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  4. [10-K] CF BANKSHARES INC. Files Annual Report

CF Bankshares (NASDAQ: CFBK) details 2025 loan growth and credit trends

Filing Impact
(High)
Filing Sentiment
(Neutral)
Form Type
10-K

Rhea-AI Filing Summary

CF Bankshares Inc. reports on its 2025 operations, highlighting a balance sheet with $2.1 billion in assets and $184.4 million in stockholders’ equity at December 31, 2025. The loan portfolio reached $1.76 billion, led by commercial, commercial real estate and multi-family loans of $1.3 billion, or 72.1% of gross loans.

Portfolio single-family residential mortgage loans totaled $445.1 million, while consumer loans were $45.4 million. The allowance for credit losses on loans was $17.7 million, or 1.01% of total loans, after $7.5 million of provision expense and $7.3 million in net charge-offs. Nonaccrual loans were $15.3 million, including $5.1 million guaranteed by the SBA.

On the funding side, average deposits were $1.76 billion in 2025, with certificates of deposit and money market accounts the largest components, and brokered deposits of $400.4 million at year-end. CFBank also had $58.0 million in FHLB advances and access to additional FHLB and Federal Reserve borrowing capacity.

Positive

  • None.

Negative

  • None.

Insights

Loan growth is modest, credit costs higher but still manageable.

CF Bankshares Inc. ended 2025 with a $2.1 billion balance sheet and a loan book of $1.76 billion. Mix continues to tilt toward commercial and commercial real estate, which together with multi-family reached $1.3 billion, or 72.1% of gross loans, increasing concentration in higher-yield but higher-risk categories.

Credit quality showed some pressure: nonaccrual loans rose to $15.3 million, and net charge-offs were $7.3 million for the year. Even so, the allowance for credit losses on loans of $17.7 million covered nonperforming loans by about one times, and the ratio to total loans stayed near 1.01%, only slightly above 2024.

On funding, average deposits grew to $1.76 billion, with a heavy weighting to interest-bearing products and a meaningful $400.4 million in brokered deposits at December 31, 2025. The company also utilized FHLB advances of $58.0 million and increased a holding company credit facility, injecting $10 million of additional Tier 1 capital into CFBank during 2025.

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Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-K

 

(Mark One)

☒

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2025

OR

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO

Commission File Number 0-25045

 

CF BANKSHARES INC.

(Exact name of Registrant as specified in its Charter)

 

Delaware

34-1877137

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

4960 E. Dublin Granville Road, Suite #400

Columbus, OH

43081

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (614) 334-7979

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock, par value $.01 per share

 

CFBK

 

The NASDAQ Capital Market

 

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES ☐ No ☒

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. YES ☐ No ☒

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ NO ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ NO ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

☐

Accelerated filer

☒

 

 

 

 

Non-accelerated filer

☐

Smaller reporting company

☒

 

 

 

 

 

 

 

Emerging growth company

 

☐

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO ☒

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant, based on the closing price of the shares of common stock on The NASDAQ Capital Market on June 30, 2025, was $136.0 million. For this purpose, directors and executive officers of the registrant are considered affiliates.

As of March 10, 2026, there were 6,434,002 shares of the registrant’s (Voting) Common Stock outstanding and 76,700 shares of the registrant’s Non-Voting Common Stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s Proxy Statement for the Annual Meeting of Stockholders to be held on May 27, 2026, are incorporated herein by reference into Part III of this Form 10-K.

 

 

 

Table of Contents

 

INDEX

 

PART I

 

Item 1.

Business

3

Item 1A.

Risk Factors

22

Item 1B.

Unresolved Staff Comments

33

Item 1C.

Cybersecurity

33

Item 2.

Properties

34

Item 3.

Legal Proceedings

35

Item 4.

Mine Safety Disclosures

35

 

 

PART II

 

Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

36

Item 6.

[Reserved]

36

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

37

Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

50

Item 8.

Financial Statements and Supplementary Data

52

Item 9.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

102

Item 9A.

Controls and Procedures

102

Item 9B.

Other Information

102

Item 9C.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

102

 

 

PART III

 

Item 10.

Directors, Executive Officers and Corporate Governance

103

Item 11.

Executive Compensation

103

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

103

Item 13.

Certain Relationships and Related Transactions, and Director Independence

104

Item 14.

Principal Accountant Fees and Services

104

 

 

PART IV

 

Item 15.

Exhibit and Financial Statement Schedules

105

Item 16.

Form 10-K Summary

105

 

 

SIGNATURES

109

 

 

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PART I

 

Forward-Looking Statements

Statements in this Annual Report on Form 10-K (this “Form 10-K”) and in our other communications that are not statements of historical fact are forward-looking statements which are made in good faith by us. Forward-looking statements include, but are not limited to: (1) projections of revenues, income or loss, earnings or loss per 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. (the “Holding Company”) or CFBank, National Association (“CFBank”); (3) statements regarding future events, actions or economic performance; and (4) statements of assumptions underlying such statements. Words such as "estimate," "strategy," "may," "believe," "anticipate," "expect," "predict," "will," "intend," "plan," "targeted," and the negative of these terms, or similar expressions, are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements. Various risks and uncertainties may cause actual results to differ materially from those indicated by our forward-looking statements, including, without limitation, those risks set forth in the section captioned “RISK FACTORS” in Part I, Item 1A of this Form 10-K.

Forward-looking statements are not guarantees of performance or results. A forward-looking statement may include a statement of the assumptions or bases underlying the forward-looking statement. We believe that we have chosen these assumptions or bases in good faith and that they are reasonable. We caution you, however, that assumptions or bases almost always vary from actual results, and the differences between assumptions or bases and actual results can be material. The forward-looking statements included in this Form 10-K speak only as of the date hereof. 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.

 

Item 1. Business.

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. CFBank was originally organized in 1892 and was formerly known as Central Federal Savings and Loan Association of Wellsville and more recently as Central Federal Bank. On December 1, 2016, CFBank converted from a federal savings institution to a national bank. 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 subject to regulation and supervision by the Board of Governors of the Federal Reserve System (the “FRB”). Effective as of July 27, 2020, the Holding Company changed its name from Central Federal Corporation to CF Bankshares Inc. As used herein, the terms “we,” “us,” “our” and the “Company” refer to CF Bankshares Inc. and CFBank, unless the context indicates to the contrary.

The consolidated financial statements include the Holding Company and CFBank. Intercompany transactions and balances are eliminated in consolidation.

Central Federal Capital Trust I (the “Trust”), a wholly-owned subsidiary of the Holding Company, was formed in 2003 to raise additional funding for the Company through a pooled private offering of trust preferred securities. The Holding Company issued $5,155,000 of subordinated debentures to the Trust in exchange for ownership of all of the common stock of the Trust and the proceeds of the preferred securities sold by the Trust. The Holding Company is not considered the primary beneficiary of this trust (variable interest entity) and, therefore, the Trust is not consolidated in the Company’s financial statements, but rather the subordinated debentures are shown as a liability.

Currently, the Company does not transact material business other than through CFBank. At December 31, 2025, the Company’s assets totaled $2.1 billion and stockholders’ equity totaled $184.4 million.

CFBank is a nationally chartered boutique commercial bank operating primarily in five (5) major metro markets: Columbus, Cleveland, Cincinnati, and Akron, Ohio, and Indianapolis, Indiana. CFBank focuses on serving the financial needs of closely held businesses and entrepreneurs, by providing comprehensive Commercial, Retail, and Mortgage Lending services presence. In all regional markets, CFBank provides commercial loans and equipment leases, commercial and residential real estate loans and treasury management depository services, residential mortgage lending, and full-service commercial and retail banking services and products. CFBank seeks to differentiate itself from its competitors by providing individualized service coupled with direct customer access to decision-makers, and ease of doing business. We believe that CFBank matches the sophistication of much larger banks, without the bureaucracy. CFBank also offers its clients the convenience of online banking, mobile banking and remote deposit capabilities.

Our revenues are derived principally from the generation of interest and fees on loans originated and noninterest income generated on the sale of loans. Our primary sources of funds are retail and business deposit accounts and certificates of deposit, brokered

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certificates of deposit and, to a lesser extent, principal and interest payments on loans and securities, Federal Home Loan Bank (“FHLB”) advances, other borrowings and proceeds from the sale of loans.

Most of our deposits and loans come from our market area. Our principal market area for deposits and loans includes the following counties in Ohio and Indiana: Franklin County, Ohio through our offices in Columbus, Ohio; Delaware County, Ohio through our Polaris office in Columbus, Ohio; Cuyahoga County, Ohio through our office in Orange Village, Ohio and our Ohio City office in Cleveland, Ohio; Summit County, Ohio through our office in Fairlawn, Ohio; Hamilton County, Ohio through our offices in Blue Ash, Ohio and our Red Bank office in Cincinnati, Ohio; and Marion County, Indiana through our office in Indianapolis, Indiana. 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.

Market Area and Competition

Our primary market areas are competitive markets for financial services and we face competition both in making loans and in attracting deposits. Direct competition comes from a number of financial institutions operating in our market area, many of which have a statewide or regional presence, and in some cases, a national presence. Many of these financial institutions are significantly larger and have greater financial resources than we do. Competition for loans and deposits comes from savings institutions, mortgage banking companies, commercial banks, credit unions, brokerage firms and insurance companies.

Lending Activities

Loan and Lease Portfolio Composition. Our loan and lease portfolio consists primarily of commercial, commercial real estate and multi-family mortgage loans, mortgage loans secured by single-family residences and, to a lesser degree, consumer loans. CFBank also finances a variety of commercial and residential construction projects. At December 31, 2025, gross loans receivable totaled $1.8 billion and increased approximately $17.0 million, or 1.0%, from $1.7 billion at December 31, 2024. Commercial, commercial real estate and multi-family mortgage loans, including related construction loans, totaled $1.3 billion in the aggregate and represented 72.1% of the gross loan portfolio at December 31, 2025, as compared to 69.1% of the gross loan portfolio at December 31, 2024. Commercial, commercial real estate and multi-family mortgage loan balances, including related construction loans, increased $63.4 million, or 5.3%, during 2025. Portfolio single-family residential mortgage loans, including related construction loans, totaled $445.1 million and represented 25.3% of total gross loans at year-end 2025, compared to 28.4% at year-end 2024. The remainder of our loan portfolio consists of consumer loans, which totaled $45.4 million, or 2.6% of gross loans receivable, at year-end 2025.

The types of loans originated are subject to federal and state laws and regulations. Interest rates charged on loans are affected by the demand for such loans, the supply of money available for lending purposes and the rates offered by competitors. In turn, these factors are affected by, among other things, economic conditions, fiscal policies of the federal government, monetary policies of the Federal Reserve Board (the "FRB") and legislative tax policies.

Loan Maturity. The following table shows the remaining contractual maturity of CFBank’s loan portfolio at December 31, 2025. Demand loans and other loans having no stated schedule of repayments or no stated maturity are reported as due within one year. The table does not include potential prepayments or scheduled principal amortization.

 

 

 

At December 31, 2025

 

 

 

Real Estate
Mortgage Loans

 

 

Consumer
Loans

 

 

Commercial
Loans

 

 

Total Loans
Receivable

 

 

 

(Dollars in thousands)

 

Amounts due:

 

 

 

 

 

 

 

 

 

 

 

 

Within one year

 

$

230,036

 

 

$

23

 

 

$

140,076

 

 

$

370,135

 

After one year:

 

 

 

 

 

 

 

 

 

 

 

 

More than one year to five years

 

 

544,070

 

 

 

2,535

 

 

 

162,473

 

 

 

709,078

 

More than five years to 15 years

 

 

151,329

 

 

 

3,299

 

 

 

66,846

 

 

 

221,474

 

More than 15 years

 

 

416,301

 

 

 

39,509

 

 

 

35

 

 

 

455,845

 

Total due after 2026

 

 

1,111,700

 

 

 

45,343

 

 

 

229,354

 

 

 

1,386,397

 

Total amount due

 

$

1,341,736

 

 

$

45,366

 

 

$

369,430

 

 

$

1,756,532

 

 

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The following table sets forth at December 31, 2025, the dollar amount of total loans and leases receivable contractually due after one year (December 31, 2026), and whether such loans have fixed interest rates or adjustable interest rates.

 

 

 

Due After December 31, 2026

 

 

 

Fixed

 

 

Adjustable

 

 

Total

 

 

 

(Dollars in thousands)

 

Real estate mortgage loans

 

$

706,468

 

 

$

405,232

 

 

$

1,111,700

 

Consumer loans

 

 

2,494

 

 

 

42,849

 

 

 

45,343

 

Commercial loans

 

 

134,156

 

 

 

95,198

 

 

 

229,354

 

Total loans

 

$

843,118

 

 

$

543,279

 

 

$

1,386,397

 

 

Origination of Loans and Leases. Lending activities are conducted through our offices located in Franklin, Cuyahoga, Delaware, Summit, and Hamilton Counties, Ohio and in Marion County, Indiana. We originate commercial, commercial real estate, multi-family and single-family residential mortgage loans, and commercial leases in the Columbus, Cleveland, Cincinnati and Akron, Ohio and Indianapolis, Indiana markets.

Commercial, commercial real estate and multi-family loans are originated with fixed, floating and adjustable-rate mortgage (“ARM”) interest rates. Fixed-rate loans are typically limited to terms of three to five years. CFBank has also utilized interest-rate swaps to economically protect the related fixed-rate loans from changes in value due to changes in interest rates but does not apply hedge accounting. See Note 17 to the Consolidated Financial Statements included in this Form 10-K for additional information on interest-rate swaps.

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. A significant lending activity has been the origination of permanent conventional mortgage loans secured by single-family residences located within and outside of our primary market area. Loan originations are primarily obtained from our loan officers and their contacts within the local real estate industry and with existing or past customers and members of the local communities. We offer both fixed-rate and 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 initial adjustment limitation of up to 5.0%, subsequent adjustments of up to 2.0% per six-month period and a 5.0% lifetime cap. The interest rate adjustments on ARM loans currently offered are indexed to a variety of established indices, primarily the Secured Overnight Financing Rate (“SOFR”) and these loans do not provide for initial deep discount interest rates. We do not originate option ARM loans or loans with negative amortization.

The volume and types of single-family ARM loan originations are affected by market factors such as the level of interest rates, consumer preferences, competition and the availability of funds. For several years, demand for single-family ARM loans was strong due to consumer preference for ARM loans as a result of the high interest rate environment. However, in the past year, demand for ARM loans has declined.

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 an individual investor. CFBank is a direct endorsed underwriter, a designation by the Department of Housing and Urban Development that allows us to offer loans insured by the Federal Housing Authority (“FHA”). CFBank is also approved by the Department of Veterans Affairs (“VA”) to originate and approve VA loans.

For the year ended December 31, 2025, single-family mortgage loans originated for sale totaled $49.7 million, an increase of $2.1 million, or 4.5%, compared to $47.6 million originated in 2024.

For the year ended December 31, 2025, portfolio single-family mortgage loans originated by CFBank totaled $14.8 million, or 0.8% of total loans. Our policy is to originate quality loans that are evaluated for risk based on the borrower’s ability to repay the loan. Collateral positions are established by obtaining independent appraisal opinions. Mortgage insurance is generally required when the loan-to-value (“LTV”) exceeds 80%. 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 $82.0 million, or 19.2% of the single-family mortgage loan portfolio, at December 31, 2025. These loans generally pose credit risks not inherent in fixed-rate loans, primarily because as interest rates rise,

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the borrowers’ payments rise, increasing the potential for default. Periodic and lifetime caps on interest rate increases help to reduce the credit risks associated with ARM loans, but also limit the interest rate sensitivity of such loans.

Commercial Real Estate and Multi-Family Residential Mortgage Lending. Origination of commercial real estate and multi-family residential mortgage loans continues to be a significant portion of CFBank’s lending activity. Commercial real estate and multi-family residential mortgage loan balances increased $94.4 million to $704.9 million at December 31, 2025. This represented an increase of 15.5% over the $610.5 million balance at December 31, 2024.

We originate commercial real estate loans that are secured by properties used for business purposes, such as manufacturing facilities, office buildings and retail facilities. We originate multi-family residential mortgage loans that are secured by apartment buildings, condominiums, and multi-family residential houses. Commercial real estate and multi-family residential mortgage loans are secured by properties generally located in our primary market area.

Underwriting policies provide that commercial real estate and multi-family residential mortgage loans may be made in amounts up to 85% of the lower of the appraised value or purchase price of the property. An independent appraisal of the property is required on all loans greater than or equal to $500,000. In underwriting commercial real estate and multi-family residential mortgage loans, we consider the appraised value and net operating income of the property, the debt service ratio and the property owner’s and/or guarantor’s financial strength, expertise and credit history. 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. We have utilized interest-rate swaps to economically protect these fixed-rate loans from changes in value due to changes in interest rates, as appropriate. See Note 17 to the Consolidated Financial Statements included in this Form 10-K for additional information on interest-rate swaps. Adjustable-rate loans are tied to various market indices and generally adjust monthly or annually. Payments on both fixed and adjustable rate loans are based on 15 to 30 year amortization periods.

Commercial real estate and multi-family residential mortgage loans are generally considered to involve a greater degree of risk than single-family residential mortgage loans. Because payments on loans secured by commercial real estate and multi-family residential properties are dependent on successful operation or management of the properties, repayment of commercial real estate and multi-family residential mortgage loans may be subject to a greater extent to adverse conditions in the real estate market or the economy. As with single-family residential mortgage loans, adjustable rate commercial real estate and multi-family residential mortgage 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. Additionally, adjustable rate commercial real estate and multi-family residential mortgage loans generally do not contain periodic and lifetime caps on interest rate changes. We seek to minimize the additional risk presented by adjustable rate commercial real estate and multi-family residential mortgage loans through underwriting criteria that require such loans to be qualified at origination with sufficient debt coverage ratios under increasing interest rate stress scenarios.

Commercial real estate and multi-family residential mortgage loans also have larger loan balances to single borrowers or groups of related borrowers compared to single-family residential mortgage loans. Some of our borrowers also have more than one commercial real estate or multi-family residential mortgage loan outstanding with us. Additionally, some loans may be collateralized by junior liens. Consequently, an adverse development involving one or more loans or credit relationships can expose us to significantly greater risk of loss compared to an adverse development involving a single-family residential mortgage loan. 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. During 2025, commercial loan balances decreased by $49.4 million, or 11.8%, to $369.4 million at year-end 2025. Commercial loans are generally secured by business equipment, inventory, accounts receivable and other business assets. In underwriting commercial loans, we consider the net operating income of the borrower, the debt service ratio and the financial strength, expertise and credit history of the business owners and/or guarantors. We offer both fixed- and adjustable-rate commercial loans. Fixed-rate loans are typically limited to a maximum term of five years. Adjustable-rate loans are tied to various market indices and generally adjust monthly or annually.

Commercial loans are generally considered to involve a greater degree of risk than loans secured by real estate. 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. We seek to mitigate these risks through underwriting policies which require such loans to be qualified at origination on the basis of the enterprise’s income and debt coverage ratio and the financial strength of the business owners and/or guarantors.

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Adjustable-rate commercial 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. Additionally, adjustable-rate commercial loans generally do not contain periodic and lifetime caps on interest rate changes. We seek to minimize the additional risk presented by adjustable-rate commercial loans through underwriting criteria that require such loans to be qualified at origination with sufficient debt coverage ratios under increasing interest rate scenarios.

Construction and Land Lending. During 2025, construction loans increased by $6.8 million, or 3.3%, to $208.9 million, as compared to the $202.2 million in the portfolio at year-end 2024. 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.

Construction loans are made to finance the construction of residential and commercial properties generally located within our primary market area. Construction loans are fixed- or adjustable-rate loans which may convert to permanent loans with maturities of up to 30 years. 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. Land development loans generally do not exceed 75% of the actual cost or current appraised value of the property, whichever is less. Loans on raw land generally do not exceed 65% of the actual cost or current appraised value of the property, whichever is less.

Construction and land financing is considered to involve a higher degree of credit risk than long-term financing on improved, owner-occupied real estate. Risk of loss on a construction loan is dependent largely upon the accuracy of the initial estimate of the property’s value at completion of construction or development compared to the estimated cost (including interest) of construction. If the estimate of value proves to be inaccurate, we may be confronted with a project, when completed, having a value which is insufficient to assure full repayment. We attempt to reduce such risks on construction loans by requiring personal guarantees and reviewing current personal financial statements and tax returns, as well as other projects of the developer.

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, 2025, our consumer loan portfolio totaled $45.4 million, which was 2.6% of gross loans receivable. During 2025, our consumer loan portfolio increased $2.9 million, or 6.7%, over the year-end 2024 balance of $42.5 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. 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. The amount of the line is based on the borrower’s credit history, income and equity in the home. When combined with the balance of the prior mortgage liens, these lines generally may not exceed 89.9% of the appraised value of the property at the time of the loan commitment. The lines are secured by a subordinate lien on the underlying real estate and are, therefore, vulnerable to declines in property values in the geographic areas where the properties are located. Credit approval for home equity lines of credit requires income sufficient to repay principal and interest due, stability of employment, an established credit record and sufficient collateral.

Delinquencies and Classified Assets. Management and the Board of Directors monitor the status of all loans 30 days or more past due on a monthly basis through the analysis of past due statistics and trends for all loans. Procedures with respect to resolving delinquencies vary depending on the nature and type of the loan and period of delinquency. We make efforts, consistent with safety and soundness principles, to work with the borrower and develop action steps to have the loan brought current. If the loan is not brought current, it then becomes necessary to take additional legal actions including the repossession of collateral.

We maintain an internal credit rating system and loan review procedures specifically developed to monitor credit risk for commercial, commercial real estate and multi-family residential loans. Internal loan reviews for these loan types are performed at least annually, and more often for loans with higher credit risk. Loan officers maintain close contact with borrowers between reviews. Adjustments to loan risk ratings are based on the reviews and at any time information is received that may affect risk ratings. Additionally, an independent third party review of commercial, commercial real estate and multi-family residential loans is performed at least annually. Management uses the results of these reviews to help determine the effectiveness of the existing policies and procedures and to provide an independent assessment of our internal loan risk rating system.

Federal regulations and CFBank’s asset classification policy require use of an internal asset classification system as a means of reporting and monitoring assets. 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. In accordance with regulations, problem loans are classified as special mention,

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substandard, doubtful or loss, and the classifications are subject to review by banking regulators. Loans designated as special mention are considered criticized assets. Loans designated as substandard, doubtful or loss are considered classified assets. Loans designated as special mention possess weaknesses that, if left uncorrected, may result in deterioration of the repayment prospects for the loan or of CFBank’s credit position at some future date. A loan is considered substandard if it is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that there will be some loss if the deficiencies are not corrected. A loan considered doubtful has all of the weaknesses inherent in those classified 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. Loans designated as loss are considered uncollectible based on the borrower’s inability to make payments, and any value attached to collateral, if any, is based on liquidation value. Loans considered loss are generally uncollectible and have so little value that their continuance as assets is not warranted and are charged off, unless certain circumstances exist that could potentially warrant a specific reserve to be established.

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 to the Consolidated Financial Statements included in this Form 10-K for detailed information on criticized and classified loans as of December 31, 2025 and 2024.

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, 2025, but exhibit weaknesses that could lead to nonaccrual status in the future. At December 31, 2025, there were no classified loans still accruing interest.

Nonperforming Assets.

 

The $282,000 increase in nonperforming loans in 2025 compared to 2024 was primarily driven by nine commercial loans, totaling $2.7 million, two commercial real estate loans, totaling $5.2 million, four single-family residential loans, totaling $913,000, and one home equity line of credit, totaling $87,000, becoming nonaccrual during the year ended December 31, 2025, partially offset by paydowns and approximately $7.1 million in charges-offs on loans that were in nonaccrual at December 31, 2024. Of the $15.3 million of nonaccrual loans at December 31, 2025, $5.1 million was guaranteed by the SBA.

For the year ended December 31, 2025, 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 $1.4 million. There was no interest income recognized on nonaccrual loans in 2025.

During the year ended December 31, 2025, no loans were modified, where the borrower was experiencing financial difficulty.

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 to the Consolidated Financial Statements included in this Form 10-K for additional information on nonperforming loans and modified loans as of December 31, 2025 and 2024.

For information on real estate owned (“REO”) and other foreclosed assets, see the section below titled “Foreclosed Assets.”

Allowance for Credit Losses on Loans and Leases (ACL - Loans). The ACL - Loans is a valuation account that is deducted from the amortized cost basis of loans and leases to present the net amount expected to be collected on loans and leases over the contractual term. Loans and leases are charged off against the allowance when the uncollectibility of the loan or lease is confirmed. Expected recoveries do not exceed the aggregate of amounts previously charged off and expected to be charged off. Adjustments to the ACL- Loans are reported in the income statement as a component of provision for credit loss. The Company has made the accounting policy election to exclude accrued interest receivable on loans and leases from the estimate of credit losses.

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.

The ACL – Loans totaled $17.7 million at December 31, 2025, and increased $204,000, or 1.2%, from $17.5 million at December 31, 2024. The increase in the ACL - Loans is due to $7.5 million in loan provision expense, partially offset by $7.3 million in net charge-offs during the year ended December 31, 2025. The ratio of the ACL - Loans to total loans was 1.01% at December 31, 2025, compared to 1.00% at December 31, 2024.

8

Table of Contents

 

We believe the ACL - Loans is adequate to absorb probable expected credit losses in the loan portfolio as of December 31, 2025; however, future additions to the allowance may be necessary based on factors including, but not limited to, deterioration in client business performance, recessionary economic conditions, declines in borrowers’ cash flows and market conditions which result in lower real estate values. Additionally, various regulatory agencies, as an integral part of their examination process, periodically review the ACL - Loans. Such agencies may require additional provisions for credit losses based on judgments and estimates that differ from those used by management, or on information available at the time of their review. Management continues to diligently monitor credit quality in the existing portfolio and analyze potential loan opportunities carefully in order to manage credit risk. An increase in credit losses could occur if economic conditions and factors which affect credit quality, real estate values and general business conditions worsen or do not improve.

 

 

 

2025

 

 

2024

 

 

2023

 

ACL-Loans, beginning of period

 

$

17,474

 

 

$

16,865

 

 

$

16,062

 

Impact of adoption ASC 326

 

 

—

 

 

 

—

 

 

 

(409

)

Balances, January 1, 2023 post ASC 326 adoption

 

 

17,474

 

 

 

16,865

 

 

 

15,653

 

Charge-offs:

 

 

 

 

 

 

 

 

 

Real estate loans:

 

 

 

 

 

 

 

 

 

Single-family

 

 

27

 

 

 

—

 

 

 

—

 

Consumer loans:

 

 

 

 

 

 

 

 

 

Other

 

 

—

 

 

 

280

 

 

 

3

 

Commercial loans

 

 

7,449

 

 

 

5,323

 

 

 

775

 

Total charge-offs

 

 

7,476

 

 

 

5,603

 

 

 

778

 

 

 

 

 

 

 

 

 

 

 

Recoveries on loans previously charged off:

 

 

 

 

 

 

 

 

 

Recoveries

 

 

 

 

 

 

 

 

 

Real estate loans:

 

 

 

 

 

 

 

 

 

Single-family

 

 

36

 

 

 

28

 

 

 

40

 

Consumer loans:

 

 

 

 

 

 

 

 

 

Home equity

 

 

2

 

 

 

6

 

 

 

4

 

Other

 

 

—

 

 

 

—

 

 

 

3

 

Commercial loans

 

 

134

 

 

 

91

 

 

 

85

 

Total recoveries

 

 

172

 

 

 

125

 

 

 

132

 

Net charge-offs

 

 

7,304

 

 

 

5,478

 

 

 

646

 

Provision for credit losses on loans

 

 

7,508

 

 

 

6,087

 

 

 

1,858

 

ACL - Loans, end of period

 

$

17,678

 

 

$

17,474

 

 

$

16,865

 

ACL - Loans to total loans and leases

 

 

1.01

%

 

 

1.00

%

 

 

0.99

%

ACL - Loans to nonperforming loans

 

 

115.33

%

 

 

116.13

%

 

 

294.74

%

Net charge-offs (recoveries) to ACL - Loans

 

 

41.32

%

 

 

31.35

%

 

 

3.83

%

Net charge-offs (recoveries) to average loans and leases

 

 

0.42

%

 

 

0.32

%

 

 

0.04

%

 

The impact of economic conditions on the housing market, collateral values, and businesses’ and consumers’ ability to pay may increase the level of charge-offs in the future. Additionally, our commercial, commercial real estate and multi-family residential loan portfolios may be detrimentally affected by adverse economic conditions. Declines in these portfolios could expose us to losses which could materially affect the Company’s earnings, capital and profitability.

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. 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.

 

 

 

At December 31,

 

 

 

2025

 

 

2024

 

 

2023

 

 

 

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

 

$

2,528

 

 

 

24.36

%

 

$

2,787

 

 

 

26.76

%

 

$

3,371

 

 

 

27.95

%

Multi-family

 

 

1,494

 

 

 

9.73

%

 

 

1,382

 

 

 

8.65

%

 

 

1,231

 

 

 

7.64

%

Commercial real estate

 

 

4,938

 

 

 

30.40

%

 

 

3,918

 

 

 

26.45

%

 

 

4,105

 

 

 

25.31

%

Construction

 

 

2,031

 

 

 

11.89

%

 

 

1,741

 

 

 

11.62

%

 

 

1,707

 

 

 

11.15

%

Consumer loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Home equity lines of credit

 

 

390

 

 

 

2.40

%

 

 

371

 

 

 

2.27

%

 

 

334

 

 

 

2.10

%

Other

 

 

296

 

 

 

.19

%

 

 

270

 

 

 

.17

%

 

 

233

 

 

 

.14

%

Commercial loans

 

 

6,001

 

 

 

21.03

%

 

 

7,005

 

 

 

24.08

%

 

 

5,884

 

 

 

25.71

%

Total

 

$

17,678

 

 

 

100.00

%

 

$

17,474

 

 

 

100.00

%

 

$

16,865

 

 

 

100.00

%

 

9

Table of Contents

 

 

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. 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, 2025 or December 31, 2024. 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 to the Consolidated Financial Statements included in this Form 10-K for information regarding foreclosed assets at December 31, 2025. Foreclosure activities are closely tied with general economic conditions and the ability of our customers to continue to meet their loan payment obligations and, therefore, the level of foreclosed assets may increase in the future if, among other things, economic conditions in our market area decline.

Investment Activities

National banks have the authority to invest in various types of liquid assets, including U.S. Treasury obligations, securities of various federal agencies, certificates of deposit of insured banks and savings institutions, bankers’ acceptances and federal funds. Subject to various restrictions, national banks may also invest their assets in commercial paper, municipal bonds, investment-grade corporate debt securities and mutual funds whose assets conform to the investments that a national bank is otherwise authorized to make directly.

The investment policy established by the Board of Directors is designed to provide and maintain adequate liquidity, generate a favorable return on investment without incurring undue interest rate and credit risk, and compliment lending activities. The policy provides authority to invest in U.S. 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, 2025, the securities available for sale portfolio totaled $17.5 million. At December 31, 2025, the U.S. Treasury security in the securities portfolio was guaranteed by the U.S. government and the collateralized mortgage obligation was guaranteed by the Government National Mortgage Association (GNMA).

Equity securities, consisting of preferred stock in another financial institution, totaled $0 at December 31, 2025 and $5.0 million at December 31, 2024. The equity security was sold during the first quarter of 2025.

Management evaluates debt securities impairment at least on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. See Notes 1 and 3 to the Consolidated Financial Statements included in this Form 10-K for a detailed discussion of management’s evaluation of securities for impairment.

The following table sets forth certain information regarding the amortized cost and fair value of securities at the dates indicated

 

 

 

At December 31,

 

 

 

2025

 

 

2024

 

 

2023

 

Securities Available For Sale

 

Amortized Cost

 

 

Fair Value

 

 

Amortized Cost

 

 

Fair Value

 

 

Amortized Cost

 

 

Fair Value

 

Corporate debt

 

$

9,985

 

 

$

8,400

 

 

$

9,983

 

 

$

7,700

 

 

$

9,980

 

 

$

7,100

 

Issued by U.S. government-sponsored entities and
   agencies:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury

 

 

998

 

 

 

1,000

 

 

 

982

 

 

 

983

 

 

 

1,007

 

 

 

988

 

Mortgage-backed securities - residential

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

4

 

 

 

4

 

Collateralized mortgage obligation

 

 

8,248

 

 

 

8,096

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Total

 

$

19,231

 

 

$

17,496

 

 

$

10,965

 

 

$

8,683

 

 

$

10,991

 

 

$

8,092

 

 

 

10

Table of Contents

 

The following table sets forth information regarding the amortized cost, weighted average yield and contractual maturity dates of debt securities as of December 31, 2025.

 

 

 

 

 

 

 

 

 

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

 

$

—

 

 

 

—

 

 

$

—

 

 

 

—

 

 

$

9,985

 

 

 

2.16

%

 

$

—

 

 

 

—

 

 

$

9,985

 

 

 

2.16

%

Issued by U.S. government-
   sponsored entities and
   agencies:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury

 

 

998

 

 

 

4.09

%

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

998

 

 

 

4.09

%

Collateralized mortgage obligation

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

8,248

 

 

 

5.88

%

 

 

8,248

 

 

 

5.88

%

Total

 

$

998

 

 

 

4.09

%

 

$

—

 

 

 

—

 

 

$

9,985

 

 

 

2.16

%

 

$

8,248

 

 

 

5.88

%

 

$

19,231

 

 

 

3.86

%

 

(1)
Interest yields are presented on a fully taxable equivalent basis using a 21 percent tax rate.

Sources of Funds

General. CFBank’s primary sources of funds are deposits, principal and interest payments on loans and securities, proceeds from sales of loans, borrowings, and funds generated from operations of CFBank. Contractual loan payments are a relatively stable source of funds, while deposit inflows and outflows and loan prepayments are significantly influenced by general market interest rates and economic conditions and competition. Borrowings may be used on a short-term basis for liquidity purposes or on a long-term basis to fund asset growth or manage interest rate risk in accordance with asset/liability management strategies.

The Holding Company, as a bank holding company, has more limited sources of liquidity than CFBank. In general, in addition to its existing liquid assets, sources of liquidity include funds raised in the securities markets through debt or equity offerings, dividends received from CFBank or the sale of assets.

Dividends from CFBank serve as a potential source of liquidity to the Holding Company to meet its obligations. Generally, CFBank may pay dividends to the Holding Company without prior regulatory approval as long as the dividend does not exceed the total of the current calendar year-to-date earnings plus any earnings from the previous two years not already paid out in dividends, and as long as CFBank remains well capitalized after the dividend payment. See Note 16 to the Consolidated Financial Statements included in this Form 10-K for additional information.

The Holding Company’s available cash and cash equivalents totaled $522,000 at December 31, 2025. Management believes that the Holding Company had adequate funds and liquidity sources at December 31, 2025 to meet its current and anticipated operating needs at this time. See the section titled “Liquidity and Capital Resources” in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 7 of this Form 10-K 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. 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 at December 31, 2025 and totaled 38.5% of average deposit balances in 2025. Money market accounts represent the second largest portion of our deposit portfolio at December 31, 2025 and totaled 39.2% of average deposit balances in 2025. The term of the certificates of deposit typically offered vary from six months to five years at rates established by management. 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.

The flow of deposits is influenced significantly by general economic conditions, changes in money market rates, prevailing interest rates and competition. 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, 2025, CFBank had $400.4 million in brokered deposits with maturity dates from January 2026 through March 2028. At December 31, 2025, cash, unpledged securities, and deposits in other financial institutions totaled $273.4 million.

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Table of Contents

 

CFBank is a participant in the Certificate of Deposit Account Registry Service® (CDARS) and Insured Cash Sweep (ICS) programs offered through IntraFi Network. 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 $400.4 million at December 31, 2025, and decreased $20.4 million, or 4.9%, from $420.8 million at December 31, 2024. Customer balances in the CDARS reciprocal and ICS reciprocal programs, which do not qualify as brokered, totaled $278.7 million at December 31, 2025 and increased $7.0 million, or 2.6%, from $271.7 million at December 31, 2024.

As of December 31, 2025 and 2024, deposits exceeding the FDIC insured limit of $250,000 totaled $525.2 million and $522.4 million, respectively.

Certificate accounts in amounts of $250,000 or more totaled $463.6 million at December 31, 2025, maturing as follows:

 

Maturity Period

 

Amount

 

 

Weighted
Average Rate

 

 

 

(Dollars in thousands)

 

Three months or less

 

$

136,866

 

 

 

4.21

%

Over 3 through 6 months

 

 

102,157

 

 

 

3.08

%

Over 6 through 12 months

 

 

123,872

 

 

 

3.20

%

Over 12 months

 

 

100,749

 

 

 

2.74

%

Total

 

$

463,644

 

 

 

 

 

The following table sets forth the distribution of average deposit account balances for the periods indicated and the weighted average interest rates on each category of deposits presented.

 

 

 

For The Year Ended December 31,

 

 

 

2025

 

 

2024

 

 

2023

 

 

 

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

 

$

112,290

 

 

 

6.37

%

 

 

4.32

%

 

$

112,949

 

 

 

6.67

%

 

 

4.86

%

 

$

113,141

 

 

 

6.96

%

 

 

4.41

%

Money market accounts

 

 

675,064

 

 

 

38.32

%

 

 

3.79

%

 

 

687,965

 

 

 

40.60

%

 

 

4.59

%

 

 

672,923

 

 

 

41.42

%

 

 

4.47

%

Savings accounts

 

 

1,621

 

 

 

0.09

%

 

 

0.62

%

 

 

1,134

 

 

 

0.07

%

 

 

0.96

%

 

 

3,087

 

 

 

0.19

%

 

 

0.37

%

Certificates of deposit

 

 

690,229

 

 

 

39.18

%

 

 

4.29

%

 

 

652,305

 

 

 

38.49

%

 

 

4.61

%

 

 

607,147

 

 

 

37.38

%

 

 

3.51

%

Total Interest-bearing deposits

 

 

1,479,204

 

 

 

83.96

%

 

 

4.06

%

 

 

1,454,353

 

 

 

85.83

%

 

 

4.62

%

 

 

1,396,298

 

 

 

85.95

%

 

 

4.04

%

Noninterest-bearing deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

 

 

282,593

 

 

 

16.04

%

 

 

—

 

 

 

240,098

 

 

 

14.17

%

 

 

—

 

 

 

228,156

 

 

 

14.05

%

 

 

—

 

Total Average Deposits

 

$

1,761,797

 

 

 

100.00

%

 

 

 

 

$

1,694,451

 

 

 

100.00

%

 

 

 

 

$

1,624,454

 

 

 

100.00

%

 

 

 

 

See the sections titled “Financial Condition – Deposits” and “Liquidity and Capital Resources” in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 7 of this Form 10-K for additional information regarding deposits.

Borrowings. As part of our operating strategy, FHLB advances are used as an alternative to retail and brokered deposits to fund our asset growth. The advances are collateralized primarily by single-family mortgage loans, multi-family mortgage loans, 1-4 family commercial real estate loans and home equity lines of credit loans, securities and cash, and secondarily by CFBank’s investment in the capital stock of the FHLB of Cincinnati. 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 $58.0 million at December 31, 2025. Based on the collateral pledged, CFBank was eligible to borrow up to a total of $242.7 million from the FHLB at year-end 2025.

The Holding Company has a credit facility with a third-party bank. Prior to April 30, 2025, the credit facility had a borrowing limit of $35 million with a revolving feature until May 21, 2024, at which time the outstanding balance was converted to a 10-year term note on a graduated 10-year amortization. Borrowings on the credit facility bore interest at a fixed rate of 3.85% until May 21, 2026, at which time the interest rate then would convert to a floating rate equal to PRIME with a floor of 3.25%. Effective April 30, 2025, an additional $10 million revolving line of credit was added to the credit facility and the interest rate was amended to reset the fixed rate to 6.00% until May 21, 2026, at which time the rate will convert to a floating rate equal to PRIME. The $10 million revolving line of credit matures on April 30, 2027. The revolving line of credit provided an additional $10 million that was injected as additional Tier 1 capital into CFBank during the second quarter of 2025. As of December 31, 2025, the Company had an outstanding balance, net of unamortized debt issuance costs, of $43.0 million on the facility.

12

Table of Contents

 

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 $122.4 million at year-end 2025. There were no outstanding borrowings from the Federal Reserve Bank at December 31, 2025.

At December 31, 2025 and 2024, 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, 2025 or December 31, 2024. 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.

See the section titled “Financial Condition - Subordinated Debentures” in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 7 of this Form 10-K for information regarding subordinated debentures issued by the Company in 2003 and 2018.

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,

 

 

 

2025

 

 

2024

 

 

2023

 

Short-term FHLB advances and other borrowings:

 

 

 

 

 

 

 

 

 

Average balance outstanding

 

$

7

 

 

$

214

 

 

$

223

 

Maximum amount outstanding at any month-end during the period

 

 

—

 

 

 

26,000

 

 

 

—

 

Balance outstanding at end of period

 

 

—

 

 

 

—

 

 

 

—

 

Weighted average interest rate during the period

 

 

4.71

%

 

 

5.48

%

 

 

4.91

%

 

Personnel

As of December 31, 2025, the Company had 98 full-time employees and six part-time employees.

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 laws and regulations applicable to the Company are continually under review by the United States Congress and state legislatures and federal and state regulatory agencies, and a change in statutes, regulations or regulatory policies applicable to the Company could have a material effect on the Company’s business.

Overview

The Holding Company and CFBank are subject to examination and comprehensive federal regulation and oversight by federal banking agencies. Such regulation and oversight is intended primarily for the protection of consumers, depositors, borrowers, the FDIC’s Deposit Insurance Fund (the “DIF”) and the banking system as a whole and not for the protection of shareholders. Applicable laws and regulations restrict permissible activities and investments and require actions to protect loan, deposit, brokerage, fiduciary and other customers, as well as the DIF. They also may restrict the Holding Company’s ability to repurchase its stock or to receive dividends from CFBank and impose capital adequacy and liquidity requirements.

As a bank 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. The Holding Company is also subject to the disclosure and regulatory requirements of the Securities Act of 1933, as amended (the “Securities Act”), and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as administered by the Securities and Exchange Commission (the “SEC”). 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”). In addition, CFBank is subject to regulation and examination by the FDIC, which insures the deposits of CFBank to the maximum extent permitted by law, and certain other requirements established by the FDIC.

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) established the Consumer Financial Protection Bureau (the “CFPB”), which regulates consumer financial products and services and certain financial services providers. The CFPB is authorized to prevent unfair, deceptive or abusive acts or practices and ensures consistent enforcement of laws

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so that consumers have access to fair, transparent and competitive markets for consumer financial products and services. Since its establishment, the CFPB has exercised extensively its rulemaking and interpretative authority.

Federal law provides federal banking regulators, including the OCC, the FRB and the FDIC, with substantial enforcement powers. The enforcement authority of the OCC and the FRB over national banks and their holding companies includes, among other things, the ability to assess civil money penalties, to issue cease and desist or removal orders and to initiate injunctive actions. In general, these enforcement actions may be initiated for violations of laws and regulations and unsafe and unsound practices. Other actions or inactions may also provide the basis for enforcement action.

Regulation of the Holding Company

General. As a bank holding company, the Holding Company’s activities are subject to extensive regulation by the FRB. The Holding Company is required to file reports with the FRB and such additional information as the FRB may require and is subject to regular examinations by the FRB. The FRB also has extensive enforcement authority over bank holding companies, including, among other things, the ability to assess civil money penalties, issue cease and desist or removal orders, and require that a bank holding company divest subsidiaries (including a subsidiary bank). In general, the FRB may initiate enforcement actions for violations of laws and regulations and unsafe or unsound practices.

Source of Strength. A bank holding company is required by law and FRB policy to act as a source of financial strength to each subsidiary bank and to commit resources to support such subsidiary bank. The FRB may require a bank holding company to contribute additional capital to an undercapitalized subsidiary bank and may disapprove of the payment of dividends to shareholders if the FRB believes the payment of such dividends would be an unsafe or unsound practice.

Prior FRB Approval. The BHCA requires the prior approval of the FRB in any case where a bank holding company proposes to:

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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 bank holding company;
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acquire all or substantially all of the assets of another bank or another financial or bank holding company; or
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merge or consolidate with any other financial or bank holding company.

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 final rule expands and codifies the presumptions for use in such determinations. By codifying the presumptions, the final rule provides greater transparency on the types of relationships that the FRB generally views as supporting a facts-and-circumstances determination that one company controls another company. The FRB’s final rule applies to questions of control under the BHCA, but does not extend to the Change in Bank Control Act.

Financial Activities. A qualifying bank holding company may elect to become a financial holding company and thereby affiliate with securities firms and insurance companies and engage in other activities that are financial in nature and not otherwise permissible for a bank holding company, if the holding company is “well managed” and “well capitalized” and each of its subsidiary banks is well capitalized under the Federal Deposit Insurance Corporation Act of 1991 prompt corrective action provisions, is well managed, and has at least a satisfactory rating under the Community Reinvestment Act (the “CRA”).

No regulatory approval is required for a financial holding company to acquire a company, other than a bank or savings association, engaged in activities that are financial in nature or incidental to activities that are financial in nature, as determined by the FRB. The Financial Services Modernization Act defines “financial in nature” to include:

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securities underwriting, dealing and market making;
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sponsoring mutual funds and investment companies;
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insurance underwriting and agency;
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merchant banking; and
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activities that the FRB has determined to be closely related to banking.

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. Effective as of August 26, 2025, however, the Holding Company decertified its financial holding company status with the FRB as a result of CFBank’s “Needs to Improve”

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rating under the Community Reinvestment Act (the “CRA”), as discussed under “Community Reinvestment Act” below. Such decertification did not result in CFBank having to divest of or discontinue any of its existing business or activities.

A national bank also may engage, subject to limitations on investment, in activities that are financial in nature, other than insurance underwriting, insurance company portfolio investment, real estate development and real estate investment, through a financial subsidiary of the bank, if the bank is well capitalized and well managed and has at least a satisfactory CRA rating. If a financial holding company or a subsidiary bank fails to maintain all requirements for the holding company to maintain financial holding company status, material restrictions may be placed on the activities of the financial holding company and its subsidiaries and on the ability of the holding company to enter into certain transactions and obtain regulatory approvals for new activities and transactions. The financial holding company could also be required to divest of subsidiaries that engage in activities that are not permitted for bank holding companies that are not financial holding companies. If restrictions are imposed on the activities of a financial holding company, the existence of such restrictions may not be made publicly available pursuant to confidentiality regulations of the bank regulatory agencies.

Each subsidiary bank of a financial holding company is subject to certain restrictions on the maintenance of reserves against deposits, extensions of credit to the financial holding company or any of its subsidiaries, investments in the stock or other securities of the financial holding company or its subsidiaries and the taking of such stock or securities as collateral for loans to any borrower. Further, a financial holding company and its subsidiaries are prohibited from engaging in certain tying arrangements in connection with any extension of credit, lease or sale of property or furnishing of any services. Various consumer laws and regulations also affect the operations of these subsidiaries.

Economic Growth, Regulatory Relief and Consumer Protection Act

The Economic Growth, Regulatory Relief and Consumer Protection Act (the "Regulatory Relief Act") repealed or modified certain provisions of the Dodd-Frank Act and eased restrictions on all but the largest banks (those with consolidated assets in excess of $250 billion). Bank holding companies with consolidated assets of less than $100 billion, including the Company, are no longer subject to enhanced prudential standards. The Regulatory Relief Act also relieves bank holding companies and banks with consolidated assets of less than $100 billion, including the Company, from certain record-keeping, reporting and disclosure requirements. Certain other regulatory requirements applied only to banks with consolidated assets in excess of $50 billion and so did not apply to the Company even before the enactment of the Regulatory Relief Act.

Transactions with Affiliates, Directors, Executive Officers and Shareholders

Sections 23A and 23B of the Federal Reserve Act and FRB Regulation W generally:

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limit the extent to which a bank or its subsidiaries may engage in “covered transactions” with any one affiliate;
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limit the extent to which a bank or its subsidiaries may engage in “covered transactions” with all affiliates; and
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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.

An affiliate of a bank is any company or entity which controls, is controlled by or is under common control with the bank. The term “covered transaction” includes the making of loans to an affiliate, the purchase of assets from an affiliate, the issuance of a guarantee on behalf of an affiliate, the purchase of securities issued by an affiliate and other similar types of transactions with an affiliate.

A bank’s authority to extend credit to executive officers, directors and greater than 10% shareholders, as well as entities such persons control, is subject to Sections 22(g) and 22(h) of the Federal Reserve Act and Regulation O promulgated thereunder by the FRB. Among other things, these loans must be made on terms (including interest rates charged and collateral required) substantially the same as those offered to unaffiliated individuals or be made as part of a benefit or compensation program and on terms widely available to employees, and must not involve a greater than normal risk of repayment. In addition, the amount of loans a bank may make to these persons is based, in part, on the bank’s capital position, and specified approval procedures must be followed in making loans which exceed specified amounts.

Regulation of CFBank

General. CFBank, as a national bank, is subject to regulation, periodic examination, enforcement authority and oversight by the OCC extending to all aspects of CFBank’s operations. OCC regulations govern permissible activities, capital requirements, dividend limitations, investments, loans and other matters. CFBank also is subject to regulation and examination by the FDIC, which insures the deposits of CFBank to the maximum extent permitted by law. Furthermore, CFBank is subject, as a member bank, to certain rules and regulations of the FRB, many of which restrict activities and prescribe documentation to protect consumers. In addition, the

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establishment of branches by CFBank is subject to prior approval of the OCC. The OCC has broad enforcement powers over national banks, including the power to impose fines and other civil and criminal penalties and to appoint a conservator or receiver if any of a number of conditions are met.

The CFPB regulates consumer financial products and services provided by CFBank through interpretations designed to protect consumers.

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.

In July 2013, the United States banking regulators issued new capital rules applicable to smaller banking organizations which also implement certain of the provisions of the Dodd-Frank Act (the “Basel III Capital Rules”). Community banking organizations, including CFBank, began transitioning to the new rules on January 1, 2015.

The Basel III Capital Rules include (a) a minimum common equity tier 1 capital ratio of 4.5%, (b) a minimum Tier 1 capital ratio of 6.0%, (c) a minimum total capital ratio of 8.0%, and (d) a minimum leverage ratio of 4.0%.

Common equity for the common equity tier 1 capital ratio generally includes common stock (plus related surplus), retained earnings, accumulated other comprehensive income (unless an institution elects to exclude such income from regulatory capital), and limited amounts of minority interests in the form of common stock, subject to applicable regulatory adjustments and deductions.

Tier 1 capital generally includes common equity as defined for the common equity tier 1 capital ratio, plus certain non-cumulative preferred stock and related surplus, cumulative preferred stock and related surplus and trust preferred securities that have been grandfathered (but which are not permitted going forward), and limited amounts of minority interests in the form of additional Tier 1 capital instruments, less certain 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.

The deductions from common equity tier 1 capital include goodwill and other intangibles, certain deferred tax assets, mortgage-servicing assets above certain levels, gains on sale in connection with a securitization, investments in a banking organization’s own capital instruments and investments in the capital of unconsolidated financial institutions (above certain levels).

Under the guidelines, capital is compared to the relative risk related to the balance sheet. To derive the risk included in the balance sheet, one of several risk weights is applied to different balance sheet and off-balance-sheet assets, primarily based on the relative credit risk of the counterparty. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

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.

In December 2018, the federal banking agencies issued a final rule to address regulatory capital treatment of credit loss allowances under the CECL model (accounting standard). 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 federal banking agencies have established a system of prompt corrective action to resolve certain of the problems of undercapitalized institutions. This system is based on five capital level categories for insured depository institutions: “well capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized” and “critically undercapitalized.”

The federal banking agencies may (or in some cases must) take certain supervisory actions depending upon a bank’s capital level. For example, the banking agencies must appoint a receiver or conservator for a bank within 90 days after the bank becomes “critically undercapitalized” unless the bank’s primary regulator determines, with the concurrence of the FDIC, that other action would better

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achieve regulatory purposes. Banking operations otherwise may be significantly affected depending on a bank’s capital category. For example, a bank that is not “well capitalized” generally is prohibited from accepting brokered deposits and offering interest rates on deposits higher than the prevailing rate in its market, and the holding company of any undercapitalized depository institution must guarantee, in part, specific aspects of the bank’s capital plan for the plan to be acceptable.

In order to be “well-capitalized”, a bank must have a common equity tier I capital ratio of at least 6.5%, a total risk-based capital of at least 10.0%, a Tier 1 risk-based capital ratio of at least 8.0% and a leverage ratio of at least 5.0%, and the bank must not be subject to any written agreement, order, capital directive or prompt corrective action directive to meet and maintain a specific capital level for any capital measure. 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, 2025.

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. In April 2015, the FRB issued a final rule which increased the size limitation for qualifying bank holding companies under the Small Bank Holding Company Policy Statement from $500 million to $1 billion of total consolidated assets. In August 2018, the FRB issued an interim final rule, as required by the Regulatory Relief Act, to further increase the size limitation under the Small Bank Holding Company Policy Statement to $3 billion of total consolidated assets.

FDIC Regulation and Insurance of Accounts. CFBank’s deposits are insured up to the applicable limits by the FDIC, and such insurance is backed by the full faith and credit of the United States Government. The general deposit insurance limit is $250,000 per separately insured depositor. As insurer, the FDIC imposes deposit insurance premiums and is authorized to conduct examinations of and to require reporting by FDIC-insured institutions, to prohibit any insured institution from engaging in any activity the FDIC determines to pose a threat to the DIF, and to take enforcement actions against insured institutions. The FDIC may terminate insurance of deposits of any insured institution if the FDIC finds that the insured institution has engaged in unsafe and unsound practices, is in an unsafe or unsound condition or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC or any other regulatory agency.

The FDIC assesses quarterly deposit insurance premiums on each insured institution based on risk characteristics of the insured institution and may also impose special assessments in emergency situations. The premiums fund the DIF. Pursuant to the Dodd-Frank Act, the FDIC has established 2.0% as the designated reserve ratio (“DRR”), which is the amount in the DIF as a percentage of all DIF insured deposits. In March 2016, the FDIC adopted final rules designed to meet the statutory minimum DRR of 1.35%. Because the DRR fell below the minimum DRR to 1.30%, the FDIC adopted a restoration plan requiring the restoration of the DRR to 1.35% within eight years (September 30, 2028). The FDIC rules further changed the method of determining risk-based assessment rates for established banks with less than $10 billion in assets to better ensure that banks taking on greater risks pay more for deposit insurance than banks that take on less risk. As of December 31, 2025, the DRR was above the statutory minimum of 1.35 percent.

Limitations on Dividends and Other Capital Distributions. Banking regulations impose various restrictions on distributions of capital, which include dividends, stock redemptions or repurchases, cash-out mergers and other transactions charged to the capital account.

Generally, for national banks such as CFBank, it is required that before and after the proposed distribution the institution remain well-capitalized. National banks may make capital distributions during any calendar year equal to the greater of 100% of net income for the year-to-date plus retained net income for the two preceding years. However, an institution deemed to be in need of more than normal supervision by the OCC may have its dividend authority restricted by the OCC. In addition, to the extent that a national bank has a negative accumulated deficit, any distributions or dividends by the bank are subject to prior non-objection by the OCC.

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. As of December 31, 2025, the Holding Company had a total of $522,000 of cash at the Holding Company level.

The Holding Company also is subject to various legal and regulatory policies and requirements impacting the Holding Company’s ability to pay dividends on its stock. In addition, the Holding Company’s ability to pay dividends on its stock is conditioned upon the payment, on a current basis, of quarterly interest payments on the subordinated debentures underlying the Company’s trust preferred securities. Finally, under the terms of the Company’s fixed-to-floating rate subordinated debt, the Holding Company’s ability to pay dividends on its stock is conditioned upon the Holding Company continuing to make required principal and interest payments, and not incurring an event of default, with respect to the subordinated debt. See Note 16 to the Consolidated Financial Statements included in this Form 10-K for additional information.

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Federal income tax laws provided deductions, totaling $2.3 million, for the Company’s 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 total $473,000 at year-end 2025. However, if CFBank were wholly or partially liquidated or otherwise ceases to be a bank, or if tax laws were to change, this amount would have to be recaptured and a tax liability recorded. Additionally, any distributions in excess of CFBank’s current and accumulated earnings and profits would reduce amounts allocated to its bad debt reserve and create a tax liability for CFBank.

Federal Reserve System

The Federal Reserve Board requires all depository institutions to maintain reserves at specified levels against their transaction accounts, primarily checking accounts. In response to the COVID-19 pandemic, the Federal Reserve Board reduced reserve requirement ratios to 0% effective on March 26, 2020, to support lending to households and businesses. The reserve requirement ratio remained at 0% as of December 31, 2025.

Federal Home Loan Bank

The Federal Home Loan Banks (“FHLBs”) provide credit to their members in the form of advances. 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. Each FHLB is required to establish standards of community investment or service that its members must maintain for continued access to long-term advances from the FHLB. The standards take into account a member’s performance under the Community Reinvestment Act ("CRA") and the member’s record of lending to first-time home buyers.

Community Reinvestment Act

The CRA requires CFBank’s primary federal regulatory agency, the OCC, to assess CFBank’s record in meeting the credit needs of the communities it serves. The OCC assigns one of four ratings: outstanding, satisfactory, needs to improve or substantial noncompliance. 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 to open or close a branch office.

In March 2023, CFBank’s primary federal regulator, the OCC, publicly released its CRA rating of “Needs to Improve” for CFBank as a result of the OCC’s regularly scheduled evaluation covering 2020 through 2022. The Company believes that the “Needs to Improve” rating was primarily attributable to CFBank’s legacy direct-to-consumer residential mortgage business. Beginning in 2021, CFBank strategically scaled down its residential mortgage business and exited the direct-to-consumer mortgage business in favor of lending in our regional markets. The Company believes that this change in our residential mortgage business and focus, together with changes in our branch network and other actions taken since 2021, have remediated these legacy issues. While CFBank’s CRA rating remains “Needs to Improve,” the Company is subject to additional requirements and conditions with respect to certain activities, including acquisitions of and mergers with other financial institutions and commencement of new activities. CFBank’s next CRA evaluation is expected to commence in 2026.

Consumer Protection Laws and Regulations

Banks are subject to regular examination to ensure compliance with federal consumer protection statutes and regulations, including, but not limited to, the following:

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The Equal Credit Opportunity Act (prohibiting discrimination in any credit transaction on the basis of any of various criteria);
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The Truth in Lending Act (requiring that credit terms are disclosed in a manner that permits a consumer to understand and compare credit terms more readily and knowledgeably);
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The Fair Housing Act (making it unlawful for a lender to discriminate in its housing-related lending activities against any person on the basis of certain criteria);
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The Home Mortgage Disclosure Act (requiring financial institutions to collect data that enables regulatory agencies to determine whether financial institutions are serving the housing credit needs of the communities in which they are located); and
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The Real Estate Settlement Procedures Act (requiring that lenders provide borrowers with disclosures regarding the nature and cost of real estate settlements and prohibits abusive practices that increase borrowers’ costs).

The banking regulators also use their authority under the Federal Trade Commission Act to take supervisory or enforcement action with respect to unfair or deceptive acts or practices by banks that may not necessarily fall within the scope of a specific banking or consumer finance law.

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Patriot Act and Anti-Money Laundering

In response to the terrorist events of September 11, 2001, the Uniting and Strengthening of America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the “Patriot Act”) was signed into law in October 2001. The Patriot Act gives the United States government powers to address terrorist threats through enhanced domestic security measures, expanded surveillance powers, increased information sharing and broadened anti-money laundering requirements. Title III of the Patriot Act takes measures intended to encourage information sharing among bank regulatory agencies and law enforcement bodies. Further, certain provisions of Title III impose affirmative obligations on a broad range of financial institutions. Among other requirements, Title III and related regulations require regulated financial institutions to establish a program specifying procedures for obtaining identifying information from customers seeking to open new accounts and establish enhanced due diligence policies, procedures and controls designed to detect and report suspicious activity. CFBank has established policies and procedures that are believed to be compliant with the requirements of the Patriot Act.

The Anti-Money Laundering Act of 2020 (the “AMLA”), which amends the Bank Secrecy Act of 1970 (the “BSA”), was enacted in January 2021. The AMLA is intended to be a comprehensive reform and modernization to U.S. bank secrecy and anti-money laundering laws. 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. Treasury Department’s Office of Foreign Assets Control (“OFAC”) administers and enforces economic and trade sanctions against targeted foreign countries and regimes, under authority of various laws, including designated foreign countries, nationals and others. OFAC publishes lists of specially designated targets and countries. CFBank is responsible for, among other things, blocking accounts of, and transactions with, such targets and countries, prohibiting unlicensed trade and financial transactions with them and reporting blocked transactions after their occurrence. Failure to comply with these sanctions could have serious financial, legal and reputational consequences, including causing applicable bank regulatory authorities not to approve merger or acquisition transactions when regulatory approval is required or to prohibit such transactions even if approval is not required. Regulatory authorities have imposed cease and desist orders and civil money penalties against institutions found to be violating these obligations.

Corporate Governance

As mandated by the Sarbanes-Oxley Act of 2002, the SEC has adopted rules and regulations governing, among other issues, corporate governance, auditing and accounting, executive compensation and enhanced and timely disclosure of corporate information. The Nasdaq Stock Market has also adopted corporate governance rules. The Board of Directors of the Company has taken a series of actions to strengthen and improve the Company’s already strong corporate governance practices in light of the rules of the SEC and Nasdaq. 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.

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. No final rule implementing this provision of the Dodd-Frank Act has, as of the date of the filing of this Annual Report on Form 10-K, been adopted. Although a final rule has not been issued, the Company has undertaken efforts to ensure that the Company’s incentive compensation plans do not encourage inappropriate risks.

In June 2010, the FRB, the OCC and the FDIC issued comprehensive final guidance on incentive compensation policies intended to ensure that the incentive compensation policies of banking organizations do not undermine the safety and soundness of such organizations by encouraging excessive risk-taking. The guidance, which covers all employees that have the ability to materially affect the risk profile of an organization, either individually or as part of a group, is based upon the key principles that a banking organization's incentive compensation arrangements should (i) provide incentives that do not encourage risk-taking beyond the organization's ability to effectively identify and manage risks, (ii) be compatible with effective internal controls and risk management and (iii) be supported by strong corporate governance, including active and effective oversight by the organization's board of directors. These three principles are incorporated into the proposed joint compensation regulations under the Dodd-Frank Act, described above.

The FRB and the OCC review, as part of their respective regular, risk-focused examination process, the incentive compensation arrangements of banking organizations, such as the Holding Company and CFBank, that are not “large, complex banking organizations.” These reviews are tailored to each organization based on the scope and complexity of the organization’s activities and the prevalence of incentive compensation arrangements. Deficiencies will be incorporated into the organization's supervisory ratings,

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which can affect the organization's ability to make acquisitions and take other actions. Enforcement actions may be taken against a banking organization if its incentive compensation arrangements, or related risk-management control or governance processes, pose a risk to the organization's safety and soundness and the organization is not taking prompt and effective measures to correct the deficiencies.

Pursuant to rules adopted by the stock exchanges and approved by the SEC in January 2013 under the Dodd-Frank Act, public company compensation committee members must meet heightened independence requirements and consider the independence of compensation consultants, legal counsel and other advisors to the compensation committee. A compensation committee must have the authority to hire advisors and to have the public company fund reasonable compensation of such advisors.

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. This clawback policy is intended to apply to compensation paid within 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.

SEC regulations require public companies such as the Holding Company to provide various disclosures about executive compensation in annual reports and proxy statements and to present to their shareholders a non-binding vote on the approval of executive compensation.

Financial Privacy Provisions

Federal and state regulations limit the ability of banks and other financial institutions to disclose non-public information about consumers to non-affiliated third parties. These limitations require disclosure of privacy policies to consumers and, in some circumstances, allow consumers to prevent disclosure of certain personal information to a non-affiliated third party. These regulations affect how consumer information is transmitted through diversified financial companies and conveyed to outside vendors.

CFBank is also subject to regulatory guidelines establishing standards for safeguarding customer information. These guidelines describe the federal bank regulatory agencies' expectations for the creation, implementation and maintenance of an information security program, which would include administrative, technical and physical safeguards appropriate to the size and complexity of the institution and the nature and scope of its activities. The standards set forth in the guidelines are intended to ensure the security and confidentiality of customer records and information, protect against any anticipated threats or hazards to the security or integrity of such records and protect against unauthorized access to or use of such records or information that could result in substantial harm or inconvenience to any customer.

Cybersecurity

In March 2015, federal regulators issued two related statements regarding cybersecurity. One statement indicates that financial institutions should design multiple layers of security controls to establish several lines of defense and to ensure that their risk management processes also address the risk posed by compromised customer credentials, including security measures to reliably authenticate customers accessing Internet-based services of the financial institution. The other statement indicates that a financial institution’s management is expected to maintain sufficient business continuity planning processes to ensure the rapid recovery, resumption and maintenance of the financial institution’s operations after a cyber attack involving destructive malware. 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. If CFBank fails to observe the regulatory guidance, it could be subject to various regulatory sanctions, including financial penalties.

In February 2018, the SEC published interpretive guidance to assist public companies in preparing disclosures about cybersecurity risks and incidents. These SEC guidelines, and any other regulatory guidance, are in addition to notification and disclosure requirements under state and federal banking law and regulations.

In November 2021, the OCC, the FRB and the FDIC issued a final rule, which became effective in May, 2022, requiring banking organizations that experience a computer-security incident to notify certain entities. A computer-security incident occurs when actual or potential harm to the confidentiality, integrity, or availability of an information system or the information occurs, or there is a violation or imminent threat of a violation to banking security policies and procedures. The affected bank must notify its respective federal regulator of the computer-security incident as soon as possible and no later than 36 hours after the bank determines a computer-security incident that rises to the level of a notification event has occurred. These notifications are intended to promote early awareness of threats to banking organizations and will help banks react to those threats before they manifest into larger

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incidents. This rule also requires bank service providers to notify their bank organization customers of a computer-security incident that has caused, or is reasonably likely to cause, a material service disruption or degradation.

Furthermore, the Cyber Incident Reporting for Critical Infrastructure Act, enacted in March 2022, will require, once administrative rules are adopted, certain covered entities, including those in the financial services industry, to report a covered cyber incident to the U.S. Department of Homeland Security’s Cybersecurity & Infrastructure Security Agency (“CISA”) within 72 hours after it reasonably believes an incident has occurred. Separate reporting to CISA will also be required within 24 hours if a ransom payment is made as a result of a ransomware attack.

On July 26, 2023, the SEC adopted final rules that require public companies to promptly disclose material cybersecurity incidents in a Current Report on Form 8-K and detailed information regarding their cybersecurity risk management, strategy, and governance on an annual basis in an Annual Report on Form 10-K. Companies are required to report on Form 8-K any cybersecurity incident they determine to be material within four business days of making that determination. See Item 1C. “Cybersecurity” in Part I of this Form 10-K. These SEC rules, and any other regulatory guidance, are in addition to notification and disclosure requirements under state and federal banking law and regulations.

State regulators have also been increasingly active in implementing privacy and cybersecurity standards and regulations. Recently, several states have adopted regulations requiring certain financial institutions to implement cybersecurity programs and providing detailed requirements with respect to these programs, including data encryption requirements. Many states have also recently implemented or modified their data breach notification and data privacy requirements. The Company expects this trend of state-level activity in those areas to continue, and is continually monitoring developments in the states in which our customers are located.

In the ordinary course of business, the Company relies on electronic communications and information systems to conduct its operations and to store sensitive data. The Company employs significant resources, processes and technology to manage and maintain cybersecurity controls. The Company employs a variety of preventative and detective tools to monitor, block, and provide alerts regarding suspicious activity, as well as to report on any suspected advanced persistent threats. Notwithstanding the strength of the Company’s defensive measures, the threat from cyber attacks is severe, attacks are sophisticated and increasing in volume, and attackers respond rapidly to changes in defensive measures. Although to date the Company has not detected a significant compromise, significant data loss or any material financial losses related to cybersecurity attacks, the Company’s systems and those of its customers and third-party service providers are under constant threat and it is possible that the Company could experience a significant event in the future. Risks and exposures related to cybersecurity attacks are expected to remain high for the foreseeable future due to the rapidly evolving nature and sophistication of these threats, as well as due to the expanding use of Internet banking, mobile banking and other technology-based products and services by us and our customers.

Effect of Environmental Regulation

Compliance with federal, state and local provisions regulating the discharge of materials into the environment, or otherwise relating to the protection of the environment, has not had a material effect upon the capital expenditures, earnings or competitive position of the Company. In the opinion of management, the Company does not have exposure to material costs associated with compliance with environmental laws and regulations or material expenditures related to environmental hazardous waste mitigation or cleanup.

The Company believes its primary exposure to environmental risk is through the lending activities of CFBank. In cases where management believes environmental risk potentially exists, CFBank mitigates its environmental risk exposure by requiring environmental site assessments at the time of loan origination to confirm collateral quality as to commercial real estate parcels posing higher than normal potential for environmental impact, as determined by reference to present and past uses of the subject property and adjacent sites. In addition, environmental assessments are typically required prior to any foreclosure activity involving non-residential real estate collateral.

Federal and State Taxation

Federal Taxation General. We report income on a calendar year, consolidated basis using the accrual method of accounting, and we are subject to federal income taxation in the same manner as other corporations, with some exceptions discussed below. The following discussion of tax matters is intended only as a summary and does not purport to be a comprehensive description of the tax rules applicable to the Company and CFBank.

Our deferred tax assets are composed of U.S. net operating losses (“NOLs”), and other temporary book to tax differences. When determining the amount of deferred tax assets that are more-likely-than-not to be realized, and therefore recorded as a benefit, the Company conducts a regular assessment of all available information. This information includes, but is not limited to, taxable income in prior periods, projected future income and projected future reversals of deferred tax items. Based on these criteria, the Company determined as of December 31, 2025 that no valuation allowance was required against the net deferred tax asset.

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In 2012, a recapitalization program through the sale of $22.5 million in common stock improved the capital levels of CFBank and provided working capital for the Holding Company. The result of the change in stock ownership associated with the stock offering, however, was that the Company incurred an ownership change within the guidelines of Section 382 of the Internal Revenue Code of 1986. At year-end 2024, the Company had net operating loss carryforwards of $21.3 million, which expire at various dates from 2025 to 2032. As a result of the ownership change, the Company's ability to utilize carryforwards that arose before the 2012 stock offering closed is limited to $163,000 per year. Due to this limitation, management determined it is more likely than not that $20.5 million of net operating loss carryforwards will expire unutilized. As required by accounting standards, the Company reduced the carrying value of deferred tax assets, and the corresponding valuation allowance, by the $7.0 million tax effect of this lost realizability.

Federal income tax laws provided additional 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 2025. However, if CFBank were wholly or partially liquidated or otherwise ceases to be a bank, or if tax laws were to change, this amount would have to be recaptured and a tax liability recorded. Additionally, any distributions in excess of CFBank’s current and accumulated earnings and profits would reduce amounts allocated to its bad debt reserve and create a tax liability for CFBank. See Note 13 to the Consolidated Financial Statements included in this Form 10-K for additional information.

Distributions. Under the Small Business Job Protection Act of 1996, if CFBank makes “non-dividend distributions” to the Company, such distributions will be considered to have been made from CFBank’s unrecaptured tax bad debt reserves (including the balance of its reserves as of December 31, 1987) to the extent thereof, and then from CFBank’s supplemental reserve for losses on loans, to the extent thereof, and an amount based on the amount distributed (but not in excess of the amount of such reserves) will be included in CFBank’s taxable income. Non-dividend distributions include distributions in excess of CFBank’s current and accumulated earnings and profits, as calculated for federal income tax purposes, distributions in redemption of stock, and distributions in partial or complete liquidation. Dividends paid out of CFBank’s current or accumulated earnings and profits will not be so included in CFBank’s taxable income.

Ohio Taxation

The consolidated organization is subject to the Ohio Financial Institutions Tax (“Ohio FIT”). The Ohio FIT is a business privilege tax for financial institutions doing business or domiciled in the State of Ohio. The three-tier structure charges financial institutions based on total capital at the prior calendar year-end based on regulatory reporting requirements.

Indiana Taxation

The consolidated organization is subject to the Indiana Financial Institution Tax (“Indiana FIT”). The Indiana FIT is a franchise tax measured by a taxpayer's apportioned income imposed on corporations for the privilege of exercising their franchise or transacting the business of a financial institution in Indiana.

Delaware Taxation

As a Delaware corporation not earning income in Delaware, the Company is exempted from Delaware corporate income tax, but is required to file an annual report with and pay an annual franchise tax to the State of Delaware.

Available Information

Our website address is www.CF.Bank (this uniform resource locator, or URL, is an inactive textual reference only and is not intended to incorporate our website into this Form 10-K). We make available free of charge through our website our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to these reports, as well as our definitive proxy statements filed pursuant to Section 14 of the Exchange Act, as soon as reasonably practicable after we electronically file such reports with the SEC. These reports can be found on our website under the caption “Investor – SEC Filings.” Investors also can obtain copies of our filings from the SEC website at www.sec.gov.

Item 1A. Risk Factors.

The following are certain risk factors that could impact our business, financial condition and/or results of operations. Investing in our common stock involves risks, including those described below. These risk factors should be considered by prospective and current investors in our common stock when evaluating the disclosures contained in this Form 10-K and in other reports that we file with the SEC. These risk factors could cause actual results and conditions to differ materially from those projected in forward-looking statements. If any of the events described in the following risk factors actually occur, or if additional risks and uncertainties not presently known to us or that we believe are immaterial do materialize, then our business, financial condition and/or results of operations could be materially adversely impacted. In addition, the trading price of our common stock could decline due to any of the events described in these risk factors.

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Economic, Market and Political Risks

Changes in economic and political conditions could adversely affect our earnings through declines in deposits, loan demand, the ability of our customers to repay loans and the value of the collateral securing our loans.

Our success depends to a significant extent upon local and national economic and political conditions, as well as governmental fiscal and monetary policies. Conditions such as inflation, recession, unemployment, changes in interest rates, fiscal and monetary policy, an increasing federal government budget deficit, the failure of the federal government to raise the federal debt ceiling and/or possible future U.S. government shutdowns over budget disagreements, slowing gross domestic product, threatened or imposed tariffs, a U.S. withdrawal from or significant renegotiation of trade agreements and other changes in the relationship of the U.S. and U.S. global partners, trade wars, and other factors beyond our control may adversely affect CFBank’s deposit levels and composition, the quality of investment securities available for purchase, demand for loans, the ability of CFBank’s borrowers to repay their loans, and the value of the collateral securing loans made by CFBank. The ongoing political turmoil and military conflict in Ukraine and the Middle East are likely to result in substantial changes in economic and political conditions for the U.S. and the remainder of the world. Disruptions in U.S. and global financial markets, and changes in oil production and supply in the Middle East and Russia, also affect the economy and stock prices in the U.S., which can affect our earnings and/or capital, as well as the ability of our customers to repay loans.

Because we have a significant amount of real estate loans, decreases in real estate values could adversely affect the value of property used as collateral and our ability to sell the collateral upon foreclosure. Adverse changes in the economy may also have a negative effect on the ability of our borrowers to make timely repayments of their loans, which would have an adverse impact on our earnings and cash flows. Moreover, our market activities are concentrated in the following counties: Franklin County through our office in Columbus, Ohio; Delaware County through our Polaris office in Columbus, Ohio; Cuyahoga County through our office in Orange Village, Ohio and our Ohio City office in Cleveland, Ohio; Hamilton County through our offices in Blue Ash, Ohio and our Red Bank office in Cincinnati, Ohio; Summit County through our office in Fairlawn, Ohio; and Marion County, Indiana through our office in Indianapolis. Our success depends on the general economic conditions of these areas, particularly given that a significant portion of our lending relates to real estate located in these regions. Therefore, adverse changes in the economic conditions in these areas could adversely impact our earnings and cash flows.

Changing interest rates may decrease our earnings and asset values.

Management is unable to accurately predict future market interest rates, which are affected by many factors, including, but not limited to inflation, recession, changes in employment levels, changes in the money supply and domestic and international disorder and instability in domestic and foreign financial markets. Policies of regulatory authorities, including monetary policies of the Board of Governors of the Federal Reserve System, also significantly affect the movement of interest rates. Changes in the interest rate environment may reduce our profits. Net interest income is a significant component of our net income, and consists of the difference, or spread, between interest income generated on interest-earning assets and interest expense incurred on interest-bearing liabilities. Net interest spreads are affected by the difference between the maturities and repricing characteristics of interest-earning assets and interest-bearing liabilities. Although certain interest-earning assets and interest-bearing liabilities may have similar maturities or periods to which they reprice, they may react in different degrees to changes in market interest rates. In addition, residential mortgage loan origination and refinancing volumes are affected by market interest rates on loans. Rising interest rates generally are associated with a lower volume of loan originations and refinancings, while falling interest rates are usually associated with higher loan originations and refinancings. Our ability to generate gains on sales of mortgage loans is significantly dependent on the level of originations. 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. A majority of our commercial, commercial real estate and multi-family residential real estate loans are adjustable rate loans and an increase in the general level of interest rates may adversely affect the ability of some borrowers to pay the interest on and principal of their obligations, especially borrowers with loans that have adjustable rates of interest. Changes in interest rates, prepayment speeds and other factors may also cause the value of our loans held for sale to change. Accordingly, changes in levels of market interest rates could materially and adversely affect our net interest spread, loan volume, asset quality, value of loans held for sale and cash flows, as well as the market value of our securities portfolio and overall profitability.

Interest rates are highly sensitive to many factors that are beyond our control. The Company’s management uses various measures to monitor interest rate risk and believes it has implemented effective asset and liability management strategies to reduce the potential adverse effects of changes in interest rates on the Company’s financial condition and results of operations. Management also periodically adjusts the mix of assets and liabilities to manage interest rate risk. However, any significant, unexpected, prolonged change in market interest rates could have a material adverse effect on our financial condition and results of operations.

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Defaults by other financial institutions could adversely affect our business, earnings and financial condition.

Many financial institutions and their related operations are closely intertwined, and the soundness of such financial institutions may, to some degree, be interdependent. Several high-profile bank failures in 2023, including Silicon Valley Bank, Signature Bank and Silvergate Capital, resulted in some degree of public panic and caused widespread questions about potential concerns in the financial institutions industry, which in turn impacted stock market prices of financial institutions in general. These failed banks were engaged in activities, such as lending focused on tech startups and cryptocurrency, that are significantly different than the activities and risk profile of community banks such as the Company, and at this time it does not appear that these bank failures were connected to any systematic risks or problems in the financial institutions industry in general. Nevertheless, concerns about, or a default or threatened default by, other financial institutions could lead to significant market-wide liquidity problems and/or losses or defaults by other financial institutions.

Risks Related to Our Lending Activities

Our allowance for credit losses may not be adequate to absorb the expected, lifetime losses in our loan portfolio.

We maintain an allowance for credit losses that is believed to be a reasonable estimate of the expected losses based on management's quarterly analysis of our loan portfolio. The determination of the allowance for credit losses requires management to make various assumptions and judgments about the collectability of CFBank’s loans, including the creditworthiness of its borrowers and the value of the real estate and other assets serving as collateral for the repayment of loans. Additional information regarding our allowance for credit losses methodology and the sensitivity of the estimates can be found in the discussion of the "Determination of the allowance for credit losses on loans (ACL - Loans)" included in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 7 of this Form 10-K.

Our estimation of future credit losses is susceptible to changes in economic, operating and other conditions, including changes in regulations and interest rates, which may be beyond our control, and the losses may exceed current estimates. We cannot be assured of the amount or timing of losses, nor whether the allowance for credit losses will be adequate in the future.

If our assumptions prove to be incorrect, our allowance for credit losses may not be sufficient to cover the expected losses from our loan portfolio, resulting in the need for additions to the allowance for credit losses which could have a material adverse impact on our financial condition and results of operations. In addition, bank regulators periodically review our allowance for credit losses as part of their examination process and may require management to increase the allowance or recognize further loan charge-offs based on judgments different than those of management.

On June 16, 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-13 “Financial Instruments - Credit Losses”, which replaces the incurred loss model with an expected loss model, which is referred to as the current expected credit loss (“CECL”) model, which we adopted effective January 1, 2023. Under the CECL model, we are required to use historical information, current conditions and reasonable and supportable forecasts to estimate the expected credit losses. If the methodologies and assumptions that we use in the CECL model prove to be incorrect or inadequate, the allowance for credit losses may not be sufficient, resulting in the need for additional allowance for credit losses to be established, which could have a material adverse impact on our financial condition and results of operations. Additionally, the time horizon over which we are required to estimate future credit losses expanded under CECL, which could result in increased volatility in future provisions for credit losses. We may also experience a higher or more volatile provision for credit losses due to higher levels of nonperforming loans and net charge-offs if commercial and consumer customers are unable to make scheduled loan payments. The Company’s one-time cumulative effect adjustment to the allowance for credit losses upon adoption in the first quarter of 2023 was $49,000.

Our emphasis on commercial, commercial real estate and multi-family residential real estate lending may expose us to increased lending risks.

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 loans secured by commercial real estate properties are dependent on successful operation or management of the properties, repayment of commercial real estate loans may be subject to a greater extent to adverse conditions in the real estate market or the economy. Commercial real estate and multi-family residential mortgage loans also have larger loan balances to single borrowers or groups of related borrowers compared to single-family residential mortgage loans. Some of our borrowers also have more than one commercial real estate or multi-family residential mortgage loan outstanding with us. Additionally, some loans may be collateralized by junior liens. Consequently, an adverse development involving one or more loans or credit relationships can expose us to significantly greater risk of loss compared to an adverse development involving a single-family residential mortgage loan.

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Our adjustable-rate loans may expose us to increased lending risks.

While adjustable-rate loans better offset the adverse effects of an increase in interest rates as compared to fixed-rate loans, the increased payments required of adjustable-rate loan borrowers upon an interest rate adjustment in a rising interest rate environment could cause an increase in delinquencies and defaults. The marketability of the underlying property also may be adversely affected in a rising interest rate environment. In addition, although adjustable-rate loans help make our asset base more responsive to changes in interest rates, the extent of this interest sensitivity is limited by the annual and lifetime interest rate adjustment limits.

We may be required to repurchase loans we have sold or indemnify loan purchasers under the terms of the sale agreements, which could adversely affect our liquidity, results of operations and financial condition.

When we sell a mortgage loan, we may agree to repurchase or substitute a mortgage loan if we are later found to have breached any representation or warranty we made about the loan or if the borrower is later found to have committed fraud in connection with the origination of the loan. While we have underwriting policies and procedures designed to avoid breaches of representations and warranties as well as borrower fraud, there can be no assurance that no breach or fraud will ever occur. Required repurchases, substitutions or indemnifications could have an adverse effect on our liquidity, results of operations and financial condition.

We depend upon the accuracy and completeness of information about customers and counterparties.

In deciding whether to extend credit or enter into other transactions with customers and counterparties, we may rely on information provided to us by customers and counterparties, including financial statements and other financial information. We may also rely on representations of customers and counterparties as to the accuracy and completeness of that information and, with respect to financial statements, on reports of independent auditors. For example, in deciding whether to extend credit to a business, we may assume that the customer’s audited financial statements conform with GAAP and present fairly, in all material respects, the financial condition, results of operations and cash flows of the customer. We may also rely on the audit report covering those financial statements. Our financial condition, results of operations and cash flows could be negatively impacted to the extent that we rely on financial statements that do not comply with GAAP or on financial statements and other financial information that are materially misleading.

Our business and financial results are subject to risks associated with the creditworthiness of our customers and counterparties.

Credit risk is inherent in the financial services business and results from, among other things, extending credit to customers, purchasing securities, and entering into financial derivative transactions and certain guarantee contracts. Credit risk is one of our most significant risks, particularly given the high percentage of our assets represented directly or indirectly by loans, and the importance of lending to our overall business. We manage credit risk by assessing and monitoring the creditworthiness of our customers and counterparties and by diversifying our loan portfolio. Many factors impact credit risk.

A borrower’s ability to repay a loan can be adversely affected by individual factors, such as business performance, job losses or health issues. A weak or deteriorating economy and changes in the United States or global markets also could adversely impact the ability of our borrowers to repay outstanding loans. Any decrease in our borrowers’ ability to repay loans would result in higher levels of nonperforming loans, net charge-offs, and provision for loan losses.

Despite maintaining a diversified loan portfolio, in the ordinary course of business, we may have concentrated credit exposure to a particular person or entity, industry, region or counterparty. Events adversely affecting specific customers, industries, regions or markets, a decrease in the credit quality of a customer base or an adverse change in the risk profile of a market, industry, or group of customers could adversely affect us.

Our credit risk may be exacerbated when collateral held by us to secure obligations to us cannot be realized upon or is liquidated at prices that are not sufficient to recover the full amount of the loan or derivative exposure due us.

If we experience higher levels of provision for loan losses in the future, our net income could be negatively affected.

Risks Related to Our Business Operations

We may not be able to effectively manage our growth.

We have experienced significant growth in the amount of our total loans in the past several years. Since January 1, 2017, our total net loans have grown by $1.3 billion, or 327.9%, and our total assets have grown by $1.6 billion, or 339.8%. Our continued growth may place significant demands on our operations and management, and our future operating results depend to a large extent on our ability to successfully manage our growth. We may not successfully implement improvements to, or integrate, our management information and control systems, procedures and processes in an efficient or timely manner and may discover deficiencies in existing systems and controls. In particular, our controls and procedures must be able to accommodate increases in our loan volume and our growth and

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expansion. If we are unable to manage our loan growth and/or expanded operations, we may experience compliance and operational problems, have to slow the pace of growth, or have to incur additional expenditures beyond current projections to support such growth, any one of which could materially and adversely affect us.

Future acquisitions or other expansion may adversely affect our financial condition and results of operations.

In the future, we may acquire other financial institutions or branches or assets of other financial institutions. We may also open new branches, enter into new lines of business, or offer new products or services. Any future acquisition or expansion of our business will involve a number of expenses and risks, which may include some or all of the following:

•
the time and expense associated with identifying and evaluating potential acquisitions or expansions;
•
the potential inaccuracy of estimates and judgments used to evaluate credit, operations, management and market risk with respect to target institutions;
•
the time and costs of evaluating new markets, hiring local management and opening new offices, and the delay between commencing these activities and the generation of profits from the expansion;
•
any financing required in connection with an acquisition or expansion;
•
the diversion of management’s attention to the negotiation of a transaction and the integration of the operations and personnel of the combining businesses;
•
entry into unfamiliar markets and the introduction of new products and services into our existing business;
•
the possible impairment of goodwill associated with an acquisition and possible adverse short-term effects on our results of operations; and
•
the risk of loss of key employees and customers.

We may incur substantial costs to expand, and we can give no assurance that such expansion will result in the levels of profits we expect. Neither can we assure that integration efforts for any future acquisitions will be successful. We may issue equity securities in connection with acquisitions, which could dilute the economic and voting interests of our existing stockholders.

We face strong competition from other financial institutions, financial services companies and other organizations offering services similar to those offered by us, which could result in our not being able to sustain or grow our loan and deposit businesses.

We conduct our business operations primarily in Franklin, Cuyahoga, Hamilton, and Summit, Counties, Ohio, and in Marion County, Indiana, and make loans generally throughout Ohio and Indiana. Increased competition within these markets may result in reduced loan originations and deposits. Ultimately, we may not be able to compete successfully against current and future competitors. Many competitors offer the types of loans and banking services that we offer. These competitors include other savings associations, community banks, regional banks and money center banks. We also face competition from many other types of financial institutions, including finance companies, brokerage firms, insurance companies, credit unions, mortgage banks, fintechs and other financial intermediaries. Our competitors with greater resources may have a marketplace advantage enabling them to maintain numerous banking locations and mount extensive promotional and advertising campaigns.

Additionally, financial intermediaries not subject to bank regulatory restrictions and banks and other financial institutions with larger capitalization have larger lending limits and are thereby able to serve the credit needs of larger clients. These institutions, particularly to the extent they are more diversified than we are, may be able to offer the same loan products and services that we offer at more competitive rates and prices. If we are unable to attract and retain banking clients, we may be unable to sustain current loan and deposit levels or increase our loan and deposit levels, and our business, financial condition and future prospects may be negatively affected.

We rely heavily on our management team and other key employees, and the unexpected loss of key employees may adversely affect our operations.

Our success depends, in large part, on our ability to attract, retain, develop and motivate management and key employees. Competition for key employees is ongoing and we may not be able to attract or retain the key employees that we want or need in order to successfully execute our business. Additionally, the unexpected loss of services of any key employee could have an adverse effect on our business and financial results.

We are exposed to operational risk.

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Similar to any large organization, we are exposed to many types of operational risk, including those discussed in more detail elsewhere in this Item, such as reputational risk, legal and compliance risk, cybersecurity risk, the risk of fraud or theft by employees or outsiders, unauthorized transactions by employees or operational errors, including clerical or record-keeping errors or those resulting from faulty or disabled computer or telecommunications systems.

We may be subject to disruptions of our operating systems arising from events that are wholly or partially beyond our control, which may include, for example, computer viruses, cyber-attacks, spikes in transaction volume and/or customer activity, electrical or telecommunications outages, or natural disasters. We could be adversely affected by operating systems disruptions if new or upgraded business management systems are defective, not installed properly or not properly integrated into existing operating systems. Although we have programs in place related to business continuity, disaster recovery and information security to maintain the confidentiality, integrity and availability of our operating systems, business applications and customer information, such disruptions may give rise to interruptions in service to customers, loss of data privacy and loss or liability to us.

Any failure or interruption in our operating or information systems, or any security or data breach, could cause reputational damage, jeopardize the confidentiality of customer information, result in a loss of customer business, subject us to regulatory intervention or expose us to civil litigation and financial loss or liability, any of which could have a material adverse effect on us.

Negative public opinion can result from our actual or alleged conduct in any number of activities, including lending practices, corporate governance and acquisitions, social media and other marketing activities, the implementation of environmental, social and governance (ESG) practices, and from actions taken by governmental regulators and community organizations in response to any of the foregoing. Negative public opinion could adversely affect our ability to attract and keep customers, could expose us to potential litigation or regulatory action, and could have a material adverse effect on our stock price or result in heightened volatility of our stock price.

Given the volume of transactions we process, certain errors may be repeated or compounded before they are discovered and successfully rectified. Our necessary dependence upon automated systems to record and process our transaction volume may further increase the risk that technical system flaws or employee tampering or manipulation of those systems will result in losses that are difficult to detect, which may give rise to disruption of service to customers and to financial loss or liability. We are further exposed to the risk that our external vendors may be unable to fulfill their contractual obligations (or will be subject to the same risk of fraud or operational errors by their respective employees as we are) or that our (or our vendors’) consumer compliance, business continuity, and data security systems will prove to be inadequate.

Unauthorized disclosure of sensitive or confidential client information or breaches in security of our systems could severely harm our business.

As part of our financial institution business, we collect, process and store sensitive consumer data by utilizing computer systems and telecommunications networks operated by both us and third-party service providers. Our necessary dependence upon automated systems to record and process transactions poses the risk that technical system flaws, employee errors, tampering or manipulation of those systems, or attacks by third parties will result in losses and may be difficult to detect. We have security and backup and recovery systems in place, as well as a business continuity plan, to ensure the computer systems will not be inoperable, to the extent possible. The Company also routinely reviews documentation of such controls and backups related to third-party service providers. Our inability to use or access these information systems at critical points in time could unfavorably impact the timeliness and efficiency of our business operations. In recent years, some banks have experienced denial of service attacks in which individuals or organizations flood the bank's website with extraordinarily high volumes of traffic, with the goal and effect of disrupting the ability of the bank to process transactions. Other businesses have been victims of ransomware attacks in which the business becomes unable to access its own information and is presented with a demand to pay a ransom in order to once again have access to its information.

We could be adversely affected if one of our employees causes a significant operational break-down or failure, either as a result of human error or where an individual purposefully sabotages or fraudulently manipulates our operations or systems. We are further exposed to the risk that the third-party service providers may be unable to fulfill their contractual obligations (or will be subject to the same risks as faced by us). These disruptions may interfere with service to our customers, cause additional regulatory scrutiny and result in a financial loss or liability. We are also at risk of the impact of natural disasters, terrorism and international hostilities on our systems or for the effects of outages or other failures involving power or communications systems operated by others.

Misconduct by employees could include fraudulent, improper or unauthorized activities on behalf of clients or improper use of confidential information. We may not be able to prevent employee errors or misconduct, and the precautions we take to detect this type of activity might not be effective in all cases. Employee errors or misconduct could subject us to civil claims for negligence or regulatory enforcement actions, including fines and restrictions on our business.

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Increasingly, there have been instances where financial institutions have been victims of fraudulent activity in which criminals pose as customers to initiate wire and automated clearinghouse transactions out of customer accounts. Although we have policies and procedures in place to verify the authenticity of our customers, we cannot assure that such policies and procedures will prevent all fraudulent transfers.

We have implemented security controls to prevent unauthorized access to our computer systems, and we require that our third-party service providers maintain similar controls. However, the Company’s management cannot be certain that these measures will be successful. A security breach of the computer systems and loss of confidential information, such as customer account numbers and related information, could result in a loss of customers’ confidence and, thus, loss of business. We could also lose revenue if competitors gain access to confidential information about our business operations and use it to compete with us. While we maintain specific "cyber" insurance coverage, which would apply in the event of various breach scenarios, the amount of coverage may not be adequate in any particular case. Furthermore, because cyber threat scenarios are inherently difficult to predict and can take many forms, some breaches may not be covered under our cyber insurance coverage.

Further, we may be impacted by data breaches at retailers and other third parties who participate in data interchanges with us and our customers that involve the theft of customer credit and debit card data, which may include the theft of our debit card personal identification numbers (PINs) and commercial card information used to make purchases at such retailers and other third parties. Such data breaches could result in us incurring significant expenses to reissue debit cards and cover losses, which could result in a material adverse effect on our results of operations.

There can be no assurance that we will not suffer such cyber-attacks or other information security breaches or attempted breaches, or incur resulting losses in the future. Our risk and exposure to these matters remains heightened because of, among other things, the evolving nature of these threats, and our plans to continue to implement internet and mobile banking capabilities to meet customer demand. As cyber and other data security threats continue to evolve, we may be required to expend significant additional resources to continue to modify and enhance its protective measures or to investigate and remediate any security vulnerabilities.

Our assets at risk for cyber-attacks include financial assets and non-public information belonging to customers. We use several third-party vendors who have access to our assets via electronic media. Certain cyber security risks arise due to this access, including cyber espionage, blackmail, ransom, and theft. As cyber and other data security threats continue to evolve, we may be required to expend significant additional resources to continue to modify and enhance our protective measures or to investigate and remediate any security vulnerabilities.

All of the types of cyber incidents discussed above could result in damage to our reputation, loss of customer business, costs of incentives to customers or business partners in order to maintain their relationships, litigation, increased regulatory scrutiny and potential enforcement actions, repairs of system damage, increased investments in cybersecurity (such as obtaining additional technology, making organizational changes, deploying additional personnel, training personnel and engaging consultants), increased insurance premiums, and loss of investor confidence and a reduction in the price of our common shares, all of which could result in financial loss and material adverse effects on our results of operations and financial condition

Our business could be adversely affected through third parties who perform significant operational services on our behalf.

The third parties performing operational services for the Company are subject to risks similar to those faced by the Company relating to cybersecurity, breakdowns or failures of their own systems, or misconduct of their employees. Like many other community banks, CFBank also relies, in significant part, on a single vendor for the systems which allow CFBank to provide banking services to CFBank’s customers, for which the systems are maintained on CFBank’s behalf by this single vendor.

One or more of the third parties utilized by us may experience a cybersecurity event or operational disruption and, if any such event does occur, it may not be adequately addressed, either operationally or financially, by such third party. Further, the operations of our third-party vendors could fail or otherwise become delayed. Certain of these third parties may have limited indemnification obligations to us in the event of a cybersecurity event or operational disruption, or may not have the financial capacity to satisfy their indemnification obligations.

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Financial or operational difficulties of a third party provider could also impair our operations if those difficulties interfere with such third party’s ability to serve the Company. If a critical third-party provider is unable to meet the needs of the Company in a timely manner, or if the services or products provided by such third party are terminated or otherwise delayed and if the Company is not able to develop alternative sources for these services and products quickly and cost-effectively, our business could be materially adversely effected.

Additionally, regulatory guidance adopted by federal banking regulators addressing how banks select, engage and manage their third-party relationships, affects the circumstances and conditions under which we work with third parties and the cost of managing such relationships.

Derivative transactions may expose us to unexpected risk and potential losses.

We are party to a number of derivative transactions. With regard to derivative transactions, we are dependent on the creditworthiness of the counterparties and are therefore susceptible to credit and operational risk in these situations. Derivative contracts and other transactions entered into with third parties are not always confirmed by the counterparties on a timely basis. While the transaction remains unconfirmed, we are subject to heightened credit and operational risk and, in the event of a default, we may find it more difficult to enforce the underlying contract. In addition, as new and more complex derivative products are created, covering a wider array of underlying credit and other instruments, disputes about the terms of the underlying contracts could arise, which could impair our ability to effectively manage our risk exposures from these products and subject us to increased costs. Any regulatory effort to create an exchange or trading platform for credit derivatives and other over-the-counter derivative contracts, or a market shift toward standardized derivatives, could reduce the risk associated with such transactions, but under certain circumstances could also limit our ability to develop derivatives that best suit our needs and those of our clients and adversely affect our profitability.

Legislative, Legal and Regulatory Risks

We operate in a highly regulated industry, and the laws and regulations that govern our operations, corporate governance, executive compensation and financial accounting, or reporting, including changes in, or failure to comply with the same, may adversely affect the Company.

The banking industry is highly regulated. We are subject to supervision, regulation and examination by various federal and state regulators, including the FRB, the SEC, the CFPB, the OCC, the FDIC, Financial Industry Regulatory Authority, Inc. (also known as FINRA), and various state regulatory agencies. The statutory and regulatory framework that governs the Company is generally designed to protect depositors and customers, the DIF, the U.S. banking and financial system, and financial markets as a whole and not to protect shareholders. These laws and regulations, among other matters, prescribe minimum capital requirements, impose limitations on our business activities (including foreclosure and collection practices), limit the dividends or distributions that we can pay, and impose certain specific accounting requirements that may be more restrictive and may result in greater or earlier charges to earnings or reductions in capital than would otherwise be required under generally accepted accounting principles in the United States of America. Compliance with laws and regulations can be difficult and costly, and changes to laws and regulations often impose additional compliance costs. Both the scope of the laws and regulations and the intensity of the supervision to which we are subject have increased in recent years in response to the perceived state of the financial services industry, as well as other factors such as technological and market changes. Such regulation and supervision may increase our costs and limit our ability to pursue business opportunities. Further, our failure to comply with these laws and regulations, even if the failure was inadvertent or reflects a difference in interpretation, could subject the Company to restrictions on business activities, fines, and other penalties, any of which could adversely affect results of operations, the capital base, and the price of our common shares. Further, any new laws, rules, or regulations could make compliance more difficult or expensive or otherwise adversely affect our business and financial condition.

Legislative or regulatory changes or actions could adversely impact our business.

Regulations affecting banks and financial services businesses are undergoing continuous change, and management cannot predict the effect of those changes. The impact of any changes to laws and regulations or other actions by regulatory agencies could adversely affect our business. Regulatory authorities have extensive discretion in connection with their supervisory and enforcement activities, including the ability to impose restrictions on the operation of an institution and the ability to determine the adequacy of an institution’s allowance for loan losses. Failure to comply with applicable laws, regulations and policies could result in sanctions being imposed by the regulatory agencies, including the imposition of civil money penalties, which could have a material adverse effect on our operations and financial condition. Even the reduction of regulatory restrictions could have an adverse effect on us if such lessening of restrictions increases competition within our industry or market areas.

We are subject to limitations and conditions on certain activities as a result of our “Needs to Improve” CRA rating.

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In March 2023, CFBank’s primary federal regulator, the OCC, publicly released its CRA rating of “Needs to Improve” for CFBank as a result of the OCC’s regularly scheduled evaluation covering 2020 through 2022. The Company believes that the “Needs to Improve” rating was primarily attributable to CFBank’s legacy direct-to-consumer residential mortgage business. Beginning in 2021, CFBank strategically scaled down its residential mortgage business and exited the direct-to-consumer mortgage business in favor of lending in our regional markets. The Company believes that this change in our residential mortgage business and focus, together with changes in our branch network and other actions taken since 2021, have remediated these legacy issues. While CFBank’s CRA rating remains “Needs to Improve,” the Company is subject to additional requirements and conditions with respect to certain activities, including acquisitions of and mergers with other financial institutions and commencement of new activities. CFBank’s next CRA evaluation is expected to commence in 2026.

Deposit insurance premiums may increase and have a negative effect on our results of operations.

The DIF maintained by the FDIC to resolve bank failures is funded by fees assessed on insured depository institutions. The costs of resolving bank failures increased for a period of time and decreased the DIF. The FDIC collected a special assessment in 2009 to replenish the DIF and also required a prepayment of an estimated amount of future deposit insurance premiums. In October 2022, the FDIC adopted a final rule increasing the assessment rate from three basis points to five basis points beginning with the first quarterly assessment period of 2023. If the costs of future bank failures increase, the deposit insurance premiums required to be paid by CFBank may also increase. The FDIC recently adopted rules revising its assessments in a manner benefiting banks, such as CFBank, with assets totaling less than $10 billion. There can be no assurance, however, that assessments will not be changed in the future.

We may be the subject of litigation which could result in legal liability and damage to our business and reputation.

From time to time, we may be subject to claims or legal action from customers, employees or others. Financial institutions like the Company and CFBank are facing a growing number of significant class actions, including those based on the manner of calculation of interest on loans and the assessment of overdraft fees. Future litigation could include claims for substantial compensatory and/or punitive damages or claims for indeterminate amounts of damages. We are also involved from time to time in other reviews, investigations and proceedings (both formal and informal) by governmental and other agencies regarding our business. These matters also could result in adverse judgments, settlements, fines, penalties, injunctions or other relief. Like other large financial institutions, we are also subject to risk from potential employee misconduct, including non-compliance with policies and improper use or disclosure of confidential information. Substantial legal liability or significant regulatory action against us could materially adversely affect our business, financial condition or results of operations and/or cause significant reputational harm to our business.

Changes in accounting standards, policies, estimates or procedures could impact our reported financial condition or results of operations.

The accounting standard setters, including the FASB, the SEC and other regulatory bodies, periodically change the financial accounting and reporting guidance that governs the preparation of our consolidated financial statements. The pace of change continues to accelerate and changes in accounting standards can be hard to predict and could materially impact how we record and report our financial condition and results of operations. In some cases, we could be required to apply new or revised guidance retroactively, resulting in the restatement of prior period financial statements.

The preparation of consolidated financial statements in conformity with GAAP requires management to make significant estimates that affect the financial statements. Due to the inherent nature of these estimates, actual results may vary materially from management’s estimates. In June 2016, FASB issued a new accounting standard for recognizing current expected credit losses, commonly referred to as CECL. CECL results in earlier recognition of credit losses and requires consideration of not only past and current events but also reasonable and supportable forecasts that affect collectability. The Company was required to comply with the new standard beginning January 1, 2023. The impact of the Company's adoption of CECL was a one-time cumulative-effect adjustment increasing our reserves for loans and unfunded commitments by $49,000.

Noncompliance with the Bank Secrecy Act (BSA) and other anti-money laundering statutes and regulations could cause a material financial loss.

The BSA and the Patriot Act contain anti-money laundering and financial transparency provisions intended to detect and prevent the use of the U.S. financial system for money laundering and terrorist financing activities. The BSA, as amended by the Patriot Act and the AMLA, requires depository institutions and their holding companies to undertake activities including maintaining an anti-money laundering program, verifying the identity of clients, monitoring for and reporting suspicious transactions, reporting on cash transactions exceeding specified thresholds, and responding to requests for information by regulatory authorities and law enforcement agencies. The Financial Crimes Enforcement Network (also known as FinCEN), a unit of the U.S. Treasury Department that administers the BSA, is authorized to impose significant civil money penalties for violations of those requirements and has recently engaged in coordinated enforcement efforts with the federal bank regulatory agencies, as well as the U.S. Department of Justice, Drug Enforcement Administration, and Internal Revenue Service. The AMLA is intended to be a comprehensive reform and modernization

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to U.S. bank secrecy and anti-money laundering laws, which includes a codified 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 incentives and protections.

There is also increased scrutiny of compliance with the rules enforced by the Office of Foreign Assets Control (also known as OFAC). If the Company’s policies, procedures, and systems are deemed deficient, or if the policies, procedures, and systems of the financial institutions that the Company has already acquired or may acquire in the future are deficient, the Company may be subject to liability, including fines and regulatory actions such as restrictions on CFBank’s ability to pay dividends and the necessity to obtain regulatory approvals to proceed with certain planned business activities, including acquisition plans, which could negatively impact our business, financial condition, and results of operations. Failure to maintain and implement adequate programs to combat money laundering and terrorist financing could also have serious reputational consequences for the Company.

Risks Related to our Capital and Capital Stock

We are a holding company and depend on our subsidiary bank for dividends.

The Holding Company is a legal entity separate and distinct from its subsidiaries and affiliates. The Holding Company’s ability to support its operations, pay dividends on its common shares and service its debt 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. As of December 31, 2025, the Holding Company had a total of $522,000 of cash at the Holding Company level.

In the event that CFBank is unable to pay dividends to the Holding Company, the Holding Company may not be able to service its debt, pay its other obligations or pay dividends on its outstanding stock. Accordingly, the Holding Company’s inability to receive dividends from CFBank could also have a material adverse effect on our business, financial condition and results of operations.

Various federal and state statutory provisions and regulations limit the amount of dividends that CFBank may pay to the Holding Company without regulatory approval. Generally, financial institutions may pay dividends without prior approval as long as the dividend does not exceed the total of the current calendar year-to-date earnings plus any earnings from the previous two years not already paid out in dividends, and as long as the financial institution remains well capitalized after the dividend payment.

The ability of CFBank to pay dividends in the future is currently influenced, and could be further influenced, by bank regulatory policies and capital guidelines and may restrict the Holding Company’s ability to declare and pay dividends on its common shares. The ability of CFBank and any other subsidiaries to pay dividends to the Holding Company is also subject to their profitability, financial condition, capital expenditures and other cash flow requirements and contractual obligations. There can be no guaranty that CFBank will be able or permitted to pay dividends to the Holding Company in the future, and any such future dividends by CFBank would be based on future earnings and, if necessary, regulatory approval.

We may elect or need to raise additional capital in the future, but capital may not be available when it is needed.

We are required by federal regulatory authorities to maintain adequate levels of capital to support our operations. In addition, federal banking agencies have recently finalized extensive changes to their capital requirements, including the adoption of the Basel III Capital Rules as discussed above, which result in higher capital requirements and more restrictive leverage and liquidity ratios than those previously in place. The final impact on us is unknown at this time, but could potentially require us to raise additional capital in the future. Our ability to raise additional capital, if needed, will depend on conditions in the capital markets, economic conditions and a number of other factors, many of which are outside our control, and are based on our financial performance. Accordingly, we cannot be assured of our ability to raise additional capital if needed or on terms acceptable to us. If we cannot raise additional capital when needed or on acceptable terms, it may have a material adverse effect on our financial condition, results of operations and prospects.

Although publicly traded, our Common Stock has less liquidity than the average liquidity of stocks listed on NASDAQ.

Although our common stock is listed for trading on NASDAQ, our common stock has less liquidity than the average liquidity for companies listed on NASDAQ. A public trading market having the desired characteristics of depth, liquidity and orderliness depends on the presence in the marketplace of willing buyers and sellers of our common stock at any given time. This marketplace depends on the individual decisions of investors and general economic and market conditions over which we have no control. This limited market may affect your ability to sell your shares on short notice, and the sale of a large number of shares at one time could temporarily depress the market price of our common stock. For these reasons, our common stock should not be viewed as a short-term investment.

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The market price of our Common Stock may be subject to fluctuations and volatility.

The market price of our common stock may fluctuate significantly due to, among other things, changes in market sentiment regarding our operations or business prospects, the banking industry generally or the macroeconomic outlook. Factors that could impact our trading price include:

•
our operating and financial results, including how those results vary from the expectations of management, securities analysts and investors;
•
developments in our business or operations or in the financial sector generally;
•
future offerings by us of debt or preferred shares, which would be senior to our common stock upon liquidation and for purposes of dividend distributions;
•
legislative or regulatory changes affecting our industry generally or our business and operations specifically;
•
the operating and stock price performance of companies that investors consider to be comparable to us;
•
announcements of strategic developments, acquisitions and other material events by us or our competitors;
•
actions by our current stockholders, including future sales of common shares by existing stockholders, including our directors and executive officers; and
•
other changes in U.S. or global financial markets, global economies and general market conditions, such as interest or foreign exchange rates, stock, commodity, credit or asset valuations or volatility.

Equity markets in general and our common stock in particular have experienced considerable volatility over the past few years. The market price of our common stock may continue to be subject to volatility unrelated to our operating performance or business prospects. Increased volatility could result in a decline in the market price of our common stock.

Provisions in the Holding Company’s Amended and Restated Certificate of Incorporation and statutory provisions could discourage a hostile acquisition of control.

The Holding Company’s Amended and Restated Certificate of Incorporation contains certain provisions that could discourage non-negotiated takeover attempts that certain stockholders might deem to be in their interests or through which stockholders might otherwise receive a premium for their shares over the then current market price and that may tend to perpetuate existing management. The Amended and Restated Certificate of Incorporation restricts the ability of an acquirer to vote more than 10% of our outstanding common stock. The provisions of the Amended and Restated Certificate of Incorporation also include: the classification of the terms of the members of the board of directors; supermajority provisions for the approval of certain business combinations; elimination of cumulative voting by stockholders in the election of directors; certain provisions relating to meetings of stockholders; and provisions allowing the board of directors to consider nonmonetary factors in evaluating a business combination or a tender or exchange offer. The provisions in the Amended and Restated Certificate of Incorporation requiring a supermajority vote for the approval of certain business combinations and containing restrictions on acquisitions of the Company’s equity securities provide that the supermajority voting requirements or acquisition restrictions do not apply to business combinations or acquisitions meeting specified board of directors’ approval requirements.

The Amended and Restated Certificate of Incorporation also authorizes the issuance of 1,000,000 shares of preferred stock, as well as 9,090,909 shares of common stock. These shares could be issued without further stockholder approval on terms or in circumstances that could deter a future takeover attempt.

Additionally, federal banking laws contain various restrictions on acquisitions of control of national banks and their holding companies.

The Amended and Restated Certificate of Incorporation, as well as certain provisions of state and federal law, may have the effect of discouraging or preventing a future takeover attempt in which stockholders of the Company otherwise might receive a substantial premium for their shares over then current market prices.

General Risk Factors

Adverse changes in the financial markets may adversely impact our results of operations.

While we generally invest in securities issued by U.S. government agencies and sponsored entities and U.S. state and local governments with limited credit risk, certain investment securities we hold possess higher credit risk since they represent beneficial interests in structured investments collateralized by residential mortgages, debt obligations and other similar asset-backed assets.

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Even securities issued by governmental agencies and entities may entail risk depending on political and economic changes. Regardless of the level of credit risk, all investment securities are subject to changes in market value due to changing interest rates, implied credit spreads and credit ratings.

We are at risk of increased losses from fraud.

Criminals are committing fraud at an increasing rate and are using more sophisticated techniques. In some cases, these individuals are part of larger criminal rings, which allow them to be more effective. Such fraudulent activity has taken many forms, ranging from wire fraud, debit card fraud, check fraud, mechanical devices attached to ATM machines, social engineering and phishing attacks to obtain personal information, or impersonation of clients through the use of falsified or stolen credentials. Additionally, an individual or business entity may properly identify itself, yet seek to establish a business relationship for the purpose of perpetrating fraud. An emerging type of fraud even involves the creation of synthetic identification in which fraudsters "create" individuals for the purpose of perpetrating fraud. Further, in addition to fraud committed directly against the Company, the Company may suffer losses as a result of fraudulent activity committed against third parties. Increased deployment of technologies, such as chip card technology, defray and reduce certain aspects of fraud; however, criminals are turning to other sources to steal personally identifiable information, such as unaffiliated healthcare providers and government entities, in order to impersonate the consumer and thereby commit fraud.

Changes in tax laws could adversely affect our performance.

We are subject to extensive federal, state and local taxes, including income, excise, sales/use, payroll, franchise, financial institutions tax, withholding and ad valorem taxes. Changes to tax laws could have a material adverse effect on our results of operations, fair values of net deferred tax assets and obligations of states and political subdivisions held in our investment securities portfolio. In addition, our customers are subject to a wide variety of federal, state and local taxes. Changes in taxes paid by our customers may adversely affect their ability to purchase homes or consumer products, which could adversely affect their demand for our loans and deposit products. In addition, such negative effects on our customers could result in defaults on the loans we have made and decrease the value of mortgage-backed securities in which we have invested.

We need to constantly update our technology in order to compete and meet customer demands.

The financial services market, including banking services, is undergoing rapid technological changes with frequent introductions of new technology-driven products and services. In addition to better serving customers, the effective use of technology increases efficiency and may enable us to reduce costs. Our future success will depend, in part, on our ability to use current technology to provide products and services that provide convenience to customers and to create additional efficiencies in our operations. Some of our competitors have substantially greater resources to invest in technological improvements. We may not be able to effectively implement new technology-driven products and services or be successful in marketing these products and services to our customers. Failure to successfully keep pace with technological changes affecting the financial services industry could negatively affect our growth, revenue and profit.

Climate change, severe weather, natural disasters, acts of war or terrorism and other external events could significantly impact our business.

Natural disasters, including severe weather events of increasing strength and frequency due to climate change, acts of war or terrorism, and other adverse external events could have a significant impact on our ability to conduct business or upon third parties who perform operational services for us or our customers. Such events could affect the stability of our deposit base, impair the ability of borrowers to repay outstanding loans, impair the value of collateral securing loans, cause significant property damage, result in lost revenue or cause us to incur additional expenses.

Item 1B. Unresolved Staff Comments

Not Applicable

Item 1C. Cybersecurity

Risk Management and Strategy

The Company prioritizes the security of our banking operations to protect our customers and our reputation, and to preserve our value. While eliminating all risk is unrealistic, we invest heavily in our Information Security program to mitigate cybersecurity risks. Our controls focus on safeguarding information systems, networks, and assets from unauthorized access, ransomware threats, and service disruptions. Third-party vendors are also held to similar standards, with reviews conducted annually.

The Company’s Information Security program establishes policies, procedures, and risk assessments related to effective and efficient controls related to design and operations of the program. The Company also leverages regulatory guidance issued by the Federal

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Financial Institutions Examination Council (FFIEC) and frameworks to develop and maintain the information security program, including, without limitation the: FFIEC Cybersecurity Assessment Tool, National Institute of Standards and Technology (NIST) Cybersecurity Framework, and Section 501(b) of the Gramm-Leach-Bliley Act of 1999. Senior Management also monitors notifications from the U.S. Computer Emergency Readiness Team (“CERT”) and the Financial Services Information Sharing and Analysis Center (FS-ISAC). Some of our procedures and controls include, without limitation:

•
Security Information and Event Management (“SIEM”) logging and triggers, alerts, and 24/7 monitoring.
•
Endpoint Detection and Response (“EDR”), encryption, and backups.
•
Third party vendor risk management.
•
Disaster recovery and incident response plans.
•
Security awareness training, social engineering testing, and remedial training.
•
Vulnerability scanning, remediation tracking, and reporting.

We regularly engage certified and reputable consultants and auditing firms to evaluate the maturity and effectiveness of our security, including testing the design and operational effectiveness of controls, penetration testing, engaging in independent reviews of policies and standards, and consulting on best practices.

CFBank also has a third-party risk management program. Management performs periodic reviews of third-party vendors on their cybersecurity and business continuity capabilities to ensure they meet contractual requirements and satisfactory audit testing results. Vendors not meeting CFBank’s risk requirements are notified to make improvements and, if the vendors cannot mitigate the identified risks, CFBank management looks to identify alternative vendors. Vendor risk assessments are retained by CFBank.

Governance

The Board of Directors, Audit Committee and the Information Technology (IT) Steering Committee, which is comprised of members from various departments including IT, Accounting, Compliance, Lending, Credit, Human Resources, Operations, Treasury Management, Treasury Support, Retail, Mortgage Sales, Mortgage Operations, Commercial Operations, and the Executive Team, provide oversight and direction of cybersecurity threats and risk management. The Board of Directors reviews and approves the Company’s policies related to Information Security and receives periodic updates from the IT Steering Committee and management in the areas of cybersecurity risks, controls, projects and initiatives, vulnerability assessments, vendor management, and security considerations. The Board of Directors is promptly notified and provided information on any cybersecurity incident that meets established reporting thresholds, as well as ongoing updates of any such incidents until they are resolved.

A dedicated team, led by the Senior Vice President of Information Technology and Information Security Officer (the “SVP of IT and ISO”) manages the day-to-day cybersecurity risk program and supervises internal personnel and relationships with external technology and security consultants. The SVP of IT and ISO has over 18 years of experience in the banking industry as it relates to strategy and cyber security and reports to the Chief Operating Officer, the IT Steering Committee, the Audit Committee, and the Board of Directors.

While we believe we have implemented robust security procedures and controls to mitigate cybersecurity threats, we cannot be certain that these measures will be successful. The threat from cybersecurity attacks is severe, attacks are sophisticated and increasing in volume, and attackers respond rapidly to changes in defensive measures. Although to date the Company has not detected a significant compromise, significant data loss or any material financial losses related to cybersecurity attacks, the Company’s systems and those of its customers and third-party service providers are under constant threat and it is possible that the Company could experience a significant event in the future. Risks and exposures related to cybersecurity attacks are expected to remain high for the foreseeable future due to the rapidly evolving nature and sophistication of these threats, as well as due to the expanding use of Internet banking, mobile banking and other technology-based products and services by us and our customers.

Item 2. Properties.

We currently conduct our business through eight branch offices located in Franklin, Cuyahoga, Delaware, Hamilton and Summit counties in Ohio and one branch office located in Marion County, Indiana as of December 31, 2025. The net book value of the Company’s real properties totaled $1.7 million at December 31, 2025, related to the owned facility used for the Company's branch office in Indianapolis, Indiana. CFBank leases its other seven branch offices in Columbus, Ohio, Cleveland, Ohio, Orange Village, Ohio, Fairlawn, Ohio, Blue Ash, Ohio, Cincinnati, Ohio. See Note 8 to the Consolidated Financial Statements included in this Form 10-K for further discussion.

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Locations

Administrative Office (leased facility):

4960 East Dublin Granville Road, Suite 400

Columbus, Ohio 43081

Branch Offices:

New Albany Branch (leased facility)

4960 East Dublin Granville Road, Suite 400

Columbus, Ohio 43081

Polaris Branch (leased facility)

1942 Polaris Parkway

Columbus, Ohio 43240

Pinecrest Branch (leased facility)

100 Park Ave, Suite 420.

Orange Village, Ohio 44122

Ohio City Branch (leased facility)

2715 Detroit Ave.

Cleveland, Ohio 44113

Fairlawn Branch (leased facility)

3009 Smith Road, Suite 100

Fairlawn, Ohio 44333

Blue Ash Branch (leased facility)

10300 Alliance Rd. #150

Cincinnati, Ohio 45242

Red Bank Branch (leased facility)

4770 Red Bank Expressway

Cincinnati, Ohio 45227

Indianapolis Branch (owned facility)

4729 East 82nd Street

Indianapolis, Indiana 46250

We may, from time to time, be involved in various legal proceedings in the normal course of business. Periodically, there have been various claims and lawsuits involving CFBank, such as claims to enforce liens, condemnation proceedings on properties in which CFBank holds security interests, claims involving the making and servicing of real property loans and other issues incident to our banking business. We are not a party to any pending legal proceeding that management believes would have a material adverse effect on our financial condition or operations, if decided adversely to us.

Item 4. Mine Safety Disclosures.

Not Applicable

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PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

(a)
Market and Dividend Information

The (voting) common stock of CF Bankshares Inc. trades on the Nasdaq® Capital Market under the symbol “CFBK.” As of December 31, 2025, there were 6,341,649 shares of (voting) common stock outstanding and held by approximately 293 registered shareholders of record. As of December 31, 2025, the Company also had an aggregate of 76,700 shares of non-voting common stock outstanding which was held by one shareholder of record.

There was $0.30 per share in dividends declared and paid on our common stock during 2025, and equivalent dividends were declared and paid on our Series D Preferred Stock in the quarters ended March 31, June 30, September 30, and December 31, 2025. The Company presently anticipates continuing to pay dividends in the future at similar levels, subject to compliance with applicable legal and regulatory requirements. The Holding Company is subject to various legal and regulatory policies and guidelines impacting the Holding Company’s ability to pay dividends on its stock. In addition, banking regulations limit the amount of dividends that can be paid to the Holding Company by CFBank without prior regulatory approval and, thus, can limit the availability of funds available to the Holding Company for the payment of dividends on its stock. The Holding Company’s ability to pay dividends on its common stock is also conditioned upon the Holding Company continuing to make certain payments on, and no event of default occurring under, the Company’s fixed-to-floating rate subordinated debt and the subordinated debentures underlying the Holding Company’s trust preferred securities. Additional information regarding our ability to pay dividends is contained in the sections titled “Financial Condition - Stockholders’ equity” and “Liquidity and Capital Resources” in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 7 of this Form 10-K and in Note 16 to the Consolidated Financial Statements included in this Form 10-K.

(b)
Not applicable.
(c)
The following table provides information concerning purchases of the Holding Company’s shares of common stock made by or on behalf of the Company or any “affiliated purchaser” as defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934, as amended, during the three months ended December 31, 2025.

 

Period

 

Total number
of common
shares
purchased

 

 

Average
price paid
per common
share

 

 

Total number
of common
shares purchased
as part of publicly
announced
plans or programs (1)

 

 

Maximum number
of common shares
that may yet be
purchased under
the plans or
programs

 

October 1, 2025 through October 31, 2025

 

 

—

 

 

 

—

 

 

 

—

 

 

 

289,622

 

November 1, 2025 through November 30, 2025

 

 

19,266

 

 

$

22.80

 

 

 

19,266

 

 

 

270,356

 

December 1, 2025 through December 31, 2025

 

 

—

 

 

 

—

 

 

 

—

 

 

 

270,356

 

Total

 

 

19,266

 

 

$

22.80

 

 

 

19,266

 

 

 

 

 

(1)
On February 4, 2025, the Company's Board of Directors authorized a stock repurchase program pursuant to which the Company is authorized to repurchase up to an aggregate of 325,000 shares, or approximately 5% of the Company's outstanding common stock, on or before January 31, 2026. On December 17, 2025, the Company's Board of Directors approved the extension of its stock repurchase program to August 15, 2026. As of December 31, 2025, 270,356 shares remained available to be purchased by the Company under this stock repurchase program.

 

Item 6. [Reserved]

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

FORWARD LOOKING STATEMENTS

Statements in this Form 10-K that are not statements of historical fact are forward-looking statements which are made in good faith by us. Forward-looking statements include, but are not limited to: (1) projections of revenues, income or loss, earnings or loss per 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. Words such as "estimate," "strategy," "may," "believe," "anticipate," "expect," "predict," "will," "intend," "plan," "targeted," and the negative of these terms, or similar expressions, are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements. Various risks and uncertainties may cause actual results to differ materially from those indicated by our forward-looking statements, including, without limitation, those risks set forth in the section captioned “RISK FACTORS” in Part I, Item 1A of this Form 10-K.

Forward-looking statements are not guarantees of performance or results. A forward-looking statement may include a statement of the assumptions or bases underlying the forward-looking statement. We believe that we have chosen these assumptions or bases in good faith and that they are reasonable. We caution you, however, that assumptions or bases almost always vary from actual results, and the differences between assumptions or bases and actual results can be material. The forward-looking statements included in this Form 10-K speak only as of the date hereof. 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.

CONDENSED CONSOLIDATED FINANCIAL DATA

The following information is derived from and should be read in conjunction with our audited Consolidated Financial Statements, the related Notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 7 of this Form 10-K.

 

 

 

At December 31,

 

 

 

2025

 

 

2024

 

 

2023

 

 

2022

 

 

2021

 

 

 

(Dollars in thousands)

 

Selected Financial Condition Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

$

2,117,321

 

 

$

2,065,523

 

 

$

2,058,615

 

 

$

1,820,174

 

 

$

1,495,589

 

Cash and cash equivalents

 

 

258,972

 

 

 

235,272

 

 

 

261,595

 

 

 

151,787

 

 

 

166,591

 

Securities available for sale

 

 

17,496

 

 

 

8,683

 

 

 

8,092

 

 

 

10,442

 

 

 

16,347

 

Equity securities

 

 

—

 

 

 

5,000

 

 

 

5,000

 

 

 

5,000

 

 

 

5,000

 

Loans held for sale

 

 

5,611

 

 

 

2,623

 

 

 

1,849

 

 

 

580

 

 

 

27,988

 

Loans and leases, net (1)

 

 

1,738,854

 

 

 

1,722,019

 

 

 

1,694,133

 

 

 

1,572,255

 

 

 

1,214,149

 

Allowance for credit losses on loans and leases

 

 

17,678

 

 

 

17,474

 

 

 

16,865

 

 

 

16,062

 

 

 

15,508

 

Nonperforming assets

 

 

15,329

 

 

 

15,047

 

 

 

5,722

 

 

 

761

 

 

 

997

 

Foreclosed assets

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Deposits

 

 

1,780,689

 

 

 

1,755,795

 

 

 

1,744,057

 

 

 

1,527,922

 

 

 

1,246,352

 

FHLB advances and other debt

 

 

100,964

 

 

 

92,680

 

 

 

109,995

 

 

 

109,461

 

 

 

89,727

 

Subordinated debentures

 

 

15,039

 

 

 

15,000

 

 

 

14,961

 

 

 

14,922

 

 

 

14,883

 

Total stockholders' equity

 

 

184,426

 

 

 

168,437

 

 

 

155,374

 

 

 

139,248

 

 

 

125,330

 

 

37

Table of Contents

 

 

 

 

For the year ended December 31,

 

 

 

2025

 

 

2024

 

 

2023

 

 

2022

 

 

2021

 

 

 

(Dollars in thousands)

 

Summary of Operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total interest income

 

$

119,995

 

 

$

118,389

 

 

$

108,279

 

 

$

67,764

 

 

$

52,348

 

Total interest expense

 

 

64,972

 

 

 

71,745

 

 

 

60,639

 

 

 

18,974

 

 

 

10,309

 

Net interest income

 

 

55,023

 

 

 

46,644

 

 

 

47,640

 

 

 

48,790

 

 

 

42,039

 

Provision for credit losses

 

 

8,247

 

 

 

6,737

 

 

 

2,317

 

 

 

787

 

 

 

(1,600

)

Net interest income after provision for credit
   losses

 

 

46,776

 

 

 

39,907

 

 

 

45,323

 

 

 

48,003

 

 

 

43,639

 

Noninterest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss on sale of equity security

 

 

(103

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Net gain on sale of loans

 

 

698

 

 

 

681

 

 

 

185

 

 

 

1,009

 

 

 

7,359

 

Other

 

 

5,332

 

 

 

4,494

 

 

 

3,846

 

 

 

2,201

 

 

 

4,281

 

Total noninterest income

 

 

5,927

 

 

 

5,175

 

 

 

4,031

 

 

 

3,210

 

 

 

11,640

 

Noninterest expense

 

 

31,176

 

 

 

28,938

 

 

 

28,369

 

 

 

28,621

 

 

 

32,461

 

Income before income taxes

 

 

21,527

 

 

 

16,144

 

 

 

20,985

 

 

 

22,592

 

 

 

22,818

 

Income tax expense

 

 

3,986

 

 

 

2,757

 

 

 

4,048

 

 

 

4,428

 

 

 

4,365

 

Net income

 

$

17,541

 

 

$

13,387

 

 

$

16,937

 

 

$

18,164

 

 

$

18,453

 

 

38

Table of Contents

 

 

 

 

 

At or for the Year ended December 31,

 

 

 

2025

 

 

2024

 

 

2023

 

 

2022

 

 

2021

 

 

 

(Dollars in thousands)

 

Selected Financial Ratios and Other Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performance Ratios (2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets

 

 

0.84

%

 

 

0.67

%

 

 

0.88

%

 

 

1.11

%

 

 

1.26

%

Return on average equity

 

 

9.90

%

 

 

8.29

%

 

 

11.46

%

 

 

13.69

%

 

 

15.58

%

Average yield on interest-earning assets (3)

 

 

6.04

%

 

 

6.17

%

 

 

5.89

%

 

 

4.37

%

 

 

3.79

%

Average rate paid on interest-bearing liabilities

 

 

4.08

%

 

 

4.54

%

 

 

3.99

%

 

 

1.55

%

 

 

0.95

%

Average interest rate spread (4)

 

 

1.96

%

 

 

1.63

%

 

 

1.90

%

 

 

2.82

%

 

 

2.84

%

Net interest margin, fully taxable equivalent (5)

 

 

2.77

%

 

 

2.43

%

 

 

2.59

%

 

 

3.15

%

 

 

3.04

%

Average interest-earning assets to interest bearing
   liabilities

 

 

124.72

%

 

 

121.33

%

 

 

120.70

%

 

 

126.74

%

 

 

127.13

%

Efficiency ratio (6)

 

 

51.15

%

 

 

55.84

%

 

 

54.90

%

 

 

55.04

%

 

 

60.47

%

Noninterest expenses to average assets

 

 

1.50

%

 

 

1.44

%

 

 

1.47

%

 

 

1.76

%

 

 

2.22

%

Common stock dividend payout ratio

 

 

11.15

%

 

 

12.14

%

 

 

8.75

%

 

 

6.47

%

 

 

4.69

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital Ratios: (2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity to total assets at end of period

 

 

8.71

%

 

 

8.15

%

 

 

7.55

%

 

 

7.65

%

 

 

8.38

%

Average equity to average assets

 

 

8.50

%

 

 

8.03

%

 

 

7.66

%

 

 

8.14

%

 

 

8.11

%

Tier 1 (core) capital to adjusted total assets (Leverage
   ratio) (7)

 

 

11.40

%

 

 

10.33

%

 

 

9.76

%

 

 

9.89

%

 

 

11.29

%

Total capital to risk weighted assets (7)

 

 

15.02

%

 

 

13.60

%

 

 

13.30

%

 

 

12.74

%

 

 

14.02

%

Tier 1 (core) capital to risk weighted assets (7)

 

 

13.85

%

 

 

12.45

%

 

 

12.17

%

 

 

11.65

%

 

 

12.77

%

Common equity tier 1 capital to risk weighted assets (7)

 

 

13.85

%

 

 

12.45

%

 

 

12.17

%

 

 

11.65

%

 

 

12.77

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset Quality Ratios: (2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming loans to total loans (8)

 

 

0.87

%

 

 

0.87

%

 

 

0.33

%

 

 

0.05

%

 

 

0.08

%

Nonperforming assets to total assets (9)

 

 

0.72

%

 

 

0.71

%

 

 

0.28

%

 

 

0.04

%

 

 

0.07

%

Allowance for credit losses on loans and leases to total
   loans

 

 

1.01

%

 

 

1.00

%

 

 

0.99

%

 

 

1.01

%

 

 

1.26

%

Allowance for credit losses on loan and leases to
   nonperforming loans (8)

 

 

115.32

%

 

 

116.13

%

 

 

294.74

%

 

 

2110.64

%

 

 

1555.47

%

Net charge-offs (recoveries) to average loans

 

 

0.42

%

 

 

0.32

%

 

 

0.04

%

 

 

0.02

%

 

(0.01%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per Share Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per common share

 

$

2.70

 

 

$

2.08

 

 

$

2.64

 

 

$

2.84

 

 

$

2.84

 

Diluted earnings per common share

 

 

2.69

 

 

 

2.06

 

 

 

2.63

 

 

 

2.78

 

 

 

2.77

 

Dividends declared per common share

 

 

0.30

 

 

 

0.25

 

 

 

0.23

 

 

 

0.18

 

 

 

0.13

 

Tangible book value per common share at end of period

 

 

27.87

 

 

 

25.51

 

 

 

23.74

 

 

 

21.43

 

 

 

19.28

 

 

(1)
Loans and leases, net represents the recorded investment in loans net of the allowance for credit losses on loans and leases (ACL – Loans).
(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%.
(4)
The average interest rate spread represents the difference between the weighted average yield on average interest-earning assets and the weighted average cost of average interest-bearing liabilities.
(5)
The net interest margin represents net interest income as a percent of average interest-earning assets.
(6)
The efficiency ratio equals noninterest expense (excluding amortization of intangibles and foreclosed asset write-downs) divided by net interest income plus noninterest income (excluding gains or losses on securities transactions).
(7)
Regulatory capital ratios of CFBank.
(8)
Nonperforming loans consist of nonaccrual loans and other loans 90 days or more past due.
(9)
Nonperforming assets consist of nonperforming loans and foreclosed assets.

 

n/m - not meaningful

39

Table of Contents

 

Business Overview

The Holding Company is a bank holding company that owns 100% of the stock of CFBank, which was formed in Ohio in 1892 and converted from a federal savings association to a national bank on December 1, 2016. Prior to December 1, 2016, the Holding Company was a registered savings and loan holding company. Effective as of December 1, 2016 and in conjunction with the conversion of CFBank to a national bank, the Holding Company became a registered bank holding company subject to regulation and supervision by the Federal Reserve Board (the “Federal Reserve”). Effective as of July 27, 2020, the Holding Company changed its name from Central Federal Corporation to CF Bankshares Inc.

CFBank focuses on serving the financial needs of closely held businesses and entrepreneurs, by providing comprehensive Commercial, Retail, and Mortgage Lending services presence. In all regional markets, CFBank provides commercial loans and equipment leases, commercial and residential real estate loans and treasury management depository services, and full-service commercial and retail banking services and products. CFBank seeks to differentiate itself from its competitors by providing individualized service coupled with direct customer access to decision-makers, and ease of doing business. We believe that CFBank matches the sophistication of much larger banks, without the bureaucracy. CFBank also offers its clients the convenience of online banking, mobile banking and remote deposit capabilities.

Most of our deposits and loans come from our market area. Our principal market area for deposits and loans includes the following counties in Ohio and Indiana: Franklin County, Ohio through our offices in Columbus, Ohio; Delaware County, Ohio through our Polaris office in Columbus, Ohio; Cuyahoga County, Ohio through our office in Orange Village, Ohio and our Ohio City office in Cleveland, Ohio; Summit County, Ohio through our office in Fairlawn, Ohio; Hamilton County, Ohio through our offices in Blue Ash, Ohio and our Red Bank office in Cincinnati, Ohio; and Marion County, Indiana through our office in Indianapolis, Indiana. 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.

Critical Accounting Policies and Estimates

We follow financial accounting and reporting policies that are in accordance with GAAP and conform to general practices within the banking industry. These policies are presented in Note 1 to our Consolidated Financial Statements. Some of these accounting policies are considered to be critical accounting policies, which are those policies that are both most important to the portrayal of the Company’s financial condition and results of operations, and require management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Application of assumptions different than those used by management could result in material changes in our financial condition or results of operations. These policies, current assumptions and estimates utilized, and the related disclosure of this process, are determined by management and routinely reviewed with the Audit Committee of the Board of Directors. We believe that the judgments, estimates and assumptions used in the preparation of the Consolidated Financial Statements were appropriate given the factual circumstances at the time.

We have identified the following accounting policy as a critical accounting policy, and an understanding of this policy is necessary to understand our financial statements. The following discussion details the critical accounting policy and the nature of the estimates made by management.

Determination of the allowance for credit losses on loans (ACL – Loans) . The ACL - Loans represents the Company's best estimate of current expected credit losses (CECL) on loans and leases using relevant available information, from internal and external sources, related to past events, current conditions, and reasonable and supportable forecasts. Historical credit loss experience provides the basis for the estimation of expected credit losses. The CECL calculation is performed and evaluated quarterly and losses are estimated over the expected life of the loan. The level of the ACL - Loans is believed to be adequate to absorb all expected future losses inherent in the loan portfolio at the measurement date.

In calculating the ACL - Loans, the loan portfolio was pooled into loan segments with similar risk characteristics. Common characteristics include the type or purpose of the loan, underlying collateral and historical/expected credit loss patterns. In developing the loan segments, the Company analyzed the degree of correlation in how loans within each portfolio respond when subjected to varying economic conditions and scenarios as well as other portfolio stress factors.

The expected credit losses are measured over the life of each loan segment utilizing the average charge-off methodology combined with economic forecast models to estimate the current expected credit loss inherent in the loan portfolio. This approach is also leveraged to estimate the expected credit losses associated with unfunded loan commitments incorporating expected utilization rates.

The Company sub-segmented certain commercial portfolios by risk level where appropriate. The Company utilized a one-year reasonable and supportable economic forecast period.

40

Table of Contents

 

The Company qualitatively adjusts model results for risk factors that are not inherently considered in the historical losses, but are nonetheless relevant in assessing the expected credit losses within the loan portfolio. These adjustments may increase or decrease the estimate of expected credit losses based upon the assessed level of risk for each qualitative factor. The various risks that may be considered in making qualitative adjustments include, among other things, the impact of (i) changes in economic conditions, (ii) changes in the nature and volume of the loan portfolio, (iii) changes in the existence, growth and effect of any concentrations in credit, (iv) changes in lending policies and procedures, including changes in underwriting standards and practices for collections, write-offs, and recoveries, (v) changes in the quality of the credit review function, (vi) changes in the experience, ability and depth of lending management and staff, (vii) changes in the volume and severity of past due and adversely classified loans and the volume of non-accrual loans, (viii) changes in the value of underlying collateral for collateral-dependent loans, and (ix) other environmental factors such as regulatory, legal and technological considerations, as well as competition.

In some cases, management may determine that an individual loan exhibits unique risk characteristics which differentiate the loan from other loans within the loan segments. In such cases, the loans are evaluated for expected credit losses on an individual basis and excluded from the collective evaluation. Specific reserve allocations of the allowance for credit losses are determined by analyzing the borrower's ability to repay amounts owed, collateral deficiencies, the relative risk grade of the loan and economic conditions affecting the borrower's industry, among other things. A loan is considered to be collateral dependent when, based upon management's assessment, the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. In such cases, expected credit losses are based on the fair value of the collateral at the measurement date, adjusted for estimated selling costs if satisfaction of the loan depends on the sale of the collateral. The fair value of collateral supporting collateral dependent loans is evaluated on a quarterly basis. 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. 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 to the Consolidated Financial Statements included in this Form 10-K.

General

Our net income is dependent primarily on net interest income, which is the difference between the interest income earned on loans and securities and our cost of funds, consisting of interest paid on deposits and borrowed funds. Net interest income is affected by regulatory, economic and competitive factors that influence interest rates, loan demand, the level of nonperforming assets and deposit flows.

Net income is also affected by, among other things, provisions for credit losses, loan fee income, service charges, gains on loan sales, operating expenses, and taxes. Operating expenses principally consist of employee compensation and benefits, occupancy, advertising and marketing, data processing, professional fees, FDIC insurance premiums and other general and administrative expenses. Our results of operations are significantly affected by general economic and competitive conditions, changes in market interest rates and real estate values, government policies and actions of regulatory authorities. Our regulators have extensive discretion in their supervisory and enforcement activities, including the authority to impose restrictions on our operations, to classify our assets and to require us to increase the level of our allowance for credit losses. Any change in such regulation and oversight, whether in the form of regulatory policy, regulations, legislation or supervisory action, may have a material impact on our business, financial condition, results of operations and/or cash flows.

Management’s discussion and analysis represents a review of our consolidated financial condition and results of operations for the periods presented. This review should be read in conjunction with our Consolidated Financial Statements and related Notes.

Financial Condition

General. Assets totaled $2.1 billion at December 31, 2025 and increased $51.8 million, or 2.5%, from $2.1 billion at December 31, 2024. The increase was primarily due to a $23.7 million increase in cash and cash equivalents and a $16.8 million increase in net loan balances.

Cash and cash equivalents. Cash and cash equivalents totaled $259.0 million at December 31, 2025, and increased $23.7 million, or 10.1%, from $235.3 million at December 31, 2024. The increase in cash and cash equivalents was primarily attributed to an increase in deposit balances and FHLB advances and other borrowings, partially offset by the increase in net loan balances.

Securities. Securities available for sale totaled $17.5 million at December 31, 2025, and increased $8.8 million, or 101.5%, compared to $8.7 million at December 31, 2024. The increase was primarily due to the purchase of a new security, partially offset by principal maturities. Equity securities totaled $0 at December 31, 2025 and $5.0 million at December 31, 2024. The decline in equity securities was due to the sale of the security during 2025.

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Table of Contents

 

Loans held for sale. Loans held for sale totaled $5.6 million at December 31, 2025 and increased $3.0 million, or 113.9%, from $2.6 million at December 31, 2024.

Loans and Leases. Net loans and leases totaled $1.74 billion at December 31, 2025 and increased $16.8 million, or 1.0%, from $1.72 billion at December 31, 2024. The increase in net loans and leases from December 31, 2024, was primarily due to a $73.9 million increase in commercial real estate loan balances, a $20.5 million increase in Multi-family residential loan balances, a $6.8 million increase in construction loan balances, and a $2.5 million increase in home equity lines of credit balances, partially offset by a $49.4 million decrease in commercial and industrial (C&I) loan balances and a $37.6 million decrease in single-family residential loan balances. The decrease in single-family residential loan balances included the sale of two portfolios of loans in the first quarter of 2025 totaling $18.1 million.

Allowance for Credit Losses on Loans (ACL – Loans). The ACL – Loans totaled $17.7 million at December 31, 2025, and increased $204,000, or 1.2%, from $17.5 million at December 31, 2024. The increase in ACL - Loans is due to $7.5 million in loan provision expense, partially offset by $7.3 million in net charge-offs during the year ended December 31, 2025. The ratio of the ACL - Loans to total loans was 1.01% at December 31, 2025, compared to 1.0% at December 31, 2024.

The ACL - Loans is a valuation account that is deducted from the loans' amortized cost basis to present the net amount expected to be collected on loans over the expected remaining life. Loans are charged off against the allowance when the uncollectibility of the loan is confirmed. Expected recoveries do not exceed the aggregate of amounts previously charged off and expected to be charged off. Adjustments to the ACL - Loans are reported in the income statement as a component of provision for credit loss. The Company has made the accounting policy election to exclude accrued interest receivable on loans from the estimate of credit losses. Further information regarding the policies and methodology used to estimate the ACL - Loans is detailed in the accompanying Notes to the Consolidated Financial Statements included in this Form 10-K.

Individually evaluated loans totaled $12.4 million at December 31, 2025, and decreased $437,000, or 3.4%, from $12.8 million at December 31, 2024. The amount of the ACL - Loans specifically calculated for individually evaluated loans totaled $2.8 million at December 31, 2025 and $2.3 million at December 31, 2024.

The reserve on individually evaluated loans is based on management’s estimate of the present value of estimated future cash flows using the loan’s effective rate or the fair value of collateral, if repayment is expected solely from the collateral. On at least a quarterly basis, management reviews each individually evaluated loan to determine whether it should have a reserve or partial charge-off. Management relies on appraisals or internal evaluations to help make this determination. Determination of whether to use an updated appraisal or internal evaluation is based on factors including, but not limited to, the age of the loan and the most recent appraisal, condition of the property and whether we expect the collateral to go through the foreclosure or liquidation process. Management considers the need for a downward adjustment to the valuation based on current market conditions and on management’s analysis, judgment and experience. The amount ultimately charged-off for these loans may be different from the reserve, as the ultimate liquidation of the collateral and/or projected cash flows may be different from management’s estimates.

Nonperforming loans, which are nonaccrual loans and loans at least 90 days past due but still accruing interest, totaled $15.3 million at December 31, 2025, and increased $282,000 from $15.0 million at December 31, 2024. The increase in nonperforming loans in 2025 compared to 2024 was primarily driven by nine commercial loans, totaling $2.7 million, two commercial real estate loans, totaling $5.2 million, four single-family residential loans, totaling $913,000, and one home equity line of credit, totaling $87,000, becoming nonaccrual during the year ended December 31, 2025, partially offset by paydowns and approximately $7.1 million in charges-offs on loans that were in nonaccrual at December 31, 2024. The ratio of nonperforming loans to total loans was 0.87% at December 31, 2025 compared to 0.87% at December 31, 2024.

The following table presents information regarding the number and balance of nonperforming loans at December 31, 2025 and December 31, 2024:

 

 

 

December 31, 2025

 

 

December 31, 2024

 

 

 

# of loans

 

 

Balance

 

 

# of loans

 

 

Balance

 

 

 

(dollars in thousands)

 

Commercial

 

 

12

 

 

$

8,181

 

 

 

7

 

 

$

13,204

 

Single-family residential real estate

 

 

6

 

 

 

1,847

 

 

 

4

 

 

 

1,649

 

Commercial real estate

 

 

2

 

 

 

5,204

 

 

 

1

 

 

 

181

 

Home equity lines of credit

 

 

2

 

 

 

97

 

 

 

1

 

 

 

13

 

Total

 

 

22

 

 

$

15,329

 

 

 

13

 

 

$

15,047

 

 

42

Table of Contents

 

 

During the year ended December 31, 2025, the Company did not modify any loans, where the borrower was experiencing financial difficulty. During the year ended December 31, 2024, the Company modified one commercial loan, with an amortized cost basis of $4.3 million at December 31, 2024, where the borrower was experiencing financial difficulty. The loan was modified to defer principal and interest payments, increase the interest rate, extend the maturity date and institute a minimum EBITDA covenant.

We have incorporated the regulatory asset classifications as a part of our credit monitoring and internal loan risk rating system. In accordance with regulations, problem loans are classified as special mention, substandard, doubtful or loss, and the classifications are subject to review by the regulators. Assets designated as special mention are considered criticized assets. Assets designated as substandard, doubtful or loss are considered classified assets. See Note 4 to the 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 decreased by $4.3 million, or 13.0%, during the year ended December 31, 2025. Loans designated as special mention increased $72,000, or 0.4%, and totaled $18.5 million at December 31, 2025, compared to $18.5 million at December 31, 2024. Loans classified as substandard decreased $4.3 million and totaled $9.9 million at December 31, 2025, compared to $14.2 million at December 31, 2024. Loans designated as doubtful totaled $385,000 at December 31, 2025 and December 31, 2024. See Note 4 to the Consolidated Financial Statements included in this Form 10-K for additional information regarding risk classification of loans.

In addition to credit monitoring through our internal loan risk rating system, we also monitor past due information for all loan segments. Loans that are not rated under our internal credit rating system include groups of homogenous loans, such as single-family residential real estate loans and consumer loans. The primary credit indicator for these groups of homogenous loans is past due information.

Total past due loans increased $472,000 and totaled $12.9 million at December 31, 2025, compared to $12.5 million at December 31, 2024. Past due loans totaled 0.7% of the loan portfolio at December 31, 2025 and December 31, 2024. See Note 4 to the Consolidated Financial Statements for additional information regarding loan delinquencies.

All lending activity involves risk of loss. Certain types of loans, such as option adjustable-rate mortgage (“ARM”) products, junior lien mortgages, high loan-to-value ratio mortgages, interest only loans, subprime loans and loans with initial teaser rates, can have a greater risk of non-collection than other loans. CFBank has not engaged in subprime lending or used option ARM products.

Loans that contain interest-only payments may present a higher risk than those loans with an amortizing payment that includes periodic principal reductions. Interest only loans are primarily commercial lines of credit secured by business assets and inventory, and consumer home equity lines of credit secured by the borrower’s primary residence. Due to the fluctuations in business assets and inventory of our commercial borrowers, CFBank has increased risk due to a potential decline in collateral values without a corresponding decrease in the outstanding principal. Interest only commercial lines of credit totaled $111.2 million, or 30.1% of CFBank’s commercial loan portfolio at December 31, 2025, compared to $131.2 million, or 31.3%, at December 31, 2024. Interest only home equity lines of credit totaled $41.1 million, or 98.5% of the total home equity lines of credit, at December 31, 2025 compared to $38.8 million, or 98.1%, at December 31, 2024.

We believe the ACL - Loans is adequate to absorb current expected credit losses in the loan portfolio as of December 31, 2025; however, future additions to the allowance may be necessary based on factors including, but not limited to, deterioration in client business performance, recessionary economic conditions, declines in borrowers’ cash flows and market conditions which result in lower real estate values. Additionally, various regulatory agencies, as an integral part of their examination process, periodically review the ACL - Loans. Such agencies may require additional provisions for credit losses based on judgments and estimates that differ from those used by management, or on information available at the time of their review. Management continues to diligently monitor credit quality in the existing portfolio and analyze potential loan opportunities carefully in order to manage credit risk. An increase in credit 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. There were no foreclosed assets at December 31, 2025 or December 31, 2024. The Company acquired a single-family residential property during the first quarter of 2025 by obtaining a deed in lieu of foreclosure. The property, which was valued at $524,000, was sold during the third quarter of 2025. 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.

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Premises and equipment. Premises and equipment, net, totaled $3.5 million at December 31, 2025, and increased $11,000, or 0.3%, from $3.5 million at December 31, 2024. See Note 8 to the Consolidated Financial Statements included in this Form 10-K for additional information.

Deposits. Deposits totaled $1.78 billion at December 31, 2025, an increase of $24.9 million, or 1.4%, from $1.76 billion at December 31, 2024. The increase was primarily due to a $13.0 million increase in interest-bearing account balances, coupled with an $11.9 million increase in noninterest-bearing accounts balances.

At December 31, 2025, approximately 29.5% of our deposit balances exceeded the FDIC insurance limit of $250,000, as compared to approximately 29.8% at December 31, 2024.

CFBank is a participant in the Certificate of Deposit Account Registry Service® (CDARS) and Insured Cash Sweep (ICS) programs offered through IntraFi Network. 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 $400.4 million at December 31, 2025, and decreased $20.4 million, or 4.9%, from $420.8 million at December 31, 2024. Customer balances in the CDARS reciprocal and ICS reciprocal programs, which do not qualify as brokered, totaled $278.7 million at December 31, 2025 and increased $7.0 million, or 2.6%, from $271.7 million at December 31, 2024.

FHLB advances and other debt. FHLB advances and other debt totaled $101.0 million at December 31, 2025, a increase of $8.3 million when compared to $92.7 million at December 31, 2024. The increase was primarily due to a $10 million increase in the outstanding balance on the Holding Company's credit facility.

The Holding Company has a credit facility with a third-party bank. Prior to April 30, 2025, the credit facility had a borrowing limit of $35 million with a revolving feature until May 21, 2024, at which time the outstanding balance was converted to a 10-year term note on a graduated 10-year amortization. Borrowings on the credit facility bore interest at a fixed rate of 3.85% until May 21, 2026, at which time the interest rate then would convert to a floating rate equal to PRIME with a floor of 3.25%. Effective April 30, 2025, an additional $10 million revolving line of credit was added to the credit facility and the interest rate was amended to reset the fixed rate to 6.00% until May 21, 2026, at which time the rate will convert to a floating rate equal to PRIME. The $10 million revolving line of credit matures on April 30, 2027. The revolving line of credit provided an additional $10 million that was injected as additional Tier 1 capital into CFBank during the second quarter of 2025. As of December 31, 2025, the Company had an outstanding balance, net of unamortized debt issuance costs, of $43.0 million on the facility.

At December 31, 2025 and 2024, CFBank had availability in unused lines of credit at two commercial banks in the amounts of $50.0 million and $15.0 million. There were no outstanding borrowings on either line at December 31, 2025 or December 31, 2024.

Subordinated debentures Subordinated debentures totaled $15.0 million at December 31, 2025 and December 31, 2024. In December 2018, the Holding Company entered into subordinated note purchase agreements with certain qualified institutional buyers and completed a private placement of $10.0 million of fixed-to-floating rate subordinated notes, resulting in net proceeds of $9,612,000 after deducting unamortized debt issuance costs of approximately $388,000. In 2003, the Holding Company issued subordinated debentures in exchange for the proceeds of a $5.0 million trust preferred securities offering issued by a trust formed by the Holding Company. The terms of the subordinated debentures allow for the Holding Company to defer interest payments for a period not to exceed five years. Interest payments on the subordinated debentures were current at December 31, 2025 and December 31, 2024. See Note 11 to the Consolidated Financial Statements included in this Form 10-K for additional information.

Stockholders’ equity. Stockholders’ equity totaled $184.4 million at December 31, 2025, an increase of $16.0 million, or 9.5%, from $168.4 million at December 31, 2024. The increase in total stockholders’ equity was primarily attributed to net income, partially offset by $1.9 million in dividend payments.

Management continues to proactively monitor capital levels and ratios in its on-going capital planning process. CFBank has leveraged its capital to support balance sheet growth and drive increased net interest income. Management remains focused on growing capital though 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 below.

Comparison of Results of Operations for 2025 and 2024

General. Net income for the year ended December 31, 2025 totaled $17.5 million (or $2.69 per diluted common share) and increased $4.1 million, or 31.0%, compared to net income of $13.4 million (or $2.06 per diluted common share) for the year ended December 31, 2024. The increase in net income was primarily due to an increase in net interest income and an increase in noninterest income, which was partially offset by an increase in provision expense and an increase in noninterest expense.

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Net interest income. Net interest income is a significant component of net income, and consists of the difference between interest income generated on interest-earning assets and interest expense incurred on interest-bearing liabilities. Net interest income is primarily affected by the volumes, interest rates and composition of interest-earning assets and interest-bearing liabilities. The tables below titled “Average Balances, Interest Rates and Yields” and “Rate/Volume Analysis of Net Interest Income” provide important information on factors impacting net interest income and should be read in conjunction with this discussion of net interest income.

Net interest income totaled $55.0 million for the year ended December 31, 2025 and increased $8.4 million, or 18.0%, compared to net interest income of $46.6 million for the year ended December 31, 2024. The increase in net interest income was primarily due to a $6.8 million, or 9.4%, decrease in interest expense, coupled with a $1.6 million, or 1.4%, increase in interest income. The decrease in interest expense was attributed to a 46bps decrease in the average cost of funds on interest-bearing liabilities, partially offset by a $12.2 million, or 0.8%, increase in average interest-bearing liabilities. The increase in interest income was primarily attributed to a $68.7 million, or 3.6%, increase in average interest-earning assets outstanding, partially offset by a 13bps decrease in the average yield on interest-earning assets. The net interest margin of 2.77% for the year ended December 31, 2025 increased 34bps compared to the net interest margin of 2.43% for the year ended December 31, 2024.

Interest income totaled $120.0 million for the year ended December 31, 2025, and increased $1.6 million, or 1.4%, compared to $118.4 million for the year ended December 31, 2024. The increase in interest income was primarily attributed to a $39.6 million, or 2.3%, increase in average loans and leases and loans held for sale.

Interest expense totaled $65.0 million for the year ended December 31, 2025, and decreased $6.8 million, or 9.4%, compared to $71.7 million for the year ended December 31, 2024. The decrease in interest expense was primarily attributed to a 56bps decrease in the average rate of interest-bearing deposits, partially offset by a $24.9 million, or 1.7%, increase in average interest-bearing deposits.

Provision for credit losses. The provision for credit losses expense for the year ended December 31, 2025 was $8.2 million, and increased $1.5 million, or 22.4%, compared to $6.7 million for the year ended December 31, 2024. Net charge-offs for the year ended December 31, 2025 totaled $7.3 million, compared to net charge-offs of $5.5 million for the year ended December 31, 2024. The increase in charge-offs was driven by the full charge-off of a non-core loan in 2025 totaling $7.0 million. This loan relationship has no remaining book balance.

The following table presents information regarding net charge-offs (recoveries) for 2025 and 2024 (in thousands):

 

 

 

2025

 

 

2024

 

(Dollars in thousands)

 

Net charge-offs (recoveries)

 

Commercial

 

$

7,315

 

 

$

5,232

 

Single-family residential real estate

 

 

(9

)

 

 

(28

)

Home equity lines of credit

 

 

(2

)

 

 

(6

)

Other consumer loans

 

 

-

 

 

 

280

 

Total

 

$

7,304

 

 

$

5,478

 

 

See the section above titled “Financial Condition – Allowance for Credit Losses on Loans” for additional information.

Noninterest income. Noninterest income for the year ended December 31, 2025 totaled $5.9 million and increased $752,000, or 14.5%, compared to $5.2 million for the year ended December 31, 2024. The increase was primarily due to a $371,000, or 14.8%, increase in service charges on deposit accounts.

Noninterest expense. Noninterest expense for the year ended December 31, 2025 totaled $31.2 million and increased $2.3 million, or 7.7%, compared to $28.9 million for the year ended December 31, 2024. The increase in noninterest expense during the year ended December 31, 2025 was primarily due to a $1.5 million increase in salaries and employee benefits expense and a $428,000 increase in professional fee expense.

Income taxes. Income tax expense was $4.0 million for the year ended December 31, 2025, an increase of $1.2 million, compared to $2.8 million for the year ended December 31, 2024. The effective tax rate for the year ended December 31, 2025 was approximately 18.5%, as compared to approximately 17.1% for the year ended December 31, 2024.

Our deferred tax assets are composed of U.S. net operating losses (“NOLs”), and other temporary book to tax differences. When determining the amount of deferred tax assets that are more-likely-than-not to be realized, and therefore recorded as a benefit, the Company conducts a regular assessment of all available information. This information includes, but is not limited to, taxable income

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in prior periods, projected future income and projected future reversals of deferred tax items. Based on these criteria, the Company determined as of December 31, 2025 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.

Comparison of Results of Operations for 2024 and 2023

General. Net income for the year ended December 31, 2024 totaled $13.4 million (or $2.06 per diluted common share) and decreased $3.5 million, or 21.0%, compared to net income of $16.9 million (or $2.63 per diluted common share) for the year ended December 31, 2023. The decrease in net income was primarily due to an increase in provision expense, a decrease in net interest income and an increase in noninterest expense, which was partially offset by an increase in noninterest income.

Net interest income. Net interest income is a significant component of net income, and consists of the difference between interest income generated on interest-earning assets and interest expense incurred on interest-bearing liabilities. Net interest income is primarily affected by the volumes, interest rates and composition of interest-earning assets and interest-bearing liabilities. The tables below titled “Average Balances, Interest Rates and Yields” and “Rate/Volume Analysis of Net Interest Income” provide important information on factors impacting net interest income and should be read in conjunction with this discussion of net interest income.

Net interest income totaled $46.6 million for the year ended December 31, 2024 and decreased $996,000, or 2.1%, compared to net interest income of $47.6 million for the year ended December 31, 2023. The decrease in net interest income was primarily due to a $11.1 million, or 18.3%, increase in interest expense, partially offset by a $10.1 million, or 9.3%, increase in interest income. The increase in interest expense was attributed to a 55bps increase in the average cost of funds on interest-bearing liabilities, coupled with a $57.5 million, or 3.8%, increase in average interest-bearing liabilities. The increase in interest income was primarily attributed to a 28bps increase in the average yield on interest-earning assets, coupled with a $79.3 million, or 4.3%, increase in average interest-earning assets outstanding. The net interest margin of 2.43% for the year ended December 31, 2024 decreased 16bps compared to the net interest margin of 2.59% for the year ended December 31, 2023.

Interest income totaled $118.4 million for the year ended December 31, 2024, and increased $10.1 million, or 9.3%, compared to $108.3 million for the year ended December 31, 2023. The increase in interest income was primarily attributed to a 31bps increase in the average yield on loans and leases and loans held for sale, coupled with a $67.3 million, or 4.1%, increase in average loans and leases and loans held for sale.

Interest expense totaled $71.7 million for the year ended December 31, 2024, and increased $11.1 million, or 18.3%, compared to $60.6 million for the year ended December 31, 2023. The increase in interest expense was primarily attributed to a 58bps increase in the average rate of interest-bearing deposits, coupled with a $58.1 million, or 4.2%, increase in average interest-bearing deposits.

Provision for credit losses. The provision for credit losses expense for the year ended December 31, 2024 was $6.7 million, and increased $4.4 million, or 190.8%, compared to $2.3 million for the year ended December 31, 2023. Net charge-offs for the year ended December 31, 2024 totaled $5.5 million, compared to net charge-offs of $646,000 for the year ended December 31, 2023.

The following table presents information regarding net charge-offs (recoveries) for 2024 and 2023 (in thousands):

 

 

 

2024

 

 

2023

 

(Dollars in thousands)

 

Net charge-offs (recoveries)

 

Commercial

 

$

5,232

 

 

$

690

 

Single-family residential real estate

 

 

(28

)

 

 

(40

)

Home equity lines of credit

 

 

(6

)

 

 

(4

)

Other consumer loans

 

 

280

 

 

 

—

 

Total

 

$

5,478

 

 

$

646

 

 

See the section above titled “Financial Condition – Allowance for Credit Losses on Loans” for additional information.

Noninterest income. Noninterest income for the year ended December 31, 2024 totaled $5.2 million and increased $1.2 million, or 28.4%, compared to $4.0 million for the year ended December 31, 2023. The increase was primarily due to a $939,000, or 60.0%, increase in service charges on deposit accounts.

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Noninterest expense. Noninterest expense for the year ended December 31, 2024 totaled $28.9 million and increased $569,000, or 2.0%, compared to $28.4 million for the year ended December 31, 2023. The increase in noninterest expense during the year ended December 31, 2024 was primarily due to a $781,000 increase in loan expense.

Income taxes. Income tax expense was $2.8 million for the year ended December 31, 2024, a decrease of $1.2 million, compared to $4.0 million for the year ended December 31, 2023. The effective tax rate for the year ended December 31, 2024 was approximately 17.1%, as compared to approximately 19.3% for the year ended December 31, 2023. The reduction in the effective tax rate for the year ended December 31, 2024 was a result of a decrease in pre-tax net income combined with an increase in the benefits received from tax-credit investments and tax exempt income.

Our deferred tax assets are composed of U.S. net operating losses (“NOLs”), and other temporary book to tax differences. When determining the amount of deferred tax assets that are more-likely-than-not to be realized, and therefore recorded as a benefit, the Company conducts a regular assessment of all available information. This information includes, but is not limited to, taxable income in prior periods, projected future income and projected future reversals of deferred tax items. Based on these criteria, the Company determined as of December 31, 2024 that no valuation allowance was required against the net deferred tax asset.

The Company records income tax expense based on the federal statutory rate adjusted for the effect of other items such as low income housing credits, historic tax credits, bank owned life insurance and other miscellaneous items.

Average Balances, Interest Rates and Yields. The following table presents, for the periods indicated, the total dollar amount of fully taxable equivalent interest income from average interest-earning assets and the resultant yields, as well as the interest expense on average interest-bearing liabilities, expressed in both dollars and rates. Average balances are computed using month-end balances.

 

 

 

For the Years Ended December 31,

 

 

 

2025

 

 

2024

 

 

2023

 

 

 

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)

 

$

11,227

 

 

$

359

 

 

 

2.70

%

 

$

13,245

 

 

$

549

 

 

 

3.43

%

 

$

14,198

 

 

$

658

 

 

 

3.86

%

Loans and leases and loans held for
   sale (3)

 

 

1,742,071

 

 

 

109,282

 

 

 

6.27

%

 

 

1,702,444

 

 

 

106,750

 

 

 

6.27

%

 

 

1,635,173

 

 

 

97,383

 

 

 

5.96

%

Other earning assets

 

 

222,748

 

 

 

9,725

 

 

 

4.37

%

 

 

191,070

 

 

 

10,415

 

 

 

5.45

%

 

 

178,275

 

 

 

9,646

 

 

 

5.41

%

FHLB and FRB stock

 

 

8,186

 

 

 

629

 

 

 

7.68

%

 

 

8,792

 

 

 

675

 

 

 

7.68

%

 

 

8,566

 

 

 

592

 

 

 

6.91

%

Total interest-earning assets

 

 

1,984,232

 

 

 

119,995

 

 

 

6.04

%

 

 

1,915,551

 

 

 

118,389

 

 

 

6.17

%

 

 

1,836,212

 

 

 

108,279

 

 

 

5.89

%

Noninterest-earning assets

 

 

100,933

 

 

 

 

 

 

 

 

 

96,518

 

 

 

 

 

 

 

 

 

92,957

 

 

 

 

 

 

 

Total assets

 

$

2,085,165

 

 

 

 

 

 

 

 

$

2,012,069

 

 

 

 

 

 

 

 

$

1,929,169

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

$

1,479,204

 

 

 

60,023

 

 

 

4.06

%

 

$

1,454,353

 

 

 

67,158

 

 

 

4.62

%

 

$

1,396,298

 

 

 

56,363

 

 

 

4.04

%

FHLB advances and other
   borrowings

 

 

111,762

 

 

 

4,949

 

 

 

4.43

%

 

 

124,417

 

 

 

4,587

 

 

 

3.69

%

 

 

124,999

 

 

 

4,276

 

 

 

3.42

%

Total interest-bearing liabilities

 

 

1,590,966

 

 

 

64,972

 

 

 

4.08

%

 

 

1,578,770

 

 

 

71,745

 

 

 

4.54

%

 

 

1,521,297

 

 

 

60,639

 

 

 

3.99

%

Noninterest-bearing liabilities

 

 

317,005

 

 

 

 

 

 

 

 

 

271,756

 

 

 

 

 

 

 

 

 

260,060

 

 

 

 

 

 

 

Total liabilities

 

 

1,907,971

 

 

 

 

 

 

 

 

 

1,850,526

 

 

 

 

 

 

 

 

 

1,781,357

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity

 

 

177,194

 

 

 

 

 

 

 

 

 

161,543

 

 

 

 

 

 

 

 

 

147,812

 

 

 

 

 

 

 

Total liabilities and equity

 

$

2,085,165

 

 

 

 

 

 

 

 

$

2,012,069

 

 

 

 

 

 

 

 

$

1,929,169

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest-earning assets

 

$

393,266

 

 

 

 

 

 

 

 

$

336,781

 

 

 

 

 

 

 

 

$

314,915

 

 

 

 

 

 

 

Net interest income/interest rate
   spread

 

 

 

 

$

55,023

 

 

 

1.96

%

 

 

 

 

$

46,644

 

 

 

1.63

%

 

 

 

 

$

47,640

 

 

 

1.90

%

Net interest margin

 

 

 

 

 

 

 

 

2.77

%

 

 

 

 

 

 

 

 

2.43

%

 

 

 

 

 

 

 

 

2.59

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average interest-earning assets to
   average interest-bearing
   liabilities

 

 

124.72

%

 

 

 

 

 

 

 

 

121.33

%

 

 

 

 

 

 

 

 

120.70

%

 

 

 

 

 

 

 

(1)
Average balance is computed using the carrying value of securities. Average yield is computed using the historical amortized cost average balance for available for sale securities.
(2)
Average yields and interest earned are stated on a fully taxable equivalent basis.
(3)
Average balance is computed using the recorded investment in loans net of the ACL and includes nonperforming loans.

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Rate/Volume Analysis of Net Interest Income. The following table presents the dollar amount of changes in interest income and interest expense for major components of interest-earning assets and interest-bearing liabilities. It distinguishes between the increase and decrease related to changes in balances and/or changes in interest rates. For each category of interest-earning assets and interest-bearing liabilities, information is provided on changes attributable to (i) changes in volume (i.e., changes in volume multiplied by the prior rate) and (ii) changes in rate (i.e., changes in rate multiplied by the prior volume). For purposes of this table, changes attributable to both rate and volume which cannot be segregated have been allocated proportionately to the change due to volume and the change due to rate.

 

 

 

 

 

 

 

 

 

 

Year Ended December 31, 2025

 

 

Year Ended December 31, 2024

 

 

 

Compared to Year Ended

 

 

Compared to Year Ended

 

 

 

December 31, 2024

 

 

December 31, 2023

 

 

 

Increase (decrease) due to

 

 

Increase (decrease) due to

 

 

 

Rate

 

 

Volume

 

 

Net

 

 

Rate

 

 

Volume

 

 

Net

 

 

 

(Dollars in thousands)

 

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Securities (1)

 

$

(111

)

 

$

(79

)

 

$

(190

)

 

$

(67

)

 

$

(42

)

 

$

(109

)

Loans and leases and loans held for sale

 

 

-

 

 

 

2,532

 

 

 

2,532

 

 

 

5,265

 

 

 

4,102

 

 

 

9,367

 

Other earning assets

 

 

(2,256

)

 

 

1,566

 

 

 

(690

)

 

 

71

 

 

 

698

 

 

 

769

 

FHLB and FRB stock

 

 

-

 

 

 

(46

)

 

 

(46

)

 

 

67

 

 

 

16

 

 

 

83

 

Total interest-earning assets

 

 

(2,367

)

 

 

3,973

 

 

 

1,606

 

 

 

5,336

 

 

 

4,774

 

 

 

10,110

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

(8,266

)

 

 

1,131

 

 

 

(7,135

)

 

 

8,384

 

 

 

2,411

 

 

 

10,795

 

FHLB advances and other borrowings

 

 

860

 

 

 

(498

)

 

 

362

 

 

 

331

 

 

 

(20

)

 

 

311

 

Total interest-bearing liabilities

 

 

(7,406

)

 

 

633

 

 

 

(6,773

)

 

 

8,715

 

 

 

2,391

 

 

 

11,106

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net change in net interest income

 

$

5,039

 

 

$

3,340

 

 

$

8,379

 

 

$

(3,379

)

 

$

2,383

 

 

$

(996

)

 

(1)
Securities amounts are presented on a fully taxable equivalent basis.

Liquidity and Capital Resources

In general terms, liquidity is a measurement of an enterprise’s ability to meet cash needs. The primary objective in liquidity management is to maintain the ability to meet loan commitments and to repay deposits and other liabilities in accordance with their terms without an adverse impact on current or future earnings. Principal sources of funds are deposits; amortization and prepayments of loans; maturities, sales and principal receipts of securities available for sale; borrowings; and operations. While maturities and scheduled amortization of loans are predictable sources of funds, deposit flows and loan prepayments are greatly influenced by general interest rates, economic conditions and competition.

CFBank is required by regulation to maintain sufficient liquidity to ensure its safe and sound operation. Thus, adequate liquidity may vary depending on CFBank’s overall asset/liability structure, market conditions, the activities of competitors, the requirements of our own deposit and loan customers and regulatory considerations. Management believes that each of the Holding Company’s and CFBank’s current liquidity is sufficient to meet its daily operating needs and fulfill its strategic planning.

Liquidity management is both a daily and long-term responsibility of management. We adjust our investments in liquid assets, primarily cash, short-term investments and other assets that are widely traded in the secondary market, based on our ongoing assessment of expected loan demand, expected deposit flows, yields available on interest-earning deposits and securities and the objective of our asset/liability management program. In addition to liquid assets, we have other sources of liquidity available including, but not limited to, access to advances from the FHLB and borrowings from the FRB and our commercial bank lines of credit.

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The following table summarizes CFBank’s cash available from liquid assets and borrowing capacity at December 31, 2025 and 2024.

 

 

 

December 31, 2025

 

 

December 31, 2024

 

 

 

(Dollars in thousands)

 

Cash, unpledged securities and deposits in other financial
   institutions

 

$

273,349

 

 

$

237,863

 

Additional borrowing capacity at the FHLB

 

 

184,374

 

 

 

186,303

 

Additional borrowing capacity at the FRB

 

 

122,360

 

 

 

127,424

 

Unused commercial bank lines of credit

 

 

65,000

 

 

 

65,000

 

Total

 

$

645,083

 

 

$

616,590

 

 

Cash, unpledged securities and deposits in other financial institutions increased $35.4 million, or 14.8%, to $273.3 million at December 31, 2025, compared to $237.9 million at December 31, 2024. The increase was primarily attributed to an increase in deposits and an increase in FHLB borrowings and other debt, partially offset by an increase in net loans.

CFBank’s additional borrowing capacity with the FHLB decreased $1.9 million, or 1.0%, to $184.4 million at December 31, 2025, compared to $186.3 million at December 31, 2024.

CFBank’s additional borrowing capacity at the FRB decreased $5.1 million, or 4.0%, to $122.4 million at December 31, 2025 from $127.4 million at December 31, 2024. CFBank is eligible to participate in the FRB’s primary credit program, providing CFBank access to short-term funds at any time, for any reason, based on the collateral pledged.

CFBank’s borrowing capacity with both the FHLB and FRB may be negatively impacted by changes such as, but not limited to, further tightening of credit policies by the FHLB or FRB, deterioration in the credit performance of CFBank’s loan portfolio or CFBank’s financial performance, or a decrease in the balance of pledged collateral.

CFBank had $65.0 million of availability in unused lines of credit with two commercial banks at December 31, 2025 and December 31, 2024.

Deposits are obtained predominantly from the markets in which CFBank’s offices are located. We rely primarily on a willingness to pay market-competitive interest rates to attract and retain retail deposits. Accordingly, rates offered by competing financial institutions may affect our ability to attract and retain deposits. CFBank relies on competitive interest rates, customer service, and relationships with customers to retain deposits.

The Holding Company has more limited sources of liquidity than CFBank. In general, in addition to its existing liquid assets, sources of liquidity include funds raised in the securities markets through debt or equity offerings, funds borrowed from third party banks or other lenders, dividends received from CFBank or the sale of assets.

Management believes that the Holding Company had adequate funds and sources of liquidity at December 31, 2025 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.

Currently, annual debt service on the subordinated debentures underlying the Company’s trust preferred securities is approximately $385,000. Prior to July 1, 2023, the subordinated debentures had a variable rate of interest, which reset quarterly, equal to the three-month London Interbank Offered Rate (LIBOR) plus 2.85%. Effective July 1, 2023, the rate of interest on the subordinated debentures resets quarterly to the three-month Secured Overnight Financing Rate (SOFR) plus 3.112%, which was 6.80% at December 31, 2025.

Currently, the annual debt service on the Company’s $10 million of fixed-to-floating rate subordinated notes is approximately $875,000. The subordinated notes initially bore a fixed rate of 7.00% until December 2023, and now the interest rate resets quarterly to a rate equal to the current three-month SOFR plus 4.402%, which was 8.09% at December 31, 2025.

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The Holding Company has a credit facility with a third-party bank. Prior to April 30, 2025, the credit facility had a borrowing limit of $35 million with a revolving feature until May 21, 2024, at which time the outstanding balance was converted to a 10-year term note on a graduated 10-year amortization. Borrowings on the credit facility bore interest at a fixed rate of 3.85% until May 21, 2026, at which time the interest rate would convert to a floating rate equal to PRIME with a floor of 3.25%. Effective April 30, 2025, an additional $10 million revolving line of credit was added to the credit facility and the interest rate was amended to reset the fixed rate to 6.00% until May 21, 2026, at which time the rate will convert to a floating rate equal to PRIME. The $10 million revolving line of credit matures on April 30, 2027. The revolving line of credit provided an additional $10 million that was injected as additional Tier 1 capital into CFBank during the second quarter of 2025. At December 31, 2025, the Company had an outstanding balance, net of unamortized debt issuance costs, of $43.0 million on the facility.

The ability of the Holding Company to pay dividends on its common stock is dependent upon the amount of cash and liquidity available at the Holding Company level, as well as the receipt of dividends and other distributions from CFBank to the extent necessary to fund such dividends.

The Holding Company is a legal entity that is separate and distinct from CFBank, which has no obligation to make any dividends or other funds available for the payment of dividends by the Holding Company. Banking regulations limit the amount of dividends that can be paid to the Holding Company by CFBank without prior regulatory approval. Generally, financial institutions may pay dividends without prior regulatory approval as long as the dividend does not exceed the total of the current calendar year-to-date earnings plus any earnings from the previous two years not already paid out in dividends, and as long as the financial institution remains well capitalized after the dividend payment.

The Holding Company also is subject to various legal and regulatory policies and requirements impacting the Holding Company’s ability to pay dividends on its stock. In addition, the Holding Company’s ability to pay dividends on its stock is conditioned upon the payment, on a current basis, of quarterly interest payments on the subordinated debentures underlying the Company’s trust preferred securities. Finally, under the terms of the Company’s fixed-to-floating rate subordinated debt, the Holding Company’s ability to pay dividends on its stock is conditioned upon the Holding Company continuing to make required principal and interest payments, and not incurring an event of default, with respect to the subordinated debt.

Federal income tax laws provided deductions, totaling $2.3 million, for thrift bad debt reserves established before 1988. Accounting standards do not require a deferred tax liability to be recorded on this amount, which otherwise would have totaled $473,000 at year-end 2025. However, if CFBank were wholly or partially liquidated or otherwise ceases to be a bank, or if tax laws were to change, this amount would have to be recaptured and a tax liability recorded. Additionally, any distributions in excess of CFBank’s current or accumulated earnings and profits would reduce amounts allocated to its bad debt reserve and create a tax liability for CFBank.

Impact of Inflation

The financial statements and related data presented herein have been prepared in accordance with GAAP, which presently require us to measure financial position and results of operations primarily in terms of historical dollars. Changes in the relative value of money due to inflation are generally not considered. In our opinion, changes in interest rates affect our financial condition to a far greater degree than changes in the inflation rate. While interest rates are generally influenced by changes in the inflation rate, they do not move concurrently. Rather, interest rate volatility is based on changes in the expected rate of inflation, as well as changes in monetary and fiscal policy. A financial institution’s ability to be relatively unaffected by changes in interest rates is a good indicator of its ability to perform in a volatile economic environment. In an effort to protect performance from the effects of interest rate volatility, we review interest rate risk frequently and take steps to minimize detrimental effects on profitability.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

Market risk is the risk of loss from adverse changes in market prices and interest rates. We have not engaged in and, accordingly, have no risk related to trading accounts, commodities or foreign exchange. Our hedging policy allows economic 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 economic hedging activities are set forth in Note 17 to our Consolidated Financial Statements. The Company’s market risk arises primarily from interest rate risk inherent in our lending, investing, deposit gathering and borrowing activities. The measurement of market risk associated with financial instruments is meaningful only when all related and offsetting on- and off-balance-sheet transactions are aggregated and the resulting net positions are identified. Disclosures about fair value are set forth in Note 6 to our Consolidated Financial Statements.

Management actively monitors and manages interest rate risk. The primary objective in managing interest rate risk is to limit, within established guidelines, the adverse impact of changes in interest rates on our net interest income and capital. We measure the effect of interest rate changes on CFBank’s economic value of equity (EVE), which is the difference between the estimated market value of CFBank’s assets and liabilities under different interest rate scenarios. The change in the EVE ratio is a long-term measure of what

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might happen to the market value of financial assets and liabilities over time if interest rates changed instantaneously and CFBank did not change existing strategies. At December 31, 2025, 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. All values are within the acceptable range established by CFBank’s Board of Directors.

 

Economic Value of Equity

as a Percent of Assets

(CFBank only)

Basis Point

 

Economic

Change in Rates

 

Value Ratio

+400

 

11.7%

+300

 

11.8%

+200

 

11.9%

+100

 

12.0%

0

 

12.2%

-100

 

12.3%

-200

 

12.5%

-300

 

12.6%

-400

 

12.7%

 

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. For example, the table indicates results based on changes in the level of interest rates, but not changes in the shape of the yield curve. CFBank also has exposure to changes in the shape of the yield curve. Although certain assets and liabilities may have similar maturities or periods to which they reprice, they may react in different degrees to changes in market interest rates. The interest rates on certain types of assets and liabilities may fluctuate in advance of changes in market interest rates, while interest rates on other types may lag behind changes in market rates. In the event of a change in interest rates, prepayments and early withdrawal levels would likely deviate significantly from those assumed in calculating the table. The ability of many borrowers to service their debt may decrease when interest rates rise. As a result, the actual effect of changing interest rates may differ materially from that presented in the foregoing table.

Changes in levels of market interest rates could materially and adversely affect our net interest income, loan volume, asset quality, value of loans held for sale and cash flows, as well as the market value of our securities portfolio and overall profitability.

Residential mortgage loan origination volumes are affected by market interest rates on loans. Rising interest rates generally are associated with a lower volume of loan originations, while falling interest rates are usually associated with higher loan originations. Our ability to generate gains on sales of mortgage loans is significantly dependent on the level of originations. Changes in interest rates, prepayment speeds and other factors may also cause the value of our loans held for sale to change.

We originate commercial, commercial real estate, multi-family residential and single family residential real estate mortgage loans for our portfolio, which, in many cases, have adjustable interest rates. Many of these loans have interest-rate floors, which protect income to CFBank should rates fall. While adjustable-rate loans better offset the adverse effects of an increase in interest rates as compared to fixed-rate loans, the increased payments required of adjustable-rate loan borrowers upon an interest rate adjustment in a rising interest rate environment could cause an increase in delinquencies and defaults. 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.

 

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Table of Contents

CF BANKSHARES INC.

 

Item 8. Financial Statements and Supplementary Data.

The following consolidated financial statements of CF Bankshares Inc., and reports of independent registered public accounting firms and management are included below.

 

 

Page

Management’s Report on Internal Control over Financial Reporting

53

Reports of Independent Registered Public Accounting Firms

54

Consolidated Balance Sheets at December 31, 2025 and 2024

57

Consolidated Statements of Income for the years ended December 31, 2025, 2024 and 2023

58

Consolidated Statements of Comprehensive Income for the years ended December 31, 2025, 2024 and 2023

59

Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2025, 2024 and 2023

60

Consolidated Statements of Changes of Cash Flows for the years ended December 31, 2025, 2024 and 2023

61

Notes to the Consolidated Financial Statements

62

 

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CF BANKSHARES INC.

 

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

The management of CF Bankshares Inc. (the “Company”) 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. The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles.

The Company’s internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2025. 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). Based on our assessment and those criteria, management concluded that the Company maintained effective internal control over financial reporting as of December 31, 2025.

Plante & Moran, PLLC, independent registered public accounting firm, has issued an audit report on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2025.

 

/s/ Timothy T. O’Dell

Timothy T. O’Dell

President and Chief Executive Officer

 

/s/ Kevin J. Beerman

Kevin J. Beerman

Executive Vice President and Chief Financial Officer

March 12, 2026

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Table of Contents

 

Report of Independent Registered Public Accounting Firm

 

To the Stockholders and Board of Directors of CF Bankshares Inc.

Opinions on the Consolidated Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheet of CF Bankshares Inc. (the “Company”) as of December 31, 2025, and the related consolidated statements of income, comprehensive income, changes in stockholders' equity, and changes in cash flows for the year then ended, and the related notes (collectively referred to as the “financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO framework”).

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, 2025, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in the COSO framework.

Basis for Opinion

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audit of the financial statements 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 included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

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Report of Independent Registered Public Accounting Firm

 

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters 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 a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Allowance for Credit Losses on Collectively Evaluated Loans – Refer to Notes 1 and 4 to the financial statements

Critical Audit Matter Description

Management’s estimate of the allowance for credit losses (“ACL”), includes a reserve on collectively evaluated loans. In the current year, significant assumptions in management’s estimate of the reserve on collectively evaluated loans include (i) the determination of the peer group utilized to determine historical loss rates; (ii) the determination of the historical lookback period utilized to determine historical loss rates; (iii) prepayment assumptions used to determine the estimated remaining life of each portfolio segment, (iv) determination of the forecast period adjustment, and (v) qualitative factor adjustments. In evaluating whether qualitative adjustments are necessary, management considers internal and external qualitative and credit market risk factors to reflect credit risks not fully captured by historical loss experience or forecast economic conditions.

Significant judgment was required by management in the selection and application of subjective assumptions. Accordingly, performing audit procedures to evaluate the Company’s estimated ACL involved a high degree of auditor judgment and required significant effort, including the involvement of professionals with specialized skill and knowledge.

How the Critical Audit Matter was Addressed in the Audit

Our audit procedures related to the Company’s estimate of the ACL on collectively evaluated loans included, but were not limited to, the following:

•
Testing the design and operating effectiveness of management’s controls over key assumptions and judgments.
•
Testing the completeness and accuracy of data utilized by management.
•
Evaluating the relevance and reliability of information used by management in the development of the estimate.
•
Evaluating the reasonableness of significant assumptions used in management’s estimate through a combination of evaluating the reasonableness of certain assumptions and developing an independent range of reasonable outcomes for the collectively evaluated component of the ACL for comparison to management’s estimate.

 

We have served as the Company's auditor since 2025.

 

/s/ Plante & Moran, PLLC

Plante & Moran, PLLC

 

Cleveland, Ohio

March 12, 2026

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Report of Independent Registered Public Accounting Firm

 

 

 

Shareholders, Board of Directors, and Audit Committee

CF Bankshares Inc.

Columbus, Ohio

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheet of CF Bankshares Inc. (the “Company”) as of December 31, 2024, the related consolidated statements of income, comprehensive income, changes in stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”). 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, 2024, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

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. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

We served as the Company's auditor from 2014 to 2025.

 

/s/ Forvis Mazars, LLP

Forvis Mazars, LLP

 

Indianapolis, Indiana

March 14, 2025

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CF BANKSHARES INC.

CONSOLIDATED BALANCE SHEETS

December 31, 2025 and 2024

(Dollars in thousands, except per share data)

 

 

 

December 31,
2025

 

 

December 31,
2024

 

ASSETS

 

 

 

 

 

 

Cash and cash equivalents

 

$

258,972

 

 

$

235,272

 

Interest-bearing deposits in other financial institutions

 

 

100

 

 

 

100

 

Securities available for sale

 

 

17,496

 

 

 

8,683

 

Equity securities

 

 

—

 

 

 

5,000

 

Loans held for sale, at fair value

 

 

5,611

 

 

 

2,623

 

Loans and leases, net of allowance for credit losses of $17,678 and $17,474, respectively

 

 

1,738,854

 

 

 

1,722,019

 

FHLB and FRB stock

 

 

8,354

 

 

 

8,918

 

Premises and equipment, net

 

 

3,547

 

 

 

3,536

 

Operating lease right-of-use assets

 

 

5,680

 

 

 

6,087

 

Bank owned life insurance

 

 

28,049

 

 

 

27,116

 

Accrued interest receivable and other assets

 

 

50,658

 

 

 

46,169

 

Total assets

 

$

2,117,321

 

 

$

2,065,523

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

Noninterest bearing

 

$

285,523

 

 

$

273,668

 

Interest bearing

 

 

1,495,166

 

 

 

1,482,127

 

Total deposits

 

 

1,780,689

 

 

 

1,755,795

 

FHLB advances and other debt

 

 

100,964

 

 

 

92,680

 

Advances by borrowers for taxes and insurance

 

 

2,523

 

 

 

2,238

 

Operating lease liabilities

 

 

5,878

 

 

 

6,229

 

Accrued interest payable and other liabilities

 

 

27,802

 

 

 

25,144

 

Subordinated debentures

 

 

15,039

 

 

 

15,000

 

Total liabilities

 

 

1,932,895

 

 

 

1,897,086

 

 

 

 

 

 

 

 

Commitments and contingent liabilities

 

 

—

 

 

 

—

 

 

 

 

 

 

 

 

Stockholders' equity

 

 

 

 

 

 

Common stock, $0.01 par value; shares authorized: 9,090,909, including 1,260,700
   shares of non-voting common stock

 

 

 

 

 

 

Voting common stock, $0.01 par value; shares issued: 6,800,762 at
   December 31, 2025 and 5,539,586 at December 31, 2024

 

 

68

 

 

 

55

 

Non-voting common stock, $0.01 par value; shares issued: 76,700 at
   December 31, 2025 and 1,260,700 at December 31, 2024

 

 

1

 

 

 

13

 

Series D preferred stock, $0.01 par value; 5,000 shares authorized; 2,000 shares issued
   at December 31, 2025 and December 31, 2024

 

 

—

 

 

 

—

 

Additional paid-in capital

 

 

93,618

 

 

 

92,225

 

Retained earnings

 

 

103,883

 

 

 

88,290

 

Accumulated other comprehensive loss

 

 

(1,371

)

 

 

(1,803

)

Treasury stock, at cost; 459,113 shares of voting common stock at
   December 31, 2025 and 398,201 shares of voting common stock at
   December 31, 2024

 

 

(11,773

)

 

 

(10,343

)

Total stockholders' equity

 

 

184,426

 

 

 

168,437

 

Total liabilities and stockholders' equity

 

$

2,117,321

 

 

$

2,065,523

 

 

 

 

See accompanying notes to consolidated financial statements.

57

Table of Contents

 

CF BANKSHARES INC.

CONSOLIDATED STATEMENTS OF INCOME

Years ended December 31, 2025, 2024 and 2023

(Dollars in thousands, except per share data)

 

 

 

2025

 

 

2024

 

 

2023

 

Interest and dividend income

 

 

 

 

 

 

 

 

 

Loans and leases, including fees

 

$

109,282

 

 

$

106,750

 

 

$

97,383

 

Securities

 

 

359

 

 

 

549

 

 

 

658

 

FHLB and FRB stock dividends

 

 

629

 

 

 

675

 

 

 

592

 

Federal funds sold and other

 

 

9,725

 

 

 

10,415

 

 

 

9,646

 

 

 

 

119,995

 

 

 

118,389

 

 

 

108,279

 

Interest expense

 

 

 

 

 

 

 

 

 

Deposits

 

 

60,023

 

 

 

67,158

 

 

 

56,363

 

FHLB advances and other debt

 

 

3,652

 

 

 

3,144

 

 

 

3,107

 

Subordinated debentures

 

 

1,297

 

 

 

1,443

 

 

 

1,169

 

 

 

 

64,972

 

 

 

71,745

 

 

 

60,639

 

Net interest income

 

 

55,023

 

 

 

46,644

 

 

 

47,640

 

Provision for credit losses

 

 

 

 

 

 

 

 

 

Provision for credit losses-loans

 

 

7,508

 

 

 

6,087

 

 

 

1,858

 

Provision for credit losses-unfunded commitments

 

 

739

 

 

 

650

 

 

 

459

 

 

 

 

8,247

 

 

 

6,737

 

 

 

2,317

 

Net interest income after provision for credit losses

 

 

46,776

 

 

 

39,907

 

 

 

45,323

 

 

 

 

 

 

 

 

 

 

 

Noninterest income

 

 

 

 

 

 

 

 

 

Service charges on deposit accounts

 

 

2,876

 

 

 

2,505

 

 

 

1,566

 

Net gains on sales of residential mortgage loans

 

 

716

 

 

 

435

 

 

 

119

 

Net (losses) gains on sales of commercial loans

 

 

(18

)

 

 

246

 

 

 

66

 

Net loss on sale of equity security

 

 

(103

)

 

 

—

 

 

 

—

 

Earnings on bank owned life insurance

 

 

933

 

 

 

850

 

 

 

625

 

Swap fee income

 

 

424

 

 

 

321

 

 

 

715

 

Other

 

 

1,099

 

 

 

818

 

 

 

940

 

 

 

 

5,927

 

 

 

5,175

 

 

 

4,031

 

Noninterest expense

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

15,720

 

 

 

14,172

 

 

 

14,513

 

Occupancy and equipment

 

 

1,760

 

 

 

1,821

 

 

 

1,694

 

Data processing

 

 

2,887

 

 

 

2,569

 

 

 

2,172

 

Franchise and other taxes

 

 

1,409

 

 

 

1,269

 

 

 

1,263

 

Professional fees

 

 

3,157

 

 

 

2,729

 

 

 

2,470

 

Director fees

 

 

686

 

 

 

574

 

 

 

658

 

Postage, printing and supplies

 

 

142

 

 

 

152

 

 

 

149

 

Advertising and marketing

 

 

418

 

 

 

134

 

 

 

336

 

Telephone

 

 

186

 

 

 

210

 

 

 

257

 

Loan expenses

 

 

915

 

 

 

1,400

 

 

 

619

 

Foreclosed assets, net

 

 

18

 

 

 

—

 

 

 

—

 

Depreciation

 

 

476

 

 

 

486

 

 

 

567

 

FDIC premiums

 

 

2,058

 

 

 

2,079

 

 

 

2,215

 

Regulatory assessment

 

 

216

 

 

 

258

 

 

 

242

 

Other insurance

 

 

194

 

 

 

198

 

 

 

209

 

Impairment of premises and equipment

 

 

—

 

 

 

56

 

 

 

60

 

Other

 

 

934

 

 

 

831

 

 

 

945

 

 

 

 

31,176

 

 

 

28,938

 

 

 

28,369

 

Income before incomes taxes

 

 

21,527

 

 

 

16,144

 

 

 

20,985

 

Income tax expense

 

 

3,986

 

 

 

2,757

 

 

 

4,048

 

Net income

 

$

17,541

 

 

$

13,387

 

 

$

16,937

 

Earnings allocated to participating securities (Series D preferred stock)

 

 

(540

)

 

 

(361

)

 

 

—

 

Net income attributable to common stockholders

 

$

17,001

 

 

$

13,026

 

 

$

16,937

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share:

 

 

 

 

 

 

 

 

 

Basic

 

$

2.70

 

 

$

2.08

 

 

$

2.64

 

Diluted

 

$

2.69

 

 

$

2.06

 

 

$

2.63

 

 

See accompanying notes to consolidated financial statements.

58

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CF BANKSHARES INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Years ended December 31, 2025, 2024 and 2023

(Dollars in thousands, except per share data)

 

 

2025

 

 

2024

 

 

2023

 

Net income

$

17,541

 

 

$

13,387

 

 

$

16,937

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

Unrealized holding gains (losses) arising during the period related to
   investment securities available for sale, net of tax of $112, $130
   and ($67):

 

432

 

 

 

487

 

 

 

(253

)

Other comprehensive income (loss), net of tax

 

432

 

 

 

487

 

 

 

(253

)

Comprehensive income

$

17,973

 

 

$

13,874

 

 

$

16,684

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to consolidated financial statements.

59

Table of Contents

 

CF BANKSHARES INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

Years ended December 31, 2025, 2024 and 2023

(Dollars in thousands, except per share data)

 

 

 

Voting

 

 

Non-voting

 

 

Series D

 

 

Additional

 

 

 

 

 

Accumulated Other

 

 

 

 

 

Total

 

 

 

Common

 

 

Common

 

 

Preferred

 

 

Paid-In

 

 

Retained

 

 

Comprehensive

 

 

Treasury

 

 

Stockholders'

 

 

 

Stock

 

 

Stock

 

 

Stock

 

 

Capital

 

 

Earnings

 

 

Loss

 

 

Stock

 

 

Equity

 

Balance at January 1, 2023

 

$

56

 

 

$

13

 

 

$

—

 

 

$

89,813

 

 

$

61,056

 

 

$

(2,037

)

 

$

(9,692

)

 

$

139,209

 

Net income

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

16,937

 

 

 

—

 

 

 

—

 

 

 

16,937

 

Other comprehensive loss

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(253

)

 

 

—

 

 

 

(253

)

Issuance of 59,784 stock-based incentive plan
   shares, net of forfeitures

 

 

1

 

 

 

—

 

 

 

—

 

 

 

(1

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Restricted stock expense, net of forfeitures

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,172

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,172

 

Stock options exercised

 

 

—

 

 

 

—

 

 

 

—

 

 

 

84

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

84

 

Acquisition of 4,875 treasury shares
   surrendered upon vesting of restricted stock
   for payment of taxes

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(95

)

 

 

(95

)

Acquisition of 1,555 treasury shares
   surrendered upon exercise of stock
   options for payment of exercise price

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(27

)

 

 

(27

)

Purchase of 9,503 treasury shares

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(177

)

 

 

(177

)

Dividends declared ($0.23 per share)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(1,476

)

 

 

—

 

 

 

—

 

 

 

(1,476

)

Balance at December 31, 2023

 

 

57

 

 

 

13

 

 

 

—

 

 

 

91,068

 

 

 

76,517

 

 

 

(2,290

)

 

 

(9,991

)

 

 

155,374

 

Net income

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

13,387

 

 

 

—

 

 

 

—

 

 

 

13,387

 

Other comprehensive income

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

487

 

 

 

—

 

 

 

487

 

Issuance of 75,618 stock-based incentive plan
   shares, net of forfeitures

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Restricted stock expense, net of forfeitures

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,155

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,155

 

Acquisition of 6,007 treasury shares
   surrendered upon vesting of restricted
   stock for payment of taxes

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(129

)

 

 

(129

)

Purchase of 11,095 treasury shares

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(223

)

 

 

(223

)

Conversion of 200,000 shares of voting
   common stock to 2,000 shares of
   Series D Stock

 

 

(2

)

 

 

—

 

 

 

—

 

 

 

2

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Cash dividends declared on common stock
   ($0.25 per share)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(1,574

)

 

 

—

 

 

 

—

 

 

 

(1,574

)

Cash dividends declared on Series D
   preferred stock ($19.00 per share)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(40

)

 

 

—

 

 

 

—

 

 

 

(40

)

Balance at December 31, 2024

 

 

55

 

 

 

13

 

 

 

—

 

 

 

92,225

 

 

 

88,290

 

 

 

(1,803

)

 

 

(10,343

)

 

 

168,437

 

Net income

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

17,541

 

 

 

—

 

 

 

—

 

 

 

17,541

 

Other comprehensive income

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

432

 

 

 

—

 

 

 

432

 

Issuance of 84,625 stock-based incentive plan
   shares, net of forfeitures

 

 

1

 

 

 

—

 

 

 

—

 

 

 

(1

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Restricted stock expense, net of forfeitures

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,394

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,394

 

Acquisition of 6,268 treasury shares
   surrendered upon vesting of restricted
   stock for payment of taxes

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(147

)

 

 

(147

)

Purchase of 54,644 treasury shares

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(1,283

)

 

 

(1,283

)

Conversion of 1,184,000 shares of non-voting
   common stock to voting stock

 

 

12

 

 

 

(12

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Cash dividends declared on common stock
   ($0.30 per share)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(1,888

)

 

 

—

 

 

 

—

 

 

 

(1,888

)

Cash dividends declared on Series D
   preferred stock ($30.00 per share)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(60

)

 

 

—

 

 

 

—

 

 

 

(60

)

Balance at December 31, 2025

 

$

68

 

 

$

1

 

 

$

—

 

 

$

93,618

 

 

$

103,883

 

 

$

(1,371

)

 

$

(11,773

)

 

$

184,426

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to consolidated financial statements.

60

Table of Contents

 

CF BANKSHARES INC.

CONSOLIDATED STATEMENTS OF CHANGES OF CASH FLOWS

Years ended December 31, 2025, 2024 and 2023

(Dollars in thousands, except per share data)

 

 

 

Years Ended December 31,

 

 

 

2025

 

 

2024

 

 

2023

 

Net income

 

$

17,541

 

 

$

13,387

 

 

$

16,937

 

Adjustments to reconcile net income to net cash from operating activities:

 

 

 

 

 

 

 

 

 

Provision credit losses

 

 

8,247

 

 

 

6,737

 

 

 

2,317

 

Depreciation

 

 

476

 

 

 

486

 

 

 

567

 

Accretion, net

 

 

(2,063

)

 

 

(1,376

)

 

 

(1,024

)

Deferred income tax (benefit) expense

 

 

(186

)

 

 

(365

)

 

 

456

 

Net loss on sale of equity security

 

 

103

 

 

 

—

 

 

 

—

 

Originations of loans held for sale

 

 

(49,749

)

 

 

(47,597

)

 

 

(10,800

)

Proceeds from sale of loans held for sale

 

 

47,477

 

 

 

47,258

 

 

 

9,650

 

Net gains on sales of residential mortgage loans

 

 

(716

)

 

 

(435

)

 

 

(119

)

Net losses (gains) on sales of commercial loans

 

 

18

 

 

 

(246

)

 

 

(66

)

Loss on disposal of premises and equipment

 

 

—

 

 

 

56

 

 

 

60

 

Loss on sale of other assets held for sale

 

 

—

 

 

 

—

 

 

 

13

 

Earnings on bank owned life insurance

 

 

(933

)

 

 

(850

)

 

 

(625

)

Restricted stock expense, net of forfeitures

 

 

1,394

 

 

 

1,155

 

 

 

1,172

 

Net change in:

 

 

 

 

 

 

 

 

 

Accrued interest receivable and other assets

 

 

1,474

 

 

 

3,520

 

 

 

(2,676

)

Operating lease right-of-use asset

 

 

661

 

 

 

753

 

 

 

687

 

Operating lease liability

 

 

(605

)

 

 

(692

)

 

 

(686

)

Accrued interest payable and other liabilities

 

 

(4,451

)

 

 

(7,602

)

 

 

2,188

 

Net cash from operating activities

 

 

18,688

 

 

 

14,189

 

 

 

18,051

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

Available-for-sale securities:

 

 

 

 

 

 

 

 

 

Maturities, prepayments and calls

 

 

1,000

 

 

 

2,205

 

 

 

2,013

 

Purchases

 

 

(9,216

)

 

 

(2,149

)

 

 

—

 

Proceeds from the sale of equity security

 

 

4,897

 

 

 

—

 

 

 

—

 

Loan and lease originations and payments, net

 

 

(33,305

)

 

 

(32,350

)

 

 

(124,851

)

Purchase of loans and leases

 

 

(9,935

)

 

 

(6,229

)

 

 

—

 

Proceeds from the sale of loans

 

 

20,441

 

 

 

5,653

 

 

 

1,835

 

Additions to premises and equipment

 

 

(487

)

 

 

(266

)

 

 

(661

)

Redemption (purchase) of FRB and FHLB stock

 

 

564

 

 

 

(436

)

 

 

(540

)

Purchase of other investments

 

 

—

 

 

 

—

 

 

 

(1,200

)

Other adjustments

 

 

477

 

 

 

578

 

 

 

(341

)

Proceeds from the sale of foreclosed assets

 

 

524

 

 

 

—

 

 

 

—

 

Proceeds from the sale of assets held for sale

 

 

—

 

 

 

—

 

 

 

1,892

 

Net cash used by investing activities

 

 

(25,040

)

 

 

(32,994

)

 

 

(121,853

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

Net change in deposits

 

 

24,894

 

 

 

11,738

 

 

 

216,135

 

Proceeds from FHLB advances and other debt

 

 

10,205

 

 

 

27,151

 

 

 

37,075

 

Repayments on FHLB advances and other debt

 

 

(1,954

)

 

 

(44,500

)

 

 

(36,575

)

Net change in advances by borrowers for taxes and insurance

 

 

285

 

 

 

59

 

 

 

(1,334

)

Cash dividends paid

 

 

(1,948

)

 

 

(1,614

)

 

 

(1,476

)

Proceeds from exercise of stock options

 

 

—

 

 

 

—

 

 

 

84

 

Acquisition of treasury shares surrendered upon vesting of restricted
   stock and exercised options for payment of taxes and exercise proceeds

 

 

(147

)

 

 

(129

)

 

 

(122

)

Purchase of treasury shares

 

 

(1,283

)

 

 

(223

)

 

 

(177

)

Net cash from (used by) financing activities

 

 

30,052

 

 

 

(7,518

)

 

 

213,610

 

Net change in cash and cash equivalents

 

 

23,700

 

 

 

(26,323

)

 

 

109,808

 

Beginning cash and cash equivalents

 

 

235,272

 

 

 

261,595

 

 

 

151,787

 

Ending cash and cash equivalents

 

$

258,972

 

 

$

235,272

 

 

$

261,595

 

Supplemental cash flow information:

 

 

 

 

 

 

 

 

 

Interest paid

 

$

64,718

 

 

$

72,166

 

 

$

58,799

 

Income tax paid

 

 

2,685

 

 

 

664

 

 

 

3,975

 

Supplemental noncash disclosures:

 

 

 

 

 

 

 

 

 

Transfer from loans to foreclosed assets

 

$

524

 

 

$

—

 

 

$

—

 

Investment payable on limited partnerships

 

 

6,370

 

 

 

6,000

 

 

 

889

 

Initial recognition of operating lease right-of-use asset

 

 

254

 

 

 

1,619

 

 

 

4,550

 

Initial recognition of operating lease liability

 

 

254

 

 

 

1,619

 

 

 

4,550

 

 

See accompanying notes to consolidated financial statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations and Principles of Consolidation:

The consolidated financial statements consist of CF Bankshares Inc. (the “Holding Company”) and its wholly-owned subsidiary, CFBank, National Association (“CFBank”). On December 1, 2016, CFBank converted from a federal savings institution to a national bank. 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 subject to regulation and supervision by the Board of Governors of the Federal Reserve System. The Holding Company and CFBank are sometimes collectively referred to herein as the “Company.” Intercompany transactions and balances are eliminated in consolidation.

CFBank provides financial services through its eight full-service banking offices in the metro markets of Columbus, Cincinnati, Cleveland and Akron, Ohio and Indianapolis, Indiana. Its primary deposit products are commercial and retail checking, savings, money market and term certificate accounts. Its primary lending products are commercial and commercial real estate, residential mortgages and installment loans. There are no significant concentrations of loans to any one industry or customer segment. However, our customers’ ability to repay their loans is dependent on general economic conditions and the real estate values in their geographic areas.

Use of Estimates: To prepare financial statements in conformity with U.S. generally accepted accounting principles (GAAP), management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and the disclosures provided, and actual results could differ. The allowance for credit losses on financial assets, deferred tax assets and fair values of financial instruments are particularly subject to change.

Cash Flows: Cash and cash equivalents include cash, deposits with other financial institutions with maturities fewer than 90 days and federal funds sold. Net cash flows are reported for customer loan and deposit transactions, interest-bearing deposits in other financial institutions and borrowings with original maturities under 90 days.

Cash in Excess of FDIC Limits: At December 31, 2025, the Company’s cash accounts exceeded federally insured limits by approximately $251.7 million. Approximately $244.1 million of that amount was held by either the Federal Reserve Bank or the Federal Home Loan Bank of Cincinnati, which is not federally insured.

Interest-Bearing Deposits in Other Financial Institutions: Interest-bearing deposits in other financial institutions mature in April, 2028 and are carried at cost. As of December 31, 2025 and December 31, 2024, there was $100 in interest-bearing deposits in other financial institutions.

Securities: Debt securities are classified as available for sale when they might be sold before maturity. Securities available for sale are carried at fair value, with unrealized holding gains and losses reported in other comprehensive income.

Interest income includes amortization of purchase premium or accretion of discount. Premiums and discounts on securities are amortized or accreted on the level-yield method, except for mortgage-backed securities and collateralized mortgage obligations where prepayments are anticipated based on industry payment trends. Gains and losses on sales are recorded on the trade date and determined using the specific identification method.

Allowance for credit losses on investment securities available for sale: For investment securities available for sale in an unrealized loss position, the Company first assesses whether it intends to sell, or it is more likely than not that it will be required to sell, the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security's amortized cost basis is written down to fair value through income. For investment securities available for sale that do not meet the aforementioned criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, the Company considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded, limited to the amount that the fair value is less than the amortized cost basis. Unrealized losses that have not been recorded through an allowance for credit losses are recognized in other comprehensive income. Adjustments to the allowance for credit losses are reported in the income statement as a component of the provision for credit loss. The Company has made the accounting policy election to exclude accrued interest receivable on investment securities available

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(Dollars in thousands, except per share data)

 

for sale from the estimate of credit losses. Accrued interest receivable on securities available for sale was $39 and $9 at December 31, 2025 and December 31, 2024, respectively. Investment securities available for sale are charged off against the allowance or, in the absence of any allowance, written down through the income statement when deemed uncollectible or when either of the aforementioned criteria regarding intent or requirement to sell is met. The Company did not record an allowance for credit losses on its investment securities available for sale as of December 31, 2025 or December 31, 2024, as the unrealized losses were attributable to changes in interest rates, not credit quality.

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. In accordance with ASC 321, the Company performs a qualitative assessment for equity securities without readily determinable fair values considering impairment indicators to evaluate whether an impairment exists. If an impairment exists, the Company will recognize a loss based on the difference between carrying value and estimated fair value.

Loans Held for Sale: Mortgage loans originated and intended for sale in the secondary market are carried at fair value under the fair value option, as determined by outstanding commitments from investors. Mortgage loans held for sale are generally sold with servicing rights released. The carrying value of mortgage loans sold is reduced by the amount allocated to the servicing rights when mortgage loans held for sale are sold with servicing rights retained. Gains and losses on sales of mortgage loans are based on the difference between the selling price and the carrying value of the related loan sold.

Loans and Leases: Loans and leases that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at the principal balance outstanding, adjusted for purchase premiums and discounts, deferred loan fees and costs and an allowance for credit losses. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized in interest income using the level yield method without anticipating prepayments.

The accrual of interest income on all classes of loans, except other consumer loans, is discontinued and the loan is placed on nonaccrual status at the time the loan is 90 days delinquent unless the loan is well-secured and in process of collection. Other consumer loans are typically charged off no later than 90 days past due. Past due status is based on the contractual terms of the loan for all classes of loans. In all cases, loans are placed on nonaccrual or charged-off at an earlier date if collection of principal or interest is considered doubtful. Nonaccrual loans and loans past due 90 days still on accrual include both smaller balance homogeneous loans that are collectively evaluated for impairment and loans that are individually evaluated for impairment. Commercial, multi-family residential real estate loans and commercial real estate loans placed on nonaccrual status are individually evaluated for impairment.

All interest accrued but not received for each loan placed on nonaccrual status is reversed against interest income in the period in which it is placed on nonaccrual status. Interest received on such loans is accounted for on the cash-basis or cost recovery method, until qualifying for return to accrual status. Loans are considered for return to accrual status provided all the principal and interest amounts that are contractually due are brought current, there is a current and well documented credit analysis, there is reasonable assurance of repayment of principal and interest, and the customer has demonstrated sustained, amortizing payment performance of at least six months.

Concentration of Credit Risk: Most of the Company’s primary business activity is with customers located within the Ohio counties of Franklin, Delaware, Hamilton, Cuyahoga and Summit and Marion County, Indiana and contiguous counties. Therefore, the Company’s exposure to credit risk can be affected by changes in the economies within these counties. Although these counties are the Company’s primary market area for loans, the Company originates residential and commercial real estate loans throughout the United States.

Allowance for Credit Losses – Loans and Leases ("ACL - Loans"): The ACL - Loans is a valuation account that is deducted from the loans' amortized cost basis to present the net amount expected to be collected on loans over the contractual term. Loans and leases are collectively referred to as “loans” for the purpose of discussing the allowance for credit losses. Loans are charged off against the allowance when the uncollectibility of the loan is confirmed. Expected recoveries do not exceed the aggregate of amounts previously charged off and expected to be charged off. Adjustments to the ACL - Loans are reported in the income statement as a component of provision for credit loss. The Company has made the accounting policy election to exclude accrued interest receivable on loans from the estimate of credit losses. The accrued interest receivable on loans at December 31, 2025 and December 31, 2024 was $8.3 million and $8.1 million, respectively.

The ACL - Loans represents the Company's best estimate of Current Expected Credit Losses ("CECL") on loans using relevant available information, from internal and external sources, related to past events, current conditions, and reasonable and supportable

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forecasts. Historical credit loss experience provides the basis for the estimation of expected credit losses. The CECL calculation is performed and evaluated quarterly and losses are estimated over the expected life of the loan. The level of the ACL - Loans is believed to be adequate to absorb all expected future losses inherent in the loan portfolio at the measurement date.

In calculating the ACL - Loans, the loan portfolio was pooled into loan segments with similar risk characteristics. Common characteristics include the type or purpose of the loan, underlying collateral and historical/expected credit loss patterns. In developing the loan segments, the Company analyzed the degree of correlation in how loans within each portfolio respond when subjected to varying economic conditions and scenarios as well as other portfolio stress factors.

The expected credit losses are measured over the life of each loan segment utilizing the average charge-off methodology combined with economic forecast models to estimate the current expected credit loss inherent in the loan portfolio. This approach is also leveraged to estimate the expected credit losses associated with unfunded loan commitments incorporating expected utilization rates.

The Company sub-segmented certain commercial portfolios by risk level where appropriate. The Company utilized a one-year reasonable and supportable economic forecast period.

The Company qualitatively adjusts model results for risk factors that are not inherently considered in the historical losses, but are nonetheless relevant in assessing the expected credit losses within the loan portfolio. These adjustments may increase or decrease the estimate of expected credit losses based upon the assessed level of risk for each qualitative factor. The various risks that may be considered in making qualitative adjustments include, among other things, the impact of (i) changes in economic conditions, (ii) changes in the nature and volume of the loan portfolio, (iii) changes in the existence, growth and effect of any concentrations in credit, (iv) changes in lending policies and procedures, including changes in underwriting standards and practices for collections, write-offs, and recoveries, (v) changes in the quality of the credit review function, (vi) changes in the experience, ability and depth of lending management and staff, (vii) changes in the volume and severity of past due and adversely classified loans and the volume of non-accrual loans, (viii) changes in the value of underlying collateral for collateral-dependent loans, and (ix) other environmental factors such as regulatory, legal and technological considerations, as well as competition.

In some cases, management may determine that an individual loan exhibits unique risk characteristics which differentiate the loan from other loans within the loan segments. In such cases, the loans are evaluated for expected credit losses on an individual basis and excluded from the collective evaluation. Specific reserves in the allowance for credit losses are determined by analyzing the borrower's ability to repay amounts owed, collateral deficiencies, the relative risk grade of the loan and economic conditions affecting the borrower's industry, among other things. A loan is considered to be collateral dependent when, based upon management's assessment, the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. In such cases, expected credit losses are based on the fair value of the collateral at the measurement date, adjusted for estimated selling costs if satisfaction of the loan depends on the sale of the collateral. The fair value of collateral supporting collateral dependent loans is evaluated on a quarterly basis.

The following portfolio segments have been identified: commercial loans; single-family residential real estate loans; multi-family residential real estate loans; commercial real estate loans; construction loans; home equity lines of credit; and other consumer loans. A description of each segment of the loan portfolio, along with the risk characteristics of each segment, is included below.

Commercial loans: Commercial loans and direct financing leases include loans and leases to businesses generally located within our primary market area. Those loans and leases are typically secured by business equipment, inventory, accounts receivable and other business assets. In underwriting commercial loans, we consider the net operating income of the borrower, the debt service ratio and the financial strength, expertise and credit history of the business owners and/or guarantors. 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. We seek to mitigate these risks through underwriting policies which require such loans to be qualified at origination on the basis of the borrower’s financial performance and the financial strength of the business owners and/or guarantors.

Single-family residential real estate loans: Single-family residential real estate loans include permanent conventional mortgage loans secured by single-family residences that we originate for portfolio and purchased loans located primarily within our primary market area. Credit approval for single-family residential real estate loans requires demonstration of sufficient income to repay the principal and interest and the real estate taxes and insurance, stability of employment and an established credit record. Our policy is to originate quality loans that are evaluated for risk based on the borrower’s ability to repay the loan. Collateral positions are established by obtaining independent appraisal opinions. Mortgage insurance may be required when the loan to value (LTV) exceeds 80%.

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(Dollars in thousands, except per share data)

 

Multi-family residential real estate loans: Multi-family residential real estate loans include loans secured by apartment buildings, condominiums and multi-family residential houses generally located within our primary market area. Underwriting policies provide that multi-family residential real estate loans generally may be made in amounts up to 85% of the lower of the appraised value or purchase price of the property. In underwriting multi-family residential real estate loans, we consider the appraised value and net operating income of the property, the debt service ratio and the property owner’s and/or guarantor’s financial strength, expertise and credit history. We offer both fixed-rate and adjustable-rate loans. Fixed-rate loans are generally limited to three years to five years, at which time they convert to adjustable-rate loans. Because payments on loans secured by multi-family residential properties are dependent on successful operation or management of the properties, repayment of multi-family residential real estate loans may be subject to a greater extent to adverse conditions in the real estate market or the economy. 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’ payments rise, increasing the potential for default. Additionally, adjustable-rate multi-family residential real estate loans generally do not contain periodic and lifetime caps on interest rate changes. We seek to minimize the additional risk presented by adjustable-rate multi-family residential real estate loans through underwriting criteria that require such loans to be qualified at origination with sufficient debt coverage ratios under increasing interest rate scenarios.

Commercial real estate loans: Commercial real estate loans include loans secured by owner occupied and non-owner occupied properties used for business purposes, such as manufacturing facilities, office buildings or retail facilities generally located within our primary market area. Underwriting policies provide that commercial real estate loans may be made in amounts up to 85% of the lower of the appraised value or purchase price of the property. In underwriting commercial real estate loans, we consider the appraised value and net operating income of the property, the debt service ratio and the property owner’s and/or guarantor’s financial strength, expertise and credit history. We offer both fixed-rate and adjustable-rate loans. Fixed-rate loans are generally limited to three years to five years, at which time they convert to adjustable-rate loans. Because payments on loans secured by commercial real estate properties are dependent on successful operation or management of the properties, repayment of commercial real estate loans may be subject to a greater extent to adverse conditions in the real estate market or the economy. Adjustable-rate commercial real 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. Additionally, adjustable-rate commercial real estate loans generally do not contain periodic and lifetime caps on interest rate changes. We seek to minimize the additional risk presented by adjustable-rate commercial real estate loans through underwriting criteria that require such loans to be qualified at origination with sufficient debt coverage ratios under increasing interest rate scenarios.

Construction loans: Construction loans include loans to finance the construction of residential and commercial properties generally located within our primary market area. Construction loans are fixed-rate or adjustable-rate loans which may convert to permanent loans with maturities of up to 30 years. Our policies provide that construction loans may generally be made in amounts 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. In underwriting construction loans, we consider the property owner’s and/or guarantor’s financial strength, expertise and credit history. Construction financing is considered to involve a higher degree of credit risk than long-term financing on improved, owner occupied real estate. Risk of loss on a construction loan is dependent largely upon the accuracy of the initial estimate of the property’s value at completion of construction or development compared to the estimated cost (including interest) of construction. If the estimate of value proves to be inaccurate, we may be confronted with a project, when completed, having a value which is insufficient to assure full repayment. We attempt to reduce such risks on construction loans through inspections of construction progress on the property and by requiring personal guarantees and reviewing current personal financial statements and tax returns, as well as other projects of the developer.

Home equity lines of credit: Home equity lines of credit include both loans we originate for portfolio and purchased loans. We originate home equity lines of credit to customers generally within our primary market area. Home equity lines of credit are variable rate loans and the interest rate adjusts monthly at various margins to 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 amount of the line is based on the borrower’s credit, income and equity in the home. When combined with the balance of the prior mortgage liens, these lines generally may not exceed 89.9% of the appraised value of the property at the time of the loan commitment. The lines are secured by a subordinate lien on the underlying real estate and are, therefore, vulnerable to declines in property values in the geographic areas where the properties are located. Credit approval for home equity lines of credit requires income sufficient to repay principal and interest due, stability of employment, an established credit record and sufficient collateral. Collections of home equity lines of credit are dependent on the borrower's continuing financial stability, and thus are more likely to be affected by adverse personal circumstances. We continue to monitor collateral values and borrower FICO® scores on both purchased and portfolio loans and, when the situation warrants, have frozen the lines of credit.

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Other consumer loans: Other consumer loans include closed-end home equity, home improvement, auto, credit card loans and any purchased loans to consumers generally located within our primary market area. Credit approval for other consumer loans requires income sufficient to repay principal and interest due, stability of employment, an established credit record and sufficient collateral for secured loans. Consumer loans typically have shorter terms and lower balances with higher yields as compared to real estate mortgage loans, but generally carry higher risks of default. Consumer loan collections are dependent on the borrower's continuing financial stability, and thus are more likely to be affected by adverse personal circumstances.

CFBank’s charge-off policy for commercial loans, single-family residential real estate loans, multi-family residential real estate loans, commercial real estate loans, construction loans and home equity lines of credit requires management to record a specific reserve or charge-off as soon as it is apparent that the borrower is troubled and there is, or likely will be, a collateral shortfall related to the estimated value of the collateral securing the loan. Other consumer loans are typically charged off no later than 90 days past due.

Allowance for Credit Losses - Off-Balance Sheet Credit Exposures: The allowance for credit losses on off-balance sheet credit exposures is a liability account representing expected credit losses over the contractual period for which the Company is exposed to credit risk resulting from a contractual obligation to extend credit. No allowance is recognized if the Company has the unconditional right to cancel the obligation. Off-balance sheet credit exposures primarily consist of amounts available under outstanding lines of credit and letters of credit. For the period of exposure, the estimate of expected credit losses considers both the likelihood that funding will occur and the amount expected to be funded over the estimated remaining life of the commitment or other off-balance sheet exposure. The likelihood and expected amount of funding are based on historical utilization rates. The amount of the allowance represents management's best estimate of expected credit losses on commitments expected to be funded over the contractual life of the commitment. The allowance for off-balance sheet credit exposures is adjusted through the income statement as a component of provision for credit loss.

Transfers of Financial Assets: Transfers of financial assets are accounted for as sales when control over the assets has been relinquished. Control over transferred assets is deemed to be surrendered when the assets have been isolated from the Company, the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.

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. These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell. If fair value declines subsequent to foreclosure, an adjustment is recorded through expense. Operating costs after acquisition are expensed.

Low Income Housing Tax Credits (LIHTC) and Historic Tax Credits (HTC): The Company has invested in LIHTCs and HTCs through direct investments and funds that assist corporations in investing in limited partnerships and limited liability companies that own, develop and operate low income residential rental properties and historic properties for purposes of qualifying for the LIHTCs and HTCs. These investments are accounted for under the proportional amortization method which recognizes the amortization of the investment in proportion to the tax credit.

Holding Company Loans to Developers: The Holding Company engages in lending to developers for the purpose of allocating excess liquidity into higher earning assets while diversifying its revenue sources. The developers are engaged in shorter term operating activities related to single family real estate developments. Income is recognized based on the interest charged on outstanding balances and from incentive payments as the housing units are sold. The outstanding balance of these loans by the Holding Company at December 31, 2025 and December 31, 2024 was $853 and $1,331, respectively and is included in accrued interest receivable and other assets in the consolidated balance sheets. Income recognized, including incentive payments, was $173, $189, and $224, respectively, for 2025, 2024 and 2023 and is included in other noninterest income in the consolidated statements of income.

Premises and Equipment: Land is carried at cost. Premises and equipment are stated at cost less accumulated depreciation. Buildings and related components are depreciated using the straight‑line method with useful lives ranging from 3 years to 40 years. Furniture, fixtures and equipment are depreciated using the straight‑line method with useful lives ranging from 2 years to 25 years. Leasehold improvements are depreciated straight-line over the shorter of the useful life or the lease term.

Federal Home Loan Bank (FHLB) stock: CFBank is a member of the Federal Home Loan Bank of Cincinnati (the “FHLB”). Members are required to own a certain amount of FHLB stock based on the level of borrowings and other factors, and may invest in additional amounts. 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.

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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.

Bank Owned Life Insurance: CFBank has purchased life insurance policies on certain directors and employees. Bank owned life insurance is recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other charges or other amounts due that are probable at settlement.

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. Such financial instruments are recorded when they are funded, and fees associated with origination are booked to non-interest income at the origination date.

Derivatives: Derivative financial instruments are recognized as assets or liabilities at fair value. 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. Changes in the fair value of the derivatives are reported currently in earnings, as other noninterest income.

Mortgage Banking Derivatives: Commitments to fund mortgage loans to be sold into the secondary market, otherwise known as interest rate locks, are accounted for as free standing derivatives. 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.

Stock-Based Compensation: Compensation cost is recognized for stock options and restricted stock awards issued to directors and employees, based on the fair value of these awards at the date of grant. A Black-Scholes model is utilized to estimate the fair value of stock options, while the market price of the Company’s common stock at the date of grant is used for restricted stock awards. Compensation cost is recognized over the required service period, generally defined as the vesting period. For awards with graded vesting, compensation cost is recognized on a straight-line basis over the required service period for each separately vesting portion of the award. Forfeitures are recognized as incurred.

Income Taxes: Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are the expected future tax amounts for the temporary differences between carrying amounts and tax basis of assets and liabilities, computed using enacted tax rates.

A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded.

The Company recognizes interest related to income tax matters as interest expense and penalties related to income tax matters as other noninterest expense.

Retirement Plans: Pension expense is the amount of annual contributions by the Company to the multi-employer contributory trusteed pension plan. Employee 401(k) and profit sharing plan expense is the amount of matching contributions. Supplemental retirement plan expense allocates the benefits over years of service.

Earnings Per Common Share: The two-class method is used in the calculation of basic and diluted earnings per share. Under the two-class method, earnings available to common stockholders for the period are allocated between common stockholders and participating securities (Series D Preferred Stock) according to dividends declared (or accumulated) and participation rights in undistributed earnings.

Comprehensive Income: Comprehensive income consists of net income and other comprehensive income. Other comprehensive income (loss) includes unrealized gains and losses on securities available for sale, which are also recognized as a separate component of equity. Reclassifications from accumulated other comprehensive loss are conducted on a specific identification method.

Loss Contingencies: Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. Management does not

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believe there were any such matters at December 31, 2025 that will have a material effect on the financial statements. See Note 21 – Contingent Liabilities.

Restrictions on Cash: Cash collateral held by our swap dealer counterparties totaled $2,120 at December 31, 2025.

Equity: Treasury stock is carried at cost. Shares sold out of treasury are valued based on the weighted average cost.

Dividend Restriction: Banking regulations require us to maintain certain capital levels and may limit the dividends paid by CFBank to the Holding Company or by the Holding Company to stockholders. The ability of the Holding Company to pay dividends on its common stock is dependent upon the amount of cash and liquidity available at the Holding Company level, as well as the receipt of dividends and other distributions from CFBank to the extent necessary to fund such dividends. The Holding Company is a legal entity that is separate and distinct from CFBank, which has no obligation to make any dividends or other funds available for the payment of dividends by the Holding Company. The Holding Company also is subject to various legal and regulatory policies and guidelines impacting the Holding Company’s ability to pay dividends on its stock. In addition, the Holding Company’s ability to pay dividends on its stock is conditioned upon the payment, on a current basis, of quarterly interest payments on the subordinated debentures underlying the Company’s trust preferred securities. Finally, under the terms of the Holding Company’s fixed-to-floating rate subordinated 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.

Fair Value of Financial Instruments: Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed in Note 6 – Fair Value. 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. Changes in assumptions or in market conditions could significantly affect these estimates.

Advertising and Marketing Expense: Advertising costs are expensed as incurred and are recorded as advertising and marketing, a component of noninterest expense. Advertising and marketing expense also includes leads-based marketing for our residential mortgage lending business.

Segment Reporting: The Company adopted Accounting Standards Update 2023-07 “Segment Reporting (Topic 280) - Improvement to Reportable Segment Disclosures” as of January 1, 2024. The Company has determined that all of its business activities meet the aggregation criteria of ASC 280, Segment Reporting, as its current operating model is structured whereby all of its business activities serve a similar base of primarily commercial clients utilizing a company-wide offering of similar products and services managed through similar processes and platforms that are collectively reviewed by the Company’s Chief Executive Officer, who has been identified as the chief operating decision maker (“CODM”).

The CODM regularly assesses performance of the aggregated single operating and reporting segment and decides how to allocate resources based on net income calculated on the same basis as is net income reported in the Company’s consolidated statements of income and other comprehensive income. The CODM is also regularly provided with expense information at a level consistent with that disclosed in the Company’s consolidated statements of income and other comprehensive income.

Recent Accounting Pronouncements and Developments:

In March 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2023-02, “Investments - Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method.” This ASU is intended to improve the accounting and disclosures for investments in tax credit structures. It allows reporting entities to elect to adopt for qualifying tax equity investments using the proportional amortization method, regardless of the program giving rise to the related income tax credits. The Company adopted the standard effective January 1, 2024. The adoption of ASU No. 2023-02 did not have a material impact on our Consolidated Financial Statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

 

In November 2023, the FASB issued ASU 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures." The amendments in this ASU apply to all public entities that are required to report segment information in accordance with FASB ASC Topic 280, Segment Reporting. The amendments in the ASU are intended to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. The amendments require that a public entity disclose, on an annual and interim basis, significant segment expenses that are regularly provided to the CODM and included within each reported measure of segment profit or loss. Public entities are required to disclose, on an annual and interim basis, an amount for other segment items by reportable segment and a description of its composition. In addition, public entities must provide all annual disclosures about a reportable segment's profit or loss and assets currently required by ASC Topic 280 in interim periods. The amendments clarify that if the CODM uses more than one measure of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources, a public entity may report one or more of those additional measures of segment profit. However, at least one of the reported segment profit or loss measures (or the single reported measure, if only one is disclosed) should be the measure that is most consistent with the measurement principles used in measuring the corresponding amounts in the public entity's consolidated financial statements. The amendments require that a public entity disclose the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. Finally, the amendments require that a public entity that has a single reportable segment provide all the disclosures required by the amendments in the ASU and all existing segment disclosures in ASC Topic 280. This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. A public entity should apply the amendments retrospectively to all prior periods presented in the financial statements. Upon transition, the segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption. The Company adopted this ASU effective for its fiscal year ended December 31, 2024 and interim periods beginning in 2025. The adoption of this ASU did not have a material impact on the Company’s Consolidated Financial Statements and disclosures.

In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” The FASB issued ASU 2023-09 to address investor requests for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. ASU 2023-09 is to be applied on a prospective basis and was effective for annual periods beginning after December 15, 2024 with early adoption permitted. The Company adopted ASU 2023-09 effective for its fiscal year ended December 31, 2025, which had an immaterial impact on income tax disclosures in the Company’s Consolidated Financial Statements.

Future Accounting Matters:

In November 2024, the FASB issued ASU No. 2024-03, “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40).” The pronouncement requires public entities to disclose additional information about specific expense categories in the notes to the financial statements. The guidance is effective for public business entities for fiscal years beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is assessing ASU 2024-03 and its impact on its Consolidated Financial Statements and disclosures.

In November 2025, the FASB issued ASU No. 2025-08, "Financial Instruments - Credit Losses (Topic 326): Purchased Loans." The pronouncement amends the guidance on the accounting for certain purchased loans. The new guidance makes significant changes to the accounting for certain acquired seasoned loans subject to the current expected credit loss model. The amendments in ASU 2025-08 apply prospectively and will be effective for the Company beginning January 1, 2027, with early adoption permitted, and is not expected to have a significant impact on the Company's Consolidated Financial Statements.

In November 2025, the FASB issued ASU No. 2025-11, "Interim Reporting (Topic 270): Narrow-Scope Improvements." The pronouncement is intended to provide clarity about the current interim reporting requirements, provides a list of the interim disclosures required by all other Codification topics and establishes a disclosure principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. ASU 2025-11 will be effective for the Company beginning January 1, 2028, with early adoption permitted, and is not expected to have a significant impact on the Company's Consolidated Financial Statements.

In December 2025, the FASB issued ASU No. 2025-12, "Codification Improvements." The pronouncement includes updates for a broad range of Topics arising from technical corrections, unintended application of the Codification, clarifications and other minor improvements. The amendments in ASU 2025-12 will be effective for the Company beginning January 1, 2029 and are not expected to have a significant impact on the Company's Consolidated Financial Statements.

69

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

 

NOTE 2 - REVENUE RECOGNITION

GAAP requires reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity's contracts to provide goods or services to customers. The core principle requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized as performance obligations are satisfied.

The majority of our revenue-generating transactions are not from contracts with customers, and instead consist of revenue generated from financial instruments, such as our loans, letters of credit, derivatives and investment securities, as well as revenue generated from our mortgage activities related to net gains on sale of loans.

All of the Company’s revenue from contracts with customers is recognized within Noninterest income. Descriptions of material revenue-generating activities which are presented in our Consolidated Statements of Income as components of Noninterest income are as follows:

•
Service charges on deposit accounts - these represent general service fees for monthly account maintenance and activity, or transaction-based fees, and consist of transaction-based revenue, time-based revenue (service period), item-based revenue or some other individual attribute-based revenue. Revenue is recognized when our performance obligation is completed, which is generally monthly for account maintenance services or when a transaction has been completed (such as a wire transfer). Payments for such performance obligations are generally received at the time the performance obligations are satisfied.

NOTE 3 – SECURITIES

The following tables summarize the amortized cost and fair value of the available-for-sale securities portfolio at December 31, 2025 and December 31, 2024 and the corresponding amounts of unrealized gains and losses recognized in accumulated other comprehensive income (loss):

 

 

 

Amortized
Cost

 

 

Gross
Unrealized
Gains

 

 

Gross
Unrealized
Losses

 

 

Fair
Value

 

December 31, 2025

 

 

 

 

 

 

 

 

 

 

 

 

Corporate debt

 

$

9,985

 

 

$

—

 

 

$

1,585

 

 

$

8,400

 

Issued by U.S. government-sponsored entities and
   agencies:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury

 

 

998

 

 

 

2

 

 

 

—

 

 

 

1,000

 

Collateralized mortgage obligations

 

 

8,248

 

 

 

—

 

 

 

152

 

 

 

8,096

 

Total

 

$

19,231

 

 

$

2

 

 

$

1,737

 

 

$

17,496

 

 

 

 

Amortized
Cost

 

 

Gross
Unrealized
Gains

 

 

Gross
Unrealized
Losses

 

 

Fair Value

 

December 31, 2024

 

 

 

 

 

 

 

 

 

 

 

 

Corporate debt

 

$

9,983

 

 

$

—

 

 

$

2,283

 

 

$

7,700

 

Issued by U.S. government-sponsored entities and
   agencies:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury

 

 

982

 

 

 

1

 

 

 

—

 

 

 

983

 

Total

 

$

10,965

 

 

$

1

 

 

$

2,283

 

 

$

8,683

 

 

There was no impairment recognized in accumulated other comprehensive loss for securities available for sale at December 31, 2025 or December 31, 2024.

There were no sales of securities during the years ended December 31, 2025, December 31, 2024 and December 31, 2023.

70

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

 

The amortized cost and fair value of debt securities at December 31, 2025 and December 31, 2024 are shown in the table below by contractual maturity. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date are shown separately.

 

 

 

December 31, 2025

 

 

December 31, 2024

 

 

 

Amortized
Cost

 

 

Fair
Value

 

 

Amortized
Cost

 

 

Fair
Value

 

Due in one year or less

 

$

998

 

 

$

1,000

 

 

$

982

 

 

$

983

 

Due from one to five years

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Due from five to ten years

 

 

9,985

 

 

 

8,400

 

 

 

9,983

 

 

 

7,700

 

Collateralized mortgage obligations

 

 

8,248

 

 

 

8,096

 

 

 

—

 

 

 

—

 

Total

 

$

19,231

 

 

$

17,496

 

 

$

10,965

 

 

$

8,683

 

 

Fair Value of securities pledged as collateral was as follows:

 

 

 

At December 31,

 

 

 

2025

 

 

2024

 

 

2023

 

Pledged as collateral for:

 

 

 

 

 

 

 

 

 

FHLB advances

 

$

—

 

 

$

—

 

 

$

497

 

Public deposits

 

 

750

 

 

 

737

 

 

 

492

 

Total

 

$

750

 

 

$

737

 

 

$

989

 

 

At year-end 2025, 2024 and 2023, there were no holdings of securities of any one issuer in an amount greater than 10% of stockholders’ equity.

The following table summarizes securities with unrealized losses at December 31, 2025 and December 31, 2024 aggregated by major security type and length of time in a continuous unrealized loss position.

 

December 31, 2025

 

Less than 12 Months

 

 

12 Months or More

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Description of Securities

 

Fair Value

 

 

Unrealized Loss

 

 

Fair Value

 

 

Unrealized Loss

 

 

Fair Value

 

 

Unrealized Loss

 

Corporate debt

 

$

—

 

 

$

—

 

 

$

8,400

 

 

$

1,585

 

 

$

8,400

 

 

$

1,585

 

Issued by U.S. government-sponsored entities and agencies:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Collateralized mortgage obligations

 

 

8,096

 

 

 

152

 

 

 

—

 

 

 

—

 

 

 

8,096

 

 

 

152

 

Total temporarily impaired

 

$

8,096

 

 

$

152

 

 

$

8,400

 

 

$

1,585

 

 

$

16,496

 

 

$

1,737

 

 

December 31, 2024

 

Less than 12 Months

 

 

12 Months or More

 

 

Total

 

Description of Securities

 

Fair
Value

 

 

Unrealized
Loss

 

 

Fair
Value

 

 

Unrealized
Loss

 

 

Fair
Value

 

 

Unrealized
Loss

 

Corporate debt

 

$

—

 

 

$

—

 

 

$

7,700

 

 

$

2,283

 

 

$

7,700

 

 

$

2,283

 

Total temporarily impaired

 

$

—

 

 

$

—

 

 

$

7,700

 

 

$

2,283

 

 

$

7,700

 

 

$

2,283

 

The unrealized losses at December 31, 2025 were related to one Corporate debt security and one Collateralized mortgage obligation security. The unrealized loss at December 31, 2024 was related to one Corporate debt security. Because the declines in fair value were 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, 2025 and December 31, 2024.

71

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

 

NOTE 4 – LOANS AND LEASES

The following table presents the recorded investment in loans and leases by portfolio segment. The recorded investment in loans and leases includes the principal balance outstanding adjusted for purchase premiums and discounts, and deferred loan fees and costs.

 

 

 

December 31,
2025

 

 

December 31,
2024

 

Commercial (1)

 

$

369,430

 

 

$

418,804

 

Real estate:

 

 

 

 

 

 

Single-family residential

 

 

427,905

 

 

 

465,517

 

Multi-family residential

 

 

170,972

 

 

 

150,434

 

Commercial

 

 

533,923

 

 

 

460,064

 

Construction

 

 

208,936

 

 

 

202,166

 

Consumer:

 

 

 

 

 

 

Home equity lines of credit

 

 

41,983

 

 

 

39,520

 

Other

 

 

3,383

 

 

 

2,988

 

Subtotal

 

 

1,756,532

 

 

 

1,739,493

 

Less: ACL – Loans

 

 

(17,678

)

 

 

(17,474

)

Loans and Leases, net

 

$

1,738,854

 

 

$

1,722,019

 

 

(1)
Includes $2,710 and $7,680 of commercial leases at December 31, 2025 and December 31, 2024, respectively.

Allowance for Credit Losses on Loans (ACL – Loans)

The ACL - Loans is a valuation account that is deducted from the amortized cost basis of loans and leases to present the net amount expected to be collected on loans over the contractual term. The ACL - Loans is adjusted by the provision for credit losses, which is reported in earnings, and reduced by charge-offs for loans, net of recoveries. Provision for credit losses on loans reflects the totality of actions taken on all loans for a particular period including any necessary increases or decreases in the allowance related to changes in credit loss expectations associated with specific loans or pools of loans. Loans are charged off against the allowance when the uncollectibility of the loan is confirmed. Expected recoveries do not exceed the aggregate of amounts previously charged off and expected to be charged off.

The ACL - Loans represents the Company's best estimate of current expected credit losses (CECL) on loans using relevant available information, from internal and external sources, related to past events, current conditions, and reasonable and supportable forecasts. Historical credit loss experience provides the basis for the estimation of expected credit losses. The CECL calculation is performed and evaluated quarterly and losses are estimated over the expected life of the loan. The level of the ACL - Loans is believed to be adequate to absorb all expected future losses inherent in the loan portfolio at the measurement date.

In calculating the ACL - Loans, the loan portfolio was pooled into loan segments with similar risk characteristics. Common characteristics include the type or purpose of the loan, underlying collateral and historical/expected credit loss patterns. In developing the loan segments, the Company analyzed the degree of correlation in how loans within each portfolio respond when subjected to varying economic conditions and scenarios as well as other portfolio stress factors.

The expected credit losses are measured over the life of each loan segment utilizing the average charge-off methodology combined with economic forecast models to estimate the current expected credit loss inherent in the loan portfolio. This approach is also leveraged to estimate the expected credit losses associated with unfunded loan commitments incorporating expected utilization rates.

The Company sub-segmented certain commercial portfolios by risk level where appropriate. The Company utilized a one-year reasonable and supportable economic forecast period.

72

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

 

The Company qualitatively adjusts model results for risk factors that are not inherently considered in the historical losses, but are nonetheless relevant in assessing the expected credit losses within the loan portfolio. These adjustments may increase or decrease the estimate of expected credit losses based upon the assessed level of risk for each qualitative factor. The various risks that may be considered in making qualitative adjustments include, among other things, the impact of (i) changes in economic conditions, (ii) changes in the nature and volume of the loan portfolio, (iii) changes in the existence, growth and effect of any concentrations in credit, (iv) changes in lending policies and procedures, including changes in underwriting standards and practices for collections, write-offs, and recoveries, (v) changes in the quality of the credit review function, (vi) changes in the experience, ability and depth of lending management and staff, (vii) changes in the volume and severity of past due and adversely classified loans and the volume of non-accrual loans, (viii) changes in the value of underlying collateral for collateral-dependent loans, and (ix) other environmental factors such as regulatory, legal and technological considerations, as well as competition.

In some cases, management may determine that an individual loan exhibits unique risk characteristics which differentiate the loan from other loans within the loan segments. In such cases, the loans are evaluated for expected credit losses on an individual basis and excluded from the collective evaluation. Specific reserves in the allowance for credit losses are determined by analyzing the borrower's ability to repay amounts owed, collateral deficiencies, the relative risk grade of the loan and economic conditions affecting the borrower's industry, among other things. A loan is considered to be collateral dependent when, based upon management's assessment, the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. In such cases, expected credit losses are based on the fair value of the collateral at the measurement date, adjusted for estimated selling costs if satisfaction of the loan depends on the sale of the collateral. The fair value of collateral supporting collateral dependent loans is evaluated on a quarterly basis.

The following tables present the activity in the ACL - Loans by portfolio segment for the years ended December 31, 2025, December 31, 2024 and December 31, 2023

 

 

December 31, 2025

 

 

 

 

 

Real Estate

 

 

Consumer

 

 

Commercial

 

 

Single-family

 

 

Multi-family

 

 

Commercial

 

 

Construction

 

 

Home
equity lines
of credit

 

 

Other

 

 

Total

 

Allowance for credit losses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances, January 1, 2025

$

7,005

 

 

$

2,787

 

 

$

1,382

 

 

$

3,918

 

 

$

1,741

 

 

$

371

 

 

$

270

 

 

$

17,474

 

Provision of credit losses

 

6,311

 

 

 

(268

)

 

 

112

 

 

 

1,020

 

 

 

290

 

 

 

17

 

 

 

26

 

 

 

7,508

 

Recoveries on loans

 

134

 

 

 

36

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

2

 

 

 

—

 

 

 

172

 

Loans charged off

 

(7,449

)

 

 

(27

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(7,476

)

Balances, December 31, 2025

$

6,001

 

 

$

2,528

 

 

$

1,494

 

 

$

4,938

 

 

$

2,031

 

 

$

390

 

 

$

296

 

 

$

17,678

 

 

 

December 31, 2024

 

 

 

 

 

Real Estate

 

 

Consumer

 

 

Commercial

 

 

Single-family

 

 

Multi-family

 

 

Commercial

 

 

Construction

 

 

Home
equity lines
of credit

 

 

Other

 

 

Total

 

Allowance for credit losses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances, January 1, 2024

$

5,884

 

 

$

3,371

 

 

$

1,231

 

 

$

4,105

 

 

$

1,707

 

 

$

334

 

 

$

233

 

 

$

16,865

 

Provision of credit losses

 

6,353

 

 

 

(612

)

 

 

151

 

 

 

(187

)

 

 

34

 

 

 

31

 

 

 

317

 

 

 

6,087

 

Recoveries on loans

 

91

 

 

 

28

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

6

 

 

 

—

 

 

 

125

 

Loans charged off

 

(5,323

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(280

)

 

 

(5,603

)

Balances, December 31, 2024

$

7,005

 

 

$

2,787

 

 

$

1,382

 

 

$

3,918

 

 

$

1,741

 

 

$

371

 

 

$

270

 

 

$

17,474

 

 

73

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

 

 

 

December 31, 2023

 

 

 

 

 

Real Estate

 

 

Consumer

 

 

Commercial

 

 

Single-family

 

 

Multi-family

 

 

Commercial

 

 

Construction

 

 

Home
Equity lines
of credit

 

 

Other

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for credit losses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances, January 1, 2023

 

5,641

 

 

 

2,956

 

 

 

1,063

 

 

 

4,110

 

 

 

1,625

 

 

 

204

 

 

 

54

 

 

 

15,653

 

Provision of credit losses

 

933

 

 

 

375

 

 

 

168

 

 

 

(5

)

 

 

82

 

 

 

126

 

 

 

179

 

 

 

1,858

 

Recoveries on loans

 

85

 

 

 

40

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

4

 

 

 

3

 

 

 

132

 

Loans charged off

 

(775

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(3

)

 

 

(778

)

Balances, December 31, 2023

$

5,884

 

 

$

3,371

 

 

$

1,231

 

 

$

4,105

 

 

$

1,707

 

 

$

334

 

 

$

233

 

 

$

16,865

 

 

Determining fair value for collateral dependent loans requires obtaining a current independent appraisal of the collateral and applying a discount factor, which includes selling costs if applicable, to the value. The fair value of real estate is generally based on appraisals by qualified licensed appraisers. The appraisers typically determine the value of the real estate by utilizing an income or market valuation approach. If an appraisal is not available, the fair value may be determined by using a cash flow analysis. The fair value of other collateral such as business assets is typically ascertained by assessing, either singularly or some combination of, asset appraisals, accounts receivable aging reports, inventory listings and/or customer financial statements. Both appraised values and values based on the borrower’s financial information are discounted as considered appropriate based on age and quality of the information and current market conditions.

The following tables present the amortized cost basis of collateral dependent loans by loan class and their respective collateral types, which are individually evaluated to determine expected credit losses.

 

 

December 31, 2025

 

 

Residential
Real Estate

 

 

Other

 

 

Total

 

 

Allowance on
Collateral
Dependent Loans

 

Commercial

$

—

 

 

$

3,128

 

 

$

3,128

 

 

$

1,415

 

Real estate:

 

 

 

 

 

 

 

 

 

 

 

Single-family residential

 

79

 

 

 

—

 

 

 

79

 

 

 

—

 

Commercial:

 

 

 

 

 

 

 

 

 

 

 

Owner occupied

 

—

 

 

 

5,204

 

 

 

5,204

 

 

 

380

 

Total

$

79

 

 

$

8,332

 

 

$

8,411

 

 

$

1,795

 

 

 

December 31, 2024

 

 

Residential
Real Estate

 

 

Other

 

 

Total

 

 

Allowance on
Collateral
Dependent Loans

 

Commercial

$

—

 

 

$

8,486

 

 

$

8,486

 

 

$

1,397

 

Real estate:

 

 

 

 

 

 

 

 

 

 

 

Single-family residential

 

86

 

 

 

—

 

 

 

86

 

 

 

—

 

Total

$

86

 

 

$

8,486

 

 

$

8,572

 

 

$

1,397

 

 

 

December 31, 2023

 

Residential
Real Estate

 

 

Other

 

 

Total

 

 

Allowance on
Collateral
Dependent Loans

 

Commercial

$

—

 

 

$

449

 

 

$

449

 

 

$

44

 

Real estate:

 

 

 

 

 

 

 

 

 

 

 

Single-family residential

 

90

 

 

 

—

 

 

 

90

 

 

 

—

 

Total

$

90

 

 

$

449

 

 

$

539

 

 

$

44

 

 

74

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

 

The following table presents the recorded investment in non-accrual loans by class of loans at December 31, 2025:

 

 

 

Non-Accrual
Loans

 

 

Non-Accrual
loans with no
Allowance for
Credit Losses

 

Commercial

 

$

8,181

 

 

$

1,074

 

Real estate:

 

 

 

 

 

 

Single-family residential

 

 

1,847

 

 

 

1,847

 

Commercial:

 

 

 

 

 

 

Owner occupied

 

 

5,204

 

 

 

4,510

 

Consumer:

 

 

 

 

 

 

Home equity lines of credit:

 

 

97

 

 

 

97

 

Total nonaccrual loans

 

$

15,329

 

 

$

7,528

 

 

Of the $15.3 million of nonaccrual loans at December 31, 2025, $5.1 million was guaranteed by the SBA.

The following table presents the recorded investment in non-accrual loans by class of loans at December 31, 2024:

 

 

 

Non-Accrual
Loans

 

 

Non-Accrual
Loans with no
Allowance for
Credit Losses

 

Commercial

 

$

12,876

 

 

$

135

 

Real estate:

 

 

 

 

 

 

Single-family residential

 

 

1,649

 

 

 

1,649

 

Consumer:

 

 

 

 

 

 

Home equity lines of credit:

 

 

13

 

 

 

13

 

Total nonaccrual loans

 

$

14,538

 

 

$

1,797

 

 

Of the $14.5 million of nonaccrual loans at December 31, 2024, $1.1 million was guaranteed by the SBA. Nonaccrual loans totaled $5.7 million at January 1, 2024.

Nonaccrual loans include both single-family mortgage, consumer loans and commercial leases that are collectively evaluated for impairment and loans individually evaluated for impairment. There were no loans 90 days or more past due and still accruing interest at December 31, 2025. There were two loans, totaling $509, that were 90 days or more past due and still accruing at December 31, 2024.

75

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

 

The following table presents the aging of the recorded investment in past due loans and leases by class of loans as of December 31, 2025:

 

 

 

30 - 59 Days
Past Due

 

 

60 - 89 Days
Past Due

 

 

90 Days or
more Past Due

 

 

Total
Past Due

 

 

Loans Not
Past Due

 

 

Nonaccrual
Loans Not
90 days or
more Past Due

 

Commercial

 

$

320

 

 

$

452

 

 

$

3,511

 

 

$

4,283

 

 

$

365,147

 

 

$

4,670

 

Real estate:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Single-family residential

 

 

892

 

 

 

719

 

 

 

1,847

 

 

 

3,458

 

 

 

424,447

 

 

 

—

 

Multi-family residential

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

170,972

 

 

 

—

 

Commercial:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-owner occupied

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

288,891

 

 

 

—

 

Owner occupied

 

 

—

 

 

 

—

 

 

 

5,204

 

 

 

5,204

 

 

 

199,212

 

 

 

—

 

Land

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

40,616

 

 

 

—

 

Construction

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

208,936

 

 

 

—

 

Consumer:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Home equity lines of credit

 

 

—

 

 

 

 

 

 

—

 

 

 

—

 

 

 

41,983

 

 

 

97

 

Other

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

3,383

 

 

 

—

 

Total

 

$

1,212

 

 

$

1,171

 

 

$

10,562

 

 

$

12,945

 

 

$

1,743,587

 

 

$

4,767

 

 

The following table presents the aging of the recorded investment in past due loans and leases by class of loans as of December 31, 2024:

 

 

 

30 - 59 Days
Past Due

 

 

60 - 89 Days
Past Due

 

 

90 Days or
more Past Due

 

 

Total
Past Due

 

 

Loans Not
Past Due

 

 

Nonaccrual
Loans Not
90 days or
more Past Due

 

Commercial

 

$

3,231

 

 

$

202

 

 

$

5,948

 

 

$

9,381

 

 

$

409,423

 

 

$

7,256

 

Real estate:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Single-family residential

 

 

1,112

 

 

 

—

 

 

 

1,649

 

 

 

2,761

 

 

 

462,756

 

 

 

—

 

Multi-family residential

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

150,434

 

 

 

—

 

Commercial:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-owner occupied

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

229,831

 

 

 

—

 

Owner occupied

 

 

—

 

 

 

—

 

 

 

181

 

 

 

181

 

 

 

205,030

 

 

 

—

 

Land

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

25,022

 

 

 

—

 

Construction

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

202,166

 

 

 

—

 

Consumer:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Home equity lines of credit

 

 

—

 

 

 

109

 

 

 

—

 

 

 

109

 

 

 

39,411

 

 

 

13

 

Other

 

 

41

 

 

 

—

 

 

 

—

 

 

 

41

 

 

 

2,947

 

 

 

—

 

Total

 

$

4,384

 

 

$

311

 

 

$

7,778

 

 

$

12,473

 

 

$

1,727,020

 

 

$

7,269

 

 

Loan Modifications:

During the year ended December 31, 2025, the Company did not modify any loans to borrowers experiencing financial difficulty.

During the year ended December 31, 2024, the Company modified one commercial loan, with an amortized cost basis of $4.3 million at December 31, 2024, where the borrower was experiencing financial difficulty. The amortized cost basis of this loan represented 1% of commercial loans at December 31, 2024. The loan was modified to increase the interest rate by 75bps, extend the maturity date by six months, and allow for an amortization holiday and deferred interest options. The loan was not past due during the year ended December 31, 2024.

76

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

 

During the year ended December 31, 2023, the Company modified one commercial loan, totaling $2.9 million, where the borrower was experiencing financial difficulty. The amortized cost basis of this loan represented 0.7% of commercial loans at December 31, 2023. The loan was modified to defer principal and interest payments for up to one year. For any period where the payments are deferred, the note will accrue at a higher rate of interest. The loan was deemed uncollectible during the year ended December 31, 2024 and was charged off.

Upon the Company’s determination that a modified loan (or portion of a loan) has subsequently been deemed uncollectible, the loan (or portion of the loan), is charged off. Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the allowance for credit losses is adjusted by the same amount.

Credit Quality Indicators:

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, such as current financial information, historical payment experience, credit documentation, public information and current economic trends, among other factors. Management analyzes loans individually by classifying the loans as to credit risk. This analysis includes commercial, commercial real estate and multi-family residential real estate loans. Internal loan reviews for these loan types are typically performed annually, and more often for loans with higher credit risk. Adjustments to loan risk ratings are based on the reviews and at any time information is received that may affect risk ratings. The following definitions are used for risk ratings:

Special Mention. Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of CFBank’s credit position at some future date.

Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that there will be some loss if the deficiencies are not corrected.

Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, condition and values, highly questionable and improbable.

Loans not meeting the criteria to be classified into one of the above categories are considered to be not rated or pass-rated loans. Loans listed as not rated are included in groups of homogeneous loans. Past due information is the primary credit indicator for groups of homogenous loans. Loans listed as pass-rated are loans that are subject to internal loan reviews and are determined not to meet the criteria required to be classified as special mention, substandard, doubtful or loss.

77

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

 

The following table summarizes the risk grading of the Company’s loan portfolio by loan class and by year of origination for the years indicated as of December 31, 2025. Consumer and Single-family residential loans are not risk graded For purposes of this disclosure, those loans are classified in the following manner: loans that are 89 days or less past due and accruing are “performing” loans and loans greater than 89 days past due or in nonaccrual are “nonperforming” loans.

 

 

 

Term Loans (amortized cost basis by origination year)

 

 

 

 

 

 

 

 

 

 

 

 

2025

 

 

2024

 

 

2023

 

 

2022

 

 

2021

 

 

Prior

 

 

Revolving
loans
amortized
cost basis

 

 

Revolving
loans
converted
to term

 

 

Total

 

Commercial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

59,943

 

 

$

25,874

 

 

$

20,473

 

 

$

41,457

 

 

$

62,332

 

 

$

29,045

 

 

$

112,874

 

 

$

3,122

 

 

$

355,120

 

Special Mention

 

 

—

 

 

 

—

 

 

 

—

 

 

 

5,000

 

 

 

—

 

 

 

2,850

 

 

 

—

 

 

 

—

 

 

 

7,850

 

Substandard

 

 

—

 

 

 

1,328

 

 

 

139

 

 

 

69

 

 

 

4,129

 

 

 

360

 

 

 

50

 

 

 

—

 

 

 

6,075

 

Doubtful

 

 

—

 

 

 

—

 

 

 

—

 

 

 

385

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

385

 

Total Commercial

 

 

59,943

 

 

 

27,202

 

 

 

20,612

 

 

 

46,911

 

 

 

66,461

 

 

 

32,255

 

 

 

112,924

 

 

 

3,122

 

 

 

369,430

 

Gross charge-offs during the year
   ended December 31, 2025

 

 

—

 

 

 

—

 

 

 

—

 

 

 

7,165

 

 

 

284

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

7,449

 

 Real estate loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Single-family residential

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Payment performance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

 

 

17,419

 

 

 

26,174

 

 

 

25,165

 

 

 

103,688

 

 

 

200,985

 

 

 

52,627

 

 

 

—

 

 

 

—

 

 

 

426,058

 

Nonperforming

 

 

—

 

 

 

—

 

 

 

193

 

 

 

401

 

 

 

690

 

 

 

563

 

 

 

—

 

 

 

—

 

 

 

1,847

 

 Total Single-family residential
   loans

 

 

17,419

 

 

 

26,174

 

 

 

25,358

 

 

 

104,089

 

 

 

201,675

 

 

 

53,190

 

 

 

—

 

 

 

—

 

 

 

427,905

 

Gross charge-offs during the year
   ended December 31, 2025

 

 

—

 

 

 

—

 

 

 

27

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

27

 

 Multi-family residential

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

 

19,972

 

 

 

27,195

 

 

 

30,168

 

 

 

18,151

 

 

 

46,905

 

 

 

19,915

 

 

 

—

 

 

 

—

 

 

 

162,306

 

Special Mention

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

8,666

 

 

 

 

 

 

 

 

 

8,666

 

 Total Multi-family residential
   loans

 

 

19,972

 

 

 

27,195

 

 

 

30,168

 

 

 

18,151

 

 

 

46,905

 

 

 

28,581

 

 

 

—

 

 

 

—

 

 

 

170,972

 

 Commercial:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Non-owner occupied

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

 

81,898

 

 

 

9,473

 

 

 

41,336

 

 

 

52,740

 

 

 

46,575

 

 

 

56,869

 

 

 

—

 

 

 

—

 

 

 

288,891

 

 Total Non-owner occupied
   loans

 

 

81,898

 

 

 

9,473

 

 

 

41,336

 

 

 

52,740

 

 

 

46,575

 

 

 

56,869

 

 

 

—

 

 

 

—

 

 

 

288,891

 

 Owner occupied

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

 

28,005

 

 

 

15,062

 

 

 

40,533

 

 

 

43,567

 

 

 

38,965

 

 

 

36,444

 

 

 

—

 

 

 

—

 

 

 

202,576

 

Substandard

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,840

 

 

 

—

 

 

 

—

 

 

 

 

 

 

 

 

 

1,840

 

 Total Owner occupied loans

 

 

28,005

 

 

 

15,062

 

 

 

40,533

 

 

 

45,407

 

 

 

38,965

 

 

 

36,444

 

 

 

—

 

 

 

—

 

 

 

204,416

 

 Land

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

 

18,042

 

 

 

17,507

 

 

 

617

 

 

 

—

 

 

 

4,450

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

40,616

 

 Total Land loans

 

 

18,042

 

 

 

17,507

 

 

 

617

 

 

 

—

 

 

 

4,450

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

40,616

 

 Construction

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

 

 

632

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

632

 

Pass

 

 

34,143

 

 

 

95,801

 

 

 

50,775

 

 

 

22,400

 

 

 

3,178

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

206,297

 

Special Mention

 

 

—

 

 

 

343

 

 

 

1,664

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

2,007

 

 Total Construction loans

 

 

34,775

 

 

 

96,144

 

 

 

52,439

 

 

 

22,400

 

 

 

3,178

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

208,936

 

Total Real Estate loans

 

 

200,111

 

 

 

191,555

 

 

 

190,451

 

 

 

242,787

 

 

 

341,748

 

 

 

175,084

 

 

 

—

 

 

 

—

 

 

 

1,341,736

 

 Consumer:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Home equity lines of credit:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Payment performance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

41,279

 

 

 

607

 

 

 

41,886

 

Nonperforming

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

87

 

 

 

10

 

 

 

97

 

 Total Home equity lines of credit

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

41,366

 

 

 

617

 

 

 

41,983

 

 Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Payment performance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

 

 

—

 

 

 

468

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

136

 

 

 

2,278

 

 

 

501

 

 

 

3,383

 

Nonperforming

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 Total Other consumer loans

 

 

—

 

 

 

468

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

136

 

 

 

2,278

 

 

 

501

 

 

 

3,383

 

 Total loans

 

$

260,054

 

 

$

219,225

 

 

$

211,063

 

 

$

289,698

 

 

$

408,209

 

 

$

207,475

 

 

$

156,568

 

 

$

4,240

 

 

$

1,756,532

 

 Total gross charge-offs during the year
   ended December 31, 2025

 

$

—

 

 

$

—

 

 

$

27

 

 

$

7,165

 

 

$

284

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

7,476

 

 

78

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

 

The following table summarizes the risk grading of the Company’s loan portfolio by loan class and by year of origination for the years indicated as of December 31, 2024. Consumer and Single-family residential loans are not risk graded. For purposes of this disclosure, those loans are classified in the following manner: loans that are 89 days or less past due and accruing are “performing” loans and loans greater than 89 days past due or in nonaccrual are “nonperforming” loans.

 

 

 

Term Loans (amortized cost basis by origination year)

 

 

 

 

 

 

 

 

 

 

 

 

2024

 

 

2023

 

 

2022

 

 

2021

 

 

2020

 

 

Prior

 

 

Revolving
loans
amortized
cost basis

 

 

Revolving
loans
converted
to term

 

 

Total

 

Commercial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

39,955

 

 

$

26,619

 

 

$

67,069

 

 

$

82,579

 

 

$

43,556

 

 

$

8,224

 

 

$

132,853

 

 

$

—

 

 

$

400,855

 

Special Mention

 

 

—

 

 

 

—

 

 

 

285

 

 

 

—

 

 

 

—

 

 

 

2,922

 

 

 

2,966

 

 

 

—

 

 

 

6,173

 

Substandard

 

 

—

 

 

 

—

 

 

 

7,085

 

 

 

4,256

 

 

 

—

 

 

 

—

 

 

 

50

 

 

 

—

 

 

 

11,391

 

Doubtful

 

 

—

 

 

 

—

 

 

 

385

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

385

 

Total Commercial

 

 

39,955

 

 

 

26,619

 

 

 

74,824

 

 

 

86,835

 

 

 

43,556

 

 

 

11,146

 

 

 

135,869

 

 

 

—

 

 

 

418,804

 

Gross charge-offs for the year ended
   December 31, 2024

 

 

—

 

 

 

—

 

 

 

1,755

 

 

 

3,568

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

5,323

 

 Real estate loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Single-family residential

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Payment performance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

 

 

29,278

 

 

 

33,749

 

 

 

121,984

 

 

 

215,330

 

 

 

42,272

 

 

 

21,255

 

 

 

—

 

 

 

—

 

 

 

463,868

 

Nonperforming

 

 

—

 

 

 

547

 

 

 

371

 

 

 

168

 

 

 

—

 

 

 

563

 

 

 

—

 

 

 

—

 

 

 

1,649

 

 Total Single-family residential
   loans

 

 

29,278

 

 

 

34,296

 

 

 

122,355

 

 

 

215,498

 

 

 

42,272

 

 

 

21,818

 

 

 

—

 

 

 

—

 

 

 

465,517

 

 Multi-family residential

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

 

30,570

 

 

 

24,798

 

 

 

7,628

 

 

 

49,647

 

 

 

2,520

 

 

 

26,424

 

 

 

—

 

 

 

—

 

 

 

141,587

 

Special Mention

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,252

 

 

 

4,595

 

 

 

 

 

 

 

 

 

8,847

 

 Total Multi-family residential
   loans

 

 

30,570

 

 

 

24,798

 

 

 

7,628

 

 

 

49,647

 

 

 

6,772

 

 

 

31,019

 

 

 

—

 

 

 

—

 

 

 

150,434

 

 Commercial:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Non-owner occupied

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

 

10,169

 

 

 

49,053

 

 

 

33,204

 

 

 

67,360

 

 

 

14,019

 

 

 

52,679

 

 

 

—

 

 

 

—

 

 

 

226,484

 

Special Mention

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

2,842

 

 

 

—

 

 

 

—

 

 

 

2,842

 

Substandard

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

505

 

 

 

—

 

 

 

—

 

 

 

505

 

 Total Non-owner occupied
   loans

 

 

10,169

 

 

 

49,053

 

 

 

33,204

 

 

 

67,360

 

 

 

14,019

 

 

 

56,026

 

 

 

—

 

 

 

—

 

 

 

229,831

 

 Owner occupied

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

 

18,424

 

 

 

42,191

 

 

 

51,788

 

 

 

47,174

 

 

 

17,707

 

 

 

26,659

 

 

 

—

 

 

 

—

 

 

 

203,943

 

Special Mention

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

589

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

589

 

Substandard

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

679

 

 

 

—

 

 

 

—

 

 

 

679

 

 Total Owner occupied loans

 

 

18,424

 

 

 

42,191

 

 

 

51,788

 

 

 

47,174

 

 

 

18,296

 

 

 

27,338

 

 

 

—

 

 

 

—

 

 

 

205,211

 

 Land

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

 

16,853

 

 

 

3,190

 

 

 

—

 

 

 

4,979

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

25,022

 

 Total Land loans

 

 

16,853

 

 

 

3,190

 

 

 

—

 

 

 

4,979

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

25,022

 

 Construction

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

 

 

420

 

 

 

—

 

 

 

—

 

 

 

1,607

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

2,027

 

Pass

 

 

51,031

 

 

 

57,409

 

 

 

68,536

 

 

 

19,632

 

 

 

3,531

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

200,139

 

 Total Construction loans

 

 

51,451

 

 

 

57,409

 

 

 

68,536

 

 

 

21,239

 

 

 

3,531

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

202,166

 

Total Real Estate loans

 

 

156,745

 

 

 

210,937

 

 

 

283,511

 

 

 

405,897

 

 

 

84,890

 

 

 

136,201

 

 

 

—

 

 

 

—

 

 

 

1,278,181

 

Consumer:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Home equity lines of credit:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Payment performance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

36,253

 

 

 

3,254

 

 

 

39,507

 

Nonperforming

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

13

 

 

 

13

 

 Total Home equity lines of credit

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

36,253

 

 

 

3,267

 

 

 

39,520

 

 Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Payment performance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

 

 

488

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

6

 

 

 

178

 

 

 

2,316

 

 

 

—

 

 

 

2,988

 

Nonperforming

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 Total Other consumer loans

 

 

488

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

6

 

 

 

178

 

 

 

2,316

 

 

 

—

 

 

 

2,988

 

 Gross charge-offs for the year
   ended December 31, 2024

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

280

 

 

 

—

 

 

 

280

 

 Total loans

 

$

197,188

 

 

$

237,556

 

 

$

358,335

 

 

$

492,732

 

 

$

128,452

 

 

$

147,525

 

 

$

174,438

 

 

$

3,267

 

 

$

1,739,493

 

 Total gross charge-offs during the year
   ended December 31, 2024

 

$

—

 

 

$

—

 

 

$

1,755

 

 

$

3,568

 

 

$

—

 

 

$

—

 

 

$

280

 

 

$

—

 

 

$

5,603

 

 

79

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

 

 

Direct Financing Leases:

The following lists the components of the net investment in direct financing leases:

 

 

 

December 31, 2025

 

 

December 31, 2024

 

Total minimum lease payments to be received

 

$

2,780

 

 

$

8,009

 

Less: unearned income

 

 

(71

)

 

 

(336

)

Plus: Indirect initial costs

 

 

1

 

 

 

7

 

Net investment in direct financing leases

 

$

2,710

 

 

$

7,680

 

 

The following summarizes the future minimum lease payments receivable in subsequent fiscal years:

 

2026

 

$

2,324

 

2027

 

 

420

 

2028

 

 

36

 

 

$

2,780

 

 

NOTE 5 – FORECLOSED ASSETS

The Company held no foreclosed assets at December 31, 2025 or at December 31, 2024. The Company acquired a single-family residential property during the first quarter of 2025 by obtaining a deed in lieu of foreclosure. The property, which was valued at $524, was sold during the third quarter of 2025.

There was no activity in the valuation allowance account or any write-downs during the years ended December 31, 2025 and 2024.

There was $18 in expenses related to foreclosed assets during the year ended December 31, 2025. There were no expenses related to foreclosed assets during the years ended December 31, 2024 and 2023.

NOTE 6 – FAIR VALUE

Fair value is the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:

Level 1 – Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2 – Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

Level 3 – Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The Company used the following methods and significant assumptions to estimate the fair value of each type of asset and liability:

Securities available for sale: The fair value of securities available for sale is determined using pricing models that vary based on asset class and include available trade, bid and other market information or matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2).

Derivatives: The fair value of derivatives, which includes interest rate lock commitments and interest rate swaps, is based on valuation models using observable market data as of the measurement date (Level 2).

80

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

 

Individually evaluated loans: The fair value of individually evaluated loans with specific allocations of the ACL-Loans is generally based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.

Appraisals for collateral-dependent individually evaluated loans are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by a third-party appraisal management company approved by the Board of Directors annually. Once received, the loan officer or a member of the credit department reviews the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value in comparison with independent data sources such as recent market data or industry-wide statistics. Appraisals are updated as needed based on facts and circumstances associated with the individual properties. Real estate appraisals typically incorporate measures such as recent sales prices for comparable properties. Appraisers may make adjustments to the sales prices of the comparable properties as deemed appropriate based on the age, condition or general characteristics of the subject property. Management applies an additional discount to real estate appraised values, typically to reflect changes in market conditions since the date of the appraisal and to cover disposition costs (including selling expenses) based on the intended disposition method of the property. Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business, resulting in a Level 3 fair value classification. Individually evaluated loans are evaluated on a quarterly basis for additional impairment and adjusted accordingly.

Loans held for sale: Loans held for sale are carried at fair value, as determined by outstanding commitments from third party investors (Level 2).

Assets and liabilities measured at fair value on a recurring basis, including financial assets and liabilities for which the Company has elected the fair value option, are summarized below:

 

 

 

Fair Value Measurements at December 31, 2025 Using Significant
Other Observable Inputs

 

 

 

(Level 2)

 

Financial Assets:

 

 

 

Securities available for sale:

 

 

 

Corporate debt

 

$

8,400

 

Issued by U.S. government-sponsored entities and agencies:

 

 

 

U.S. Treasury

 

 

1,000

 

Collateralized mortgage obligations

 

 

8,096

 

Total securities available for sale

 

$

17,496

 

Loans held for sale

 

$

5,611

 

Derivative assets

 

$

3,578

 

Financial Liabilities:

 

 

 

Derivative liabilities

 

$

3,578

 

 

81

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

 

 

 

Fair Value Measurements at December 31, 2024 Using Significant Other Observable Inputs

 

 

 

(Level 2)

 

Financial Assets:

 

 

 

Securities available for sale:

 

 

 

Corporate debt

 

$

7,700

 

Issued by U.S. government-sponsored entities and agencies:

 

 

 

U.S. Treasury

 

 

983

 

Total securities available for sale

 

$

8,683

 

Loans held for sale

 

$

2,623

 

Derivative assets

 

$

3,730

 

Financial Liabilities:

 

 

 

Derivative liabilities

 

$

3,730

 

 

The Company had no assets or liabilities measured at fair value on a recurring basis that were measured using Level 1 or Level 3 inputs at December 31, 2025 or December 31, 2024. There were no transfers of assets or liabilities measured at fair value between levels during 2025 or 2024.

Assets and liabilities measured at fair value on a non-recurring basis at December 31, 2025 are summarized below:

 

Fair Value Measurements at December 31, 2025 Using

 

Significant Unobservable Inputs (Level 3)

 

 

 

 

 

Individually evaluated loans:

 

 

 

Commercial

 

$

595

 

Real Estate:

 

 

 

Commercial:

 

 

 

Owner occupied

 

 

313

 

Total individually evaluated loans

 

 

908

 

 

There were no assets and liabilities measured at fair value on a non-recurring basis at December 31, 2024

 

There were no write-downs of individually evaluated collateral dependent loans during the years ended December 31, 2025 and 2024.

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, 2025:

 

 

 

Fair Value

 

 

Valuation
Technique(s)

 

Unobservable Inputs

 

(Range) Weighted
Average

 

Individually evaluated loans:

 

 

 

 

 

 

 

 

 

 

Commercial

 

$

595

 

 

Comparable sales
approach

 

Adjustment for differences between the stated value and net realizable value

 

 

8.00

%

Real-estate

 

 

 

 

 

 

 

 

 

Commercial:

 

 

 

 

 

 

 

 

 

 

Owner occupied

 

$

313

 

 

Comparable sales
approach

 

Adjustment for differences between the stated value and net realizable value

 

 

4.00

%

 

Financial Instruments Recorded Using Fair Value Option:

The Company has elected the fair value option for loans held for sale. These loans are intended for sale and the Company believes that the fair value is the best indicator of the resolution of these loans. Loans originated as construction loans, that were subsequently

82

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

 

transferred to held for sale, are carried at the lower of cost or market and are not included. Interest income is recorded based on the contractual terms of the loan and in accordance with the Company’s policy on loans held for investment. None of these loans were 90 days or more past due or on nonaccrual as of December 31, 2025 or December 31, 2024.

As of December 31, 2025 and December 31, 2024, the aggregate fair value, contractual balance and gain or loss on loans held for sale were as follows:

 

 

 

December 31, 2025

 

 

December 31, 2024

 

Aggregate fair value

 

$

5,611

 

 

$

2,623

 

Contractual balance

 

 

5,611

 

 

 

2,623

 

Gain

 

 

—

 

 

 

—

 

 

The total amount of gains and losses from changes in fair value included in earnings for the years ended December 31, 2025, 2024 and 2023 for loans held for sale were:

 

 

 

2025

 

 

2024

 

 

2023

 

Interest income

 

$

155

 

 

$

175

 

 

$

30

 

Interest expense

 

 

—

 

 

 

—

 

 

 

—

 

Change in fair value

 

 

—

 

 

 

—

 

 

 

—

 

Total change in fair value

 

$

155

 

 

$

175

 

 

$

30

 

 

The carrying amounts and estimated fair values of financial instruments at year-end 2025 were as follows:

 

 

 

Fair Value Measurements at December 31, 2025 Using:

 

 

 

Carrying

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Value

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Financial assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

258,972

 

 

$

258,972

 

 

$

—

 

 

$

—

 

 

$

258,972

 

Interest-bearing deposits in other financial institutions

 

 

100

 

 

 

100

 

 

 

—

 

 

 

—

 

 

 

100

 

Securities available for sale

 

 

17,496

 

 

 

—

 

 

 

17,496

 

 

 

—

 

 

 

17,496

 

Loans held for sale

 

 

5,611

 

 

 

—

 

 

 

5,611

 

 

 

—

 

 

 

5,611

 

Loans and leases, net

 

 

1,738,854

 

 

 

—

 

 

 

—

 

 

 

1,725,771

 

 

 

1,725,771

 

FHLB and FRB stock

 

 

8,354

 

 

n/a

 

 

n/a

 

 

n/a

 

 

n/a

 

Accrued interest receivable

 

 

8,655

 

 

 

212

 

 

 

107

 

 

 

8,336

 

 

 

8,655

 

Derivative assets

 

 

3,578

 

 

 

—

 

 

 

3,578

 

 

 

—

 

 

 

3,578

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

$

(1,780,689

)

 

$

(1,084,276

)

 

$

(697,492

)

 

$

—

 

 

$

(1,781,768

)

FHLB advances and other debt

 

 

(100,964

)

 

 

—

 

 

 

(106,248

)

 

 

—

 

 

 

(106,248

)

Advances by borrowers for taxes and insurance

 

 

(2,523

)

 

 

—

 

 

 

—

 

 

 

(2,523

)

 

 

(2,523

)

Subordinated debentures

 

 

(15,039

)

 

 

—

 

 

 

(17,550

)

 

 

—

 

 

 

(17,550

)

Accrued interest payable

 

 

(2,513

)

 

 

—

 

 

 

(2,513

)

 

 

—

 

 

 

(2,513

)

Derivative liabilities

 

 

(3,578

)

 

 

—

 

 

 

(3,578

)

 

 

—

 

 

 

(3,578

)

 

83

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

 

The carrying amounts and estimated fair values of financial instruments at year-end 2024 were as follows:

 

 

Fair Value Measurements at December 31, 2024 Using:

 

 

Carrying

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Value

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Financial assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

235,272

 

 

$

235,272

 

 

$

—

 

 

$

—

 

 

$

235,272

 

Interest-bearing deposits in other financial
   institutions

 

100

 

 

 

100

 

 

 

—

 

 

 

—

 

 

 

100

 

Securities available for sale

 

8,683

 

 

 

—

 

 

 

8,683

 

 

 

—

 

 

 

8,683

 

Equity securities

 

5,000

 

 

 

—

 

 

 

5,000

 

 

 

—

 

 

 

5,000

 

Loans held for sale

 

2,623

 

 

 

—

 

 

 

2,623

 

 

 

—

 

 

 

2,623

 

Loans and leases, net

 

1,722,019

 

 

 

—

 

 

 

—

 

 

 

1,691,030

 

 

 

1,691,030

 

FHLB and FRB stock

 

8,918

 

 

n/a

 

 

n/a

 

 

n/a

 

 

n/a

 

Accrued interest receivable

 

8,395

 

 

 

182

 

 

 

151

 

 

 

8,062

 

 

 

8,395

 

Derivative assets

 

3,730

 

 

 

—

 

 

 

3,730

 

 

 

—

 

 

 

3,730

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

$

(1,755,795

)

 

$

(1,065,780

)

 

$

(689,282

)

 

$

—

 

 

$

(1,755,062

)

FHLB advances and other debt

 

(92,680

)

 

 

—

 

 

 

(94,414

)

 

 

—

 

 

 

(94,414

)

Advances by borrowers for taxes and insurance

 

(2,238

)

 

 

—

 

 

 

—

 

 

 

(2,238

)

 

 

(2,238

)

Subordinated debentures

 

(15,000

)

 

 

—

 

 

 

(17,021

)

 

 

—

 

 

 

(17,021

)

Accrued interest payable

 

(2,259

)

 

 

—

 

 

 

(2,259

)

 

 

—

 

 

 

(2,259

)

Derivative liabilities

 

(3,730

)

 

 

—

 

 

 

(3,730

)

 

 

—

 

 

 

(3,730

)

 

The methods and assumptions used to estimate fair value which have not been previously described are described below.

Cash and Cash Equivalents and Interest-Bearing Deposits in Other Financial Institutions

The carrying amounts of cash and short-term instruments approximate fair values and are classified as Level 1.

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 Company performs a qualitative assessment for equity securities without readily determinable fair values considering impairment indicators to evaluate whether an impairment exists. If an impairment exists, the Company will recognize a loss based on the difference between carrying value and fair value. This method results in a Level 3 classification.

FHLB and FRB Stock

It is not practical to determine the fair value of FHLB and FRB stock due to restrictions placed on its transferability.

Loans and Leases

Fair values of loans and leases, excluding loans held for sale, are estimated utilizing an exit pricing methodology as follows: For variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values resulting in a Level 3 classification. Fair values for other loans are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality resulting in a Level 3 classification. The discount rate for the discounted cash flow analyses includes a credit quality adjustment. Individually evaluated loans are valued at the lower of cost or fair value as described previously.

84

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

 

Deposits

The fair values disclosed for demand deposits (e.g., interest and noninterest bearing checking, passbook savings, and money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amount) resulting in a Level 1 classification. Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flows calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits resulting in a Level 2 classification.

FHLB Advances and Other Debt

The fair values of the Company’s long-term FHLB and credit facility advances are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements resulting in a Level 2 classification.

The fair values of the Company’s subordinated debentures are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements resulting in a Level 2 classification.

Accrued Interest Receivable/Payable

The carrying amounts of accrued interest approximate fair value resulting in a Level 1, 2 or 3 classification, consistent with the asset or liability with which they are associated.

Advances by Borrowers for Taxes and Insurance

The carrying amount of advances by borrowers for taxes and insurance approximates fair value resulting in a Level 3 classification, consistent with the liability with which they are associated.

Off-Balance-Sheet Instruments

The fair value of off-balance-sheet items is not considered material.

NOTE 7 – LOAN SERVICING

Mortgage loans serviced for others are not reported as assets. The principal balances of these loans at year-end were as follows:

 

 

 

December 31, 2025

 

 

December 31, 2024

 

Total mortgage loans serviced

 

$

8,532

 

 

$

770

 

 

Custodial escrow balances maintained in connection with serviced loans were $386 and $42 at year-end 2025 and 2024, respectively.

The mortgage servicing rights on these loans were immaterial at December 31, 2025 and 2024.

NOTE 8 - PREMISES AND EQUIPMENT AND OPERATING LEASES

Year-end premises and equipment were as follows:

 

 

 

December 31, 2025

 

 

December 31, 2024

 

Land and land improvements

 

$

248

 

 

$

248

 

Buildings

 

 

2,786

 

 

 

2,426

 

Furniture, fixtures and equipment

 

 

2,915

 

 

 

2,791

 

 

 

5,949

 

 

 

5,465

 

Less: accumulated depreciation

 

 

(2,402

)

 

 

(1,929

)

 

$

3,547

 

 

$

3,536

 

 

Depreciation expense for 2025, 2024 and 2023 totaled $476, $486, and $567, respectively.

85

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

 

Operating Leases:

A lease is defined as a contract, or part of a contract, that conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration.

The leases in which the Company is the lessee are comprised of real estate property for branches and offices and for equipment with terms extending through 2034. All of our leases are classified as operating leases, and therefore are required to be recognized on the Consolidated Balance Sheets as a right-of-use (“ROU”) asset and a corresponding operating lease liability.

The calculated amount of the ROU assets and lease liabilities are impacted by the length of the lease term and the discount rate used to present value the minimum lease payments. The Company’s lease agreements often include one or more options to renew at the Company’s discretion which were considered, as applicable, in the calculation of the ROU assets and lease liabilities. If, at lease inception, the Company considers the exercising of a renewal option to be reasonably certain, the Company will include the extended term in the calculation of the ROU asset and lease liability. The Company uses the discount rate implicit in the lease whenever this rate is readily determinable. As this rate is not readily determinable in our operating leases, the Company utilizes its incremental borrowing rate at lease inception, on a collateralized basis, over a similar term. At December 31, 2025, the weighted-average remaining lease term for the Company’s operating leases was 8.2 years and the weighted-average discount rate was 7.43%. At December 31, 2024, the weighted-average remaining lease term for the Company’s operating leases was 8.8 years and the weighted-average discount rate was 7.47%.

The Company’s operating lease costs were $661, $753, and $687 for the years ended December 31, 2025, 2024 and 2023, respectively. The variable lease costs totaled $785, $816, and $681 for the years ended December 31, 2025, 2024 and 2023, respectively. As the Company elected not to separate lease and non-lease components for all classes of underlying assets and instead to account for them as a single lease component, the variable lease cost primarily represents variable payments such as common area maintenance and utilities.

Future minimum operating lease payments as of December 31, 2025 are as follows:

 

2026

 

$

919

 

2027

 

 

875

 

2028

 

 

894

 

2029

 

 

913

 

2030

 

 

932

 

Thereafter

 

 

3,122

 

Total future minimum rental commitments

 

 

7,655

 

Less - amounts representing interest

 

 

(1,777

)

Total operating lease liabilities

 

$

5,878

 

 

86

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

 

 

NOTE 9 – DEPOSITS

Time deposits of $100 or more were $627,046 and $626,760 at year-end 2025 and 2024, respectively. Time deposits of $250 or more were $463,644 and $464,044 at year-end 2025 and 2024, respectively.

Scheduled maturities of time deposits for the next five years are as follows:

 

2026

 

$

586,253

 

2027

 

 

80,915

 

2028

 

 

28,371

 

2029

 

 

—

 

2030

 

 

875

 

Thereafter

 

 

—

 

Total

 

$

696,414

 

 

Brokered deposits at year-end 2025 and 2024 totaled $400,393 and $420,820, respectively.

NOTE 10 –FHLB ADVANCES AND OTHER DEBT

FHLB advances and other debt were as follows:

 

 

 

Weighted
Average Rate at December 31, 2025

 

 

December 31, 2025

 

 

December 31, 2024

 

FHLB fixed rate advances

 

 

 

 

 

 

 

 

 

Maturities:

 

 

 

 

 

 

 

 

 

2026

 

 

1.45

%

 

$

16,000

 

 

$

16,000

 

2027

 

 

3.88

%

 

 

12,500

 

 

 

12,500

 

2028

 

 

1.69

%

 

 

17,000

 

 

 

17,000

 

2029

 

 

3.94

%

 

 

12,500

 

 

 

12,500

 

Total FHLB fixed rate advances

 

 

 

 

 

58,000

 

 

 

58,000

 

Variable rate other debt:

 

 

 

 

 

 

 

 

 

Holding Company credit facility

 

 

6.00

%

 

 

42,964

 

 

 

34,680

 

Total

 

 

 

 

$

100,964

 

 

$

92,680

 

 

Each FHLB advance is payable at its maturity date, with a prepayment penalty if repaid before maturity.

The FHLB advances were collateralized as follows:

 

 

 

December 31, 2025

 

 

December 31, 2024

 

Single-family mortgage loans

 

$

291,458

 

 

$

294,000

 

Multi-family mortgage loans

 

 

72,737

 

 

 

54,950

 

Commercial real estate loans (1-4 family)

 

 

10,244

 

 

 

9,974

 

Home equity lines of credit

 

 

2,845

 

 

 

3,505

 

Cash

 

 

-

 

 

 

3,300

 

Total

 

$

377,284

 

 

$

365,729

 

 

Based on the collateral pledged to the FHLB, CFBank was eligible to borrow up to a total of $242,674 from the FHLB at December 31, 2025 inclusive of the amount outstanding.

87

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

 

The Holding Company has a credit facility with a third-party bank. Prior to April 30, 2025, the credit facility had a borrowing limit of $35,000 with a revolving feature until May 21, 2024, at which time the outstanding balance was converted to a 10-year term note on a graduated 10-year amortization. Borrowings on the credit facility bore interest at a fixed rate of 3.85% until May 21, 2026, at which time the interest rate would convert to a floating rate equal to PRIME with a floor of 3.25%. Effective April 30, 2025, an additional $10,000 revolving line of credit was added to the credit facility and the interest rate was amended to reset the fixed rate to 6.00% until May 21, 2026, at which time the rate will convert to a floating rate equal to PRIME. The $10,000 revolving line of credit matures on April 30, 2027. The revolving line of credit provided an additional $10,000 that was injected as additional Tier 1 capital into CFBank during the second quarter of 2025. As of December 31, 2025, the Company had an outstanding balance, net of unamortized debt issuance costs, of $42,964 on the credit facility. At December 31, 2024, the Company had an outstanding balance, net of unamortized debt issuance costs, of $34,680 on the credit facility.

Contractual maturities of the Holding Company credit facility as of December 31, 2025 are as follows:

 

 2026

 

$

1,750

 

 2027

 

 

12,625

 

 2028

 

 

2,625

 

 2029

 

 

3,500

 

 2030

 

 

3,500

 

Thereafter

 

 

19,250

 

Less - unamortized debt issuance costs

 

 

(286

)

 

$

42,964

 

 

At December 31, 2025, CFBank had additional availability in unused lines of credit at two commercial banks in amounts of $50,000 and $15,000. There were no outstanding borrowings on either line at December 31, 2025 and December 31, 2024. Interest on any principal amounts outstanding from time to time under these lines accrues daily at a variable rate based on the commercial bank’s cost of funds and current market returns.

There were no outstanding borrowings with the FRB at December 31, 2025 or at December 31, 2024.

Assets pledged as collateral with the FRB were as follows:

 

 

 

2025

 

 

2024

 

Commercial loans

 

$

26,362

 

 

$

42,807

 

Commercial real estate loans

 

 

136,996

 

 

 

121,196

 

 

$

163,358

 

 

$

164,003

 

 

Based on the collateral pledged, CFBank was eligible to borrow up to $122,360 from the FRB at year-end 2025.

NOTE 11 – SUBORDINATED DEBENTURES

2003 Subordinated Debentures:

In December 2003, Central Federal Capital Trust I, a trust formed by the Holding Company, closed a pooled private offering of 5,000 trust preferred securities with a liquidation amount of $1 per security. The Holding Company issued $5,155 of subordinated debentures to the trust in exchange for ownership of all of the common stock of the trust and the proceeds of the preferred securities sold by the trust. The Holding Company is not considered the primary beneficiary of this trust (variable interest entity); therefore, the trust is not consolidated in the Company’s financial statements, but rather the subordinated debentures are shown as a liability. The Holding Company’s investment in the common stock of the trust was $155 and is included in other assets.

The Holding Company may redeem the subordinated debentures, in whole or in part, in a principal amount with integral multiples of $1, at 100% of the principal amount, plus accrued and unpaid interest. The subordinated debentures mature on December 30, 2033. The subordinated debentures are also redeemable in whole or in part from time to time, upon the occurrence of specific events defined within the trust indenture. There are no required principal payments on the subordinated debentures over the next five years. The Holding Company has the option to defer interest payments on the subordinated debentures for a period not to exceed five consecutive years.

88

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

 

Prior to July 1, 2023, the subordinated debentures had a variable rate of interest, reset quarterly, equal to the three-month London Interbank Offered Rate (LIBOR) plus 2.85%. Effective July 1, 2023, the rate of interest on the subordinated debentures began to reset quarterly to the three-month Secured Overnight Financing Rate (SOFR) plus 3.112%, which was 6.80% at December 31, 2025 and 7.44% at December 31, 2024.

2018 Fixed-to-floating rate subordinated notes:

In December 2018, the Holding Company entered into subordinated note purchase agreements with certain qualified institutional buyers and completed a private placement of $10 million of fixed-to-floating rate subordinated notes with a maturity date of December 30, 2028 pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended, and Rule 506(b) of Regulation D promulgated thereunder. After payment of approximately $388 of debt issuance costs, the Holding Company’s net proceeds were approximately $9,612.

The subordinated notes initially bore interest at 7.00%, from and including December 20, 2018, to but excluding December 30, 2023, payable semi-annually in arrears on June 30 and December 30 of each year. From and including December 30, 2024, 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%, which was 8.09% at December 31, 2025 and 8.73% at December 31, 2024. Interest is payable quarterly in arrears on March 30, June 30, September 30, and December 30 of each year. The Holding Company may, at its option, redeem the notes beginning on December 30, 2023 and on any scheduled interest payment date thereafter. At December 31, 2025, the balance of the subordinated notes, net of unamortized debt issuance costs, was $9,884.

NOTE 12 – BENEFIT PLANS

Multi-employer pension plan:

CFBank participates in the Pentegra Defined Benefit Plan for Financial Institutions (the “Pentegra DB Plan”), a multi-employer contributory trusteed pension plan. The retirement benefits to be provided by the plan were frozen as of June 30, 2003 and future employee participation in the plan was stopped. The plan was maintained for all eligible employees and the benefits were funded as accrued. The cost of funding was charged directly to operations.

The funding shortfall (surplus) of the Pentegra DB Plan at June 30, 2025 was $101 and at June 30, 2024 was $162. CFBank’s contributions for the plan years ending June 30, 2025, June 30, 2024, and June 30, 2023 totaled $63, $22, and $24, respectively. Contributions to the plan may vary from period to period due to the change in the plan's unfunded liability. The unfunded liability is primarily related to the change in plan assets and the change in plan liability from one year to the next. The change in plan assets is based on contributions deposited, benefits paid and the actual rate of return earned on plan assets. The change in plan liability is based on demographic changes and changes in the interest rates used to determine plan liability. In the event the actual rate of return earned on plan assets declines, the value of the plan assets will decline. In the event the interest rates used to determine plan liability decrease, plan liability will increase. The combined effect of each change determines the change in the unfunded liability and the change in the employer contributions.

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 is a single plan under Internal Revenue Code Section 413(c) and, as a result, all of the assets stand behind all of the liabilities. Accordingly, under the Pentegra DB Plan contributions made by a participating employer may be used to provide benefits to participants of other participating employers.

Funded status (market value of plan assets divided by funding target) based on valuation reports as of July 1, 2025 and 2024 was 80.03% and 75.76%, respectively.

Total contributions made to the Pentegra DB Plan, as reported on Form 5500 of the Pentegra DB Plan, totaled $63,406 and $151,773 for the plan years ended June 30, 2024 and June 30, 2023, respectively. CFBank’s contributions to the Pentegra DB Plan were not more than 5% of the total contributions to the Pentegra DB Plan.

89

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

 

401(k) Plan:

The Company sponsors a 401(k) plan that allows employee contributions up to the maximum amount allowable under federal tax regulations, which are currently matched in an amount equal to 50% of the first 8% of the compensation contributed. Total expense for matching contributions for 2025, 2024 and 2023 was $210, $170 and $92, 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. Under the plan, CFBank pays him, or his beneficiary, a benefit of $25 annually for 20 years, beginning six months after his retirement date, which was February 28, 2008. The expense related to this plan totaled $3, $4, and $5 in 2025, 2024 and 2023, respectively. The accrual is included in accrued interest payable and other liabilities in the Consolidated Balance Sheets and totaled $51 at year-end 2025 and $74 at year-end 2024.

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 ($6), ($12) and ($12) in 2025, 2024 and 2023, respectively. 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 $109 at year-end 2025 and $115 at year-end 2024.

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 $339, $134, and $129 in 2025, 2024 and 2023, respectively. 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 $955 at year-end 2025 and $617 at year-end 2024.

NOTE 13 – INCOME TAXES

The Company adopted ASU 2023-09 on a prospective basis during the year ended December 31, 2025, which expanded income tax disclosures.

Pretax income from continuing operations for the year ended December 31, 2025 is as follows:

 

 

 

December 31, 2025

 

 

 

 

 

Domestic

 

$

21,527

 

Foreign

 

 

—

 

Total

 

$

21,527

 

Income tax expense from continuing operations for the years ended December 31, 2025, 2024, and 2023 was as follows:

 

 

 

December 31, 2025

 

 

December 31, 2024

 

 

December 31, 2023

 

 

 

 

 

 

 

 

 

 

 

Current Expense

 

 

 

 

 

 

 

 

 

Federal

 

$

4,112

 

 

$

—

 

 

$

—

 

State

 

 

60

 

 

 

—

 

 

 

—

 

Total current tax expense

 

 

4,172

 

 

 

3,122

 

 

 

3,592

 

Deferred expense (benefit)

 

 

 

 

 

 

 

 

 

Federal (1)

 

 

(186

)

 

 

—

 

 

 

—

 

Total deferred tax expense (benefit)

 

 

(186

)

 

 

(365

)

 

 

456

 

Total income tax expense

 

$

3,986

 

 

$

2,757

 

 

$

4,048

 

 

(1)
Includes tax benefit of operating loss carryforwards of $34, $34, and $34 for the years ended December 31, 2025, 2024 and 2023, respectively.

90

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

 

Effective tax rates differ from the federal statutory rate of 21% applied to income before income taxes for the years ended December 31, 2025, 2024 and 2023 due to the following:

 

 

 

December 31, 2025

 

December 31, 2024

 

 

December 31, 2023

 

Federal Statutory Income Tax

 

$

4,521

 

21.00%

 

$

3,390

 

 

21

%

 

$

4,407

 

 

21

%

Effect of:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

State taxes, net of federal benefit (1)

 

 

47

 

0.22%

 

 

—

 

 

 

 

 

—

 

 

 

Tax credits, net of amortization

 

 

 

 

 

 

(398

)

 

 

 

 

(194

)

 

 

Low-income housing tax credits

 

 

(581

)

(2.70%)

 

 

—

 

 

 

 

 

—

 

 

 

Historical rehabilitation tax credits (2)

 

 

325

 

1.51%

 

 

—

 

 

 

 

 

—

 

 

 

Nontaxable or nondeductible items

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock compensation

 

 

(44

)

(0.21%)

 

 

(17

)

 

 

 

 

(7

)

 

 

Bank owned life insurance income

 

 

(196

)

(0.91%)

 

 

(179

)

 

 

 

 

(131

)

 

 

Other

 

 

(86

)

(0.40%)

 

 

(39

)

 

 

 

 

(27

)

 

 

Total

 

$

3,986

 

18.51%

 

$

2,757

 

 

17

%

 

$

4,048

 

 

19

%

 

(1) State taxes in Indiana made up the majority (greater than 50%) of the tax effect in this category.

(2) Including tax impact of tax basis reduction.

 

Income taxes paid, net of refunds for the year ended December 31, 2025 were as follows:

 

 

 

December 31, 2025

 

 

 

 

 

Federal

 

$

2,625

 

State

 

 

60

 

Total

 

$

2,685

 

Year-end deferred tax assets and liabilities for the years ended December 31, 2025 and 2024 were due to the following:

 

 

 

2025

 

 

2024

 

Deferred income tax assets:

 

 

 

 

 

 

Allowance for credit losses

 

$

4,311

 

 

$

4,084

 

Compensation related items

 

 

812

 

 

 

620

 

Deferred loan fees

 

 

335

 

 

 

167

 

Nonaccrual interest

 

 

150

 

 

 

43

 

Net operating loss carry forward

 

 

237

 

 

 

261

 

Operating lease liabilities

 

 

1,255

 

 

 

1,329

 

Unrealized mark-to-market loss

 

 

367

 

 

 

479

 

Total deferred income tax assets

 

 

7,467

 

 

 

6,983

 

Deferred income tax liabilities:

 

 

 

 

 

 

FHLB stock dividend

 

 

227

 

 

 

226

 

Depreciation

 

 

436

 

 

 

547

 

Operating lease right-of-use assets

 

 

1,214

 

 

 

1,299

 

Limited partnership interests

 

 

1,232

 

 

 

663

 

Prepaid expenses

 

 

107

 

 

 

71

 

Total deferred income tax liabilities

 

 

3,216

 

 

 

2,806

 

Net deferred income tax asset

 

$

4,251

 

 

$

4,177

 

 

At December 31, 2025, the Company had a deferred tax asset recorded of $4,251. At December 31, 2024, the Company had a deferred tax asset recorded of $4,177. These balances are included in the accrued interest receivable and other assets on the

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

 

Consolidated Balance Sheets. At December 31, 2025 and December 31, 2024, the Company had no unrecognized tax benefits recorded. The Company is subject to U.S. federal income tax and is no longer subject to federal examination for years prior to 2022.

Our deferred tax assets are composed of U.S. net operating losses (“NOLs”), and other temporary book to tax differences. When determining the amount of deferred tax assets that are more-likely-than-not to be realized, and therefore recorded as a benefit, the Company conducts a regular assessment of all available information. This information includes, but is not limited to, taxable income in prior periods, projected future income and projected future reversals of deferred tax items. Based on these criteria, the Company determined as of December 31, 2025 that no valuation allowance was required against the net deferred tax asset.

In 2012, a recapitalization program through the sale of $22,500 in common stock improved the capital levels of CFBank and provided working capital for the Holding Company. The result of the change in stock ownership associated with the stock offering, however, was that the Company incurred an ownership change within the guidelines of Section 382 of the Internal Revenue Code of 1986. At year-end 2024, the Company had net operating loss carryforwards of $21,283, which expire at various dates from 2025 to 2032. As a result of the ownership change, the Company's ability to utilize carryforwards that arose before the 2012 stock offering closed is limited to $163 per year. Due to this limitation, management determined it was more likely than not that $20,520 of net operating loss carryforwards would expire unutilized. As required by accounting standards, the Company reduced the carrying value of deferred tax assets, and the corresponding valuation allowance, by the $6,977 tax effect of this lost realizability.

Federal income tax laws provided additional deductions, totaling $2,250, for thrift bad debt reserves established before 1988. Accounting standards do not require a deferred tax liability to be recorded on this amount, which otherwise would have totaled $473 at year-end 2025. However, if CFBank were wholly or partially liquidated or otherwise ceases to be a bank, or if tax laws were to change, this amount would have to be recaptured and a tax liability recorded. Additionally, any distributions in excess of CFBank’s current and accumulated earnings and profits would reduce amounts allocated to its bad debt reserve and create a tax liability for CFBank.

 

NOTE 14 – RELATED-PARTY TRANSACTIONS

Loans to principal officers, directors, and their affiliates during 2025 and 2024 were as follows:

 

 

 

Year ended December 31,

 

 

 

2025

 

 

2024

 

Beginning balance

 

$

23,316

 

 

$

23,388

 

New loans

 

 

7,712

 

 

 

4,532

 

Repayments

 

 

(3,389

)

 

 

(4,604

)

Ending balance

 

$

27,639

 

 

$

23,316

 

 

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.

Deposits from principal officers, directors, and their affiliates totaled $3,865 and $3,594 at year-end 2025 and 2024, respectively.

NOTE 15 – STOCK-BASED COMPENSATION

The Company has a stock-based compensation plan, as described below, under which awards are outstanding or may be granted in the future. Total compensation cost that has been charged against income for the plan totaled $1,394, $1,155 and $1,172 for 2025, 2024 and 2023, respectively. The total income tax benefit was $293, $243 and $246 for 2025, 2024 and 2023, respectively.

The 2019 Equity Incentive Plan (the “2019 Plan”) was approved by stockholders on May 29, 2019 and replaced the Company’s 2009 Equity Compensation Plan (the “2009 Plan” and, together with the 2019 Plan, the “Plans”). The 2019 Plan authorized up to 300,000 shares (plus any shares that are subject to grants under the 2009 Plan and that are later forfeited or expire), to be awarded pursuant to stock options, stock appreciation rights, restricted stock or restricted stock units. An amendment to the Company’s 2019 Plan was approved by stockholders on May 29, 2024 to increase the number of shares of common stock reserved for awards thereunder from 300,000 to 500,000. There were 125,889 shares remaining available for awards of stock option, stock appreciation rights, restricted stock or restricted stock units under the 2019 Plan at December 31, 2025.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

 

Stock Options:

The 2019 Plan permits the grant of stock options to directors, officers and employees of the Holding Company and CFBank. Option awards are granted with an exercise price equal to the market price of the Company’s common stock on the date of grant, generally have vesting periods ranging from one year to three years, and are exercisable for ten years from the date of grant. Unvested stock options immediately vest upon a change of control.

The fair value of each option award is estimated on the date of grant using a closed form option valuation (Black-Scholes) model. Expected volatilities are based on historical volatilities of the Company’s common stock. The Company uses historical data to estimate option exercise and post-vesting termination behavior. Employee and management options are tracked separately. The expected term of options granted is based on historical data and represents the period of time that options granted are expected to be outstanding, which takes into account that the options are not transferable. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of the grant.

There were no stock options granted during the years ended December 31, 2025 and December 31, 2024. There were no stock options exercised during the year ended December 31, 2025 and December 31, 2024. There were no options canceled, forfeited or expired during the year ended December 31, 2025 and December 31, 2024. As of December 31, 2025, there were no outstanding stock options.

Restricted Stock Awards:

The 2019 Plans also permits the grant of restricted stock awards to directors, officers and employees. Compensation is recognized over the vesting period of the awards based on the fair value of the stock at grant date. The fair value of the stock is determined using the closing share price on the date of grant and shares generally have a vesting period of three years. There were 84,625 shares of restricted stock granted in 2025 and 75,618 shares of restricted stock granted in 2024.

A summary of changes in the Company’s nonvested shares of restricted stock for the year follows:

 

Nonvested Shares

 

Shares

 

 

Weighted
Average
Grant-Date
Fair Value

 

Nonvested at January 1, 2025

 

 

132,165

 

 

$

19.70

 

Granted

 

 

84,625

 

 

 

22.21

 

Vested

 

 

(63,523

)

 

 

20.01

 

Forfeited

 

 

(7,449

)

 

 

20.94

 

Nonvested at December 31, 2025

 

 

145,818

 

 

$

20.96

 

 

As of December 31, 2025, the unrecognized compensation cost related to nonvested shares granted under the Plans was $1,956 and the weighted average period over which this will be recognized is 1.9 years. As of December 31, 2024 the unrecognized compensation cost related to nonvested shares granted under the Plans was $1,625.

There were 63,523 shares of restricted stock that vested during the year ended December 31, 2025 and 60,126 shares of restricted stock that vested during the year ended December 31, 2024. There were 7,449 and 2,353 shares of restricted stock forfeited during the years ended December 31, 2025 and December 31, 2024, respectively.

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.

Prompt corrective action regulations provide five classifications for banking organizations: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If a banking organization is classified as adequately capitalized, regulatory approval is required to accept brokered deposits. If a banking organization is classified as undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

 

In July 2013, the Holding Company’s primary federal regulator, the Board of Governors of the Federal Reserve System (the “Federal Reserve”), published final rules (the “Basel III Capital Rules”) establishing a comprehensive capital framework for U.S. banking organizations. The rules implement the Basel Committee's December 2010 framework known as “Basel III” for strengthening international capital standards as well as certain provisions of the Dodd-Frank Act. In order to avoid limitations on capital distributions, such as dividend payments and certain bonus payments to executive officers, the Basel III Capital Rules require insured financial institutions to hold a capital conservation buffer of common equity tier 1 capital above the minimum risk-based capital requirements. The capital conservation buffer consists of an additional amount of common equity equal to 2.5% of risk-weighted assets. Quantitative measures established by the Basel III Capital Rules to ensure capital adequacy require the maintenance of minimum amounts and ratios of Common Equity Tier 1 capital, Tier 1 capital and Total capital, as defined in the regulations, to risk-weighted assets, and of Tier 1 capital to adjusted quarterly average assets (“Leverage Ratio”).

The Basel III Capital Rules require CFBank to maintain: 1) a minimum ratio of Common Equity Tier 1 capital to risk-weighted assets of 4.5%, plus a 2.5% “capital conservation buffer” (resulting in a minimum ratio of Common Equity Tier 1 capital to risk-weighted assets of 7.0%); 2) a minimum ratio of Tier 1 capital to risk-weighted assets of 6.0%, plus the capital conservation buffer (resulting in a minimum Tier 1 capital ratio of 8.5%); 3) a minimum ratio of Total capital to risk-weighted assets of 8.0%, plus the capital conservation buffer (resulting in a minimum Total capital ratio of 10.5%); and 4) a minimum Leverage Ratio of 4.0%.

The capital conservation buffer is designed to absorb losses during periods of economic stress. Failure to maintain the minimum Common Equity Tier 1 capital ratio plus the capital conservation buffer will result in potential restrictions on a banking institution’s ability to pay dividends, repurchase stock and/or pay discretionary compensation to its employees.

As of December 31, 2025 and 2024, the most recent notification from CFBank's primary regulator categorized CFBank as well capitalized under the regulatory framework for prompt corrective action. The following tables present actual and required capital ratios as of December 31, 2025 and December 31, 2024 for CFBank under the Basel III Capital Rules. Capital levels required to be considered well capitalized are based upon prompt corrective action regulations, as amended to reflect the changes under the Basel III Capital Rules.

 

 

 

Actual

 

 

Minimum Capital
Required-Basel III

 

 

To Be Well Capitalized
Under Applicable
Regulatory Capital
Standards

 

 

 

Amount

 

 

Ratio

 

 

Amount

 

 

Ratio

 

 

Amount

 

 

Ratio

 

December 31, 2025

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Capital to risk weighted assets

 

$

260,801

 

 

 

15.02

%

 

$

182,309

 

 

 

10.50

%

 

$

173,628

 

 

 

10.00

%

Tier 1 (Core) Capital to risk weighted
   assets

 

 

240,413

 

 

 

13.85

%

 

 

147,583

 

 

 

8.50

%

 

 

138,902

 

 

 

8.00

%

Common equity tier 1 capital to risk-
   weighted assets

 

 

240,413

 

 

 

13.85

%

 

 

121,539

 

 

 

7.00

%

 

 

112,858

 

 

 

6.50

%

Tier 1 (Core) Capital to adjusted total
   assets (Leverage Ratio)

 

 

240,413

 

 

 

11.40

%

 

 

84,391

 

 

 

4.00

%

 

 

105,489

 

 

 

5.00

%

 

 

 

Actual

 

 

Minimum Capital
Required-Basel III

 

 

To Be Well Capitalized
Under Applicable
Regulatory Capital
Standards

 

 

 

Amount

 

 

Ratio

 

 

Amount

 

 

Ratio

 

 

Amount

 

 

Ratio

 

December 31, 2024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Capital to risk weighted assets

 

$

230,120

 

 

 

13.60

%

 

$

177,636

 

 

 

10.50

%

 

$

169,177

 

 

 

10.00

%

Tier 1 (Core) Capital to risk weighted
   assets

 

 

210,675

 

 

 

12.45

%

 

 

143,801

 

 

 

8.50

%

 

 

135,342

 

 

 

8.00

%

Common equity tier 1 capital to risk-weighted
   assets

 

 

210,675

 

 

 

12.45

%

 

 

118,424

 

 

 

7.00

%

 

 

109,965

 

 

 

6.50

%

Tier 1 (Core) Capital to adjusted total assets
   (Leverage Ratio)

 

 

210,675

 

 

 

10.33

%

 

 

81,614

 

 

 

4.00

%

 

 

102,018

 

 

 

5.00

%

 

CFBank converted from a mutual to a stock institution in 1998, and a “liquidation account” was established with an initial balance of $14,300, which was the net worth reported in the conversion prospectus. The liquidation account represents a calculated amount

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

 

for the purposes described below, and it does not represent actual funds included in the Consolidated Financial Statements of the Company. Eligible depositors who have maintained their accounts, less annual reductions to the extent they have reduced their deposits, would be entitled to a priority distribution from this account if CFBank liquidated and its assets exceeded its liabilities. Dividends may not reduce CFBank’s stockholder’s equity below the required liquidation account balance.

Dividend Restrictions:

Banking regulations require us to maintain certain capital levels and may limit the dividends paid by CFBank to the Holding Company or by the Holding Company to stockholders. The ability of the Holding Company to pay dividends on its stock is dependent upon the amount of cash and liquidity available at the Holding Company level, as well as the receipt of dividends and other distributions from CFBank to the extent necessary to fund such dividends. The Holding Company is a legal entity that is separate and distinct from CFBank, which has no obligation to make any dividends or other funds available for the payment of dividends by the Holding Company. The Holding Company also is subject to various legal and regulatory policies and guidelines impacting the Holding Company’s ability to pay dividends on its stock. In addition, the Holding Company’s ability to pay dividends on its stock is conditioned upon the payment, on a current basis, of quarterly interest payments on the subordinated debentures underlying the Company’s trust preferred securities. Finally, under the terms of the Holding Company’s fixed-to-floating rate subordinated debt, the Holding Company’s ability to pay dividends on its stock is conditioned upon the Holding Company continuing to make required principal and interest payments, and not incurring an event of default, with respect to the subordinated debt.

Additionally, CFBank does not intend to make distributions to the Holding Company that would result in a recapture of any portion of its thrift bad debt reserve as discussed in Note 13-Income Taxes.

 

NOTE 17 – DERIVATIVE INSTRUMENTS

Interest-rate swaps:

CFBank enters into interest-rate swaps with certain qualifying commercial loan customers to meet their interest rate risk management needs. CFBank simultaneously enters into interest rate swaps with dealer counterparties, with identical notional amounts and offsetting terms. The net result of these interest rate swaps is that the customer pays a fixed rate of interest and CFBank receives a floating rate. These back-to-back loan swaps are derivative financial instruments and are reported at fair value in “accrued interest receivable and other assets” and “accrued interest payable and other liabilities” in the Consolidated Balance Sheets. Changes in the fair value of loan swaps are recorded in other noninterest income and sum to zero because of the offsetting terms of swaps with borrowers and swaps with dealer counterparties.

CFBank utilizes interest-rate swaps as part of its asset liability management strategy to help manage its interest rate risk position and does not use derivatives for trading purposes. Hedge accounting is not applied. The notional amount of the interest-rate swaps does not represent amounts exchanged by the parties. The amount exchanged is determined by reference to the notional amount and the other terms of the individual interest-rate swap agreements. CFBank was party to interest-rate swaps with a combined notional amount of $102,052, $92,818 and $81,858 at December 31, 2025, 2024 and 2023, respectively.

The counterparty to CFBank’s interest-rate swaps is exposed to credit risk whenever the interest-rate swaps are in a liability position. At December 31, 2025, CFBank had $2,127 in cash pledged as collateral for these derivatives. Should the liability increase beyond the collateral value, CFBank may be required to pledge additional collateral.

Additionally, CFBank’s interest-rate swap instruments contain provisions that require CFBank to remain well capitalized under regulatory capital standards and to comply with certain other regulatory requirements. The interest-rate swaps may be called by the counterparty if CFBank fails to maintain well-capitalized status under regulatory capital standards or becomes subject to certain adverse regulatory events such as a regulatory cease and desist order. As of December 31, 2025, 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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

 

Summary information about the derivative instruments is as follows:

 

 

 

2025

 

 

2024

 

 

2023

 

Notional amount

 

$

102,052

 

 

$

92,818

 

 

$

81,858

 

Weighted average pay rate on interest-rate swaps

 

 

5.68

%

 

 

5.45

%

 

 

5.36

%

Weighted average receive rate on interest-rate swaps

 

 

6.24

%

 

 

6.93

%

 

 

7.81

%

Weighted average maturity (years)

 

 

9.0

 

 

 

8.6

 

 

 

8.2

 

Fair value of derivative asset

 

$

3,578

 

 

$

3,730

 

 

$

4,710

 

Fair value of derivative liability

 

$

(3,578

)

 

$

(3,730

)

 

$

(4,710

)

 

Mortgage banking derivatives:

Mortgage banking activities include two types of commitments: rate lock commitments and forward loan sales commitments. Rate lock commitments are loans in our pipeline that have an interest rate locked with the customer. The commitments are generally for periods of 30 to 60 days and are at market rates. In order to mitigate the effect of the interest rate risk inherent in providing rate lock commitments, we economically hedge our commitments by entering into a forward loan sales contract under best efforts. Commitments to fund certain mortgage loans (interest rate locks) to be sold into the secondary market are considered derivatives. These mortgage banking derivatives are not designated in hedge relationships. The Company had $2,422 and $3,566 of interest rate lock commitments related to residential mortgage loans at December 31, 2025 and 2024, respectively. The fair value of these interest lock commitments was immaterial at December 31, 2025 and 2024.

 

The following table represents the notional amount of loans sold during the years ended December 31, 2025, 2024 and 2023:

 

 

 

December 31, 2025

 

 

December 31, 2024

 

 

December 31, 2023

 

Notional amount of loans sold

 

$

49,749

 

 

$

47,597

 

 

$

10,799

 

 

The following table represents the revenue recognized on mortgage activities for the years ended December 31, 2025, 2024 and 2023:

 

 

 

December 31, 2025

 

 

December 31, 2024

 

 

December 31, 2023

 

Gain (loss) on loans sold

 

$

716

 

 

$

435

 

 

$

119

 

Gain (loss) from change in fair value of loans
   held-for-sale

 

 

—

 

 

 

—

 

 

 

—

 

Gain (loss) from change in fair value of derivatives

 

 

—

 

 

 

—

 

 

 

—

 

 

 

$

716

 

 

$

435

 

 

$

119

 

 

NOTE 18 – LOAN COMMITMENTS AND OTHER RELATED ACTIVITIES

Some financial instruments, such as loan commitments, credit lines, letters of credit and overdraft protection, are issued to meet customer financing needs. These are agreements to provide credit or to support the credit of others, as long as conditions established in the contract are met, and usually have expiration dates. Commitments may expire without being used. The same credit policies are used to make such commitments as are used for loans, including obtaining collateral at exercise of the commitment.

The contractual amounts of financial instruments with off-balance-sheet risk at year end were as follows:

 

 

 

2025

 

 

2024

 

 

 

Fixed Rate

 

 

Variable Rate

 

 

Fixed Rate

 

 

Variable Rate

 

Commitments to make loans

 

$

45,603

 

 

$

182,018

 

 

$

11,593

 

 

$

202,590

 

Unused lines of credit

 

$

6,173

 

 

$

164,343

 

 

$

13,718

 

 

$

190,972

 

Standby letters of credit

 

$

1,689

 

 

$

—

 

 

$

2,795

 

 

$

—

 

 

Commitments to make loans are generally made for periods of 60 days or less, except for construction loan commitments, which are typically for a period of one to three years, and loans under a specific drawdown schedule, which are based on the individual contracts. The fixed-rate loan commitments had interest rates ranging from 4.50% to 9.75% and maturities ranging from three months to 30 years at December 31, 2025. The fixed-rate loan commitments had interest rates ranging from 3.0% to 10.00% and maturities ranging from one month to 30 years at December 31, 2024.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

 

The Company maintains an allowance for credit losses on off-balance-sheet commitments using the CECL methodology. This reserve level remains appropriate and is reported in other liabilities in the Consolidated Balance Sheets. The related allowance for credit losses on unfunded commitments was $2,710 and $1,971 at December 31, 2025 and December 31, 2024, respectively.

 

 

 

December 31,

 

 

 

2025

 

 

2024

 

Balance at beginning of the period

 

$

1,971

 

 

$

1,321

 

Provision for credit losses-unfunded commitments

 

739

 

 

 

650

 

Ending Balance

 

$

2,710

 

 

$

1,971

 

 

NOTE 19 – PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION

Condensed financial information of CF Bankshares Inc. follows:

 

 

 

2025

 

 

2024

 

Assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

522

 

 

$

1,028

 

Equity securities

 

 

-

 

 

 

5,000

 

Investment in banking subsidiary

 

 

239,269

 

 

 

209,137

 

Investment in and advances to other subsidiary

 

 

276

 

 

 

267

 

Other assets

 

 

2,864

 

 

 

3,058

 

Total assets

 

$

242,931

 

 

$

218,490

 

 

 

 

 

 

 

 

Liabilities and Equity

 

 

 

 

 

 

Subordinated debentures

 

$

15,039

 

 

$

15,000

 

Other borrowings

 

 

42,964

 

 

 

34,680

 

Accrued expenses and other liabilities

 

 

502

 

 

 

373

 

Stockholders' equity

 

 

184,426

 

 

 

168,437

 

Total liabilities and stockholders' equity

 

$

242,931

 

 

$

218,490

 

 

 

 

2025

 

 

2024

 

 

2023

 

Dividend income

 

$

2,500

 

 

$

3,250

 

 

$

6,000

 

Interest income

 

 

—

 

 

 

—

 

 

 

1

 

Other income

 

 

237

 

 

 

706

 

 

 

724

 

Interest expense

 

 

3,452

 

 

 

2,842

 

 

 

2,492

 

Other expense

 

 

941

 

 

 

931

 

 

 

887

 

(Loss) income before income tax and before undistributed
   subsidiary income

 

 

(1,656

)

 

 

183

 

 

 

3,346

 

Tax effect

 

 

882

 

 

 

685

 

 

 

599

 

(Loss) income after income tax and before undistributed
   subsidiary income

 

 

(774

)

 

 

868

 

 

 

3,945

 

Equity in undistributed subsidiary income

 

 

18,315

 

 

 

12,519

 

 

 

12,992

 

Net income

 

$

17,541

 

 

$

13,387

 

 

$

16,937

 

Comprehensive income

 

$

17,973

 

 

$

13,874

 

 

$

16,684

 

 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

 

 

 

2025

 

 

2024

 

 

2023

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

 

Net Income

 

$

17,541

 

 

$

13,387

 

 

$

16,937

 

Adjustments:

 

 

 

 

 

 

 

 

 

Effect of subsidiaries' operations

 

 

(18,315

)

 

 

(12,519

)

 

 

(12,992

)

Amortization, net

 

 

39

 

 

 

39

 

 

 

39

 

Net loss on sale of equity security

 

 

103

 

 

 

—

 

 

 

—

 

Change in other assets and other liabilities

 

 

323

 

 

 

373

 

 

 

(284

)

Net cash (used by) from operating activities

 

 

(309

)

 

 

1,280

 

 

 

3,700

 

Cash flows from investing activities

 

 

 

 

 

 

 

 

 

Investments in banking subsidiary

 

 

(10,000

)

 

 

—

 

 

 

(6,000

)

Sale of equity securities

 

 

4,897

 

 

 

—

 

 

 

—

 

Net cash used by investing activities

 

 

(5,103

)

 

 

—

 

 

 

(6,000

)

Cash flows from financing activities

 

 

 

 

 

 

 

 

 

Proceeds from other borrowings

 

 

10,034

 

 

 

1,184

 

 

 

10,034

 

Repayments of other borrowings

 

 

(1,750

)

 

 

—

 

 

 

(6,000

)

Proceeds from exercise of stock options

 

 

—

 

 

 

—

 

 

 

84

 

Acquisition of treasury shares surrendered upon vesting
   of restricted stock for payment of taxes and exercise
   proceeds

 

 

(147

)

 

 

(129

)

 

 

(122

)

Purchase of treasury shares

 

 

(1,283

)

 

 

(223

)

 

 

(177

)

Cash dividends paid

 

 

(1,948

)

 

 

(1,614

)

 

 

(1,476

)

Net cash from (used by) financing activities

 

 

4,906

 

 

 

(782

)

 

 

2,343

 

Net change in cash and cash equivalents

 

 

(506

)

 

 

498

 

 

 

43

 

Beginning cash and cash equivalents

 

 

1,028

 

 

 

530

 

 

 

487

 

Ending cash and cash equivalents

 

$

522

 

 

$

1,028

 

 

$

530

 

 

98

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

 

NOTE 20 – EARNINGS PER COMMON SHARE

The following table sets forth the computation of basic and diluted earnings per share:

 

 

 

Year Ended

 

 

 

December 31, 2025

 

 

December 31, 2024

 

 

December 31, 2023

 

Basic

 

 

 

 

 

 

 

 

 

Net income

 

$

17,541

 

 

$

13,387

 

 

$

16,937

 

Earnings allocated to participating securities

 

 

(540

)

 

 

(361

)

 

 

—

 

Net income allocated to common shareholders

 

$

17,001

 

 

$

13,026

 

 

$

16,937

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding including
   unvested share-based payment awards

 

 

6,437,678

 

 

 

6,393,124

 

 

 

6,547,283

 

Less: Unvested share-based payment awards-2019 Plan

 

 

(147,606

)

 

 

(118,553

)

 

 

(126,195

)

Average shares

 

 

6,290,072

 

 

 

6,274,571

 

 

 

6,421,088

 

Basic earnings per common share

 

$

2.70

 

 

$

2.08

 

 

$

2.64

 

 

 

 

 

 

 

 

 

 

Diluted

 

 

 

 

 

 

 

 

 

Net income allocated to common shareholders

 

$

17,001

 

 

$

13,026

 

 

$

16,937

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding for basic
   earnings per common share

 

 

6,290,072

 

 

 

6,274,571

 

 

 

6,421,088

 

Add: Dilutive effects of assumed exercises of stock
   options

 

 

—

 

 

 

—

 

 

 

3,353

 

Add: Dilutive effects of unvested share-based payment
   awards-2019 Plan

 

 

41,727

 

 

 

34,421

 

 

 

23,006

 

Average shares and dilutive potential common shares

 

 

6,331,799

 

 

 

6,308,992

 

 

 

6,447,447

 

Diluted earnings per common share

 

$

2.69

 

 

$

2.06

 

 

$

2.63

 

 

There were no anti-dilutive securities during the years ended December 31, 2025, 2024 and 2023.

NOTE 21 - CONTINGENT LIABILITIES

General Litigation:

The Company is subject to claims and lawsuits that arise primarily in the ordinary course of business. It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the consolidated financial position, results of operations and cash flows of the Company.

99

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

 

NOTE 22 - ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table summarizes the changes within each classification of accumulated other comprehensive income, net of tax, for the years ended December 31, 2025, 2024 and 2023 and summarizes the significant amounts reclassified out of each component of accumulated other comprehensive income:

 

Changes in Accumulated Other Comprehensive Income by Component

For the Year Ended December 31, 2025, 2024 and 2023(1)

 

 

 

Unrealized Gains and Losses on Available-for-Sale
Securities

 

 

 

2025

 

 

2024

 

 

2023

 

Accumulated other comprehensive loss, beginning of period

 

$

(1,803

)

 

$

(2,290

)

 

$

(2,037

)

Other comprehensive gain (loss) before reclassifications

 

 

432

 

 

 

487

 

 

 

(253

)

Less amount reclassified from accumulated other
   comprehensive loss (2)

 

 

—

 

 

 

—

 

 

 

—

 

Net current-period other comprehensive income (loss)

 

 

432

 

 

 

487

 

 

 

(253

)

Accumulated other comprehensive loss, end of period

 

$

(1,371

)

 

$

(1,803

)

 

$

(2,290

)

 

(1)
All amounts are net of tax. 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, 2025, 2024 and 2023.

NOTE 23 - PREFERRED STOCK

Series D Preferred Stock:

On February 6, 2024, the Company issued 2,000 shares of its newly-designated series of non-voting convertible perpetual preferred stock, series D, par value $0.01 per share (the “Series D Preferred Stock”) to an existing stockholder of the Company in exchange for 200,000 shares of (Voting) Common Stock. On May 29, 2024, the Company issued 160 shares of Series D Preferred Stock to an existing stockholder of the Company in exchange for 16,000 shares of (Voting) Common Stock. On December 5, 2024, these 160 shares of Series D Preferred Stock were exchanged back to 16,000 shares of (Voting) common stock. At December 31, 2025 and 2024, 2,000 shares of Series D Preferred Stock were outstanding.

Each share of Series D Preferred Stock will be convertible either (i) automatically into 100 shares of the Company’s Non-Voting Common Stock if and when the Company’s shareholders approve an amendment to the Company’s Certificate of Incorporation to increase the number of authorized shares of Non-Voting Common Stock to permit the conversion of all outstanding shares of Series D Preferred Stock into shares of Non-Voting Common Stock (which shareholder approval and amendment the Company may, but is not obligated, to seek); (ii) unless previously converted into shares of Non-Voting Common Stock, into 100 shares of (Voting) Common Stock at the request of the holder, provided that upon such conversion the holder, together with all affiliates of the holder, will not own or control in aggregate more than 9.9% of the outstanding (Voting) Common Stock (or of any class of voting securities issued by the Company); or (iii) unless previously converted into shares of Non-Voting Common Stock, into 100 shares of (Voting) Common Stock upon transfer of such shares of Series D Preferred Stock to a non-affiliate of the holder in specified permitted transactions. The holders of Series D Preferred Stock are not entitled to any liquidation preferences. The holders of Series D Preferred Stock participate with common shareholders pro rata in dividends on an as-converted basis.

100

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

 

 

NOTE 24 - TAX CREDIT INVESTMENTS

The Company has investments in various limited partnerships that sponsor affordable housing projects and federal historic projects. The purpose of the investments is to earn an adequate return of capital through the receipt of tax credits and to assist the Company in achieving goals associated with the Community Reinvestment Act. These investments are included in other assets on the Consolidated Balance Sheet, with any unfunded commitments included in other liabilities. The investments are amortized as a component of income tax expense.

The following table summarizes the Company’s tax credit investments as of December 31, 2025 and December 31, 2024.

 

 

December 31, 2025

 

 

December 31, 2024

 

Investment Type

Investment

 

 

Unfunded Commitment

 

 

Investment

 

 

Unfunded Commitment

 

Low Income Housing Tax Credit (LIHTC)

$

24,570

 

 

$

12,540

 

 

$

20,139

 

 

$

10,767

 

Historic Tax Credit (HTC)

 

1,835

 

 

 

1,943

 

 

 

1,953

 

 

 

1,573

 

Total

$

26,405

 

 

$

14,483

 

 

$

22,092

 

 

$

12,340

 

 

The following table summarizes the amortization expense and tax credits recognized for the Company’s tax credit investments for the years ended December 31, 2025 and 2024, respectively:

 

 

 

Year Ended December 31,

 

Amortization expense

 

2025

 

 

2024

 

LIHTC

 

$

1,569

 

 

$

1,439

 

HTC

 

 

488

 

 

 

72

 

Total

 

$

2,057

 

 

$

1,511

 

 

 

 

 

 

 

 

Tax credits recognized

 

 

 

 

 

 

LIHTC

 

$

1,821

 

 

$

1,447

 

HTC

 

 

627

 

 

 

88

 

Total

 

$

2,448

 

 

$

1,535

 

 

NOTE 25 - SUBSEQUENT EVENT

On January 5, 2026, the Company’s Board of Directors declared a cash dividend of $0.09 per share on its Common Stock and a corresponding cash dividend of $9.00 per share on its Series D Preferred Stock. The dividend was paid on January 26, 2026 to shareholders of record as of the close of business on January 15, 2026.

 

 

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Table of Contents

 

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None

Item 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”). Management's assessment of the effectiveness of internal control over financial reporting is expressed at the level of reasonable assurance because a control system, no matter how well designed and operated, can provide only reasonable, but not absolute, assurance that the control system's objectives will be met. As of December 31, 2025, an evaluation was performed under the supervision and with the participation of management, including the Company's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on that evaluation, management concluded that our internal controls over financial reporting as of December 31, 2025 were effective.

Management’s Report on Internal Control Over Financial Reporting. Information required by Item 308 of Regulation S-K is included on page 54 of this Form 10-K; the information appears under the caption “Management’s Report on Internal Control over Financial Reporting”.

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 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information.

(a)
None
(b)
On December 1, 2025, Timothy T. O’Dell, Chief Executive Officer, President and a director of the Holding Company and Chief Executive Officer and a director of CFBank, terminated his trading plan which was adopted on September 4, 2025. No shares of common stock of the Company were sold under this trading plan prior to its termination. Information regarding the terminated plan is provided in the table below.

Name & Title

Date Adopted

Character of Trading Arrangement

Aggregate Number of Shares of (Voting) Common Stock to Purchased or Sold Pursuant to Trading Arrangement

Duration (1)

Date Terminated

Timothy T. O’Dell

Director, CEO and President of the Holding Company and Director and CEO of CFBank

 

September 4, 2025

 

Rule 10b5-1 Trading Arrangement

 

Sale of up to 40,000 shares

 

April 30, 2026

December 1, 2025

 

(1) Trading arrangement permitted transactions through and including the earlier to occur of (a) the completion of all sales or (b) the date listed in the table.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not Applicable

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PART III

Item 10. Directors, Executive Officers and Corporate Governance.

Directors. Information required by Item 401 of Regulation S-K with respect to our directors will be included in the section captioned “PROPOSAL 1 – ELECTION OF DIRECTORS” of our definitive Proxy Statement for the 2026 Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission (the “Commission” or the “SEC”) pursuant to SEC Regulation 14A (the “2025 Proxy Statement”), which section is incorporated herein by reference.

Executive Officers of the Registrant. Information required by Item 401 of Regulation S-K with respect to our executive officers will be included in the section captioned “EXECUTIVE OFFICERS” in our 2026 Proxy Statement, which section is incorporated herein by reference.

Compliance with Section 16(a) of the Exchange Act. Information required by Item 405 of Regulation S-K will be included in the section captioned “BENEFICIAL OWNERSHIP OF COMPANY COMMON STOCK – DELINQUENT SECTION 16(a) REPORTS” in our 2026 Proxy Statement, which section is incorporated herein by reference.

Code of Ethics. We have adopted a Code of Ethics and Business Conduct, which applies to all employees, including our principal executive officer, principal financial officer and principal accounting officer. We require all directors, officers and other employees to review and adhere to the Code of Ethics and Business Conduct in addressing the legal and ethical issues encountered in conducting their work. The Code of Ethics and Business Conduct requires that our employees avoid conflicts of interest, comply with all laws and other legal requirements, conduct business in an honest and ethical manner and otherwise act with integrity and in the Company’s best interest. The Code of Ethics and Business Conduct is available on our website, www.CF.Bank under the tab “Investor – Overview–Governance Documents.” Disclosures of any amendments to or waivers with regard to the provisions of the Code of Ethics and Business Conduct also will be posted on the Company’s website.

Corporate Governance. Information required by Items 407(c)(3), (d)(4) and (d)(5) of Regulation S-K will be included in the section captioned “CORPORATE GOVERNANCE – Board Meetings and Committees” in our 2026 Proxy Statement, which section is incorporated herein by reference. The procedures by which stockholders of the Company may recommend nominees to the Company’s Board of Directors have not materially changed from those described in the Company’s definitive Proxy Statement for the 2025 Annual Meeting of Shareholders held on June 4, 2025.

Insider Trading Arrangements and Policies. The Company has adopted an Insider Trading Policy that governs the purchase, sale, and/or dispositions of the Company’s securities by directors, officers and employees that is designed to promote compliance with insider trading laws, rules and regulations, and any listing standards applicable to the Company. A copy of the Insider Trading Policy is filed as Exhibit 19 to this Form 10-K.

Item 11. Executive Compensation.

Information required by Item 402 of Regulation S-K will be included in the sections captioned “COMPENSATION OF EXECUTIVE OFFICERS” and “2025 COMPENSATION OF DIRECTORS” and "PAY VERSUS PERFORMANCE" in our 2026 Proxy Statement, which sections are incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Security Ownership of Certain Beneficial Owners and Management. Information required by Item 403 of Regulation S-K will be included in the section captioned “BENEFICIAL OWNERSHIP OF COMPANY COMMON STOCK” in our 2026 Proxy Statement, which section is incorporated herein by reference.

103

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Related Stockholder Matters – Equity Compensation Plan Information. 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 2019 Equity Incentive Plan, as amended, at December 31, 2025.

 

 

 

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

 

 

—

 

 

$

—

 

 

 

125,889

 

Equity compensation plans not approved by shareholders

 

 

—

 

 

 

—

 

 

 

—

 

Total

 

 

—

 

 

$

—

 

 

 

125,889

 

 

Item 13. Certain Relationships and Related Transactions, and Director Independence.

Information required by Items 404 and 407(a) of Regulation S-K will be included in the sections captioned “CORPORATE GOVERNANCE – Certain Relationships and Related Party Transactions” and “CORPORATE GOVERNANCE – Director Independence” in our 2026 Proxy Statement, which sections are incorporated herein by reference.

Item 14. Principal Accounting Fees and Services.

Our independent registered public accounting firm is Plante & Moran, PLLC, Cleveland, Ohio (PCAOB Auditor Firm ID 166).

Information required by this Item 14 will be included in the section captioned “AUDIT COMMITTEE MATTERS” in our 2026 Proxy Statement, which section is incorporated herein by reference.

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Table of Contents

 

PART IV

Item 15. Exhibits and Financial Statement Schedules

(a)(1) Financial Statements:

The following report of the independent registered public accounting firm and consolidated statements of CF Bankshares Inc. and subsidiaries are included under “Item 8. Financial Statements and Supplementary Data” of this Form 10-K:

 

 

 

 

Page

Reports of Plante & Moran, PLLC, Independent Registered Public Accounting Firm (Plante & Moran, PLLC, Cleveland, Ohio, Auditor Firm ID 166)

54

Report of Forvis Mazars, LLP, Independent Registered Public Accounting Firm (Forvis Mazars, LLP, Indianapolis, Indiana, Auditor Firm ID 686)

56

Consolidated Balance Sheets at December 31, 2025 and 2024

57

Consolidated Statements of Income for the years ended December 31, 2025, 2024 and 2023

58

Consolidated Statements of Comprehensive Income for the years ended December 31, 2025, 2024 and 2023

59

Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2025, 2024 and 2023

60

Consolidated Statements of Changes of Cash Flows for the years ended December 31, 2025, 2024 and 2023

61

Notes to the Consolidated Financial Statements

62

Parent Company Condensed Financial Information is included in Note 19 to the Consolidated Financial Statements

97

 

(a)(2) Financial Statement Schedules:

All schedules for which provision is made in the applicable accounting regulations of the SEC are not required under the related instructions or are inapplicable and, therefore, have been omitted.

(a)(3) Exhibits:

The documents listed in the Exhibit Index that immediately precedes the signature page of this Form 10-K, are filed/furnished with this Form 10-K as exhibits or incorporated into this Form 10-K by reference as noted. Each management contract or compensatory plan or arrangement required to be filed as an exhibit to this Form 10-K is identified as such in the Exhibit Index.

(b) Exhibits:

The documents listed in the Exhibit Index that immediately precedes the signature page of this Form 10-K are filed/furnished with this Form 10-K as exhibits or incorporated into this Form 10-K by reference as noted.

(b) Financial Statement Schedules:

None.

Item 16. Form 10-K Summary

Not Applicable

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Table of Contents

 

EXHIBIT INDEX

 

Exhibit No.

 

Description of Exhibit

 

 

 

3.1

 

Certificate of Incorporation of the registrant (incorporated by reference to Exhibit 3.1 to the registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, filed with the Commission on November 9, 2017 (File No. 0-25045))

 

 

 

3.2

 

Amendment to Certificate of Incorporation of the registrant (incorporated by reference to Exhibit 3.2 to the registrant’s Registration Statement on Form S-2 (File No. 333-129315), filed with the Commission on October 28, 2005)

 

 

 

3.3

 

Amendment to Certificate of Incorporation of the registrant (incorporated by reference to Exhibit 3.4 to the registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2009, filed with the commission on August 14, 2009 (File No. 0-25045))

 

 

 

3.4

 

Amendment to Certificate of Incorporation of the registrant (incorporated by reference to Exhibit 3.5 to the registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2011, filed with the Commission on November 10, 2011 (File No. 0-25045))

 

 

 

3.5

 

Amendment to Certificate of Incorporation of the registrant (incorporated by reference to Exhibit 3.5 to the registrant’s Post-Effective Amendment to the Registration Statement on Form S-1 (File No. 333-177434), filed with the Commission on May 4, 2012)

 

 

 

3.6

 

Certificate of Designations to Certificate of Incorporation of the registrant (incorporated by reference to Exhibit 3.1 to the registrant’s Current Report on Form 8-K dated May 7, 2014 and filed with the Commission on May 13, 2014. (File No. 0-25045))

 

 

 

3.7

 

Amendment to Certificate of Incorporation of the registrant (incorporated by reference to Exhibit 3.1 to the registrant’s Current Report on Form 8-K dated August 20, 2018, filed with the commission on August 20, 2018 (File No. 0-25045)

 

 

 

3.8

 

Certificate of Designations to Certificate of Incorporation of the registrant (incorporated by reference to Exhibit 3.1 to the registrant’s Current Report on Form 8-K dated October 25, 2019, filed with the Commission on October 31, 2019 (File No. 0-25045))

 

 

 

3.9

 

Certificate of Amendment to Certificate of Incorporation of the registrant (incorporated by reference to Exhibit 3.1 to the registrant’s Current Report on Form 8-K dated May 29, 2020, filed with the Commission on June 2, 2020 (File No. 0-25045))

 

 

 

3.10

 

Amendment to Certificate of Incorporation of the registrant (incorporated by reference to Exhibit 3.1 to the registrant’s Current Report on Form 8-K dated July 28, 2020, filed with the Commission on July 20, 2020 (File No. 0-25045))

 

 

 

3.11

 

Certificate of Incorporation, as amended, of the registrant (incorporated by reference to the registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2020, filed with the Commission on August 12, 2020 (File No. 0-25045)) [This document represents the Certificate of Incorporation of the registrant in compiled form incorporating all amendments. This compiled document has not been filed with the Delaware Secretary of State.]

 

 

 

3.12

 

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))

106

Table of Contents

 

 

 

 

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 4.4 to the registrant’s Form 10-K for the fiscal year ended December 31, 2024, filed with the Commission on March 29, 2024 (File No. 0-25045)

 

 

 

4.5

 

Agreement to furnish instruments defining rights of holders of long-term debt

 

 

 

 

 

 

10.1*

 

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)

 

 

 

10.2*

 

First Amendment to the CF Bankshares Inc. 2019 Equity Incentive Plan (incorporated by reference to Exhibit 10.6 to the registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed with the Commission on March 14, 2025 (File No. 0-25045))

 

 

 

10.3*

 

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))

 

 

 

10.4*

 

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))

 

 

 

10.5*

 

Employment Agreement, dated April 22, 2019, by and among Central Federal Corporation, CFBank and Timothy T. O’Dell (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K dated April 26, 2019, filed with the Commission on April 26, 2019 (File No. 0-25045))

 

 

 

10.6*

 

First Amendment to Employment Agreement, dated as of June 6, 2024, by and among CF Bancshares Inc., CFBank and Timothy T. O’Dell (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K dated June 6, 2024, filed with the Commission on June 6, 2024 (File No. 0-25045))

 

 

 

10.7*

 

Central Federal Corporation Incentive Compensation Plan (incorporated by reference to Exhibit 10.3 to the registrant’s Current Report on Form 8-K dated August 16, 2016, filed with the Commission on August 16, 2016 (File No. 0-25045))

 

 

 

10.8*

 

Employment Agreement, dated January 25, 2023, by and among Central Federal Corporation, CFBank and Bradley Ringwald (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K dated January 25, 2023, filed with the Commission on January 27, 2023 (File No. 0-25045))

 

 

 

10.9*

 

First Amendment to Employment Agreement, dated as of June 6, 2024, by and among CF Bancshares Inc., CFBank and Bradley Ringwald (incorporated by reference to Exhibit 10.2 to the registrant’s Current Report on Form 8-K dated June 6, 2024, filed with the Commission on June 6, 2024 (File No. 0-25045))

 

 

 

10.10*

 

Employment Agreement, dated January 25, 2023, by and among Central Federal Corporation, CFBank and Kevin Beerman (incorporated by reference to Exhibit 10.2 to the registrant’s Current Report on Form 8-K dated January 25, 2023, filed with the Commission on January 27, 2023 (File No. 0-25045))

 

 

 

10.11*

 

Deferred Cash Incentive Agreement, dated as of December 29, 2022, by and between CFBank and Timothy T. O’Dell (incorporated by reference to Exhibit 10.12 to the registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the Commission on March 31, 2023 (File No. 0-25045))

 

 

 

10.12*

 

Deferred Cash Incentive Agreement, dated as of August 23, 2021, by and between CFBank and Bradley Ringwald (incorporated by reference to Exhibit 10.13 to the registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the Commission on March 31, 2023 (File No. 0-25045))

 

 

 

10.13*

 

Deferred Cash Incentive Agreement, dated as of August 23, 2021, by and between CFBank and Kevin Beerman (incorporated by reference to Exhibit 10.14 to the registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the Commission on March 31, 2023 (File No. 0-25045))

 

 

 

21.1

 

Subsidiaries of the Registrant

 

 

 

19

 

Insider Trading Policy

107

Table of Contents

 

 

 

 

23.1

 

Consent of Plante & Moran

 

 

 

23.2

 

Consent of Forvis Mazars

 

 

 

31.1

 

Rule 13a-14(a) Certifications of the Chief Executive Officer

 

 

 

31.2

 

Rule 13a-14(a) Certifications of the Principal Financial Officer

 

 

 

32.1

 

Section 1350 Certifications of the Chief Executive Officer and Principal Financial Officer

 

 

 

97

 

Clawback Policy (incorporated by reference to Exhibit 97 to the registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the Commission on March 29, 2025 (File No. 0-25045))

 

 

 

101.1

 

Interactive Data File ( Inline XBRL)

 

 

 

104

 

Cover Page Interactive Data File, formatted in Inline XBRL and contained in Exhibit 101

 

* Management contract or compensation plan or arrangement identified pursuant to Item 15 of Form 10-K

108

Table of Contents

 

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorize

 

 

 

 

CF BANKSHARES INC.

 

 

 

/s/ Timothy T. O’Dell

 

Timothy T. O’Dell

 

President and Chief Executive Officer

 

Date: March 12, 2026

 

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

Name

 

Title

 

Date

 

 

 

 

 

/s/ Timothy T. O’Dell

 

Director, President and Chief Executive Officer

 

March 12, 2026

Timothy T. O’Dell

 

 

 

 

 

 

 

 

 

 

 

 

 

 

/s/ Kevin J. Beerman

 

Executive Vice President and Chief Financial Officer

 

March 12, 2026

Kevin J. Beerman

 

 

 

 

 

 

 

 

 

 

 

 

 

 

/s/ Robert E. Hoeweler

 

Chairman

 

March 12, 2026

Robert E. Hoeweler

 

 

 

 

 

 

 

 

 

 

 

 

 

 

/s/ Thomas P. Ash

 

Director

 

March 12, 2026

Thomas P. Ash

 

 

 

 

 

 

 

 

 

 

 

 

 

 

/s/ James H. Frauenberg II

 

Director

 

March 12, 2026

James H. Frauenberg II

 

 

 

 

 

 

 

 

 

 

 

 

 

 

/s/ Edward W. Cochran

 

Director

 

March 12, 2026

Edward W. Cochran

 

 

 

 

 

 

 

 

 

 

 

 

 

 

/s/ David L. Royer

 

Director

 

March 12, 2026

David L. Royer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

109

Source: View Original Filing on SEC EDGAR

FAQ

How large was CF Bankshares Inc. (CFBK) at December 31, 2025?

CF Bankshares Inc. reported total assets of $2.1 billion and stockholders’ equity of $184.4 million at December 31, 2025. These figures reflect its boutique commercial banking strategy across Ohio and Indiana, focused on closely held businesses, entrepreneurs and residential mortgage customers.

What is the loan portfolio composition for CF Bankshares Inc. (CFBK) in 2025?

At year-end 2025, CFBK had gross loans of $1.76 billion. Commercial, commercial real estate and multi-family loans totaled $1.3 billion, or 72.1% of gross loans. Portfolio single-family residential mortgages were $445.1 million, and consumer loans totaled $45.4 million, or 2.6% of gross loans.

How did CF Bankshares Inc. (CFBK) credit quality and reserves look in 2025?

CFBK’s allowance for credit losses on loans was $17.7 million, or 1.01% of total loans, at December 31, 2025. Nonaccrual loans reached $15.3 million, including $5.1 million guaranteed by the SBA. Net charge-offs were $7.3 million, offset by $7.5 million of provision expense.

What were CF Bankshares Inc. (CFBK) key funding sources in 2025?

In 2025, CFBK’s average deposits totaled $1.76 billion, dominated by money market and certificate of deposit balances. Brokered deposits were $400.4 million at December 31, 2025. The bank also had $58.0 million of FHLB advances and significant unused borrowing capacity.

How significant were nonperforming loans for CF Bankshares Inc. (CFBK) in 2025?

Nonaccrual loans increased by $282,000 in 2025, ending at $15.3 million. Additions included several commercial, commercial real estate and single-family loans. Of the total nonaccrual balance, $5.1 million was guaranteed by the SBA, helping mitigate potential loss severity.

What is CF Bankshares Inc. (CFBK) deposit mix and rate environment in 2025?

In 2025, interest-bearing deposits represented about 84% of average deposits, with certificates of deposit and money market accounts the largest categories. Certificates averaged a 4.29% rate, while money market accounts averaged 3.79%, reflecting a higher-rate environment and competition for funding.
CF Bankshares Inc

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