CFBK 10-K & 10-Q changes, risk factors and insider trading
Cf Bankshares Inc. · Nasdaq · National Commercial Banks · CIK 1070680 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
Removed heading “We may experience increasing scrutiny and evolving expectations from customers, regulators, investors, and other stakeholders with respect to the Company’s environmental, social and governance practices.”
Largest changes
“Financial institutions are facing increasing scrutiny from customers, regulators, investors, and other stakeholders related to their environmental, social, and governance (“ESG”) practices and disclosure. Investor advocacy groups, investment funds, and influential investors are also increasingly focused on these practices, especially as they relate to the environment, health and safety, diversity, labor conditions, and human rights. …”see in full comparison
“We may experience increasing scrutiny and evolving expectations from customers, regulators, investors, and other stakeholders with respect to the Company’s environmental, social and governance practices.”see in full comparison
“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.”see in full comparison
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.see in full comparisonEven 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.
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.see in full comparison
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.see in full comparisonAsThea resultimpact of the Company's adoption ofCECL,CECLcreditwaslossaallowancesone-timemaycumulative-effectincrease,adjustmentwhichincreasingwouldourdecreasereservesretainedforearningsloans andregulatoryunfundedcapital.commitments by $49,000.
Full comparison: every changed paragraph (25)
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,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.
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.
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 "CECLDetermination Implementationof 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.
On June 16, 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“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.
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.
In addition,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.
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. AsThe a resultimpact of the Company's adoption of CECL,CECL creditwas lossa allowancesone-time maycumulative-effect increase,adjustment whichincreasing wouldour decreasereserves retainedfor earningsloans and regulatoryunfunded capital.commitments by $49,000.
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, 2024,2025, the Holding Company had a total of $1.0 million$522,000 of cash at the Holding Company level.
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.
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. 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.
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 may experience increasing scrutiny and evolving expectations from customers, regulators, investors, and other stakeholders with respect to the Company’s environmental, social and governance practices.
Financial institutions are facing increasing scrutiny from customers, regulators, investors, and other stakeholders related to their environmental, social, and governance (“ESG”) practices and disclosure. Investor advocacy groups, investment funds, and influential investors are also increasingly focused on these practices, especially as they relate to the environment, health and safety, diversity, labor conditions, and human rights. Increased ESG-related compliance costs for the Company as well as among our suppliers, vendors and various other parties within our supply chain could result in increases to our overall operational costs. Failure to adapt to or comply with regulatory requirements or investor or stakeholder expectations and standards could negatively impact our reputation, ability to do business with certain partners, access to capital, and the price of our common shares. New government regulations could also result in new or more stringent forms of ESG oversight and expanding mandatory and voluntary reporting, diligence, and disclosure.
Management's Discussion & Analysis (MD&A)
New heading “n/m - not meaningful”
New heading “Comparison of Results of Operations for 2025 and 2024”
Removed heading “Comparison of Results of Operations for 2023 and 2022”
Largest changes
The Holding Company has asee in full comparison$35.0 millioncreditfacility.facilityThewith a third-party bank. Prior to April 30, 2025, the credit facilitywashad 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 facilitybearbore interest at a fixed rate of 3.85% until May 21, 2026,andat which time the interest rate thenconvertswould 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 31,2024,2025, the Company had an outstanding balance, net of unamortized debt issuance costs, of$34.7$43.0 million on the facility.
The Holding Company has asee in full comparison$35.0 millioncredit facility with a third-party bank.ThePrior to April 30, 2025, the credit facilitywashad 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 facilitybearbore interest at a fixed rate of 3.85% until May 21, 2026,andat which time the interest ratethenwouldconvertsconvert to a floating rate equal to PRIME with a floor of3.75%.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 31,2024,2025, the Company had an outstanding balance, net of unamortized debt issuance costs, of$34.7$43.0 million on the facility.
“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).”see in full comparison
Full comparison: every changed paragraph (88)
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
The Holding Company is a financialbank 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 electedsupervision financial holding company status withby the FRB.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, residential mortgage lending, and full-service commercial and retail banking services and products. CFBank seeks to differentiate itself from its competitors by providing individualized service coupled with direct customer access to decision-makers, and ease of doing business. We believe that CFBank matches the sophistication of much larger banks, without the bureaucracy. CFBank also offers its clients the convenience of online banking, mobile banking and remote deposit capabilities.
Most of our deposits and loans come from our market area. Our principal market area for deposits and loans includes the following counties in Ohio and Indiana: Franklin County, Ohio through our offices in Columbus, Ohio; Delaware County, Ohio through our Polaris office in Columbus, Ohio; Cuyahoga County, Ohio through our office in 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.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.
CECL Implementation. In June 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-13 “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” This ASU requires a new Current Expected Credit Losses (“CECL”) methodology that replaced the previous "incurred loss" model for measuring credit losses, which encompassed allowances for current known and inherent losses within the portfolio. CECL provides for an "expected loss" model for measuring credit losses, which encompasses allowances for losses expected to be incurred over the life of the portfolio. The CECL model requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations now use forward-looking information to better inform their credit loss estimates. Many of the loss estimation techniques applied historically are still permitted, although the inputs to those techniques reflect the full amount of expected credit losses. Organizations continue to use judgment to determine which loss estimation method is appropriate for their circumstances. ASU 2016-13 requires enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. These disclosures include qualitative and quantitative requirements that provide additional information about the amounts recorded in the financial statements. In addition, ASU 2016-13 amended the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. ASU 2016-13 was effective for the Company on January 1, 2023.
The CECL methodology required under ASU 2016-13 applies to loans held for investment, held to maturity debt securities, and off balance-sheet credit exposures. The ASU allows for several different methods of computing the allowance for credit losses. Based on its analysis of observable data, the Company concluded the average charge-off method to be the most appropriate and statistically relevant. A lookback to March 31, 2000 was utilized as the historical loss period due to its inclusion of several economic cycles and relevance to real estate secured assets.
The expected loss estimate is made up of a historical lookback of actual losses applied over the life of the loan portfolio and adjusted for qualitative factors and forecasted losses based on economic and forward-looking data applied over a reasonable and supportable forecast period.
The impact of the Company’s adoption of ASU 2016-13 effective January 1, 2023 was a one-time cumulative-effect adjustment increasing our reserves for loans and unfunded commitments by $49,000.
The qualitative impact of the accounting standard is still directed by many of the same factors that impacted the previous methodology for computing the allowance for loan and lease losses (ALLL) including, but not limited to, economic conditions, quality and experience of staff, changes in the value of collateral, concentrations of credit in loan types or industries and changes to lending policies. In addition to this, the Company also uses reasonable and supportable forecasts. Examples of this are regression analyses of data from the Federal Open Market Committee quarterly economic projections for change in real GDP and of national unemployment.
We have identified the following accounting policy thatas it is thea 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.
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 into the accompanying Notes to Consolidated Financial Statements.Statements included in this Form 10-K.
Net income is also affected by, among other things, provisions for loan and leasecredit 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.
General. Assets totaled $2.1 billion at December 31, 20242025 and increased $6.9$51.8 million, or 0.3%,2.5%, from $2.1 billion at December 31, 2023.2024. The increase was primarily due to a $27.9$23.7 million increase in cash and cash equivalents and a $16.8 million increase in net loan balances, partially offset by a $26.3 million decrease in cash and cash equivalents.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, and decreased $26.3 million, or 10.1%, from $261.6 million at December 31, 2023.2024. The decreaseincrease 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, and increased $591,000, or 7.3%, compared to $8.1 million at December 31, 2023.2024. The increase was primarily due to the purchase of a new securities,security, partially offset by principal maturities. Equity securities totaled $0 at December 31, 2025 and $5.0 million at both December 31, 20242024. andThe Decemberdecline 31,in 2023.equity securities was due to the sale of the security during 2025.
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 and increased $774,000, or 41.9%, from $1.8 million at December 31, 2023.2024.
Loans and Leases. Net loans and leases totaled $1.7$1.74 billion at December 31, 20242025 and increased $27.9$16.8 million, or 1.6%,1.0%, from $1.7$1.72 billion at December 31, 2023.2024. The increase in net loans and leases from December 31, 2023,2024, was primarily due to a $27.0$73.9 million increase in commercial real estate loan balances, a $19.7$20.5 million increase in multi-familyMulti-family residential loan balances, ana $11.4$6.8 million increase in construction loan balances, and a $3.6$2.5 million increase in home equity lines of credit,credit balances, partially offset by a $21.1$49.4 million decrease in commercial and industrial (C&I) loan balances,balances and a $12.7$37.6 million decrease in single-family residential loan balances. The increasesdecrease in single-family residential loan balances included the sale of two portfolios of loans in the aforementionedfirst loanquarter balancesof were2025 primarilytotaling related$18.1 to increased sales activity and new relationships.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, and increased $609,000, or 3.6%, from $16.9 million at December 31, 2023.2024. The increase in the ACL - Loans is due to $6.1$7.5 million in loan provision expense, partially offset by $5.5$7.3 million in net charge-offs during the year ended December 31, 2024.2025. The ratio of the ACL - Loans to total loans was 1.00%1.01% at December 31, 2024,2025, compared to 0.99%1.0% at December 31, 2023.2024.
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 contractualexpected term.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-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 notesNotes 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, and increased $9.3 million, or 268.6%, from $3.5 million at December 31, 2023. The increase was primarily due to newly identified commercial loans during 2024 totaling $12.7 million, partially offset by charge-offs and principal payments.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 and $697,000 at December 31, 2023.2024.
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, and increased $9.3 million from $5.7 million at December 31, 2023.2024. The increase in nonaccrualnonperforming loans in 2025 compared to 2024 was primarily driven by threenine commercial loans, totaling $11.3$2.7 million, onetwo commercial equipmentreal lease,estate loans, totaling $85,000,$5.2 andmillion, threefour single-family residential loans, totaling $1.1$913,000, million,and one home equity line of credit, totaling $87,000, becoming nonaccrual during the year ended December 31, 2024,2025, partially offset by paydowns and approximately $3.5$7.1 million in charges-offs on loans that were in nonaccrual at December 31, 2023.2024. The ratio of nonperforming loans to total loans was 0.87% at December 31, 20242025 compared to 0.33%0.87% at December 31, 2023.2024.
The following table presents information regarding the number and balance of nonperforming loans at December 31, 20242025 and December 31, 2023.2024:
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. 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 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.
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 into the accompanying Notes to Consolidated Financial Statements included in this Form 10-K for additional information regarding the regulatory asset classifications.
The level of total criticized and classified loans increaseddecreased by $19.9$4.3 million, or 151.2%,13.0%, during the year ended December 31, 2024.2025. Loans designated as special mention increased $14.4 million,$72,000, or 352.8%,0.4%, and totaled $18.5 million at December 31, 2024,2025, compared to $4.1$18.5 million at December 31, 2023.2024. Loans classified as substandard increaseddecreased $5.6$4.3 million and totaled $9.9 million at December 31, 2025, compared to $14.2 million at December 31, 2024, compared to $8.6 million at December 31, 2023.2024. Loans designated as doubtful declined $63,000 and totaled $385,000 at December 31, 2024, compared to $448,0002025 and December 31, 2023.2024. See Note 4 into the accompanying Notes to Consolidated Financial Statements included in this Form 10-K for additional information regarding risk classification of loans.
Total past due loans increased $10.1 million$472,000 and totaled $12.1$12.9 million at December 31, 2024,2025, compared to $2.0$12.5 million at December 31, 2023.2024. Past due loans totaled 0.7% of the loan portfolio at December 31, 2024,2025 compared to 0.1% atand December 31, 2023.2024. See Note 4 into the accompanying Notes to Consolidated Financial Statements for additional information regarding loan delinquencies.
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 $131.2$111.2 million, or 31.3%30.1% of CFBank’s commercial loan portfolio at December 31, 2024,2025, compared to $147.5$131.2 million, or 33.5%,31.3%, at December 31, 2023.2024. Interest only home equity lines of credit totaled $38.8$41.1 million, or 98.1%98.5% of the total home equity lines of credit, at December 31, 20242025 compared to $33.6$38.8 million, or 93.4%,98.1%, at December 31, 2023.2024.
We believe the ACL - Loans is adequate to absorb current expected credit losses in the loan portfolio as of December 31, 20242025; 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 loancredit 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 loancredit 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, 20242025 or December 31, 2023.2024. 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.
Premises and equipment. Premises and equipment, net, totaled $3.5 million at December 31, 2024,2025, and decreasedincreased $276,000,$11,000, or 7.2%,0.3%, from $3.8$3.5 million at December 31, 2023.2024. See Note 8 into the accompanying Notes to 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.
Deposits. Deposits totaled $1.76 billion at December 31, 2024, an increase of $11.7 million, or 0.7%, from $1.74 billion at December 31, 2023. The increase was primarily due to a $37.8 million increase in noninterest-bearing account balances, partially offset by a $26.0 million decrease in interest-bearing account balances. The decrease in interest-bearing account balances when compared to December 31, 2023, included a $19.6 million reduction in brokered deposits.
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, a decrease of $17.3 million when compared to $110.0 million at December 31, 2023.2024. The decreaseincrease was primarily due anto $18.5a $10 million decreaseincrease in FHLBthe fixedoutstanding ratebalance advances.on the Holding Company's credit facility.
The Holding Company has a $35.0 million credit facility.facility Thewith a third-party bank. Prior to April 30, 2025, the credit facility washad 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 bearbore interest at a fixed rate of 3.85% until May 21, 2026, andat which time the interest rate then convertswould 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, 2024,2025, the Company had an outstanding balance, net of unamortized debt issuance costs, of $34.7$43.0 million on the facility.
At December 31, 20242025 and 2023,2024, CFBank had availability in unused lines of credit at two commercial banks in the amounts of $50.0 million and $15.0 million, respectively.million. There were no outstanding borrowings on either line at December 31, 20242025 or December 31, 2023.2024.
Subordinated debentures Subordinated debentures totaled $15.0 million at December 31, 20242025 and $15.0 million at December 31, 2023.2024. 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, 20242025 and December 31, 2023.2024. See Note 11 into the accompanying Notes to Consolidated Financial Statements included in this Form 10-K for additional information.
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.
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):
What changed in the latest 10-Q
Risk Factors
There are certain risks and uncertainties in our business that could cause our actual results to differ materially from those anticipated. A detailed discussion of our risk factors is included in “Item 1A. Risk Factors” of Part I of the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. There were no material changes to those risk factors as presented in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
No wording changes found in this section.
Full comparison: every changed paragraph (0)
Management's Discussion & Analysis (MD&A)
Not available: the section could not be located automatically in both filings (non-standard layout or incorporated by reference). See the original filing. Open the filing on SEC.gov.
CFBK insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 1 filing (1 insider, 1 trade date, 400 shares, about $14.1K). Net open-market shares: -400 (purchases minus sales); net value about -$14.1K.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-09-11 | Mckinney Marianne |
Open-market sale | 400 | $35.36 | $14.1K |
| 2026-08-04 | Hoeweler Robert E |
Gift | 1,000 | — | — |
| 2026-06-11 | O'dell Timothy T |
Shares withheld for tax | 1,932 | $30.25 | $58.4K |
| 2026-05-21 | Hoeweler Robert E |
Gift | 1,450 | — | — |
| 2026-04-11 | O'dell Timothy T |
Shares withheld for tax | 5,000 | $29.49 | $147.4K |
| 2026-04-11 | Ringwald Bradley J |
Shares withheld for tax | 592 | $29.49 | $17.5K |
| 2026-04-11 | Meder Timothy |
Shares withheld for tax | 267 | $29.49 | $7.9K |
| 2026-04-11 | Mckinney Marianne |
Shares withheld for tax | 247 | $29.49 | $7.3K |
Well-known investors holding CFBK (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Two Sigma Investments | 2026-06-30 | 171,288 | $5.6M | 0.0% | Added 250% |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 104,173 | $3.4M | 0.0% | Added 150% |
| Renaissance Technologies | 2026-06-30 | 102,423 | $3.4M | 0.0% | Added 8% |
| AQR Capital Management (Cliff Asness) | 2026-06-30 | 49,122 | $1.6M | 0.0% | Added 27% |
| Millennium Management (Israel Englander) | 2026-06-30 | 19,443 | $637.1K | 0.0% | Added 8% |
| D. E. Shaw & Co. | 2026-06-30 | 9,373 | $307.2K | 0.0% | New position |
| Point72 Asset Management (Steve Cohen) | 2026-06-30 | 8,098 | $265.4K | 0.0% | New position |