2023. The
increase in nonaccrual loans was primarily driven one commercial loan,
totaling $1.5 million, a commercial equipment lease, totaling $62,000, a
single-family residential loan, totaling $372,000, and a consumer loan
totaling $251,000, becoming nonaccrual during the first quarter of 2024. The
ratio of nonperforming loans to total loans was 0.46% at March 31, 2024
compared to 0.33% at December 31, 2023.
The Company adopted ASU 2022-02,
Financial Instruments- Credit Losses (Topic 326): Troubled Debt Restructuring
and Vintage Disclosures
, during the first quarter of 2023. This amendment eliminated the Troubled
Debt Restructuring ("TDR") recognition and measurement guidance and, instead,
required that an entity evaluate (consistent with the accounting for other
loan modifications) whether the modification represents a new loan or a
continuation of an existing loans. The amendments also enhanced existing
disclosure requirements and introduced new requirements related to certain
modifications of receivables made to borrowers experiencing financial
difficulty. During the three months ended March 31, 2024 and March 31, 2023,
the Company did not modify any loans.
We have incorporated the regulatory asset classifications as a part of our
credit monitoring and internal loan risk rating system. In accordance with
regulations, problem loans are classified as special mention, substandard,
doubtful or loss, and the classifications are subject to review by the
regulators. Assets designated as special mention are considered criticized
assets. Assets designated as substandard, doubtful or loss are considered
classified assets. See Note 4 to our Consolidated Financial Statements
included in this Quarterly Report on Form 10-Q for additional information
regarding the regulatory asset classifications.
The level of total criticized and classified loans increased by $2.1 million,
or 16.2%, during the three months ended March 31, 2024. Loans designated as
special mention decreased $7,000, or 0.2%, and totaled $4.1 million at March
31, 2024, compared to $4.1 million at December 31, 2023. Loans classified as
substandard increased $2.1 million, or 24.8%, and totaled $10.8 million at
March 31, 2024, compared to $8.6 million at December 31, 2023. Loans
designated as doubtful totaled $448,000 at March 31, 2024 and December 31,
2023. See Note 4 to our Consolidated Financial Statements included in this
Quarterly Report on Form 10-Q for additional information regarding risk
classification of loans.
In addition to credit monitoring through our internal loan risk rating system,
we also monitor past due information for all loan segments. Loans that are not
rated under our internal credit rating system include groups of homogenous
loans, such as single-family residential real estate loans and consumer loans.
The primary credit indicator for these groups of homogenous loans is past due
information.
Total past due loans increased $3.4 million and totaled $5.4 million at March
31, 2024, compared to $2.0 million at December 31, 2023. Past due loans
totaled 0.3% of the loan portfolio at March 31, 2024, compared to 0.1% at
December 31, 2023. See Note 4 to our Consolidated Financial Statements
included in this Quarterly Report on Form 10-Q for additional information
regarding loan delinquencies.
All lending activity involves risk of loss. Certain types of loans, such as
option adjustable-rate mortgage (ARM) products, junior lien mortgages, high
loan-to-value ratio mortgages, interest only loans, subprime loans and loans
with initial teaser rates, can have a greater risk of non-collection than
other loans. CFBank has not engaged in subprime lending or used option ARM
products.
38
-------------------------------------------------------------------------------
Table of Contents
CF BANKSHARES INC.
PART 1. Item 2
MANAGEMENT DISCUSSION AND ANALYSIS
Loans that contain interest only payments may present a higher risk than those
loans with an amortizing payment that includes periodic principal reductions.
Interest only loans are primarily commercial lines of credit secured by
business assets and inventory, and consumer home equity lines of credit
secured by the borrower's primary residence. Due to the fluctuations in
business assets and inventory of our commercial borrowers, CFBank has
increased risk due to a potential decline in collateral values without a
corresponding decrease in the outstanding principal
. Interest only commercial lines of credit totaled $110.7 million, or 25.7%,
of CFBank's commercial portfolio at March 31, 2024, compared to $147.5
million, or 33.5%, at December 31, 2023. Interest only home equity lines of
credit totaled $33.4 million, or 92.5%, of the total home equity lines of
credit at March 31, 2024, compared to $33.6 million, or 93.4%, at December 31,
2023.
We believe the ACL - Loans is adequate to absorb current expected credit
losses in the loan portfolio as of March 31, 2024; however, future additions
to the allowance may be necessary based on factors including, but not limited
to, deterioration in client business performance, recessionary economic
conditions, declines in borrowers' cash flows and market conditions which
result in lower real estate values. Additionally, various regulatory agencies,
as an integral part of their examination process, periodically review the ACL
- Loans. Such agencies may require additional provisions for loan losses based
on judgments and estimates that differ from those used by management, or on
information available at the time of their review. Management continues to
diligently monitor credit quality in the existing portfolio and analyze
potential loan opportunities carefully in order to manage credit risk. An
increase in loan losses could occur if economic conditions and factors which
affect credit quality, real estate values and general business conditions
worsen or do not improve
.
Foreclosed assets
.
The Company held no foreclosed assets at March 31, 2024 or December 31, 2023.
The level of foreclosed assets and charges to foreclosed assets expense may
change in the future in connection with workout efforts related to foreclosed
assets, nonperforming loans and other loans with credit issues.
Deposits
.
Deposits totaled $1.7 billion at March 31, 2024, a decrease of $21.0 million,
or 1.2%, when compared to $1.7 billion at December 31, 2023. The decrease when
compared to December 31, 2023, is primarily due to a $21.9 million decrease in
interest-bearing account balances, partially offset by a $925,000 increase in
noninterest-bearing account balances. The decrease in interest-bearing account
balances was primarily due to a $51.1 million decrease in brokered account
balances, partially offset by an increase of $28.5 million in core deposit
balances.
At March 31, 2024, approximately 29.8% of our deposit balances exceeded the
FDIC insurance limit of $250,000, as compared to approximately 29.2% at
December 31, 2023.
CFBank is a participant in the Certificate of Deposit Account Registry
Service(R) (CDARS) and Insured Cash Sweep (ICS) programs offered through
IntraFi. IntraFi works with a network of banks to offer products that can
provide FDIC insurance coverage in excess of $250,000 through these innovative
products. Brokered deposits, including CDARS and ICS deposits that qualify as
brokered, totaled $389.3 million at March 31, 2024, and decreased $51.1
million, or 11.6%, from $440.4 million at December 31, 2023. Customer balances
in the CDARS reciprocal and ICS reciprocal programs, which do not qualify as
brokered, totaled $272.6 million at March 31, 2024, and increased $34.8
million, or 14.7%, from $237.8 million at December 31, 2023.
FHLB advances and other debt
.
FHLB advances and other debt totaled $111.0 million at March 31, 2024, an
increase of $1.0 million, or 0.9%, when compared to $110.0 million at December
31, 2023.
The increase was due
to a $1.0 million increase on the Company's line of credit with a third party
financial institution.
The Holding Company has a $35.0 million credit facility. The credit facility
is revolving until May 21, 2024, at which time any then-outstanding balance
will be converted to a 10-year term note on a graduated 10-year amortization.
Borrowings on the credit facility bear interest at a fixed rate of 3.85% until
May 21, 2026, and the interest rate then converts to a floating rate equal to
PRIME with a floor of 3.25%.
The purpose of the credit facility is to provide an additional source of
liquidity for the Holding Company and to provide funds for the Holding Company
to downstream as additional capital to CFBank to support growth. As of March
31, 2024, the Company had an outstanding balance of $34.5 million on the
facility.
At March 31, 2024, CFBank had availability in unused lines of credit at two
commercial banks in the amounts of $50.0 million and $15.0 million. There were
no outstanding borrowings on either line at March 31, 2024 or December 31,
2023.
39
-------------------------------------------------------------------------------
Table of Contents
CF BANKSHARES INC.
PART 1. Item 2
MANAGEMENT DISCUSSION AND ANALYSIS
Subordinated debentures
.
Subordinated debentures totaled $15.0 million at both March 31, 2024 and
December 31, 2023. In December 2018, the Holding Company entered into
subordinated note purchase agreements with certain qualified institutional
buyers and completed a private placement of $10.0 million of fixed-to-floating
rate subordinated notes, resulting in net proceeds of $9,612,000 after
deducting unamortized debt issuance costs of approximately $388,000. In 2003,
the Holding Company issued subordinated debentures in exchange for the
proceeds of a $5.0 million trust preferred securities offering issued by a
trust formed by the Holding Company. The terms of the subordinated debentures
allow for the Holding Company to defer interest payments for a period not to
exceed five years. Interest payments on the subordinated debentures were
current at March 31, 2024 and December 31, 2023.
Stockholders' equity
.
Stockholders' equity totaled $158.0 million at March 31, 2024, an increase of
$2.6 million, or 1.7%, from $155.4 million at December 31, 2023.
The increase in total stockholders' equity during the three months ended March
31, 2024 was primarily attributed to net income, partially offset by $386,000
in dividend payments.
Management continues to proactively monitor capital levels and ratios in its
on-going capital planning process. CFBank has leveraged its capital to support
balance sheet growth and drive increased net interest income. Management
remains focused on growing capital though earnings; however, should the need
arise, CFBank has additional sources of capital and alternatives it could
utilize as further discussed
in the "Liquidity and Capital Resources" section in this Quarterly Report on
Form 10-Q.
Currently, the Holding Company has excess cash or sources of liquidity to
cover its expenses for the foreseeable future, and could inject capital into
CFBank if necessary. Also, CFBank has the flexibility to manage its balance
sheet size as a result of the short duration of the loans held for sale, as
well as to deploy those assets into higher earning assets to improve net
interest income as the opportunity presents itself
.
Comparison of the Results of Operations for the Three Months Ended March 31,
2024 and 2023.
General
.
Net income for the three months ended March 31, 2024 totaled $3.1 million (or
$0.47 per diluted common share)
compared to net income of $4.4 million (or $0.68 per diluted common share) for
the three months ended March 31, 2023.
The decrease in net income was primarily the result of a decrease in net
interest income and an increase in provision for credit losses expense,
partially offset by a decrease in noninterest expense and an increase in
noninterest income.
Net interest income.
Net interest income is a significant component of net income, and consists of
the difference between interest income generated on interest-earning assets
and interest expense incurred on interest-bearing liabilities. Net interest
income is primarily affected by the volumes, interest rates and composition of
interest-earning assets and interest-bearing liabilities. The tables in the
sections below titled
"Average Balances, Interest Rates and Yields"
and
"Rate/Volume Analysis of Net Interest Income"
provide important information on factors impacting net interest income and
should be read in conjunction with this discussion of net interest income.
Net interest income totaled $11.3 million for the quarter ended March 31, 2024
and decreased
$1.4 million, or 11.4%, compared to net interest income of $12.7 million for
the quarter ended March 31, 2023. The decrease was primarily due to a $6.4
million, or 55.6%, increase in interest expense, partially offset by a $4.9
million, or 20.3%, increase in interest income.
The increase in interest expense was attributed to a 127bps increase in the
average cost of funds on interest-bearing liabilities, coupled with a $166.4
million, or 11.8%, increase in average interest-bearing liabilities. The
increase in interest income was primarily attributed to a $176.3 million, or
10.2%, increase in average interest-earning assets outstanding, coupled with a
51bps increase in the average yield on interest-earning assets. The net
interest margin of 2.36% for the quarter ended March 31, 2024 decreased 57bps
compared to the net interest margin of 2.93% for the first quarter of 2023
.
Interest income totaled $29.1 million for the quarter ended March 31, 2024,
and increased $4.9 million, or 20.3%, compared to $24.2 million for the
quarter ended March 31, 2023.
The increase in interest income was primarily attributed to a 51bps increase
in the average yield on loans and leases and loans held for sale, coupled with
a $107.2 million, or 6.8%, increase in average loans and leases outstanding
and loans held for sale.
Interest expense totaled $17.8 million for the quarter ended March 31, 2024,
and increased $6.4 million, or 55.6%, compared to $11.5 million for the
quarter ended March 31, 2023.
The increase in interest expense was primarily attributed to a 134bps increase
in the average rate of interest-bearing deposits, coupled with a $165.2
million, or 12.8%, increase in average interest-bearing deposits.
Provision for credit losses.
There was $1.2 million in provision for credit losses expense for the quarter
ended March 31, 2024, which reflected an increase of $1.0 million, or 421.9%,
compared to a $237,000 provision
for the quarter ended March 31, 2023
.
The increase in the provision for credit losses during the quarter ended March
31, 2024 was primarily driven by a reserve placed on an individually evaluated
loan, which was also placed on nonaccrual status during the quarter ended
March 31, 2024.
Net recoveries for the quarter ended March 31, 2024 totaled $16,000, compared
to net-charge offs of $5,000 for the quarter ended March 31, 2023.
40
-------------------------------------------------------------------------------
Table of Contents
CF BANKSHARES INC.
PART 1. Item 2
MANAGEMENT DISCUSSION AND ANALYSIS
The following table presents information regarding net charge-offs
(recoveries) for the three months ended March 31, 2024 and 2023.
For the three months ended March 31,
2024 2023
(unaudited) (Dollars in thousands)
Commercial $ (6) $ 5
Single-family residential real estate (8) (3)
Home equity lines of credit (2) -
Other consumer loans - 3
Total $ (16) $ 5
Noninterest income.
Noninterest income for the quarter ended March 31, 2024 totaled $905,000 and
increased $186,000, or 25.9%, compared to $719,000 for the quarter ended March
31, 2023. The increase was primarily due to a $255,000 increase in service
charges on deposit accounts, a $167,000 increase in the net gain on sales of
commercial loans, partially offset by a $299,000 decrease in other noninterest
income.
Noninterest expense.
Noninterest expense for the quarter ended March 31, 2024 totaled $7.2 million
and decreased $504,000, or 7.0%, compared to $7.7 million for the quarter
ended March 31, 2023. The decrease in noninterest expense was primarily due to
a $478,000 decrease in salaries and employee benefits. The decrease in
salaries and employee benefits was primarily due to a decrease in the number
of employees coupled with lower payroll taxes.
Income tax expense.
Income tax expense was $695,000 for the quarter ended March 31, 2024, a
decrease of $381,000 compared to $1.1 million for the quarter ended March 31,
2023. The effective tax rate for the quarter ended March 31, 2024 was
approximately 18.5%, as compared to approximately 19.5% for the quarter ended
March 31, 2023.
Our deferred tax assets are composed of U.S. net operating losses ("NOLs"),
and other temporary book to tax differences. When determining the amount of
deferred tax assets that are more-likely-than-not to be realized, and
therefore recorded as a benefit, the Company conducts a regular assessment of
all available information. This information includes, but is not limited to,
taxable income in prior periods, projected future income and projected future
reversals of deferred tax items. Based on these criteria, the Company
determined as of March 31, 2024 that no valuation allowance was required
against the net deferred tax asset.
The Company records income tax expense based on the federal statutory rate
adjusted for the effect of other items such as low income housing credits,
bank owned life insurance and other miscellaneous items.
41
-------------------------------------------------------------------------------
Table of Contents
CF BANKSHARES INC.
PART 1. Item 2
MANAGEMENT DISCUSSION AND ANALYSIS
Average Balances, Interest Rates and Yields.
The following tables present, for the periods indicated, the total dollar
amount of fully taxable equivalent interest income from average interest-earning
assets and the resultant yields, as well as the interest expense on average
interest-bearing liabilities, expressed in both dollars and rates.
Average balances are computed using month-end balances.
For Three Months Ended March 31,
2024 2023
Average Interest Average Average Interest Average
Outstanding Earned/ Yield/ Outstanding Earned/ Yield/
Balance Paid Rate Balance Paid Rate
(Dollars in thousands)
Interest-earning assets:
Securities $ 13,077 $ 129 3.23% $ 15,197 $ 215 4.84%
(1) (2)
Loans and leases and loans held for sale 1,694,701 26,010 6.14% 1,587,536 22,338 5.63%
(3)
Other earning assets 196,600 2,782 5.66% 125,780 1,502 4.78%
FHLB and FRB stock 8,488 165 7.78% 8,064 121 6.00%
Total interest-earning assets 1,912,866 29,086 6.07% 1,736,577 24,176 5.56%
Noninterest-earning assets 91,328 87,766
Total assets $ 2,004,194 $ 1,824,343
Interest-bearing liabilities:
Deposits $ 1,453,397 16,650 4.58% $ 1,288,161 10,419 3.24%
FHLB advances and other borrowings 125,724 1,152 3.67% 124,610 1,024 3.29%
Total interest-bearing liabilities 1,579,121 17,802 4.51% 1,412,771 11,443 3.24%
Noninterest-bearing liabilities 267,714 269,780
Total liabilities 1,846,835 1,682,551
Equity 157,359 141,792
Total liabilities and equity $ 2,004,194 $ 1,824,343
Net interest-earning assets $ 333,745 $ 323,806
Net interest income/interest rate spread $ 11,284 1.56% $ 12,733 2.32%
Net interest margin 2.36% 2.93%
Average interest-earning assets
to average interest-bearing liabilities 121.13% 122.92%
(1)
Average balance is computed using the carrying value of securities. Average
yield is computed using the historical amortized cost average balance for
available for sale securities.
(2)
Average yields and interest earned are stated on a fully taxable equivalent
basis.
(3)
Average balance is computed using the recorded investment in loans net of the
ACL - Loans and includes nonperforming loans.
42
-------------------------------------------------------------------------------
Table of Contents
CF BANKSHARES INC.
PART 1. Item 2
MANAGEMENT DISCUSSION AND ANALYSIS
Rate/Volume Analysis of Net Interest Income.
The following table presents the dollar amount of changes in interest income
and interest expense for major components of interest-earning assets and
interest-bearing liabilities. It distinguishes between the increase and
decrease related to changes in balances and/or changes in interest rates. For
each category of interest-earning assets and interest-bearing liabilities,
information is provided on changes attributable to (i) changes in volume
(i.e., changes in volume multiplied by the prior rate) and (ii) changes in
rate (i.e., changes in rate multiplied by prior volume). For purposes of this
table, changes attributable to both rate and volume which cannot be segregated
have been allocated proportionately to the change due to volume and the change
due to rate.
Three Months Ended
March 31, 2024
Compared to Three Months Ended
March 31, 2023
Increase (decrease)
due to
Rate Volume Net
(Dollars in thousands)
Interest-earning assets:
Securities $ (61) $ (25) $ (86)
(1)
Loans and leases 2,104 1,568 3,672
Other earning assets 315 965 1,280
FHLB and FRB Stock 37 7 44
Total interest-earning assets 2,395 2,515 4,910
Interest-bearing liabilities:
Deposits 4,756 1,475 6,231
FHLB advances and other borrowings 119 9 128
Total interest-bearing liabilities 4,875 1,484 6,359
Net change in net interest income $ (2,480) $ 1,031 $ (1,449)
(1)
Securities amounts are presented on a fully taxable equivalent basis.
Critical Accounting Policies
We follow financial accounting and reporting policies that are in accordance
with U.S. generally accepted accounting principles and conform to general
practices within the banking industry. These policies are presented in Note 1
to our 2023 Audited Financial Statements. Some of these accounting policies
are considered to be critical accounting policies, which are those policies
that are both most important to the portrayal of the Company's financial
condition and results of operations, and require management's most difficult,
subjective or complex judgments, often as a result of the need to make
estimates about the effect of matters that are inherently uncertain.
Application of assumptions different than those used by management could
result in material changes in our financial condition or results of
operations. These policies, current assumptions and estimates utilized, and
the related disclosure of this process, are determined by management and
routinely reviewed with the Audit Committee of the Board of Directors. We
believe that the judgments, estimates and assumptions used in the preparation
of the Consolidated Financial Statements were appropriate given the factual
circumstances at the time.
We believe there have been no significant changes during the three months
ended March 31, 2024 to the items that we disclosed as our critical accounting
policies and estimates in Management's Discussion and Analysis of Financial
Condition and Results of Operations in our Annual Report on Form 10-K for the
year ended December 31, 2023.
Liquidity and Capital Resources
In general terms, liquidity is a measurement of an enterprise's ability to
meet cash needs. The primary objective in liquidity management is to maintain
the ability to meet loan commitments and to repay deposits and other
liabilities in accordance with their terms without an adverse impact on
current or future earnings. Principal sources of funds are deposits;
amortization and prepayments of loans; maturities, sales and principal
receipts of securities available for sale; borrowings; and operations. While
maturities and scheduled amortization of loans are predictable sources of
funds, deposit flows and loan prepayments are greatly influenced by general
interest rates, economic conditions and competition.
43
-------------------------------------------------------------------------------
Table of Contents
CF BANKSHARES INC.
PART 1. Item 2
MANAGEMENT DISCUSSION AND ANALYSIS
CFBank is required by regulation to maintain sufficient liquidity to ensure
its safe and sound operation. Thus, adequate liquidity may vary depending on
CFBank's overall asset/liability structure, market conditions, the activities
of competitors, the requirements of our own deposit and loan customers and
regulatory considerations. Management believes that each of the Holding
Company's and CFBank's current liquidity is sufficient to meet its daily
operating needs and fulfill its strategic planning.
Liquidity management is both a daily and long-term responsibility of
management. We adjust our investments in liquid assets, primarily cash,
short-term investments and other assets that are widely traded in the
secondary market, based on our ongoing assessment of expected loan demand,
expected deposit flows, yields available on interest-earning deposits and
securities and the objective of our asset/liability management program. In
addition to liquid assets, we have other sources of liquidity available
including, but not limited to, access to advances from the FHLB and borrowings
from the FRB and our commercial bank lines of credit.
The following table summarizes CFBank's cash available from liquid assets and
borrowing capacity at March 31, 2024 and December 31, 2023.
March 31, 2024 December 31, 2023
(Dollars in thousands)
Cash, unpledged securities and deposits in other financial institutions $ 237,292 $ 262,004
Additional borrowing capacity at the FHLB 191,683 183,654
Additional borrowing capacity at the FRB 144,457 136,240
Unused commercial bank lines of credit 65,000 65,000
Total $ 638,432 $ 646,898
Cash, unpledged securities and deposits in other financial institutions
decreased $24.7 million, or 9.4%, to $237.3 million at March 31, 2024,
compared to $262.0 million at December 31, 2023. The decrease is primarily
attributed to
a decrease in deposits, partially offset by an increase in loans and leases.
CFBank's additional borrowing capacity with the FHLB increased $8.0 million,
or 4.4%, to $191.7 million at March 31, 2024, compared to $183.7 million at
December 31, 2023.
CFBank's additional borrowing capacity at the FRB increased $8.3 million, or
6.0%, to $144.5 million at March 31, 2024 from $136.2 million at December 31,
2023. CFBank is eligible to participate in the FRB's primary credit program,
providing CFBank access to short-term funds at any time, for any reason, based
on the collateral pledged.
CFBank's borrowing capacity with both the FHLB and FRB may be negatively
impacted by changes such as, but not limited to, further tightening of credit
policies by the FHLB or FRB, deterioration in the credit performance of
CFBank's loan portfolio or CFBank's financial performance, or a decrease in
the balance of pledged collateral.
CFBank had $65.0 million of availability in unused lines of credit with two
commercial banks at March 31, 2024 and at December 31, 2023.
Deposits are obtained predominantly from the markets in which CFBank's offices
are located. We rely primarily on a willingness to pay market-competitive
interest rates to attract and retain retail deposits. Accordingly, rates
offered by competing financial institutions may affect our ability to attract
and retain deposits.
CFBank relies on co
m
petitive interest rates, custo
m
er service,
and relationships with custo
m
ers to
retain d
e
posits.
The FDIC provides d
e
posit insur
a
nce
c
ov
e
r
a
ge up
t
o $250,000 p
e
r d
e
positor.
The Holding Company has more limited sources of liquidity than CFBank. In
general, in addition to its existing liquid assets, sources of liquidity
include funds raised in the securities markets through debt or equity
offerings, funds borrowed from third party banks or other lenders, dividends
received from CFBank or the sale of assets.
Management believes that the Holding Company had adequate funds and sources of
liquidity at March 31, 2024 to meet its current and anticipated operating
needs at this time. The Holding Company's current cash requirements include
operating expenses and interest on subordinated debentures and other debt. The
Company may also pay dividends on its common stock if and when declared by the
Board of Directors.
44
-------------------------------------------------------------------------------
Table of Contents
CF BANKSHARES INC.
PART 1. Item 2
MANAGEMENT DISCUSSION AND ANALYSIS
Currently, annual debt service on the subordinated debentures underlying the
Company's trust preferred securities is approximately $435,000. Prior to July
1, 2023, the subordinated debentures had a variable rate of interest, which
reset quarterly, equal to the three-month London Interbank Offered Rate
(LIBOR) plus 2.85%. Effective July 1, 2023, the rate of interest on the
subordinated debentures resets quarterly to the three-month Secured Overnight
Financing Rate (SOFR) plus 3.112%, which was 8.41% at March 31, 2024.
Currently, the annual debt service on the Company's $10 million of
fixed-to-floating rate subordinated notes is $970,000. The subordinated notes
initially bore a fixed rate of 7.00% until December 2023, and now the interest
rate resets quarterly to a rate equal to the current three-month SOFR plus
4.402%, which was 9.70% at March 31, 2024.
The Holding Company has a $35.0 million credit facility with a third-party
bank. The credit facility is revolving until May 21, 2024, at which time any
then-outstanding balance will be converted to a 10-year term note on a
graduated 10-year amortization. Borrowings on the credit facility bear
interest at a fixed rate of 3.85% until May 21, 2026, and the interest rate
then converts to a floating rate equal to PRIME with a floor of 3.75%.
The purpose of the credit facility is to provide an additional source of
liquidity for the Holding Company and to provide funds for the Holding Company
to downstream as additional capital to CFBank to support growth. At March 31,
2024, the Company had an outstanding balance, net of unamortized debt issuance
costs, of $34.5 million on the facility.
The ability of the Holding Company to pay dividends on its common stock is
dependent upon the amount of cash and liquidity available at the Holding
Company level, as well as the receipt of dividends and other distributions
from CFBank to the extent necessary to fund such dividends.
The Holding Company is a legal entity that is separate and distinct from
CFBank, which has no obligation to make any dividends or other funds available
for the payment of dividends by the Holding Company. Banking regulations limit
the amount of dividends that can be paid to the Holding Company by CFBank
without prior regulatory approval. Generally, financial institutions may pay
dividends without prior approval as long as the dividend does not exceed the
total of the current calendar year-to-date earnings plus any earnings from the
previous two years not already paid out in dividends, and as long as the
financial institution remains well capitalized after the dividend payment.
The Holding Company also is subject to various legal and regulatory policies
and requirements impacting the Holding Company's ability to pay dividends on
its stock. In addition, the Holding Company's ability to pay dividends on its
stock is conditioned upon the payment, on a current basis, of quarterly
interest payments on the subordinated debentures underlying the Company's
trust preferred securities. Finally, under the terms of the Company's
fixed-to-floating rate subordinated debt, the Holding Company's ability to pay
dividends on its stock is conditioned upon the Holding Company continuing to
make required principal and interest payments, and not incurring an event of
default, with respect to the subordinated debt.
Federal income tax laws provided deductions, totaling $2.3 million, for thrift
bad debt reserves established before 1988. Accounting standards do not require
a deferred tax liability to be recorded on this amount, which otherwise would
have totaled $473,000 at year-end 2023. However, if CFBank were wholly or
partially liquidated or otherwise ceases to be a bank, or if tax laws were to
change, this amount would have to be recaptured and a tax liability recorded.
Additionally, any distributions in excess of CFBank's current or accumulated
earnings and profits would reduce amounts allocated to its bad debt reserve
and create a tax liability for CFBank.
45
-------------------------------------------------------------------------------
Table of Contents
CF BANKSHARES INC.
PART 1. Item 3
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Management believes that, as of March 31, 2024, there has been no material
change in the Company's market risk from the information contained in the
Company's Annual Report on Form 10-K filed with the SEC for the year ended
December 31, 2023.
46
-------------------------------------------------------------------------------
Table of Contents
CF BANKSHARES INC.
PART 1. Item 4
CONTROLS AND PROCEDURES
Evaluation of disclosure controls and procedures
. We maintain disclosure controls and procedures that are designed to ensure
that information required to be disclosed in our Securities Exchange Act of
1934 (Exchange Act) reports is recorded, processed, summarized and reported
within the time periods specified in the SEC's rules and forms, and that such
information is accumulated and communicated to our management, including our
principal executive officer and principal financial officer, as appropriate,
to allow timely decisions regarding required disclosure. Management, with the
participation of our principal executive officer and principal financial
officer, has evaluated the effectiveness of our disclosure controls and
procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the
Exchange Act) as of the end of the period covered by this report. Based on
such evaluation, our principal executive officer and principal financial
officer have concluded that our disclosure controls and procedures were
effective as of and for the quarter ended March 31, 2024.
Changes in internal control over financial reporting
. We made no changes in our internal controls over financial reporting (as
defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) in the first
quarter of 2024 that have materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting.
47
-------------------------------------------------------------------------------
Table of Contents
CF BANKSHARES INC.
PART II. Item 1 to 6
OTHER INFORMATION
Ite
m 1. Legal Proceedings
The Holding Company and CFBank may, from time to time, be involved in various
legal proceedings in the normal course of business. Periodically, there have
been various claims and lawsuits involving CFBank, such as claims to enforce
liens, condemnation proceedings on properties in which CFBank holds security
interests, claims involving the making and servicing of real property loans
and other claims and lawsuits incident to our banking business.
We are not a party to any pending legal proceeding that management believes
would have a material adverse effect on our financial condition or results of
operations, if decided adversely to us.
It
em 1A. Risk Factors
There are certain risks and uncertainties in our business that could cause our
actual results to differ materially from those anticipated. A detailed
discussion of our risk factors is included in "Item 1A. Risk Factors" of Part
I of the Company's Annual Report on Form 10-K for the year ended December 31,
2023. There were no material changes to those risk factors as presented in the
Company's Annual Report on Form 10-K for the year ended December 31, 2023.
It
em 2. Unregistered Sales of Equity Securities and Use of Proceeds
(a)
None.
(b)
Not applicable.
(c)
The following table provides information concerning purchases of the Holding
Company's shares of common stock made by or on behalf of the Company or any
"affiliated purchaser" as defined in Rule 10b-18(a)(3) under the Securities
Exchange Act of 1934, as amended, during the three months ended March 31, 2024.
Period Total number Average Total number of common Maximum number of common
of common price paid shares purchased as shares that may yet
shares per common part of publicly announced be purchased under the
purchased share plans or programs plans or programs
(3)
January 1, 6,247 (1) 20.61 5,050 235,447
2024 through
January
31, 2024
February 1, 5,265 (2) 21.28 800 234,647
2024 through
February
29, 2024
March 1, 3,000 20.03 3,000 231,647
2024 through
March 31,
2024
Total 14,512 $ 20.73 8,850
(1)
Includes 1,197 shares of common stock surrendered to the Company for the
payment of taxes upon the vesting of restricted stock and 5,050 shares of
common stock repurchased under the stock repurchase program.
(2)
Includes 4,465 shares of common stock surrendered to the Company for the
payment of taxes upon the vesting of restricted stock and 800 shares of common
stock repurchased under the stock repurchase program.
(3)
On July 5, 2023, the Company's Board of Directors authorized a new stock
repurchase program pursuant to which the Company may repurchase up to 250,000
shares of the Company's common stock on or before June 30, 2024.
I
tem 3. Defaults Upon Senior Securities
Not applicable.
It
em 4. Mine Safety Disclosures
Not applicable.
Ite
m 5. Other Information
(a)
None.
(b)
None.
48
-------------------------------------------------------------------------------
Table of Contents
CF BANKSHARES INC.
PART II. Item 1 to 6
OTHER INFORMATION
(c)
During the quarter ended March 31, 2024, no director or 16 officer (as defined
under Rule 16a-1 of the Exchange Act)
adopted
or
terminated
any Rule 10b5-1 trading arrangements or any
non-Rule
10b5-1
trading arrangements (in each case, as defined in Item 408(a) of Regulation
S-K).
Item 6. Exhibits
Exhibit Description of Exhibit
Number
3.1 Certificate of Incorporation of the registrant (incorporated by
reference to Exhibit 3.1 to the registrant's Quarterly Report
on Form 10-Q for the quarter ended September 30, 2017, filed
with the Commission on November 9, 2017 (File No. 0-25045))
3.2 Amendment to Certificate of Incorporation of the registrant
(incorporated by reference to Exhibit 3.2 to the
registrant's Registration Statement on Form S-2, filed with
the Commission on October 28, 2005 (File No. 333-129315))
3.3 Amendment to Certificate of Incorporation of the registrant
(incorporated by reference to Exhibit 3.4 to the registrant's
Form 10-Q for the quarter ended June 30, 2009, filed with
the Commission on August 14, 2009 (File No. 0-25045))
3.4 Amendment to Certificate of Incorporation of the registrant
(incorporated by reference to Exhibit 3.5 to the registrant's
Form 10-Q for the quarter ended September 30, 2011, filed
with the Commission on November 10, 2011 (File No. 0-25045))
3.5 Amendment to Certificate of Incorporation of the registrant
(incorporated by reference to Exhibit 3.5 to the registrant's
Post-Effective Amendment to the Registration Statement on Form S-1,
filed with the Commission on May 4, 2012 (File No. 333-177434))
3.6 Certificate of Designations to Certificate of Incorporation of
the registrant (incorporated by reference to Exhibit 3.1 to the
registrant's Current Report on Form 8-K dated May 7, 2014 and
filed with the Commission on May 13, 2014 (File No. 0-25045))
3.7 Amendment to Certificate of Incorporation of the registrant
(incorporated by reference to Exhibit 3.1 to the registrant's
Current Report on Form 8-K dated August 20, 2018, filed
with the commission on August 20, 2018 (File No. 0-25045)
3.8 Certificate of Designations to Certificate of Incorporation of
the registrant (incorporated by reference to Exhibit 3.1 to the
registrant's Current Report on Form 8-K dated October 25, 2019,
filed with the Commission on October 31, 2019 (File No. 0-25045))
3. Certificate of Amendment to Certificate of Incorporation of the
9 registrant (incorporated by reference to Exhibit 3.1 to the
registrant's Current Report on Form 8-K dated May 29, 2020,
filed with the Commission on June 2, 2020 (File No. 0-25045))
3.1 Amendment to Certificate of Incorporation of the registrant
0 (incorporated by reference to Exhibit 3.1 to the registrant's
Current Report on Form 8-K dated July 28, 2020, filed
with the commission on July 20, 2020 (File No. 0-25045)
3.11 Certificate of Incorporation, as amended, of the registrant (incorporated by reference to Exhibit 3.10 to the
registrant's Form 10-Q for the quarter ended June 30, 2020, filed with the Commission on August 12, 2020 (File
No. 0-25045)) [This document represents the Certificate of Incorporation of the registrant in compiled form
incorporating all amendments. This compiled document has not been filed with the Delaware Secretary of State.]
3.1 Certificate of Designations to Certificate of Incorporation of
2 the registrant (incorporated by reference to Exhibit 3.1 to the
registrant's Current Report on Form 8-K dated February 5, 2024,
filed with the Commission on February 6, 2024 (File No. 0-25045))
3.13 Second Amended and Restated Bylaws of the registrant
(incorporated by reference to Exhibit 3.3 to the registrant's
Form 10-K for the fiscal year ended December 31, 2007, filed
with the Commission on March 27, 2008 (File No. 0-25045))
31.1 Rule 13a-14(a) Certifications of the Chief Executive Officer
31.2 Rule 13a-14(a) Certifications of the Principal Financial Officer
32.1 Section 1350 Certifications
101.1 Interactive Data File (Inline XBRL)
104 Cover Page Interactive Data File, formatted
in Inline XBRL and contained in Exhibit 101
49
-------------------------------------------------------------------------------
Table of Contents
CF BANKSHARES INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CF BANKSHARES INC.
Dated: May 14, 2024 By: /s/ Timothy T. O'Dell
Timothy T. O'Dell
President and Chief Executive Officer
Dated: May 14, 2024 By: /s/ Kevin J. Beerman
Kevin J. Beerman
Executive Vice President and Chief Financial Officer
50
CF BANKSHARES INC.
Exhibit 31.1
Rule 13a-14(a) Certifications of the Chief Executive Officer
I, Timothy T. ODell, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q for the quarterly period ended
March 31, 2024
of
CF Bankshares Inc.
;
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officer and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined
in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)
Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
b)
Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
c)
Evaluated the effectiveness of the registrants disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and
d)
Disclosed in this report any change in the registrants internal control over
financial reporting that occurred during the registrants most recent fiscal
quarter that has materially affected, or is reasonably likely to materially
affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrants auditors and the audit committee of registrants board of directors:
a)
All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrants ability to record, process,
summarize and report financial information; and
b)
Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal control over
financial reporting.
Dated: /s/ Timothy T. ODell
May 14, 202
4
Timothy T. ODell
President and
Chief Executive Officer
-------------------------------------------------------------------------------
CF BANKSHARES INC.
Exhibit 31.2
Rule 13a-14(a)
Certifications of the
Principal
Financial Officer
I,
Kevin J. Beerman
certify that:
1. I have reviewed this Quarterly Report on Form 10-Q for the quarterly period ended
March 31, 2024
of
CF Bankshares Inc.
;
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officer and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined
in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating
to the registrant, including its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrants disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrants internal control over
financial reporting that occurred during the registrants most recent fiscal
quarter that has materially affected, or is reasonably likely to materially
affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrants auditors and the audit committee of registrants board of directors:
a)
All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrants ability to record, process,
summarize and report financial information; and
b)
Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal control over
financial reporting.
Dated: /s/
May 14, 2024 Kevin J. Beerman
Kevin J. Beerman
Executive
Vice President and
Chief
Financial Officer
-------------------------------------------------------------------------------
CF BANKSHARES INC.
Exhibit 32.1
Section 1350 Certifications
In connection with the Quarterly Report on Form 10-Q
of
CF Bankshares Inc.
(the Company)
for the quarter ended
March 31, 2024
, as filed with the Securities and
Exchange Commission (the Report), the undersigned, Timothy T. ODell,
President and
Chief Executive Officer of the Company, and
Kevin J. Beerman
,
Executive
Vice President
and
Chief
Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section
1350, as added by Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1)
The Report fully complies with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934; and
(2)
The information contained in th
e
Report fairly presents, in all material respects, the consolidated financial
condition and results of operations of the Company and its subsidiaries as of
and for the period covered by th
e
Report.
Dated: By: /s/ Timothy T. ODell
May 14, 202
4
Timothy T. ODell
President and
Chief Executive Officer
Dated: By: /s/ Kevin J. Beerman
May 14, 202
4
Kevin J. Beerman
Executive
Vice
President and
Chief
Financial
Officer
-------------------------------------------------------------------------------
{graphic omitted}
{graphic omitted}