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CF BANKSHARES INC.

CF BANKSHARES INC.CFBKEarnings & Financial Report

Nasdaq · Financials · National Commercial Banks

CF Bankshares Inc. is a U.S.-based regional bank holding company operating through its community bank subsidiary. It offers a full suite of personal and commercial banking solutions including deposit products, various loan options, wealth management services and digital banking tools, primarily serving individual consumers and small-to-medium business clients across the U.S. Midwest region.

What changed in CF BANKSHARES INC.'s 10-K — 2022 vs 2023

Top changes in CF BANKSHARES INC.'s 2023 10-K

636 paragraphs added · 900 removed · 448 edited across 3 sections

Item 1. Business

Business — how the company describes what it does

110 edited+28 added−307 removed167 unchanged
Our principal market area for loans and deposits includes the following Ohio counties: Franklin County through our offices in Columbus, Ohio (formerly located in Worthington, Ohio until March 1, 2023) ; Delaware County; Ohio; through our Polaris office in Columbus, Ohio; Cuyahoga County, through our office in Woodmere, Ohio and our Ohio City office in Cleveland, Ohio; Summit County through our office in Fairlawn, Ohio; Hamilton County through our offices in Blue Ash, Ohio and our Red Bank office in Cincinnati, Ohio; and Marion County, Indiana through our office in Indianapolis.
Our principal market area for loans and deposits includes the following counties: Franklin County through our office in Columbus, Ohio (formerly located in Worthington, Ohio until March 1, 2023); Delaware County, Ohio through our Polaris office in Columbus, Ohio; Cuyahoga County through our office in Woodmere, Ohio and our Ohio City office in Cleveland, Ohio; Summit County through our office in Fairlawn, Ohio; Hamilton County through our offices in Blue Ash, Ohio and our Red Bank office in Cincinnati, Ohio; and Marion County, Indiana through our office in Indianapolis.
As an FHLB member, CFBank must maintain an investment in the capital stock of the FHLB of Cincinnati. Upon the origination or renewal of a loan or advance, each FHLB is required by law to obtain and maintain a security interest in certain types of collateral.
CFBank is a member of the FHLB of Cincinnati. As an FHLB member, CFBank must maintain an investment in the capital stock of the FHLB of Cincinnati. Upon the origination or renewal of a loan or advance, each FHLB is required by law to obtain and maintain a security interest in certain types of collateral.
The Board of Directors has adopted charters for the Board’s various committees, including the Audit Committee, the Compensation Committee, and the Nominating and Corporate Governance Committee, as well as a Code of Business Conduct and Ethics governing the directors, officers and employees of the Company.
The Board of Directors has adopted charters for the Board’s various committees, including the Audit Committee, the Compensation Committee, and the Corporate Governance and Nominating Committee, as well as a Code of Ethics and Business Conduct governing the directors, officers and employees of the Company.
The interest rate adjusts monthly at various margins above the prime rate of interest as disclosed in The Wall Street Journal. The margin is based on certain factors including the loan balance, value of collateral, election of auto-payment and the borrower’s FICO® score.
The interest rate adjusts monthly at various margins above the prime rate of interest (“PRIME”) as disclosed in The Wall Street Journal. The margin is based on certain factors including the loan balance, value of collateral, election of auto-payment and the borrower’s FICO® score.
Specific terms of an individual account vary according to the type of account, the minimum balance required, the time period funds must remain on deposit and the interest rate, among other factors. 13 Table of Contents The flow of deposits is influenced significantly by general economic conditions, changes in money market rates, prevailing interest rates and competition.
Specific terms of an individual account vary according to the type of account, the minimum balance required, the time period funds must remain on deposit and the interest rate, among other factors. 12 Table of Contents The flow of deposits is influenced significantly by general economic conditions, changes in money market rates, prevailing interest rates and competition.
The Company’s management believes that CFBank met the ratio requirements to be deemed “well-capitalized” according to the guidelines described above as of December 31, 2022. The Holding Company currently qualifies under the FRB’s Small Bank Holding Company Policy Statement for exemption from the FRB’s consolidated risk-based capital and leverage rules at the holding company level.
The Company’s management believes that CFBank met the ratio requirements to be deemed “well-capitalized” according to the guidelines described above as of December 31, 2023. The Holding Company currently qualifies under the FRB’s Small Bank Holding Company Policy Statement for exemption from the FRB’s consolidated risk-based capital and leverage rules at the holding company level.
We have utilized interest-rate swaps to protect these fixed-rate loans from changes in value due to changes in interest rates, as appropriate. See Note 18 in the accompanying Notes to Consolidated Financial Statements for additional information on interest-rate swaps . Adjustable-rate loans are tied to various market indices and generally adjust monthly or annually.
We have utilized interest-rate swaps to protect these fixed-rate loans from changes in value due to changes in interest rates, as appropriate. See Note 17 in the accompanying Notes to Consolidated Financial Statements for additional information on interest-rate swaps . Adjustable-rate loans are tied to various market indices and generally adjust monthly or annually.
The Basel III Capital Rules also place restrictions on the payment of capital distributions, including dividends, and certain 18 Table of Contents discretionary bonus payments to executive officers if the banking organization does not hold a capital conservation buffer of greater than 2.5 percent composed of common equity tier 1 capital above its minimum risk-based capital requirements, or if its eligible retained income is negative in that quarter and its capital conservation buffer ratio was less than 2.5 percent at the beginning of the quarter.
The Basel III Capital Rules also place restrictions on the payment of capital distributions, including dividends, and certain discretionary bonus payments to executive officers if the banking organization does not hold a capital conservation buffer of greater than 2.5 percent composed of common equity tier 1 capital above its minimum risk-based capital requirements, or if its eligible retained income is negative in that quarter and its capital conservation buffer ratio was less than 2.5 percent at the beginning of the quarter.
Classified loans include all nonaccrual loans, which are discussed in further detail in the section below titled “Nonperforming Assets” . In addition to nonaccrual loans, classified loans include loans that were identified as substandard assets, were still accruing interest at December 31, 2022, but exhibit weaknesses that could lead to nonaccrual status in the future.
Classified loans include all nonaccrual loans, which are discussed in further detail in the section below titled “Nonperforming Assets” . In addition to nonaccrual loans, classified loans include loans that were identified as substandard assets, were still accruing interest at December 31, 2023, but exhibit weaknesses that could lead to nonaccrual status in the future.
In turn, these factors are affected by, among other things, economic conditions, fiscal policies of the federal government, monetary policies of the FRB and legislative tax policies. ‎ 5 Table of Contents Loan Maturity. The following table shows the remaining contractual maturity of CFBank’s loan portfolio at December 31, 2022.
In turn, these factors are affected by, among other things, economic conditions, fiscal policies of the federal government, monetary policies of the FRB and legislative tax policies. ‎ 5 Table of Contents Loan Maturity. The following table shows the remaining contractual maturity of CFBank’s loan portfolio at December 31, 2023.
See the section titled “ Financial Condition - Foreclosed Assets” in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 7 of this Form 10-K and Note 5 in the accompanying Notes to Consolidated Financial Statements for information regarding foreclosed assets at December 31, 2022.
See the section titled “ Financial Condition - Foreclosed Assets” in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 7 of this Form 10-K and Note 5 in the accompanying Notes to Consolidated Financial Statements for information regarding foreclosed assets at December 31, 2023.
See the section titled “Liquidity and Capital Resources” for information regarding Holding Company liquidity and regulatory matters. Deposits . CFBank offers a variety of deposit accounts with a range of interest rates and terms including savings accounts, retail and business checking accounts, money market accounts and certificates of deposit.
See the section titled “Liquidity and Capital Resources” for information regarding the Holding Company’s liquidity and regulatory matters. Deposits . CFBank offers a variety of deposit accounts with a range of interest rates and terms including savings accounts, retail and business checking accounts, money market accounts and certificates of deposit.
At December 31, 2022, all mortgage-backed securities in the securities portfolio were insured or guaranteed by Ginnie Mae, Freddie Mac or Fannie Mae. Equity securities, consisting of preferred stock in another financial institution, totaled $5.0 million at December 31, 2022 and December 31, 2021.
At December 31, 2023, all mortgage-backed securities in the securities portfolio were insured or guaranteed by Ginnie Mae, Freddie Mac or Fannie Mae. Equity securities, consisting of preferred stock in another financial institution, totaled $5.0 million at December 31, 2023 and December 31, 2022.
Among other things, it codifies a risk-based approach to anti-money laundering compliance for financial institutions; requires the development of standards for evaluating technology and internal processes for BSA compliance; expands enforcement-related and investigation-related authority, including increasing available sanctions for certain BSA violations and instituting BSA whistleblower initiatives and protections. Office of Foreign Assets Control Regulation The U.S.
Among other things, it codifies a risk-based approach to anti-money laundering compliance for financial institutions; requires the development of standards for evaluating technology and internal processes for BSA compliance; expands enforcement-related and investigation-related authority, including increasing available sanctions for certain BSA violations and instituting BSA whistleblower initiatives and protections. 20 Table of Contents Office of Foreign Assets Control Regulation The U.S.
There were no outstanding borrowings from the Federal Reserve Bank at December 31, 2022. At December 31, 2022 and 2021, CFBank had $65.0 million of availability in unused lines of credit with two commercial banks. There were no outstanding borrowings on these lines of credit at December 31, 2022 or December 31, 2021.
There were no outstanding borrowings from the Federal Reserve Bank at December 31, 2023. At December 31, 2023 and 2022, CFBank had $65.0 million of availability in unused lines of credit with two commercial banks. There were no outstanding borrowings on these lines of credit at December 31, 2023 or December 31, 2022.
The proposed rule is intended to: (i) prohibit incentive-based payment arrangements that the banking agencies determine could encourage certain financial institutions to take inappropriate risks by providing excessive compensation or that could lead to material financial loss; (ii) require the board of directors of those financial institutions to take certain oversight actions related to incentive-based compensation; and (iii) require those financial institutions to disclose information concerning incentive-based compensation 22 Table of Contents arrangements to the appropriate federal regulator.
The proposed rule is intended to: (i) prohibit incentive-based payment arrangements that the banking agencies determine could encourage certain financial institutions to take inappropriate risks by providing excessive compensation or that could lead to material financial loss; (ii) require the board of directors of those financial institutions to take certain oversight actions related to incentive-based compensation; and (iii) require those financial institutions to disclose information concerning incentive-based compensation arrangements to the appropriate federal regulator.
The rating assigned to a financial institution is considered in connection with various applications submitted by the financial institution or its holding company to its banking regulators, including applications to acquire another financial institution or 20 Table of Contents to open or close a branch office.
The rating assigned to a financial institution is considered in connection with various applications submitted by the financial institution or its holding company to its banking regulators, including applications to acquire another financial institution or 19 Table of Contents to open or close a branch office.
The rule revises the federal banking agencies’ regulatory capital rules to identify which credit loss allowances under the CECL model are eligible for inclusion in regulatory capital and to provide banking organizations the option to phase in over three years the day-one adverse effects on regulatory capital that may result from the adoption of the CECL model.
The rule revises the federal banking agencies’ regulatory capital rules to identify which 17 Table of Contents credit loss allowances under the CECL model are eligible for inclusion in regulatory capital and to provide banking organizations the option to phase in over three years the day-one adverse effects on regulatory capital that may result from the adoption of the CECL model.
Our policies provide that construction loans may be made in amounts generally up to 80% of the appraised value of the 8 Table of Contents property, and an independent appraisal of the property is required. Loan proceeds are disbursed in increments as construction progresses and as inspections warrant and regular inspections are required to monitor the progress of construction.
Our policies provide that construction loans may be made in amounts generally up to 80% of the appraised value of the property, and an independent appraisal of the property is required. Loan proceeds are disbursed in increments as construction progresses and as inspections warrant and regular inspections are required to monitor the progress of construction.
Tier 2 capital, which can be included in the total capital ratio, generally consists of other preferred stock and subordinated debt meeting certain conditions plus limited amounts of the allowance for loan and lease losses, subject to specified eligibility criteria, less applicable deductions.
Tier 2 capital, which can be included in the total capital ratio, generally consists of other preferred stock and subordinated debt meeting certain conditions plus limited amounts of the allowance for credit losses, subject to specified eligibility criteria, less applicable deductions.
A financial institution is also expected to develop appropriate processes to enable recovery of data and business operations and address rebuilding 23 Table of Contents network capabilities and restoring data if the financial institution or its critical service providers fall victim to this type of cyber-attack.
A financial institution is also expected to develop appropriate processes to enable recovery of data and business operations and address rebuilding network capabilities and restoring data if the financial institution or its critical service providers fall victim to this type of cyber-attack.
Although the ALLL may be allocated to specific loans or loan types, the entire ALLL is available for any loan that, in management’s judgment, should be charged off.
Although the ACL - Loans may be allocated to specific loans or loan types, the entire ACL - Loans is available for any loan that, in management’s judgment, should be charged off.
Commercial, commercial real estate and multi-family mortgage loans, including related construction loans, totaled $1.1 billion in the aggregate and represented 66.9% of the gross loan portfolio at December 31, 2022, as compared to 68.4% of the gross loan portfolio at December 31, 2021.
Commercial, commercial real estate and multi-family mortgage loans, including related construction loans, totaled $1.2 billion in the aggregate and represented 68.4% of the gross loan portfolio at December 31, 2023, as compared to 66.9% of the gross loan portfolio at December 31, 2022.
Executive and Incentive Compensation The Dodd-Frank Act requires that the federal banking agencies, including the FRB and the FDIC, issue a rule related to incentive-based compensation.
Executive and Incentive Compensation The Dodd-Frank Act requires that the federal banking agencies, including the FRB and the OCC, issue a rule related to incentive-based compensation.
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 2022. 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.
Accounting standards do not require a deferred tax liability to be recorded on this amount, which otherwise would total $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.
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 December 31, 2022, the Company had an outstanding balance, net of unamortized debt issuance costs, of $29.5 million on the facility.
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 December 31, 2023, the Company had an outstanding balance, net of unamortized debt issuance costs, of $33.5 million on the facility.
For the year ended December 31, 2022, the amount of additional interest income that would have been recognized on nonaccrual loans, if such loans had continued to perform in accordance with their contractual terms, was approximately $47,000. There was no interest income recognized on nonaccrual loans in 2022.
For the year ended December 31, 2023, the amount of additional interest income that would have been recognized on nonaccrual loans, if such loans had continued to perform in accordance with their contractual terms, was approximately $251,000. There was no interest income recognized on nonaccrual loans in 2023.
See Note 18 in the accompanying Notes to Consolidated Financial Statements for additional information on interest-rate swaps .
See Note 17 in the accompanying Notes to Consolidated Financial Statements for additional information on interest-rate swaps .
Because payments on commercial loans are dependent on successful operation of the borrowers’ business enterprises, repayment of such loans may be subject to a greater extent to adverse conditions in the economy.
Because payments on commercial loans are dependent on successful operation of the business enterprise, repayment of such loans may be subject to a greater extent to adverse conditions in the economy.
All single-family mortgage loans sold are underwritten according to Federal Home Loan Mortgage Corporation (Freddie Mac) or Federal National Mortgage Association (Fannie Mae) guidelines, or are underwritten to comply with additional guidelines as may be required by the individual investor.
All single-family mortgage loans sold are underwritten according to Federal Home Loan Mortgage Corporation (Freddie Mac) or Federal National Mortgage Association (Fannie Mae) guidelines, or are underwritten to comply with additional guidelines as may be 6 Table of Contents required by the individual investor.
Deposits are obtained predominantly from the areas 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, as well as customer service and relationships with customers. At December 31, 2022, CFBank had $291.8 million in brokered deposits with maturity dates from January 2023 through February 2027.
Deposits are obtained predominantly from the areas 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, as well as customer service and relationships with customers. At December 31, 2023, CFBank had $440.4 million in brokered deposits with maturity dates from January 2024 through February 2027.
In addition to access to FHLB advances, CFBank has borrowing capacity available with the Federal Reserve Bank of Cleveland through the Borrower-in-Custody program. The borrowings are collateralized by commercial loans and commercial real estate loans. Based on the collateral pledged, CFBank was eligible to borrow up to a total of $105.1 million at year-end 2022.
In addition to access to FHLB advances, CFBank has borrowing capacity available with the Federal Reserve Bank of Cleveland through the Borrower-in-Custody program. The borrowings are collateralized by commercial loans and commercial real estate loans. Based on the collateral pledged, CFBank was eligible to borrow up to a total of $136.2 million at year-end 2023.
See Note 17, Regulatory Capital Matters, in the accompanying Notes to Consolidated Financial Statements for additional information. The Holding Company’s available cash and cash equivalents totaled $487,000 at December 31, 2022. Management believes that the Holding Company had adequate funds and liquidity sources at December 31, 2022 to meet its current and anticipated operating needs at this time .
See Note 16, Regulatory Capital Matters, in the accompanying Notes to Consolidated Financial Statements for additional information. The Holding Company’s available cash and cash equivalents totaled $530,000 at December 31, 2023. Management believes that the Holding Company had adequate funds and liquidity sources at December 31, 2023 to meet its current and anticipated operating needs at this time .
At December 31, 2022, the Company’s assets totaled $1.8 billion and stockholders’ equity totaled $139.2 million. CFBank is a nationally chartered boutique commercial bank operating primarily in four (4) major metro markets: Columbus, Cleveland, and Cincinnati, Ohio, and Indianapolis, Indiana.
At December 31, 2023, the Company’s assets totaled $2.1 billion and stockholders’ equity totaled $155.4 million. CFBank is a nationally chartered boutique commercial bank operating primarily in four (4) major metro markets: Columbus, Cleveland, and Cincinnati, Ohio, and Indianapolis, Indiana.
See Notes 1 and 3 in the accompanying Notes to Consolidated Financial Statements for a detailed discussion of management’s evaluation of securities for OTTI. ‎ 12 Table of Contents The following table sets forth certain information regarding the amortized cost and fair value of securities at the dates indicated At December 31, 2022 2021 2020 Securities Available For Sale Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value Corporate debt $ 9,978 $ 7,500 $ 9,976 $ 9,750 $ - $ - Issued by U.S. government-sponsored entities and agencies: U.S.
See Notes 1 and 3 in the accompanying Notes to Consolidated Financial Statements for a detailed discussion of management’s evaluation of securities for impairment. ‎ 11 Table of Contents The following table sets forth certain information regarding the amortized cost and fair value of securities at the dates indicated At December 31, 2023 2022 2021 Securities Available For Sale Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value Corporate debt $ 9,980 $ 7,100 $ 9,978 $ 7,500 $ 9,976 $ 9,750 Issued by U.S. government-sponsored entities and agencies: U.S.
CFBank participates in various loan programs offered by the Small Business Administration (the “SBA”), enabling us to provide our customers and small business owners in our markets with access to funding to support their businesses, as well as reduce credit risk associated with these loans. Individual loans include SBA guarantees of up to 75%.
CFBank participates in various loan programs offered by the Small Business Administration (the “SBA”), enabling us to provide our customers and small business owners in our markets with access to funding to support their businesses, as well as reduce credit risk associated with these loans. Individual loans include SBA guarantees of up to 90%. Single-Family Mortgage Lending .
FHLB advances are made pursuant to several credit programs, each of which has its own interest rate and range of maturities. The maximum amount that the FHLB will advance to member institutions fluctuates from time to time in accordance with the policies of the FHLB. FHLB advances totaled $80.0 million at December 31, 2022.
FHLB advances are made pursuant to several credit programs, each of which has its own interest rate and range of maturities. The maximum amount that the FHLB will advance to member institutions fluctuates from time to time in accordance with the policies of the FHLB. FHLB advances totaled $76.5 million at December 31, 2023.
Treasury and federal entity/agency securities meeting the policy’s guidelines, mortgage-backed securities and collateralized mortgage obligations insured or guaranteed by the United States government and its entities/agencies, municipal and corporate bonds and other investment instruments. At December 31, 2022, the securities available for sale portfolio totaled $10.4 million.
Treasury and federal entity/agency securities meeting the policy’s guidelines, mortgage-backed securities and collateralized mortgage obligations insured or guaranteed by the United States government and its entities/agencies, municipal and corporate bonds and other investment instruments. At December 31, 2023, the securities available for sale portfolio totaled $8.1 million.
The Holding Company’s common stock trades on the NASDAQ Capital Market under the symbol “CFBK,” which subjects the Holding Company to various requirements under the NASDAQ Marketplace Rules. CFBank, as a national banking association, is subject to regulation, supervision and examination primarily by the Office of the Comptroller of the Currency (the “OCC”).
The Holding Company’s common stock trades on the NASDAQ Capital Market under the symbol “CFBK”, which subjects the Holding Company to various requirements under the NASDAQ Marketplace Rules. 14 Table of Contents CFBank, as a national banking association, is subject to regulation, supervision and examination primarily by the Office of the Comptroller of the Currency (the “OCC”).
Item 1. B usiness. General The Holding Company was organized as a Delaware corporation in September 1998 as the holding company for CFBank, in connection with CFBank’s conversion from a mutual to stock form of organization.
Item 1. B usiness. General CF Bankshares Inc. (“Holding Company”) was organized as a Delaware corporation in September 1998 as the holding company for CFBank, in connection with CFBank’s conversion from a mutual to stock form of organization.
At December 31, 2022, cash, unpledged securities, and deposits in other financial institutions totaled $154.4 million. CFBank is a participant in the Certificate of Deposit Account Registry Service® (CDARS) and Insured Cash Sweep (ICS) programs offered through IntraFi Network.
At December 31, 2023, cash, unpledged securities, and deposits in other financial institutions totaled $262.0 million. CFBank is a participant in the Certificate of Deposit Account Registry Service® (CDARS) and Insured Cash Sweep (ICS) programs offered through IntraFi Network.
The OCC has adopted risked-based capital guidelines for national banks, which guidelines include both a definition of capital and a framework for calculating risk weighted assets by assigning assets and off-balance-sheet items to broad risk categories.
Regulatory Capital . National banks are required to maintain a minimum level of regulatory capital. The OCC has adopted risked-based capital guidelines for national banks, which guidelines include both a definition of capital and a framework for calculating risk weighted assets by assigning assets and off-balance-sheet items to broad risk categories.
After One Year After Five Years One Year or Less through Five Years through Ten Years After Ten Years Total Weighted Weighted Weighted Weighted Weighted Amortized Average Amortized Average Amortized Average Amortized Average Amortized Average Securities Available For Sale Cost Yield Cost Yield Cost Yield Cost Yield Cost Yield Corporate $ - - $ - - $ 9,978 4.28% $ - - $ 9,978 4.28% Issued by U.S. government-sponsored entities and agencies: U.S.
After One Year After Five Years One Year or Less through Five Years through Ten Years After Ten Years Total Weighted Weighted Weighted Weighted Weighted Amortized Average Amortized Average Amortized Average Amortized Average Amortized Average Securities Available For Sale Cost Yield Cost Yield Cost Yield Cost Yield Cost Yield Corporate $ - - $ - - $ 9,980 1.03% $ - - $ 9,980 1.03% Issued by U.S. government-sponsored entities and agencies: U.S.
Management regularly evaluates the internal cost of funds, surveys rates offered by competitors, reviews cash flow requirements for lending and liquidity, and executes rate changes when necessary as part of its asset/liability management, profitability and liquidity objectives. Certificate of deposit accounts represent the largest portion of our deposit portfolio and totaled 43.3% of average deposit balances in 2022.
Management regularly evaluates the internal cost of funds, surveys rates offered by competitors, reviews cash flow requirements for lending and liquidity, and executes rate changes when necessary as part of its asset/liability management, profitability and liquidity objectives. Money market accounts represent the largest portion of our deposit portfolio and totaled 41.4% of average deposit balances in 2023.
Transactions with Affiliates, Directors, Executive Officers and Shareholders Sections 23A and 23B of the Federal Reserve Act and FRB Regulation W generally: limit the extent to which a bank or its subsidiaries may engage in “covered transactions” with any one affiliate; limit the extent to which a bank or its subsidiaries may engage in “covered transactions” with all affiliates; and require that all such transactions be on terms (including interest rates charged and collateral required) substantially the same, or at least as favorable to the bank or subsidiary, as those provided to a non-affiliate. 17 Table of Contents An affiliate of a bank is any company or entity which controls, is controlled by or is under common control with the bank.
Transactions with Affiliates, Directors, Executive Officers and Shareholders Sections 23A and 23B of the Federal Reserve Act and FRB Regulation W generally: limit the extent to which a bank or its subsidiaries may engage in “covered transactions” with any one affiliate; limit the extent to which a bank or its subsidiaries may engage in “covered transactions” with all affiliates; and require that all such transactions be on terms (including interest rates charged and collateral required) substantially the same, or at least as favorable to the bank or subsidiary, as those provided to a non-affiliate.
Management evaluates debt securities for other-than-temporary impairment (OTTI) at least on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation.
Management evaluates debt securities impairment at least on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation.
As a financial holding company, the Holding Company is subject to regulation by the Board of Governors of the Federal Reserve Board (the “FRB”) under the Bank Holding Company Act of 1956, as amended (the “BHCA”) and to inspection, examination and supervision by the FRB.
As a financial holding company, the Holding Company is subject to regulation by the FRB under the Bank Holding Company Act of 1956, as amended (the “BHCA”) and to inspection, examination and supervision by the FRB.
Consumer and Other Lending . The consumer loan portfolio generally consists of home equity lines of credit, home improvement loans, loans secured by deposits and purchased loans. At December 31, 2022, our consumer loan portfolio totaled $32.5 million, which was 2.0% of gross loans receivable.
Consumer and Other Lending . The consumer loan portfolio generally consists of home equity lines of credit, home improvement loans, loans secured by deposits and purchased loans. At December 31, 2023, our consumer loan portfolio totaled $38.4 million, which was 2.2% of gross loans receivable.
Because the DRR remained below the statutory minimum, the FDIC adopted a final rule in October 2022 increasing the assessment rate from three basis points to five basis points beginning with the first quarterly assessment period of 2023. Limitations on Dividends and Other Capital Distributions.
Because the DRR remained below the statutory minimum, the FDIC adopted a final rule in October 2022 increasing the assessment rate from three basis points to five basis points beginning with the first quarterly assessment period of 2023.
Declines in these portfolios could expose us to losses which could materially affect the Company’s earnings, capital and profitability. ‎ 11 Table of Contents The following table sets forth the ALLL in each of the categories listed at the dates indicated and the percentage of such amounts to the total ALLL and loans in each category as a percent of total loans.
Declines in these portfolios could expose us to losses which could materially affect the Company’s earnings, capital and profitability. ‎ 10 Table of Contents The following table sets forth the ACL - Loans in each of the categories listed at the dates indicated and the percentage of such amounts to total loans.
In response, the Company strategically scaled down its Residential Mortgage Business and exited the direct-to-consumer mortgage business in favor of lending in our regional markets. For the year ended December 31, 2022, portfolio single-family mortgage loans originated by CFBank totaled $146.1 million, or 9.2% of total loans.
In response, beginning in 2021, the Company strategically scaled down its Residential Mortgage Business and exited the direct-to-consumer mortgage business in favor of lending in our regional markets. For the year ended December 31, 2023, portfolio single-family mortgage loans originated by CFBank totaled $45.2 million, or 2.6% of total loans.
The remainder of our loan portfolio consists of consumer loans, which totaled $32.5 million, or 2.0% of gross loans receivable, at year-end 2022. The types of loans originated are subject to federal and state laws and regulations.
The remainder of our loan portfolio consists of consumer loans, which totaled $38.4 million, or 2.2% of gross loans receivable, at year-end 2023. The types of loans originated are subject to federal and state laws and regulations.
We seek to minimize and mitigate these risks through underwriting policies which require such loans to be qualified at origination on the basis of the property’s income and debt coverage ratio and the financial strength of the property owners and/or guarantors. Commercial Lending . The origination of commercial loans continues to be a significant component of our lending activity.
We seek to minimize and mitigate these risks through underwriting policies which require such loans to be qualified at origination on the basis of the property’s income and debt coverage ratio and the financial strength of the property owners and/or guarantors. 7 Table of Contents Commercial Lending .
As of December 31, 2022, the Holding Company had a total of $487,000 of cash at the Holding Company level. At December 31, 2022, the Holding Company also had $5.1 million available on its revolving line-of-credit facility.
As of December 31, 2023, the Holding Company had a total of $530,000 of cash at the Holding Company level. At December 31, 2023, the Holding Company also had $1.2 million available on its revolving line-of-credit facility.
See the section titled “Financial Condition - Allowance for loan and lease losses” in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 7 of this Form 10-K and Notes 1 and 4, in the accompanying Notes to Consolidated Financial Statements for additional information on nonperforming loans and TDRs as of December 31, 2022 and 2021.
See the section titled “Financial Condition - Allowance for credit losses on loans” in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 7 of this Form 10-K and Notes 1 and 4, in the accompanying Notes to Consolidated Financial Statements for additional information on nonperforming loans and modified loans as of December 31, 2023 and 2022.
Public companies will be required, once stock exchanges impose additional listing requirements under the Dodd-Frank Act and rules adopted by the SEC in October 2022, to adopt and implement “clawback” policies for incentive compensation payments and to disclose the details of the procedures which allow recovery of incentive compensation that was paid on the basis of erroneous financial information necessitating a restatement due to material noncompliance with financial reporting requirements.
Following the adoption of additional listing requirements in 2023 to comply with the Dodd-Frank Act and rules adopted by the SEC in October 2022, public companies are now required to adopt and implement “clawback” policies for incentive compensation payments and to disclose the details of the procedures which allow recovery of incentive compensation that was paid on the basis of erroneous financial information necessitating a restatement due to material noncompliance with financial reporting requirements.
During 2022, construction loans increased by $100.7 million, or 120.9%, to $184.1 million, as compared to the $84.4 million in the portfolio at year-end 2021. CFBank’s strong capital levels has allowed CFBank to take advantage of select market opportunities in this area within the risk tolerances we have identified.
During 2023, construction loans increased by $6.6 million, or 3.6%, to $190.7 million, as compared to the $184.1 million in the portfolio at year-end 2022. CFBank’s strong capital levels have allowed CFBank to take advantage of select market opportunities in this area within the risk tolerances we have identified.
In conjunction with competitive product offerings in the market, and the lack of availability for mortgage insurance, jumbo loans and portfolio ARM loans exceeding 80% are often originated without mortgage insurance. Portfolio single-family residential ARM loans totaled $56.5 million, or 12.2% of the single-family mortgage loan portfolio, at December 31, 2022.
In conjunction with competitive product offerings in the market, and the lack of availability for mortgage insurance, jumbo loans and portfolio ARM loans exceeding 80% are often originated without mortgage insurance. Portfolio single-family residential ARM loans totaled $90.9 million, or 19.0% of the single-family mortgage loan portfolio, at December 31, 2023.
Commercial, commercial real estate and multi-family mortgage loan balances, including related construction loans, increased $220.2 million, or 26.2%, during 2022. Portfolio single-family residential mortgage loans, including related construction loans, totaled $494.5 million and represented 31.1% of total gross loans at year-end 2022, compared to 29.5% at year-end 2021.
Commercial, commercial real estate and multi-family mortgage loan balances, including related construction loans, increased $108.4 million, or 10.2%, during 2023. Portfolio single-family residential mortgage loans, including related construction loans, totaled $502.8 million and represented 29.4% of total gross loans at year-end 2023, compared to 31.1% at year-end 2022.
Fixed rate loans are 7 Table of Contents generally limited to three to five years, at which time they convert to adjustable rate loans. At times, CFBank accommodates loans to borrowers who desire fixed-rate loans for longer than three to five years.
We offer both fixed and adjustable rate loans. Fixed rate loans are generally limited to three to five years, at which time they convert to adjustable rate loans. At times, CFBank accommodates loans to borrowers who desire fixed-rate loans for longer than three to five years.
At December 31, 2022, gross loans receivable totaled $1.6 billion and increased approximately $358.7 million, or 29.2%, from $1.2 billion at December 31, 2021.
At December 31, 2023, gross loans receivable totaled $1.7 billion and increased approximately $122.7 million, or 7.7%, from $1.6 billion at December 31, 2022.
See the section titled “Financial Condition - Allowance for loan and lease losses” in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 7 of this Form 10-K for a detailed discussion of management’s methodology for determining the appropriate level of the ALLL.
See the section titled “Financial Condition - Allowance for credit losses on loans” in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 7 of this Form 10-K for a detailed discussion of management’s methodology for determining the appropriate level of the ACL – Loans.
Commercial real estate and multi-family residential mortgage loan balances increased $42.9 million to $479.2 million at December 31, 2022. This represented an increase of 9.8% over the $436.3 million balance at December 31, 2021. We originate commercial real estate loans that are secured by properties used for business purposes, such as manufacturing facilities, office buildings or retail facilities.
This represented an increase of 17.6% over the $479.2 million balance at December 31, 2022. We originate commercial real estate loans that are secured by properties used for business purposes, such as manufacturing facilities, office buildings or retail facilities. We originate multi-family residential mortgage loans that are secured by apartment buildings, condominiums, and multi-family residential houses.
IntraFi Network works with a network of banks to offer products that can provide Federal Deposit Insurance Corporation (“FDIC”) insurance coverage in excess of $250,000 through these innovative products. Brokered deposits, including CDARS and ICS deposits that qualify as brokered, totaled $291.8 million at December 31, 2022, and increased $13.7 million, or 4.9% from $278.1 million at December 31, 2021.
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 $440.4 million at December 31, 2023, and increased $148.6 million, or 50.9%, from $291.8 million at December 31, 2022.
For the year ended December 31, 2022, single-family mortgage loans originated for sale totaled $97.3 million, a decrease of $2.3 billion, or 95.9%, compared to $2.4 billion that was originated in 2021. A shift in the mortgage industry resulted in significantly fewer refinance opportunities and lower margins on residential mortgage loans.
For the year ended December 31, 2023, single-family mortgage loans originated for sale totaled $10.8 million, a decrease of $86.5 million, or 88.9%, compared to $97.3 million originated in 2022. A shift in the mortgage industry resulted in significantly fewer refinance opportunities and lower margins on residential mortgage loans.
During 2022, our consumer loan portfolio increased $6.2 million, or 23.6%, over the year-end 2021 balance of $26.3 million. Home equity lines of credit include those loans we originate for our portfolio and purchased loans. We offer a variable rate home equity line of credit product which we originate for our portfolio.
During 2023, our consumer loan portfolio increased $5.9 million, or 18.1%, over the year-end 2022 balance of $32.5 million. Home equity lines of credit include those loans we originate for our portfolio and purchased loans. We offer a variable rate home equity line of credit product which we originate for our portfolio.
This clawback policy is intended to apply to compensation paid the three completed fiscal years immediately preceding the date the issuer is required to prepare a restatement and would cover all executives who received incentive awards.
This clawback 21 Table of Contents policy is intended to apply to compensation paid the three completed fiscal years immediately preceding the date the issuer is required to prepare a restatement and would cover all executives who received incentive awards. The Company adopted its Clawback policy effective November 29, 2023.
Treasury 3,025 2,925 6,551 6,561 8,517 8,636 Mortgage-backed securities - residential 17 17 35 36 62 65 Collateralized mortgage obligations - - - - - - Total $ 13,020 $ 10,442 $ 16,562 $ 16,347 $ 8,579 $ 8,701 The following table sets forth information regarding the amortized cost, weighted average yield and contractual maturity dates of debt securities as of December 31, 2022.
Treasury 1,007 988 3,025 2,925 6,551 6,561 Mortgage-backed securities - residential 4 4 17 17 35 36 Total $ 10,991 $ 8,092 $ 13,020 $ 10,442 $ 16,562 $ 16,347 The following table sets forth information regarding the amortized cost, weighted average yield and contractual maturity dates of debt securities as of December 31, 2023.
If fair value declines subsequent to foreclosure, a valuation allowance is recorded through expense. Operating and maintenance costs after acquisition are expensed. REO and other foreclosed assets totaled $0 at December 31, 2022 and December 31, 2021.
If fair value declines subsequent to foreclosure, a valuation allowance is recorded through expense. Operating and maintenance costs after acquisition are expensed. There were no foreclosed assets at December 31, 2023 or December 31, 2022.
If CFBank were to borrow on these lines of credit, interest would accrue daily at a variable rate based on the commercial bank’s cost of funds and current market returns. During 2019, CFBank entered into a $25.0 million warehouse facility with a commercial bank.
If CFBank were to borrow on these lines of credit, interest would accrue daily at a variable rate based on the commercial bank’s cost of funds and current market returns.
We have incorporated the regulatory asset classifications as a part of our credit monitoring and internal loan risk rating system. Loans are classified 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.
Loans are classified 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.
The ratio of the ALLL to total loans, excluding loan balances subject to SBA guarantees, was 1.03% at December 31, 2022, compared to 1.27% at December 31, 2021. 10 Table of Contents We believe the ALLL is adequate to absorb probable incurred credit losses in the loan portfolio as of December 31, 2022; 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.
We believe the ACL - Loans is adequate to absorb probable incurred credit losses in the loan portfolio as of December 31, 2023; 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.
This description, as well as other descriptions of laws and regulations contained in this Form 10-K, is not complete and is qualified in its entirety by reference to the applicable laws and regulations.
Regulation and Supervision Set forth below is a brief description of certain laws and regulations that apply to us. This description, as well as other descriptions of laws and regulations contained in this Form 10-K, is not complete and is qualified in its entirety by reference to the applicable laws and regulations.
The following table sets forth certain information regarding short-term borrowings at or for the periods ended on the dates indicated (Dollars in thousands) For the Year ended December 31, 2022 2021 2020 Short-term FHLB advances and other borrowings: Average balance outstanding $ - $ 9,076 $ 23,178 Maximum amount outstanding at any month-end during the period - 23,426 70,013 Balance outstanding at end of period - - 70,013 Weighted average interest rate during the period - 3.02% 3.31% Personnel As of December 31, 2022, the Company had 120 full-time and 5 part-time employees. 15 Table of Contents Regulation and Supervision Set forth below is a brief description of certain laws and regulations that apply to us.
The following table sets forth certain information regarding short-term borrowings at or for the periods ended on the dates indicated (Dollars in thousands) For the Year ended December 31, 2023 2022 2021 Short-term FHLB advances and other borrowings: Average balance outstanding $ 223 $ - $ 9,076 Maximum amount outstanding at any month-end during the period - - 23,426 Balance outstanding at end of period - - - Weighted average interest rate during the period 4.91% - 3.02% Personnel As of December 31, 2023, the Company had 103 full-time and 5 part-time employees.
For The Year Ended December 31, 2022 2021 2020 Average Balance Percent of Total Average Deposits Average Rate Paid Average Balance Percent of Total Average Deposits Average Rate Paid Average Balance Percent of Total Average Deposits Average Rate Paid (Dollars in thousands) Interest- bearing checking accounts $ 91,204 6.64% 1.41% $ 92,094 7.60% 0.38% $ 35,681 4.03% 1.45% Money market accounts 429,606 31.26% 1.76% 282,299 23.28% 0.50% 254,033 28.65% 1.13% Savings accounts 5,582 0.40% 0.19% 15,793 1.30% 0.15% 20,637 2.33% 0.11% Certificates of deposit 594,611 43.26% 1.19% 588,072 48.50% 1.06% 429,111 48.41% 1.96% Total Interest-bearing deposits 1,121,003 81.56% 1.42% 978,258 80.68% 0.82% 739,462 83.42% 1.60% Noninterest-bearing deposits: Demand deposits 253,440 18.44% - 234,239 19.32% - 146,935 16.58% - Total Average Deposits $ 1,374,443 100.00% $ 1,212,497 100.00% $ 886,397 100.00% See the sections titled “Financial Condition – Deposits” and “Liquidity and Capital Resources” for additional information regarding deposits.
For The Year Ended December 31, 2023 2022 2021 Average Balance Percent of Total Average Deposits Average Rate Paid Average Balance Percent of Total Average Deposits Average Rate Paid Average Balance Percent of Total Average Deposits Average Rate Paid (Dollars in thousands) Interest- bearing checking accounts $ 113,141 6.96% 4.41% $ 91,204 6.64% 1.41% $ 92,094 7.60% 0.38% Money market accounts 672,923 41.42% 4.47% 429,606 31.26% 1.76% 282,299 23.28% 0.50% Savings accounts 3,087 0.19% 0.37% 5,582 0.40% 0.19% 15,793 1.30% 0.15% Certificates of deposit 607,147 37.38% 3.51% 594,611 43.26% 1.19% 588,072 48.50% 1.06% Total Interest-bearing deposits 1,396,298 85.95% 4.04% 1,121,003 81.56% 1.42% 978,258 80.68% 0.82% Noninterest-bearing deposits: Demand deposits 228,156 14.05% - 253,440 18.44% - 234,239 19.32% - Total Average Deposits $ 1,624,454 100.00% $ 1,374,443 100.00% $ 1,212,497 100.00% See the sections titled “Financial Condition – Deposits” and “Liquidity and Capital Resources” for additional information regarding deposits.
The ratio of the ALLL to total loans was 1.01% at December 31, 2022, compared to 1.26% at December 31, 2021.
The ratio of the ACL - Loans to total loans was 0.99% at December 31, 2023, compared to 1.01% at December 31, 2022.
The BHCA requires the prior approval of the FRB in any case where a financial holding company proposes to: acquire direct or indirect ownership or control of more than 5% of the voting shares of any bank that is not already majority-owned by the financial holding company; acquire all or substantially all of the assets of another bank or another financial or bank holding company; or merge or consolidate with any other financial or bank holding company. 16 Table of Contents In April 2020, the FRB adopted a final rule to revise its regulations related to determinations of whether a company has the ability to exercise a controlling influence over another company for purposes of the BHCA.
The BHCA requires the prior approval of the FRB in any case where a financial holding company proposes to: acquire direct or indirect ownership or control of more than 5% of the voting shares of any bank that is not already majority-owned by the financial holding company; acquire all or substantially all of the assets of another bank or another financial or bank holding company; or merge or consolidate with any other financial or bank holding company.
Customer balances in the CDARS reciprocal and ICS programs, which no longer qualify as brokered, totaled $157.9 million at December 31, 2022 and increased $99.5 million, or 170.5%, from $58.4 million at December 31, 2021. As of December 31, 2022 and 2021, deposits exceeding the FDIC insured limit of $250,000 totaled $690.4 million and $504.9 million, respectively.
Customer balances in the CDARS reciprocal and ICS reciprocal programs, which do not qualify as brokered, totaled $237.8 million at December 31, 2023 and increased $79.9 million, or 50.6%, from $157.9 million at December 31, 2022. As of December 31, 2023 and 2022, deposits exceeding the FDIC insured limit of $250,000 totaled $509.7 million and $690.4 million, respectively.
At December 31, 2022 2021 2020 Amount % of Loans in each Category Amount % of Loans in each Category Amount % of Loans in each Category (Dollars in thousands) Real estate loans: Single-family $ 3,914 24.37% $ 3,348 28.20% $ 1,299 16.21% Multi-family 997 6.21% 827 6.24% 467 4.97% Commercial real estate 3,384 21.07% 5,034 29.24% 9,184 30.36% Construction 2,644 16.46% 1,744 6.78% 2,254 8.82% Consumer loans: Home equity lines of credit 333 2.07% 272 1.97% 276 2.30% Other 26 .16% 156 .17% 116 .26% Commercial loans 4,764 29.66% 4,127 27.40% 3,426 37.08% Total ALLL $ 16,062 100.00% $ 15,508 100.00% $ 17,022 100.00% Foreclosed Assets Assets acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis.
At December 31, 2023 2022 2021 Amount % of Loans in each Category Amount % of Loans in each Category Amount % of Loans in each Category (Dollars in thousands) Real estate loans: Single-family $ 3,371 27.95% $ 3,914 29.28% $ 3,348 28.20% Multi-family 1,231 7.64% 997 6.56% 827 6.24% Commercial real estate 4,105 25.31% 3,384 23.62% 5,034 29.24% Construction 1,707 11.15% 2,644 11.59% 1,744 6.78% Consumer loans: Home equity lines of credit 334 2.10% 333 1.93% 272 1.97% Other 233 .14% 26 .11% 156 .17% Commercial loans 5,884 25.71% 4,764 26.91% 4,127 27.40% Total $ 16,865 100.00% $ 16,062 100.00% $ 15,508 100.00% Foreclosed Assets Assets acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis.
We offer several ARM loan programs with terms of up to 30 years and, with the 6 Table of Contents majority of the programs, interest rates adjust with a maximum adjustment limitation of 2.0% per year and a 5.0% lifetime cap.
We offer both fixed-rate and adjustable-rate mortgage (“ARM”) loans with maturities generally up to 30 years, priced competitively with current market rates. We offer several ARM loan programs with terms of up to 30 years and, with the majority of the programs, interest rates adjust with a maximum adjustment limitation of 2.0% per year and a 5.0% lifetime cap.

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Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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The increase in interest income was primarily attributed to a $347.1 million, or 33.6%, increase in average loans outstanding, coupled with a 18bps increase in the average yield on loans, partially offset by a $238.7 million, or 97.4%, decrease in average loans held for sale outstanding.
The increase in interest income was primarily attributed to a $347.1 million, or 33.6%, increase in average loans outstanding, coupled with a 18bps increase in the average yield on loans, partially offset by a $238.7 million, or 97.4%, decrease in average loans held for sale.
Another critical accounting policy relates to fair value of financial instruments, which are estimated using relevant market information and other assumptions. Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments, and other factors, especially in the absence of broad markets for particular items.
Another critical accounting policy relates to fair values of financial instruments, which are estimated using relevant market information and other assumptions. Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments, and other factors, especially in the absence of broad markets for particular items.
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 specific reserve, as the ultimate liquidation of the collateral and/or projected cash flows may be different from management’s estimates.
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 .
(2) Asset quality ratios and capital ratios are end-of-period ratios. All other ratios are based on average monthly balances during the indicated periods. (3) Calculations of yield are presented on a taxable equivalent basis using the federal income tax rate.
(2) Asset quality ratios and capital ratios are end-of-period ratios. All other ratios are based on average monthly balances during the indicated periods. (3) Calculations of yield are presented on a taxable equivalent basis using the federal income tax rate of 21%.
CFBank had $65.0 million of availability in unused lines of credit with two commercial banks at December 31, 2022 and December 31, 2021. 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.
CFBank had $65.0 million of availability in unused lines of credit with two commercial banks at December 31, 2023 and December 31, 2022. 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.
Management believes that the Holding Company had adequate funds at December 31, 2022 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.
Management believes that the Holding Company had adequate funds at December 31, 2023 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.
Our principal market area for loans and deposits includes the following Ohio counties: Franklin County through our office in Columbus, Ohio (formerly located in Worthington, Ohio until March 1, 2023) and our loan production office in Columbus, Ohio; Delaware County, Ohio through our Polaris office in Columbus, Ohio; Cuyahoga County, through our office in Woodmere, Ohio and our Ohio City office in Cleveland, Ohio; Summit County through our office in Fairlawn, Ohio; Hamilton County through our offices in Blue Ash, Ohio and our Red Bank office in Cincinnati, Ohio; and Marion County, Indiana through our office in Indianapolis.
Our principal market area for loans and deposits includes the following counties: Franklin County through our office in Columbus, Ohio (formerly located in Worthington, Ohio until March 1, 2023); Delaware County, Ohio through our Polaris office in Columbus, Ohio; Cuyahoga County through our office in Woodmere, Ohio and our Ohio City office in Cleveland, Ohio; Summit County through our office in Fairlawn, Ohio; Hamilton County through our offices in Blue Ash, Ohio and our Red Bank office in Cincinnati, Ohio; and Marion County, Indiana through our office in Indianapolis.
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 2022.
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.
Additional information is included in Notes 1, 6 and 18 in the accompanying Notes to Consolidated Financial Statements. 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.
Additional information is included in Notes 1, 6 and 17 in the accompanying Notes to Consolidated Financial Statements. 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.
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, historic tax credits, bank owned life insurance and other miscellaneous items. 51 Table of Contents Average Balances, Interest Rates and Yields.
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, historic tax credits, bank owned life insurance and other miscellaneous items. ‎ 49 Table of Contents Average Balances, Interest Rates and Yields.
There were no foreclosed assets at December 31, 2022 or December 31, 2021. 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 . Premises and equipment.
There were no foreclosed assets at December 31, 2023 or December 31, 2022. 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 . Premises and equipment.
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.
When determining the amount of deferred tax assets that are more-likely-than-not to be realized, and therefore recorded as a benefit, the 47 Table of Contents 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.
Additionally, various regulatory agencies, as an integral part of their examination process, periodically review the ALLL. 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.
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.
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. 43 Table of Contents We have identified accounting policies that are critical accounting policies, and an understanding of these policies is necessary to understand our financial statements.
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 have identified accounting policies that are critical accounting policies, and an understanding of these policies is necessary to understand our financial statements.
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.
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.
CFBank has leveraged its capital to support balance sheet growth and drive increased net interest income. Management remains focused on growing capital though improving results from operations; 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 report.
CFBank has leveraged its capital to support balance sheet growth and drive increased net interest income. Management remains focused on growing capital though improving results from operations; 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 Form 10-K.
Co mparison of Results of Operations for 2022 and 2021 General. Net income for the year ended December 31, 2022 totaled $18.2 million (or $2.78 per diluted common share) and decreased $289,000, or 1.6%, compared to net income of 18.5 million (or $2.77 per diluted common share) for the year ended December 31, 2021.
Comparison of Results of Operations for 2022 and 2021 General. Net income for the year ended December 31, 2022 totaled $18.2 million (or $2.78 per diluted common share) and decreased $289,000, or 1.6%, compared to net income of $18.5 million (or $2.77 per diluted common share) for the year ended December 31, 2021.
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.
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 45 Table of Contents 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.
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. 53 Table of Contents The following table summarizes CFBank’s cash available from liquid assets and borrowing capacity at December 31, 2022 and 2021.
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. 51 Table of Contents The following table summarizes CFBank’s cash available from liquid assets and borrowing capacity at December 31, 2023 and 2022.
The decrease in the net gain on sale of residential mortgage loans was the result of the Company’s decision in early 2021 to scale down and exit the direct-to-consumer mortgage business in favor of lending in our regional markets.
The decrease in the net gain on sale of residential mortgage loans was the result of the Company’s decision 48 Table of Contents in early 2021 to scale down and exit the direct-to-consumer mortgage business in favor of lending in our regional markets.
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 loan and lease losses.
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.
Based on the variables involved and the fact that management must make judgments about outcomes that are inherently uncertain, the determination of the ALLL is considered to be a critical accounting policy .
Based on the variables involved and the fact that management must make judgments about outcomes that are inherently uncertain, the determination of the ACL - Loans is considered to be a critical accounting policy.
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 December 31, 2022, the Company had an outstanding balance, net of unamortized debt issuance costs, of $29.5 million on the facility.
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 December 31, 2023, the Company had an outstanding balance, net of unamortized debt issuance costs, of $33.5 million on the facility.
At December 31, 2022, the Company had an outstanding balance, net of unamortized debt issuance costs, of $29.5 million on the facility. 54 Table of Contents 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.
At December 31, 2023, the Company had an outstanding balance, net of unamortized debt issuance costs, of $33.5 million on the facility. 52 Table of Contents 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 increase in data processing expense was primarily related to the conversion of our core processing system during the third quarter of 2022. The impairment of property and equipment was related to the pending sale of our Worthington headquarters building . Income taxes.
The increase in data processing expense was primarily related to the conversion of our core processing system during the third quarter of 2022. The impairment of property and equipment was related to the then-pending sale (as of December 31, 2022) of our Worthington headquarters building . Income taxes.
On at least a quarterly basis, management reviews each impaired loan to determine whether it should have a specific reserve or partial charge-off. Management relies on appraisals or internal evaluations to help make this determination.
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.
The specific reserve on impaired 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.
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.
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 company status with the Federal Reserve Board (the “FRB”).
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 company status with the FRB.
Net charge-offs for the year ended December 31, 2022 totaled $233,000, compared to net recoveries of $86,000 for the year ended December 31, 2021 . 49 Table of Contents The following table presents information regarding net charge-offs (recoveries) for 2022 and 2021. 2022 2021 (Dollars in thousands) Net charge-offs (recoveries) Commercial $ 263 $ (56) Single-family residential real estate (19) (9) Home equity lines of credit (11) (21) Total $ 233 $ (86) See the section below titled “Financial Condition – Allowance for loan and lease losses ” for additional information.
The following table presents information regarding net charge-offs (recoveries) for 2022 and 2021. 2022 2021 (Dollars in thousands) Net charge-offs (recoveries) Commercial $ 263 $ (56) Single-family residential real estate (19) (9) Home equity lines of credit (11) (21) Total $ 233 $ (86) See the section below titled “Financial Condition – Allowance for loan and lease losses ” for additional information.
At December 31, 2022 2021 2020 2019 2018 (Dollars in thousands) Selected Financial Condition Data: Total assets $ 1,820,174 $ 1,495,589 $ 1,476,995 $ 880,545 $ 665,025 Cash and cash equivalents 151,787 166,591 221,594 45,879 67,304 Securities available for sale 10,442 16,347 8,701 8,174 10,114 Equity securities 5,000 5,000 5,000 - - Loans held for sale 580 27,988 283,165 135,711 17,385 Loans and leases, net (1) 1,572,255 1,214,149 895,344 663,303 550,683 Allowance for loan and lease loss (ALLL) 16,062 15,508 17,022 7,138 7,012 Nonperforming assets 761 997 695 2,439 415 Foreclosed assets - - - - 38 Deposits 1,527,922 1,246,352 1,113,070 746,323 579,786 FHLB advances and other debt 109,461 89,727 214,426 29,017 19,500 Subordinated debentures 14,922 14,883 14,844 14,806 14,767 Total stockholders' equity 139,248 125,330 110,210 80,664 45,559 For the year ended December 31, 2022 2021 2020 2019 2018 (Dollars in thousands) Summary of Operations: Total interest income $ 67,764 $ 52,348 $ 42,386 $ 35,104 $ 24,886 Total interest expense 18,974 10,309 14,578 13,404 6,997 Net interest income 48,790 42,039 27,808 21,700 17,889 Provision for loan and lease losses 787 (1,600) 10,915 - - Net interest income after provision for loan and lease losses 48,003 43,639 16,893 21,700 17,889 Noninterest income: Net gain on sale of loans 1,009 7,359 58,366 10,767 1,927 Other 2,201 4,281 1,627 953 789 Total noninterest income 3,210 11,640 59,993 11,720 2,716 Noninterest expense 28,621 32,461 40,603 21,379 15,275 Income before income taxes 22,592 22,818 36,283 12,041 5,330 Income tax expense 4,428 4,365 6,675 2,440 1,057 Net income $ 18,164 $ 18,453 $ 29,608 $ 9,601 $ 4,273 ‎ 41 Table of Contents At or for the year ended December 31, 2022 2021 2020 2019 2018 (Dollars in thousands) Selected Financial Ratios and Other Data: Performance Ratios (2) Return on average assets 1.11% 1.26% 2.59% 1.30% 0.78% Return on average equity 13.69% 15.58% 32.04% 17.57% 10.11% Average yield on interest-earning assets (3) 4.37% 3.79% 3.89% 4.98% 4.75% Average rate paid on interest-bearing liabilities 1.55% 0.95% 1.64% 2.38% 1.71% Average interest rate spread (4) 2.82% 2.84% 2.25% 2.60% 3.04% Net interest margin, fully taxable equivalent (5) 3.15% 3.04% 2.55% 3.08% 3.41% Average interest-earning assets to interest bearing liabilities 126.74% 127.13% 122.64% 124.90% 128.04% Efficiency ratio (6) 55.04% 60.47% 46.24% 63.97% 74.13% Noninterest expenses to average assets 1.76% 2.22% 3.55% 2.89% 2.78% Common stock dividend payout ratio 6.47% 4.69% 0.67% n/m n/m Capital Ratios: (2) Equity to total assets at end of period 7.65% 8.38% 7.46% 9.16% 6.85% Average equity to average assets 8.14% 8.11% 8.07% 7.39% 7.68% Tier 1 (core) capital to adjusted total assets (Leverage ratio) (7) 9.89% 11.29% 9.74% 10.58% 10.13% Total capital to risk weighted assets (7) 12.74% 14.02% 14.31% 12.96% 12.37% Tier 1 (core) capital to risk weighted assets (7) 11.65% 12.77% 13.05% 11.97% 11.12% Common equity tier 1 capital to risk weighted assets (7) 11.65% 12.77% 13.05% 11.97% 11.12% Asset Quality Ratios: (2) Nonperforming loans to total loans (8) 0.05% 0.08% 0.08% 0.36% 0.07% Nonperforming assets to total assets (9) 0.04% 0.07% 0.05% 0.28% 0.06% Allowance for loan and lease losses to total loans 1.01% 1.26% 1.87% 1.06% 1.26% Allowance for loan and lease losses to nonperforming loans (8) 2110.64% 1555.47% 2449.21% 292.66% 1859.95% Net charge-offs (recoveries) to average loans 0.02% (0.01%) 0.13 (0.02%) (0.01%) Per Share Data: (10) Basic earnings per common share $ 2.84 $ 2.84 $ 4.53 $ 2.05 $ 1.02 Diluted earnings per common share 2.78 2.77 4.47 2.03 1.00 Dividends declared per common share 0.18 0.13 0.03 - - Tangible book value per common share at end of period 21.43 19.28 16.79 12.40 10.51 (1) Loans and leases, net represents the recorded investment in loans net of the ALLL.
At December 31, 2023 2022 2021 2020 2019 (Dollars in thousands) Selected Financial Condition Data: Total assets $ 2,058,615 $ 1,820,174 $ 1,495,589 $ 1,476,995 $ 880,545 Cash and cash equivalents 261,595 151,787 166,591 221,594 45,879 Securities available for sale 8,092 10,442 16,347 8,701 8,174 Equity securities 5,000 5,000 5,000 5,000 - Loans held for sale 1,849 580 27,988 283,165 135,711 Loans and leases, net (1) 1,694,133 1,572,255 1,214,149 895,344 663,303 Allowance for credit losses on loans and leases 16,865 16,062 15,508 17,022 7,138 Nonperforming assets 5,722 761 997 695 2,439 Foreclosed assets - - - - - Deposits 1,744,057 1,527,922 1,246,352 1,113,070 746,323 FHLB advances and other debt 109,995 109,461 89,727 214,426 29,017 Subordinated debentures 14,961 14,922 14,883 14,844 14,806 Total stockholders' equity 155,374 139,248 125,330 110,210 80,664 For the year ended December 31, 2023 2022 2021 2020 2019 (Dollars in thousands) Summary of Operations: Total interest income $ 108,279 $ 67,764 $ 52,348 $ 42,386 $ 35,104 Total interest expense 60,639 18,974 10,309 14,578 13,404 Net interest income 47,640 48,790 42,039 27,808 21,700 Provision for loan and lease losses 2,317 787 (1,600) 10,915 - Net interest income after provision for loan and lease losses 45,323 48,003 43,639 16,893 21,700 Noninterest income: Net gain on sale of loans 185 1,009 7,359 58,366 10,767 Other 3,846 2,201 4,281 1,627 953 Total noninterest income 4,031 3,210 11,640 59,993 11,720 Noninterest expense 28,369 28,621 32,461 40,603 21,379 Income before income taxes 20,985 22,592 22,818 36,283 12,041 Income tax expense 4,048 4,428 4,365 6,675 2,440 Net income $ 16,937 $ 18,164 $ 18,453 $ 29,608 $ 9,601 39 Table of Contents At or for the year ended December 31, 2023 2022 2021 2020 2019 (Dollars in thousands) Selected Financial Ratios and Other Data: Performance Ratios (2) Return on average assets 0.88% 1.11% 1.26% 2.59% 1.30% Return on average equity 11.46% 13.69% 15.58% 32.04% 17.57% Average yield on interest-earning assets (3) 5.89% 4.37% 3.79% 3.89% 4.98% Average rate paid on interest-bearing liabilities 3.99% 1.55% 0.95% 1.64% 2.38% Average interest rate spread (4) 1.90% 2.82% 2.84% 2.25% 2.60% Net interest margin, fully taxable equivalent (5) 2.59% 3.15% 3.04% 2.55% 3.08% Average interest-earning assets to interest bearing liabilities 120.70% 126.74% 127.13% 122.64% 124.90% Efficiency ratio (6) 54.90% 55.04% 60.47% 46.24% 63.97% Noninterest expenses to average assets 1.47% 1.76% 2.22% 3.55% 2.89% Common stock dividend payout ratio 8.75% 6.47% 4.69% 0.67% n/m Capital Ratios: (2) Equity to total assets at end of period 7.55% 7.65% 8.38% 7.46% 9.16% Average equity to average assets 7.66% 8.14% 8.11% 8.07% 7.39% Tier 1 (core) capital to adjusted total assets (Leverage ratio) (7) 9.76% 9.89% 11.29% 9.74% 10.58% Total capital to risk weighted assets (7) 13.30% 12.74% 14.02% 14.31% 12.96% Tier 1 (core) capital to risk weighted assets (7) 12.17% 11.65% 12.77% 13.05% 11.97% Common equity tier 1 capital to risk weighted assets (7) 12.17% 11.65% 12.77% 13.05% 11.97% Asset Quality Ratios: (2) Nonperforming loans to total loans (8) 0.33% 0.05% 0.08% 0.08% 0.36% Nonperforming assets to total assets (9) 0.28% 0.04% 0.07% 0.05% 0.28% Allowance for credit losses on loans and leases to total loans 0.99% 1.01% 1.26% 1.87% 1.06% Allowance for credit losses on loan and leases to nonperforming loans (8) 294.74% 2110.64% 1555.47% 2449.21% 292.66% Net charge-offs (recoveries) to average loans 0.04% 0.02% (0.01%) 13.00% (0.02%) Per Share Data: Basic earnings per common share $ 2.64 $ 2.84 $ 2.84 $ 4.53 $ 2.05 Diluted earnings per common share 2.63 2.78 2.77 4.47 2.03 Dividends declared per common share 0.23 0.18 0.13 - - Tangible book value per common share at end of period 23.74 21.43 19.28 16.79 12.40 (1) Loans and leases, net represents the recorded investment in loans net of the allowance for credit losses on loans and leases (ACL – Loans).
Loans designated as special mention increased $4.4 million, or 182.3%, and totaled $6.8 million at December 31, 2022, compared to $2.4 million at December 31, 2021. Loans classified as substandard decreased $2.9 million, or 81.0%, and totaled $681,000 at December 31, 2022, compared to $3.6 million at December 31, 2021.
Loans designated as special mention decreased $2.7 million, or 40.3%, and totaled $4.1 million at December 31, 2023, compared to $6.8 million at December 31, 2022. Loans classified as substandard increased $8.0 million and totaled $8.6 million at December 31, 2023, compared to $681,000 at December 31, 2022.
Additional information regarding this policy is included in the previous section titled “ Financial Condition - Allowance for loan and lease losses” and in Notes 1, 4 and 6 in the accompanying Notes to Consolidated Financial Statements. Fair value of financial instruments.
Additional information regarding this policy is included in the section titled “Financial Condition - Allowance for Credit Losses on Loans ” and in Notes 1, 4 and 6 in the accompanying Notes to Consolidated Financial Statements. Fair value of financial instruments.
Nonaccrual loans at December 31, 2022 and December 31, 2021 do not include $95,000 and $2.8 million, respectively, of TDRs where customers have established a sustained period of repayment performance, generally six months, loans are current according to their modified terms and repayment of the remaining contractual payments is expected. These loans are included in total impaired loans.
Nonaccrual loans at December 31, 2022 did not include $95,000 of TDRs where customers had established a sustained period of repayment performance, generally six months, the loans were current according to their modified terms and repayment of the remaining contractual payments was expected. These loans were included in total impaired loans.
Subordinated debentures Subordinated debentures totaled $14.9 million at December 31, 2022 and $14.9 million at December 31, 2021. 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, net of unamortized debt issuance costs of approximately $388,000.
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.
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).
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 the prior volume).
Interest payments were current at December 31, 2022 and December 31, 2021. See Note 11, Subordinated Debentures, in the accompanying Notes to Consolidated Financial Statements for additional information. Stockholders’ equity. Stockholders’ equity totaled $139.2 million at December 31, 2022, an increase of $13.9 million, or 11.1%, from $125.3 million at December 31, 2021.
Interest payments on the subordinated debentures were current at December 31, 2023 and December 31, 2022. See Note 11in the accompanying Notes to Consolidated Financial Statements for additional information. Stockholders’ equity. Stockholders’ equity totaled $155.4 million at December 31, 2023, an increase of $16.1 million, or 11.6%, from $139.2 million at December 31, 2022.
Interest only commercial lines of credit totaled $117.9 million, or 27.6%, of CFBank’s commercial portfolio at December 31, 2022, compared to $120.1 million, or 35.6% at December 31, 2021.
Interest-only commercial lines of credit totaled $147.5 million, or 33.5% of CFBank’s commercial portfolio at December 31, 2023, compared to $117.9 million, or 27.6%, at December 31, 2022.
The credit facility is revolving until May 21, 2024, at which time any then-outstanding balance is converted to a 10-year term note on a graduated 10-year amortization.
The Holding Company has a $35.0 million facility with a third-party bank. The credit facility is revolving until May 21, 2024, at which time any then-outstanding balance is converted to a 10-year term note on a graduated 10-year amortization.
Customer balances in the CDARS reciprocal and ICS reciprocal programs, which do not qualify as brokered, totaled $157.9 million at December 31, 2022 and increased $99.5 million, or 170.5%, from $58.4 million at December 31, 2021. FHLB advances and other debt.
Customer balances in the CDARS reciprocal and ICS reciprocal programs, which do not qualify as brokered, totaled $237.8 million at December 31, 2023 and increased $79.9 million, or 50.6%, from $157.9 million at December 31, 2022. FHLB advances and other debt.
At December 31, 2022 and 2021, 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 December 31, 2022 or December 31, 2021. During 2019, CFBank entered into a $25.0 million warehouse facility with a commercial bank.
At December 31, 2023 and 2022, CFBank had availability in unused lines of credit at two commercial banks in the amounts of $50.0 million and $15.0 million, respectively. There were no outstanding borrowings on either line at December 31, 2023 or December 31, 2022.
The increase in total stockholders’ equity was primarily attributed to net income, partially offset by dividends of $1.1 million, share repurchases of $2.5 million and a $1.9 million increase in other comprehensive loss. Management continues to proactively monitor capital levels and ratios in its on-going capital planning process.
The increase in total stockholders’ equity was primarily attributed to net income, partially offset by $1.5 million in dividend payments and a $253,000 increase in other comprehensive loss. The other comprehensive loss was the result of the mark-to-market adjustment of our investment portfolio. Management continues to proactively monitor capital levels and ratios in its on-going capital planning process.
This review should be read in conjunction with our consolidated financial statements and related notes. 44 Table of Contents Fi nancial Condition General. Assets totaled $1.8 billion at December 31, 2022 and increased $324.6 million, or 21.7%, from $1.5 billion at December 31, 2021.
This review should be read in conjunction with our consolidated financial statements and related notes. Fi nancial Condition General. Assets totaled $2.1 billion at December 31, 2023 and increased $238.4 million, or 13.1%, from $1.8 billion at December 31, 2022.
(10) Adjusted to reflect the 1-for-5.5 reverse stock split effected on August 20, 2018. n/m - not meaningful ‎ 42 Table of Contents Bus iness 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.
(9) Nonperforming assets consist of nonperforming loans and foreclosed assets. n/m - not meaningful ‎ 40 Table of Contents Bus iness 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.
Forward-looking statements include, but are not limited to: (1) projections of revenues, income or loss, earnings or loss per share of common stock, capital structure and other financial items; (2) plans and objectives of the management or Boards of Directors of CF Bankshares Inc.
Forward-looking statements include, but are not limited to: (1) projections of revenues, income or loss, earnings or loss per share of common stock, capital structure and other financial items; (2) plans and objectives of the management or Boards of Directors of Holding Company or CFBank; (3) statements regarding future events, actions or economic performance; and (4) statements of assumptions underlying such statements.
We believe that CFBank matches the sophistication of much larger banks, without the bureaucracy. Most of our deposits and loans come from our market area.
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.
The increase was primarily due to a $118.3 million increase in single-family residential loan balances, a $100.8 million increase in construction loan balances, a $90.5 million increase in commercial loan balances, a $27.4 million increase in multi-family loan balances, a $15.5 million increase in commercial real estate loan balances, and a $6.5 million increase in home equity lines of credit.
The increase was primarily due to a $57.9 million increase in commercial real estate loan balances, a $26.6 million increase in multi-family loan balances, a $13.2 million increase in single-family residential loan balances, a $12.5 million increase in commercial loan balances, a $6.6 million increase in construction loan balances, and a $5.2 million increase in home equity lines of credit.
The increase is primarily due to a $326.9 million increase in money market account balances, partially offset by a $26.4 million decrease in certificate of deposit account balances and a $16.9 million decrease in checking account balances.
The increase is primarily due to a $105.3 million increase in certificate of deposit account balances, a $102.5 million increase in money market account balances, and an $11.4 million increase in checking account balances, partially offset by a $3.1 million decrease in savings account balances.
The effective tax rate for the year ended December 31, 2020 was favorably impacted by the recognition of approximately $1.0 million of historic tax credits. Our deferred tax assets are composed of U.S. net operating losses (“NOLs”), and other temporary book to tax differences.
The effective tax rate for the year ended December 31, 2023 was approximately 19.3%, as compared to approximately 19.6% for the year ended December 31, 2022. Our deferred tax assets are composed of U.S. net operating losses (“NOLs”), and other temporary book to tax differences.
The decrease in the net gain on sale of loans was partially offset by an increase in net interest income, a decrease in provision expense and a decrease in noninterest expenses. Net interest income.
The decrease in net income was primarily due to a decrease in net interest income and an increase in provision expense, which was partially offset by an increase in noninterest interest income and a decrease in noninterest expense. Net interest income.
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.
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.
The decrease in interest expense was attributed to a 69bps decrease in the average cost of funds on interest-bearing liabilities, partially offset by a $198.5 million, or 22.4%, increase in average interest-bearing liabilities .
The increase in interest expense was attributed to a 244bps increase in the average cost of funds on interest-bearing liabilities, coupled with a $298.5 million, or 24.4%, increase in average interest-bearing liabilities .
December 31, 2022 December 31, 2021 (Dollars in thousands) Cash, unpledged securities and deposits in other financial institutions $ 154,410 $ 168,953 Additional borrowing capacity at the FHLB 187,854 113,077 Additional borrowing capacity at the FRB 105,119 72,195 Unused commercial bank lines of credit 65,000 65,000 Total $ 512,383 $ 419,225 Cash, unpledged securities and deposits in other financial institutions decreased $14.6 million, or 8.61%, to $154.4 million at December 31, 2022, compared to $169.0 million at December 31, 2021.
December 31, 2023 December 31, 2022 (Dollars in thousands) Cash, unpledged securities and deposits in other financial institutions $ 262,004 $ 154,410 Additional borrowing capacity at the FHLB 183,654 187,854 Additional borrowing capacity at the FRB 136,240 105,119 Unused commercial bank lines of credit 65,000 65,000 Total $ 646,898 $ 512,383 Cash, unpledged securities and deposits in other financial institutions increased $107.6 million, or 69.7%, to $262.0 million at December 31, 2023, compared to $154.4 million at December 31, 2022.
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.
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.
Net loans and leases totaled $1.6 billion at December 31, 2022, and increased $358.1 million, or 29.5%, from $1.2 billion at December 31, 2021.
Net loans and leases totaled $1.7 billion at December 31, 2023 and increased $121.9 million, or 7.8%, from $1.6 billion at December 31, 2022.
The following table presents information regarding the number and balance of nonperforming loans at December 31, 2022 and December 31, 2021.
The ratio of nonperforming loans to total loans was 0.33% at December 31, 2023 compared to 0.05% at December 31, 2022. The following table presents information regarding the number and balance of nonperforming loans at December 31, 2023 and December 31, 2022.
The decrease in noninterest expense during the year ended December 31, 2021 was primarily due to a $5.0 million decrease in salaries and employee benefits expense, a $2.6 million decrease in advertising and promotion expense and a $722,000 decrease in professional fees expense, partially offset by a $650,000 increase in FDIC premiums.
The decrease in noninterest expense during the year ended December 31, 2023 was primarily due to a $635,000 decrease in data processing expense and a $612,000 decrease in salaries and employee benefits expense, partially offset by a $1.1 million increase in FDIC premiums.
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 ALLL and includes nonperforming loans. 52 Table of Contents Rate/Volume Analysis of Net Interest Income.
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.
Interest only home equity lines of credit totaled $30.5 million, or 99.2%, of the total home equity lines of credit at December 31, 2022 compared to $23.9 million, or 98.7%, at December 31, 2021. 47 Table of Contents We believe the ALLL is adequate to absorb probable incurred credit losses in the loan portfolio as of December 31, 2022; 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.
We believe the ACL - Loans is adequate to absorb current expected credit losses in the loan portfolio as of December 31, 2023; 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.
Our Commercial Banking Business continues to experience strong growth and has become the primary driver of our earnings and performance. Criti cal Accounting Policies and Estimates 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.
Criti cal Accounting Policies and Estimates 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 Consolidated Financial Statements.
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. COVID-19 Impact. The World Health Organization declared the coronavirus COVID-19 a pandemic in March 2020.
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. CECL Implementation.
Currently, annual debt service on the subordinated debentures underlying the Company’s trust preferred securities is approximately $390,000. The subordinated debentures have a variable rate of interest, reset quarterly, equal to the three-month LIBOR plus 2.85%. The total rate in effect was 7.58% at December 31, 2022.
Currently, annual debt service on the subordinated debentures underlying the Company’s trust preferred securities is approximately $430,000. 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%.
Assets designated as substandard, doubtful or loss are considered classified assets . See Note 4 in the accompanying Notes to Consolidated Financial Statements for additional information regarding descriptions of the regulatory asset classifications. The level of total criticized and classified loans increased by $1.4 million, or 23.4%, during the twelve months ended December 31, 2022.
See Note 4 in the accompanying Notes to Consolidated Financial Statements included in this Form 10-K for additional information regarding the regulatory asset classifications. The level of total criticized and classified loans increased by $5.6 million, or 73.6%, during the year ended December 31, 2023.
Cash and cash equivalents totaled $151.8 million at December 31, 2022, and decreased $14.8 million, or 8.9%, from $166.6 million at December 31, 2021. The decrease in cash and cash equivalents was primarily attributed to an increase in net loans, partially offset by an increase in deposits and a decrease in loans held for sale. Securities.
The increase in cash and cash equivalents was primarily attributed to an increase in deposits, partially offset by an increase in net loans. Securities. Securities available for sale totaled $8.1 million at December 31, 2023, and decreased $2.3 million, or 22.5%, compared to $10.4 million at December 31, 2022. The decrease was primarily due to principal maturities.
For the Years Ended December 31, 2022 2021 2020 Average Interest Average Average Interest Average Average Interest Average Outstanding Earned/ Yield/ Outstanding Earned/ Yield/ Outstanding Earned/ Yield/ Balance Paid Rate Balance Paid Rate Balance Paid Rate (Dollars in thousands) Interest-earning assets: Securities (1) (2) $ 17,805 $ 881 4.58% $ 19,311 $ 756 3.93% $ 10,285 $ 161 1.59% Loans held for sale 6,509 172 2.64% 245,164 5,572 2.27% 214,177 6,231 2.91% Loans and leases (3) 1,379,192 63,545 4.61% 1,032,075 45,684 4.43% 798,572 35,620 4.46% Other earning assets 138,805 2,818 2.03% 79,017 102 0.13% 61,451 175 0.28% FHLB and FRB stock 7,413 348 4.69% 6,220 234 3.76% 5,006 199 3.98% Total interest-earning assets 1,549,724 67,764 4.37% 1,381,787 52,348 3.79% 1,089,491 42,386 3.89% Noninterest-earning assets 79,467 79,393 55,597 Total assets $ 1,629,191 $ 1,461,180 $ 1,145,088 Interest-bearing liabilities: Deposits $ 1,121,003 15,952 1.42% $ 978,258 8,014 0.82% $ 739,462 11,911 1.61% FHLB advances and other borrowings 101,757 3,022 2.97% 108,637 2,295 2.11% 148,887 2,667 1.79% Total interest-bearing liabilities 1,222,760 18,974 1.55% 1,086,895 10,309 0.95% 888,349 14,578 1.64% Noninterest-bearing liabilities 273,789 255,855 164,337 Total liabilities 1,496,549 1,342,750 1,052,686 Equity 132,642 118,430 92,402 Total liabilities and equity $ 1,629,191 $ 1,461,180 $ 1,145,088 Net interest-earning assets $ 326,964 $ 294,892 $ 201,142 Net interest income/interest rate spread $ 48,790 2.82% $ 42,039 2.84% $ 27,808 2.25% Net interest margin 3.15% 3.04% 2.55% Average interest-earning assets to average interest-bearing liabilities 126.74% 127.13% 122.64% (1) Average balance is computed using the carrying value of securities.
For the Years Ended December 31, 2023 2022 2021 Average Interest Average Average Interest Average Average Interest Average Outstanding Earned/ Yield/ Outstanding Earned/ Yield/ Outstanding Earned/ Yield/ Balance Paid Rate Balance Paid Rate Balance Paid Rate (Dollars in thousands) Interest-earning assets: Securities (1) (2) $ 14,198 $ 658 3.86% $ 17,805 $ 881 4.58% $ 19,311 $ 756 3.93% Loans and leases and loans held for sale (3) 1,635,173 97,383 5.96% 1,385,701 63,717 4.60% 1,277,239 51,256 4.01% Other earning assets 178,275 9,646 5.41% 138,805 2,818 2.03% 79,017 102 0.13% FHLB and FRB stock 8,566 592 6.91% 7,413 348 4.69% 6,220 234 3.76% Total interest-earning assets 1,836,212 108,279 5.89% 1,549,724 67,764 4.37% 1,381,787 52,348 3.79% Noninterest-earning assets 92,957 79,467 79,393 Total assets $ 1,929,169 $ 1,629,191 $ 1,461,180 Interest-bearing liabilities: Deposits $ 1,396,298 56,363 4.04% $ 1,121,003 15,952 1.42% $ 978,258 8,014 0.82% FHLB advances and other borrowings 124,999 4,276 3.42% 101,757 3,022 2.97% 108,637 2,295 2.11% Total interest-bearing liabilities 1,521,297 60,639 3.99% 1,222,760 18,974 1.55% 1,086,895 10,309 0.95% Noninterest-bearing liabilities 260,060 273,789 255,855 Total liabilities 1,781,357 1,496,549 1,342,750 Equity 147,812 132,642 118,430 Total liabilities and equity $ 1,929,169 $ 1,629,191 $ 1,461,180 Net interest-earning assets $ 314,915 $ 326,964 $ 294,892 Net interest income/interest rate spread $ 47,640 1.90% $ 48,790 2.82% $ 42,039 2.84% Net interest margin 2.59% 3.15% 3.04% Average interest-earning assets to average interest-bearing liabilities 120.70% 126.74% 127.13% (1) Average balance is computed using the carrying value of securities.
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 additional borrowing capacity at the FRB increased $31.1 million, or 29.6%, to $136.2 million at December 31, 2023 from $105.1 million at December 31, 2022. 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.
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, historic tax credits, bank owned life insurance and other miscellaneous items. Com parison of Results of Operations for 2021 and 2020 General.
Based on these criteria, the Company determined as of December 31, 2023 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, historic tax credits, bank owned life insurance and other miscellaneous items.
The following table presents information regarding net charge-offs (recoveries) for 2021 and 2020. 2021 2020 (Dollars in thousands) Net charge-offs (recoveries) Commercial $ (56) $ 633 Single-family residential real estate (9) 394 Home equity lines of credit (21) 4 Total $ (86) $ 1,031 See the section below titled “Financial Condition – Allowance for loan and lease losses” for additional information.
The following table presents information regarding net charge-offs (recoveries) for 2023 and 2022. 2023 2022 (Dollars in thousands) Net charge-offs (recoveries) Commercial $ 690 $ 263 Single-family residential real estate (40) (19) Home equity lines of credit (4) (11) Total $ 646 $ 233 See the section above titled “Financial Condition – Allowance for Credit Losses on Loans ” for additional information.
The increase in interest income was primarily attributed to a $233.5 million, or 29.2%, increase in average loans outstanding and a $31.0 million, or 14.5%, increase in average loans held for sale outstanding, partially offset by a 64bps decrease in the average yield on loans held for sale and a 3bps decrease in the average yield on loans.
The increase in interest income was primarily attributed to a 136bps increase in the average yield on loans and leases and loans held for sale, coupled with a $249.5 million, or 18.0%, increase in average loans and leases and loans held for sale.
The decrease was primarily attributed to an increase in net loans, partially offset by an increase in deposits and decreases in loans held for sale and securities . CFBank’s additional borrowing capacity with the FHLB increased $74.8 million, or 66.1%, to $187.9 million at December 31, 2022, compared to $113.1 million at December 31, 2021.
The increase was primarily attributed to an increase in deposits, partially offset by an increase in net loan balances . CFBank’s additional borrowing capacity with the FHLB decreased $4.2 million, or 2.2%, to $183.7 million at December 31, 2023, compared to $187.9 million at December 31, 2022.
Noninterest income . Noninterest income for the year ended December 31, 2021 totaled $11.6 million and decreased $48.4 million, or 80.6%, compared to $60.0 million for the year ended December 31, 2020.
Noninterest expense for the year ended December 31, 2023 totaled $28.4 million and decreased $252,000, or 0.9%, compared to $28.6 million for the year ended December 31, 2022.
Net income for the year ended December 31, 2021 totaled $18.5 million (or $2.77 per diluted common share) and decreased $11.1 million, or 37.7%, compared to net income of $29.6 million (or $4.47 per diluted common share) for the year ended December 31, 2020.
Net interest income totaled $47.6 million for the year ended December 31, 2023 and decreased $1.2 million, or 2.4%, compared to net interest income of $48.8 million for the year ended December 31, 2022.
The decrease in interest expense was primarily attributed to a 79bps decrease in the average rate of interest-bearing deposits, partially offset by a $238.8 million, or 32.3%, increase in average interest-bearing deposits. Provision for loan and lease losses.
The increase in interest expense was primarily attributed to a 262bps increase in the average rate of interest-bearing deposits, coupled with a $275.3 million, or 24.6%, increase in average interest-bearing deposits. Provision for credit losses.
Currently, the annual debt service on the Company’s $10 million of fixed-to-floating rate subordinated notes is $700,000. The subordinated notes have a fixed rate of 7.00% until December 2023 at which time the interest rate will reset quarterly to a rate equal to the then current three-month LIBOR plus 4.14%.
The Holding Company’s subordinated notes had a fixed rate of 7.00% until December 2023, at which time the interest rate began to reset quarterly to a rate equal to the then current three-month SOFR plus 4.402%. The Holding Company has a $35.0 million credit facility.
Year Ended Year Ended December 31, 2022 December 31, 2021 Compared to Year Ended Compared to Year Ended December 31, 2021 December 31, 2020 Increase (decrease) due to Increase (decrease) due to Rate Volume Net Rate Volume Net (Dollars in thousands) Interest-earning assets: Securities (1) $ 165 $ (40) $ 125 $ 373 $ 222 $ 595 Loans held for sale 780 (6,180) (5,400) (1,482) 823 (659) Loans and leases 1,936 15,925 17,861 (274) 10,338 10,064 Other earning assets 2,584 132 2,716 (114) 41 (73) FHLB and FRB stock 64 50 114 (11) 46 35 Total interest-earning assets 5,529 9,887 15,416 (1,508) 11,470 9,962 Interest-bearing liabilities: Deposits 6,627 1,311 7,938 (6,994) 3,097 (3,897) FHLB advances and other borrowings 880 (153) 727 427 (799) (372) Total interest-bearing liabilities 7,507 1,158 8,665 (6,567) 2,298 (4,269) Net change in net interest income $ (1,978) $ 8,729 $ 6,751 $ 5,059 $ 9,172 $ 14,231 (1) Securities amounts are presented on a fully taxable equivalent basis.
Year Ended Year Ended December 31, 2023 December 31, 2022 Compared to Year Ended Compared to Year Ended December 31, 2022 December 31, 2021 Increase (decrease) due to Increase (decrease) due to Rate Volume Net Rate Volume Net (Dollars in thousands) Interest-earning assets: Securities (1) $ (98) $ (125) $ (223) $ 165 $ (40) $ 125 Loans and leases 20,898 12,768 33,666 2,716 9,745 12,461 Other earning assets 5,832 996 6,828 2,584 132 2,716 FHLB and FRB stock 184 60 244 64 50 114 Total interest-earning assets 26,816 13,699 40,515 5,529 9,887 15,416 Interest-bearing liabilities: Deposits 35,645 4,766 40,411 6,627 1,311 7,938 FHLB advances and other borrowings 501 753 1,254 880 (153) 727 Total interest-bearing liabilities 36,146 5,519 41,665 7,507 1,158 8,665 Net change in net interest income $ (9,330) $ 8,180 $ (1,150) $ (1,978) $ 8,729 $ 6,751 (1) Securities amounts are presented on a fully taxable equivalent basis.
See Note 8, Premises and Equipment and Note 25, Other assets held for sale, in the accompanying Notes to Consolidated Financial Statements for additional information. Deposits . Deposits totaled $1.5 billion at December 31, 2022, an increase of $281.6 million, or 22.6%, from $1.2 billion at December 31, 2021.
Premises and equipment, net, totaled $3.8 million at December 31, 2023, and increased $34,000, or 0.9%, from $3.8 million at December 31, 2022. See Note 8 in the accompanying Notes to Consolidated Financial Statements for additional information. Deposits .
The increase in net interest income was primarily due to a $9.9 million, or 23.5%, increase in interest income, coupled with a $4.3 million, or 29.3%, decrease in interest expense.
The decrease in net interest income was primarily due to a $41.6 million, or 219.6%, increase in interest expense, partially offset by a $40.5 million, or 59.8%, increase in interest income.
Interest expense totaled $10.3 million for the twelve months ended December 31, 2021, and decreased $4.3 million, or 29.3%, compared to $14.6 million for the twelve months ended December 31, 2020.
Interest expense totaled $60.6 million for the twelve months ended December 31, 2023, and increased $41.6 million, or 219.6%, compared to $19.0 million for the twelve months ended December 31, 2022.
Nonperforming loans, which are nonaccrual loans and loans 90 days past due but still accruing interest, totaled $761,000 at December 31, 2022, and decreased $236,000 from $997,000 at December 31, 2021.
Nonperforming loans, which are nonaccrual loans and loans at least 90 days past due but still accruing interest, totaled $5.7 million at December 31, 2023, and increased $5.0 million from $761,000 at December 31, 2022. The increase in nonaccrual loans was primarily driven by seven commercial loans, totaling $5.0 million, becoming nonaccrual during in 2023.
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. ‎ 40 Table of Contents CONDENSE D CONSOLIDATED FINANCIAL DATA The following information should be read in conjunction with our Consolidated Financial Statements, the related Notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in this 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.
One commercial loan totaling $80,000 was classified as doubtful at December 31, 2022 compared to $147,000 at December 31, 2021 . See Note 4 in the accompanying Notes to Consolidated Financial Statements for additional information regarding risk classification of loans.
Total past due loans decreased $136,000 and totaled $2.0 million at December 31, 2023, compared to $2.1 million at December 31, 2022. Past due loans totaled 0.1% of the loan portfolio at both December 31, 2023 and December 31, 2022. See Note 4 in the accompanying Notes to Consolidated Financial Statements for additional information regarding loan delinquencies.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Fixed-rate loans are generally limited to three years to five years , at which time they convert to adjustable-rate loans.
Fixed-rate loans are generally limited to three years to five years , at which time they convert to adjustable-rate loans.
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, condition and values, highly questionable and improbable.
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, condition and values, highly questionable and improbable.
Equity Securities Equity securities without a readily determinable fair value are held at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.
Equity Securities Equity securities without a readily determinable fair value are held at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.
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.
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.
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.
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.
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. Historic Tax Credits: The Company made equity investments as a non-managing member in two entities that received historic tax credits (HTC) pursuant to Section 47 of the Internal Revenue Code.
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. Historic Tax Credits: The Company has made equity investments as a non-managing member in two entities that received historic tax credits (HTC) pursuant to Section 47 of the Internal Revenue Code.
FHLB stock is carried at cost, classified as a restricted security, and periodically evaluated for impairment based on ultimate recovery of par value. Both cash and stock dividends are reported as income. Federal Reserve Bank (FRB) stock: CFBank is a member of the Federal Reserve System and is required to own a certain amount of stock in the FRB.
Federal Reserve Bank (FRB) stock: CFBank is a member of the Federal Reserve System and is required to own a certain amount of stock in the FRB. FRB stock is carried at cost, classified as a restricted security, and periodically evaluated for impairment based on ultimate recovery of par value. Both cash and stock dividends are reported as income.
Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.
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, which is recognized as income.
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.
In addition, 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.
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.
All interest accrued but not received for each loan placed on nonaccrual is reversed against interest income in the period in which it is placed in a 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.
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.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.
NOTE 17 – 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.
NOTE 16 – 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.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.
These economic and judgmental factors include consideration of the following: levels of and trends in delinquencies and impaired loans; levels of and trends in charge-offs and recoveries; trends in volume and terms of loans; effects of any changes in risk selection and underwriting standards; other changes in lending policies, procedures, and practices; experience, ability, and depth of lending management and other relevant staff; national and local economic trends and conditions; industry conditions; and effects of changes in credit concentrations.
These economic and judgmental factors included consideration of the following: levels of and trends in delinquencies and impaired loans; levels of and trends in charge-offs and recoveries; trends in volume and terms of loans; effects of any changes in risk selection and underwriting standards; other changes in lending policies, procedures, and practices; experience, ability, and depth of lending management and other relevant staff; national and local economic trends and conditions; industry conditions; and effects of changes in credit concentrations.
Adjustable-rate multi-family residential real estate loans generally pose credit risks not inherent in fixed-rate loans, primarily because as interest rates rise, the borrowers’ 68 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share data) payments rise, increasing the potential for default.
Adjustable-rate multi-family residential real 67 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share data) estate loans generally pose credit risks not inherent in fixed-rate loans, primarily because as interest rates rise, the borrowers’ payments rise, increasing the potential for default.
The unpaid principal balance is the contractual principal balance outstanding. The recorded investment is the unpaid principal balance adjusted for partial charge-offs, purchase premiums and discounts, deferred loan fees and costs. Cash payments of interest on these loans during the twelve months ended December 31, 2022, 2021 and 2020 totaled $ 47 , $ 169 and $ 159 , respectively.
The unpaid principal balance is the contractual principal balance outstanding. The recorded investment is the unpaid principal balance adjusted for partial charge-offs, purchase premiums and discounts, deferred loan fees and costs. Cash payments of interest on these loans during the twelve months ended December 31, 2022 and 2021 totaled $ 47 and $ 169 , respectively.
NOTE 24 - BRANCH SALE On December 29, 2020, CFBank entered into a Branch Purchase and Assumption Agreement (the “P&A Agreement”) with Consumers National Bank (“Consumers”) providing for the acquisition by Consumers of two branches of CFBank in Columbiana County, Ohio – CFBank’s drive-up branch location in Wellsville, Ohio and CFBank’s branch location in Calcutta, Ohio (the “Branches”).
NOTE 23 - BRANCH SALE On December 29, 2020, CFBank entered into a Branch Purchase and Assumption Agreement (the “P&A Agreement”) with Consumers National Bank (“Consumers”) providing for the acquisition by Consumers of two branches of CFBank in Columbiana County, Ohio – CFBank’s drive-up branch location in Wellsville, Ohio and CFBank’s branch location in Calcutta, Ohio (the “Branches”).
The marketability of the underlying property also may be adversely affected in a rising interest rate environment. Cash flows are affected by changes in market interest rates. Generally, in rising interest rate environments, loan prepayment rates are likely to decline, and in falling interest rate environments, loan prepayment rates are likely to increase. 56 Table of Contents CF BANKSHARES INC.
The marketability of the underlying property also may be adversely affected in a rising interest rate environment. Cash flows are affected by changes in market interest rates. Generally, in rising interest rate environments, loan prepayment rates are likely to decline, and in falling interest rate environments, loan prepayment rates are likely to increase. 54 Table of Contents CF BANKSHARES INC.
Loan Commitments and Related Financial Instruments : Financial instruments include off - balance-sheet credit instruments, such as commitments to make loans and commercial letters of credit, issued to meet customer financing needs. The face amount for these items represents the exposure to loss, before considering customer collateral or ability to repay.
Loan Commitments and Related Financial Instruments : Financial instruments include off - balance-sheet credit instruments, such as commitments to make loans and issue commercial letters of credit to meet customer financing needs. The face amount for these items represents the exposure to loss, before considering customer collateral or ability to repay.
Accounting standards do not require a deferred tax liability to be recorded on this amount, which otherwise would have totaled $ 473 at year-end 2022. 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.
Accounting standards do not require a deferred tax liability to be recorded on this amount, which otherwise would have totaled $ 473 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.
Based on our assessment and those criteria, management concluded that the Company maintained effective internal control over financial reporting as of December 31, 2022. This annual report does not contain an audit report of the Company’s registered public accounting firm regarding internal control over financial reporting.
Based on our assessment and those criteria, management concluded that the Company maintained effective internal control over financial reporting as of December 31, 2023. This annual report does not contain an audit report of the Company’s registered public accounting firm regarding internal control over financial reporting.
The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
The following tables present actual and required capital ratios as of December 31, 2022 and December 31, 2021 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.
The following tables present actual and required capital ratios as of December 31, 2023 and December 31, 2022 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.
Our hedging policy allows hedging activities, such as interest-rate swaps, up to a notional amount of 10% of total assets and a value at risk of 10% of core capital. Disclosures about our hedging activities are set forth in Note 18 to our Consolidated Financial Statements.
Our hedging policy allows hedging activities, such as interest-rate swaps, up to a notional amount of 10% of total assets and a value at risk of 10% of core capital. Disclosures about our hedging activities are set forth in Note 17 to our Consolidated Financial Statements.
If a loan is impaired, a portion of the allowance is allocated so that the loan is reported, net, at the present value of estimated future cash flows using the loan’s existing rate, or at the fair value of collateral, less costs to sell, if repayment is expected solely from the collateral.
If a loan was impaired, a portion of the allowance was allocated so that the loan was reported, net, at the present value of estimated future cash flows using the loan’s existing rate, or at the fair value of collateral, less costs to sell, if repayment was expected solely from the collateral.
The HTC investments are accounted for under the equity method of accounting and are included in accrued interest receivable and other assets on the consolidated balance sheets. The Company’s recorded investment in these entities was $ 2,097 at December 31, 2022 and 2021.
The HTC investments are accounted for under the equity method of accounting and are included in accrued interest receivable and other assets on the consolidated balance sheets. The Company’s recorded investment in these entities was $ 2,097 at December 31, 2023 and 2022.
In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed under the Company’s internal underwriting policy.
In order to determine whether a borrower was experiencing financial difficulty, an evaluation was performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation was performed under the Company’s internal underwriting policy.
Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2022. In making this assessment, management used the criteria for effective internal control over financial reporting as described in the 2013 Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2023. In making this assessment, management used the criteria for effective internal control over financial reporting as described in the 2013 Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
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, 2022: Fair Value Valuation Technique(s) Unobservable Inputs (Range) Weighted Average Impaired loans: Commercial $ 80 Comparable sales approach Adjustment for differences between the stated value and net realizable value 64.00 % Other assets held for sale $ 1,930 Contract value less costs to sell Sales commission 4.00 % Financial Instruments Recorded Using Fair Value Option: The Company has elected the fair value option for loans held for sale.
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 Technique(s) Unobservable Inputs (Range) Weighted Average Impaired loans: Commercial $ 403 Comparable sales approach Adjustment for differences between the stated value and net realizable value 10.43 % 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, 2022: Fair Value Valuation Technique(s) Unobservable Inputs (Range) Weighted Average Impaired loans: Commercial $ 80 Comparable sales approach Adjustment for differences between the stated value and net realizable value 64.00 % Other assets held for sale $ 1,930 Contract value less costs to sell Sales commission 4.00 % Financial Instruments Recorded Using Fair Value Option: The Company has elected the fair value option for loans held for sale.
All values are within the acceptable range established by CFBank’s Board of Directors. 55 Table of Contents Economic Value of Equity as a Percent of Assets (CFBank only) Basis Point Economic Change in Rates Value Ratio +400 8.1% +300 8.7% +200 9.2% +100 9.9% 0 10.5% -100 11.1% -200 11.7% -300 12.2% -400 12.4% In evaluating CFBank’s exposure to interest rate risk, certain limitations inherent in the method of analysis presented in the foregoing table must be considered.
All values are within the acceptable range established by CFBank’s Board of Directors. 53 Table of Contents Economic Value of Equity as a Percent of Assets (CFBank only) Basis Point Economic Change in Rates Value Ratio +400 7.9% +300 8.5% +200 9.0% +100 9.6% 0 10.2% -100 10.8% -200 11.4% -300 12.1% -400 12.3% In evaluating CFBank’s exposure to interest rate risk, certain limitations inherent in the method of analysis presented in the foregoing table must be considered.
This compiled document has not been filed with the Delaware Secretary of State.] 3.12 Second Amended and Restated Bylaws of the registrant (incorporated by reference to Exhibit 3.3 to the registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007, filed with the Commission on March 27, 2008 (File No. 0-25045)) 4.1 Form of Stock Certificate of Central Federal Corporation (incorporated by reference to Exhibit 4.0 to the registrant’s Registration Statement on Form SB-2 (File No. 333-64089), filed with the Commission on September 23, 1998) 4.2 Form of Subordinated Note Purchase Agreement by and between the Company and several Purchasers, dated December 20,2018 (incorporated by reference to Exhibit 10.1 to the registrants Current Report on Form 8-K dated December 20, 2018, filed with the Commission on December 21, 2018 (File No. 0-25045)) 4.3 Form of 7.0% Fixed-to-Floating Rate Subordinated Note due 2028 (incorporated by reference to Exhibit 10.2 to the registrants Current Report on Form 8-K dated December 20, 2018, filed with the Commission on December 21, 2018 (File No. 0-25045)) 4.4 Description of Capital Stock (incorporated by reference to Exhibit 4.5 to the registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020, filed with the Commission on March 23, 2021 (File No. 0-25045)) 4.5 Agreement to furnish instruments defining rights of holders of long-term debt 10.1 * Central Federal Corporation 2009 Equity Compensation Plan (incorporated by reference to Appendix A to the registrant’s Definitive Proxy Statement filed with the Commission on March 31, 2009) 10.2 * First Amendment to the Central Federal Corporation 2009 Equity Compensation Plan (incorporated by reference to Appendix A to the registrant’s Definitive Proxy Statement filed with the Commission on April 11, 2013) 107 Table of Contents 10.3 * Form of Incentive Stock Options Award Agreement under the Central Federal Corporation 2009 Equity Compensation Plan (incorporated by reference to Exhibit 10.3 to the registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012, filed with the Commission on April 1, 2013 (File No. 0-25045) 10.4 * Form of Non-Qualified Stock Option Award Agreement under the Central Federal Corporation 2009 Equity Compensation Plan (incorporated by reference to Exhibit 10.4 to the registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012, filed with the Commission on April 1, 2013 (File No. 0-25045) 10.5 * Central Federal Corporation 2019 Equity Compensation Plan (incorporated by reference to Annex A to the registrant’s Definitive Proxy Statement filed with the Commission on April 26, 2019) 10.6 * Form of Employee Restricted Stock Award Agreement under the Central Federal Corporation 2019 Equity Compensation Plan (incorporated by reference to Exhibit 10.8 to the registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed with the Commission on March 16, 2020 (File No. 0-25045)) 10.7 * Form of Director Restricted Stock Award Agreement under the Central Federal Corporation 2019 Equity Compensation Plan (incorporated by reference to Exhibit 10.9 to the registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed with the Commission on March 16, 2020 (File No. 0-25045)) 10.8 * Employment Agreement, dated April 22, 2019, by and among Central Federal Corporation, CFBank and Timothy T.
This compiled document has not been filed with the Delaware Secretary of State.] 3.12 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 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 Annual Report on Form 10-K for the fiscal year ended December 31, 2007, filed with the Commission on March 27, 2008 (File No. 0-25045)) 4.1 Form of Stock Certificate of Central Federal Corporation (incorporated by reference to Exhibit 4.0 to the registrant’s Registration Statement on Form SB-2 (File No. 333-64089), filed with the Commission on September 23, 1998) 4.2 Form of Subordinated Note Purchase Agreement by and between the Company and several Purchasers, dated December 20,2018 (incorporated by reference to Exhibit 10.1 to the registrants Current Report on Form 8-K dated December 20, 2018, filed with the Commission on December 21, 2018 (File No. 0-25045)) 4.3 Form of 7.0% Fixed-to-Floating Rate Subordinated Note due 2028 (incorporated by reference to Exhibit 10.2 to the registrants Current Report on Form 8-K dated December 20, 2018, filed with the Commission on December 21, 2018 (File No. 0-25045)) 4.4 Description of Capital Stock 4.5 Agreement to furnish instruments defining rights of holders of long-term debt 10.1 * Central Federal Corporation 2009 Equity Compensation Plan (incorporated by reference to Appendix A to the registrant’s Definitive Proxy Statement filed with the Commission on March 31, 2009) 10.2 * First Amendment to the Central Federal Corporation 2009 Equity Compensation Plan (incorporated by reference to Appendix A to the registrant’s Definitive Proxy Statement filed with the Commission on April 11, 2013) 10.3 * Form of Incentive Stock Option Award Agreement under the Central Federal Corporation 2009 Equity Compensation Plan (incorporated by reference to Exhibit 10.3 to the registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012, filed with the Commission on April 1, 2013 (File No. 0-25045) 108 Table of Contents 10.4 * Form of Non-Qualified Stock Option Award Agreement under the Central Federal Corporation 2009 Equity Compensation Plan (incorporated by reference to Exhibit 10.4 to the registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012, filed with the Commission on April 1, 2013 (File No. 0-25045) 10.5 * Central Federal Corporation 2019 Equity Compensation Plan (incorporated by reference to Annex A to the registrant’s Definitive Proxy Statement filed with the Commission on April 26, 2019) 10.6 * Form of Employee Restricted Stock Award Agreement under the Central Federal Corporation 2019 Equity Compensation Plan (incorporated by reference to Exhibit 10.8 to the registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed with the Commission on March 16, 2020 (File No. 0-25045)) 10.7 * Form of Director Restricted Stock Award Agreement under the Central Federal Corporation 2019 Equity Compensation Plan (incorporated by reference to Exhibit 10.9 to the registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed with the Commission on March 16, 2020 (File No. 0-25045)) 10.8 * Employment Agreement, dated April 22, 2019, by and among Central Federal Corporation, CFBank and Timothy T.
Large groups of smaller balance homogeneous loans, such as consumer, single-family residential real estate loans and commercial leases, are collectively evaluated for impairment, and accordingly, they are not separately identified for impairment disclosures.
Large groups of smaller balance homogeneous loans, such as consumer, single-family residential real estate loans and commercial leases, were collectively evaluated for impairment, and accordingly, they were not separately identified for impairment disclosures.
As of December 31, 2022, an evaluation was performed under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures.
As of December 31, 2023, an evaluation was performed under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures.
The following table shows the number of shares of our common stock subject to outstanding stock option awards and remaining available for awards under the Company’s Equity Incentive Plans at December 31, 2022.
The following table shows the number of shares of our common stock subject to outstanding stock option awards and remaining available for awards under the Company’s Equity Incentive Plans at December 31, 2023.
The following table summarizes securities with unrealized losses at December 31, 2022 and December 31, 2021 aggregated by major security type and length of time in a continuous unrealized loss position.
The following table summarizes securities with unrealized losses at December 31, 2023 and December 31, 2022 aggregated by major security type and length of time in a continuous unrealized loss position.
Under the plan, CFBank pays him, or his beneficiary, a benefit of $ 25 annually for 20 years, beginning 6 months after his retirement date, which was February 28, 2008. The expense related to this plan totaled $ 6 , $ 7 and $ 7 in 2022, 2021 and 2020, respectively.
Under the plan, CFBank pays him, or his beneficiary, a benefit of $ 25 annually for 20 years, beginning 6 months after his retirement date, which was February 28, 2008. The expense related to this plan totaled $ 5 , $ 6 , and $ 7 in 2023, 2022 and 2021, respectively.
As of December 31, 2022, 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.
As of December 31, 2023, 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.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None Ite m 9A. Controls and Procedures. Evaluation of disclosure controls and procedures. Management is responsible for establishing and maintaining effective disclosure controls and procedures, as defined under Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None Ite m 9A. Controls and Procedures. Evaluation of disclosure controls and procedures. Management is responsible for establishing and maintaining effective disclosure controls and procedures, as defined under Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
At December 31, 2022, CFBank’s EVE ratios, using interest rate shocks ranging from a 400 bps rise in rates to a 400 bps decline in rates, are shown in the following table.
At December 31, 2023, CFBank’s EVE ratios, using interest rate shocks ranging from a 400 bps rise in rates to a 400 bps decline in rates, are shown in the following table.
Amounts in parentheses indicate a reduction of other comprehensive income. (2) There were no amounts reclassified out of other comprehensive income for the years ended December 31, 2022, 2021 and 2020.
Amounts in parentheses indicate a reduction of other comprehensive income. (2) There were no amounts reclassified out of other comprehensive income for the years ended December 31, 2023, 2022 and 2021.
Management does not believe there were any such matters at December 31, 2022 that will have a material effect on the financial statements. See Note 22 – Contingent Liabilities. Restrictions on Cash : Cash on deposit with the FHLB included $ 3,300 pledged as collateral for FHLB advances at December 31, 2022. Equity : Treasury stock is carried at cost.
Management does not believe there were any such matters at December 31, 2023 that will have a material effect on the financial statements. See Note 21 – Contingent Liabilities. Restrictions on Cash : Cash on deposit with the FHLB included $ 3,300 pledged as collateral for FHLB advances at December 31, 2023. Equity : Treasury stock is carried at cost.
The maximum exposure to loss related to these investments was $ 2,097 at December 31, 2022, representing the Company’s investment balance . Joint Ventures: The Holding Company has contributed funds into a series of joint ventures (equity stake) for the purpose of allocating excess liquidity into higher earning assets while diversifying its revenue sources.
The maximum exposure to loss related to these investments was $ 2,097 at December 31, 2023, representing the Company’s investment balance . 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.
Based on that evaluation, management concluded that our internal controls over financial reporting as of December 31, 2022 were effective. Management’s Report on Internal Control Over Financial Reporting. Information required by Item 308 of Regulation S-K is included on page 57 of this Form 10-K; the information appears under the caption “Management’s Report on Internal Control over Financial Reporting”.
Based on that evaluation, management concluded that our internal controls over financial reporting as of December 31, 2023 were effective. Management’s Report on Internal Control Over Financial Reporting. Information required by Item 308 of Regulation S-K is included on page 56 of this Form 10-K; the information appears under the caption “Management’s Report on Internal Control over Financial Reporting”.
In March 2022, the FASB issued ASU 2022-02 "Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures." This ASU eliminates the accounting guidance on troubled debt restructurings for creditors in ASC 310-40 and requires 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.
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 Company's derivatives consist mainly of interest rate swap agreements, which are used as part of its asset liability management program to help manage interest rate risk. The Company does not use derivatives for trading purposes. The derivative transactions are considered instruments with no hedging designation, otherwise known as stand-alone derivatives.
The Company's derivatives consist mainly of interest rate swap agreements, which are used as part of its asset liability management program to help manage interest rate risk. The Company does not use derivatives for trading purposes. The derivative transactions are stand-alone derivatives with no hedging designation.
TDRs of all classes of loans are separately identified for impairment disclosures and are measured at the present value of estimated future cash flows using each loan’s effective rate at inception. If a TDR is considered to be a collateral dependent loan, the loan is reported, net, at the fair value of the collateral.
TDRs of all classes of loans were separately identified for impairment disclosures and were measured at the present value of estimated future cash flows using each loan’s effective rate at inception. If a TDR was considered to be a collateral dependent loan, the loan was reported, net, at the fair value of the collateral.
The general component is calculated based on CFBank’s loan balances and actual three-year historical loss rates. For loans with little or no actual loss experience, industry estimates are used based on loan segment. This loss experience is supplemented with other economic and judgmental factors based on the risks present for each loan class.
The general component was calculated based on CFBank’s loan balances and actual three-year historical loss rates. For loans with little or no actual loss experience, industry estimates were used based on loan segment. This loss experience was supplemented with other economic and judgmental factors based on the risks present for each loan class.
Total expense for matching contributions for 2022, 2021 and 2020 was $ 301 , $ 343 and $ 293 , respectively. Salary Continuation Agreement: In 2004, CFBank entered into a nonqualified salary continuation agreement with its former Chairman Emeritus. Benefits provided under the plan are unfunded, and payments are made by CFBank.
Total expense for matching contributions for 2023, 2022 and 2021 was $ 92 , $ 301 and $ 343 , respectively. Salary Continuation Agreement: In 2004, CFBank entered into a nonqualified salary continuation agreement with its former Chairman Emeritus. Benefits provided under the plan are unfunded, and payments are made by CFBank.
Derivatives : The fair value of derivatives, which includes yield maintenance provisions, interest rate lock commitments and interest rate swaps, is based on valuation models using observable market data as of the measurement date (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).
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.
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.
Life Insurance Benefits: CFBank has entered into agreements with certain employees, former employees and directors to provide life insurance benefits which are funded through life insurance policies purchased and owned by CFBank. The expense related to these benefits totaled ($ 3 ), $ 13 and ($ 16 ) in 2022, 2021 and 2020, respectively.
Life Insurance Benefits: CFBank has entered into agreements with certain employees, former employees and directors to provide life insurance benefits which are funded through life insurance policies purchased and owned by CFBank. The expense related to these benefits totaled ($ 12 ), ($ 3 ) and $ 13 in 2023, 2022 and 2021, respectively.
At December 31, 2022 and 2021, nonaccrual TDRs were as follows: 2022 2021 Commercial $ 80 $ 147 Total $ 80 $ 147 Nonaccrual loans at December 31, 2022 and 2021 did not include $ 95 and $ 2,831 , respectively, of TDRs where customers had established a sustained period of repayment performance, generally six months, the loans were current according to their modified terms and repayment of the remaining contractual payments was expected.
At December 31, 2022, nonaccrual TDRs were as follows: 2022 Commercial $ 80 Total $ 80 Nonaccrual loans at December 31, 2022 did not include $ 95 of TDRs where customers had established a sustained period of repayment performance, generally six months, the loans were current according to their modified terms and repayment of the remaining contractual payments was expected.
The general reserve component covers non-impaired loans of all classes and is based on historical loss experience adjusted for current factors. The historical loss experience is determined by loan class and is based on the actual loss history experienced by CFBank over a three-year period.
The general reserve component covered non-impaired loans of all classes and was based on historical loss experience adjusted for current factors. The historical loss experience was determined by loan class and was based on the actual loss history experienced by CFBank over a three-year period.
Deferred Cash Incentive Agreements: CFBank has entered into agreements with certain officers to provide deferred cash compensation as an incentive and reward for the success of CFBank. The expense related to these benefits totaled $ 262 , $ 118 and $ 0 in 2022, 2021 and 2020, respectively.
Deferred Cash Incentive Agreements: CFBank has entered into agreements with certain officers to provide deferred cash compensation as an incentive and reward for the success of CFBank. The expense related to these benefits totaled $ 129 , $ 262 , and $ 118 in 2023, 2022 and 2021, respectively.
There were no transfers of assets or liabilities measured at fair value between levels during 2022 or 2021.
There were no transfers of assets or liabilities measured at fair value between levels during 2023 or 2022.
If the payment of the loan is dependent on the sale of the collateral, then costs to liquidate the collateral are included when determining the impairment. For TDRs that subsequently default, the amount of reserve is determined in accordance with the accounting policy for the ALLL.
If the payment of the loan was dependent on the sale of the collateral, then costs to liquidate the collateral were included when determining the impairment. For TDRs that subsequently default, the amount of reserve was determined in accordance with the accounting policy for the ALLL.
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 would unlikely be required to sell these securities before their anticipated recovery, the Company did not consider these securities to be other-than-temporarily impaired at December 31, 2022 and December 31, 2021.
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 would unlikely be required to sell these securities before their anticipated recovery, the Company did not consider these securities to be impaired at December 31, 2023 and December 31, 2022.
Upon implementation of the ASU, the expected loss estimate will be made up of a historical lookback of actual losses applied over the life of the loan portfolio and adjusted for qualitative factors and forecasted losses based on economic and forward-looking data applied over a reasonable and supportable forecast period.
Upon implementation of ASU 2016-13, the expected loss estimate is made up of a historical lookback of actual losses applied over the life of the loan portfolio and adjusted for qualitative factors and forecasted losses based on economic and forward-looking data applied over a reasonable and supportable forecast period.
The qualitative impact of the new accounting standard will still be directed by many of the same factors that impacted the previous methodology for computing the ALLL including, but not limited to, economic conditions, quality and experience of staff, changes in the value of collateral, concentrations of credit in loan types or industries and changes to lending policies.
The qualitative impact of the new accounting standard is still directed by many of the same factors that impacted the previous methodology for computing the allowance for loan and lease losses (ALLL), including, but not limited to, economic conditions, quality and experience of staff, changes in the value of collateral, concentrations of credit in loan types or industries and changes to lending policies.
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. ‎ 94 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share data) NOTE 14 – RELATED-PARTY TRANSACTIONS Loans to principal officers, directors, and their affiliates during 2022 and 2021 were as follows: Year ended December 31, 2022 2021 Beginning balance $ 10,137 $ 10,277 New loans 1,189 2,843 Repayments ( 3,028 ) ( 2,983 ) Ending balance $ 8,298 $ 10,137 All loans to related parties were made by CFBank in the ordinary course of business under terms equivalent to those prevailing in the market for arm’s length transactions at the time of origination.
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. ‎ 95 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share data) NOTE 14 – RELATED-PARTY TRANSACTIONS Loans to principal officers, directors, and their affiliates during 2023 and 2022 were as follows: Year ended December 31, 2023 2022 Beginning balance $ 8,298 $ 10,137 New loans 15,604 1,189 Repayments ( 514 ) ( 3,028 ) Ending balance $ 23,388 $ 8,298 All loans to related parties were made by CFBank in the ordinary course of business under terms equivalent to those prevailing in the market for arm’s length transactions at the time of origination.
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. Regarding the discount rate, Topic 842 requires the use of the rate implicit in the lease whenever this rate is readily determinable.
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. Regarding the discount rate, the rate implicit in the lease is used whenever this rate is readily determinable.
Deposits from principal officers, directors, and their affiliates totaled $ 4,214 and $ 8,282 at year-end 2022 and 2021, respectively. NOTE 15 – STOCK-BASED COMPENSATION The Company has two stock-based compensation plans (collectively, the “Plans”), as described below, under which awards are outstanding or may be granted in the future.
Deposits from principal officers, directors, and their affiliates totaled $ 3,922 and $ 4,214 at year-end 2023 and 2022, respectively. NOTE 15 – STOCK-BASED COMPENSATION The Company has two stock-based compensation plans (collectively, the “Plans”), as described below, under which awards are outstanding or may be granted in the future.
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 year-end 2022, the Company had net operating loss carryforwards of $ 22,089 , which expire at various dates from 2024 to 2032 .
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 year-end 2023, the Company had net operating loss carryforwards of $ 21,927 , which expire at various dates from 2024 to 2032 .
Changes in internal control over financial reporting. There were no changes in our internal controls over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) in the fourth quarter of 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Ite m 9B. Other Information. None I tem 9C.
Changes in internal control over financial reporting. There were no changes in our internal controls over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) in the fourth quarter of 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Ite m 9B. Other Information.
The accrual for CFBank’s obligation under these agreements is included in accrued interest payable and other liabilities in the consolidated balance sheets and totaled $ 139 at year-end 2022 and $ 141 at year-end 2021.
The accrual for CFBank’s obligation under these agreements is included in accrued interest payable and other liabilities in the consolidated balance sheets and totaled $ 126 at year-end 2023 and $ 139 at year-end 2022.
The accrual for CFBank’s obligation under these agreements is included in accrued interest payable and other liabilities in the consolidated balance sheets and totaled $ 380 at year-end 2022 and $ 118 at year-end 2021.
The accrual for CFBank’s obligation under these agreements is included in accrued interest payable and other liabilities in the consolidated balance sheets and totaled $ 509 at year-end 2023 and $ 380 at year-end 2022.
The Pentegra DB Plan is a tax-qualified defined-benefit pension plan. The Pentegra DB Plan operates as a multi-employer plan for accounting purposes and as a multiple-employer plan under the Employee Retirement Income Security Act of 1974 (ERISA) and the Internal Revenue Code. There are no collective bargaining agreements in place that require contributions to the Pentegra DB Plan.
The Pentegra DB Plan operates as a multi-employer plan for accounting purposes and as a multiple-employer plan under the Employee Retirement Income Security Act of 1974 (ERISA) and the Internal Revenue Code. There are no collective bargaining agreements in place that require contributions to the Pentegra DB Plan.
(the “Company”) as of December 31, 2022 and 2021, the related consolidated statements of income, comprehensive income, changes in stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2022, and the related notes (collectively referred to as the “financial statements”).
(the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of income, comprehensive income, changes in stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”).
Ite m 8. Financial Statements and Supplementary Data. MANAGE MENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING The management of CF Bankshares Inc. is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities and Exchange Act of 1934, as amended.
MANAGE MENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING The management of CF Bankshares Inc. is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities and Exchange Act of 1934, as amended.
Factors considered by management in determining impairment for all loan classes include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired.
Factors considered by management in determining impairment for all loan classes included payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experienced insignificant payment delays and payment shortfalls generally were not classified as impaired.
There were 115,818 shares remaining available for awards of stock option grants, stock appreciation rights, restricted stock awards or restricted stock units under the 2019 Plan at December 31, 2022. Stock Options: The Plans permit the grant of stock options to directors, officers and employees of the Holding Company and CFBank.
There were 76,330 shares remaining available for awards of stock option grants, stock appreciation rights, restricted stock awards or restricted stock units under the 2019 Plan at December 31, 2023. Stock Options: The Plans permit the grant of stock options to directors, officers and employees of the Holding Company and CFBank.
From and including December 30, 2023, to but excluding December 30, 2028 or the earlier redemption of the notes, the interest rate will reset quarterly to an interest rate equal to the then current three-month LIBOR (but not less than zero) plus 4.14 %, payable quarterly in arrears on March 30, June 30, September 30, and December 30 of each year.
From and including December 30, 2023, to but excluding 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.
Equity Compensation Plan Information Plan Category (a) ‎ Number of Common Shares to be issued upon exercise of all outstanding options, warrants and rights (a) (b) ‎ Weighted-average exercise price of outstanding options, warrants and rights (b) (c) ‎ Number of Common Shares remaining available for future issuance under equity compensation plans (excluding common shares reflected in column (a)) Equity compensation plans approved by shareholders 11,089 $ 7.63 115,818 Equity compensation plans not approved by shareholders - - - Total 11,089 $ 7.63 115,818 It em 13.
Equity Compensation Plan Information Plan Category (a) ‎ Number of Common Shares to be issued upon exercise of all outstanding options, warrants and rights (a) (b) ‎ Weighted-average exercise price of outstanding options, warrants and rights (b) (c) ‎ Number of Common Shares remaining available for future issuance under equity compensation plans (excluding common shares reflected in column (a)) Equity compensation plans approved by shareholders - $ - 76,330 Equity compensation plans not approved by shareholders - - - Total - $ - 76,330 It em 13.
The fair value of these mortgage banking derivatives was reflected by a derivative asset of $ 0 , $ 555 , and $ 18,100 at December 31, 2022, 2021 and 2020, respectively, which was included in other assets in the consolidated balance sheet. Fair values were estimated based on anticipated gains on the sale of the underlying loans.
The fair value of these mortgage banking derivatives was reflected by a derivative asset was immaterial at December 31, 2023 and 2022 and $ 555 at December 31, 2021, which was included in other assets in the consolidated balance sheet. Fair values were estimated based on anticipated gains on the sale of the underlying loans.
The principal balances of these loans at year-end were as follows: December 31, 2022 December 31, 2021 Mortgage loans serviced for Freddie Mac $ 1,163 $ 1,598 Custodial escrow balances maintained in connection with serviced loans were $ 38 and $ 40 at year-end 2022 and 2021, respectively.
The principal balances of these loans at year-end were as follows: December 31, 2023 December 31, 2022 Mortgage loans serviced for Freddie Mac $ 991 $ 1,163 Custodial escrow balances maintained in connection with serviced loans were $ 33 and $ 38 at year-end 2023 and 2022, respectively.
Mortgage banking activities include two types of commitments: rate lock commitments and forward loan commitments. Fair values of these mortgage derivatives are based on anticipated gains on the underlying loans. Changes in the fair values of these derivatives are included in net gains on sales of loans.
Mortgage banking activities include two types of commitments: rate lock commitments and forward loan commitments. Fair values of these mortgage derivatives are based on anticipated gains on the underlying loans.
The accrual is included in accrued interest payable and other liabilities in the consolidated balance sheets and totaled $ 115 at year-end 2022 and $ 134 at year-end 2021.
The accrual is included in accrued interest payable and other liabilities in the consolidated balance sheets and totaled $ 95 at year-end 2023 and $ 115 at year-end 2022.
CONSOLIDATED STATEMENTS OF COMREHENSIVE INCOME Years ended December 31, 2022, 2021 and 2020 (Dollars in thousands, except per share data) 2022 2021 2020 Net income $ 18,164 $ 18,453 $ 29,608 Other comprehensive income: Unrealized holding gains (losses) arising during the period related to investment securities available for sale, net of tax of ($ 496 ), ($ 71 ) and $ 18 : ( 1,867 ) ( 266 ) 68 Other comprehensive income (loss), net of tax ( 1,867 ) ( 266 ) 68 Comprehensive income $ 16,297 $ 18,187 $ 29,676 See accompanying notes to consolidated financial statements. 62 Table of Contents CF BANKSHARES INC.
CONSOLIDATED STATEMENTS OF COMREHENSIVE INCOME Years ended December 31, 2023, 2022 and 2021 (Dollars in thousands, except per share data) 2023 2022 2021 Net income $ 16,937 $ 18,164 $ 18,453 Other comprehensive income: Unrealized holding gains (losses) arising during the period related to investment securities available for sale, net of tax of ($ 67 ), ($ 496 ) and ($ 71 ): ( 253 ) ( 1,867 ) ( 266 ) Other comprehensive income (loss), net of tax ( 253 ) ( 1,867 ) ( 266 ) Comprehensive income $ 16,684 $ 16,297 $ 18,187 See accompanying notes to consolidated financial statements. 61 Table of Contents CF BANKSHARES INC.

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