10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-K

[X]     ANNUAL REPORT PURSUANT TOSECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year ended December 31, 2016

Or

[]     TRANSITION REPORT PURSUANT TOSECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to______________

Commission File Number 0-25045

CENTRAL FEDERAL CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	34-1877137
(State or other jurisdiction of	(IRS Employer
incorporation or organization)	Identification No.)

7000 N. High Street, Worthington, Ohio	43085
(Address of Principal Executive Offices)	(Zip Code)

(614) 334-7979

(Registrant’s Telephone Number, Including Area Code)

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

Common Stock, par value $.01 per share	Nasdaq® Capital Market
(Title of Class)	(Name of Exchange on which Registered)

Securities registered pursuant to Section 12(g) of the Exchange 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 [X]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act

YES [  ]NO[X]

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.)                                                                                                                                                                    YES[X]    NO [  ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K(Section 229.405 of this chapter) is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  []

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

Large accelerated filer [  ]	Accelerated filer [  ]
Non-accelerated filer [  ]	Smaller reporting company [X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). 

YES [  ]  NO [X]

The aggregate market value of the voting and non-voting common equity of the registrant held by non-affiliates as of June 30, 2016was  $21.8 million based upon the closing price as reported on the Nasdaq® Capital Market for that date.

As of March10, 2017, there were 16,294,910  shares of the registrant’s Common Stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s Annual Report to Stockholders  for its fiscal year ended December 31, 2016,  included as Exhibit 13.1 to this Form 10-K,and its Proxy Statement for the Annual Meeting of Stockholders  to be held on  May312017,are incorporated herein by reference into Parts II and III, respectively, of this Form 10-K.

INDEX

PART I
Item 1.	Business	3
Item 1A.	Risk Factors	33
Item 1B.	Unresolved Staff Comments	39
Item 2.	Properties	39
Item 3.	Legal Proceedings	40
Item 4.	Mine Safety Disclosures	40
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	40
Item 6.	Selected Financial Data	40
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	40
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	41
Item 8.	Financial Statements and Supplementary Data	41
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	41
Item 9A.	Controls and Procedures	41
Item 9B.	Other Information	41
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	42
Item 11.	Executive Compensation	43
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	43
Item 13.	Certain Relationships and Related Transactions, and Director Independence	43
Item 14.	Principal Accounting Fees and Services	43
PART IV
Item 15.	Exhibits and Financial Statement Schedules	43
SIGNATURES		44
EXHIBIT INDEX		45

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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 common share, capital structure and other financial items; (2) plans and objectives of the management or Boards of Directors of Central Federal Corporation (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.  The Holding Company, including its wholly-owned subsidiary, CFBank (together referred to as the “Company”) believes it has 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 report speak only as of the date of the report.  We undertake no obligation to publicly release revisions to any forward-looking statements to reflect events or circumstances after the date of such statements, except to the extent required by law.

PART I

Item 1.  Business.

General

Central Federal Corporation (the “Holding Company”), was organized as a Delaware corporation in September 1998 as the holding company for CFBank,in connection with CFBank’s conversion from a mutual to stock form of organization.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 and elected financial holding company status.  As a financial holding company, we are subject to regulation by the Board of Governors of the Federal Reserve System (the “FRB”).As used herein, the terms “we,” “us,” “our” and the “Company” refer to Central Federal Corporation and its subsidiaries, unless the context indicates to the contrary.

The consolidated financial statements include the Holding Company and CFBank (together referred to as the “Company”).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.  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, 2016, the Company’s assets totaled $436.1 million and stockholders’ equity totaled $39.3 million. 

CFBank is a community-oriented national bank offering a variety of financial services to meet the needs of the communities we serve.  Our business model emphasizes personalized service, customer access to decision makers, quick execution, and the convenience of online internet banking, mobile banking, remote deposit and corporate treasury management.  In addition, CFBank provides residential lending and full service retail banking services and products.  We attract retail and business deposits from the general public and use the deposits, together with borrowings and other funds, primarily to originate commercial and commercial real estate loans, single-family and multi-family residential mortgage loans and home equity lines of credit.  The majority of our customers are small businesses, small business owners and consumers.

Revenues are derived principally from the generation of interest and fees on loans originated and, to a lesser extent, interest and dividends on securities.  Ourprimary 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.

Our principal market area for loans and deposits includes the following Ohio counties: Franklin County through our office in Worthington, Ohio; Summit County through our office in Fairlawn, Ohio; Columbiana County through our offices in Calcutta and Wellsville, Ohio; and Cuyahoga County, through our agency office in Woodmere, Ohio.  We originate commercial and residential real estate loans and business loans primarily throughout Ohio.

Regulatory Matters

From May 2011 until 2014, the Holding Company and CFBank each were subject to Cease and Desist Orders (the “Holding Company Order” and the “CFBank Order”, respectively, and collectively, the “Orders”) with the FRB as successor tothe Office of Thrift Supervision (the “OTS”) asthe primary regulator of the Holding Company and CFBank.  See Note 2 to the Consolidated Financial Statements included in our 2016 Annual Report to Stockholders, included as Exhibit 13.1 to this Form 10-K, for additional information regarding the Orders.

Effective as of January 23, 2014, the OCC released and terminated the CFBank Order based upon the improved capital position of CFBank, among other factors.  Notwithstandingthe release of the CFBank Order, CFBank wasrequired to continue to maintain a minimum Tier 1 Leverage Capital Ratio of 8% and a Total Risk-based Capital to Risk-Weighted Assets ratio of 12% until December 23, 2015, and CFBank further committed to the OCC to continue to adhere to certain prudent practices.The foregoing commitments remained in place until December 23, 2015.  See Note 2 to the Consolidated Financial Statements included in our 2016 Annual Report to Stockholders, included as Exhibit 13.1 to this Form 10-K, for additional information regarding the Orders.

On May 15, 2014, the FRB announced the termination of the Holding Company Order, effective as of May 9, 2014.  Following the termination of the Holding Company Order, the Holding Company wasrequired to continue to adhere to certain requirements and restrictions based on commitments made to the FRB in connection with the termination of the Holding Company Order.  These commitments required the Holding Company, among other things, to continue to implement certain actions in accordance with the capital plan previously submitted to the FRB; not declare or pay dividends on its stock, purchase or redeem its stock, or accept dividends or other capital distributions from CFBank without the prior written approval of the FRB; not incur, increase or guarantee any debt without the prior written consent of the FRB; and provide prior written notice to the FRB with respect to certain changes in directors and senior executive officers.  The foregoing commitments remained in place until January 8, 2016.See Note 2 to the Consolidated Financial Statements included in our 2016 Annual Report to Stockholders, included as Exhibit 13.1 to this Form 10-K, for additional information regarding the Orders.

Although we are no longer subject to the Orders or the regulatory commitments made following the release of the Orders, we remain subject to extensive supervision and regulation by our regulators, and it is possible that regulatory compliance expenses could continue to have a material adverse impact on us in the future.

Dividend Restrictions

The ability of the Holding Company to pay dividends on its common stock and Series B Preferred Stock is generally dependent upon the receipt of dividends and other distributions from CFBank.  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 requirements, 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, so long as the Company’s Series B Preferred Stock remains outstanding, the Holding Company will be prohibited from paying dividends on the Company’s common stock(other than dividends payable solely in shares), for the then-current dividend period, unless full dividends on the Series B Preferred Stock have been paid or set aside for payment.  Dividends on the Series B Preferred Stock are non-cumulative, which means that if for any reason we do not declare cash dividends on the Series B Preferred Stock for a quarterly dividend period we will have no obligation to pay any dividends for that period (i.e., the dividends will not accrue or cumulate), whether or not we declare dividends on the Series B Preferred Stock for any subsequent dividend period.

The Holding Company had $2.2 million in cash and cash equivalents at December 31, 2016.  Management believes that the Holding Company has adequate operating capital for the foreseeable future. 

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Market Area and Competition

Ourprimary market areas in Ohio are competitive markets for financial servicesand 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 Portfolio Composition.The loan 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.It also consists of a portfolio of residential mortgage loans totaling $46.9 millionas a result of participation in the Northpointe Mortgage Purchase Program.See Note 4 to the Consolidated Financial Statements included in our 2016 Annual Report to Stockholders, included as Exhibit 13.1 to this Form 10-K, for additional information regarding the Northpointe Mortgage Purchase Program.  CFBank also finances a variety of commercial and residential construction projects.At December 31, 2016,grossloans receivable totaled$353.1 million and increased approximately $49.4 million, or 16.3% from$303.7 million at December 31, 2015.  Commercial, commercial real estate and multi-family mortgage loans, including related construction loans, totaled $221.4 million and represented 62.7%of the gross loan portfolio at December 31, 2016as compared to56.5% of the gross loan portfolioat December 31, 2015.Commercial, commercial real estate and multi-family mortgage loan balances, including related construction loans,increased  $49.8 million, or 29.0%  during 2016.Portfoliosingle-family residential mortgage loans, including related construction loans and residential mortgage loans originated throughthe Northpointe Mortgage Purchase Program, totaled $107.9 million and represented 30.6% of total gross loans at year-end 2016,compared to 34.3% at year-end 2015.The remainder of our loanportfolio consistsofconsumer loans, whichtotaled$23.7 million, or 6.7% of gross loans receivable, at year-end 2016.

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 FRBand legislative tax policies.

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The following table sets forth the composition of the loan portfolio in dollar amounts andas a percentage of the portfolio at the dates indicated.

		December 31,
		2016			2015			2014			2013			2012
			Percent			Percent			Percent			Percent			Percent
		Amount	of Total		Amount	of Total		Amount	of Total		Amount	of Total		Amount	of Total
	(Dollars in thousands)
Real estate mortgage loans:
Single-family	$	92,544	26.21%	$	81,985	27.00%	$	51,445	19.53%	$	32,219	15.13%	$	43,058	27.21%
Multi-family		34,291	9.71%		28,950	9.53%		28,790	10.93%		32,197	15.12%		21,576	13.63%
Construction		25,822	7.31%		24,662	8.12%		23,641	8.98%		11,465	5.39%		14	0.01%
Commercial real estate		105,313	29.83%		96,488	31.78%		91,119	34.58%		83,752	39.34%		54,291	34.30%
Total real estate mortgage loans		257,970	73.06%		232,085	76.43%		194,995	74.02%		159,633	74.99%		118,939	75.15%
Consumer loans:
Home equity loans		479	0.14%		504	0.17%		549	0.21%		352	0.17%		419	0.26%
Home equity lines of credit		23,109	6.55%		21,837	7.19%		16,898	6.42%		14,851	6.98%		12,963	8.19%
Automobile		-	0.00%		65	0.02%		122	0.05%		77	0.04%		50	0.03%
Other		158	0.04%		5,449	1.79%		4,305	1.63%		431	0.20%		501	0.32%
Total consumer loans		23,746	6.73%		27,855	9.17%		21,874	8.31%		15,711	7.38%		13,933	8.80%
Commercial loans (1)		71,334	20.21%		43,744	14.40%		46,532	17.67%		37,526	17.63%		25,408	16.05%
Total loans receivable		353,050	100.0%		303,684	100.0%		263,401	100.0%		212,870	100.0%		158,280	100.0%
Less:
Allowance for loan and lease losses		(6,925)			(6,620)			(6,316)			(5,729)			(5,237)
Loans receivable, net	$	346,125		$	297,064		$	257,085		$	207,141		$	153,043

⁽¹⁾ Includes $2,874 of commercial leases

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Loan Maturity.The following table shows the remaining contractual maturity of the loan portfolio at December 31, 2016.  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, 2016
	Real Estate Mortgage Loans(1)		Consumer Loans		Commercial Loans		Total Loans Receivable
	(Dollars in thousands)
Amounts due:
Within one year	$	79,170	$	100	$	11,743	$	91,013
After one year:
More than one year to three years		40,150		81		17,432		57,663
More than three years to five years		33,175		17		17,205		50,397
More than five years to 10 years		37,033		1,230		8,163		46,426
More than 10 years to 15 years		20,997		2,744		16,791		40,532
More than 15 years		47,445		19,574		-		67,019
Total due after 2017		178,800		23,646		59,591		262,037
Total amount due	$	257,970	$	23,746	$	71,334	$	353,050

The following table sets forth at December 31, 2016, the dollar amount of total loans receivable contractually due after December 31, 2017, and whether such loans have fixed interest rates or adjustable interest rates.

	Due After December 31, 2017
	Fixed		Adjustable		Total
Real estate mortgage loans(1)	$	112,259	$	66,542	$	178,801
Consumer loans		335		23,310		23,645
Commercial loans		26,783		32,808		59,591
Total loans	$	139,377	$	122,660	$	262,037

(1) Real estate mortgage loans include single-family, multi-family and commercial real estate loans and construction loans.

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Origination of Loans and Leases.Lending activities are conducted through ouroffices located in Franklin,  Summit, Cuyahoga and Columbiana Counties, Ohio. We originate commercial, commercial real estate and multi-family mortgage loans and also expanded into business financial services in the Akron, Cleveland and Columbus, Ohio markets. 

Commercial, commercial real estate and multi-family loans are originated withfixed, floating and ARM interest rates.  Fixed-rate loans are generally limited to terms of three to five years.Historically, CFBank has also utilized interest-rate swaps to protect the related fixed-rate loans from changes in value due to changes in interest rates.  See Note 20 to the Consolidated Financial Statementsincluded in our 2016 Annual Report to Stockholders, included as Exhibit 13.1 to this Form 10-K, for additional information on interest-rate swaps.  

CFBank participates in various loan programs offered by the Small Business Administration (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%.

A majority of oursingle-family mortgage loan originations are fixed-rate loans.  Current originations of long-term, fixed-rate single-family mortgages are generally sold rather than retained in portfolio in order to minimize investment in long-term, fixed-rate assets that have the potential to expose the Company to long-term interest rate risk.  Although we currently expect that most of our long-term, fixed-rate mortgage loan originations will continue to be sold, primarily on a servicing-released basis, a portion of these loans may be retained for portfolio within our interest rate risk and profitability guidelines. 

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 ourprimary 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 adjustable-rate mortgage (ARM) loans with maturities generally up to 30 years, priced competitively with current market rates.  We offer several ARM loan programs with terms of up to 30 years and with the majority of the programs interest rates that adjust with a maximum adjustment limitation of 2.0% per year and a 5.0% lifetime cap.  The interest rate adjustments on ARM loans currently offered are indexed to a variety of established indices 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.  In recent years, demand for single-family ARM loans has been weak due to consumer preference for fixed-rate loans as a result of the low interest rate environment.  Consequently, our origination of ARM loans on single-family residential properties has not been significant as compared to our origination of fixed-rate loans.  

We currently sell the majority of the single-family mortgage loans that we originateon a servicing released basis.  All single-family mortgage loans sold are underwritten according to Federal Home Loan Mortgage Corporation (Freddie Mac) or Federal National Mortgage Association (Fannie Mae) guidelines, or are underwritten to comply with additional guidelines as may be required by the individual investor.  CFBank is  adirect 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). 

For the year ended December 31, 2016, single-family mortgage loansoriginated for sale totaled $24.2 million,  adecrease of $17.4 million, or 41.8%,compared to $41.6 million that was originated in 2015.The decrease in originations was partially due to lower sales activity.  The volume of refinance activity, which is very sensitive to market mortgage interest rates,wasa significant factor that impacted the level of residential loan originations in 2016.If market mortgage rates increase, our mortgage production, and the resultant gains on sales of loans, could decrease.

At December 31, 2016, portfolio single-family mortgage loans originated by CFBanktotaled $9.3 million, or 2.6% of total loans.  Ourpolicy is to originate single-family residential mortgage loans for portfolio in amounts up to 85%of thelower of the appraised value or the purchase price of the property securing the loan, without requiring private mortgage insurance.  Loans in excess of 85% of the lower of the appraised value or purchase price of the property securing the loan require private mortgage insurance.  Mortgage loans generally include due-on-sale clauses which provide uswith the contractual right to deem the loan immediately due and payable in the event the borrower transfers ownership of the property without ourconsent. 

Portfolio single-family residential ARM loans, which totaled $14.1million, or 15.3% of the single-family mortgage loan portfolio at December 31, 2016, 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. 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.

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CFBank has participated in a Mortgage Purchase Program with Northpointe Bank (Northpointe), a Michigan banking corporation, since December 2012.  Pursuant to the terms of a participation agreement, CFBank purchases participation interests in loans made by Northpointe related to fully underwritten and pre-sold mortgage loans originated by various prescreened mortgage brokers located throughout the U.S.  The underlying loans are individually (MERS) registered loans which are held until funded by the end investor. The mortgage loan investors include Fannie Mae and Freddie Mac, and other major financial institutions.  This process on average takes approximately 14 days.  Given the short-term holding period of the underlying loans, common credit risks (such as past due, impairment and TDR, nonperforming, and nonaccrual classification) are substantially reduced.  Therefore, no allowance is allocated by CFBank to these loans.  These loans are 100% risk rated for CFBank capital adequacy purposes.  Under the participation agreement, CFBank agrees to purchase a 95% ownership/participation interest in each of the aforementioned loans, and Northpointe maintains a 5% ownership interest in each loan it participates.See Note 4 to the Consolidated Financial Statements included in our 2016 Annual Report to Stockholders, included as Exhibit 13.1 to this Form 10-K.

Commercial Real Estate and Multi-Family ResidentialMortgage Lending.Origination of commercial real estate and multi-family residential mortgage loanscontinues to be a  significant portion of CFBank’s lending activity.Commercial real estate and multi-family residential mortgage loan balances  increased $14.2 million to $139.6 million at December 31, 2016. This represented an increase of 11.3% over the $125.4 million balance at December 31, 2015.

Weoriginate commercial real estate loans that are secured by properties used for business purposes, such as manufacturing facilities, office buildings or retail facilities.  We originate multi-family residential mortgage loans that are secured by apartment buildings, condominiums, and multi-family residential houses.Commercial real estate and multi-family residential mortgage loans are secured by propertiesgenerally 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 theappraised value or purchase price of the property.An independent appraisal of the property is required on all loans greater than or equal to $250,000. 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 loansto borrowers who desire fixed-rate loans for longer than three to five years.  We have utilized interest-rate swaps to protect these fixed-rate loans from changes in value due to changes in interest rates, as appropriate.See Note 20 to the Consolidated Financial Statements  included in our 2016 Annual Report to Stockholders, included as Exhibit 13.1 to 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 25 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 criteriathat require such loans to be qualified at origination with sufficient debt coverage ratios under increasing interest rate 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 propertyowners and/or guarantors.

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Commercial Lending.  The origination of commercial loans continues to be a significant component of our lending activity.During 2016, commercial lending activity increased by $27.6 million, or 63.1%, to $71.3 million at year-end 2016.  Weoriginate commercial loans primarily to businesses located within our primary market area.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 generally 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.

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.With economic improvement in our market areas, there was also an increase in commercial building activity. During 2016, construction loans increased by $1.2 million, or 4.7%, to $25.8 million compared to the $24.7 million in the portfolio at year-end 2015.  CFBank’s strong capital levels has allowed CFBank to take advantage of select market opportunities in this areawithin 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 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, wemay 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, automobile loans, home improvement loans and loans secured by deposits.  At December 31, 2016, the consumer loan portfolio totaled $23.7 million, which was 6.7% of gross loans receivable. During 2016, the consumer loan portfolio decreased  $4.1 million, or 14.8% over the year-end 2015 balance of $27.9 million.

Home equity lines of credit include those purchased in the past and loans we originate for our portfolio.  We offer a  variable rate home equity line of creditproduct which we originate for our portfolio.  The interest rateadjusts monthly at various margins above the prime rate of interest as disclosed in The Wall Street Journal.  The margin is based on certain factors including the loan balance, value of collateral, election of auto-payment and the borrower’s FICO® score.  The 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.

10

Delinquencies and Classified Assets.Management and the Board of Directors monitors the status of all loans 30 days or more past due on a monthly basis through the analysis ofpast 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 therepossession 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 ascurrent 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, 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 mentionpossess 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 exit that could potentially warrant a specific reserve to be established.

See the section titled “Financial Condition -Allowance for loan losses”and Notes 1and4  to the Consolidated Financial Statements included in our 2016 Annual Report to Stockholders, included as Exhibit 13.1 to this Form 10-K, for detailed information on criticized and classified loans as of December 31, 2016 and 2015.

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 the following loans that were identified as substandard assets,were still accruing interestat December 31, 2016, but exhibit weaknesses that could lead to nonaccrual status in the future.  

	# of Loans		Balance
Commercial	2	$	294
Single-family residential real estate	2		17
Multi-family residential real estate	1		171
Commercial real estate	6		4,312
Home equity lines of credit	3		225
Total	14	$	5,019

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The following tablesets forth information concerning delinquent loans in dollar amounts and as a percentage of the total loan portfolio.  The amounts presented in the table below represent the total remaining balances of the loans rather than the actual payment amounts which are overdue. Loans shown as 90 days or more delinquent include nonaccrual loans, regardless of delinquency.

	December 31, 2016						December 31, 2015						December 31, 2014
	60-89 Days			90 Days or More			60-89 Days			90 Days or More			60-89 Days			90 Days or More
	Number	Balance		Number	Balance		Number	Balance		Number	Balance		Number	Balance		Number	Balance
	of	of		of	of		of	of		of	of		of	of		of	of
	Loans	Loans		Loans	Loans		Loans	Loans		Loans	Loans		Loans	Loans		Loans	Loans
	(Dollars in thousands)						(Dollars in thousands)						(Dollars in thousands)
Real estate loans:
Single-family	1	$	49	8	$	397	-	$	-	12	$	640	2	$	46	9	$	549
Multi-family	-		-	-		-	-		-	-		-	-		-	-		-
Commercial	1		600	-		-	-		-	1		446	-		-	1		477
Consumer loans:
Home equity lines of credit	1		15	1		44	-		-	2		115	-		-	2		153
Home equity loans	-		-	-		-	-		-	-		-	-		-	-		-
Automobile	-		-	-		-	-		-	-		-	-		-	-		-
Other	-		-	-		-	-		-	-		-	2		10	-		-
Commercial loans	-		-	3		263	1		9	3		224	-		-	3		369
Total delinquent loans	3	$	664	12	$	704	1	$	9	18	$	1,425	4	$	56	15	$	1,548
Delinquent loans as a percent of total loans			.19%			.20%			.00%			.47%			.02%			.59%

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	December 31, 2013						December 31, 2012
	60-89 Days			90 Days or More			60-89 Days			90 Days or More
	Number	Balance		Number	Balance		Number	Balance		Number	Balance
	of	of		of	of		of	of		of	of
	Loans	Loans		Loans	Loans		Loans	Loans		Loans	Loans
	(Dollars in thousands)						(Dollars in thousands)
Real estate loans:
Single-family	1	$	36	10	$	479	2	$	122	5	$	113
Multi-family	-		-	1		1,701	-		-	2		2,082
Commercial	-		-	5		2,943	-		-	9		3,438
Consumer loans:
Home equity lines of credit	-		-	1		52	-		-	1		9
Home equity loans	-		-	-		-	-		-	-		-
Automobile	-		-	-		-	-		-	-		-
Other	-		11	-		-	-		-	-		-
Commercial loans	-		-	2		563	1		65	3		714
Total delinquent loans	1	$	47	19	$	5,738	3	$	187	20	$	6,356
Delinquent loans as a percent of total loans			.02%			2.78%			.12%			4.02%

13

Nonperforming Assets.  The following table contains information regarding nonperforming loans andrepossessed assets.  CFBank’s policy isto stop accruing interest on loans 90 daysor more past due unless the loan principal and interest are determined by management to be fully secured and in the process of collection. All interest accrued but not received for loans placed on nonaccrual is reversed against interest income.

	At December 31,
	2016		2015		2014		2013		2012
Loans past due over 90 days still on accrual	$	-	$	-	$	-	$	-	$	-
Nonaccrual loans:
Single-family real estate		397		640		549		479		113
Multi-family real estate		-		-		-		1,701		2,082
Commercial real estate		-		446		477		2,943		3,438
Consumer		44		115		153		52		9
Commercial		263		224		369		563		714
Total nonaccrual loans		704		1,425		1,548		5,738		6,356
Total nonperforming loans		704		1,425		1,548		5,738		6,356
REO		204		1,636		1,636		1,636		1,525
Other foreclosed assets		-		-		-		-		-
Total nonperforming assets		908		3,061		3,184		7,374		7,881
Troubled Debt Restructurings (1)		2,986		4,920		5,233		3,517		3,684
Total nonperforming and troubled debt restructurings	$	3,894	$	7,981	$	8,417	$	10,891	$	11,565
Nonperforming loans to total loans		0.20%		0.47%		0.59%		2.70%		4.02%
Nonperforming assets to total assets		0.21%		0.87%		1.01%		2.88%		3.66%

⁽¹⁾ Reflects TDRs where customers have established a sustained period of repayment performance, loans are current according to their modified terms, and repayment of the remaining contractual payments is expected.

The $721,000decrease in nonperforming loans in 2016compared to 2015was primarily due to loan payments and payoffs.There were  $324,000 in loans that became nonperforming in 2016 related to threesingle-family residential loans, one commercial loan and one consumer loan.  

CFBank has seen steady improvement in the credit quality of its level of nonperforming loans over the last fiveyears.For the year ended December 31, 2016, 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 $43,000.  There was no interest income recognized on nonaccrual loans in 2016.

14

Accounting Standards Update (ASU) No. 2011-02 to Receivables (ASC 310), A Creditor’s Determination of Whether a Restructuring is a Troubled Debt Restructuring,clarified the guidance for a creditor’s evaluation of whether it has granted a concession and whether a debtor is experiencing financial difficulties. With regard to determining whether a concession has been granted, the ASU clarified that creditors are precluded from using the effective interest method to determine whether a concession has been granted. In the absence of using the effective interest method, a creditor must now focus on other considerations such as the value of the underlying collateral, evaluation of other collateral or guarantees, the debtor’s ability to access other funds at market rates, interest rate increases and whether the restructuring results in a delay in payment that is insignificant.The Company applies the guidance in this ASU to identify its restructured loans as troubled debt restructurings (“TDRs”). Loans restructured in 2016 identified as TDRs totaled $239,000.

As a component of management’s focus on the workout of troubled credits, the terms of certain loans were modified in TDRs, where concessions were granted to borrowers experiencing financial difficulties. The modification of the terms of such loans may have included one or a combination of the following: a reduction of the stated interest rate of the loan; an increase in the stated rate of interest lower than the current market rate for new debt with similar risk; an extension of the maturity date; or a change in the payment terms. Nonaccrual loans included  $144,000in TDRs at December 31, 2016, while non-accrual loans included $356,000 of TDRs at December 31, 2015.

At year-end 2016 there were a total of $3.1 million of TDRs,including$2.5 million in commercial real estate loans, $294,000in commercial loans,  $122,000 in single family residential loans and $37,000 in multi-family loans, which were not included in nonperforming loans, where customers have established a sustained period of repayment performance, loans are current according to their modified terms, and repayment of the remaining contractual payments is expected.

See the section titled “Financial Condition -Allowance for loan losses” and Notes 1and 4  to the Consolidated Financial Statements included in our 2016 Annual Report to Stockholders, included as Exhibit 13.1 to this Form 10-K, for additional information on nonperforming loans and TDRs as of December 31, 2016 and 2015. 

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

Allowance for Loan and Lease Losses (ALLL).The ALLL is a valuation allowance for probable incurred credit losses.  The ALLL methodology is designed as part of a thorough process that incorporates management’s current judgments about the credit quality of the loan portfolio into a determination of the ALLL in accordance with generally accepted accounting principles and supervisory guidance.  Management analyzes the adequacy of the ALLL quarterly through reviews of the loan portfolio, including: the nature and volume of the loan portfolio and segments of the portfolio; industry and loan concentrations; historical loss experience; delinquency statistics and the level of nonperforming loans; specific problem loans; the ability of borrowers to meet loan terms; an evaluation of collateral securing loans and the market for various types of collateral; various collection strategies; current economic condition, trends and outlook; and other factors that warrant recognition in providing for an adequate ALLL.  See the section titled “Financial Condition -Allowance for loan losses” in our 2016 Annual Report to Stockholders, included as Exhibit 13.1 to this Form 10-K, for a detailed discussion of management’s methodology for determining the appropriate level of the ALLL.

The ALLL totaled $6.9  million at December 31, 2016, and increased $305,000, or 4.6%, from $6.6million at December 31, 2015.  The increase in the ALLL is due to a combination of factors including a  16.3% increase in overall loan balances and net recoveries during the twelve months ended December 31, 2016, which was partially offset by continuous improvement in credit quality and a 50.6% decrease in nonperforming loans.  The ratio of the ALLL to total loans was 1.96% at December 31, 2016, compared to 2.18% at December 31, 2015.  In addition, the ratio of the ALLL to nonperforming loans improved to 983.7% at December 31, 2016, compared to 464.6% at December 31, 2015.

We believe the ALLL is adequate to absorb probable incurred credit losses in the loan portfolio as of December 31, 2016; 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 ALLL.  Such agencies may require additional provisions for loan losses based on judgments and estimates that differ from those used by management.  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 estimated probable incurred losses and an increase in required loan provision expense could occur if economic conditions and factors which affect credit quality, real estate values and general business conditions worsen.

15

The following table sets forth activity in the ALLL for the years ended December 31:

	2016		2015		2014		2013		2012
ALLL, beginning of period	$	6,620	$	6,316	$	5,729	$	5,237	$	6,110
Charge-offs:
Real estate loans:
Single-family		147		40		-		164		64
Multi-family		-		-		-		59		796
Commercial real estate		-		25		5		6		1,467
Consumer loans:
Home equity		53		41		26		17		126
Automobile		-		-		-		-		5
Other		1		10		-		6		34
Commercial loans		123		8		44		-		99
Total charge-offs		324		124		75		252		2,591
Recoveries on loans previously charged off:
Recoveries
Real estate loans:
Single-family		42		1		4		3		9
Multi-family		143		-		-		88		22
Commercial real estate		145		33		349		66		138
Consumer loans:
Home equity		69		113		24		29		17
Automobile		-		-		2		8		7
Other		-		6		-		13		16
Commercial loans		-		25		5		41		380
Total recoveries		399		178		384		248		589
Net charge-offs (recoveries)		(75)		(54)		(309)		4		2,002
Provision for loan and lease losses		230		250		278		496		1,129
Reclassification of ALLL on loan-related commitments		-		-		-		-		-
ALLL, end of period	$	6,925	$	6,620	$	6,316	$	5,729	$	5,237
ALLL to total loans		1.96%		2.18%		2.39%		2.69%		3.31%
ALLL to nonperforming loans		983.66%		464.56%		408.01%		99.85%		82.39%
Net charge-offs (recoveries) to ALLL		-1.08%		-0.82%		-4.89%		0.07%		38.23%
Net charge-offs (recoveries) to average loans		-0.02%		-0.02%		-0.13%		0.00%		1.43%

16

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 portfoliosmay 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 ALLL in each of the categories listed at the dates indicated and the percentage of such amounts to the total ALLL and loans in each category as a percent of total loans.  Although the ALLL may be allocated to specific loans or loan types, the entire ALLL is available for any loan that, in management’s judgment, should be chargedoff.

	At December 31,
	2016				2015				2014
	Amount		% of Allowance in each Category to Total Allowance	% of Loans in each Category	Amount		% of Allowance in each Category to Total Allowance	% of Loans in each Category	Amount		% of Allowance in each Category to Total Allowance	% of Loans in each Category
	(Dollars in thousands)
Real estate loans:
Single-family	$	735	10.61%	26.21%	$	691	10.44%	27.00%	$	634	10.04%	19.51%
Multi-family		716	10.34%	9.71%		705	10.65%	9.53%		818	12.95%	10.93%
Commercial real estate		2,727	39.38%	29.83%		2,710	40.94%	31.78%		2,541	40.23%	34.60%
Construction		580	8.38%	7.31%		561	8.47%	8.12%		442	7.00%	0
Consumer loans:
Home equity lines of credit		486	7.02%	6.55%		474	7.16%	7.19%		441	6.98%	6.42%
Other		34	.49%	.18%		99	1.50%	1.98%		94	1.49%	1.90%
Commercial loans		1,647	23.78%	20.21%		1,380	20.84%	14.40%		1,346	21.31%	17.66%
Total ALLL	$	6,925	100.00%	100.00%	$	6,620	100.00%	100.00%	$	6,316	100.00%	100.00%

17

	At December 31,
	2013				2012
	Amount		% of Allowance in each Category to Total Allowance	% of Loans in each Category	Amount		% of Allowance in each Category to Total Allowance	% of Loans in each Category
	(Dollars in thousands)
Real estate loans:
Single-family	$	120	2.09%	15.13%	$	332	6.34%	27.21%
Multi-family		1,262	22.03%	15.12%		1,396	26.66%	13.63%
Commercial real estate		2,325	40.58%	39.34%		1,946	37.16%	34.30%
Construction		119	2.08%	5.39%		-	.00%	0.01%
Consumer loans:
Home equity lines of credit		139	2.43%	6.98%		241	4.60%	8.19%
Other		5	.09%	.41%		11	.21%	.61%
Commercial loans		1,759	30.70%	17.63%		1,311	25.03%	16.05%
Total ALLL	$	5,729	100.00%	100.00%	$	5,237	100.00%	100.00%

Foreclosed Assets

Assets acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis.  If fair value declines subsequent to foreclosure, a valuation allowance is recorded through expense.  Operating and maintenance costs after acquisition are expensed.  REO and other foreclosed assets totaled $204,000 at December 31, 2016 and $1.6million at December 31, 2015.See the section titled “Financial Condition -Foreclosed Assets”and Note 5  to the Consolidated Financial Statementsin our 2016 Annual Report to Stockholders, included as Exhibit 13.1 to this Form 10-K, for information regarding foreclosed assets at December 31, 2016.  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.

18

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 theBoard of Directors is designed to provide and maintain adequate liquidity, generate a favorable return on investmentwithout 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’sguidelines, 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, 2016, the securities portfolio totaled $14.1 million.  At December 31, 2016, all mortgage-backed securities and collateralized mortgage obligations in the securities portfolio were insured or guaranteed by Ginnie Mae, Freddie Mac or Fannie Mae.

Management evaluates securities for other-than-temporary impairment (OTTI) at least on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation.See Notes  1and 3  to the Consolidated Financial Statements contained in our 2016 Annual Report to Stockholders, included as Exhibit 13.1 to this Form 10-K, for a detailed discussion of management’s evaluation of securities for OTTI.

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

	At December 31,
	2016				2015				2014
Securities Available For Sale	Amortized Cost.		Fair Value		Amortized Cost.		Fair Value		Amortized Cost.		Fair Value
Corporate	$	-	$	-	$	-	$	-	$	2,932	$	2,936
State and Municipal		-		-		-		-		897		886
Issued by U.S. government-sponsored entities and agencies:
U.S. Treasury		13,521		13,505		8,575		8,536		5,018		5,011
Mortgage-backed securities - residential		345		357		463		481		687		727
Collateralized mortgage obligations		189		196		339		351		860		885
Total temporarily impaired	$	14,055	$	14,058	$	9,377	$	9,368	$	10,394	$	10,445

19

The following table sets forth information regarding the amortized cost, weighted average yield and contractual maturity dates of debt securities as ofDecember 31, 2016.

				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
Issued by U.S. government-sponsored entities and agencies:
U.S. Treasury		2,518	0.78%		11,003	1.36%		-	0.00%		-	0.00%		13,521	1.25%
Mortgage-backed securities - residential		1	7.30%		90	6.79%		197	3.50%		57	7.01%		345	4.95%
Collateralized mortgage obligations		-	0.00%		-	0.00%		-	0.00%		189	3.97%		189	3.97%
Total Securities Available For Sale	$	2,519	0.78%	$	11,093	1.40%	$	197	3.50%	$	246	4.67%	$	14,055	1.38%

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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 financial 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 its subsidiaries 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 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.  Any future dividend payments by CFBank to the Holding Company would be based on future earnings and, if necessary, regulatory approval.See Note 2 to the Consolidated Financial Statements included in our 2016 Annual Report to Stockholders, included as Exhibit 13.1 to this Form 10-K.

The Holding Company’s available cash and cash equivalents totaled $2.2 million at December 31, 2016. Based on historical cash utilization rate and estimates of future requirements, there is sufficient liquidity to cover operating expenses for the foreseeable future.See the section titled “Liquidity and Capital Resources” and Note 2  to the Consolidated Financial Statements contained in our 2016 Annual Report to Stockholders, included as Exhibit 13.1 to this Form 10-K, for information regarding Holding Company liquidity and regulatory matters.

Deposits.CFBank offers a variety of deposit accounts with a range of interest rates and terms includingsavings accounts, retail and businesschecking 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 and totaled49.4%  of average deposit balances in 2016.  The term of the certificates of deposit typically offered vary from seven days 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, 2016, CFBank had $29.7 million in brokered deposits with maturity dates from January 2017 through March 2021. At December 31, 2016, cash, unpledged securities and deposits in other financial institutions totaled $63.7 million.

CFBank has been a participant in the Certificate of Deposit Account Registry Service® (CDARS), a network of banks that allows us to provide our customers with FDIC insurance coverage on certificate of deposit account balances up to $50 million.Although CFBank customers participate in the CDARS program, CDARS deposits are considered brokered deposits by banking regulation.  Customer balances in the CDARS program totaled $9.6 million at December 31, 2016and increased $266,000, or 2.9%, from $9.3 million at December 31, 2015.

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Certificate accounts in amounts of $100,000 or more totaled $128.2 million at December 31, 2016,  maturing as follows:

Maturity Period	Amount		Weighted Average Rate
	(Dollars in thousands)
Three months or less	$	25,147	0.98%
Over 3 through 6 months		17,406	1.04%
Over 6 through 12 months		35,988	1.30%
Over 12 months		49,644	1.66%
Total	$	128,185

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.  Averages for the periods presented are based on month-end balances.

	For The Year Ended December 31,
	2016				2015				2014
	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	$	7,245	2.29%	0.03%	$	8,793	3.23%	0.02%	$	8,911	3.81%	0.02%
Money market accounts		90,512	28.67%	0.78%		72,819	26.78%	0.75%		41,556	17.79%	0.39%
Savings accounts		16,398	5.19%	0.10%		16,478	6.06%	0.10%		16,270	6.97%	0.10%
Certificates of deposit		156,084	49.44%	1.24%		142,320	52.34%	1.16%		134,203	57.44%	1.03%
Noninterest-bearing deposits:
Demand deposits		45,468	14.41%	-		31,503	11.59%	-		32,681	13.99%	-
Total Average Deposits	$	315,707	100.00%	0.98%	$	271,913	100.00%	0.92%	$	233,621	100.00%	0.78%

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The following table presents, by various rate categories, the amount of certificate accounts outstanding at the dates indicated and the periods to maturity of the certificate accounts outstanding at December 31, 2016.

	Period to Maturity from December 31, 2016								At December 31,
	Less than		One to		Two to		Over
	One Year		Two Years		Three Years		Three Years		2016		2015		2014
	(Dollars in thousands)
Certificate accounts:
0 to 0.99%	$	22,680	$	2,819	$	328	$	220	$	26,047	$	40,782	$	78,444
1.00 to 1.99%		85,766		30,694		5,671		10,771		132,902		89,905		34,781
2.00 to 2.99%		174		104		1,750		11,332		13,360		11,658		22,977
3.00 to 3.99%		-		-		-		-		-		100		243
4.00 to 4.99%		-		-		-		-		-		-		239
5.00% and above		-		-		-		-		-		499		499
Total certificate accounts	$	108,620	$	33,617	$	7,749	$	22,323	$	172,309	$	142,944	$	137,183

See the sections titled “Financial Condition – Deposits”  and “Liquidity and Capital Resources” contained in our 2016 Annual Report to Stockholders, included as Exhibit 13.1 to 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, commercial real estate 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 $13.5  million at December 31, 2016.  Based on the collateral pledged and CFBank’s holdings of FHLB stock, CFBank was eligible to borrow up to a total of $44.5 million at year-end 2016.

In addition to access to FHLB advances, CFBank hasborrowing capacity available with the Federal Reserve Bank through the Borrower in Custody program.  The borrowings are collateralized by commercial loansand commercial real estate loans.  Based on the collateral pledged, CFBank was eligible to borrow up to a total of $31.8 million at year-end 2016.  There were no amounts outstanding from the Federal Reserve Bank at December 31, 2016.  CFBank also had$1.0 million available in an unsecured line of credit with a  commercial bank at December 31, 2016.  Interest on this line accrues daily and is variable based on the commercial bank’s cost of funds and current market returns.There was no amount outstanding on this line of credit at December 31, 2016.See the section titled “Liquidity and Capital Resources” contained in our 2016 Annual Report to Stockholders, included as Exhibit 13.1 to this Form 10-K, for additional information.

See the section titled “Financial Condition - Subordinated Debentures” contained in our 2016 Annual Report to Stockholders, includedas Exhibit 13.1 to this Form 10-K, for information regarding subordinated debentures issued by the Company in 2003.

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The following table sets forth certain information regarding short-term borrowings at or for the periods ended on the dates indicated:

	For the Year ended December 31,
	2016		2015		2014
Short-term FHLB advances and other borrowings:
Average balance outstanding	$	385	$	5	$	54
Maximum amount outstanding at any month-end during the period		6,000		-		-
Balance outstanding at end of period		-		-		-
Weighted average interest rate during the period		0.59%		0.45%		0.21%

Subsidiary Activities

As of December 31, 2016,  we maintained CFBank and the Trustas wholly owned subsidiaries. 

Personnel

As of December 31, 2016,  the Company had  58full-time and 6part-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.

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 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 FDIC’s Deposit Insurance Fund.  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.

Effective as of December 1, 2016, CFBank converted from a federal savings association to a national bank and, in connection with that conversion, the Holding Company became a registered bank holding company and elected financial holding company status. 

As a financial holding company, the Holding Company is subject to regulation by the Federal Reserve Board (the “FRB”) under the Bank Holding Company Act 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 Exchange Act, as administered by 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”).  CFBank has also been and continues to be 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 so that consumers have access to fair, transparent and competitive markets for consumer financial products and services. The CFPB has rulemaking and interpretative authority.

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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 financial 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 financial holding companies, including, among other things, the ability to assess civil money penalties, issue cease and desist or removal orders, and require that a financial 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.  Under FRB policy, a financial holding company is expected to act as a source of financial strength to each subsidiary bank and to commit resources to support such subsidiary bank.  Under this policy, the FRB may require a financial 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 Bank Holding Company Act requires the prior approval of the FRB in any case where a financial holding company proposes to:

· acquire direct or indirect ownership or control of more than 5% of the voting shares of any bank that is not already majority-owned by it;

· acquire all or substantially all of the assets of another bank or another financial or bank holding company; or

· merge or consolidate with any other financial or bank holding company.

Financial Holding Company Status.  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 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 Holding Company became a financial holding company effective as of December 1, 2016.

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 Federal Reserve Board.  The Financial Services Modernization Act defines “financial in nature” to include:

· securities underwriting, dealing and market making;

· sponsoring mutual funds and investment companies;

· insurance underwriting and agency;

· merchant banking; and

· activities that the Federal Reserve Board has determined to be closely related to banking.

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 Community Reinvestment Act rating.  A subsidiary bank of a financial holding company or a national bank with a financial subsidiary must continue to be well capitalized and well managed in order to continue to engage in activities that are financial in nature without regulatory actions or restrictions, which could include divestiture of the financial-in-nature subsidiary or subsidiaries.  In addition, a financial holding company or a bank may not acquire a company that is engaged in activities that are financial in nature unless each of the subsidiary banks of the financial holding company or the bank has a Community Reinvestment Act rating of satisfactory or better.

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.

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Transactions with Affiliates, Directors, Executive Officers and Shareholders

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

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

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

· require that all such transactions be on terms 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 the affiliate, the purchase of assets from the affiliate, the issuance of a guarantee on behalf of the affiliate, the purchase of securities issued by the affiliate and other similar types of transactions.

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 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.   

Prior to January 1, 2015, the regulatory capital guidelines included a minimum for the ratio of total capital to risk-weighted assets of 8%, with at least half of the ratio composed of common shareholders’ equity, minority interests in certain equity accounts of consolidated subsidiaries and a limited amount of qualifying preferred stock and qualified trust preferred securities, less goodwill and certain other intangible assets (known as “Tier 1” risk-based capital). The remainder of total risk-based capital (“Tier 2 capital” may consist, among other things, of certain amounts of mandatory convertible debt securities, subordinated debt, preferred stock not qualifying as Tier 1 capital, allowance for loan and lease losses and net unrealized gains, after applicable taxes, on available-for-sale equity securities with readily determinable fair values, all subject to limitations established by the guidelines.  Under the guidelines, capital is compared to the relative risk related to the balance sheet.  To derive the risk included in the balance sheetone of four risk weights (0%, 20%, 50% and 100%) 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 guidelines also provided for a minimum ratio of Tier 1 capital to average assets, or “leverage ratio,” of 3% for financial holding companies and bank holding companies that met certain criteria, including having the highest regulatory rating, and 4% for all other financial holding companies and bank holding companies.

Following the termination of  the CFBank Order effective January 23, 2014, CFBank wassubject to the heightened capital requirements imposed by the OCC and wasrequired to maintain an 8% Tier 1 (core) Capital ratio to adjusted total assets and 12% Total Capital to risk weighted assets until December 23, 2015.  CFBank was no longer subject to the heightened capital requirements at December 31, 2015.See Note 2-Regulatory Matters and Note 19-Regulatory Capital Matters to the Consolidated Financial

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Statements included in our 2016 Annual Report to Stockholders, included as Exhibit 13.1 to this Form 10-K, for additional information.

Any national bank that fails to comply with its capital plan or has a Tier 1 risk-based or core capital ratio of less than 3.0% or a risk-based capital ratio of less than 6.0% and is considered “significantly undercapitalized” must be made subject to one or more additional specified actions and operating restrictions which may cover all aspects of its operations and may include a forced merger or acquisition of the institution.  The OCC is also generally authorized to reclassify an institution into a lower capital category and impose the restrictions applicable to such category if the institution is engaged in unsafe or unsound practices or is in an unsafe or unsound condition.

The risk-based capital guidelines adopted by the federal banking agencies are based on the “International Convergence of Capital Measurement and Capital Standard” (Basel I), published by the Basel Committee on Banking Supervision (the “Basel Committee”) in 1988.  In 2004, the Basel Committee published a new capital adequacy framework (Basel II) for large, internationally active banking organizations, and in December 2010 and January 2011, the Basel Committee issued an update to Basel II (“Basel III”).  The Basel Committee frameworks did not become applicable to banks supervised in the United States until adopted into United States law or regulations.  Although the United States banking regulators imposed some of the Basel II and Basel III rules on banks with $250 billion or more in assets or $10 billion of on-balance sheet foreign exposure, it was not until July 2013 that the United States banking regulators issued final (or, in the case of the FDIC, interim final) 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 new minimum capital requirements became effective on January 1, 2015, whereas a new capital conservation buffer and deductions from common equity capital phase in from January 1, 2016 through January 1, 2019, and most deductions from common equity tier 1 capital will phase in from January 1, 2015 through January 1, 2019.

The new rules include (a) a new common equity tier 1 capital ratio of at least 4.5%, (b) a Tier 1 capital ratio of at least 6.0%, rather than the former 4.0%, (c) a minimum total capital ratio that remains at 8.0%, and (d) a minimum leverage ratio of 4.0%.

Common equity for the common equity tier 1 capital ratio includes common stock (plus related surplus) and retained earnings, plus limited amounts of minority interests in the form of common stock, less the majority of certain regulatory deductions.        

Tier 1 capital 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, includes certain capital instruments (such as subordinated debt) and limited amounts of the allowance for loan and lease losses, subject to new 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).  The deductions phase in from 2015 through 2019. 

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.  Some of the risk weightings were changed effective January 1, 2015.

The new rules also place restrictions on the payment of capital distributions, including dividends, and certain discretionary bonus payments to executive officers if the company does not hold a capital conservation buffer of greater than 2.5 percent composed of common equity tier 1 capital above its minimum risk-based capital requirements, or if its eligible retained income is negative in that quarter and its capital conservation buffer ratio was less than 2.5 percent at the beginning of the quarter.  The capital conservation buffer phases in starting on January 1, 2016, at .625%.  The implementation of Basel III is not expected to have a material impact on CFBank’s capital ratios.

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 achieve regulatory purposes.  Banking operations otherwise may be significantly affected depending on a bank’s capital category.  For

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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, 2016.

Because the Holding Company’s total consolidated assets are less than $1 billion, the Holding Company 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.

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 deposit insurance fund, 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 Deposit Insurance Fund (“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% by September 30, 2020, the deadline imposed by the Dodd-Frank Act.  The Dodd-Frank Act requires the FDIC to offset the effect on insured institutions with assets of less than $10 billion of the increase in the statutory minimum DRR to 1.35% from the former statutory minimum of 1.15%.  Although the FDIC’s new rules reduced assessment rates on all banks, they imposed a surcharge on banks with assets of $10 billion or more to be paid until the DRR reaches 1.35%.  The rules also provide assessment credits to banks with assets of less than $1 billion for the portion of their assessments that contribute to the increase of the DRR to 1.35%.  The 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.

In addition, all FDIC-insured institutions are required to pay assessments to fund interest payments on bonds issued by the Financing Corporation, which was established by the government to recapitalize a predecessor to the DIF. These assessments will continue until the Financing Corporation bonds mature in 2019.

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 thegreaterof 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.  Pursuant to the commitments applicable to CFBank following the termination of the CFBank Order, CFBank was not permitted to declare or pay dividends or make any other capital distributions without receiving prior written approval of the OCC.  These commitments remained in place until December 23, 2015, but the restrictions are no longer applicable to CFBank after December 23, 2015.

The ability of the Holding Company to pay dividends on its common stock and Series B Preferred Stock is generally dependent upon the receipt of dividends and other distributions from CFBank.  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 requirements, 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

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conditioned upon the payment, on a current basis, of quarterly interest payments on the subordinated debentures underlying the Company’s trust preferred securities.  Finally, so long as the Company’s Series B Preferred Stock remains outstanding, the Holding Company will be prohibited from paying dividends on (other than dividends payable solely in shares) the Company’s common stock, for the then-current dividend period, unless full dividends on the Series B Preferred Stock have been paid or set aside for payment.  Dividends on the Series B Preferred Stock are non-cumulative, which means that if for any reason we do not declare cash dividends on the Series B Preferred Stock for a quarterly dividend period we will have no obligation to pay any dividends for that period (i.e., the dividends will not accrue or cumulate), whether or not we declare dividends on the Series B Preferred Stock for any subsequent dividend period.  See Note 2-Regulatory Matters and Note 19-Regulatory Capital Matters to the Consolidated Financial Statements included in our 2016 Annual Report to Stockholders, included as Exhibit 13.1 to this Form 10-K, for additional information.

Federal income tax laws provided 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 total $765 at year-end 2015. However, if CFBank were wholly or partially liquidated or otherwise ceases to be a bank, or if tax laws were to change, this amount would have to be recaptured and a tax liability recorded. Additionally, any distributions in excess of CFBank’s current or accumulated earnings and profits would reduce amounts allocated to its bad debt reserve and create a tax liability for CFBank. The amount of additional taxable income created by such a distribution is an amount that, when reduced by the tax attributable to the income, is equal to the amount of the distribution. Thus, if CFBank makes a distribution that reduces the amount allocated to its bad debt reserve, then approximately one and one-half times the amount used would be includible in gross income for federal income tax purposes, assuming a 34% corporate income tax rate. CFBank does not intend to make distributions that would result in a recapture of any portion of its bad debt reserve.

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 and the member’s record of lending to first-time home buyers.

Privacy Provisions

Federal and state regulations limit the ability of banks and other financial institutions to disclose non-public information about consumers to nonaffiliated 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 nonaffiliated third party.

Patriot Act

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.

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 Nominating and Corporate Governance Committee, as well as a Code of Business Conduct and Ethics governing the directors, officers and employees of the Company.

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Executive and Incentive Compensation

In June 2010, the Federal Reserve Board, the OCC and the FDIC issued joint interagency guidance on incentive compensation policies (the “Joint Guidance”) 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. This principles-based 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.

In 2011, federal banking regulatory agencies jointly issued proposed rules on incentive-based compensation arrangements under applicable provisions of the Dodd-Frank Act (the “First Proposed Joint Rules”).  The First Proposed Joint Rules generally would have applied to financial institutions with $1.0 billion or more in assets that maintain incentive-based compensation arrangements for certain covered employees.

In May 2016, the federal bank regulatory agencies approved a second joint notice of proposed rules (the “Second Proposed Joint Rules”) designed to prohibit incentive-based compensation arrangements that encourage inappropriate risks at financial institutions.  The Second Proposed Joint Rules would apply to covered financial institutions with total assets of $1 billion or more. The requirements of the Second Proposed Joint Rules would differ for each of three categories of financial institutions:

· Level 1 consists of institutions with assets of $250 billion or more;

· Level 2 consists of institutions with assets of at least $50 billion and less than $250 billion; and

· Level 3 consists of institutions with assets of at least $1 billion and less than $50 billion.

Some of the requirements would apply only to Level 1 and Level 2 institutions. For all covered institutions, however, the Second Proposed Joint Rules would (A) prohibit incentive-based compensation arrangements that are “excessive” or “could lead to material financial loss; (B) require incentive-based compensation that is consistent with a balance of risk and reward, effective management and control of risk, and effective governance; and (C) require board oversight, recordkeeping and disclosure to the appropriate regulatory agency.  So long as CFBank’s total assets are less than $1 billion, CFBank would not be subject to the express requirements of the Second Proposed Joint Rules.  However, the potential application to CFBank cannot be fully determined until final rules have been adopted.

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.

Public companies will be required, once stock exchanges impose additional listing requirements under the Dodd-Frank Act, to implement “clawback” procedures 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 a three-year look-back window of the restatement and would cover all executives who received incentive awards.

Federal and State Taxation

Federal TaxationGeneral.Wereport 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.  The Company recorded a deferred tax valuation allowance which reduced the Company’s deferred tax asset to zero beginning in 2009 and continuing up until the fourth quarter of 2015; the Company maintained this valuation allowance against the net deferred tax assets during this period based on its estimate of future reversal and utilization.  As a result, there was no income tax benefit recorded during the first three quarters of 2015. 

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

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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, 2015, in part because the Company had achieved seven consecutive quarters of pretax income, that it was no longer necessary to maintain a full valuation allowance against the entire net deferred tax asset.  As a result, the valuation allowance on the deferred tax asset was reversed which resulted in a credit to income tax expense of $3.2 million during the fourth quarter of 2015.

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 2016, the Company had net operating loss carryforwards of $23.1 million, which expire at various dates from 2024 to 2033, and has alternative minimum tax credit carryforwards of $50,000, which do not expire. As a result of the ownership change, the Company's ability to utilize carryforwards that arose before the 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 $765,000 at year-end 2016.  However, if CFBank were wholly or partially liquidated or otherwise ceases to be a bank, or if tax laws were to change, this amount would have to be recaptured and a tax liability recorded.   Additionally, any distributions in excess of CFBank’s current or accumulated earnings and profits would reduce amounts allocated to its bad debt reserve and create a tax liability for CFBank. The amount of additional taxable income created by such a distribution is an amount that, when reduced by the tax attributable to the income, is equal to the amount of the distribution. Thus, if CFBank were to makea distribution that reducedthe amount allocated to its bad debt reserve, then approximately one and one-half times the amount used would be includible in gross income for federal income tax purposes, assuming a 34% corporate income tax rate. CFBank does not intend to make distributions that would result in a recapture of any portion of its bad debt reserve.

See Note 14 to the Consolidated Financial Statements included in our 2016 Annual Report to Stockholders, included as Exhibit 13.1 to 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.

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The amount of additional taxable income triggered by a non-dividend distribution is an amount that, when reduced by the tax attributable to the income, is equal to the amount of the distribution.  Thus, if CFBank makes a non-dividend distribution to the Holding Company, approximately one and one-half times the amount of such distribution (but not in excess of the amount of the reserves described in the previous paragraph) would be includable in income for federal income tax purposes, assuming a 34% federal corporate income tax rate.  CFBank does not intend to pay dividends that would result in a recapture of any portion of its bad debt reserves.

Ohio Taxation

Beginning on January 1, 2014, the Ohio corporate franchise tax began to be phased out and the Holding Company was no longer subject to this tax on a stand-alone basis thereafter. For the 2014 tax year the consolidated organization was subject to the newly enacted Ohio Financial Institutions tax (“FIT”). The FITis 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. Based on its size, the Holding Company was charged at 80 basis points of its total equity capital.

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.CFBankonline.com.  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 soon as reasonably practicable after we electronically file such reports with the Securities Exchange Commission (SEC).  These reports can be found on our website under the caption “Investor Relations – SEC Filings.”  Investors also can obtain copies of our filings from the SEC website at www.sec.gov.

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Item 1A.  Risk Factors.

The following are certain risk factors that could impact our business, financial results and 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 thisForm 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 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.

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, money supply and other factors beyond our control can adversely affect our asset quality, deposit levels and loan demand and, therefore, our earnings and our capital.  The recent election of a new United States President is widely expected to result in substantial, unpredictable changes in economic and political conditions for the United States and the rest of the world.  Economic turmoil in Europe and Asia and changes in oil production in the Middle East affect the economy and stock prices in the United States, which can affect our earnings and capital and 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 Ohio counties:  Summit County, and contiguous counties through our office in Fairlawn, Ohio; Franklin County, and contiguous counties through our office in Worthington, Ohio; Columbiana County, and contiguous counties through our officesin Wellsville and Calcutta, Ohio;  and Cuyahoga County, and contiguous counties through our agency office in Woodmere, Ohio.   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.

We may not be able to maintain consistent earnings or profitability.

Although we achieved operating profits in 2016 and 2015, we had incurred net operating losses in each of the previous five years.  While our operating performance has improved since August 2012, there is no assurance that our earnings will be consistent or increase in the future. In addition, if earnings do not grow proportionately with our assets or equity, our overall profitability may be adversely affected.

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, 2014, our total net loans have grown by $140.2 million, or 65.9%, and our total assets have grown by $176.1 million, or 68.9%.  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 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.

Our allowance for loan losses may not be adequate to cover actual losses.  Higher loan losses could require us to increase our allowance for loan losses through a charge to earnings.

When we loan money we incur the risk that our borrowers will not repay their loans.  We reserve for loan losses by establishing an allowance through a charge to earnings.  The amount of this allowance is based on our assessment of probable incurred credit losses in our loan portfolio.  The process for determining the amount of the allowance is critical to our financial condition and results of operations.  It requires subjective and complex judgments about the future, including forecasts of economic or market conditions that might impair the ability of our borrowers to repay their loans.  It also requires that we make various assumptions and judgments about

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the collectability of our loan portfolio, including the creditworthiness of our borrowers and the value of the real estate and other assets serving as collateral for the repayment of many of our loans.  The allowance for loan losses may not be sufficient to cover probable losses in our loan portfolio.  We might underestimate the loan losses inherent in our loan portfolio and have loan losses in excess of the amount reserved.  We might increase the allowance because of changing economic conditions.  For example, when real estate values decline, the potential severity of loss on a real estate-secured loan can increase significantly, especially in the case of loans with high loan-to-value ratios.  The lingering nature of the decline in the national economy and the local economies of the areas in which our loans are concentrated could result in an increase in loan delinquencies, foreclosures or repossessions resulting in increased charge-off amounts and the need for additional loan loss allowances in future periods.  In addition, our determination as to the amount of our allowance for loan losses is subject to review by our regulators as part of their examination process, which may result in the establishment of an additional allowance based upon the judgment of the regulators after a review of the information available at the time of their examination.  The additions to our allowance for loan losses would be made through increased provisions for loan losses, which would reduce our income and could materially and adversely affect our financial condition, earnings and profitability.

We may make, or be required to make, further increases in our provision for loan losses and to charge off additional loans in the future, which could adversely affect our results of operations.

As a result of changes in balances and composition of the loan portfolio, changes in economic and market conditions that occur from time to time and other factors specific to a borrower’s circumstances, the level of nonperforming assets will fluctuate.  Although we have made progress in reducing our level of nonperforming assets during 2016 and 2015, and remain committed to aggressive workout efforts, our nonperforming assets could remain at higherthan desired levels for the immediate future.  If housing and real estate markets resume decline, we may experience increased delinquencies and credit losses.  An increase in our nonperforming assets, credit losses or our provision for loan losses would adversely affect our financial condition and results of operations. 

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. 

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 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 principal source of funds to support its operations, pay dividends on its common shares and service its debt is dividends from CFBank.  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 common or preferred shares.  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.  Under these laws and regulations, the amount of dividends that may be paid by CFBank in any calendar year is generally limited to the current year’s net profits, combined with the retained net profits of the preceding two years.  In addition, the FRB has issued policy statements that provide that insured banks and bank and savings holding companies should generally only pay dividends out of current operating earnings.  Thus, 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

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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.

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

The Deposit Insurance Fund (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.  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 benefitting 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.

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.  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 volumes and refinancing 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.

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

The financial services industry is extensively regulated.  We are subject to extensive state and federal regulation, supervision and legislation that govern almost all aspects of our operations.  These laws and regulations are primarily intended for the protection of consumers, depositors, borrowers and the deposit insurance fund, not to benefit our shareholders.  Changes to laws and regulations or other actions by regulatory agencies may negatively impact us, possibly limiting the services we provide, increasing the ability of non-banks to compete with us or requiring us to change the way we operate.  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.

In light of conditions in the global financial markets and the global economy that occurred in the last decade, regulators increased their focus on the regulation of the financial services industry.  In the last several years, Congress and the federal bank regulators have acted on an unprecedented scale in responding to the stresses experienced in the global financial markets.  Some of the laws enacted by Congress and regulations promulgated by federal bank regulators subject us and other financial institutions to additional restrictions, oversight and costs that may have an adverse impact on our business and results of operations.  In addition to laws, regulations and supervisory and enforcement actions directed at the operations of banks, proposals to reform the housing finance market contemplate winding down Fannie Mae and Freddie Mac, which could negatively affect our sales of loans.

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In July 2013, the Holding Company’s primary federal regulator, the FRB, published final rules (the “Basel III Capital Rules”) establishing a new comprehensive capital framework for U.S. banking organizations.  The rules implement the Basel Committee's December 2010 framework known as “Basel III” for strengthening international capital standards as well as certain provisions of the Dodd-Frank Act.  The implementation of the Basel III Capital Rules result in higher capital requirements and more restrictive leverage and liquidity ratios than those previously in place.  In addition, in order to avoid limitations on capital distributions, such as dividend payments and certain bonus payments to executive officers, the Basel III Capital Rules require insured financial institutions to hold a capital conservation buffer of common equity tier 1 capital above the minimum risk-based capital requirements.  The capital conservation buffer will be phased in over time, becoming fully effective on January 1, 2019, and will consist of an additional amount of common equity equal to 2.5% of risk-weighted assets.  The Basel III Capital Rules revised the regulatory agencies' prompt corrective action framework by incorporating the new regulatory capital minimums and updating the definition of common equity.  The Basel III Capital Rules became effective for the Company on January 1, 2015, and will be fully phased in by January 1, 2019.  Although the implementation of Basel III, once fully phased in, is not expected to have a material impact on our capital ratios, any future changes to capital requirements could have such an effect.

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 Summit, Columbiana, Franklin and Cuyahoga Counties, Ohio, and make loans generally throughout Ohio.  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 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.

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 50,000,000 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

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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.

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 may 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.

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

Our current management team was put in place following the completion of the Company’s common stock offering in August 2012.  Our performance since August 2012 has been strongly influenced by our ability to attract and to retain senior management experienced in banking in the markets we serve.  Our ability to retain executive officers and the current management team will continue to be important to successful implementation of our strategies.  The unexpected loss of services of any key management personnel, or the inability to recruit and retain qualified personnel in the future, could have an adverse effect on our business and financial results.

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 our taxes could have a material adverse effect on our results of operations.  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 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.

We are exposed to cyber-security risks, including hacking and identity theft.

We rely heavily on communications and information systems to conduct our business. A failure, interruption or breach in security of these systems could result in disruptions to our accounting, deposit, loan and other systems, and could adversely affect our customer relationships. While we have implemented policies and procedures designed to prevent or limit the effect of these possible events, there can be no assurance that any such failure, interruption or security breach will not occur or, if any does occur, that it can be sufficiently remediated. 

There have been increasing efforts on the part of third parties, including through cyber attacks, to breach data security at financial institutions or with respect to financial transactions. There have been several recent instances involving financial services and consumer-based companies reporting the unauthorized disclosure of client or customer information or the destruction or theft of corporate data, by both private individuals and foreign governments.  In addition, because the techniques used to cause such security breaches change frequently, often are not recognized until launched against a target and may originate from less regulated and remote areas around the world, we may be unable to proactively address these techniques or to implement adequate preventative measures.

Cyber threats are rapidly evolving and we may not be able to anticipate or prevent all such attacks.  We may incur increasing costs in an effort to minimize these risks or in the investigation of such cyber-attacks or related to the protection of our customers from identity theft as a result of such attacks.  Nevertheless, the occurrence of any failure, interruption or security breach of our systems, or of our

37

third-party service providers, particularly if widespread or resulting in financial losses to customers, could also seriously damage our reputation, result in a loss of customer business, subject it to additional regulatory scrutiny, or expose it to civil litigation and financial liability.

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.

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.

Although publicly traded, our Common Stock has substantially 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 substantially 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.

The market price of our common stock may fluctuate in the future, and this volatility may be unrelated to our performance. General market price declines or overall market swings in the future could adversely affect the price of our common stock, and the current market price may not be indicative of future market prices.

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.

38

Item 1B.  Unresolved Staff Comments

Not Applicable

Item 2.Properties.

We conduct our business through four branch offices located in Summit, Columbiana and Franklin Counties, Ohio, and a loan production office in Cuyahoga County, Ohio.  The net book value of the Company’s properties totaled $3.1 million at December 31, 2016.  CFBank also leases its branch office in Fairlawn, Ohio and its agency office located in Woodmere, Ohio in Cuyahoga County.  See Note 8 to the Consolidated Financial Statements included in our 2016 Annual Report to Stockholders, included as Exhibit 13.1 to this Form 10-K,for further discussion.

Locations

Administrative Office (owned facility):

7000 N. High Street

Worthington, Ohio 43085

Branch Offices:

Worthington Branch (owned facility)

7000 N. High Street

Worthington, Ohio 43085

Fairlawn Branch (leased facility)

3009 Smith Road, Suite 100

Fairlawn, Ohio 44333

Wellsville Branch (owned facility)

601 Main Street

Wellsville, Ohio 43968

Calcutta Branch (owned facility)

49028 Foulks Drive

Calcutta, Ohio 43920

39

AgencyOffice (leased facility):

28879 Chagrin Blvd.

Woodmere, Ohio 44122

Item 3.Legal Proceedings.

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

PART II

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

During the fiscal quarter ended December 31, 2016, the Company did not repurchase any of its securities.Since the inception of the Company’s common stock repurchase program in May 2016, the Company has repurchased a total of 21,300 sharesas of December 31, 2016.

The market information required by Item 201(a), the stockholders information required by Item 201(b) and the dividend information required by Item 201(c) of Regulation S-K are incorporated herein by reference from our 2016 Annual Report to Stockholders, included as Exhibit 13.1 to this Form 10-K; the information appears under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations−Market Prices and Dividends Declared.”

Item 6.Selected Financial Data.

Information required by Item 301 of Regulation S-K is incorporated herein by reference from our 2016 Annual Report to Stockholders, included as Exhibit 13.1 to this Form 10-K; the information appears under the caption “Selected Financial and Other Data” therein.

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

Information required by Item 303 of Regulation S-K is incorporated herein by reference from our2016 Annual Report to Stockholders, included as Exhibit 13.1 to this form 10-K; the information appears under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations”therein.

40

Item 7A.Quantitative and Qualitative Disclosures About Market Risk.

Information required by Item 305 of Regulation S-K is incorporated herein by reference from our 2016 Annual Report to Stockholders, included as Exhibit 13.1 to this Form 10-K; the information appears under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations−Quantitative and Qualitative Disclosures about Market Risks” therein.

Item 8.Financial Statements and Supplementary Data.

The consolidated financial statements required by Article 8 of Regulation S-X are incorporated by reference to our 2016 Annual Report to Stockholders, included as Exhibit 13.1 to this Form 10-K; the consolidated financial statements appear under the caption “Financial Statements”  therein and include the following: 

Management’s Report on Internal Control over Financial Reporting

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets

Consolidated Statements of Income

Consolidated Statements of Comprehensive Income

Consolidated Statements of Changes in Stockholders’ Equity

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

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.  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, 2016, an evaluation was performed under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures.  Based on that evaluation, management concluded that our internal controls over financial reporting as of December 31, 2016were effective.

Management’s Report on Internal Control Over Financial Reporting.  Information required by Item 308 of Regulation S-K is incorporated herein by reference from our 2016 Annual Report to Stockholders, included as Exhibit 13.1 to this Form 10-K;the information appears under the caption “Management’s Report on Internal Control over Financial Reporting”  therein.

Changes in internal control over financial reporting.  We made 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 2016that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B.Other Information.

None

41

PART III

Item 10.  Directors,Executive Officers and Corporate Governance.

Directors.  Information required by Item 401 of Regulation S-K with respect to our directorsis incorporated herein by reference from our definitive Proxy Statement for our2016 Annual Meeting of Stockholders to be filed with the Commission pursuant to SEC Regulation 14A (the “2017 Proxy Statement”), under the caption “PROPOSAL 1.  ELECTION OF DIRECTORS.”

Executive Officers of the Registrant.  Provided below is information regarding our executive officers:

3
Name	Age at December 31, 2016	Position held with the Holding Company and/or Subsidiaries
Robert E. Hoeweler	69	Chairman of the Holding Company and CFBank
Timothy T. O’Dell	63	President and Chief Executive Officer of the Holding Company and CFBank
John W. Helmsdoerfer	58	Chief Financial Officer of the Holding Company and CFBank; Treasurer of the Holding Company

Mr. Hoeweler is the Chairman of the Board of CFBank and the Holding Company.  Mr. Hoeweler is the Chief Executive Officer of a diverse group of companies owned by the Hoeweler family, including manufacturing, communications, distribution, business services and venture capital entities.  He serves on the boards of a major waste management company and large commercial bakery.  He previously has been the Chairman of two family led businesses in financial services, a midsized community bank and a major payment processing services company.

Mr. O’Dell is the President and CEO and Director of CFBank and the Holding Company.  Prior to joining CFBank in 2012, Mr. O’Dell owned and operated a consulting company specializing in providing advisory services to a number of privately held enterprises in construction, health care, real estate and professional services.  Mr. O’Dell previously spent 22 years at Fifth Third Bank, and was a senior executive with Fifth Third’s Central Ohio operations for 12 of those years, concluding his tenure serving as President and Chief Executive Officer. At Fifth Third’s Central Ohio Affiliate, Mr. O’Dell also served as Executive Vice President and senior lender and managed its commercial banking and residential, commercial real estate divisions.  Previously he managed the Asset Based Lending Division for Fifth Third Bank engaged in financing growth companies and acquisition financing.  During his tenure, Fifth Third’s Central Ohio division grew by $4 billion in deposits and $5 billion in loans from organic growth and through strategic acquisitions.  Mr. O’Dell served on the board of the Columbus Chamber of Commerce and The Ohio State University Medical Center, and he was a founding investor in the Ohio TechAngel Venture Fund.  Mr. O'Dell holds a B.B.A. from Marshall University.

Mr. Helmsdoerferhas been the CFO of the Holding Company and CFBank since March 2013.  As a CPA with over 30 years of financial experience, which includes Big Four public accounting and 24 years as a CFO, he has a diverse finance and operations background in addition to his financial services background.  Prior to joining CFBank, Mr. Helmsdoerfer spent 18 years with Fifth Third Bank where he held positions as both a CFO and Regional CFO for the Central Ohio affiliate and region.   He also served as CFO for Nationwide Bank and Wilmington Savings Bank during his career.   Mr. Helmsdoerfer holds a B.S.B.A degree from Miami University where he graduated cum laude.

42

Compliance with Section 16(a) of the Exchange Act.  Information required by Item 405 of Regulation S-K is incorporated herein by reference from our2017 ProxyStatement, under the caption “BENEFICIAL OWNERSHIP OF COMPANY COMMON STOCK– SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE.”Copies of Section 16 reports, Forms 3, 4 and 5 are available onour website, www.CFBankonline.com,  under the tab “Investor Relations – Section 16 Filings.”

Code of Ethics.  We have adopted a Code of Ethics and Business Conduct, whichapplies to all employees, includingourprincipal executive officer, principal financial officer and principal accounting officer.  Since the Company’s inception in 1998, we have had a code of ethics.  We require all directors, officers and other employees to 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.  All employees are required to review the Code of Ethics and Business Conduct.The Code of Ethics and Business Conductis available on our website, www.CFBankonline.com under the tab “Investor Relations – Corporate Governance.”  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 is incorporated herein by reference from our 2017 ProxyStatement, under the caption “CORPORATE GOVERNANCE.”  

Item 11.Executive Compensation.

Information required by Item 402 of Regulation S-K is incorporated herein by reference from our 2017Proxy Statement, under the caption “COMPENSATION OF EXECUTIVE OFFICERS.”

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-Kis incorporated hereinby reference from our2017 Proxy Statement under the caption “BENEFICIAL OWNERSHIP OF COMPANY COMMON STOCK.”  

Related Stockholder Matters – Equity Compensation Plan Information.  Information required by Item 201(d) of Regulation S-K is incorporated herein by reference from our 2017 Proxy Statement, under the caption “COMPENSATION OF EXECUTIVE OFFICERS-EQUITY COMPENSATION PLAN INFORMATION,” and from our 2016 Annual Report to Stockholders distributed to stockholders and furnished to the Commission under Rule 14a-3(b) and (c) of the Exchange Act, where the information appears under the caption “Note 16 – Stock-Based Compensation” therein. 

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

Information required by Items 404 and 407(a) of Regulation S-K is incorporated herein by reference from our 2017 Proxy Statement, under the caption“CORPORATE GOVERNANCE-CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS” and“CORPORATE GOVERNANCE-DIRECTOR INDEPENDENCE.”  

Item 14.Principal Accounting Fees and Services.

Information required by this Item 14 is incorporated by reference from our2017Proxy Statement, under the caption “AUDIT COMMITTEE MATTERS.”

PART IV

Item 15.Exhibits and Financial Statement Schedules

See the Exhibit Indexof this Report Form 10-K.

43

SIGNATURES

Pursuant to the requirements ofSection 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

CENTRAL FEDERAL CORPORATION

/s/ Timothy T. O’Dell

Timothy T. O’Dell

President and Chief Executive Officer

Date: March 15, 2017

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/ Robert E. Hoeweler	Chairman	March 15, 2017
Robert E. Hoeweler
/s/ Timothy T. O’Dell	Director, President and Chief Executive Officer	March 15, 2017
Timothy T. O’Dell
/s/ Thomas P. Ash	Director	March 15, 2017
Thomas P. Ash
/s/ James H. Frauenberg II	Director	March 15, 2017
James H. Frauenberg II
/s/ Edward W. Cochran	Director	March 15, 2017
Edward W. Cochran
/s/ Robert H. Milbourne	Director	March 15, 2017
Robert H. Milbourne

44

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 Registration Statement on Form SB-2 (File No. 333-64089), filed with the Commission on September 23, 1998)
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	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 Certificate for the Series B Preferred Stock of Central Federal Corporation (incorporated by reference to Exhibit 4.1 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))
4.3	Form of Warrant for the purchase of common stock of Central Federal Corporation (incorporated by reference to Exhibit 4.2 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))
4.4	Form of Registration Rights Agreement (incorporated by reference to Exhibit 4.3 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))
10.1*	1999 Stock-Based Incentive Plan (as Amended and Restated) (incorporated by reference to Appendix A to the registrant’s Definitive Proxy Statement filed with the Commission on March 21, 2000)
10.2*	Central Federal Corporation 2009 Equity Compensation Plan (incorporated by reference to Appendix A to the registrant’s Definitive Proxy Statement filed with the Commission on March 31, 2009)
10.3*	First Amendment to the Central Federal Corporation 2009 Equity Compensation Plan (incorporated by reference to Appendix A to the registrant’s Definitive Proxy Statement filed with the Commission on April 11, 2013)
10.4*	Form of Incentive Stock Options Award Agreement under the Central Federal Corporation 2009 Equity Compensation Plan (incorporated by reference to Exhibit 10.3 to the registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012, filed with the Commission on April 1, 2013 (File No. 0-25045)
10.5*	Form of Non-Qualified Stock Option Award Agreement under the Central Federal Corporation 2009 Equity Compensation Plan (incorporated by reference to Exhibit 10.4 to the registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012, filed with the Commission on April 1, 2013 (File No. 0-25045)
10.6*	Form of Employee Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.3 to the registrant’s Current Report on Form 8-K filed with the Commission on November 3, 2015 (File No. 0-25045))
10.7*	Form of Director Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.4 to the registrant’s Current Report on Form 8-K filed with the Commission on November 3, 2015 (File No. 0-25045))
10.8*	Employment Agreement, dated August 15, 2016, 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 filed with the Commission on August 16, 2016 (File No. 0-25045))
10.9*	Employment Agreement, dated August 15, 2016, by and among Central Federal Corporation, CFBank and John W. Helmsdoerfer (incorporated by reference to Exhibit 10.2 to the registrant’s Current Report on Form 8-K filed with the Commission on August 16, 2016 (File No. 0-25045))

10.10*	Central Federal Corporation Incentive Compensation Plan (incorporated by reference to Exhibit 10.3 to the registrant’s Current Report on Form 8-K filed with the Commission on August 16, 2016 (File No. 0-25045))
11.1	Statement Re:  Computation of Per Share Earnings
13.1	Annual Report to Security Holders for the Fiscal Year Ended December 31, 2016
21.1	Subsidiaries of the Registrant
23.1	Consent of Independent Registered Public Accounting Firm
31.1	Rule 13a-14(a) Certifications of the Chief Executive Officer
31.2	Rule 13a-14(a) Certifications of the Chief Financial Officer
32.1	Section 1350 Certifications of the Chief Executive Officer and Chief Financial Officer
101.1	Interactive Data File (XBRL)

____________________________________________________________________________________________________________

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

EX-11.1

Exhibit 11.1

Computation of Per Share Earnings

The information regarding Computation of Per Share Earnings is incorporated by reference from the Company’s 2016 Annual Report to Stockholders distributed to stockholders and furnished to the Commission under Rules 14a-3(b) and (c) of the Exchange Act; the computation appears under the caption “Note 23 - Earnings (Loss) Per Common Share” therein.

EX-13.1

Exhibit 13.1

Annual Report to Security Holders For the Fiscal Year ended December 31, 2016

TABLE OF CONTENTS	Page
MESSAGE TO STOCKHOLDERS
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Selected Financial and Other Data	1
Forward-Looking Statements	3
Business Overview	5
Regulatory Matters	5
Financial Condition	6
Comparison of Results of Operations for 2016 and 2015	11
Comparison of Results of Operations for 2015 and 2014	13
Quantitative and Qualitative Disclosures about Market Risk	16
Liquidity and Capital Resources	18
Impact of Inflation	20
Critical Accounting Policies	20
Market Prices and Dividends Declared	22
FINANCIAL STATEMENTS
Management’s Report on Internal Control Over Financial Reporting	1
Report of Independent Registered Public Accounting Firm	2
Consolidated Financial Statements	3
Notes to Consolidated Financial Statements	8
BOARD OF DIRECTORS AND OFFICERS	54
CFBANK LOCATIONS	54
CORPORATE DATA	55
Annual Report	55
Annual Meeting	55
Shareholder Services	55

To Our Shareholders;

Your Team at CFBank has accomplished many goals during 2016 including:

· We converted our charter from a Savings Association to a National Bank, which we believe will better align with our business model and provide additional flexibility for business lending.

· We increased our income before income taxes for 2016 by $1.1 million, or 89.8%, over the prior year on a comparable basis.

· We grew our net loans by 16.5% and our deposits by 29.2%, which compares favorably to peer and industry growth rates.

· We maintained and strengthened our credit quality, while at the same time achieving above average loan growth.  Net recoveries were $75,000 for 2016.

· We upgraded our operating platform, which enhanced our corporate cash management banking products and capabilities.  

· We introduced to our business customers, equipment leasing and interest rate SWAP capabilities, allowing us to compete effectively with larger regional banks for quality equipment financing and owner occupied commercial real estate lending relationships.

We believe that our 2016 accomplishments serve to further position CFBank for continued growth and expansion.  We are confident that we have the necessary infrastructure, deposits, loan pipelines and business opportunities in place.  As we continue to expand our balance sheet by growing earning assets prudently, we expect to realize greater earnings leverage.  Offering full service Commercial Banking product offerings, coupled with our presence in multiple major metro markets, positions CFBank well for expanding our Commercial Banking businesses and customer base. 

Our relationship based, customer focused, and highly responsive approach to business banking has been very well received by business customers and entrepreneurs alike, as a more user friendly and customer centric alternative to dealing with larger regional banks.

We remain committed to continued earnings growth and to building a quality banking franchise.  It is clear to us that asset size matters to overall performance.  CFBank has the necessary talent on board along with the “dry powder” to continue to grow and expand, while improving further the performance of our Bank.

On behalf of your CFBank Team, our thanks to you our Shareholders for your support.

Onward and Upward in 2017!

/s/ Timothy T. O’Dell

Timothy T. O’Dell

President and Chief Executive Officer

/s/ Robert E. Hoeweler

Robert E. Hoeweler

Chairman of the Board

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

SELECTED FINANCIAL AND OTHER DATA

The information in the following tables should be read in conjunction with our Consolidated Financial Statements, the related Notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in this report.

		At December 31,
	2016		2015		2014		2013		2012
		(Dollars in thousands)
Selected Financial Condition Data:
Total assets	$	436,112	$	351,293	$	315,588	$	255,748	$	215,035
Cash and cash equivalents		57,941		25,895		28,207		19,160		25,152
Securities available for sale		14,058		9,368		10,445		9,672		17,639
Loans held for sale		2,812		889		3,505		3,285		623
Loans and Leases, net (1)		346,125		297,064		257,085		207,141		153,043
Allowance for loan and lease loss (ALLL)		6,925		6,620		6,316		5,729		5,237
Nonperforming assets		908		3,061		3,184		7,374		7,881
Foreclosed assets		204		1,636		1,636		1,636		1,525
Other intangible assets		-		-		-		-		49
Deposits		375,364		290,467		258,315		208,309		173,508
FHLB advances		13,500		14,500		14,500		10,000		10,000
Other secured borrowings		-		-		-		6,526		-
Subordinated debentures		5,155		5,155		5,155		5,155		5,155
Total stockholders' equity		39,292		38,312		34,509		22,864		23,643

		At December 31,
	2016		2015		2014		2013		2012
		(Dollars in thousands)
Summary of Operations:
Total interest income	$	14,409	$	12,405	$	10,611	$	7,500	$	7,268
Total interest expense		3,096		2,608		1,889		2,113		2,633
Net interest income		11,313		9,797		8,722		5,387		4,635
Provision for loan and lease losses		230		250		278		496		1,129
Net interest income after provision for loan and lease losses		11,083		9,547		8,444		4,891		3,506
Noninterest income:
Net gain (loss) on sale of securities		-		(12)		-		-		143
Other		1,177		1,360		1,492		1,893		862
Total noninterest income		1,177		1,348		1,492		1,893		1,005
Noninterest expense		9,823		9,611		9,457		7,702		8,277
Income (loss) before income taxes		2,437		1,284		479		(918)		(3,766)
Income tax expense (benefit)		810		(3,193)		-		-		-
Net income (loss)	$	1,627	$	4,477	$	479	$	(918)	$	(3,766)
Dividends on Series B preferred stock and accretion of discount		(857)		(857)		(421)		-		-
Dividends on Series A preferred stock and accretion of discount		-		-		-		-		(328)
Discount on redemption of Series A preferred stock		-		-		-		-		4,960
Net income (loss) available to common stockholders	$	770	$	3,620	$	58	$	(918)	$	866

1

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

		At December 31,
	2016		2015		2014		2013		2012
		(Dollars in thousands)
Selected Financial Ratios and Other Data:
Performance Ratios (2)
Return on average assets		0.43%		1.36%		0.17%		(0.39%)		(1.65%)
Return on average equity		4.19%		12.84%		1.67%		(4.04%)		(24.29%)
Average yield on interest-earning assets (3)		4.09%		4.06%		4.03%		3.51%		3.48%
Average rate paid on interest-bearing liabilities		1.06%		1.00%		0.85%		1.12%		1.37%
Average interest rate spread (4)		3.03%		3.06%		3.18%		2.39%		2.11%
Net interest margin, fully taxable equivalent (5)		3.21%		3.21%		3.31%		2.52%		2.22%
Average interest-earning assets to interest bearing liabilities		121.04%		117.42%		119.19%		113.05%		108.41%
Efficiency ratio (6)		78.65%		86.14%		92.59%		105.11%		137.98%
Noninterest expenses to average assets		2.60%		2.92%		3.31%		3.26%		3.62%
Common stock dividend payout ratio		n/m		n/m		n/m		n/m		n/m
Capital Ratios: (2)
Equity to total assets at end of period		9.01%		10.91%		10.93%		8.94%		10.99%
Average equity to average assets		10.27%		10.60%		10.05%		9.60%		6.78%
Tangible capital ratio (7)		n/a		n/a		11.03%		9.34%		10.97%
Tier 1 (core) capital to adjusted total assets (Leverage ratio) (7)		9.66%		11.12%		11.03%		9.34%		10.97%
Total capital to risk weighted assets (7)		12.46%		13.67%		14.18%		12.08%		15.53%
Tier 1 (core) capital to risk weighted assets (7)		11.20%		12.40%		12.92%		10.81%		14.26%
Common equity tier 1 capital to risk weighted assets (7)		11.20%		12.40%		n/a		n/a		n/a
Asset Quality Ratios: (2)
Nonperforming loans to total loans (8)		0.20%		0.47%		0.59%		2.70%		4.02%
Nonperforming assets to total assets (9)		0.21%		0.87%		1.01%		2.88%		3.66%
Allowance for loan and lease losses to total loans		1.96%		2.18%		2.39%		2.69%		3.31%
Allowance for loan and lease losses to nonperforming loans (8)		983.66%		464.56%		408.01%		99.85%		82.39%
Net charge-offs (recoveries) to average loans		(0.02%)		(0.02%)		(0.13%)		0.00%		1.43%
Per Share Data: (10)
Basic earnings (loss) per common share	$	0.05	$	0.23	$	0.00	$	(0.06)	$	0.14
Diluted earnings (loss) per common share		0.05		0.20		0.00		(0.06)		0.14
Dividends declared per common share		-		-		-		-		-
Tangible book value per common share at end of period		1.67		1.64		1.42		1.44		1.48

(1)	Loans and leases, net represents the recorded investment in loans net of the ALLL.
(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 34%.
(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 writedowns) 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.
(10)	Per share amounts adjusted for the one-for-five reverse stock split effective May 4, 2012.
	n/m - not meaningful

2

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

FORWARD LOOKING STATEMENTS

Statements in this annual report 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 common share, capital structure and other financial items; (2) plans and objectives of the management or Boards of Directors of Central Federal Corporation (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.  The following, among other factors, could cause such differences:

· 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;

· changes in interest rates that may reduce net interest margin and impact funding sources;

· the possibility that we will need to make increased provisions for loan andlease losses;

· our ability to maintain sufficient liquidity to continue to fund our operations;

· our ability to reduce our high level of nonperforming assets and the associated operating expenses;

· changes in market rates and prices, including real estate values, which may adversely impact the value of financial products including securities, loans and deposits;

· the possibility of other-than-temporary impairment of securities held in our securities portfolio;

· results of examinations of the Holding Company and CFBank by the regulators, including the possibility that the regulators may, among other things, require CFBank to increase its allowance for loan and lease losses or write-down assets;

· our ability to continue to meet regulatory requirements and guidelinesto which we are subject;

· our ability to generate profits in the future;

· our ability to raise additional capital if and when necessary in the future;

· changes in tax laws, rules and regulations;

· increases in deposit insurance rates or premiums;

· further legislative and regulatory changes which may increase compliance costs and burdens;

· unexpected losses of key management;

· various monetary and fiscal policies and regulations, including those determined by the Board of Governors of the Federal Reserve System (the “FRB”), the Federal Deposit Insurance Corporation (the “FDIC”) and the Office of the Comptroller of the Currency (the “OCC”);

· further increases in competition from other local and regional commercial banks, savings banks, credit unions and other non-bank financial institutions;

· our ability to grow our core businesses;

· our ability to effectively manage our growth;

· any failure, interruption or breach in security of our communications and information systems;

3

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

· technological factors which may affect our operations, pricing, products and services;

· unanticipated litigation, claims or assessments; and

· Management's ability to manage these and other risks.

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.  The Holding Company, including its subsidiaries (together referred to as the “Company”) believes it has 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 report speak only as of the date of the report.  We undertake no obligation to publicly release revisions to any forward-looking statements to reflect events or circumstances after the date of such statements, except to the extent required by law.

Our filings with the Securities and Exchange Commission (the “SEC”) detail other risks, all of which are difficult to predict and many of which are beyond our control.

4

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

Business Overview

The Holding Company is a financial holding company that owns 100% of the stock of CFBank, National Association (CFBank), which was formed in Ohio in 1892 and converted from a federal savings association to a national bank on December 1, 2016.  Prior to December 1, 2016, the Holding Company was a registered savings and loan holding company.  Effective as of December 1, 2016 and in conjunction with the conversion of CFBank to a national bank, the Holding Company became a registered bank holding company and elected financial holding status with the FRB.

CFBank has a presence in three major metro Ohio markets – Columbus, Cleveland and Akron– as well as its two locations in Columbiana County, Ohio.  CFBank provides Business Banking products and services including commercial loans and leases, commercial and residential real estate loans and treasury management depository services.  As a full service commercial bank, our business, along with our products and services, is focused on serving the banking and financial needs of closely held businesses.  Our business model emphasizes personalized service, customer access to decision makers, quick execution, and the convenience of online internet banking, mobile banking, remote deposit and corporate treasury management.  In addition, CFBank provides residential lending and full service retail banking services and products.Most of our deposits and loans come from our market area.  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.

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 loan and lease losses, loan fee income, service charges, gains on loan sales, operating expenses, and taxes.  Operating expenses principally consist of employee compensation and benefits, occupancy, FDIC insurance premiums and other general and administrative expenses.  In general, 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 loan and lease 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.

Regulatory Matters

FromMay 2011 until 2014, the Holding Company and CFBank each were subject to Cease and Desist Orders (the “Holding Company Order” and the “CFBank Order”, respectively, and collectively, the “Orders”) with the FRB, as successor to the Office of Thrift Supervision (the “OTS”) asthe primary regulator of the Holding Company and CFBank.  See Note 2 to the consolidated financial statements included in this annual report for additional information regarding the Orders.

Effective as of January 23, 2014, the OCC released and terminated the CFBank Order based upon the improved capital position of CFBank, among other factors.  Following the release of the CFBank Order, CFBank was required to continue to maintain a minimum Tier 1 Leverage Capital Ratio of 8% and a Total Risk-based Capital to Risk-Weighted Assets ratio of 12% until December 23, 2015, and CFBank further committed to the OCC to adhere to certain prudent practices.The foregoing commitments remained in place until December 23, 2015.See Note 2 to the consolidated financial statements included in this annual report for additional information regarding the Orders.

5

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

On May 15, 2014, the FRB announced the termination of the Holding Company Order, effective as of May 9, 2014.  Following the termination of the Holding Company Order, the Holding Company was required to continue to adhere to certain requirements and restrictions based on commitments made to the FRB in connection with the termination of the Holding Company Order.  These commitments required the Holding Company, among other things, to continue to implement certain actions in accordance with the capital plan previously submitted to the FRB; not declare or pay dividends on its stock, purchase or redeem its stock, or accept dividends or other capital distributions from CFBank without the prior written approval of the FRB; not incur, increase or guarantee any debt without the prior written consent of the FRB; and provide prior written notice to the FRB with respect to certain changes in directors and senior executive officers.  The foregoing commitments remained in place until January 8, 2016.See Note 2 to the consolidated financial statements included in this Annual Report for additional information regarding the Orders.

Although we are no longer subject to the Orders or the regulatory commitments made following the release of the Orders, we remain subject to extensive supervision and regulation by our regulators and it is possible that regulatory compliance expenses could continue to have a material adverse impact on us in the future.

Dividend Restrictions

Banking regulations limit the amount of dividends that may be paid without prior approval of regulatory agencies.  Generally, CFBank may pay dividends to the Holding Company 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 CFBank remains well capitalized after the dividend payment.  Future dividend payments by CFBank to the Holding Company would be based on future earnings and, if necessary, regulatory approval.  Management believes that the Holding Company has adequate operating capital for the foreseeable future. The Holding Company had $2.2 million in cash and cash equivalents at December 31, 2016.  

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 $436.1 million at December 31, 2016 and increased  $84.8 million, or 24.1%, from $351.3 million at December 31, 2015.  The increase was primarily due to a $49.1 million increase in net loan balances and a $32.0 million increase in cash and cash equivalents.

Cash and cash equivalents.Cash and cash equivalents totaled $57.9 million at December 31, 2016, andincreased  $32.0 million, or 123.8%, from $25.9 million at December 31, 2015.  The increase in cash and cash equivalents was a result of management’s efforts to increase deposit activity in order to fund anticipated loan growth and to improve the loan to deposit ratio.

Securities. Securities available for sale totaled $14.1 million at December 31, 2016, andincreased  $4.7 million, or 50.1%, compared to $9.4 million at December 31, 2015.  The increase was due to $6.0 million in purchases, partially offset by scheduled maturities and repayments.

Loans and Leases.Net loans totaled $346.1 million at December 31, 2016, and increased $49.1 million, or 16.5%, from $297.1 million at December 31, 2015. The increase was primarily due to a $27.6 million increase in commercial loan balances, a $10.6 million increase in single-family loan balances, a $8.8 million increase in commercial real estate loan balances, a $5.3 million increase in multi-family loan balances, and a $1.2 million increase in construction loan balances, partially offset by a $4.1 million decrease in total consumer loan balances.  The increase in single-family residential loan balances was primarily attributed to an increase in balances associated with our Northpointe mortgage program.  The increase in commercial loan balances, single-family residential, commercial real estate, multi-family and construction loans was due to increased sales activity.  The decrease in total consumer loan balances is primarily due to payoffs and maturities.

CFBank has participated in a Mortgage Purchase Program with Northpointe Bank (Northpointe), a Michigan banking corporation, since December 2012.  Pursuant to the terms of a participation agreement, CFBank purchases participation interests in loans made by Northpointe related to fully underwritten and pre-sold mortgage loans originated by various prescreened mortgage brokers located throughout the U.S.  The underlying loans are individually (MERS) registered loans which are held until funded by the end investor.  The mortgage loan investors include Fannie Mae and Freddie Mac, and other major financial institutions.  This process on average takes approximately 14 days.  Given the short-term holding period of the underlying loans, common credit risks (such as past due, impairment and TDR, nonperforming, and nonaccrual classification) are substantially reduced.  Therefore, no allowance is allocated

6

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

by CFBank to these loans.  These loans are 100% risk rated for CFBank capital adequacy purposes.  Under the participation agreement,  CFBank agrees to purchase  a 95% ownership/participation interest in each of the aforementioned loans, and Northpointe maintains a 5% ownership interest in each loan it participates.  During the twelve months ended December 31, 2016 and December 31, 2015, loan origination activity totaled $824.7 and $722.2 million, respectively, and payoffs for the same period totaled $821.3 and $703.7 million, respectively.  At December 31, 2016 and December 31, 2015, CFBank held $46.9 million and $43.5 million, respectively, of such loans which are included in single-family residential loan totals.

Allowance for loan and  lease losses (ALLL).  The allowance for loan and lease losses totaled $6.9 million at December 31, 2016, and increased $305,000, or 4.6%, from $6.6 million at December 31, 2015.  The increase in the ALLL is due to a combination of factors including a 16.5% increase in net loan balances and net recoveries during the twelve months ended December 31, 2016, which was partially offset by continued improvement in credit quality and a 50.6% decrease in nonperforming loans.  The ratio of the ALLL to total loans was 1.96% at December 31, 2016, compared to 2.18% at December 31, 2015.  In addition, the ratio of the ALLL to nonperforming loans improved to 983.7% at December 31, 2016, compared to 464.6% at December 31, 2015.

The ALLL is a valuation allowance for probable incurred credit losses.  The ALLL methodology is designed as part of a thorough process that incorporates management’s current judgments about the credit quality of the loan portfolio into a determination of the ALLL in accordance with generally accepted accounting principles and supervisory guidance.  Management analyzes the adequacy of the ALLL quarterly through reviews of the loan portfolio, including the nature and volume of the loan portfolio and segments of the portfolio; industry and loan concentrations; historical loss experience; delinquency statistics and the level of nonperforming loans; specific problem loans; the ability of borrowers to meet loan terms; an evaluation of collateral securing loans and the market for various types of collateral; various collection strategies; current economic conditions, trends and outlook; and other factors that warrant recognition in providing for an adequate ALLL.  Based on the variables involved and the significant judgments management must make about outcomes that are uncertain, the determination of the ALLL is considered to be a critical accounting policy. See the section titled “Critical Accounting Policies” for additional discussion.

The ALLL consists of specific and general components.  The specific component relates to loans that are individually classified as impaired.  A loan is impaired when, based on current information and events, it is probable that CFBank will be unable to collect all amounts due according to the contractual terms of the loan agreement. Loans of all classes within the commercial, commercial real estate and multi-family residential loan segments, regardless of size, and loans of all other classes over $250,000, are individually evaluated for impairment when they are 90 days past due, or earlier than 90 days past due if information regarding the payment capacity of the borrower indicates that payment in full according to the loan terms is doubtful.  If a loan is impaired, a portion of the allowance is allocated so that the loan is reported, net, at the present value of estimated future cash flows using the loan’s existing rate, or at the fair value of collateral, less costs to sell, if repayment is expected solely from the collateral.  Large groups of smaller balance loans, such as consumer and single-family residential real estate loans, are collectively evaluated for impairment, and accordingly, they are not separately identified for impairment disclosures.  Loans within any class for which the terms have been modified resulting in a concession, and for which the borrower is experiencing financial difficulties, are considered troubled debt restructurings (TDRs) and are classified as impaired.  See Notes 1 and 4 to our consolidated financial statements included in this annual report for additional information regarding the ALLL.

Individually impaired loans totaled $3.4 million at December 31, 2016, and decreased $2.3 million, or 40.0%, from $5.8 million at December 31, 2015.  The decrease was primarily due to loan repayments.  The amount of the ALLL specifically allocated to individually impaired loans totaled $22,000 at December 31, 2016 and $20,000 at December 31, 2015.  The increase in the ALLL specifically allocated to impaired loans was due to a slight increase in the reserve allocation based on updated evaluations.  

The specific reserve on impaired loans is based on management’s estimate of the present value of estimated future cash flows using the loan’s effective rate or the fair value of collateral, if repayment is expected solely from the collateral.  On at least a quarterly basis, management reviews each impaired loan to determine whether it should have a specific reserve or partial charge-off. Management relies on appraisals or internal evaluations to help make this determination.  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 specific reserve, as the ultimate liquidation of the collateral and/or projected cash flows may be different from management’s estimates. 

7

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

Nonperforming loans, which are nonaccrual loans and loans 90 days past due but still accruing interest, decreased $721,000, or 50.6%, and totaled $704,000 at December 31, 2016, compared to $1.4 million at December 31, 2015.The ratio of nonperforming loans to total loans was 0.20% at December 31, 2016, compared to 0.47% at December 31, 2015.

The following table presents information regarding the number and balance of nonperforming loans at December 31, 2016 and December 31, 2015.

	December 31, 2016			December 31, 2015
	# of loans	Balance			# of loans	Balance
	(dollars in thousands)
Commercial	3	$	263		3	$	224
Single-family residential real estate	8		397		12		640
Commercial real estate	-		-		1		446
Home equity lines of credit	1		44		2		115
Total	12	$	704		18	$	1,425

Nonaccrual loans include some nonperforming loans that were previously modified and identified as TDRs.  TDRs included in nonaccrual loans totaled $144,000 at December 31, 2016 and $356,000 at December 31, 2015.The decrease in TDRs included in nonaccrual loans was primarily due to loan repayments.

Nonaccrual loans at December 31, 2016 and December 31, 2015 do not include $3.0 million and $4.9 million, respectively, of TDRs where customers have established a sustained period of repayment performance, generally six months, loans are current according to their modified terms and repayment of the remaining contractual payments is expected.  These loans are included in total impaired loans.See Notes 1 and 4 to our consolidated financial statements included in this annual report for additional information regarding impaired loans and nonperforming loans.

The general reserve component covers non-impaired loans of all classes and is based on historical loss experience adjusted for current factors.  The historical loss experience is determined by loan class and is based on the actual loss history experienced by the Company over a three-year period.  The general component is calculated based on CFBank’s loan balances and actual historical three-year historical loss rates.  For loans with little or no actual loss experience, industry estimates are used based on loan segment. This actual loss experience is supplemented with other economic and judgmental factors based on the risks present for each loan class.  These economic and judgmental factors include consideration of the following:  levels of and trends in delinquencies and impaired loans; levels of and trends in charge-offs and recoveries; trends in volume and terms of loans; effects of any changes in risk selection and underwriting standards; other changes in lending policies, procedures, and practices; experience, ability, and depth of lending management and other relevant staff; national and local economic trends and conditions; industry conditions; and effects of changes in credit concentrations.

Management’s loan review process is an integral part of identifying problem loans and determining the ALLL. We maintain an internal credit rating system and loan review procedures specifically developed as the primary credit quality indicator to monitor credit risk for commercial, commercial real estate and multi-family residential real estate loans.  We analyze these loans individually and categorize 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.  Credit 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.

8

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

We have incorporated the regulatory asset classifications as a part of our credit monitoring and internal loan risk rating system.  In accordance with regulations, problem loans are classified as special mention, substandard, doubtful or loss, and the classifications are subject to review by the regulators.  Assets designated as special mention are considered criticized assets.  Assets designated as substandard, doubtful or loss are considered classified assets. See Note 4 to our consolidated financial statements included in this annual report for additional information regarding descriptions of the regulatory asset classifications.

The level of total criticized and classified loans decreased by $3.6 million during the twelve months ended December 31, 2016 due to management’s on-going efforts to improve credit quality and continued payments by customers.  Loans designated as special mention decreased $3.7million, or 50.7%, and totaled  $3.6 million at December 31, 2016, compared to $7.4 million at December 31, 2015.  Loans classified assubstandard increased $108,000, or 1.9%, and totaled $5.7 million at December 31, 2016, compared to $5.6 million at December 31, 2015.  No loans were classified as doubtful at December 31, 2016 and December 31, 2015.  See Note 4 to our consolidated financial statements included in this annual report 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 $169,000, or 12.2%, and totaled $1.6 million at December 31, 2016, compared to $1.4 million at December 31, 2015.  Past due loans totaled 0.4% of the loan portfolio at December 31, 2016, compared to 0.5% at December 31, 2015.See Note 4 to our 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, used option ARM products or made loans with initial teaser rates.

Unsecured commercial loans may present a higher risk of non-collection than secured commercial loans.  Unsecured commercial loans totaled $3.3 million, or 4.6% of the commercial loan portfolio, at December 31, 2016 and $2.6 million, or 5.9% of the commercial loan portfolio, at December 31, 2015. The unsecured loans are primarily lines of credit to small businesses in CFBank’s market area and are guaranteed by the small business owners.  At December 31, 2016 and December 31, 2015, none of the unsecured loans were 30 days or more delinquent.

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 $19.9 million, or 27.9% of the commercial loan portfolio, at December 31, 2016 compared to $16.5 million, or 37.7%, at December 31, 2015.  Given the recessionary effects of the economy in the past several years, the collateral that secures the home equity lines of credit may have experienced a deterioration in value since the loan was originated, increasing the risk to CFBank. Interest only home equity lines of credit totaled $20.7 million, or 89.6% of total home equity lines of credit, at December 31, 2016 compared to $19.2 million, or 85.8%, at December 31, 2015.

We believe the ALLL is adequate to absorb probable incurred credit losses in the loan portfolio as of December 31, 2016; however, future additions to the allowance may be necessary based on factors including, but not limited to, further deterioration in client business performance, continued or deepening 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 ALLL.  Such agencies may require additional provisions for loan and lease losses based on judgments and estimates that differ from those used by management, or on information available at the time of their review.  Management continues to diligently monitor credit quality in the existing portfolio and analyze potential loan opportunities carefully in order to manage credit risk.  An increase in loan losses could occur if economic conditions and factors which affect credit quality, real estate values and general business conditions worsen or do not improve.

9

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

Foreclosed assets.  Foreclosed assets totaled $204,000 at December 31, 2016  compared to $1.6 million at December 31, 2015.  Foreclosed assets at December 31, 2016 consisted of one single-family residential property that was transferred into REO at fair value in December 2016.  Foreclosed assets at December 31, 2015consisted of one multi-family property that was transferred into REO at fair value at the time of transfer in 2013.The multi-family property was sold during the second quarter of 2016.  The level of foreclosed assets and charges to foreclosed assets expense may increase in the future as we increase our workout efforts related to foreclosed assets, nonperforming loans and other loans with credit issues.

Premises and equipment.  Premises and equipment, net, totaled $3.4 million at December 31, 2016, anddecreased  $180,000, or 5.0%, from $3.6 million at December 31, 2015.  See Note 8 – Premises and Equipment to our consolidated financial statements included in this annual report for additional information.

Deposits.Deposits totaled $375.4 million at December 31, 2016, an increase of $84.9 million, or 29.2%, from $290.5 million at December 31, 2015.The increase is primarily attributed to a $29.4 million increase incertificate of deposit account balances, a $29.0 million increase in checking account balances, and a $26.5 million increase in money market account balances.  The majority of the deposit increase was a result of management’s focused sales and marketing efforts to grow core deposits to fund anticipated loan growth and improve the loan to deposit ratio. 

Noninterest bearing checking account balances totaled $72.8 million at December 31, 2016 and increased $29.9 million, or 69.6%, compared to $42.9 million at December 31, 2015.  The majority of this increase is attributable to our focused sales efforts to grow core deposits and to expand our relationship opportunities with our customers.

CFBank is a participant in the Certificate of Deposit Account Registry Service® (CDARS) program, a network of banks that allows us to provide our customers with FDIC insurance coverage on certificate of deposit account balances up to $50 million.  CDARS balances are considered brokered deposits by regulation.  Brokered deposits, including CDARS balances, totaled $29.7 million at December 31, 2016, and increased $7.7 million, or 34.7%, from $22.1 million at December 31, 2015.  Customer balances in the CDARS program totaled $9.6 million at December 31, 2016 and increased $266,000, or 2.9%, from $9.3 million at December 31, 2015.

FHLB advances.FHLB advances totaled $13.5 million at December 31, 2016 and decreased $1.0 million, or 6.9%, compared to $14.5 million at December 31, 2015.See the section titled “Liquidity and Capital Resources”  for additional information regarding FHLB advances.

Subordinated debentures.Subordinated debentures totaled $5.2 million at both December 31, 2016 and December 31, 2015.  These debentures were issued in 2003 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.  The Holding Company’s Board of Directors elected to defer interest payments on the subordinated debentures from time to time beginning in December 2010 in order to preserve cash at the Holding Company.  However, the Holding Company paid all deferred and current interest payments in June 2014 and has made current interest payments for all subsequent quarters throughthe quarter ended December 31, 2016.

Stockholders’ equity.Stockholders’ equity totaled $39.3 million at December 31, 2016, an increase of $980,000, or 2.6%, from $38.3 million at December 31, 2015.  The increase in total stockholders’ equity was primarily attributed to net income, which was partially offset by the dividend paid on the Company’s Series B Preferred Stock.  See Note 17 to theconsolidated financial statements included in this annual report for additional information.

Stock Repurchase Program

In May 2016, the Company announced that its Board of Directors adopted a stock repurchase program pursuant to which the Company may repurchase up to 3% of the Company’s common stock over the subsequent six-month period.  The Board of Directors subsequently approved the continuation of this repurchase program for an additional six-month period commencing November 10, 2016.  Any purchases under the repurchase program will be made from time to time in the open market in accordance with applicable federal and state securities laws and regulations.  The timing and amount of any stock repurchases will be determined by the Company’s management based on its evaluation of market conditions, regulatory requirements and other corporate considerations.  Since the commencement of the program, the Company has repurchased 21,300 common shares for an aggregate purchase price of $30,000 as of December 31, 2016.  All repurchased shares are held by the Company as treasury stock.

10

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

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.  

Currently, the Holding Company has excess cash to cover its expenses for the foreseeable future, and could inject capital into CFBank if necessary.  Also, CFBank has the flexibility to manage its balance sheet size as a result of the short duration of the assets as discussed with the Northpointe mortgage program, as well as to deploy those assets into higher earning assets to improve net interest income as the opportunity presents itself.

Comparison of Results of Operations for 2016 and 2015

General.Income before income tax expense for the twelve months ended December 31, 2016 totaled $2.4 million and increased $1.1 million, or 89.8%, compared to income before income tax expense of $1.3 million for the twelve months ended December 31, 2015.  The increase in income before income tax expense was due a $1.5 million increase in net interest income and a $20,000 decrease in provision expense, partially offset by a $171,000 decrease in noninterest income and a $212,000 increase in noninterest expense.

The Company reversed its deferred tax valuation allowance during the fourth quarter of 2015 and began recording income tax expense for 2016, which impacted the comparability of net income (after tax) between periods.  Net income for the twelve months ended December 31, 2016 totaled $1.6 million and decreased $2.9 million compared to net income of $4.5 million for the twelve months ended December 31, 2015.  The decrease in net income was primarily due to a $4.0 million increase in income tax expense (due to the $3.2 million credit to income tax expense as a result of the reversal of the deferred tax valuation allowance in 2015, compared to income tax expense of $810,000 for the year ended December 31, 2016), a $171,000 decrease in other noninterest income, and a $212,000 increase in noninterest expense, which was partially offset by a $1.5 million increase in net interest income, and a $20,000 decrease in provision expense. 

Net income attributable to common stockholders totaled $770,000, or $0.05 per diluted common share, for the year ended December 31, 2016, compared to net income attributable to common stockholders of $3.6 million, or $0.20 per diluted common share, for the year ended December 31, 2015.  For the years ended December 31, 2016 and 2015, preferred dividends on the Series B Preferred Stock and accretion of discount reduced net income attributable to common stockholders by $857,000 for each period.

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 $11.3 million for the year ended December 31, 2016 and increased $1.5 million, or 15.5%, compared to $9.8 million for the year ended December 31, 2015.  The increase in net interest income was primarily due to a $2.0 million, or 16.2%, increase in interest income, partially offset by a $488,000, or 18.7%, increase in interest expense.  The increase in interest income was primarily attributed to a $46.7 million, or 15.3%, increase in average interest-earnings assets outstanding, and a 3bps increase in average yield on interest-earning assets.  The increase in interest expense was attributed to a $30.8 million, or 11.8%, increase in average interest-bearing liabilities outstanding and a 6bps increase in the average cost of funds on interest-bearing liabilities.  Net interest margin was 3.21% and 3.21% for the years ended December 31, 2016 and December 31, 2015, respectively.

Interest income totaled $14.4 million and increased $2.0 million, or 16.2%, for the twelve months ended December 31, 2016, compared to $12.4 million for the twelve months ended December 31, 2015. The increase in interest income was primarily due to a $42.5 million, or 15.7%, increase in average loans and loans held for sale balances from $270.9 million at December 31, 2015, to $313.5 million at December 31, 2016. 

Interest expense totaled $3.1 million and increased $488,000, or 18.7%, for the year ended December 31, 2016, compared to $2.6 million for the year ended December 31, 2015.  The increase in interest expense resulted primarily from increased deposit costs due to a $29.8 million, or 12.4%, increase in average interest-bearing deposit balances. The overall cost of funds on total interest-bearing deposits increased 6bps to 98bps at December 31, 2016 compared to 92bps at December 31, 2015.

11

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

Provision for loan and lease losses.  The provision for loan and lease losses totaled $230,000 for the twelve months ended December 31, 2016 and decreased $20,000, or 8.0%, compared to $250,000 for the twelve months ended December 31, 2015.  The decrease in the provision for loan and lease losses for the year ended December 31, 2016 was primarily due to improved credit quality, a continued decrease in the majority of historical loss rates and favorable trends in certain qualitative factors and net recoveries.  Net recoveries for the year ended December 31, 2016 totaled $75,000 compared to net recoveries of $54,000 for the year ended December 31, 2015.The ratio of the ALLL to nonperforming loans at December 31, 2016 improved to 983.7% compared to 464.6% at December 31, 2015.

The following table presents information regarding net charge-offs for 2016 and 2015.

	2016		2015
(Dollars in thousands)	Charge-offs (recoveries)
Commercial	$	123	$	(17)
Single-family residential real estate		105		39
Multi-family residential real estate		(143)		-
Commercial real estate		(145)		(8)
Home equity lines of credit		(16)		(72)
Other consumer loans		1		4
Total	$	(75)	$	(54)

See the section titled “Financial Condition – Allowance for loan and lease losses” for additional information.

Noninterest income.  Noninterest income for the year ended December 31, 2016 totaled $1.2 million, and decreased $171,000, or 12.7%, compared to $1.3 million for the year ended December 31, 2015.  The decrease was primarily due to a $243,000 decrease in other noninterest income, and a $191,000 decrease in net gains on sales of loans, partially offset by a $250,000 increase in service charges on deposit accounts.  The decrease in other noninterest income was due to decreased activity related to the Company’s joint ventures.  The decrease in the net gains on sales of loans was primarily due to lower residential mortgage sales activity.  The increase in service charges on deposit accounts was related to increased pricing, deposit growth and activity and new account relationships. 

Noninterest expense.Noninterest expense for the year ended December 31, 2016 totaled $9.8 million and increased $212,000, or 2.2%, compared to the $9.6 million for the year ended December 31, 2015.  The overall increase in operating expenses is primarily attributed to a $212,000 increase in salaries and employee benefits, a $192,000 increase in professional fees, partially offset by $199,000 decrease in FDIC premiums.  Salaries and benefit expenses increased primarily due to an increase in personnel in the commercial lending, credit administration, operations and information technology areas.  The increase in professional fees was primarily due to increases in recruiting fees, general legal expense related to certain one-time projects and legal expenses related to loan workout activity.  The decrease in FDIC premiums was due to lower assessment factors charged based on CFBank’s improved performance.

Income taxes.Income tax expense totaled $810,000 for year ended December 31, 2016, an increase of $4.0 million compared to a  $3.2 million credit to income tax expense for year ended December 31,2015.  With the reversal of the deferred tax valuation allowance as of December 31, 2015, as discussed below, the Company is now recording income tax expense based on the federal statutory rate adjusted for the effect of bank owned life insurance and other miscellaneous items.  The effective tax rate for the year ended December 31, 2016, was approximately 33.2%which management believes is a reasonable estimate for the effective tax rate.

Our deferred tax assets are composed of U.S. net operating losses (“NOLs”), and other temporary book to tax differences.  The Company recorded a deferred tax valuation allowance which reduced the Company’s deferred tax asset to zero beginning in 2009 and continuing up until the fourth quarter of 2015; the Company maintained this valuation allowance against the net deferred tax assets during this period based on its estimate of future reversal and utilization.  As a result, there was no income tax benefit recorded during the first three quarters of 2015.

12

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

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, 2015, in part because the Company had achieved seven consecutive quarters of pretax income, that it was no longer necessary to maintain a full valuation allowance against the entire net deferred tax asset.  As a result, the valuation allowance on the deferred tax asset was reversed which resulted in a credit to income tax expense of $3.2 million.  With the reversal of the deferred tax valuation allowance, the Company is now recording income tax expense based on the federal statutory rate adjusted for the effect of other items such as incentive stock expense, bank owned life insurance, and other miscellaneous items.

Comparison of Results of Operations for 2015 and 2014

General.  Net income for the twelve months ended December 31, 2015 totaled $4.5 million and increased $4.0 million compared to net income of $479,000 for the twelve months ended December 31, 2014.  The increase in net income was due to a $3.2 million credit to income tax expense as a result of the reversal of a deferred tax valuation allowance, a $1.1 million increase in net interest income and a $28,000 decrease in provision expense, partially offset by a $144,000 decrease in noninterest income and a $154,000 increase in noninterest expenses. 

Net income attributable to common stockholders totaled $3.6 million, or $0.20 per diluted common share, for the year ended December 31, 2015, compared to net income attributable to common stockholders of $58,000, or $0.00 per diluted common share, for the year ended December 31, 2014.  The dividend and accretion of discount on the Series B Preferred Stock decreased the net income attributable to common stockholders by $857,000 for the year ended December 31, 2015 compared to $421,000 for the year ended December 31, 2014 (during which the Series B Preferred Stock was outstanding for only approximately six months). 

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 $9.8 million for the year ended December 31, 2015 and increased $1.1 million, or 12.3%, compared to $8.7 million for the year ended December 31, 2014.  The increase in net interest income was primarily due to a $1.8 million, or 16.9%, increase in interest income, partially offset by a $719,000, or 38.1%, increase in interest expense.  The increase in interest income was primarily attributed to a $41.9 million, or 15.9%, increase in average interest-earnings assets outstanding, and a 3bps increase in average yield on interest-earning assets.  The increase in interest expense was attributed to a $39.0 million, or 17.7%, increase in average interest-bearing liabilities outstanding and a 15bps increase in the average cost of funds on interest-bearing liabilities.  As a result, net interest margin of 3.21% for the year ended December 31, 2015 decreased 10bps compared to the net interest margin of 3.31% for the year ended December 31, 2014.

Interest income totaled $12.4 million and increased $1.8 million, or 16.9%, for the twelve months ended December 31, 2015, compared to $10.6 million for the twelve months ended December 31, 2014. The increase in interest income was primarily due to a $36.8 million, or 15.7%, increase in average loans and loans held for sale balances from $234.2 million at December 31, 2014, to $270.9 million at December 31, 2015, and a 8bps improvement in the average yield on loans and loans held for sale. 

Interest expense totaled $2.6 million and increased $719,000, or 38.1%, for the year ended December 31, 2015, compared to $1.9 million for the year ended December 31, 2014.  The increase in interest expense resulted primarily from increased deposit costs due to a $39.5 million, or 19.6%, increase in average interest-bearing deposit balances. The overall cost of funds on total interest-bearing deposits increased 14bps to 92bps at December 31, 2015 compared to 78bps at December 31, 2014.

13

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

Provision for loan losses.  The provision for loan and lease losses totaled $250,000 for the twelve months ended December 31, 2015 and decreased $28,000, or 10.1%, compared to $278,000 for the twelve months ended December 31, 2014.  The decrease in the provision for loan losses for the year ended December 31, 2015 was primarily due to improved credit quality, a continued decrease in historical loss rates, net recoveries and improving coverage ratios.  Net recoveries for the year ended December 31, 2015 totaled $54,000 and decreased $255,000 compared to net recoveries of $309,000 for the year ended December 31, 2014.  The variance is primarily due to a large commercial real estate loan recovery in 2014.  The ratio of the ALLL to nonperforming loans at December 31, 2015 improved to 464.6% compared to 408.0% at December 31, 2014.

The following table presents information regarding net charge-offs for 2015 and 2014.

	2015		2014
(Dollars in thousands)	Charge-offs (recoveries)
Commercial	$	(17)	$	39
Single-family residential real estate		39		(4)
Multi-family residential real estate		-		-
Commercial real estate		(8)		(344)
Home equity lines of credit		(72)		2
Other consumer loans		4		(2)
Total	$	(54)	$	(309)

See the section titled “Financial Condition – Allowance for loan and lease losses” for additional information.

Noninterest income.  Noninterest income for the year ended December 31, 2015 totaled $1.3 million, and decreased $144,000, or 9.7%, compared to $1.5 million for the year ended December 31, 2014.  The decrease was primarily due to a $211,000 decrease in net gains on sales of loans, partially offset by a $79,000 increase in service charges on deposit accounts.  The decrease in the net gains on sales of loans was primarily due to lower sales activity.  The increase in service charges on deposit accounts was related to increased deposit growth and account relationships. 

Noninterest expense. Noninterest expense for the year ended 2015 totaled $9.6 million and increased $154,000, or 1.6%, compared to the $9.5 million recognized in 2014.  The overall increase in operating expenses is primarily attributed to a $308,000 increase in salaries and employee benefits, a $157,000 increase in data processing expenses, and a $125,000 increase in loan expense, partially offset by a $261,000 decrease in professional fees and a $191,000 decrease in foreclosed asset related expenses.

Salaries and benefit expenses increased primarily due to an increase in personnel in the credit administration, operations and treasury management areas.  The increase in data processing expenses was driven by expanded information technology services associated with the Company’s growth and expansion, along with investments in our infrastructure.  The increase in loan expense was primarily due to increased expenses incurred to obtain updated appraisals on certain loans coupled with other related loan costs.  Professional fees decreased due to lower consulting fees than the prior year as various projects were completed, while the decrease in foreclosed asset expense was a result of lower maintenance costs required from the prior year. 

Income taxes.  Our deferred tax assets are composed of U.S. net operating losses (“NOLs”), and other temporary book to tax differences.  The Company recorded a deferred tax valuation allowance which reduced the Company’s deferred tax asset to zero beginning in 2009 and continuing through the year ended December 31, 2014.  The Company maintained this valuation allowance against the net deferred tax assets at December 31, 2014 based on its estimate of future reversal and utilization.  As a result, there was no income tax benefit recorded for the year ended December 31, 2014. 

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, 2015, in part because the Company had achieved seven consecutive quarters of pretax income, that it was no longer necessary to maintain a full valuation allowance against the entire net deferred tax asset.  As a result, the valuation allowance on the deferred tax asset was reversed which resulted in a credit to income tax expense of $3.2 million.

14

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

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,
		2016				2015					2014
	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)	$	9,806	$	125	1.28%	$	9,542	$	131	1.38%	$	8,557	$	157	1.85%
Loans and loans held for sale (3)		313,472		14,050	4.48%		270,939		12,126	4.48%		234,189		10,310	4.40%
Other earning assets		26,839		156	0.58%		22,953		70	0.30%		18,758		66	0.35%
FHLB stock		1,942		78	4.02%		1,942		78	4.02%		1,942		78	4.02%
Total interest-earning assets		352,059		14,409	4.09%		305,376		12,405	4.06%		263,446		10,611	4.03%
Noninterest-earning assets		25,761					23,808					22,280
Total assets	$	377,820				$	329,184				$	285,726
Interest-bearing liabilities:
Deposits	$	270,239		2,657	0.98%	$	240,410		2,212	0.92%	$	200,940		1,562	0.78%
FHLB advances and other borrowings		20,621		439	2.13%		19,660		396	2.01%		20,097		327	1.63%
Total interest-bearing liabilities		290,860		3,096	1.06%		260,070		2,608	1.00%		221,037		1,889	0.85%
Noninterest-bearing liabilities		48,158					34,236					35,983
Total liabilities		339,018					294,306					257,020
Equity		38,802					34,878					28,706
Total liabilities and equity	$	377,820				$	329,184				$	285,726
Net interest-earning assets	$	61,199				$	45,306				$	42,409
Net interest income/interest rate spread			$	11,313	3.03%			$	9,797	3.06%			$	8,722	3.18%
Net interest margin					3.21%					3.21%					3.31%
Average interest-earning assets to average interest-bearing liabilities		121.04%					117.42%					119.19%
(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, with an effective tax rate of 34%.
(2) Average yields and interest earned are stated on a fully taxable equivalent basis.
(3) Average balance is computed using the recorded investment in loans net of the ALLL and includes nonperforming loans.

15

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

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

	Year Ended						Year Ended
	December 31, 2016						December 31, 2015
	Compared to Year Ended						Compared to Year Ended
	December 31, 2015						December 31, 2014
	Increase (decrease) due to						Increase (decrease) due to
	Rate		Volume		Net		Rate		Volume		Net
	(Dollars in thousands)
Interest-earning assets:
Securities (1)	$	(10)	$	4	$	(6)	$	(43)	$	17	$	(26)
Loans and loans held for sale		18		1,906		1,924		174		1,642		1,816
Other earning assets		72		14		86		(10)		14		4
FHLB stock		-		-		-		-		-		-
Total interest-earning assets		80		1,924		2,004		121		1,673		1,794
Interest-bearing liabilities:
Deposits		159		286		445		314		336		650
FHLB advances and other borrowings		24		19		43		76		(7)		69
Total interest-bearing liabilities		183		305		488		390		329		719
Net change in net interest income	$	(103)	$	1,619	$	1,516	$	(269)	$	1,344	$	1,075

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

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 hedging activities, such as interest-rate swaps, up to a notional amount of 10% of total assets and a value at risk of 10% of core capital.  Disclosures about our hedging activities are set forth in Note 20 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 its assets and liabilities under different interest rate scenarios.  The change in the EVE ratio is a long-term measure of what 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, 2016, CFBank’s EVE ratios, using interest rate shocks ranging from a 400 bps rise in rates to a 200 bps decline in rates, are shown in the following table.  All values are within the acceptable range established by CFBank’s Board of Directors.

16

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

Economic Value of Equity
as a Percent of Assets
(CFBank only)
Basis Point	Economic
Change in Rates	Value Ratio
+400	9.9%
+300	10.5%
+200	11.0%
+100	11.5%
0	11.8%
(100)	11.5%
(200)	11.2%

In evaluating CFBank’s exposure to interest rate risk, certain shortcomings 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.

We continue to originate the majority of fixed-rate single-family residential real estate loans for sale rather than retain long-term, low fixed-rate loans in portfolio.  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 and multi-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 continue to 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.

17

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

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 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 line of credit. 

The following table summarizes CFBank’s cash available from liquid assets and borrowing capacity at December 31, 2016 and 2015.

	December 31, 2016		December 31, 2015
	(Dollars in thousands)
Cash, unpledged securities and deposits in other financial institutions	$	63,734	$	25,617
Additional borrowing capacity at the FHLB		30,998		15,813
Additional borrowing capacity at the FRB		31,846		30,241
Unused commercial bank line of credit		1,000		1,000
Total	$	127,578	$	72,671

Cash, unpledged securities and deposits in other financial institutions increased $38.1 million, or 148.8%, to $63.7 million at December 31, 2016 compared to $25.6 million at December 31, 2015.  The increase was primarily due to an increase incash which was a result of management’s efforts to increase deposit activity in order to fund anticipated loan growth.

CFBank’s additional borrowing capacity with the FHLB increased $15.2 million, or 96.0%, to $31.0 million at December 31, 2016 compared to $15.8 million at December 31, 2015.  The increase in additional borrowing capacity is a result of additional collateral pledged due to the increase in loans. 

CFBank’s additional borrowing capacity at the FRB increased $1.6 million, or 5.3%, to $31.8 million at December 31, 2016  from $30.2 million at December 31, 2015.  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 including, 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 a $1.0 million unused line of credit with one commercial bank at December 31, 2016, and 2015.

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. Accordingly, rates offered by competing financial institutions may affect our ability to attract and retain deposits. 

18

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

CFBank relies on competitive interest rates, customer service,and relationships with customers toretain deposits.To promote and stabilize liquidity inthe bankingand financialservices sector, the FDIC, pursuant to the provisions ofthe Dodd-Frank Wall Street Reform and Consumer Protection Act, permanently increased deposit insurance coverage from$100,000to $250,000 per depositor.

The Holding Company, as a financial 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 its subsidiaries or the sale of assets.  Pursuant to the commitments made in connection with the termination of the Holding Company Order, the Holding Company was not permitted to declare or pay dividends on its stock, purchase or redeem its stock, or accept dividends or other capital distributions from CFBank without the prior written approval of the FRB.  In addition, the Holding Company was not permitted to incur, increase or guarantee any debt without the prior written consent of the FRB.  Effective as of January 8, 2016, the Holding Company ceased to be subject to the foregoing restrictions.  In addition, the Holding Company is permitted to raise funds in the securities markets through equity offerings.

The Holding Company had adequate funds at December 31, 2016 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.  The Company may elect to pay dividends on its preferred stock and common stock, if and when declared by the Board of Directors, subject, in the case of dividends on common stock, to the payment in full of the dividend on the Company’s Series B Preferred Stock for the current dividend period. 

Currently, annual debt service on the subordinated debentures is approximately $185,000.  The subordinated debentures have a variable rate of interest, reset quarterly, equal to the three-month LIBOR plus 2.85%.  The total rate in effect was 3.85% at December 31, 2016.  An increase in the three-month LIBOR would increase the debt service requirement of the subordinated debentures. 

Banking regulations limit the amount of dividends that can be paid to the Holding Company by CFBank without prior regulatory approval. Generally, financial institutions may pay dividends without prior approval as long as the dividend does not exceed the total of the current calendar year-to-date earnings plus any earnings from the previous two years not already paid out in dividends, and as long as the financial institution remains well capitalized after the dividend payment.Any future dividend payments by CFBank to the Holding Company would be based on future earnings and, if necessary, regulatory approval. 

The ability of the Holding Company to pay dividends on its common stock and Series B Preferred Stock is generally dependent upon the receipt of dividends and other distributions from CFBank.  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 requirements impacting the Holding Company’s ability to pay dividends on its stock.  Pursuant to the commitments made to the FRB in connection with the termination of the Holding Company Order, the Holding Company was not permitted to declare or pay dividends on its stock without the prior approval or written non-objection of the FRB.  Effective January 8, 2016, however, the Holding Company is no longer required to obtain the FRB’s prior approval or written non-objection to pay dividends.  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, so long as the Company’s Series BPreferred Stock remains outstanding, the Holding Company will be prohibited from paying dividends on (other than dividends payable solely for the then-current dividend period in shares) the Company’s common stock, unless full dividends on the Series B Preferred Stock have been paid or set aside for payment.

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 $765 at year-end 2015. However, if CFBank were wholly or partially liquidated or otherwise ceases to be a bank, or if tax laws were to change, this amount would have to be recaptured and a tax liability recorded. Additionally, any distributions in excess of CFBank’s current or accumulated earnings and profits would reduce amounts allocated to its bad debt reserve and create a tax liability for CFBank. The amount of additional taxable income created by such a distribution is an amount that, when reduced by the tax attributable to the income, is equal to the amount of the distribution. Thus, if CFBank were to make a distribution that reducedthe amount allocated to its bad debt reserve, then approximately one and one-half times the amount used would be includible in gross income for federal income tax purposes, assuming a 34% corporate income tax rate. CFBank does not intend to make distributions that would result in a recapture of any portion of its bad debt reserve.

19

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

Portions of the proceeds from the common stock offering completed in 2012 as well as the preferred stock offering completed in 2014 havebeen retained by the Holding Company for general corporate purposes.   The Holding Company had $2.2 million in cash and cash equivalents at December 31, 2016.

Impact of Inflation

The financial statements and related data presented herein have been prepared in accordance with U.S. generally accepted accounting principles, 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.

Critical Accounting Policies

We follow financial accounting and reporting policies that are in accordance with U.S. generally accepted accounting principles and conform to general practices within the banking industry.  These policies are presented in Note 1 to our 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 accounting policies that are critical accounting policies, and an understanding of these policies is necessary to understand our financial statements.  The following discussion details the critical accounting policies and the nature of the estimates made by management.

Determination of the allowance for loan and lease losses.The ALLL represents management’s estimate of probable incurred credit losses in the loan portfolio at each balance sheet date. The allowance consists of general and specific components.  The general component covers loans not classified as impaired and is based on historical loss experience, adjusted for current factors. Current factors considered include, but are not limited to, management’s oversight of the portfolio, including lending policies and procedures; nature, level and trend of the portfolio, including past due and nonperforming loans, loan concentrations, loan terms and other characteristics; current economic conditions and outlook; collateral values; and other items.  The specific component of the ALLL relates to loans that are individually classified as impaired. Loans exceeding policy thresholds are regularly reviewed to identify impairment. A loan is impaired when, based on current information and events, it is probable that CFBank will be unable to collect all amounts due according to the contractual terms of the loan agreement. Loans for which the terms have been modified resulting in a concession, and for which the borrower is experiencing financial difficulties, are considered troubled debt restructurings and classified as impaired.  Determining whether a loan is impaired and whether there is an impairment loss requires judgment and estimates, and the eventual outcomes may differ from estimates made by management.  The determination of whether a loan is impaired includes: review of historical data; judgments regarding the ability of the borrower to meet the terms of the loan; an evaluation of the collateral securing the loan and estimation of its value, net of selling expenses, if applicable; various collection strategies; and other factors relevant to the loan or loans.  Impairment is measured based on the fair value of collateral, less costs to sell, if the loan is collateral dependent, or alternatively, the present value of expected future cash flows discounted at the loan’s effective rate, if the loan is not collateral dependent. When the selected measure is less than the recorded investment in the loan, an impairment loss is recorded. As a result, determining the appropriate level for the ALLL involves not only evaluating the current financial situation of individual borrowers or groups of borrowers, but also current predictions about future events that could change before an actual loss is determined.  Based on the variables involved and the fact that management must make judgments about outcomes that are inherently uncertain, the determination of the ALLL is considered to be a critical accounting policy. Additional information regarding this policy is included in the previous section titled “Financial Condition - Allowance for loan and lease losses” and in Notes 1, 4 and 6 to our consolidated financial statements.

20

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

Valuation of the deferred tax asset.

Our deferred tax assets are composed of U.S. net operating losses (“NOLs”), and other temporary book to tax differences.  The Company recorded a deferred tax valuation allowance which reduced the Company’s deferred tax asset to zero beginning in 2009 and continuing up until the fourth quarter of 2015; the Company maintained this valuation allowance against the net deferred tax assets during this period based on its estimate of future reversal and utilization.  As a result, there was no income tax benefit recorded during the first three quarters of 2015.

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, 2015, in part because the Company had achieved seven consecutive quarters of pretax income, that it was no longer necessary to maintain a full valuation allowance against the entire net deferred tax asset.  As a result, the valuation allowance on the deferred tax asset was reversed as of December 31, 2015,which resulted in a credit to income tax expense of $3.2 million.

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 changewithin the guidelines of Section 382 of the Internal Revenue Code of 1986. At year-end 2016, the Company had net operating loss carryforwards of $23.1 million, which expire at various dates from 2024 to 2033. As a result of the ownership change, the Company's ability to utilize carryforwards that arose before the 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 $765,000 at year-end 2016.  However, if CFBank were wholly or partially liquidated or otherwise ceases to be a bank, or if tax laws were to change, this amount would have to be recaptured and a tax liability recorded.   Additionally, any distributions in excess of CFBank’s current or accumulated earnings and profits would reduce amounts allocated to its bad debt reserve and create a tax liability for CFBank. The amount of additional taxable income created by such a distribution is an amount that, when reduced by the tax attributable to the income, is equal to the amount of the distribution. Thus, if CFBank were to make a distribution that reduced the amount allocated to its bad debt reserve, then approximately one and one-half times the amount used would be includible in gross income for federal income tax purposes, assuming a 34% corporate income tax rate. CFBank does not intend to make distributions that would result in a recapture of any portion of its bad debt reserve.

At December 31, 2015, the Company had a  deferred tax asset recorded of approximately $3.3 million, after reversing the valuation allowance mentioned above.  At December 31, 2016, the Company had a deferred tax asset recorded of approximately $2.6million.  At December 31, 2016 and 2015, 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 2013.  Additional information is included in Notes 1 and 14 to our consolidated financial statements.

Fair value of financial instruments.  Another critical accounting policy relates to fair value of financial instruments, which are estimated using relevant market information and other assumptions.  Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments, and other factors, especially in the absence of broad markets for particular items.  Changes in assumptions or in market conditions could significantly affect the estimates.  Additional information is included in Notes 1 and 6 to our consolidated financial statements.

21

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

Market Prices and Dividends Declared

The common stock of Central Federal Corporation trades on the Nasdaq® Capital Market under the symbol “CFBK.”  As of December 31, 2016, there were 16,294,910 shares of common stock outstanding and held by approximately 255shareholders of record.

The following table shows the quarterly reported high and low sales prices of our common stock during 2016 and 2015.  There were no dividends declared or paid on our common stock during 2016 or 2015.

2016	High		Low
First Quarter	$	1.45	$	1.11
Second Quarter	$	1.40	$	1.28
Third Quarter	$	1.41	$	1.31
Fourth Quarter	$	1.79	$	1.38

2015	High		Low
First Quarter	$	1.45	$	1.25
Second Quarter	$	1.43	$	1.25
Third Quarter	$	1.44	$	1.28
Fourth Quarter	$	1.50	$	1.29

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, the Holding Company’s ability to pay dividends on its common stock is conditioned upon certain payments on the subordinated debentures underlying the Holding Company’s trust preferred securities and dividends on the Company’s Series B Preferred Stock.  Additional information is contained in the section titled “Financial Condition - Stockholders’ equity” and in Notes 2 and 17 to our consolidated financial statements.

22

CENTRAL FEDERAL CORPORATION

Worthington, Ohio

ANNUAL REPORT

December 31, 2016 and 2015

CONTENTS
	Page
Management’s Report on Internal Control Over Financial Reporting	1
Report of Independent Registered Public Accounting Firm	2
Consolidated Balance Sheets	3
Consolidated Statements of Income	4
Consolidated Statements of Comprehensive Income	5
Consolidated Statements of Changes in Stockholders’ Equity	6
Consolidated Statements of Changes of Cash Flows	7
Notes to Consolidated Financial Statements	8

CENTRAL FEDERAL CORPORATION

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

The management of Central Federal Corporation 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, 2016.  In making this assessment, management used the criteria for effective internal control over financial reporting as described in the 2013 Internal Control-Integrated Frameworkissued 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, 2016.

This annual report does not contain an audit report of the Company’s registered public accounting firm regarding internal control over financial reporting.  Management’s report was not subject to audit by the Company’s registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.

/s/ Timothy T. O’Dell

Timothy T. O’Dell

President and Chief Executive Officer

/s/ John W. Helmsdoerfer

John W. Helmsdoerfer, CPA

Chief Financial Officer and Treasurer

March 15, 2017

1

Report Of Independent Registered Public Accounting Firm

Audit Committee, Board of Directors and Stockholders

Central Federal Corporation

Worthington, Ohio

We have audited the accompanying consolidated balance sheets of Central Federal Corporation as of December 31, 2016 and 2015, and 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, 2016.  The Company's management is responsible for these consolidated financial statements.  Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  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.  The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  Our audits included consideration of internal control over financial reporting as a basis for designing auditing procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.  Accordingly, we express no such opinion.  Our audits also included examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management and evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Central Federal Corporation as of December 31, 2016, and 2015, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2016, in conformity with accounting principles generally accepted in the United States of America.

/s/ BKD, LLP

BKD, LLP

Indianapolis, Indiana

March 15, 2017

2

CENTRAL FEDERAL CORPORATION

CONSOLIDATED BALANCE SHEETS

December 31, 2016 and 2015

(Dollars in thousands, except per share data)

	2016		2015
ASSETS
Cash and cash equivalents	$	57,941	$	25,895
Interest-bearing deposits in other financial institutions		100		-
Securities available for sale		14,058		9,368
Loans held for sale, at fair value		2,812		889
Loans and leases, net of allowance of $6,925 and $6,620		346,125		297,064
FHLB stock		1,942		1,942
Foreclosed assets, net		204		1,636
Premises and equipment, net		3,429		3,609
Bank owned life insurance		4,930		4,797
Accrued interest receivable and other assets		4,571		6,093
Total assets	$	436,112	$	351,293
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Noninterest bearing	$	72,779	$	42,926
Interest bearing		302,585		247,541
Total deposits		375,364		290,467
FHLB advances		13,500		14,500
Advances by borrowers for taxes and insurance		408		656
Accrued interest payable and other liabilities		2,393		2,203
Subordinated debentures		5,155		5,155
Total liabilities		396,820		312,981
Commitments and contingent liabilities		-		-
Stockholders' equity
Common stock, $.01 par value;
shares authorized: 50,000,000;
shares issued: 16,427,917 in 2016 and 16,135,917 in 2015		164		161
Series B Preferred stock, $0.01 par value; 480,000 shares authorized;
480,000 issued at December 31, 2016 and December 31, 2015		5		5
Additional paid-in capital		60,163		59,937
Accumulated deficit		(17,767)		(18,537)
Accumulated other comprehensive income (loss)		2		(9)
Treasury stock, at cost; 133,007 and 111,707 shares of common stock		(3,275)		(3,245)
Total stockholders' equity		39,292		38,312
Total liabilities and stockholders' equity	$	436,112	$	351,293

See accompanying notes to consolidated financial statements.

3

CENTRAL FEDERAL CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

Years ended December 31, 2016  and 2015

(Dollars in thousands, except per share data)

	2016		2015
Interest and dividend income
Loans and leases, including fees	$	14,050	$	12,126
Securities		125		131
FHLB stock dividends		78		78
Federal funds sold and other		156		70
		14,409		12,405
Interest expense
Deposits		2,657		2,212
FHLB advances and other debt		254		232
Subordinated debentures		185		164
		3,096		2,608
Net interest income		11,313		9,797
Provision for loan and lease losses		230		250
Net interest income after provision for loan and lease losses		11,083		9,547
Noninterest income
Service charges on deposit accounts		741		491
Net gains on sales of loans		134		325
Net loss on sales of securities		-		(12)
Earnings on bank owned life insurance		133		132
Other		169		412
		1,177		1,348
Noninterest expense
Salaries and employee benefits		4,965		4,753
Occupancy and equipment		579		533
Data processing		1,116		1,054
Franchise and other taxes		358		318
Professional fees		1,148		956
Director fees		228		150
Postage, printing and supplies		168		198
Advertising and promotion		125		145
Telephone		123		119
Loan expenses		141		207
Foreclosed assets, net		65		137
Depreciation		211		211
FDIC premiums		222		421
Regulatory assessment		62		131
Other insurance		109		121
Other		203		157
		9,823		9,611
Income before incomes taxes		2,437		1,284
Income tax expense (benefit)		810		(3,193)
Net income		1,627		4,477
Dividends on Series B preferred stock and accretion of discount		(857)		(857)
Net income attributable to common stockholders	$	770	$	3,620
Earnings per common share:
Basic	$	0.05	$	0.23
Diluted	$	0.05	$	0.20

See accompanying notes to consolidated financial statements.

4

CENTRAL FEDERAL CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Years ended December 31, 2016  and 2015

(Dollars in thousands, except per share data)

	2016		2015
Net income	$	1,627	$	4,477
Other comprehensive income (loss):
Unrealized holding gains (losses) arising during the period related to investment securities available for sale, net of tax of $1 and $0:		11		(72)
Less: reclassification adjustment for net losses realized during the period on investment securities available for sale, net of tax of $0 and $0:		-		12
Other comprehensive income (loss), net of tax		11		(60)
Comprehensive income	$	1,638	$	4,417

See accompanying notes to consolidated financial statements.

5

CENTRAL FEDERAL CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

Years ended December 31, 2016  and 2015

(Dollars in thousands, except per share data)

									Accumulated
			Series B		Additional				Other				Total
	Common		Preferred		Paid-In		Accumulated		Comprehensive		Treasury		Stockholders'
	Stock		Stock		Capital		Deficit		Income		Stock		Equity
Balance at January 1, 2015		159		5		59,696		(22,157)		51		(3,245)		34,509
Net income								4,477						4,477
Other comprehensive (loss)										(60)				(60)
Issuance of 200,500 stock based incentive plan shares, net of forfeitures		2												2
Restricted stock expense, net of forfeitures						15								15
Stock option expense, net of forfeitures						119								119
Cash dividends declared on Series B preferred stock and accretion of discount						107		(857)						(750)
Balance at December 31, 2015		161		5		59,937		(18,537)		(9)		(3,245)		38,312
Net income								1,627						1,627
Other comprehensive income										11				11
Issuance of 292,000 stock based incentive plan shares, net of forfeitures		3				(3)								-
Restricted stock expense, net of forfeitures						96								96
Stock option expense, net of forfeitures						26								26
Purchase of 21,300 treasury shares												(30)		(30)
Cash dividends declared on Series B preferred stock and accretion of discount						107		(857)						(750)
Balance at December 31, 2016	$	164	$	5	$	60,163	$	(17,767)	$	2	$	(3,275)	$	39,292

See accompanying notes to consolidated financial statements.

6

CENTRAL FEDERAL CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES OF CASH FLOWS

Years ended December 31, 2016  and 2015

(Dollars in thousands, except per share data)

fff

	2016		2015
Net income	$	1,627	$	4,477
Adjustments to reconcile net income to net cash from operating activities:
Provision for loan losses and leases		230		250
Depreciation		211		211
Amortization, net		(66)		25
Deferred income tax (benefit)		623		(3,251)
Net loss on sales of securities		-		12
Originations of loans held for sale		(24,219)		(41,617)
Proceeds from sale of loans held for sale		22,430		44,830
Net gains on sales of loans		(134)		(325)
Loss on disposal of premises and equipment		16		-
Gain on sale of foreclosed assets		(4)		-
Earnings on bank owned life insurance		(133)		(132)
Stock-based compensation expense		122		134
Net change in:
Accrued interest receivable and other assets		899		993
Accrued interest payable and other liabilities		190		(505)
Net cash from operating activities		1,792		5,102
Cash flows from investing activities:
Net (increase) decrease in interest-bearing deposits in other financial institutions		(100)		494
Available-for-sale securities:
Maturities, prepayments and calls		1,261		5,509
Purchases		(5,981)		(4,573)
Loan and lease originations and payments, net		(49,056)		(44,531)
Proceeds from the sale of loans		1,124		4,099
Additions to premises and equipment		(47)		(45)
Proceeds from the sale of foreclosed assets		200		-
Net cash used by investing activities		(52,599)		(39,047)
Cash flows from financing activities:
Net change in deposits		84,881		32,128
Proceeds from FHLB advances		37,700		2,500
Repayments on FHLB advances		(38,700)		(2,500)
Net change in advances by borrowers for taxes and insurance		(248)		255
Cash dividends paid on Series B preferred stock		(750)		(750)
Purchase of treasury shares		(30)		-
Net cash from financing activities		82,853		31,633
Net change in cash and cash equivalents		32,046		(2,312)
Beginning cash and cash equivalents		25,895		28,207
Ending cash and cash equivalents	$	57,941	$	25,895
Supplemental cash flow information:
Interest paid	$	3,061	$	2,612
Income tax paid		70		-
Supplemental noncash disclosures:
Transfers from loans to repossessed assets	$	204	$	-
Loans issued to finance the sale of repossessed assets		1,440		-
Loans transferred from held for sale to portfolio		-		1,833
Loans transferred from portfolio to held for sale		-		1,561
Dividends payable on Series B preferred stock		187		187

See accompanying notes to consolidated financial statements.

7

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 include Central Federal Corporation (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.  The Holding Company and CFBank are sometimes collectively referred to herin as the “Company”.  Intercompany transactions and balances are eliminated in consolidation. 

CFBank provides financial services through its four full-service banking offices in Fairlawn, Calcutta, Wellsville and Worthington, Ohio, and through its agency office in Woodmere, Ohio.  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 loan and lease losses (ALLL), 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.

Interest-Bearing Deposits in Other Financial Institutions:  Interest‑bearing deposits in other financial institutions mature in April, 2019 and are carried at cost.  As of December 31, 2016, there was $100 inan interest-bearing deposit in other financial institutions.

Securities:  Debt securities are classified as available for sale when they might be sold before maturity. Equity securities with readily determinable fair values are classified as available for sale.  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 without anticipating prepayments, 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.

Management evaluates securities for other-than-temporary impairment (OTTI) at least on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation.  For securities in an unrealized loss position, management considers the extent and duration of the unrealized loss and the financial condition and near-term prospects of the issuer.  Management also assesses whether it intends to sell, or will more likely than not be required to sell, a security in an unrealized loss position before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the entire difference between amortized cost and fair value is recognized as impairment through earnings.  For debt securities that do not meet the aforementioned criteria, the amount of impairment is split into two components as follows: 1) OTTI related to credit loss, which must be recognized in the income statement and 2) OTTI related to other factors, which is recognized in other comprehensive income.  The credit loss is defined as the difference between the present value of the cash flows expected to be collected and the amortized cost basis. For equity securities, the entire amount of impairment is recognized through earnings.

8

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

Loans Held for Sale:  Mortgage loans originated and intended for sale in the secondary market are carried at fair value, 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.  Loans originated as construction loans, that were subsequently transferred to held for sale, are carried at the lower of cost or market.  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 loan and lease losses (ALLL).  Interest income is accrued on the unpaid principal balance.  Loan origination fees, net of certain direct origination costs, are deferred and recognized in interest income using the level‑yield method without anticipating prepayments. 

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

All interest accrued but not received for loans placed on nonaccrual is reversed against interest income in the period in which it is placed in a nonaccrual status.  Interest received on such loans is accounted for on the cash-basis or cost‑recovery method, until qualifying for return to accrual status.  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 Columbiana, Franklin, Summit, Cuyahoga 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 Loan and Lease Losses (ALLL):  The ALLL is a valuation allowance for probable incurred credit losses.  Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed.  Subsequent recoveries, if any, are credited to the allowance.  Management estimates the allowance balance required using past loan loss experience, the nature and volume of the portfolio, information about specific borrower situations and estimated collateral values, economic conditions, and other factors.  Allocations of the allowance may be made for specific loans, but the entire allowance is available for any loan that, in management’s judgment, should be charged off.

The allowance consists of specific and general components.  The specific component relates to loans that are individually classified as impaired. A loan is impaired when, based on current information and events, it is probable that CFBank will be unable to collect all amounts due according to the contractual terms of the loan agreement.  Loans within any loan class for which the terms have been modified resulting in a concession, and for which the borrower is experiencing financial difficulties, are considered troubled debt restructurings (TDRs) and classified as impaired.  

Factors considered by management in determining impairment for all loan classes include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired.  Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record and the amount of the shortfall in relation to the principal and interest owed.

9

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

All loans within the commercial, multi-family residential and commercial real estate segments, regardless of size, and loans of all other classes with balances over $250 are individually evaluated for impairment when they are 90 days past due, or earlier than 90 days past due if information regarding the payment capacity of the borrower indicates that payment in full according to the loan terms is doubtful.  If a loan is impaired, a portion of the allowance is allocated so that the loan is reported, net, at the present value of estimated future cash flows using the loan’s existing rate, or at the fair value of collateral, less costs to sell, if repayment is expected solely from the collateral.  Large groups of smaller balance homogeneous loans, such as consumer and single-family residential real estate loans, are collectively evaluated for impairment, and accordingly, they are not separately identified for impairment disclosures.

TDRs of all classes of loans are separately identified for impairment disclosures and are measured at the present value of estimated future cash flows using each loan’s effective rate at inception.  If a TDR is considered to be a collateral dependent loan, the loan is reported, net, at the fair value of the collateral. If the payment of the loan is dependent on the sale of the collateral, then costs to liquidate the collateral are included when determining the impairment.  For TDRs that subsequently default, the amount of reserve is determined in accordance with the accounting policy for the ALLL.

Interest income on all classes of impaired loans that are on nonaccrual status is recognized in accordance with the accounting policy for nonaccrual loans.  Cash receipts on all classes of impaired loans that are on nonaccrual status are generally applied to the principal balance outstanding.  Interest income on all classes of impaired loans that are not on nonaccrual status is recognized on the accrual method. TDRs may be classified as accruing if the borrower has been current for a period of at least six months with respect to loan payments and management expects that the borrower will be able to continue to make payments in accordance with the terms of the restructured note.

The general reserve component covers non‑impaired loans of all classes and is based on historical loss experience adjusted for current factors.  The historical loss experience is determined by loan class and is based on the actual loss history experienced by the Company over a three-year period.  The general component is calculated based on CFBank’s loan balances and actual historical three-year historical loss rates.  For loans with little or no actual loss experience, industry estimates are used based on loan segment. This actual loss experience is supplemented with other economic and judgmental factors based on the risks present for each loan class.  These economic and judgmental factors include consideration of the following:  levels of and trends in delinquencies and impaired loans; levels of and trends in charge-offs and recoveries; trends in volume and terms of loans; effects of any changes in risk selection and underwriting standards; other changes in lending policies, procedures, and practices; experience, ability, and depth of lending management and other relevant staff; national and local economic trends and conditions; industry conditions; and effects of changes in credit concentrations.

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 include loans to businesses generally located within our primary market area. Those 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.  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 located within and outside of 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 single-family residential real estate loans for portfolio in amounts up to 85% of the lower of the appraised value or the purchase price of the property securing the loan, without requiring private mortgage insurance.  Loans in excess of 85% of the lower of the appraised value or purchase price of the property securing the loan require private mortgage insurance.  CFBank has not engaged in subprime lending, used option adjustable-rate mortgage products or made loans with initial teaser rates.

10

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(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 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 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 and adjustable-rate loans. Fixed-rate loans are generally limited to three 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 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 above the prime rate of interest as disclosed in The Wall Street Journal. The margin is based on certain factors including the loan balance, value of collateral, election of auto-payment, and the borrower’s FICO® score.  The 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.  Collectability of home equity lines of credit are dependent on the borrower's continuing financial stability, and thus are

11

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

more likely to be affected by adverse personal circumstances. In 2005 and 2006, we purchased home equity lines of credit collateralized by properties located throughout the United States. The purchased home equity lines of credit may present higher risk than the home equity lines of credit we originate for our portfolio as they include properties in geographic areas that have experienced significant declines in housing values, such as California, Florida and Virginia.  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.

Other consumer loans:  Other consumer loans include closed-end home equity, home improvement, and auto and credit card 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.

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.

Joint Ventures:  The Holding Company contributed funds into a series of joint ventures (equity stake) for the purpose of allocating excess liquidity into higher earning assets while diversifying its revenue sources.  The funding for the joint ventures is related to shorter term operating activities and is related to the development of single family real estate in the form of condominiums.  Income is recognized based on a rate of return on the outstanding investment balance.  As units are sold, the Holding Company receives an additional incentive payment; the incentive payment is recognized as income. The balance outstanding in joint ventures at December 31, 2016 and December 31, 2015 was $325 and $1,285, respectively.  Income recognized on the joint ventures was $100 and $265, respectively, for 2016 and 2015.

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 to 40 years. Furniture, fixtures and equipment are depreciated using the straight‑line method with useful lives ranging from 2 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 FHLB system.  Members are required to own a certain amount of 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.

Bank Owned Life Insurance:  CFBank purchased life insurance policies on certain directors and employees in 2002.  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 commercial letters of credit, issued to meet customer financing needs.  The face amount for these items represents the exposure to loss, before considering customer collateral or ability to repay.  Such financial instruments are recorded when they are funded, and fees associated with origination are booked to non-interest income at the origination date.

12

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

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 considered instruments with no hedging designation, otherwise known as stand-alone derivatives.  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.  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.

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 full valuation allowance was recorded in 2009 to reduce the carrying amount of the Company’s net deferred tax asset to zero.  This valuation allowance was reversed in the fourth quarter of 2015.  See Note 14 – Income Taxes.

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.

Reverse Stock Split:    Reclassifications did not impact prior period net loss or total stockholders' equity.  On May 4, 2012, the Company completed a 1-for-5 reverse stock split, whereby every 5 shares of the Company’s common stock were reclassified into one share of common stock. All share and per share amounts for all periods presented have been adjusted to reflect the reverse split as though it had occurred prior to the earliest period presented.

Earnings Per Common Share:  Basic earnings per common share is net income available to common stockholders divided by the weighted average number of common shares outstanding during the period.  All outstanding unvested share-based payment awards that contain rights to nonforfeitable dividends are considered participating securities for this calculation.  Diluted earnings per common share includes the dilutive effect of additional potential common shares issuable under stock options.  Earnings and dividends per share are restated for all reverse stock splits through the date of issuance of the financial statements.

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

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 believe there are any such matters that will have a material effect on the financial statements.  See Note 24 – Contingent Liabilities.

Restrictions on Cash:  Cash on hand or on deposit with the Federal Reserve Bank (FRB) is required to meet regulatory reserve and clearing requirements. The reserve requirement at December 31, 2016 was $267.  Cash on deposit with the FHLB includes $3,300 pledged as collateral for FHLB advances. 

13

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

Equity:  Treasury stock is carried at cost. The carrying value of preferred stock and the common stock warrant is based on allocation of issuance proceeds, net of issuance costs, in proportion to their relative fair values.  Preferred stock is carried net of the discount established through the allocation of proceeds.

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 and Series B Preferred Stock is generally dependent upon the receipt of dividends and other distributions from CFBank.  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.  Prior to January 8, 2016, pursuant to the commitments made to the FRB in connection with the termination of the Holding Company Order (as further discussed in Note 2), the Holding Company was not permitted to declare or pay dividends on its stock without the prior approval or written non-objection of the FRB.  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, so long as the Company’s Series B Preferred Stock remains outstanding, the Holding Company will be prohibited from paying dividends on (other than dividends payable solely in shares) the Company’s common stock, for the then-current dividend period, unless full dividends on the Series B Preferred Stock have been paid or set aside for payment.  Dividends on the Series B Preferred Stock are non-cumulative, which means that if for any reason we do not declare cash dividends on the Series B Preferred Stock for a quarterly dividend period we will have no obligation to pay any dividends for that period (i.e., the dividends will not accrue or cumulate), whether or not we declare dividends on the Series B Preferred Stock for any subsequent dividend period.

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.

Operating Segments:  While management monitors and analyzes the revenue streams of the Company’s various products and services, the operations and financial performance is evaluated on a Company‑wide basis.  Operating results are not reviewed by senior management to make resource allocation or performance decisions.  Accordingly, all of the financial service operations are considered by management to be aggregated in one reportable operating segment. 

Reclassifications:  Some items in the prior year financial statements were reclassified to conform to the current presentation.  Reclassifications had no effect on prior period net loss or stockholders’ equity.

Adoption of New Accounting Standards:

As extended by ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date,Accounting Standards update (ASU) No. 2014-09 and the clarifying ASUs are effective for public companies for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period.  Transitional guidance is included in the updates.  Earlier adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period.  While interest income is specifically out of scope of this standard, management is currently evaluating the revenue streams within “noninterest income” to assess the applicability of this standard.  Since the Company’s products are substantially financial in nature, adoption of ASU No. 2015-14is not expected to have a material impact on the Company’s consolidated financial statements.

In June 2014 the FASB issued ASU No. 2014-12, Compensation - Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (June 2014).  This Update defines the accounting treatment for share-based payments and “resolves the diverse accounting treatment of those awards in practice.” The new requirement mandates that “a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition.”  Compensation cost will now be recognized in the period in which it becomes likely that the performance target will be met.   The amendments in this Update are effective for annual reporting periods beginning after December 15, 2015. Early adoption is permitted.    Adoption of the ASU 2014-12 on January 1, 2016 did not have an impact on the Company's accounting disclosures.

14

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

The FASB has issued ASU No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes, which changes how deferred taxes are classified on organizations’ balance sheets.  The ASU eliminates the current requirement for organizations to present deferred tax liabilities and assets as current and noncurrent in a classified balance sheet. Instead, organizations will be required to classify all deferred tax assets and liabilities as noncurrent.  The amendments apply to all organizations that present a classified balance sheet. For public companies, the amendments are effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods.Adoption of the ASU is not expected to have a significant effect on the Company's consolidated financial statements.

In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.  ASU 2016-01 amends the guidance in U.S. GAAP on the accounting for equity investments, financial liabilities under the fair value option and the presentations and disclosure requirements of financial instruments.  ASU 2016-01 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years.  Early adoption is permitted for the accounting guidance on financial liabilities under the fair value option.  The Company will adopt the methodologies prescribed by the ASU by the date required.  The Company continues to evaluate this standard, however, adoption of the ASU is not expected to have a significant impact on the Company’s consolidated financial statements.

On February 25, 2016, FASB issued ASU No. 2016-02, Leases (Topic 842).  Under the new ASU, lessees will recognize lease assets and liabilities on their balance sheet for all leases with terms of more than 12 months.  The new lessee accounting model retains two types of leases, and is consistent with the lessee accounting model under existing GAAP.  One type of lease (finance leases) will be accounted for in substantially the same manner as capital leases are accounted for today.  The other type of lease (operating leases) will be accounted for (both in the income statement and statement of cash flows) in a manner consistent with today’s operating leases.  Lessor accounting under the new standard is fundamentally consistent with existing GAAP.  Lessees and lessors would be required to provide additional qualitative and quantitative disclosures to help financial statement users assess the amount, timing, and uncertainty of cash flows arising from leases.  These disclosures are intended to supplement the amounts recorded in the financial statements so that users can understand more about the nature of an organization’s leasing activities.  For public business entities, the final leases standard will be effective for fiscal years beginning after December 15, 2018 including interim periods within those fiscal years.  Early application is permitted.  The Company continues to evaluate the provision of the new lease standard but, due to the small number of lease agreements presently in effect for the Company, believes the new guidance will not have a significant impact on the Company’s consolidated financial statements.

The FASB has issued ASU No. 2015-03, Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs.  The amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts.  The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU.  For public business entities, the amendments are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years.  The amendments should be applied on a retrospective basis, wherein the balance sheet of each individual period presented should be adjusted to reflect the period-specific effects of applying the new guidance.  Upon transition, an entity is required to comply with the applicable disclosures for a change in an accounting principle. These disclosures include the nature of and reason for the change in accounting principle, the transition method, a description of the prior-period information that has been retrospectively adjusted and the effect of the change on the financial statement line items, i.e., debt issuance cost asset and the debt liability.  The Company has adopted the methodologies prescribed by this ASU.  Adoption of the ASU did not have a significant effect on the Company's consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-07, Investments—Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting.  ASU No. 2016-07 affects all entities that have an investment that becomes qualified for the equity method of accounting as a result of an increase in the level of ownership interest or degree of influence.  The amendments in this update eliminate the requirement that, when an investment qualifies for use of the equity method, an investor must adjust the investment, results of operations, and retained earnings retroactively on a step-by-step basis as if the equity method had been in effect during all previous periods that the investment had been held.  ASU No. 2016-07 requires that the equity method investor add the cost of acquiring the additional interest in the investee to the current basis of the investor’s previously held interest and adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting.  The amendments also require that an entity that has an available-for-sale equity security that becomes qualified for the equity method of accounting recognize through earnings the unrealized holding gain or loss in accumulated other comprehensive income at the date the investment becomes qualified for use of the equity method.  The amendments in ASU No. 2016-07 are effective for all entities for

15

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016.  Earlier application is permitted.  Adoption of ASU No. 2016-07 is not expected to have a material impact on the Company’sconsolidated financial statements.

In March 2016, the FASB issuedASU No. 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.  ASU No. 2016-09 affects all entities that issue share-based payment awards to their employees.  The new guidance involves several aspects of the accounting for share-based payment transactions, including income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows.  Under ASU No. 2016-09, any excess tax benefits or tax deficiencies should be recognized as income tax expense or benefit in the income statement.  Excess tax benefits are to be classified as an operating activity in the statement of cash flows.  In accruing compensation cost, an entity can make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest, as required under current guidance, or account for forfeitures when they occur.  For an award to qualify for equity classification, an entity cannot partially settle the award in excess of the employer's maximum statutory withholding requirements.  Such cash paid by an employer when directly withholding shares for tax withholding purposes should be classified as a financing activity in the statement of cash flows.  The amendments in ASU No. 2016-09 are effective for public business entities for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2016.  Early adoption is permitted. Adoption of ASU No. 2016-07 is not expected to have a material impact on the Company’s consolidated financial statements.

The FASB has issued ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. The amendments clarify the following two aspects of Topic 606: (a) identifying performance obligations; and (b) the licensing implementation guidance. The amendments do not change the core principle of the guidance in Topic 606.  The effective date and transition requirements for the amendments are the same as the effective date and transition requirements in Topic 606. Public entities should apply the amendments for annual reporting periods beginning after December 15, 2017, including interim reporting periods therein (i.e., January 1, 2018, for a calendar year entity). Early application for public entities is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period.  While interest income is specifically out of scope of this standard, management is currently evaluating the revenue streams within “noninterest income’ to assess the applicability of this standard.Since the Company’s products are substantially financial in nature, adoption of ASU No. 2016-10is not expected to have a material impact on the Company’s consolidated financial statements.

The FASB has issued ASU No. 2016-11, Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting. This ASU rescinds SEC paragraphs pursuant to two SEC Staff Announcements at the March 3, 2016 Emerging Issues Task Force (EITF) meeting.  SEC Staff Announcement, “Rescission of Certain SEC Staff Observer Comments upon Adoption of Topic 606, Revenue from Contracts with Customers,” was announced at the March 3, 2016, EITF meeting. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). The SEC Staff is rescinding the following SEC Staff Observer comments that are codified in Topic 605, Revenue Recognition, and Topic 932, Extractive Activities—Oil and Gas, effective upon adoption of Topic 606, Revenue from Contracts with Customers. Specifically, registrants should not rely on the following SEC Staff Observer comments upon adoption of Topic 606: 

· Revenue and Expense Recognition for Freight Services in Process, which is codified in paragraph 605-20-S99-2;

· Accounting for Shipping and Handling Fees and Costs, which is codified in paragraph 605-45-S99-1;

· Accounting for Consideration Given by a Vendor to a Customer (including Reseller of the Vendor’s Products), which is codified in paragraph 605-50-S99-1; and

· Accounting for Gas-Balancing Arrangements (i.e., use of the “entitlements method”), which is codified in paragraph 932-10-S99-5.

While interest income is specifically out of scope of this standard, management is currently evaluating the revenue streams within “noninterest income’ to assess the applicability of this standard.Adoption of ASU No. 2016-11 is not expected to have a material impact on the Company’s consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.  Once effective,ASU No. 2016-13 will significantly change current guidance for recognizing impairment of financial instruments.  Current guidance requires an "incurred loss" methodology for recognizing credit losses that delays recognition until it is probable a loss has been incurred.  ASU No. 2016-13 replaces the incurred loss impairment methodology with a new methodology that reflects expected credit losses over the lives of the loans and requires consideration of a broader range of information to inform credit loss estimates.  The ASU requires an organization to estimate all expected credit losses for financial assets measured at amortized cost, including loans and held-to-maturity debt securities, based on historical experience, current conditions, and reasonable and supportable forecasts.  Additional disclosures are required.  ASU No. 2016-13 also amends the

16

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration.  Under the new guidance, entities will determine whether all or a portion of the unrealized loss on an available-for-sale debt security is a credit loss.  Any credit loss will be recognized as an allowance for credit losses on available-for-sale debt securities rather than as a direct reduction of the amortized cost basis of the investment, as is currently required.  As a result, entities will recognize improvements to estimated credit losses on available-for-sale debt securities immediately in earnings rather than as interest income over time, as currently required.  ASU No. 2016-13 eliminates the current accounting model for purchased credit impaired loans and debt securities.  Instead, purchased financial assets with credit deterioration will be recorded gross of estimated credit losses as of the date of acquisition and the estimated credit losses amounts will be added to the allowance for credit losses.  Thereafter, entities will account for additional impairment of such purchased assets using the models listed above.  ASU No. 2016-13 will take effect for U.S. Securities and Exchange Commission (SEC) filers for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019.  Early application will be permitted for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018.  While the Company generally expects that the implementation of ASU 2016-13 has the potential to increase their allowance for loan losses balance, the Company is continuing to evaluate the potential impact on the Company’s financial statements.  Presentations have been made to the Board of Directors, and management is currently assessing any additional data and system requirements necessary for adoption.

NOTE 2- REGULATORY MATTERS

Regulatory Matters:  

From May 2011 until 2014, the Holding Company and CFBank each were subject toCease and Desist Orders (the “Holding Company Order” and the “CFBank Order”, respectively, and collectively, the “Orders”) with the Federal Reserve Board (the “FRB”), as successor to the Office of Thrift Supervision (the “OTS”) as the primary regulator of the Holding Company and CFBank.  The Orders imposed significant directives applicable to the Holding Company and CFBank, including requirements that we maintain heightened capital levels, reduce the level of our classified and criticized assets, achieve growth and operating metrics in line with an approved business plan, and comply with restrictions on brokered deposits and on certain types of lending and prohibitions on dividends and repurchases of our capital stock. 

Effective as of January 23, 2014, the OCC released and terminated the CFBank Order based upon the improved capital position of CFBank, among other factors.  Notwithstanding the release of the CFBank Order, CFBank was required to continue to maintain a minimum Tier 1 Leverage Capital Ratio of 8% and a Total Risk-based Capital to Risk-Weighted Assets ratio of 12% until December 23, 2015, and CFBank further committed to the OCC to adhere to certain prudent practices.  The foregoing commitments remained in place until December 23, 2015.

On May 15, 2014, the FRB announced the termination of the Holding Company Order, effective as of May 9, 2014.  Notwithstanding the termination of the Holding Company Order, the Holding Company was required to continue to adhere to certain requirements and restrictions based on commitments made to the FRB in connection with the termination of the Holding Company Order.  These commitments required the Holding Company, among other things, to continue to implement certain actions in accordance with the capital plan previously submitted to the FRB; not declare or pay dividends on its stock, purchase or redeem its stock, or accept dividends or other capital distributions from CFBank without the prior written approval of the FRB; not incur, increase or guarantee any debt without the prior written consent of the FRB; and provide prior written notice to the FRB with respect to certain changes in directors and senior executive officers.  The foregoing commitments remained in place until January 8, 2016.

Although we are no longer subject to the Orders or the regulatory commitments made following the release of the Orders, we remain subject to extensive supervision and regulation by our regulators and it is possible that regulatory compliance expenses could continue to have a material adverse impact on us in the future.

17

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

Dividend Restrictions:

The ability of the Holding Company to pay dividends on its common stock and Series B Preferred Stock is generally dependent upon the receipt of dividends and other distributions from CFBank.  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, so long as the Company’s Series B Preferred Stock remains outstanding, the Holding Company will be prohibited from paying dividends on (other than dividends payable solely in shares) the Company’s common stock, for the then-current dividend period, unless full dividends on the Series B Preferred Stock have been paid or set aside for payment.  Dividends on the Series B Preferred Stock are non-cumulative, which means that if for any reason we do not declare cash dividends on the Series B Preferred Stock for a quarterly dividend period we will have no obligation to pay any dividends for that period (i.e., the dividends will not accrue or cumulate), whether or not we declare dividends on the Series B Preferred Stock for any subsequent dividend period.

NOTE 3 – SECURITIES

The following table summarizes the amortized cost and fair value of the available-for-sale securities portfolio at December 31, 2016 and December31, 2015 and the corresponding amounts of unrealized gains and losses recognized in accumulated other comprehensive income (loss):

			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
December 31, 2016
Issued by U.S. government-sponsored entities and agencies:
U.S. Treasury	$	13,521	$	11	$	27	$	13,505
Mortgage-backed securities - residential		345		12		-		357
Collateralized mortgage obligations		189		7		-		196
Total	$	14,055	$	30	$	27	$	14,058

			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
December 31, 2015
Issued by U.S. government-sponsored entities and agencies:
U.S. Treasury	$	8,575	$	4	$	43	$	8,536
Mortgage-backed securities - residential		463		18		-		481
Collateralized mortgage obligations		339		12		-		351
Total	$	9,377	$	34	$	43	$	9,368

There was no other-than-temporary impairment recognized in accumulated other comprehensive income (loss) for securities available for sale at December 31, 2016 or December 31, 2015.

There were no sales of securities for the years ended December 31, 2016 or December 31, 2015; however, there was an early redemption of a municipal security during the first quarter of 2015 which is reflected in net loss on sales of securities.

18

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

The amortized cost and fair value of debt securities at December 31, 2016 and December 31, 2015 are shown 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, 2016				December 31, 2015
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
Due in one year or less	$	2,518	$	2,518	$	1,002	$	1,000
Due from one to five years		11,003		10,987		7,573		7,536
Mortgage-backed securities - residential		345		357		463		481
Collateralized mortgage obligations		189		196		339		351
Total	$	14,055	$	14,058	$	9,377	$	9,368

Fair value of securities pledged was as follows:

	2016		2015
Pledged as collateral for:
FHLB advances	$	2,327	$	3,530
Public deposits		2,043		2,055
Interest-rate swaps		195		261
Total	$	4,565	$	5,846

At year end 2016 and 2015, there were no holdings of securities of any one issuer, other than U.S. Treasuries and U.S. government-sponsored entities and agencies, in an amount greater than 10% of stockholders’ equity.

19

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

The following table summarizes securities with unrealized losses at December 31, 2016 and December 31, 2015 aggregated by major security type and length of time in a continuous unrealized loss position.

December 31, 2016	Less than 12 Months				12 Months or More				Total
Description of Securities	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Issued by U.S. government-sponsored entities and agencies:
U.S. Treasury	$	10,492	$	27	$	-	$	-	$	10,492	$	27
Mortgage-backed securities - residential (1)		1		-		-		-		1		-
Total temporarily impaired	$	10,493	$	27	$	-	$	-	$	10,493	$	27

⁽¹⁾ Securities with an unrealized loss were less than $1 resulting in rounding to zero.

December 31, 2015	Less than 12 Months				12 Months or More				Total
Description of Securities	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Issued by U.S. government-sponsored entities and agencies:
U.S. Treasury	$	6,541	$	43	$	-	$	-	$	6,541	$	43
Mortgage-backed securities - residential		-		-		-		-		-		-
Total temporarily impaired	$	6,541	$	43	$	-	$	-	$	6,541	$	43

The unrealized losses in U.S. Treasuries and Mortgage-backed securities at December 31, 2016 andU.S. Treasuries at December 31, 2015, are related to multiple securities.  Because the decline in fair value is attributable to changes in market conditions, and not credit quality, and because the Company does not have the intent to sell these securities and will unlikely be required to sell these securities before their anticipated recovery, the Company did not consider these securities to be other-than-temporarily impaired at December 31, 2016 and December 31, 2015.

20

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

NOTE 4 – LOANSAND 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, 2016		December 31, 2015
Commercial (1)	$	71,334	$	43,744
Real estate:
Single-family residential		92,544		81,985
Multi-family residential		34,291		28,950
Commercial		105,313		96,488
Construction		25,822		24,662
Consumer:
Home equity lines of credit		23,109		21,837
Other		637		6,018
Subtotal		353,050		303,684
Less: ALLL		(6,925)		(6,620)
Loans and Leases, net	$	346,125	$	297,064

⁽¹⁾ Includes $2,874 of commercial leases.

Mortgage Purchase Program:

CFBank has participated in a Mortgage Purchase Program with Northpointe Bank (Northpointe), a Michigan banking corporation, since December 2012.  Pursuant to the terms of a participation agreement, CFBank purchases participation interests in loans made by Northpointe related to fully underwritten and pre-sold mortgage loans originated by various prescreened mortgage brokers located throughout the U.S.  The underlying loans areindividually (MERS) registered loans which are held until funded by the end investor. The mortgage loan investors include Fannie Mae and Freddie Mac, and other major financial institutions.  This process on average takes approximately 14 days.  Given the short-term holding period of the underlying loans, common credit risks (such as past due, impairment and TDR, nonperforming, and nonaccrual classification) are substantially reduced.  Therefore, no allowance is allocated by CFBank to these loans.These loans are 100% risk rated for CFBank capital adequacy purposes.  Under the participation agreement,  CFBank agrees to purchase a95%ownership/participation interest in each of the aforementioned loans, and Northpointe maintains a 5% ownership interest in each loan it participates.  At December 31, 2016 and 2015, CFBank held $46,919 and $43,517, respectively,  of such loans which have been included in single-family residential loan totals above.

21

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

Allowance for Loan and Lease Losses:

The ALLL is a valuation allowance for probable incurred credit losses in the loan and lease portfolio based on management’s evaluation of various factors including past loan loss experience, the nature and volume of the portfolio, information about specific borrower situations and estimated collateral values, economic conditions and other factors. A provision for loan and lease losses is charged to operations based on management’s periodic evaluation of these and other pertinent factors described in Note 1 of the Notes to Consolidated Financial Statements.

The following tables present the activity in the ALLL by portfolio segment for the years ended December 31, 2016 and 2015:

	December 31, 2016
			Real Estate								Consumer
	Commercial		Single-family		Multi-family		Commercial		Construction		Home Equity lines of credit		Other		Total
Beginning balance	$	1,380	$	691	$	705	$	2,710	$	561	$	474	$	99	$	6,620
Addition to (reduction in) provision for loan losses		390		149		(132)		(128)		19		(4)		(64)		230
Charge-offs		(123)		(147)		-		-		-		(53)		(1)		(324)
Recoveries		-		42		143		145		-		69		-		399
Ending balance	$	1,647	$	735	$	716	$	2,727	$	580	$	486	$	34	$	6,925

	December 31, 2015
			Real Estate								Consumer
	Commercial		Single-family		Multi-family		Commercial		Construction		Home Equity lines of credit		Other		Total
Beginning balance	$	1,346	$	634	$	818	$	2,541	$	442	$	441	$	94	$	6,316
Addition to (reduction in) provision for loan losses		17		96		(113)		161		119		(39)		9		250
Charge-offs		(8)		(40)		-		(25)		-		(41)		(10)		(124)
Recoveries		25		1		-		33		-		113		6		178
Ending balance	$	1,380	$	691	$	705	$	2,710	$	561	$	474	$	99	$	6,620

22

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

The following table presents the balance in the ALLL and the recorded investment in loans and leases by portfolio segment and based on impairment method as of December 31, 2016:  

			Real Estate								Consumer
	Commercial		Single- family		Multi- family		Commercial		Construction		Home Equity lines of credit		Other		Total
ALLL:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	1	$	-	$	-	$	21	$	-	$	-	$	-	$	22
Collectively evaluated for impairment		1,646		735		716		2,706		580		486		34		6,903
Total ending allowance balance	$	1,647	$	735	$	716	$	2,727	$	580	$	486	$	34	$	6,925
Loans:
Individually evaluated for impairment	$	557	$	122	$	37	$	2,732	$	-	$	-	$	-	$	3,448
Collectively evaluated for impairment		70,777		92,422		34,254		102,581		25,822		23,109		637		349,602
Total ending loan balance	$	71,334	$	92,544	$	34,291	$	105,313	$	25,822	$	23,109	$	637	$	353,050

The following table presents the balance in the ALLL and the recorded investment in loans and leases by portfolio segment and based on impairment method as of December 31, 2015:  

			Real Estate								Consumer
	Commercial		Single- family		Multi- family		Commercial		Construction		Home Equity lines of credit		Other		Total
ALLL:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	5	$	1	$	-	$	14	$	-	$	-	$	-	$	20
Collectively evaluated for impairment		1,375		690		705		2,696		561		474		99		6,600
Total ending allowance balance	$	1,380	$	691	$	705	$	2,710	$	561	$	474	$	99	$	6,620
Loans:
Individually evaluated for impairment		422	$	289	$	1,590	$	3,449	$	-	$	-	$	-	$	5,750
Collectively evaluated for impairment		43,322		81,696		27,360		93,039		24,662		21,837		6,018		297,934
Total ending loan balance	$	43,744	$	81,985	$	28,950	$	96,488	$	24,662	$	21,837	$	6,018	$	303,684

23

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

The following table presents loans individually evaluated for impairment by class of loans as of and for the year ended December 31, 2016. The unpaid principal balance is the contractual principal balance outstanding. The recorded investment is the unpaid principal balance adjusted for partial charge-offs, purchase premiums and discounts, deferred loan fees and costs.

	Unpaid Principal Balance		Recorded Investment		ALLL Allocated		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial	$	476	$	358	$	-	$	436	$	13
Real estate:
Single-family residential		-		-		-		-		-
Multi-family residential		37		37		-		41		2
Commercial:
Non-owner occupied		112		112		-		114		8
Owner occupied		871		350		-		360		46
Land		-		-		-		-		-
Total with no allowance recorded		1,496		857		-		951		69
With an allowance recorded:
Commercial		199		199		1		232		9
Real estate:
Single-family residential		122		122		-		125		7
Multi-family residential		-		-		-		-		-
Commercial:
Non-owner occupied		2,068		2,068		19		2,086		126
Owner occupied		202		202		2		208		10
Land		-		-		-		-		-
Total with an allowance recorded		2,591		2,591		22		2,651		152
Total	$	4,087	$	3,448	$	22	$	3,602	$	221

24

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

The following table presents loans individually evaluated for impairment by class of loans as of and for the year ended December 31, 2015. The unpaid principal balance is the contractual principal balance outstanding. The recorded investment is the unpaid principal balance adjusted for partial charge-offs, purchase premiums and discounts, deferred loan fees and costs.

	Unpaid Principal Balance		Recorded Investment		ALLL Allocated		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial	$	36	$	28	$	-	$	65	$	1
Real estate:
Single-family residential		322		161		-		166		-
Multi-family residential		1,545		1,545		-		1,561		95
Commercial:
Non-owner occupied		546		446		-		455		-
Owner occupied		688		167		-		174		39
Land		-		-		-		-		-
Total with no allowance recorded		3,137		2,347		-		2,421		135
With an allowance recorded:
Commercial		394		394		5		439		12
Real estate:
Single-family residential		128		128		1		130		7
Multi-family residential		45		45		-		48		3
Commercial:
Non-owner occupied		2,224		2,224		9		2,242		136
Owner occupied		363		363		1		371		20
Land		294		249		4		274		18
Total with an allowance recorded		3,448		3,403		20		3,504		196
Total	$	6,585	$	5,750	$	20	$	5,925	$	331

The following table presents the recorded investment in nonperforming loans by class of loans as of December 31, 2016 and 2015:

	2016		2015
Loans past due over 90 days still on accrual	$	-	$	-
Nonaccrual loans:
Commercial		263		224
Real estate:
Single-family residential		397		640
Commercial:
Non-owner occupied		-		446
Consumer:
Home equity lines of credit:
Originated for portfolio		44		20
Purchased for portfolio		-		95
Total nonaccrual		704		1,425
Total nonperforming loans	$	704	$	1,425

25

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

Nonaccrual loans include both smaller balance single-family mortgage and consumer loans that are collectively evaluated for impairment and individually classified impaired loans. There were no loans 90 days or more past due and still accruing interest at December 31, 2016 or December 31, 2015.  

The following table presents the aging of the recorded investment in past due loans by class of loans as of December 31, 2016:

	30 - 59 Days Past Due		60 - 89 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Loans Not Past Due		Nonaccrual Loans Not > 90 days Past Due
Commercial	$	-	$	-	$	119	$	119	$	71,215	$	144
Real estate:
Single-family residential		284		49		106		439		92,105		291
Multi-family residential		-		-		-		-		34,291		-
Commercial:
Non-owner occupied		-		-		-		-		60,936		-
Owner occupied		269		600		-		869		34,891		-
Land		-		-		-		-		8,617		-
Construction		48		-		-		48		25,774		-
Consumer:
Home equity lines of credit:
Originated for portfolio		-		15		-		15		22,440		44
Purchased for portfolio		69		-		-		69		585		-
Other		-		-		-		-		637		-
Total	$	670	$	664	$	225	$	1,559	$	351,491	$	479

The following table presents the aging of the recorded investment in past due loans by class of loans as of December 31, 2015:  

	30 - 59 Days Past Due		60 - 89 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Loans Not Past Due		Nonaccrual Loans Not > 90 days Past Due
Commercial	$	-	$	9	$	28	$	37	$	43,707	$	196
Real estate:
Single-family residential		598		161		148		907		81,078		492
Multi-family residential		-		-		-		-		28,950		-
Commercial:
Non-owner occupied		-		446		-		446		57,573		446
Owner occupied		-		-		-		-		30,169		-
Land		-		-		-		-		8,300		-
Construction		-		-		-		-		24,662		-
Consumer:
Home equity lines of credit:
Originated for portfolio		-		-		-		-		20,789		20
Purchased for portfolio		-		-		-		-		1,048		95
Other		-		-		-		-		6,018		-
Total	$	598	$	616	$	176	$	1,390	$	302,294	$	1,249

26

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

Troubled Debt Restructurings (TDRs):

From time to time, the terms of certain loans are modified as TDRs, where concessions are granted to borrowers experiencing financial difficulties. The modification of the terms of such loans may have included one or a combination of the following: a reduction of the stated interest rate of the loan; an increase in the stated rate of interest lower than the current market rate for new debt with similar risk; an extension of the maturity date; or a change in the payment terms.

As of December 31, 2016 and December 31, 2015, TDR’s totaled $3,130 and $5,276, respectively.  The Company allocated $22 and $20 of specific reserves to loans modified in TDRs as of December 31, 2016 and 2015, respectively. The Company had not committed to lend additional amounts as of December 31, 2016 or 2015 to customers with outstanding loans that wereclassified as nonaccrual TDRs.

There was one commercial loan in the amount of $239 that was modified as a TDR during the year ended December 31, 2016, where concessions were granted to a borrower experiencing financial difficulty.  There was onesingle-family residential loan and one home equity line of credit that were modified as TDRs during the year ended December 31, 2015, where concessions were granted to borrowers experiencing financial difficulties.  The home equity line of credit was paid off in June 2015. 

The following table presents loans modified as TDRs by class of loans during the year ended December 31, 2016:

	Number of Loans		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commercial		1	$	339	$	339
		1	$	339	$	339

The following table presents loans modified as TDRs by class of loans during the year ended December 31, 2015:

	Number of Loans		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Real estate:
Single-family residential		1	$	9	$	9
Consumer:
Home equity lines of credit:
Originated for portfolio		1		9		9
		2	$	18	$	18

The TDRs described above resulted in nocharge-offs during the years ended December 31, 2016 and 2015, respectively.

There was one nonperforming TDR that went into payment default during the year ended December 31, 2016.  There were no loans classified as TDRs for which there was a payment default within twelve months following the modification during the year ending December 31, 2015. 

The terms of certain other loans were modified during the year ended December 31, 2016 and 2015 that did not meet the definition of a TDR. These loans had a total recorded investment of $33,294 and $19,097 as of December 31, 2016 and 2015, respectively. The modification of these loans involved either a modification of the terms of a loan to borrowers who were not experiencing financial difficulties, a delay in a payment that was considered to be insignificant or there were no concessions granted.

In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed under the Company’s internal underwriting policy.

27

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

Nonaccrual loans include loans that were modified and identified as TDRs and the loans are not performing.  At December 31, 2016 and 2015, nonaccrual TDRs were as follows: 

	2016		2015
Commercial	$	144	$	195
Real estate:
Single-family residential		-		161
Total	$	144	$	356

Nonaccrual loans at December 31, 2016 and 2015 did not include $2,986 and $4,920, respectively, of TDRs where customers have established a sustained period of repayment performance, generally six months, the loans are current according to their modified terms and repayment of the remaining contractual payments is expected.  These loans are included in total impaired loans.

Credit Quality Indicators:

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, such as current financial information, historical payment experience, credit documentation, public information and current economic trends, among other factors.  Management analyzes loans individually by classifying the loans as to credit risk.  This analysis includes commercial, commercial real estate and multi-family residential real estate loans.  Internal loan reviews for these loan types are performed at least annually, and more often for loans with higher credit risk. Adjustments to loan risk ratings are 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 loans are loans that are subject to internal loan reviews and are determined not to meet the criteria required to be classified as special mention, substandard, doubtful or loss.

28

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

The recorded investment in loans by risk category and by class of loans as of December 31, 2016 and based on the most recent analysis performed follows.  There were no loans rated doubtful at December 31, 2016. 

	Not Rated		Pass		Special Mention		Substandard		Total
Commercial	$	47	$	70,444	$	286	$	557	$	71,334
Real estate:
Single-family residential		92,130		-		-		414		92,544
Multi-family residential		-		33,615		505		171		34,291
Commercial:
Non-owner occupied		115		58,183		1,782		856		60,936
Owner occupied		-		33,493		1,048		1,219		35,760
Land		-		6,380		-		2,237		8,617
Construction		1,997		23,825		-		-		25,822
Consumer:
Home equity lines of credit:
Originated for portfolio		22,328		-		-		127		22,455
Purchased for portfolio		512		-		-		142		654
Other		637		-		-		-		637
	$	117,766	$	225,940	$	3,621	$	5,723	$	353,050

The recorded investment in loans by risk category and class of loans as of December 31, 2015 follows.  There were no loans rated doubtful at December 31, 2015.

	Not Rated		Pass		Special Mention		Substandard		Total
Commercial	$	83	$	41,473	$	1,892	$	296	$	43,744
Real estate:
Single-family residential		81,318		-		-		667		81,985
Multi-family residential		2,777		25,466		528		179		28,950
Commercial:
Non-owner occupied		125		54,674		1,852		1,368		58,019
Owner occupied		-		26,923		3,079		167		30,169
Land		-		5,720		-		2,580		8,300
Construction		11,252		13,410		-		-		24,662
Consumer:
Home equity lines of credit:
Originated for portfolio		20,677		-		-		112		20,789
Purchased for portfolio		802		-		-		246		1,048
Other		2,172		3,846		-		-		6,018
	$	119,206	$	171,512	$	7,351	$	5,615	$	303,684

29

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

NOTE 5 – FORECLOSED ASSETS

Foreclosed assets at year-end were as follows:

	2016		2015
Commercial real estate	$	-	$	1,636
Single-family residential		204		-
Subtotal		204		1,636
Valuation Allowance		-		-
Total	$	204	$	1,636

There was no activity in the valuation allowance account or any write-downs during the years ended December 31, 2016 and 2015.

Expenses related to foreclosed assets include:

	2016		2015
Net loss (gain) on sales	$	(4)	$	-
Operating expenses, net of rental income		69		137
	$	65	$	137

Foreclosed assets at December 31, 2016 consisted of one single-family residential property that was transferred into REO at fair value in December 2016.  Foreclosed assets at December 31, 2015consisted ofone multi-family property that was transferred into REO at fair value at the time of transfer in 2013.Foreclosed asset expensesincurred during 2016 and 2015 related to light rehabilitation and maintenance expense incurred to ready the property to sell, increase occupancy levels, and certain other operating costs.

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).

30

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

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

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

Loans held for sale:  Loans held for sale are carried at fair value, as determined by outstanding commitments from third party investors (Level 2).During the second quarter of 2015, CFBank signed an agreement with the intent to sell its credit card portfolio to a third party.  As a result, as of June 30, 2015, the credit card portfolio was transferred to held for sale at the lower of cost of market of $175,000, which approximated fair value at the time of transfer.  In February 2016, the sale of the credit card portfolio was consummated.

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, 2016 Using Significant Other Observable Inputs
	(Level 2)
Financial Assets:
Securities available for sale:
Issued by U.S. government-sponsored entities and agencies:
U.S. Treasury	$	13,505
Mortgage-backed securities - residential		357
Collateralized mortgage obligations		196
Total securities available for sale	$	14,058
Loans held for sale	$	2,812
Yield maintenance provisions (embedded derivatives)	$	122
Interest rate lock commitments	$	9
Financial Liabilities:
Interest-rate swaps	$	122

31

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

	Fair Value Measurements at December 31, 2015 Using Significant Other Observable Inputs
	(Level 2)
Financial Assets:
Securities available for sale:
Issued by U.S. government-sponsored entities and agencies:
U.S. Treasury	$	8,536
Mortgage-backed securities - residential		481
Collateralized mortgage obligations		351
Total securities available for sale	$	9,368
Loans held for sale	$	889
Yield maintenance provisions (embedded derivatives)	$	213
Interest rate lock commitments	$	8
Financial Liabilities:
Interest-rate swaps	$	213

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, 2016 or 2015.  There were no transfers of assets or liabilities measured at fair value between levels during 2016 or 2015.

Assets measured at fair value on a non-recurring basis are summarized below:

Fair Value Measurements at December 31, 2016 Using
Significant Unobservable Inputs (Level 3)
Impaired loans:
Commercial	$	130
Real Estate:
Single-family residential		122
Multi-family residential		37
Commercial:
Non-owner occupied		2,161
Owner occupied		200
Land		-
Total impaired loans	$	2,650

32

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

Fair Value Measurements at December 31, 2015 Using
Significant Unobservable Inputs (Level 3)
Impaired loans:
Commercial	$	143
Real Estate:
Single-family residential		128
Multi-family residential		45
Commercial:
Non-owner occupied		2,215
Owner occupied		213
Land		245
Total impaired loans	$	2,989

The Company had no assets or liabilities measured at fair value on a non-recurring basis that were measured using Level 1 or 2 inputs at December 31, 2016 or 2015.

Impaired loans that are measured for impairment using the fair value of the collateral for collateral dependent loans, had a principal balance of $2,672, with a valuation allowance of $21 at December 31, 2016.  Impaired loans that are measured for impairment using the fair value of the collateral for collateral dependent loans, had a principal balance of $3,050 with a valuation allowance of $16 at December 31, 2015. 

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, 2016:  

	Fair Value		Valuation Technique(s)	Unobservable Inputs	(Range) Weighted Average
Impaired loans:
Commercial	$	130	Comparable sales approach	Adjustment for differences between the comparable market transactions	3.48%
Real estate:
Single-family residential		122	Comparable sales approach	Adjustment for differences between the comparable market transactions	(1.81% , 3.61%)  2.91%
Multi-family residential		37	Comparable sales approach	Adjustment for differences between the comparable market transactions	9.64%
Commercial:
Non-owner occupied		2,161	Comparable sales approach	Adjustment for differences between the comparable market transactions	(1.10%, 5.74%) 1.35%
Owner occupied		200	Comparable sales approach	Adjustment for differences between the comparable market transactions	-4.46%

33

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

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, 2015:

	Fair Value		Valuation Technique(s)	Unobservable Inputs	(Range) Weighted Average
Impaired loans:
Commercial	$	143	Comparable sales approach	Adjustments by management to reflect current discount rates	1.10%
Real estate:
Single -family residential		128	Comparable sales approach	Adjustment for differences between the comparable market transactions	(-1.23% , 4.63%)  -.17%
Multi-family residential		45	Comparable sales approach	Adjustment for differences between the comparable market transactions	5.74%
Commercial:
Non-owner occupied		2,215	Comparable sales approach	Adjustment for differences between the comparable market transactions	(1.10%, 5.74%) 1.35%
Owner occupied		213	Comparable sales approach	Adjustment for differences between the comparable market transactions	-29.30%
Land		245	Comparable sales approach	Adjustment for differences between the comparable market transactions	(-1.89%, 2.54%) .08%

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 transferred to held for sale, are carried at the lower 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, 2016 or December 31, 2015. 

As of December 31, 2016 and December 31, 2015, the aggregate fair value, contractual balance and gain or loss of loans held for sale were as follows:

	December 31, 2016		December 31, 2015
Aggregate fair value	$	2,812	$	889
Contractual balance		2,801		884
Gain (loss)		11		5

The total amount of gains and losses from changes in fair value included in earnings for the year ended December 31, 2016 and 2015 for loans held for sale were:

	2016		2015
Interest income	$	60	$	56
Interest expense		-		-
Change in fair value		6		(10)
Total change in fair value	$	66	$	46

34

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 were as follows:

	Fair Value Measurements at December 31, 2016 Using:
	Carrying
	Value		Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	57,941	$	57,941	$	-	$	-	$	57,941
Interest-bearing deposits in other financial institutions		100		100		-		-		100
Securities available for sale		14,058		-		14,058		-		14,058
Loans held for sale		2,812		-		2,812		-		2,812
Loans, net		346,125		-		-		343,523		343,523
FHLB stock		1,942		n/a		n/a		n/a		n/a
Accrued interest receivable		1,054		13		40		1,001		1,054
Yield maintenance provisions (embedded derivatives)		122		-		122		-		122
Interest rate lock commitments		9		-		9		-		9
Financial liabilities
Deposits	$	(375,364)	$	(202,158)	$	(171,967)	$	-	$	(374,125)
FHLB advances and other borrowings		(13,500)		-		(13,597)		-		(13,597)
Advances by borrowers for taxes and insurance		(408)		-		-		(408)		(408)
Subordinated debentures		(5,155)		-		(3,411)		-		(3,411)
Accrued interest payable		(78)		(2)		(76)		-		(78)
Interest-rate swaps		(122)		-		(122)		-		(122)

The carrying amounts and estimated fair values of financial instruments at December 31, 2015 were as follows:

	Fair Value Measurements at December 31, 2015 Using:
	Carrying
	Value		Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	25,895	$	25,895	$	-	$	-	$	25,895
Interest-bearing deposits in other financial institutions		-		-		-		-		-
Securities available for sale		9,368		-		9,368		-		9,368
Loans held for sale		889		-		889		-		889
Loans, net		297,064		-		-		295,498		295,498
FHLB stock		1,942		n/a		n/a		n/a		n/a
Accrued interest receivable		831		1		21		809		831
Yield maintenance provisions (embedded derivatives)		213		-		213		-		213
Interest rate lock commitments		8		-		8		-		8
Financial liabilities
Deposits	$	(290,467)	$	(147,523)	$	(143,236)	$	-	$	(290,759)
FHLB advances and other borrowings		(14,500)		-		(14,693)		-		(14,693)
Advances by borrowers for taxes and insurance		(656)		-		-		(656)		(656)
Subordinated debentures		(5,155)		-		(2,269)		-		(2,269)
Accrued interest payable		(44)		-		(44)		-		(44)
Interest-rate swaps		(213)		-		(213)		-		(213)

35

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

The methods and assumptions used to estimate fair value are described as follows.

Cash and Cash Equivalents

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

Interest-Bearing Deposits in Other Financial Institutions

The carrying amounts of interest bearing deposits in other financial institutions approximate fair values and are classified as Level 1.

FHLB Stock

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

Loans

Fair values of loans, excluding loans held for sale, are estimated 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.  Impaired loans are valued at the lower of cost or fair value as described previously. The methods utilized to estimate the fair value of loans do not necessarily represent an exit price.

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.

Other Borrowings

The fair values of the Company’s long-term FHLB 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 for the secured borrowings are valued in the same manner as loans noted above, resulting in a Level 3 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 or 2 classification,consistent with the asset or liability with which they are associated.

Off-Balance-Sheet Instruments

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

36

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

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, 2016		December 31, 2015
Mortgage loans serviced for Freddie Mac	$	4,261	$	5,593

Custodial escrow balances maintained in connection with serviced loans were $119 and $132 at year-end 2015 and 2014, respectively.

NOTE 8- PREMISES AND EQUIPMENT

Year-end premises and equipment were as follows:

	December 31, 2016		December 31, 2015
Land and land improvements	$	1,293	$	1,293
Buildings		3,832		3,827
Furniture, fixtures and equipment		2,150		2,655
		7,275		7,775
Less: Accumulated Depreciation		(3,846)		(4,166)
	$	3,429	$	3,609

Depreciation expense for 2016 and 2015 totaled $211 and$211, respectively.

Operating Leases:

The Company leases certain branch and loan office property space under two operating leases. Each lease requires CFBank to absorb its pro rata share of building operating expenses and utilities based on square footage. The Company entered into a lease agreement to open a commercial banking agency  office in Woodmere, Ohio, which opened in January of 2014.  The Woodmere lease is for a 128-month term commencing January 1, 2014 with no renewal options. The Company leases CFBank’s Fairlawn branch office pursuant to a  ten year operating lease beginning in 2014 with annual rent increases each year. There is one five-year renewal option on this lease.  Lease expense for the years ended December 31, 2016 and 2015 totaled $311 and $319, respectively.  Leasehold improvements are depreciated straight line over the lease term before consideration of renewal options. 

Lease expense is recognized evenly over the lease term to account for lease incentives.  Rent commitments, before renewal options, are as follows:

2017	$	320
2018		321
2019		322
2020		324
2021		325
Thereafter		858
	$	2,470

37

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

NOTE 9 – DEPOSITS

Time deposits of $100 or more were $128,185 and $106,574 at year-end 2016 and 2015, respectively.  Time deposits of $250 or more were $38,575 and $23,970 at year-end 2016 and 2015, respectively.

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

2017	$	108,620
2018		33,617
2019		7,749
2020		14,626
2021		7,697
Thereafter		-
Total	$	172,309

Brokereddeposits at year-end 2016 and 2015 totaled $29,738and $22,073, respectively. 

NOTE 10 –FHLB ADVANCES

Fixed Rate Advances from the FHLB were as follows:

	Weighted
	Average Rate	December 31, 2016		December 31, 2015
Fixed Rate Advances
Maturities:
2016		$	-	$	5,000
2017	1.12%		2,500		1,500
2019	1.62%		3,500		2,500
2020	2.02%		3,500		2,500
2021	2.32%		4,000		3,000
Total		$	13,500	$	14,500

Each advance is payable at its maturity date, with a prepayment penalty for fixed-rate advances. 

The advances were collateralized as follows:

	December 31, 2016		December 31, 2015
Single-family mortgage loans	$	38,342	$	29,490
Multi-family mortgage loans		14,854		8,185
Commercial real estate loans (1-4 family)		2,793		3,155
Securities		2,327		3,530
Cash		3,300		3,300
Total	$	61,616	$	47,660

Based on the collateral pledged to the FHLB and CFBank’s holdings of FHLB stock, CFBank was eligible to borrow up to a total of $44,498 from the FHLB at December 31, 2016. 

38

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

Payments due to the FHLB over the next five years are as follows:

	December 31, 2016
2017	$	2,500
2018		-
2019		3,500
2020		3,500
2021		4,000
	$	13,500

NOTE 11 - OTHER BORROWINGS

There were no outstanding borrowings with the Federal Reserve Bank (the “FRB”) at December 31, 2016 or at December 31, 2015. 

Assets pledged as collateral with the FRB were as follows:

	2016		2015
Commercial loans	$	16,380	$	19,696
Commercial real estate loans		39,230		37,702
	$	55,610	$	57,398

Based on the collateral pledged, CFBank was eligible to borrow up to $31,846 from the FRB at year-end 2016.

CFBank had a $1.0 million line of credit with a commercial bank at both December 31, 2016 and December 31, 2015.  There were no outstanding borrowings on this line of credit at December 31, 2016 or December 31, 2015.  If CFBank were to borrow on this line of credit, interest would accrue daily at a variable rate based on the commercial bank’s cost of funds and current market returns.

NOTE 12 – 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, on or after December 30, 2008 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.The Holding Company’s Board of Directors elected to defer interest payments on the subordinated debentures from time to time beginning in December 2010 in order to preserve cash at the Holding Company.  However, the Holding Company paid all deferred and current interest payments in June 2014, and has paid the interest current on the subordinated debentures for all subsequent quarters through December 31, 2016.

The subordinated debentures have a variable rate of interest, reset quarterly, equal to the three-month London Interbank Offered Rate plus 2.85%, which was 3.85% at year-end 2016 and 3.45% at year-end 2015.

39

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

NOTE 13 – 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 unfunded liability under the Pentegra DB Plan at June 30, 2016 totaled  $53  and at June 30, 2015 was $36.  CFBank’s contributions for the plan years ending June 30, 2017 and June 30, 2016, totaled $42,  and $22, 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 those 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 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, 2016 and 2015 was 94.90% and96.52%, respectively. 

Total contributions made to the Pentegra DB Plan, as reported on Form 5500 of the Pentegra DB Plan, totaled $163 and  $191 for the plan years ended June 30, 2015 and June 30, 2014, respectively.CFBank’s contributions to the Pentegra DB Plan were not more than 5% of the total contributions to the Pentegra DB Plan.

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 25% of the first 8% of the compensation contributed.  Expense for 2016 and 2015 was $49 and$52, respectively.

Salary Continuation Agreement:

In 2004, CFBank entered into a nonqualified salary continuation agreement with itsformer 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 6 months after his retirement date, which was February 28, 2008.  The expense related to this plan totaled $10 and$11 in 2016 and 2015, respectively. The accrual is included in accrued interest payable and other liabilities in the consolidated balance sheets and totaled $218 at year-end 2016 and $233 at year-end 2015. 

Life Insurance Benefits:

CFBank has entered into agreements with certain employees, former employees and directors to provide life insurance benefits which are funded through life insurance policies purchased and owned by CFBank.  The expense related to these benefits totaled ($3) and($2) in 2016 and 2015, 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 $210 at year-end 2016 and $213 at year-end 2015.

40

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

NOTE 14 – INCOME TAXES

Income tax expense was as follows:

	December 31, 2016		December 31, 2015
Current Federal	$	187	$	58
Deferred Federal (1)		623		(3,251)
Total	$	810	$	(3,193)

(1) Includes tax benefit of operating loss carryforwards of $717 and $531 for the years ended December 31, 2016 and 2015.

Effective tax rates differ from the federal statutory rate of 34% applied to income (loss) before income taxes due to the following:

	December 31, 2016		December 31, 2015
Federal Statutory rate times financial statement income (loss)	$	829	$	436
Effect of:
Incentive Stock Options		6		33
Bank owned life insurance income		(45)		(45)
Increase (decrease) in deferred tax valuation allowance		-		(3,656)
Other		20		39
	$	810	$	(3,193)
Effective tax rate		33%		-249%

41

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

Year-end deferred tax assets and liabilities were due to the following:

	2016		2015
Deferred tax assets:
Allowance for loan and lease losses	$	1,575	$	1,497
Compensation related issues		353		314
Deferred loan fees		155		118
AMT Credit		50		105
Nonaccrual interest		41		132
Net operating loss carry forward		863		1,580
Other		70		2
		3,107		3,748
Deferred tax liability:
FHLB stock dividend		366		366
Mortgage servicing rights		2		4
Depreciation		47		43
Prepaid expenses		63		78
Mark-to-market Loans		2		3
		480		494
Net deferred tax asset	$	2,627	$	3,254

At December 31, 2016, the Company had a deferred tax asset recorded of approximately $2,600.  At December 31, 2015, the Company had a deferred tax asset recorded of approximately $3,300 after reversing its valuation allowance noted below.  At December 31, 2016 and December 31, 2015, 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 2013.

Our deferred tax assets are composed of U.S. net operating losses (“NOLs”), and other temporary book to tax differences.  The Company recorded a deferred tax valuation allowance which reduced the Company’s deferred tax asset to zero beginning in 2009 and continuing up until the fourth quarter of 2015. The Company maintained this valuation allowance against the net deferred tax assets during this period based on its estimate of future reversal and utilization.  As a result, there was no income tax benefit recorded during the first three quarters of 2015. 

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, 2015, in part because the Company had achieved seven consecutive quarters of pretax income, that it was no longer necessary to maintain a full valuation allowance against the entire net deferred tax asset.  As a result, the valuation allowance on the deferred tax asset was reversed, which resulted in a credit to income tax expense of $3,200 during the fourth quarter of 2015.

42

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

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 changewithin the guidelines of Section 382 of the Internal Revenue Code of 1986.  At year-end 2016, the Company had net operating loss carryforwards of  $23,059, which expire at various dates from 2024 to 2033, and has alternative minimum tax credit carryforwards of $50, which do not expire. As a result of the ownership change, the Company's ability to utilize carryforwards that arose before the stock offering closed is limited to $163 per year. Due to this limitation, management determined it is more likely than not that $20,520 of net operating loss carryforwards will expire unutilized. As required by 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$765 at year-end 2016.  However, if CFBank were wholly or partially liquidated or otherwise ceases to be a bank, or if tax laws were to change, this amount would have to be recaptured and a tax liability recorded.  Additionally, any distributions in excess of CFBank’s current or accumulated earnings and profits would reduce amounts allocated to its bad debt reserve and create a tax liability for CFBank. The amount of additional taxable income created by such a distribution is an amount that, when reduced by the tax attributable to the income, is equal to the amount of the distribution. Thus, if CFBank were to make a distribution that reducedthe amount allocated to its bad debt reserve, then approximately one and one-half times the amount used would be includible in gross income for federal income tax purposes, assuming a 34% corporate income tax rate. CFBank does not intend to make distributions that would result in a recapture of any portion of its bad debt reserve.

NOTE 15 – RELATED-PARTY TRANSACTIONS

Loans to principal officers, directors and their affiliates during 2016 were as follows:

Beginning balance	$	635
New loans		1,826
Effect of changes in composition of related parties		-
Repayments		(62)
Ending balance	$	2,399

All loans to related parties were made 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 at year-end 2016 and 2015 were $274 and$262, respectively.

43

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

NOTE 16 – STOCK-BASED COMPENSATION

The Company has issued awards under three stock-based compensation plans (the “Plans”), as described below.  Total compensation cost that has been charged against income for those Plans totaled $122 and $134 for 2016 and 2015, respectively.  The total income tax benefit was $35 and $13 for 2016 and 2015, respectively.

The Plans are all stockholder-approved and authorize stock option grants and restricted stock awards to be made to directors, officers and employees. The 1999 Stock-Based Incentive Plan, which expired July 13, 2009, provided 38,778 shares of common stock for stock option grants and 15,511 shares of common stock for restricted stock awards.  The 2003 Equity Compensation Plan (the “2003 Plan”), as amended and restated, provided an aggregate of 100,000 shares for stock option grants and restricted stock awards, of which up to 30,000 shares could be awarded in the form of restricted stock awards.  The 2009 Equity Compensation Plan (the “2009 Plan”), which was approved by stockholders on May 21, 2009, replaced the 2003 Plan and provided for 200,000 shares, plus any remaining shares available to grant or that are later forfeited or expire under the 2003 Plan, to be made available to be issued as stock option grants, stock appreciation rights or restricted stock awards.  On May 16, 2013, the Company’s stockholders approved the First Amendment to the 2009 Plan to increase the number of shares of common stock reserved for stock option grants and restricted stock awards thereunder to 1,500,000. 

Stock Options:

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

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

There were no stock options granted or exercised during the years ended December 31, 2016 and December 31, 2015. 

A summary of stock option activity in the Plans for 2016 follows:

	Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Intrinsic Value
Outstanding at beginning of year	566,696	$	1.48
Cancelled or Forfeited	(23,950)		2.01
Outstanding at end of period	542,746	$	1.46	6.4	$	198,040
Expected to vest	-	$	-	-	$	-
Exercisable at end of period	542,746	$	1.46	6.4	$	198,040

During the year ended December 31, 2016, there were 23,950 stock options canceled or forfeited.  Expense associated with unvested forfeited shares is reversed. As of December 31, 2016,all stock options granted under the Plans were vested.

44

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

Restricted Stock Awards:

The Plans also permit the grant of restricted stock awards to directors, officers and employees. Compensation is recognized over the vesting period of the awards based on the fair value of the stock at grant date.  The fair value of the stock is determined using the closing share price on the date of grant and shares generally have vesting periods of one to three years.  There were 292,000 shares of restricted stock issued in 2016 and200,500 shares of restricted stock issued in 2015. 

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

Nonvested Shares	Shares	Weighted Average Grant-Date Fair Value
Nonvested at January 1, 2016	200,500	$	1.37
Granted	292,000		1.64
Vested	(66,834)		1.37
Forfeited	-		-
Nonvested at December 31, 2016	425,666	$	1.56

As of December 31, 2016 and 2015, the unrecognized compensation cost related to nonvested shares granted under the Plans was $642 and $272, respectively.   There were 66,834 shares that vested during the year ended December 31, 2016.  

There were 539,792 shares remaining available for stock option grants and restricted stock awards under the 2009 Plan at December 31, 2016.

NOTE 17 – PREFERRED STOCK 

Series B Preferred Stock:

Commencing in April 2014, the Company conducted a private placement of up to 480,000 shares of its 6.25% Non-Cumulative Convertible Perpetual Preferred Stock, Series B (“Series B Preferred Stock”) for an offering price of $25.00 per share (the “Private Placement”).  Pursuant to the Private Placement, the Company sold an aggregate of 480,000 shares of Series B Preferred Stock on May 12, 2014 and July 15, 2014, for an aggregate offering price of $12,000.  The Series B Preferred Stock was sold by the Company with the assistance of McDonald Partners, LLC, as placement agent, on a best efforts basis.  After payment of approximately $482 in placement fees to McDonald Partners, LLC and approximately $149 of other offering expenses, the Company’s net proceeds from its sale of the 480,000 shares of Series B Preferred Stock in the Private Placement were approximately $11,369.  

For each share of Series B Preferred Stock sold in the Private Placement, the Company also agreed to issue, at no additional charge, a Warrant to purchase (i) 2.00 shares of common stock of the Company if the purchaser purchased less than $700(28,000 shares) of Series B Preferred Stock in the Private Placement, or (ii) 3.25 shares of common stock if the purchaser purchased $700(28,000 shares) or more of Series B Preferred Stock in the Private Placement.  See Note 18-Common Stock Warrants for additional information.  

The Series B Preferred Stock and Warrants have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or under the securities laws of any state in reliance upon exemptions from registration thereunder, including the exemptions provided under Section 4(a)(2) of the Securities Act and Rule 506(b) promulgated thereunder.  The Series B Preferred Stock and Warrants were sold solely to “accredited investors” as defined in Rule 501(a), and neither the Series B Preferred Stock or Warrants, nor any shares of common stock of the Company into which the Series B Preferred Stock may be converted or for which the Warrants may be exercised, may be resold for a period of at least six months from the date of issue without registration or an exemption from registration under the Securities Act and applicable state securities laws.  However, the Company has agreed to provide certain registration rights to the holders of the Warrants pursuant to the terms of a Registration Rights Agreement between the Company and each purchaser of Series B Preferred Stock and Warrants in the Private Placement.

45

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

NOTE 18 – COMMON STOCK WARRANTS

Series B Preferred Stock – Warrants:

For each share of Series B Preferred Stock issued by the Company in the Private Placement, the Company also issued, at no additional charge, a Warrant to purchase (i) 2.00 shares of common stock of the Company if the purchaser purchased less than $700  (28,000 shares) of Series B Preferred Stock in the Private Placement, or (ii) 3.25 shares of common stock if the purchaser purchased $700  (28,000 shares) or more of Series B Preferred Stock in the Private Placement.  Warrants to purchase an aggregate of 1,152,125 shares of common stock were issued by the Company to the purchasers of the 480,000 shares of Series B Preferred Stock sold in the Private Placement.  Subject to certain limitations, the Warrants are exercisable for a period of approximately five (5) years expiring on July 15, 2019, at a cash purchase price of $1.85 per share of common stock.

NOTE 19 – 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.

In July 2013, the Holding Company’s primary federal regulator, the FRB, published final rules (the “Basel III Capital Rules”) establishing a new comprehensive capital framework for U.S. banking organizations.  The rules implement the Basel Committee's December 2010 framework known as “Basel III” for strengthening international capital standards as well as certain provisions of the Dodd-Frank Act.  The Basel III Capital Rules provide higher capital requirements and more restrictive leverage and liquidity ratios than those previously in place.  In addition, in order to avoid limitations on capital distributions, such as dividend payments and certain bonus payments to executive officers, the Basel III Capital Rules require insured financial institutions to hold a capital conservation buffer of common equity tier 1 capital above the minimum risk-based capital requirements.  The capital conservation buffer will be phased in over time, becoming fully effective on January 1, 2019, and will consist of an additional amount of common equity equal to 2.5% of risk-weighted assets.  The Basel III Capital Rules revise the regulatory agencies' prompt corrective action framework by incorporating the new regulatory capital minimums and updating the definition of common equity.  The Basel III Capital Rules became effective for the Company on January 1, 2015, and will be fully phased in by January 1, 2019.  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”).  CBank’s implementation of the new rules on January 1, 2015 did not have a material impact on our capital needs or classifications.

When fully phased in on January 1, 2019, the Basel III Capital Rules will 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% upon full implementation); 2) a minimum ratio of Tier 1 capital to risk-weighted assets of 6.0%, plus the capital conservation buffer (resulting in a minimum of Tier 1 capital ratio of 8.5% upon full implementation); 3) a minimum ratio of Total capital to risk-weighted assets of 8.0%, plus a capital conservation buffer (resulting in a minimum Total capital ratio of 10.5% upon full implementation); and 4) a minimum Leverage Ratio of 4.0%.

The implementation of the capital conservation buffer began on January 1, 2016 at the 0.625% level and will be phased in over a four year period increasing by increments of that amount on each subsequent January 1 until it reaches 2.5% on January 1, 2019.  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.

46

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

The CFBank Order required CFBank to have an 8% Tier 1 (Core) Capital to adjusted total assets and 12% Total Capital to risk weighted assets.CFBank remained subject to the heightened capital requirements imposed by the OCC and was required to maintain an 8% Tier 1 (core) Capital ratio to adjusted total assets and 12% Total Capital to risk weighted assets, until December 23, 2015.See Note 2.-Regulatory Matters for additional information.

Actual and required capital amounts and ratios are presented below at year end:

											To Be Well
					Minimum Capital			Minimum Capital			Capitalized Under
					Required-Basel III			Required-Basel III			Applicable Regulatory
		Actual			Phase-In Schedule			Fully Phased-In			Capital Standards
		Amount	Ratio		Amount	Ratio		Amount	Ratio		Amount	Ratio
December 31, 2016
Total Capital to risk
weighted assets	$	45,118	12.46%	$	31,256	8.63%	$	38,029	10.50%	$	36,218	10.00%
Tier 1 (Core) Capital to risk
weighted assets		40,556	11.20%		24,013	6.63%		30,785	8.50%		28,974	8.00%
Common equity tier 1 capital
to risk-weighted assets		40,556	11.20%		18,580	5.13%		25,353	7.00%		23,542	6.50%
Tier 1 (Core) Capital to
adjusted total assets (Leverage ratio)		40,556	9.66%		16,792	4.00%		16,792	4.00%		20,991	5.00%

								To Be Well
								Capitalized Under			Required
					For Capital			Applicable Regulatory			Pursuant to
		Actual			Adequacy Purposes			Capital Standards			OCC Commitment (1)
		Amount	Ratio		Amount	Ratio		Amount	Ratio		Amount	Ratio
December 31,2015
Total Capital to risk
weighted assets	$	41,528	13.67%	$	24,310	8.00%	$	30,388	10.00%	$	N/A	N/A
Tier 1 (Core) Capital to risk
weighted assets		37,694	12.40%		18,233	6.00%		24,310	8.00%		N/A	N/A
Common equity tier 1 capital
to risk-weighted assets		37,694	12.40%		13,675	4.50%		19,752	6.50%		N/A	N/A
Tier 1 (Core) Capital to
adjusted total assets		37,694	11.12%		13,557	4.00%		16,946	5.00%		N/A	N/A

⁽¹⁾ The heightened capital requirements were applicable to CFBank until December 23, 2015, under the CFBank Order and the subsequent commitments made by CFBank to the OCC.See Note 2- Regulatory Matters for additional information.

47

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

The Qualified Thrift Lender (QTL) test requires savings associations to maintain at least 65% of assets in housing-related finance and other specified areas.  If this test is not met, limits are placed on growth, branching, new investments, FHLB advances and dividends. Management believes that this test was met by CFBank at December 31, 2015.  Effective December 1, 2016, CFBank converted from a federal savings association to a national bankand, as a result, is no longer subject to the QTL requirements.

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 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:

The Holding Company’s principal source of funds for dividend payments is dividends received from CFBank. Banking regulations limit the amount of dividends that may be paid without prior approval of regulatory agencies. Under these regulations, the amount of dividends that may be paid in any calendar year is limited to the current year’s net profits, combined with the retained net profits of the preceding two years, subject to the capital requirements described above.  Any future dividend payments by CFBank to the Holding Company would be based on future earnings and, if necessary, regulatory approval. 

Prior to January 8, 2016, any dividends by the Holding Company on its common stock or Series B Preferred Stock, and any dividends or capital contributions by CFBank to the Holding Company, were also subject to the commitments made by the Holding Company and CFBank in connection with the release of the Orders.  The Holding Company received prior approval from the FRB for the payment of quarterly cash dividends on its Series B Preferred Stock in each of the previous quarters commencing with the first dividend payment on July 15, 2014 through the dividend payment on January 15, 2016. 

The Holding Company’s ability to pay dividends on its stock is also conditioned upon the payment, on a current basis, of quarterly interest payments on the subordinated debentures underlying the Company’s trust preferred securities.  Additionally, so long as the Company’s Series B Preferred Stock remains outstanding, the Holding Company will be prohibited from paying dividends (other than dividends payable solely in shares) on the Company’s common stock for the then-current dividend period, unless full dividends on the Series B Preferred Stock have been paid or set aside for payment.  Dividends on the Series B Preferred Stock are non-cumulative, which means that if for any reason we do not declare cash dividends on the Series B Preferred Stock for a quarterly dividend period we will have no obligation to pay any dividends for that period (i.e., the dividends will not accrueor cumulate), whether or not we declare dividends on the Series B Preferred Stock for any subsequent dividend period.

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 14-Income taxes.

48

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

NOTE 20 – DERIVATIVE INSTRUMENTS

Interest-rate swaps:

CFBank utilizes interest-rate swaps as part of its asset liability management strategy to help manage its interest rate risk position and does not use derivatives for trading purposes.  The notional amount of the interest-rate swaps does not represent amounts exchanged by the parties.  The amount exchanged is determined by reference to the notional amount and the other terms of the individual interest-rate swap agreements.  CFBank was party to interest-rate swaps with a combined notional amount of $2,280 at December 31, 2016 and $2,877 at December 31, 2015.

The objective of the interest-rate swaps is to protect the related fixed-rate commercial real estate loans from changes in fair value due to changes in interest rates.  CFBank has a program whereby it lends to its borrowers at a fixed-rate with the loan agreement containing a two-way yield maintenance provision, which will be invoked in the event of prepayment of the loan, and is expected to exactly offset the fair value of unwinding the swap.  The yield maintenance provision represents an embedded derivative which is bifurcated from the host loan contract and, as such, the swaps and embedded derivatives are not designated as hedges.  Accordingly, both instruments are carried at fair value and changes in fair value are reported in current period earnings.CFBank currently does not have any derivatives designated as hedges. 

Contingent Features:Thecounterparty to CFBank’sinterest-rate swaps is exposed to credit risk whenever the interest-rate swaps are inaliability position. At December 31, 2016, CFBankhad $695 in securities and cash pledged as collateral for these derivatives. Shouldthe liability increase beyond the collateral value, CFBank will be required to pledge additional collateral. 

Additionally, CFBank’s interest-rate swap instruments contain provisions that require CFBank to remain well capitalized under regulatory capital standards. The interest-rate swaps may be called by the counterparty if CFBank fails to maintain well-capitalized status under regulatory capital standards.  As of December 31, 2016, CFBank was well-capitalized under regulatory capital standards.

Summary information about the derivative instruments is as follows:

	2016		2015
Notional amount	$	2,280	$	2,877
Weighted average pay rate on interest-rate swaps		3.74%		3.67%
Weighted average receive rate on interest-rate swaps		0.75%		0.39%
Weighted average maturity (years)		3.1		4.0
Fair value of interest-rate swaps	$	(122)	$	(213)
Fair value of yield maintenance provisions	$	122	$	213

The fair value of the yield maintenance provisions and interest-rate swaps is recorded in other assets and other liabilities, respectively, in the consolidated balance sheet.  Changes in the fair value of the yield maintenance provisions and interest-rate swaps are reported currently in earnings, as other noninterest income in the consolidated statements of income.  There were no net gains or losses recognized in earnings related to yield maintenance provisions and interest-rate swaps in 2016 or 2015.

Mortgage banking derivatives:

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 approximately $2,164 and $1,560of interest rate lock commitments related to residential mortgage loans at December 31, 2016 and 2015, respectively.  The fair value of these mortgage banking derivatives was reflected by a derivative asset of $8 and $8at December 31, 2016 and 2015, respectively, which was included in other assets in the consolidated balance sheet. Fair values were estimated based on anticipated gains on the sale of the underlying loans. Changes in the fair values of these mortgage banking derivatives are included in net gains on sales of loans. Net gains (losses) recognized in earnings related to these mortgage banking derivatives totaled $7 and($28) in 2016 and2015, respectively.

49

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

NOTE 21 – 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. Off‑balance-sheet risk to credit loss exists up to the face amount of these instruments, although material losses are not anticipated.  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:

	2016				2015
	Fixed Rate		Variable Rate		Fixed Rate		Variable Rate
Commitments to make loans	$	21,335	$	22,171	$	4,623	$	15,187
Unused lines of credit	$	3,714	$	29,621	$	647	$	19,764
Standby letters of credit	$	991	$	-	$	1,154	$	-

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 year, and loans under a specific drawdown schedule, which are based on the individual contracts.  The fixed-rate loan commitments had interest rates ranging from 1.75% to 6.50% and maturities ranging from 2months to 30 years at December 31, 2016. The fixed-rate loan commitments had interest rates ranging from 4.25% to 6.50% and maturities ranging from3 months to 14 years at December 31, 2015.

NOTE 22 – PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION

Condensed financial information of Central Federal Corporation follows:

	2016		2015
Assets
Cash and cash equivalents	$	2,197	$	2,673
Investment in banking subsidiary		41,448		37,745
Investment in and advances to other subsidiary		225		222
Other assets		901		3,112
Total assets	$	44,771	$	43,752
Liabilities and Equity
Subordinated debentures	$	5,155	$	5,155
Accrued expenses and other liabilities		324		285
Stockholders' equity		39,292		38,312
Total liabilities and stockholders' equity	$	44,771	$	43,752

50

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

	2016		2015
Interest income	$	2	$	1
Other income		131		291
Interest expense		185		164
Other expense		646		548
Loss before income tax and undistributed subsidiary income		(698)		(420)
Tax effect		236		1,798
Gain (loss) after income tax and undistributed subsidiary income		(462)		1,378
Equity in undistributed subsidiary income		2,089		3,099
Net income	$	1,627	$	4,477
Comprehensive income	$	1,638	$	4,417

	2016		2015
Cash flows from operating activities
Net Income	$	1,627	$	4,477
Adjustments:
Effect of subsidiaries' operations		(2,089)		(3,099)
Change in other assets and other liabilities		766		(980)
Net cash from (used by) operating activities		304		398
Cash flows from financing activities
Purchase of treasury shares		(30)		-
Dividends paid on Series B preferred stock		(750)		(750)
Net cash from (used by) financing activities		(780)		(750)
Net change in cash and cash equivalents		(476)		(352)
Beginning cash and cash equivalents		2,673		3,025
Ending cash and cash equivalents	$	2,197	$	2,673

51

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

NOTE 23 – EARNINGS (LOSS) 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 unvested share-based payment awards according to dividends declared (or accumulated) and participation rights in undistributed earnings.  The factors used in the earnings per share computation follow:

	December 31, 2016		December 31, 2015
Basic
Net income	$	1,627	$	4,477
Dividends on Series B  preferred stock and accretion of discount		(857)		(857)
Net income allocated to common stockholders	$	770	$	3,620
Weighted average common shares outstanding including unvested share-based payment awards		16,020,847		15,857,127
Less: Unvested share-based payment awards		-		-
Average shares		16,020,847		15,857,127
Basic earnings per common share	$	0.05	$	0.23
Diluted
Net earnings allocated to common stockholders	$	770	$	3,620
Add back: Preferred Dividends on Series B stock		-		857
Net earnings allocated to fully-diluted	$	770	$	4,477
Weighted average common shares outstanding for basic earnings per common share		16,020,847		15,857,127
Add: Dilutive effects of assumed exercises of stock options		38,184		8,473
Add: Dilutive effects of assumed exercises of Series B preferred stock		-		6,857,143
Average shares and dilutive potential common shares		16,059,031		22,722,743
Diluted earnings per common share	$	0.05	$	0.20

The following potential common shares were anti-dilutive and not considered in computing diluted earnings (loss) per common share.

	2016	2015
Stock options	282,971	417,058
Series B preferred stock	6,857,143	-
Stock warrants	1,152,125	1,152,125

52

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

NOTE 24 - 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.

NOTE 25 - ACCUMULATED OTHER COMPREHENSIVE INCOME

The following table summarizes the changes within each classification of accumulated other comprehensive income, net of tax, for the year ended December 31, 2016 and December 31, 2015 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, 2016 and 2015  (1)
	Unrealized Gains and Losses on Available-for-Sale Securities
	2016		2015
Accumulated other comprehensive income (loss), beginning of period	$	(9)	$	51
Other comprehensive gain (loss) before reclassifications		11		(72)
Less amount reclassified from accumulated other comprehensive loss (2)		-		12
Net current-period other comprehensive income (loss)		11		(60)
Accumulated other comprehensive income (loss), end of period	$	2	$	(9)

⁽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 year ended December 31, 2016.  There was $12 reclassified out of other comprehensive income for year ended December 31, 2015 due to an early redemption of a municipal security.

53

Central Federal Corporation and CFBank	Central Federal Corporation Officers
Board of Directors
Robert E. Hoeweler	Timothy T. O’Dell
Chief Executive Officer, Hoeweler Holdings	President and Chief Executive Officer
Chairman of the Board, Central Federal Corporation and CFBank
Thomas P. Ash	John W. Helmsdoerfer, CPA
Director of Governmental Relations	Executive Vice President,
Buckeye Association of School Administrators	Chief Financial Officer and Treasurer
Edward W. Cochran
Attorney	Barbara Pyke
	Corporate Secretary
James H. Frauenberg II
Principal Owner,
Addison Holdings LLC
	CFBank Executive Officers
Robert H. Milbourne
RHM Advisors	Timothy T. O’Dell
	President and Chief Executive Officer
Timothy T. O’Dell
President and Chief Executive Officer,	John W. Helmsdoerfer, CPA
CFBank	Executive Vice President and
	Chief Financial Officer
CFBank
Office Locations  (Markets Served)
Worthington, Ohio (Greater Columbus)*
7000 North High Street
Worthington, Ohio 43085
614-334-7979
Woodmere, Ohio (Greater Cleveland)**
28879 Chagrin Blvd.
Woodmere, Ohio 44122
216-468-3100
Fairlawn, Ohio (Akron/Canton)*
3009 Smith Road, Suite 100
Fairlawn, Ohio 44333
330-666-7979
Wellsville, Ohio (Columbiana County)*
601 Main Street
Wellsville, Ohio 43968
330-532-1517
Calcutta, Ohio (Columbiana County)*
49028 Foulks Drive
Calcutta, Ohio 43920
330-385-4323

* Full service branch

** Agency office

54

Corporate Data

Annual Report

A  COPY OF THE ANNUAL REPORT ON FORM 10-K FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS AVAILABLE WITHOUT CHARGE UPON WRITTEN REQUEST TO:

John W. Helmsdoerfer, CPA

Executive Vice President and Chief Financial Officer

Central Federal Corporation

7000 North High Street

Worthington, Ohio 43085

Phone: 614-318-4661

Fax: 614-334-7980

Email: Johnhelmsdoerfer@cfbankmail.com

Annual Meeting

The Annual Meeting of Shareholders of Central Federal Corporation will be held at 10 a.m., local time, on Wednesday, May 31, 2017, at the New Albany Country Club, 1 Club Lane, New Albany, Ohio 43054.

Shareholder Services

Registrar and Transfer Company serves as transfer agent for Central Federal Corporation shares. Communications regarding change of address, transfer of shares or lost certificates should be sent to:

Computershare, Inc.

250 Royall Street

Canton, MA 02021

Phone: 1-800-368-5948

55

EX-21.1

Exhibit 21.1

Subsidiaries of the Registrant

CFBank, National Association

Central Federal Capital Trust I

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the Registration Statements of Central Federal Corporation on Form S-8 (333-84817, 333-114025,  333-163102 and 333-207354), Form S-3 (333-110218, 333-124323 and 333-156564) and Form S-1/A (333-177434) of our report dated March 15, 2017, on our audits of the consolidated financial statements of Central Federal Corporation as of December 31, 2016 and 2015, and for each of the two years in the period ended December 31, 2016, which report is included in this Annual Report on Form 10-K.

/s/ BKD, LLP

BKD, LLP

Indianapolis, Indiana

March 15, 2017

EX-31.1

Exhibit 31.1

Rule 13a-14(a) Certifications

I, Timothy T. O’Dell, certify, that:

1. I have reviewed this report on Form 10-K of Central Federal Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. 

Date: March 15, 2017	/s/ Timothy T. O’Dell
	Timothy T. O’Dell
	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

Rule 13a-14(a) Certifications

I, John W. Helmsdoerfer, certify, that:

1. I have reviewed this report on Form 10-K of Central Federal Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. 

Date:  March 15, 2017	/s/ John W. Helmsdoerfer
	John W. Helmsdoerfer, CPA
	Treasurer and Chief Financial Officer

EX-32.1

Exhibit 32.1

Section 1350 Certifications

In connection with the Annual Report of Central Federal Corporation (the “Company”) on Form 10-K for the fiscal year ended December 31, 2016 as filed with the Securities and Exchange Commission (the “Report”), the undersigned, Timothy T. O’Dell, President and Chief Executive Officer of the Company and John W. Helmsdoerfer,Treasurer and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as added by Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the period covered by the Report.

/s/ Timothy T. O’Dell

Timothy T. O’Dell

President and Chief Executive Officer

/s/ John W. Helmsdoerfer

John W. Helmsdoerfer, CPA

Treasurer and Chief Financial Officer

Date:March 15, 2017

XML

Document And Entity Information - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2016	Mar. 10, 2017	Jun. 30, 2016
Document And Entity Information [Abstract]
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	FY
Entity Registrant Name	CENTRAL FEDERAL CORP
Entity Central Index Key	0001070680
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Current Reporting Status	Yes
Entity Public Float			$ 21.8
Entity Common Stock, Shares Outstanding		16,294,910

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Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
ASSETS
Cash and cash equivalents	$ 57,941	$ 25,895
Interest-bearing deposits in other financial institutions	100
Securities available for sale	14,058	9,368
Loans held for sale, at fair value	2,812	889
Loans and leases, net of allowance of $6,925 and $6,620	346,125	297,064
FHLB stock	1,942	1,942
Foreclosed assets, net	204	1,636
Premises and equipment, net	3,429	3,609
Bank owned life insurance	4,930	4,797
Accrued interest receivable and other assets	4,571	6,093
Total assets	436,112	351,293
Deposits
Noninterest bearing	72,779	42,926
Interest bearing	302,585	247,541
Total deposits	375,364	290,467
FHLB advances	13,500	14,500
Advances by borrowers for taxes and insurance	408	656
Accrued interest payable and other liabilities	2,393	2,203
Subordinated debentures	5,155	5,155
Total liabilities	396,820	312,981
Commitments and Contingent Liabilities
Stockholders' equity
Common stock, $.01 par value; shares authorized: 50,000,000; shares issued: 16,427,917 in 2016 and 16,135,917 in 2015	164	161
Series B Preferred stock, $0.01 par value; 480,000 shares authorized; 480,000 issued at December 31, 2016 and December 31, 2015	5	5
Additional paid-in capital	60,163	59,937
Accumulated deficit	(17,767)	(18,537)
Accumulated other comprehensive income (loss)	2	(9)
Treasury stock, at cost; 133,007 and 111,707 shares of common stock	(3,275)	(3,245)
Total stockholders' equity	39,292	38,312
Total liabilities and stockholder's equity	$ 436,112	$ 351,293

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Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Loans, allowance	$ 6,925	$ 6,620
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	50,000,000	50,000,000
Common stock, shares issued	16,427,917	16,135,917
Treasury stock, shares	133,007	111,707
Series B Preferred Stock [Member]
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, share authorized	480,000	480,000
Preferred stock, share issued	480,000	480,000

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Consolidated Statements Of Income - USD ($)	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Interest and dividend income
Loans and leases, including fees	$ 14,050,000	$ 12,126,000
Securities	125,000	131,000
FHLB stock dividends	78,000	78,000
Federal funds sold and other	156,000	70,000
Total interest and dividend income	14,409,000	12,405,000
Interest expense
Deposits	2,657,000	2,212,000
FHLB advances and other debt	254,000	232,000
Subordinated debentures	185,000	164,000
Total interest expense	3,096,000	2,608,000
Net interest income	11,313,000	9,797,000
Provision for loan losses and leases	230,000	250,000
Net interest income after provision for loan and lease losses	11,083,000	9,547,000
Noninterest income
Service charges on deposit accounts	741,000	491,000
Net gains on sales of loans	134,000	325,000
Net loss on sales of securitites		(12,000)
Earnings on bank owned life insurance	133,000	132,000
Other	169,000	412,000
Total noninterest income	1,177,000	1,348,000
Noninterest expense
Salaries and employee benefits	4,965,000	4,753,000
Occupancy and equipment	579,000	533,000
Data processing	1,116,000	1,054,000
Franchise and other taxes	358,000	318,000
Professional fees	1,148,000	956,000
Director fees	228,000	150,000
Postage, printing and supplies	168,000	198,000
Advertising and promotion	125,000	145,000
Telephone	123,000	119,000
Loan expenses	141,000	207,000
Foreclosed assets, net	65,000	137,000
Depreciation	211,000	211,000
FDIC premiums	222,000	421,000
Regulatory assessment	62,000	131,000
Other insurance	109,000	121,000
Other	203,000	157,000
Total noninterest expense	9,823,000	9,611,000
Income before income taxes	2,437,000	1,284,000
Income tax expense (benefit)	810,000	(3,193,000)
Net income	1,627,000	4,477,000
Dividends on Series B preferred stock and accretion of discount	(857,000)	(857,000)
Net income attributable to common stockholders	$ 770,000	$ 3,620,000
Earnings per common share:
Basic	$ 0.05	$ 0.23
Diluted	$ 0.05	$ 0.20

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Consolidated Statements Of Comprehensive Income - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Consolidated Statements Of Comprehensive Income [Abstract]
Net income	$ 1,627	$ 4,477
Other comprehensive income (loss):
Unrealized holding gains (losses) arising during the period related to investment securities available for sale, net of tax of $1 and $0:	11	(72)
Less: reclassification adjustment for net losses realized during the period on investment securities available for sale, net of tax of $0 and $0:		12
Other comprehensive income (loss), net of tax	11	(60)
Comprehensive income	$ 1,638	$ 4,417

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Consolidated Statements Of Comprehensive (Parenthetical) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Consolidated Statements Of Comprehensive Income [Abstract]
Unrealized holding gains (losses) arising during the period related to investment securities available for sale, tax	$ 1	$ 0
Reclassification adjustment for net losses realized during the period on investment securities available for sale, tax	$ 0	$ 0

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Consolidated Statements Of Changes In Stockholders' Equity - USD ($) $ in Thousands	Common Stock [Member]	Additional Paid-In Capital [Member]	Accumulated Deficit [Member]	Accumulated Other Comprehensive Income [Member]	Treasury Stock [Member]	Series B Preferred Stock [Member]	Total
Balance at Dec. 31, 2014	$ 159	$ 59,696	$ (22,157)	$ 51	$ (3,245)	$ 5	$ 34,509
Net income			4,477				4,477
Other comprehensive income (loss)				(60)			(60)
Issuance of stock based incentive plan shares, net of forfeitures	2						2
Restricted stock expense, net of forfeitures		15					15
Stock option expense, net of forfeitures		119					119
Cash dividends declared on Series B preferred stock and accretion of discount		107	(857)				(750)
Balance at Dec. 31, 2015	161	59,937	(18,537)	(9)	(3,245)	5	38,312
Net income			1,627				1,627
Other comprehensive income (loss)				11			11
Issuance of stock based incentive plan shares, net of forfeitures	3	(3)
Restricted stock expense, net of forfeitures		96					96
Stock option expense, net of forfeitures		26					26
Purchase of treasury shares					(30)		(30)
Cash dividends declared on Series B preferred stock and accretion of discount		107	(857)				(750)
Balance at Dec. 31, 2016	$ 164	$ 60,163	$ (17,767)	$ 2	$ (3,275)	$ 5	$ 39,292

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Consolidated Statements Of Changes In Stockholders' Equity (Parenthetical) - shares	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Consolidated Statements Of Changes In Stockholders' Equity [Abstract]
Stock based incentive plan, shares issued	292,000	200,500
Treasury Stock, Shares, Acquired	21,300

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Consolidated Statements Of Changes Of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Consolidated Statements Of Changes Of Cash Flows [Abstract]
Net income	$ 1,627	$ 4,477
Adjustments to reconcile net income to net cash from operating activities:
Provision for loan losses and leases	230	250
Depreciation	211	211
Amortization, net	(66)	25
Deferred income tax (benefit)	623	(3,251)
Net loss on sales of securities		12
Originations of loans held for sale	(24,219)	(41,617)
Proceeds from sale of loans held for sale	22,430	44,830
Net gains on sales of loans	(134)	(325)
Loss on disposal of premises and equipment	16
Gain on sale of foreclosed assets	(4)
Earnings on bank owned life insurance	(133)	(132)
Stock-based compensation expense	122	134
Net change in:
Accrued interest receivable and other assets	899	993
Accrued interest payable and other liabilities	190	(505)
Net cash from operating activities	1,792	5,102
Cash flows from investing activities:
Net (increase) decrease in interest-bearing deposits in other financial institutions	(100)	494
Available-for-sale securities:
Maturities, prepayments and calls	1,261	5,509
Purchases	(5,981)	(4,573)
Loan and lease originations and payments, net	(49,056)	(44,531)
Proceeds from the sale of loans	1,124	4,099
Additions to premises and equipment	(47)	(45)
Proceeds from the sale of foreclosed assets	200
Net cash used by investing activities	(52,599)	(39,047)
Cash flows from financing activities:
Net change in deposits	84,881	32,128
Proceeds from FHLB advances	37,700	2,500
Repayments on FHLB advances	(38,700)	(2,500)
Net change in advances by borrowers for taxes and insurance	(248)	255
Cash dividends paid on Series B preferred stock	(750)	(750)
Purchase of treasury shares	(30)
Net cash from financing activities	82,853	31,633
Net change in cash and cash equivalents	32,046	(2,312)
Beginning cash and cash equivalents	25,895	28,207
Ending cash and cash equivalents	57,941	25,895
Supplemental cash flow information:
Interest paid	3,061	2,612
Income taxes paid	70
Supplemental noncash disclosures:
Transfers from loans to repossessed assets	204
Loans issued to finance the sale of repossessed assets	1,440
Loans transferred from held for sale to portfolio		1,833
Loans transferred from portfolio to held for sale		1,561
Dividends payable on Series B preferred stock	$ 187	$ 187

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Summary Of Significant Accounting Policies

12 Months Ended

Dec. 31, 2016

Summary Of Significant Accounting Policies [Abstract]

Summary Of Significant Accounting Policies

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations and Principles of Consolidation: 

The consolidated financial statements include Central Federal Corporation (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.  The Holding Company and CFBank are sometimes collectively referred to herin as the “Company”.  Intercompany transactions and balances are eliminated in consolidation. 

CFBank provides financial services through its four full-service banking offices in Fairlawn, Calcutta, Wellsville and Worthington, Ohio, and through its agency office in Woodmere, Ohio.  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 loan and lease losses (ALLL), 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.

Interest-Bearing Deposits in Other Financial Institutions:  Interest‑bearing deposits in other financial institutions mature in April, 2019 and are carried at cost.  As of December 31, 2016, there was $100 inan interest-bearing deposit in other financial institutions.

Securities:  Debt securities are classified as available for sale when they might be sold before maturity. Equity securities with readily determinable fair values are classified as available for sale.  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 without anticipating prepayments, 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.

Management evaluates securities for other-than-temporary impairment (OTTI) at least on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation.  For securities in an unrealized loss position, management considers the extent and duration of the unrealized loss and the financial condition and near-term prospects of the issuer.  Management also assesses whether it intends to sell, or will more likely than not be required to sell, a security in an unrealized loss position before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the entire difference between amortized cost and fair value is recognized as impairment through earnings.  For debt securities that do not meet the aforementioned criteria, the amount of impairment is split into two components as follows: 1) OTTI related to credit loss, which must be recognized in the income statement and 2) OTTI related to other factors, which is recognized in other comprehensive income.  The credit loss is defined as the difference between the present value of the cash flows expected to be collected and the amortized cost basis. For equity securities, the entire amount of impairment is recognized through earnings.

Loans Held for Sale:  Mortgage loans originated and intended for sale in the secondary market are carried at fair value, 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.  Loans originated as construction loans, that were subsequently transferred to held for sale, are carried at the lower of cost or market.  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 loan and lease losses (ALLL).  Interest income is accrued on the unpaid principal balance.  Loan origination fees, net of certain direct origination costs, are deferred and recognized in interest income using the level‑yield method without anticipating prepayments. 

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

All interest accrued but not received for loans placed on nonaccrual is reversed against interest income in the period in which it is placed in a nonaccrual status.  Interest received on such loans is accounted for on the cash-basis or cost‑recovery method, until qualifying for return to accrual status.  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 Columbiana, Franklin, Summit, Cuyahoga 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 Loan and Lease Losses (ALLL):  The ALLL is a valuation allowance for probable incurred credit losses.  Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed.  Subsequent recoveries, if any, are credited to the allowance.  Management estimates the allowance balance required using past loan loss experience, the nature and volume of the portfolio, information about specific borrower situations and estimated collateral values, economic conditions, and other factors.  Allocations of the allowance may be made for specific loans, but the entire allowance is available for any loan that, in management’s judgment, should be charged off.

The allowance consists of specific and general components.  The specific component relates to loans that are individually classified as impaired. A loan is impaired when, based on current information and events, it is probable that CFBank will be unable to collect all amounts due according to the contractual terms of the loan agreement.  Loans within any loan class for which the terms have been modified resulting in a concession, and for which the borrower is experiencing financial difficulties, are considered troubled debt restructurings (TDRs) and classified as impaired.  

Factors considered by management in determining impairment for all loan classes include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired.  Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record and the amount of the shortfall in relation to the principal and interest owed.

All loans within the commercial, multi-family residential and commercial real estate segments, regardless of size, and loans of all other classes with balances over $250 are individually evaluated for impairment when they are 90 days past due, or earlier than 90 days past due if information regarding the payment capacity of the borrower indicates that payment in full according to the loan terms is doubtful.  If a loan is impaired, a portion of the allowance is allocated so that the loan is reported, net, at the present value of estimated future cash flows using the loan’s existing rate, or at the fair value of collateral, less costs to sell, if repayment is expected solely from the collateral.  Large groups of smaller balance homogeneous loans, such as consumer and single-family residential real estate loans, are collectively evaluated for impairment, and accordingly, they are not separately identified for impairment disclosures.

TDRs of all classes of loans are separately identified for impairment disclosures and are measured at the present value of estimated future cash flows using each loan’s effective rate at inception.  If a TDR is considered to be a collateral dependent loan, the loan is reported, net, at the fair value of the collateral. If the payment of the loan is dependent on the sale of the collateral, then costs to liquidate the collateral are included when determining the impairment.  For TDRs that subsequently default, the amount of reserve is determined in accordance with the accounting policy for the ALLL.

Interest income on all classes of impaired loans that are on nonaccrual status is recognized in accordance with the accounting policy for nonaccrual loans.  Cash receipts on all classes of impaired loans that are on nonaccrual status are generally applied to the principal balance outstanding.  Interest income on all classes of impaired loans that are not on nonaccrual status is recognized on the accrual method. TDRs may be classified as accruing if the borrower has been current for a period of at least six months with respect to loan payments and management expects that the borrower will be able to continue to make payments in accordance with the terms of the restructured note.

The general reserve component covers non‑impaired loans of all classes and is based on historical loss experience adjusted for current factors.  The historical loss experience is determined by loan class and is based on the actual loss history experienced by the Company over a three-year period.  The general component is calculated based on CFBank’s loan balances and actual historical three-year historical loss rates.  For loans with little or no actual loss experience, industry estimates are used based on loan segment. This actual loss experience is supplemented with other economic and judgmental factors based on the risks present for each loan class.  These economic and judgmental factors include consideration of the following:  levels of and trends in delinquencies and impaired loans; levels of and trends in charge-offs and recoveries; trends in volume and terms of loans; effects of any changes in risk selection and underwriting standards; other changes in lending policies, procedures, and practices; experience, ability, and depth of lending management and other relevant staff; national and local economic trends and conditions; industry conditions; and effects of changes in credit concentrations.

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 include loans to businesses generally located within our primary market area. Those 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.  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 located within and outside of 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 single-family residential real estate loans for portfolio in amounts up to 85% of the lower of the appraised value or the purchase price of the property securing the loan, without requiring private mortgage insurance.  Loans in excess of 85% of the lower of the appraised value or purchase price of the property securing the loan require private mortgage insurance.  CFBank has not engaged in subprime lending, used option adjustable-rate mortgage products or made loans with initial teaser rates.

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 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 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 and adjustable-rate loans. Fixed-rate loans are generally limited to three 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 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 above the prime rate of interest as disclosed in The Wall Street Journal. The margin is based on certain factors including the loan balance, value of collateral, election of auto-payment, and the borrower’s FICO® score.  The 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.  Collectability 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. In 2005 and 2006, we purchased home equity lines of credit collateralized by properties located throughout the United States. The purchased home equity lines of credit may present higher risk than the home equity lines of credit we originate for our portfolio as they include properties in geographic areas that have experienced significant declines in housing values, such as California, Florida and Virginia.  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.

Other consumer loans:  Other consumer loans include closed-end home equity, home improvement, and auto and credit card 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.

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.

Joint Ventures:  The Holding Company contributed funds into a series of joint ventures (equity stake) for the purpose of allocating excess liquidity into higher earning assets while diversifying its revenue sources.  The funding for the joint ventures is related to shorter term operating activities and is related to the development of single family real estate in the form of condominiums.  Income is recognized based on a rate of return on the outstanding investment balance.  As units are sold, the Holding Company receives an additional incentive payment; the incentive payment is recognized as income. The balance outstanding in joint ventures at December 31, 2016 and December 31, 2015 was $325 and $1,285, respectively.  Income recognized on the joint ventures was $100 and $265, respectively, for 2016 and 2015.

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 to 40 years. Furniture, fixtures and equipment are depreciated using the straight‑line method with useful lives ranging from 2 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 FHLB system.  Members are required to own a certain amount of 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.

Bank Owned Life Insurance:  CFBank purchased life insurance policies on certain directors and employees in 2002.  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 commercial letters of credit, issued to meet customer financing needs.  The face amount for these items represents the exposure to loss, before considering customer collateral or ability to repay.  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 considered instruments with no hedging designation, otherwise known as stand-alone derivatives.  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.  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.

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 full valuation allowance was recorded in 2009 to reduce the carrying amount of the Company’s net deferred tax asset to zero.  This valuation allowance was reversed in the fourth quarter of 2015.  See Note 14 – Income Taxes.

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.

Reverse Stock Split:    Reclassifications did not impact prior period net loss or total stockholders' equity.  On May 4, 2012, the Company completed a 1-for-5 reverse stock split, whereby every 5 shares of the Company’s common stock were reclassified into one share of common stock.All share and per share amounts for all periods presented have been adjusted to reflect the reverse split as though it had occurred prior to the earliest period presented.

Earnings Per Common Share:  Basic earnings per common share is net income available to common stockholders divided by the weighted average number of common shares outstanding during the period.  All outstanding unvested share-based payment awards that contain rights to nonforfeitable dividends are considered participating securities for this calculation.  Diluted earnings per common share includes the dilutive effect of additional potential common shares issuable under stock options.  Earnings and dividends per share are restated for all reverse stock splits through the date of issuance of the financial statements.

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

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 believe there are any such matters that will have a material effect on the financial statements.  See Note 24 – Contingent Liabilities.

Restrictions on Cash:  Cash on hand or on deposit with the Federal Reserve Bank (FRB) is required to meet regulatory reserve and clearing requirements. The reserve requirement at December 31, 2016 was $267.  Cash on deposit with the FHLB includes $3,300 pledged as collateral for FHLB advances. 

Equity:  Treasury stock is carried at cost. The carrying value of preferred stock and the common stock warrant is based on allocation of issuance proceeds, net of issuance costs, in proportion to their relative fair values.  Preferred stock is carried net of the discount established through the allocation of proceeds.

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 and Series B Preferred Stock is generally dependent upon the receipt of dividends and other distributions from CFBank.  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.  Prior to January 8, 2016, pursuant to the commitments made to the FRB in connection with the termination of the Holding Company Order (as further discussed in Note 2), the Holding Company was not permitted to declare or pay dividends on its stock without the prior approval or written non-objection of the FRB.  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, so long as the Company’s Series B Preferred Stock remains outstanding, the Holding Company will be prohibited from paying dividends on (other than dividends payable solely in shares) the Company’s common stock, for the then-current dividend period, unless full dividends on the Series B Preferred Stock have been paid or set aside for payment.  Dividends on the Series B Preferred Stock are non-cumulative, which means that if for any reason we do not declare cash dividends on the Series B Preferred Stock for a quarterly dividend period we will have no obligation to pay any dividends for that period (i.e., the dividends will not accrue or cumulate), whether or not we declare dividends on the Series B Preferred Stock for any subsequent dividend period.

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.

Operating Segments:  While management monitors and analyzes the revenue streams of the Company’s various products and services, the operations and financial performance is evaluated on a Company‑wide basis.  Operating results are not reviewed by senior management to make resource allocation or performance decisions.  Accordingly, all of the financial service operations are considered by management to be aggregated in one reportable operating segment. 

Reclassifications:  Some items in the prior year financial statements were reclassified to conform to the current presentation.  Reclassifications had no effect on prior period net loss or stockholders’ equity.

Adoption of New Accounting Standards:

As extended by ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date,Accounting Standards update (ASU) No. 2014-09 and the clarifying ASUs are effective for public companies for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period.  Transitional guidance is included in the updates.  Earlier adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period.  While interest income is specifically out of scope of this standard, management is currently evaluating the revenue streams within “noninterest income” to assess the applicability of this standard.  Since the Company’s products are substantially financial in nature, adoption of ASU No. 2015-14is not expected to have a material impact on the Company’s consolidated financial statements.

In June 2014 the FASB issued ASU No. 2014-12, Compensation - Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (June 2014).  This Update defines the accounting treatment for share-based payments and “resolves the diverse accounting treatment of those awards in practice.” The new requirement mandates that “a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition.”  Compensation cost will now be recognized in the period in which it becomes likely that the performance target will be met.   The amendments in this Update are effective for annual reporting periods beginning after December 15, 2015. Early adoption is permitted.    Adoption of the ASU 2014-12 on January 1, 2016 did not have an impact on the Company's accounting disclosures.

The FASB has issued ASU No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes, which changes how deferred taxes are classified on organizations’ balance sheets.  The ASU eliminates the current requirement for organizations to present deferred tax liabilities and assets as current and noncurrent in a classified balance sheet. Instead, organizations will be required to classify all deferred tax assets and liabilities as noncurrent.  The amendments apply to all organizations that present a classified balance sheet. For public companies, the amendments are effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Adoption of the ASU is not expected to have a significant effect on the Company's consolidated financial statements.

In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.  ASU 2016-01 amends the guidance in U.S. GAAP on the accounting for equity investments, financial liabilities under the fair value option and the presentations and disclosure requirements of financial instruments.  ASU 2016-01 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years.  Early adoption is permitted for the accounting guidance on financial liabilities under the fair value option.  The Company will adopt the methodologies prescribed by the ASU by the date required.  The Company continues to evaluate this standard, however, adoption of the ASU is not expected to have a significant impact on the Company’s consolidated financial statements.

On February 25, 2016, FASB issued ASU No. 2016-02, Leases (Topic 842).  Under the new ASU, lessees will recognize lease assets and liabilities on their balance sheet for all leases with terms of more than 12 months.  The new lessee accounting model retains two types of leases, and is consistent with the lessee accounting model under existing GAAP.  One type of lease (finance leases) will be accounted for in substantially the same manner as capital leases are accounted for today.  The other type of lease (operating leases) will be accounted for (both in the income statement and statement of cash flows) in a manner consistent with today’s operating leases.  Lessor accounting under the new standard is fundamentally consistent with existing GAAP.  Lessees and lessors would be required to provide additional qualitative and quantitative disclosures to help financial statement users assess the amount, timing, and uncertainty of cash flows arising from leases.  These disclosures are intended to supplement the amounts recorded in the financial statements so that users can understand more about the nature of an organization’s leasing activities.  For public business entities, the final leases standard will be effective for fiscal years beginning after December 15, 2018 including interim periods within those fiscal years.  Early application is permitted.  The Company continues to evaluate the provision of the new lease standard but, due to the small number of lease agreements presently in effect for the Company, believes the new guidance will not have a significant impact on the Company’s consolidated financial statements.

The FASB has issued ASU No. 2015-03, Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs.  The amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts.  The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU.  For public business entities, the amendments are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years.  The amendments should be applied on a retrospective basis, wherein the balance sheet of each individual period presented should be adjusted to reflect the period-specific effects of applying the new guidance.  Upon transition, an entity is required to comply with the applicable disclosures for a change in an accounting principle. These disclosures include the nature of and reason for the change in accounting principle, the transition method, a description of the prior-period information that has been retrospectively adjusted and the effect of the change on the financial statement line items, i.e., debt issuance cost asset and the debt liability.  The Company has adopted the methodologies prescribed by this ASU.  Adoption of the ASU did not have a significant effect on the Company's consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-07, Investments—Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting.  ASU No. 2016-07 affects all entities that have an investment that becomes qualified for the equity method of accounting as a result of an increase in the level of ownership interest or degree of influence.  The amendments in this update eliminate the requirement that, when an investment qualifies for use of the equity method, an investor must adjust the investment, results of operations, and retained earnings retroactively on a step-by-step basis as if the equity method had been in effect during all previous periods that the investment had been held.  ASU No. 2016-07 requires that the equity method investor add the cost of acquiring the additional interest in the investee to the current basis of the investor’s previously held interest and adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting.  The amendments also require that an entity that has an available-for-sale equity security that becomes qualified for the equity method of accounting recognize through earnings the unrealized holding gain or loss in accumulated other comprehensive income at the date the investment becomes qualified for use of the equity method.  The amendments in ASU No. 2016-07 are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016.  Earlier application is permitted.  Adoption of ASU No. 2016-07 is not expected to have a material impact on the Company’sconsolidated financial statements.

In March 2016, the FASB issuedASU No. 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.  ASU No. 2016-09 affects all entities that issue share-based payment awards to their employees.  The new guidance involves several aspects of the accounting for share-based payment transactions, including income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows.  Under ASU No. 2016-09, any excess tax benefits or tax deficiencies should be recognized as income tax expense or benefit in the income statement.  Excess tax benefits are to be classified as an operating activity in the statement of cash flows.  In accruing compensation cost, an entity can make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest, as required under current guidance, or account for forfeitures when they occur.  For an award to qualify for equity classification, an entity cannot partially settle the award in excess of the employer's maximum statutory withholding requirements.  Such cash paid by an employer when directly withholding shares for tax withholding purposes should be classified as a financing activity in the statement of cash flows.  The amendments in ASU No. 2016-09 are effective for public business entities for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2016.  Early adoption is permitted. Adoption of ASU No. 2016-07 is not expected to have a material impact on the Company’s consolidated financial statements.

The FASB has issued ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. The amendments clarify the following two aspects of Topic 606: (a) identifying performance obligations; and (b) the licensing implementation guidance. The amendments do not change the core principle of the guidance in Topic 606.  The effective date and transition requirements for the amendments are the same as the effective date and transition requirements in Topic 606. Public entities should apply the amendments for annual reporting periods beginning after December 15, 2017, including interim reporting periods therein (i.e., January 1, 2018, for a calendar year entity). Early application for public entities is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period.  While interest income is specifically out of scope of this standard, management is currently evaluating the revenue streams within “noninterest income’ to assess the applicability of this standard.Since the Company’s products are substantially financial in nature, adoption of ASU No. 2016-10is not expected to have a material impact on the Company’s consolidated financial statements.

The FASB has issued ASU No. 2016-11, Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting. This ASU rescinds SEC paragraphs pursuant to two SEC Staff Announcements at the March 3, 2016 Emerging Issues Task Force (EITF) meeting.  SEC Staff Announcement, “Rescission of Certain SEC Staff Observer Comments upon Adoption of Topic 606, Revenue from Contracts with Customers,” was announced at the March 3, 2016, EITF meeting. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). The SEC Staff is rescinding the following SEC Staff Observer comments that are codified in Topic 605, Revenue Recognition, and Topic 932, Extractive Activities—Oil and Gas, effective upon adoption of Topic 606, Revenue from Contracts with Customers. Specifically, registrants should not rely on the following SEC Staff Observer comments upon adoption of Topic 606: 

· Revenue and Expense Recognition for Freight Services in Process, which is codified in paragraph 605-20-S99-2;

· Accounting for Shipping and Handling Fees and Costs, which is codified in paragraph 605-45-S99-1;

· Accounting for Consideration Given by a Vendor to a Customer (including Reseller of the Vendor’s Products), which is codified in paragraph 605-50-S99-1; and

· Accounting for Gas-Balancing Arrangements (i.e., use of the “entitlements method”), which is codified in paragraph 932-10-S99-5.

While interest income is specifically out of scope of this standard, management is currently evaluating the revenue streams within “noninterest income’ to assess the applicability of this standard.Adoption of ASU No. 2016-11 is not expected to have a material impact on the Company’s consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.  Once effective,ASU No. 2016-13 will significantly change current guidance for recognizing impairment of financial instruments.  Current guidance requires an "incurred loss" methodology for recognizing credit losses that delays recognition until it is probable a loss has been incurred.  ASU No. 2016-13 replaces the incurred loss impairment methodology with a new methodology that reflects expected credit losses over the lives of the loans and requires consideration of a broader range of information to inform credit loss estimates.  The ASU requires an organization to estimate all expected credit losses for financial assets measured at amortized cost, including loans and held-to-maturity debt securities, based on historical experience, current conditions, and reasonable and supportable forecasts.  Additional disclosures are required.  ASU No. 2016-13 also amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration.  Under the new guidance, entities will determine whether all or a portion of the unrealized loss on an available-for-sale debt security is a credit loss.  Any credit loss will be recognized as an allowance for credit losses on available-for-sale debt securities rather than as a direct reduction of the amortized cost basis of the investment, as is currently required.  As a result, entities will recognize improvements to estimated credit losses on available-for-sale debt securities immediately in earnings rather than as interest income over time, as currently required.  ASU No. 2016-13 eliminates the current accounting model for purchased credit impaired loans and debt securities.  Instead, purchased financial assets with credit deterioration will be recorded gross of estimated credit losses as of the date of acquisition and the estimated credit losses amounts will be added to the allowance for credit losses.  Thereafter, entities will account for additional impairment of such purchased assets using the models listed above.  ASU No. 2016-13 will take effect for U.S. Securities and Exchange Commission (SEC) filers for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019.  Early application will be permitted for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018.  While the Company generally expects that the implementation of ASU 2016-13 has the potential to increase their allowance for loan losses balance, the Company is continuing to evaluate the potential impact on the Company’s financial statements.  Presentations have been made to the Board of Directors, and management is currently assessing any additional data and system requirements necessary for adoption.

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Regulatory Matters

12 Months Ended

Dec. 31, 2016

Regulatory Matters [Abstract]

Regulatory Matters

NOTE 2- REGULATORY MATTERS

Regulatory Matters:  

From May 2011 until 2014, the Holding Company and CFBank each were subject toCease and Desist Orders (the “Holding Company Order” and the “CFBank Order”, respectively, and collectively, the “Orders”) with the Federal Reserve Board (the “FRB”), as successor to the Office of Thrift Supervision (the “OTS”) as the primary regulator of the Holding Company and CFBank.  The Orders imposed significant directives applicable to the Holding Company and CFBank, including requirements that we maintain heightened capital levels, reduce the level of our classified and criticized assets, achieve growth and operating metrics in line with an approved business plan, and comply with restrictions on brokered deposits and on certain types of lending and prohibitions on dividends and repurchases of our capital stock. 

Effective as of January 23, 2014, the OCC released and terminated the CFBank Order based upon the improved capital position of CFBank, among other factors.  Notwithstanding the release of the CFBank Order, CFBank was required to continue to maintain a minimum Tier 1 Leverage Capital Ratio of 8% and a Total Risk-based Capital to Risk-Weighted Assets ratio of 12% until December 23, 2015, and CFBank further committed to the OCC to adhere to certain prudent practices.  The foregoing commitments remained in place until December 23, 2015.

On May 15, 2014, the FRB announced the termination of the Holding Company Order, effective as of May 9, 2014.  Notwithstanding the termination of the Holding Company Order, the Holding Company was required to continue to adhere to certain requirements and restrictions based on commitments made to the FRB in connection with the termination of the Holding Company Order.  These commitments required the Holding Company, among other things, to continue to implement certain actions in accordance with the capital plan previously submitted to the FRB; not declare or pay dividends on its stock, purchase or redeem its stock, or accept dividends or other capital distributions from CFBank without the prior written approval of the FRB; not incur, increase or guarantee any debt without the prior written consent of the FRB; and provide prior written notice to the FRB with respect to certain changes in directors and senior executive officers.  The foregoing commitments remained in place until January 8, 2016.

Although we are no longer subject to the Orders or the regulatory commitments made following the release of the Orders, we remain subject to extensive supervision and regulation by our regulators and it is possible that regulatory compliance expenses could continue to have a material adverse impact on us in the future.

Dividend Restrictions:

The ability of the Holding Company to pay dividends on its common stock and Series B Preferred Stock is generally dependent upon the receipt of dividends and other distributions from CFBank.  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, so long as the Company’s Series B Preferred Stock remains outstanding, the Holding Company will be prohibited from paying dividends on (other than dividends payable solely in shares) the Company’s common stock, for the then-current dividend period, unless full dividends on the Series B Preferred Stock have been paid or set aside for payment.  Dividends on the Series B Preferred Stock are non-cumulative, which means that if for any reason we do not declare cash dividends on the Series B Preferred Stock for a quarterly dividend period we will have no obligation to pay any dividends for that period (i.e., the dividends will not accrue or cumulate), whether or not we declare dividends on the Series B Preferred Stock for any subsequent dividend period.

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Securities

12 Months Ended

Dec. 31, 2016

Securities [Abstract]

Securities

NOTE 3 – SECURITIES

The following table summarizes the amortized cost and fair value of the available-for-sale securities portfolio at December 31, 2016 and December31, 2015 and the corresponding amounts of unrealized gains and losses recognized in accumulated other comprehensive income (loss):

			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
December 31, 2016
Issued by U.S. government-sponsored entities and agencies:
U.S. Treasury	$	13,521	$	11	$	27	$	13,505
Mortgage-backed securities - residential		345		12		-		357
Collateralized mortgage obligations		189		7		-		196
Total	$	14,055	$	30	$	27	$	14,058

			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
December 31, 2015
Issued by U.S. government-sponsored entities and agencies:
U.S. Treasury	$	8,575	$	4	$	43	$	8,536
Mortgage-backed securities - residential		463		18		-		481
Collateralized mortgage obligations		339		12		-		351
Total	$	9,377	$	34	$	43	$	9,368

There was no other-than-temporary impairment recognized in accumulated other comprehensive income (loss) for securities available for sale at December 31, 2016 or December 31, 2015.

There were no sales of securities for the years ended December 31, 2016 or December 31, 2015; however, there was an early redemption of a municipal security during the first quarter of 2015 which is reflected in net loss on sales of securities.

The amortized cost and fair value of debt securities at December 31, 2016 and December 31, 2015 are shown 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, 2016				December 31, 2015
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
Due in one year or less	$	2,518	$	2,518	$	1,002	$	1,000
Due from one to five years		11,003		10,987		7,573		7,536
Mortgage-backed securities - residential		345		357		463		481
Collateralized mortgage obligations		189		196		339		351
Total	$	14,055	$	14,058	$	9,377	$	9,368

Fair value of securities pledged was as follows:

	2016		2015
Pledged as collateral for:
FHLB advances	$	2,327	$	3,530
Public deposits		2,043		2,055
Interest-rate swaps		195		261
Total	$	4,565	$	5,846

At year end 2016 and 2015, there were no holdings of securities of any one issuer, other than U.S. Treasuries and U.S. government-sponsored entities and agencies, in an amount greater than 10% of stockholders’ equity.

The following table summarizes securities with unrealized losses at December 31, 2016 and December 31, 2015 aggregated by major security type and length of time in a continuous unrealized loss position.

December 31, 2016	Less than 12 Months				12 Months or More				Total
Description of Securities	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Issued by U.S. government-sponsored entities and agencies:
U.S. Treasury	$	10,492	$	27	$	-	$	-	$	10,492	$	27
Mortgage-backed securities - residential (1)		1		-		-		-		1		-
Total temporarily impaired	$	10,493	$	27	$	-	$	-	$	10,493	$	27

⁽¹⁾ Securities with an unrealized loss were less than $1 resulting in rounding to zero.

December 31, 2015	Less than 12 Months				12 Months or More				Total
Description of Securities	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Issued by U.S. government-sponsored entities and agencies:
U.S. Treasury	$	6,541	$	43	$	-	$	-	$	6,541	$	43
Mortgage-backed securities - residential		-		-		-		-		-		-
Total temporarily impaired	$	6,541	$	43	$	-	$	-	$	6,541	$	43

The unrealized losses in U.S. Treasuries and Mortgage-backed securities at December 31, 2016 andU.S. Treasuries at December 31, 2015, are related to multiple securities.  Because the decline in fair value is attributable to changes in market conditions, and not credit quality, and because the Company does not have the intent to sell these securities and will unlikely be required to sell these securities before their anticipated recovery, the Company did not consider these securities to be other-than-temporarily impaired at December 31, 2016 and December 31, 2015.

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Loans And Leases

12 Months Ended

Dec. 31, 2016

Loans And Leases [Abstract]

Loans And Leases

NOTE 4 – LOANSAND 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, 2016		December 31, 2015
Commercial (1)	$	71,334	$	43,744
Real estate:
Single-family residential		92,544		81,985
Multi-family residential		34,291		28,950
Commercial		105,313		96,488
Construction		25,822		24,662
Consumer:
Home equity lines of credit		23,109		21,837
Other		637		6,018
Subtotal		353,050		303,684
Less: ALLL		(6,925)		(6,620)
Loans and Leases, net	$	346,125	$	297,064

⁽¹⁾ Includes $2,874 of commercial leases.

Mortgage Purchase Program:

CFBank has participated in a Mortgage Purchase Program with Northpointe Bank (Northpointe), a Michigan banking corporation, since December 2012.  Pursuant to the terms of a participation agreement, CFBank purchases participation interests in loans made by Northpointe related to fully underwritten and pre-sold mortgage loans originated by various prescreened mortgage brokers located throughout the U.S.  The underlying loans areindividually (MERS) registered loans which are held until funded by the end investor. The mortgage loan investors include Fannie Mae and Freddie Mac, and other major financial institutions.  This process on average takes approximately 14 days.  Given the short-term holding period of the underlying loans, common credit risks (such as past due, impairment and TDR, nonperforming, and nonaccrual classification) are substantially reduced.  Therefore, no allowance is allocated by CFBank to these loans. These loans are 100% risk rated for CFBank capital adequacy purposes.  Under the participation agreement, CFBank agrees to purchase a 95% ownership/participation interest in each of the aforementioned loans, and Northpointe maintains a 5% ownership interest in each loan it participates.  At December 31, 2016 and 2015, CFBank held $46,919 and $43,517, respectively,  of such loans which have been included in single-family residential loan totals above.

Allowance for Loan and Lease Losses:

The ALLL is a valuation allowance for probable incurred credit losses in the loan and lease portfolio based on management’s evaluation of various factors including past loan loss experience, the nature and volume of the portfolio, information about specific borrower situations and estimated collateral values, economic conditions and other factors. A provision for loan and lease losses is charged to operations based on management’s periodic evaluation of these and other pertinent factors described in Note 1 of the Notes to Consolidated Financial Statements.

The following tables present the activity in the ALLL by portfolio segment for the years ended December 31, 2016 and 2015:

	December 31, 2016
			Real Estate								Consumer
	Commercial		Single-family		Multi-family		Commercial		Construction		Home Equity lines of credit		Other		Total
Beginning balance	$	1,380	$	691	$	705	$	2,710	$	561	$	474	$	99	$	6,620
Addition to (reduction in) provision for loan losses		390		149		(132)		(128)		19		(4)		(64)		230
Charge-offs		(123)		(147)		-		-		-		(53)		(1)		(324)
Recoveries		-		42		143		145		-		69		-		399
Ending balance	$	1,647	$	735	$	716	$	2,727	$	580	$	486	$	34	$	6,925

	December 31, 2015
			Real Estate								Consumer
	Commercial		Single-family		Multi-family		Commercial		Construction		Home Equity lines of credit		Other		Total
Beginning balance	$	1,346	$	634	$	818	$	2,541	$	442	$	441	$	94	$	6,316
Addition to (reduction in) provision for loan losses		17		96		(113)		161		119		(39)		9		250
Charge-offs		(8)		(40)		-		(25)		-		(41)		(10)		(124)
Recoveries		25		1		-		33		-		113		6		178
Ending balance	$	1,380	$	691	$	705	$	2,710	$	561	$	474	$	99	$	6,620

The following table presents the balance in the ALLL and the recorded investment in loans and leases by portfolio segment and based on impairment method as of December 31, 2016:  

			Real Estate								Consumer
	Commercial		Single- family		Multi- family		Commercial		Construction		Home Equity lines of credit		Other		Total
ALLL:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	1	$	-	$	-	$	21	$	-	$	-	$	-	$	22
Collectively evaluated for impairment		1,646		735		716		2,706		580		486		34		6,903
Total ending allowance balance	$	1,647	$	735	$	716	$	2,727	$	580	$	486	$	34	$	6,925
Loans:
Individually evaluated for impairment	$	557	$	122	$	37	$	2,732	$	-	$	-	$	-	$	3,448
Collectively evaluated for impairment		70,777		92,422		34,254		102,581		25,822		23,109		637		349,602
Total ending loan balance	$	71,334	$	92,544	$	34,291	$	105,313	$	25,822	$	23,109	$	637	$	353,050

The following table presents the balance in the ALLL and the recorded investment in loans and leases by portfolio segment and based on impairment method as of December 31, 2015:  

			Real Estate								Consumer
	Commercial		Single- family		Multi- family		Commercial		Construction		Home Equity lines of credit		Other		Total
ALLL:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	5	$	1	$	-	$	14	$	-	$	-	$	-	$	20
Collectively evaluated for impairment		1,375		690		705		2,696		561		474		99		6,600
Total ending allowance balance	$	1,380	$	691	$	705	$	2,710	$	561	$	474	$	99	$	6,620
Loans:
Individually evaluated for impairment		422	$	289	$	1,590	$	3,449	$	-	$	-	$	-	$	5,750
Collectively evaluated for impairment		43,322		81,696		27,360		93,039		24,662		21,837		6,018		297,934
Total ending loan balance	$	43,744	$	81,985	$	28,950	$	96,488	$	24,662	$	21,837	$	6,018	$	303,684

The following table presents loans individually evaluated for impairment by class of loans as of and for the year ended December 31, 2016. The unpaid principal balance is the contractual principal balance outstanding. The recorded investment is the unpaid principal balance adjusted for partial charge-offs, purchase premiums and discounts, deferred loan fees and costs.

	Unpaid Principal Balance		Recorded Investment		ALLL Allocated		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial	$	476	$	358	$	-	$	436	$	13
Real estate:
Single-family residential		-		-		-		-		-
Multi-family residential		37		37		-		41		2
Commercial:
Non-owner occupied		112		112		-		114		8
Owner occupied		871		350		-		360		46
Land		-		-		-		-		-
Total with no allowance recorded		1,496		857		-		951		69
With an allowance recorded:
Commercial		199		199		1		232		9
Real estate:
Single-family residential		122		122		-		125		7
Multi-family residential		-		-		-		-		-
Commercial:
Non-owner occupied		2,068		2,068		19		2,086		126
Owner occupied		202		202		2		208		10
Land		-		-		-		-		-
Total with an allowance recorded		2,591		2,591		22		2,651		152
Total	$	4,087	$	3,448	$	22	$	3,602	$	221

The following table presents loans individually evaluated for impairment by class of loans as of and for the year ended December 31, 2015. The unpaid principal balance is the contractual principal balance outstanding. The recorded investment is the unpaid principal balance adjusted for partial charge-offs, purchase premiums and discounts, deferred loan fees and costs.

	Unpaid Principal Balance		Recorded Investment		ALLL Allocated		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial	$	36	$	28	$	-	$	65	$	1
Real estate:
Single-family residential		322		161		-		166		-
Multi-family residential		1,545		1,545		-		1,561		95
Commercial:
Non-owner occupied		546		446		-		455		-
Owner occupied		688		167		-		174		39
Land		-		-		-		-		-
Total with no allowance recorded		3,137		2,347		-		2,421		135
With an allowance recorded:
Commercial		394		394		5		439		12
Real estate:
Single-family residential		128		128		1		130		7
Multi-family residential		45		45		-		48		3
Commercial:
Non-owner occupied		2,224		2,224		9		2,242		136
Owner occupied		363		363		1		371		20
Land		294		249		4		274		18
Total with an allowance recorded		3,448		3,403		20		3,504		196
Total	$	6,585	$	5,750	$	20	$	5,925	$	331

The following table presents the recorded investment in nonperforming loans by class of loans as of December 31, 2016 and 2015:

	2016		2015
Loans past due over 90 days still on accrual	$	-	$	-
Nonaccrual loans:
Commercial		263		224
Real estate:
Single-family residential		397		640
Commercial:
Non-owner occupied		-		446
Consumer:
Home equity lines of credit:
Originated for portfolio		44		20
Purchased for portfolio		-		95
Total nonaccrual		704		1,425
Total nonperforming loans	$	704	$	1,425

Nonaccrual loans include both smaller balance single-family mortgage and consumer loans that are collectively evaluated for impairment and individually classified impaired loans. There were no loans 90 days or more past due and still accruing interest at December 31, 2016 or December 31, 2015.  

The following table presents the aging of the recorded investment in past due loans by class of loans as of December 31, 2016:

	30 - 59 Days Past Due		60 - 89 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Loans Not Past Due		Nonaccrual Loans Not > 90 days Past Due
Commercial	$	-	$	-	$	119	$	119	$	71,215	$	144
Real estate:
Single-family residential		284		49		106		439		92,105		291
Multi-family residential		-		-		-		-		34,291		-
Commercial:
Non-owner occupied		-		-		-		-		60,936		-
Owner occupied		269		600		-		869		34,891		-
Land		-		-		-		-		8,617		-
Construction		48		-		-		48		25,774		-
Consumer:
Home equity lines of credit:
Originated for portfolio		-		15		-		15		22,440		44
Purchased for portfolio		69		-		-		69		585		-
Other		-		-		-		-		637		-
Total	$	670	$	664	$	225	$	1,559	$	351,491	$	479

The following table presents the aging of the recorded investment in past due loans by class of loans as of December 31, 2015:  

	30 - 59 Days Past Due		60 - 89 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Loans Not Past Due		Nonaccrual Loans Not > 90 days Past Due
Commercial	$	-	$	9	$	28	$	37	$	43,707	$	196
Real estate:
Single-family residential		598		161		148		907		81,078		492
Multi-family residential		-		-		-		-		28,950		-
Commercial:
Non-owner occupied		-		446		-		446		57,573		446
Owner occupied		-		-		-		-		30,169		-
Land		-		-		-		-		8,300		-
Construction		-		-		-		-		24,662		-
Consumer:
Home equity lines of credit:
Originated for portfolio		-		-		-		-		20,789		20
Purchased for portfolio		-		-		-		-		1,048		95
Other		-		-		-		-		6,018		-
Total	$	598	$	616	$	176	$	1,390	$	302,294	$	1,249

Troubled Debt Restructurings (TDRs):

From time to time, the terms of certain loans are modified as TDRs, where concessions are granted to borrowers experiencing financial difficulties. The modification of the terms of such loans may have included one or a combination of the following: a reduction of the stated interest rate of the loan; an increase in the stated rate of interest lower than the current market rate for new debt with similar risk; an extension of the maturity date; or a change in the payment terms.

As of December 31, 2016 and December 31, 2015, TDR’s totaled $3,130 and $5,276, respectively.  The Company allocated $22 and $20 of specific reserves to loans modified in TDRs as of December 31, 2016 and 2015, respectively. The Company had not committed to lend additional amounts as of December 31, 2016 or 2015 to customers with outstanding loans that were classified as nonaccrual TDRs.

There was one commercial loan in the amount of $239 that was modified as a TDR during the year ended December 31, 2016, where concessions were granted to a borrower experiencing financial difficulty.  There was onesingle-family residential loan and one home equity line of credit that were modified as TDRs during the year ended December 31, 2015, where concessions were granted to borrowers experiencing financial difficulties.  The home equity line of credit was paid off in June 2015. 

The following table presents loans modified as TDRs by class of loans during the year ended December 31, 2016:

	Number of Loans		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commercial		1	$	339	$	339
		1	$	339	$	339

The following table presents loans modified as TDRs by class of loans during the year ended December 31, 2015:

	Number of Loans		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Real estate:
Single-family residential		1	$	9	$	9
Consumer:
Home equity lines of credit:
Originated for portfolio		1		9		9
		2	$	18	$	18

The TDRs described above resulted in no charge-offs during the years ended December 31, 2016 and 2015, respectively.

There was one nonperforming TDR that went into payment default during the year ended December 31, 2016.  There were no loans classified as TDRs for which there was a payment default within twelve months following the modification during the year ending December 31, 2015. 

The terms of certain other loans were modified during the year ended December 31, 2016 and 2015 that did not meet the definition of a TDR. These loans had a total recorded investment of $33,294 and $19,097 as of December 31, 2016 and 2015, respectively. The modification of these loans involved either a modification of the terms of a loan to borrowers who were not experiencing financial difficulties, a delay in a payment that was considered to be insignificant or there were no concessions granted.

In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed under the Company’s internal underwriting policy.

Nonaccrual loans include loans that were modified and identified as TDRs and the loans are not performing.  At December 31, 2016 and 2015, nonaccrual TDRs were as follows: 

	2016		2015
Commercial	$	144	$	195
Real estate:
Single-family residential		-		161
Total	$	144	$	356

Nonaccrual loans at December 31, 2016 and 2015 did not include $2,986 and $4,920, respectively, of TDRs where customers have established a sustained period of repayment performance, generally six months, the loans are current according to their modified terms and repayment of the remaining contractual payments is expected.  These loans are included in total impaired loans.

Credit Quality Indicators:

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, such as current financial information, historical payment experience, credit documentation, public information and current economic trends, among other factors.  Management analyzes loans individually by classifying the loans as to credit risk.  This analysis includes commercial, commercial real estate and multi-family residential real estate loans.  Internal loan reviews for these loan types are performed at least annually, and more often for loans with higher credit risk. Adjustments to loan risk ratings are 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 loans are loans that are subject to internal loan reviews and are determined not to meet the criteria required to be classified as special mention, substandard, doubtful or loss.

The recorded investment in loans by risk category and by class of loans as of December 31, 2016 and based on the most recent analysis performed follows.  There were no loans rated doubtful at December 31, 2016. 

	Not Rated		Pass		Special Mention		Substandard		Total
Commercial	$	47	$	70,444	$	286	$	557	$	71,334
Real estate:
Single-family residential		92,130		-		-		414		92,544
Multi-family residential		-		33,615		505		171		34,291
Commercial:
Non-owner occupied		115		58,183		1,782		856		60,936
Owner occupied		-		33,493		1,048		1,219		35,760
Land		-		6,380		-		2,237		8,617
Construction		1,997		23,825		-		-		25,822
Consumer:
Home equity lines of credit:
Originated for portfolio		22,328		-		-		127		22,455
Purchased for portfolio		512		-		-		142		654
Other		637		-		-		-		637
	$	117,766	$	225,940	$	3,621	$	5,723	$	353,050

The recorded investment in loans by risk category and class of loans as of December 31, 2015 follows.  There were no loans rated doubtful at December 31, 2015.

	Not Rated		Pass		Special Mention		Substandard		Total
Commercial	$	83	$	41,473	$	1,892	$	296	$	43,744
Real estate:
Single-family residential		81,318		-		-		667		81,985
Multi-family residential		2,777		25,466		528		179		28,950
Commercial:
Non-owner occupied		125		54,674		1,852		1,368		58,019
Owner occupied		-		26,923		3,079		167		30,169
Land		-		5,720		-		2,580		8,300
Construction		11,252		13,410		-		-		24,662
Consumer:
Home equity lines of credit:
Originated for portfolio		20,677		-		-		112		20,789
Purchased for portfolio		802		-		-		246		1,048
Other		2,172		3,846		-		-		6,018
	$	119,206	$	171,512	$	7,351	$	5,615	$	303,684

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Foreclosed Assets

12 Months Ended

Dec. 31, 2016

Foreclosed Assets [Abstract]

Foreclosed Assets

NOTE 5 – FORECLOSED ASSETS

Foreclosed assets at year-end were as follows:

	2016		2015
Commercial real estate	$	-	$	1,636
Single-family residential		204		-
Subtotal		204		1,636
Valuation Allowance		-		-
Total	$	204	$	1,636

There was no activity in the valuation allowance account or any write-downs during the years ended December 31, 2016 and 2015.

Expenses related to foreclosed assets include:

	2016		2015
Net loss (gain) on sales	$	(4)	$	-
Operating expenses, net of rental income		69		137
	$	65	$	137

Foreclosed assets at December 31, 2016 consisted of one single-family residential property that was transferred into REO at fair value in December 2016.  Foreclosed assets at December 31, 2015 consisted ofone multi-family property that was transferred into REO at fair value at the time of transfer in 2013.Foreclosed asset expensesincurred during 2016 and 2015 related to light rehabilitation and maintenance expense incurred to ready the property to sell, increase occupancy levels, and certain other operating costs.

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Fair Value

12 Months Ended

Dec. 31, 2016

Fair Value [Abstract]

Fair Value

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 yield maintenance provisions, interest rate lock commitments and interest rate swaps, is based on valuation models using observable market data as of the measurement date (Level 2).

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

Loans held for sale:  Loans held for sale are carried at fair value, as determined by outstanding commitments from third party investors (Level 2).  During the second quarter of 2015, CFBank signed an agreement with the intent to sell its credit card portfolio to a third party.  As a result, as of June 30, 2015, the credit card portfolio was transferred to held for sale at the lower of cost of market of $175,000, which approximated fair value at the time of transfer.  In February 2016, the sale of the credit card portfolio was consummated.

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, 2016 Using Significant Other Observable Inputs
	(Level 2)
Financial Assets:
Securities available for sale:
Issued by U.S. government-sponsored entities and agencies:
U.S. Treasury	$	13,505
Mortgage-backed securities - residential		357
Collateralized mortgage obligations		196
Total securities available for sale	$	14,058
Loans held for sale	$	2,812
Yield maintenance provisions (embedded derivatives)	$	122
Interest rate lock commitments	$	9
Financial Liabilities:
Interest-rate swaps	$	122

	Fair Value Measurements at December 31, 2015 Using Significant Other Observable Inputs
	(Level 2)
Financial Assets:
Securities available for sale:
Issued by U.S. government-sponsored entities and agencies:
U.S. Treasury	$	8,536
Mortgage-backed securities - residential		481
Collateralized mortgage obligations		351
Total securities available for sale	$	9,368
Loans held for sale	$	889
Yield maintenance provisions (embedded derivatives)	$	213
Interest rate lock commitments	$	8
Financial Liabilities:
Interest-rate swaps	$	213

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, 2016 or 2015.  There were no transfers of assets or liabilities measured at fair value between levels during 2016 or 2015.

Assets measured at fair value on a non-recurring basis are summarized below:

Fair Value Measurements at December 31, 2016 Using
Significant Unobservable Inputs (Level 3)
Impaired loans:
Commercial	$	130
Real Estate:
Single-family residential		122
Multi-family residential		37
Commercial:
Non-owner occupied		2,161
Owner occupied		200
Land		-
Total impaired loans	$	2,650

Fair Value Measurements at December 31, 2015 Using
Significant Unobservable Inputs (Level 3)
Impaired loans:
Commercial	$	143
Real Estate:
Single-family residential		128
Multi-family residential		45
Commercial:
Non-owner occupied		2,215
Owner occupied		213
Land		245
Total impaired loans	$	2,989

The Company had no assets or liabilities measured at fair value on a non-recurring basis that were measured using Level 1 or 2 inputs at December 31, 2016 or 2015.

Impaired loans that are measured for impairment using the fair value of the collateral for collateral dependent loans, had a principal balance of $2,672, with a valuation allowance of $21 at December 31, 2016.  Impaired loans that are measured for impairment using the fair value of the collateral for collateral dependent loans, had a principal balance of $3,050 with a valuation allowance of $16 at December 31, 2015. 

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, 2016:  

	Fair Value		Valuation Technique(s)	Unobservable Inputs	(Range) Weighted Average
Impaired loans:
Commercial	$	130	Comparable sales approach	Adjustment for differences between the comparable market transactions	3.48%
Real estate:
Single-family residential		122	Comparable sales approach	Adjustment for differences between the comparable market transactions	(1.81% , 3.61%)  2.91%
Multi-family residential		37	Comparable sales approach	Adjustment for differences between the comparable market transactions	9.64%
Commercial:
Non-owner occupied		2,161	Comparable sales approach	Adjustment for differences between the comparable market transactions	(1.10%,  5.74%) 1.35%
Owner occupied		200	Comparable sales approach	Adjustment for differences between the comparable market transactions	-4.46%

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, 2015:

	Fair Value		Valuation Technique(s)	Unobservable Inputs	(Range) Weighted Average
Impaired loans:
Commercial	$	143	Comparable sales approach	Adjustments by management to reflect current discount rates	1.10%
Real estate:
Single -family residential		128	Comparable sales approach	Adjustment for differences between the comparable market transactions	(-1.23% , 4.63%)  -.17%
Multi-family residential		45	Comparable sales approach	Adjustment for differences between the comparable market transactions	5.74%
Commercial:
Non-owner occupied		2,215	Comparable sales approach	Adjustment for differences between the comparable market transactions	(1.10%,  5.74%) 1.35%
Owner occupied		213	Comparable sales approach	Adjustment for differences between the comparable market transactions	-29.30%
Land		245	Comparable sales approach	Adjustment for differences between the comparable market transactions	(-1.89%,  2.54%) .08%

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 transferred to held for sale, are carried at the lower 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, 2016 or December 31, 2015. 

As of December 31, 2016 and December 31, 2015, the aggregate fair value, contractual balance and gain or loss of loans held for sale were as follows:

	December 31, 2016		December 31, 2015
Aggregate fair value	$	2,812	$	889
Contractual balance		2,801		884
Gain (loss)		11		5

The total amount of gains and losses from changes in fair value included in earnings for the year ended December 31, 2016 and 2015 for loans held for sale were:

	2016		2015
Interest income	$	60	$	56
Interest expense		-		-
Change in fair value		6		(10)
Total change in fair value	$	66	$	46

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

	Fair Value Measurements at December 31, 2016 Using:
	Carrying
	Value		Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	57,941	$	57,941	$	-	$	-	$	57,941
Interest-bearing deposits in other financial institutions		100		100		-		-		100
Securities available for sale		14,058		-		14,058		-		14,058
Loans held for sale		2,812		-		2,812		-		2,812
Loans, net		346,125		-		-		343,523		343,523
FHLB stock		1,942		n/a		n/a		n/a		n/a
Accrued interest receivable		1,054		13		40		1,001		1,054
Yield maintenance provisions (embedded derivatives)		122		-		122		-		122
Interest rate lock commitments		9		-		9		-		9
Financial liabilities
Deposits	$	(375,364)	$	(202,158)	$	(171,967)	$	-	$	(374,125)
FHLB advances and other borrowings		(13,500)		-		(13,597)		-		(13,597)
Advances by borrowers for taxes and insurance		(408)		-		-		(408)		(408)
Subordinated debentures		(5,155)		-		(3,411)		-		(3,411)
Accrued interest payable		(78)		(2)		(76)		-		(78)
Interest-rate swaps		(122)		-		(122)		-		(122)

The carrying amounts and estimated fair values of financial instruments at December 31, 2015 were as follows:

	Fair Value Measurements at December 31, 2015 Using:
	Carrying
	Value		Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	25,895	$	25,895	$	-	$	-	$	25,895
Interest-bearing deposits in other financial institutions		-		-		-		-		-
Securities available for sale		9,368		-		9,368		-		9,368
Loans held for sale		889		-		889		-		889
Loans, net		297,064		-		-		295,498		295,498
FHLB stock		1,942		n/a		n/a		n/a		n/a
Accrued interest receivable		831		1		21		809		831
Yield maintenance provisions (embedded derivatives)		213		-		213		-		213
Interest rate lock commitments		8		-		8		-		8
Financial liabilities
Deposits	$	(290,467)	$	(147,523)	$	(143,236)	$	-	$	(290,759)
FHLB advances and other borrowings		(14,500)		-		(14,693)		-		(14,693)
Advances by borrowers for taxes and insurance		(656)		-		-		(656)		(656)
Subordinated debentures		(5,155)		-		(2,269)		-		(2,269)
Accrued interest payable		(44)		-		(44)		-		(44)
Interest-rate swaps		(213)		-		(213)		-		(213)

The methods and assumptions used to estimate fair value are described as follows.

Cash and Cash Equivalents

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

Interest-Bearing Deposits in Other Financial Institutions

The carrying amounts of interest bearing deposits in other financial institutions approximate fair values and are classified as Level 1.

FHLB Stock

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

Loans

Fair values of loans, excluding loans held for sale, are estimated 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.  Impaired loans are valued at the lower of cost or fair value as described previously. The methods utilized to estimate the fair value of loans do not necessarily represent an exit price.

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.

Other Borrowings

The fair values of the Company’s long-term FHLB 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 for the secured borrowings are valued in the same manner as loans noted above, resulting in a Level 3 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 or 2 classification,consistent with the asset or liability with which they are associated.

Off-Balance-Sheet Instruments

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

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Loan Servicing

12 Months Ended

Dec. 31, 2016

Loan Servicing [Abstract]

Loan Servicing

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, 2016		December 31, 2015
Mortgage loans serviced for Freddie Mac	$	4,261	$	5,593

Custodial escrow balances maintained in connection with serviced loans were $119 and $132 at year-end 2015 and 2014, respectively.

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Premises And Equipment

12 Months Ended

Dec. 31, 2016

Premises And Equipment [Abstract]

Premises And Equipment

NOTE 8- PREMISES AND EQUIPMENT

Year-end premises and equipment were as follows:

	December 31, 2016		December 31, 2015
Land and land improvements	$	1,293	$	1,293
Buildings		3,832		3,827
Furniture, fixtures and equipment		2,150		2,655
		7,275		7,775
Less: Accumulated Depreciation		(3,846)		(4,166)
	$	3,429	$	3,609

Depreciation expense for 2016 and 2015 totaled $211 and $211, respectively.

Operating Leases:

The Company leases certain branch and loan office property space under two operating leases.  Each lease requires CFBank to absorb its pro rata share of building operating expenses and utilities based on square footage.  The Company entered into a lease agreement to open a commercial banking agency office in Woodmere, Ohio, which opened in January of 2014.  The Woodmere lease is for a 128-month term commencing January 1, 2014 with no renewal options.  The Company leases CFBank’s Fairlawn branch office pursuant to a  ten year operating lease beginning in 2014 with annual rent increases each year. There is one five-year renewal option on this lease.  Lease expense for the years ended December 31, 2016 and 2015 totaled $311 and $319, respectively.  Leasehold improvements are depreciated straight line over the lease term before consideration of renewal options. 

Lease expense is recognized evenly over the lease term to account for lease incentives.  Rent commitments, before renewal options, are as follows:

2017	$	320
2018		321
2019		322
2020		324
2021		325
Thereafter		858
	$	2,470

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Deposits

12 Months Ended

Dec. 31, 2016

Deposits [Abstract]

Deposits

NOTE 9 – DEPOSITS

Time deposits of $100 or more were $128,185 and $106,574 at year-end 2016 and 2015, respectively.  Time deposits of $250 or more were $38,575 and $23,970 at year-end 2016 and 2015, respectively.

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

2017	$	108,620
2018		33,617
2019		7,749
2020		14,626
2021		7,697
Thereafter		-
Total	$	172,309

Brokereddeposits at year-end 2016 and 2015 totaled $29,738and $22,073, respectively. 

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FHLB Advances

12 Months Ended

Dec. 31, 2016

FHLB Advances [Abstract]

FHLB Advances

NOTE 10 –FHLB ADVANCES

Fixed Rate Advances from the FHLB were as follows:

	Weighted
	Average Rate	December 31, 2016		December 31, 2015
Fixed Rate Advances
Maturities:
2016		$	-	$	5,000
2017	1.12%		2,500		1,500
2019	1.62%		3,500		2,500
2020	2.02%		3,500		2,500
2021	2.32%		4,000		3,000
Total		$	13,500	$	14,500

Each advance is payable at its maturity date, with a prepayment penalty for fixed-rate advances. 

The advances were collateralized as follows:

	December 31, 2016		December 31, 2015
Single-family mortgage loans	$	38,342	$	29,490
Multi-family mortgage loans		14,854		8,185
Commercial real estate loans (1-4 family)		2,793		3,155
Securities		2,327		3,530
Cash		3,300		3,300
Total	$	61,616	$	47,660

Based on the collateral pledged to the FHLB and CFBank’s holdings of FHLB stock, CFBank was eligible to borrow up to a total of $44,498 from the FHLB at December 31, 2016. 

Payments due to the FHLB over the next five years are as follows:

	December 31, 2016
2017	$	2,500
2018		-
2019		3,500
2020		3,500
2021		4,000
	$	13,500

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Other Borrowings

12 Months Ended

Dec. 31, 2016

Other Borrowings [Abstract]

Other Borrowings

NOTE 11 - OTHER BORROWINGS

There were no outstanding borrowings with the Federal Reserve Bank (the “FRB”) at December 31, 2016 or at December 31, 2015. 

Assets pledged as collateral with the FRB were as follows:

	2016		2015
Commercial loans	$	16,380	$	19,696
Commercial real estate loans		39,230		37,702
	$	55,610	$	57,398

Based on the collateral pledged, CFBank was eligible to borrow up to $31,846 from the FRB at year-end 2016.

CFBank had a $1.0 million line of credit with a commercial bank at both December 31, 2016 and December 31, 2015.  There were no outstanding borrowings on this line of credit at December 31, 2016 or December 31, 2015.  If CFBank were to borrow on this line of credit, interest would accrue daily at a variable rate based on the commercial bank’s cost of funds and current market returns.

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Subordinated Debentures

12 Months Ended

Dec. 31, 2016

Subordinated Debentures [Abstract]

Subordinated Debentures

NOTE 12 – 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, on or after December 30, 2008 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.The Holding Company’s Board of Directors elected to defer interest payments on the subordinated debentures from time to time beginning in December 2010 in order to preserve cash at the Holding Company.  However, the Holding Company paid all deferred and current interest payments in June 2014, and has paid the interest current on the subordinated debentures for all subsequent quarters through December 31, 2016. 

The subordinated debentures have a variable rate of interest, reset quarterly, equal to the three-month London Interbank Offered Rate plus 2.85%, which was 3.85% at year-end 2016 and 3.45% at year-end 2015.

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Benefit Plans

12 Months Ended

Dec. 31, 2016

Benefit Plans [Abstract]

Benefit Plans

NOTE 13 – 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 unfunded liability under the Pentegra DB Plan at June 30, 2016 totaled  $53  and at June 30, 2015 was $36.  CFBank’s contributions for the plan years ending June 30, 2017 and June 30, 2016, totaled $42, and $22, 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 those 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 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, 2016 and 2015 was 94.90% and  96.52%, respectively. 

Total contributions made to the Pentegra DB Plan, as reported on Form 5500 of the Pentegra DB Plan, totaled $163 and  $191 for the plan years ended June 30, 2015 and June 30, 2014, respectively.  CFBank’s contributions to the Pentegra DB Plan were not more than 5% of the total contributions to the Pentegra DB Plan.

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 25% of the first 8% of the compensation contributed.  Expense for 2016 and 2015 was $49 and $52, 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 6 months after his retirement date, which was February 28, 2008.  The expense related to this plan totaled $10 and $11 in 2016 and 2015, respectively. The accrual is included in accrued interest payable and other liabilities in the consolidated balance sheets and totaled $218 at year-end 2016 and $233 at year-end 2015. 

Life Insurance Benefits:

CFBank has entered into agreements with certain employees, former employees and directors to provide life insurance benefits which are funded through life insurance policies purchased and owned by CFBank.  The expense related to these benefits totaled ($3) and ($2) in 2016 and 2015, 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 $210 at year-end 2016 and $213 at year-end 2015.

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Income Taxes

12 Months Ended

Dec. 31, 2016

Income Taxes [Abstract]

Income Taxes

NOTE 14 – INCOME TAXES

Income tax expense was as follows:

	December 31, 2016		December 31, 2015
Current Federal	$	187	$	58
Deferred Federal (1)		623		(3,251)
Total	$	810	$	(3,193)

(1) Includes tax benefit of operating loss carryforwards of $717 and $531 for the years ended December 31, 2016 and 2015.

Effective tax rates differ from the federal statutory rate of 34% applied to income (loss) before income taxes due to the following:

	December 31, 2016		December 31, 2015
Federal Statutory rate times financial statement income (loss)	$	829	$	436
Effect of:
Incentive Stock Options		6		33
Bank owned life insurance income		(45)		(45)
Increase (decrease) in deferred tax valuation allowance		-		(3,656)
Other		20		39
	$	810	$	(3,193)
Effective tax rate		33%		-249%

Year-end deferred tax assets and liabilities were due to the following:

	2016		2015
Deferred tax assets:
Allowance for loan and lease losses	$	1,575	$	1,497
Compensation related issues		353		314
Deferred loan fees		155		118
AMT Credit		50		105
Nonaccrual interest		41		132
Net operating loss carry forward		863		1,580
Other		70		2
		3,107		3,748
Deferred tax liability:
FHLB stock dividend		366		366
Mortgage servicing rights		2		4
Depreciation		47		43
Prepaid expenses		63		78
Mark-to-market Loans		2		3
		480		494
Net deferred tax asset	$	2,627	$	3,254

At December 31, 2016, the Company had a deferred tax asset recorded of approximately $2,600.  At December 31, 2015, the Company had a deferred tax asset recorded of approximately $3,300 after reversing its valuation allowance noted below.  At December 31, 2016 and December 31, 2015, 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 2013.

Our deferred tax assets are composed of U.S. net operating losses (“NOLs”), and other temporary book to tax differences.  The Company recorded a deferred tax valuation allowance which reduced the Company’s deferred tax asset to zero beginning in 2009 and continuing up until the fourth quarter of 2015. The Company maintained this valuation allowance against the net deferred tax assets during this period based on its estimate of future reversal and utilization.  As a result, there was no income tax benefit recorded during the first three quarters of 2015. 

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, 2015, in part because the Company had achieved seven consecutive quarters of pretax income, that it was no longer necessary to maintain a full valuation allowance against the entire net deferred tax asset.  As a result, the valuation allowance on the deferred tax asset was reversed, which resulted in a credit to income tax expense of $3,200 during the fourth quarter of 2015.

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 changewithin the guidelines of Section 382 of the Internal Revenue Code of 1986. At year-end 2016, the Company had net operating loss carryforwards of  $23,059, which expire at various dates from 2024 to 2033, and has alternative minimum tax credit carryforwards of $50, which do not expire. As a result of the ownership change, the Company's ability to utilize carryforwards that arose before the stock offering closed is limited to $163 per year. Due to this limitation, management determined it is more likely than not that $20,520 of net operating loss carryforwards will expire unutilized. As required by 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$765 at year-end 2016.  However, if CFBank were wholly or partially liquidated or otherwise ceases to be a bank, or if tax laws were to change, this amount would have to be recaptured and a tax liability recorded.  Additionally, any distributions in excess of CFBank’s current or accumulated earnings and profits would reduce amounts allocated to its bad debt reserve and create a tax liability for CFBank. The amount of additional taxable income created by such a distribution is an amount that, when reduced by the tax attributable to the income, is equal to the amount of the distribution. Thus, if CFBank were to make a distribution that reduced the amount allocated to its bad debt reserve, then approximately one and one-half times the amount used would be includible in gross income for federal income tax purposes, assuming a 34% corporate income tax rate. CFBank does not intend to make distributions that would result in a recapture of any portion of its bad debt reserve.

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Related-Party Transactions

12 Months Ended

Dec. 31, 2016

Related-Party Transactions [Abstract]

Related-Party Transactions

NOTE 15 – RELATED-PARTY TRANSACTIONS

Loans to principal officers, directors and their affiliates during 2016 were as follows:

Beginning balance	$	635
New loans		1,826
Effect of changes in composition of related parties		-
Repayments		(62)
Ending balance	$	2,399

All loans to related parties were made 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 at year-end 2016 and 2015 were $274 and$262, respectively.

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Stock-Based Compensation

12 Months Ended

Dec. 31, 2016

Stock-Based Compensation [Abstract]

Stock-Based Compensation

NOTE 16 – STOCK-BASED COMPENSATION

The Company has issued awards under three stock-based compensation plans (the “Plans”), as described below.  Total compensation cost that has been charged against income for those Plans totaled $122 and $134 for 2016 and 2015, respectively.  The total income tax benefit was $35 and $13 for 2016 and 2015, respectively.

The Plans are all stockholder-approved and authorize stock option grants and restricted stock awards to be made to directors, officers and employees. The 1999 Stock-Based Incentive Plan, which expired July 13, 2009, provided 38,778 shares of common stock for stock option grants and 15,511 shares of common stock for restricted stock awards.  The 2003 Equity Compensation Plan (the “2003 Plan”), as amended and restated, provided an aggregate of 100,000 shares for stock option grants and restricted stock awards, of which up to 30,000 shares could be awarded in the form of restricted stock awards.  The 2009 Equity Compensation Plan (the “2009 Plan”), which was approved by stockholders on May 21, 2009, replaced the 2003 Plan and provided for 200,000 shares, plus any remaining shares available to grant or that are later forfeited or expire under the 2003 Plan, to be made available to be issued as stock option grants, stock appreciation rights or restricted stock awards.  On May 16, 2013, the Company’s stockholders approved the First Amendment to the 2009 Plan to increase the number of shares of common stock reserved for stock option grants and restricted stock awards thereunder to 1,500,000. 

Stock Options:

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

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

There were no stock options granted or exercised during the years ended December 31, 2016 and December 31, 2015. 

A summary of stock option activity in the Plans for 2016 follows:

	Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Intrinsic Value
Outstanding at beginning of year	566,696	$	1.48
Cancelled or Forfeited	(23,950)		2.01
Outstanding at end of period	542,746	$	1.46	6.4	$	198,040
Expected to vest	-	$	-	-	$	-
Exercisable at end of period	542,746	$	1.46	6.4	$	198,040

During the year ended December 31, 2016, there were 23,950 stock options canceled or forfeited.  Expense associated with unvested forfeited shares is reversed. As of December 31, 2016, all stock options granted under the Plans were vested.

Restricted Stock Awards:

The Plans also permit the grant of restricted stock awards to directors, officers and employees. Compensation is recognized over the vesting period of the awards based on the fair value of the stock at grant date.  The fair value of the stock is determined using the closing share price on the date of grant and shares generally have vesting periods of one to three years.  There were 292,000 shares of restricted stock issued in 2016 and200,500 shares of restricted stock issued in 2015. 

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

Nonvested Shares	Shares	Weighted Average Grant-Date Fair Value
Nonvested at January 1, 2016	200,500	$	1.37
Granted	292,000		1.64
Vested	(66,834)		1.37
Forfeited	-		-
Nonvested at December 31, 2016	425,666	$	1.56

As of December 31, 2016 and 2015, the unrecognized compensation cost related to nonvested shares granted under the Plans was $642 and $272, respectively.   There were 66,834 shares that vested during the year ended December 31, 2016.  

There were 539,792 shares remaining available for stock option grants and restricted stock awards under the 2009 Plan at December 31, 2016.

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Preferred Stock

12 Months Ended

Dec. 31, 2016

Preferred Stock [Abstract]

Preferred Stock

NOTE 17 – PREFERRED STOCK 

Series B Preferred Stock:

Commencing in April 2014, the Company conducted a private placement of up to 480,000 shares of its 6.25% Non-Cumulative Convertible Perpetual Preferred Stock, Series B (“Series B Preferred Stock”) for an offering price of $25.00 per share (the “Private Placement”).  Pursuant to the Private Placement, the Company sold an aggregate of 480,000 shares of Series B Preferred Stock on May 12, 2014 and July 15, 2014, for an aggregate offering price of $12,000.  The Series B Preferred Stock was sold by the Company with the assistance of McDonald Partners, LLC, as placement agent, on a best efforts basis.  After payment of approximately $482 in placement fees to McDonald Partners, LLC and approximately $149 of other offering expenses, the Company’s net proceeds from its sale of the 480,000 shares of Series B Preferred Stock in the Private Placement were approximately $11,369.  

For each share of Series B Preferred Stock sold in the Private Placement, the Company also agreed to issue, at no additional charge, a Warrant to purchase (i) 2.00 shares of common stock of the Company if the purchaser purchased less than $700(28,000 shares) of Series B Preferred Stock in the Private Placement, or (ii) 3.25 shares of common stock if the purchaser purchased $700(28,000 shares) or more of Series B Preferred Stock in the Private Placement.  See Note 18-Common Stock Warrants for additional information.  

The Series B Preferred Stock and Warrants have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or under the securities laws of any state in reliance upon exemptions from registration thereunder, including the exemptions provided under Section 4(a)(2) of the Securities Act and Rule 506(b) promulgated thereunder.  The Series B Preferred Stock and Warrants were sold solely to “accredited investors” as defined in Rule 501(a), and neither the Series B Preferred Stock or Warrants, nor any shares of common stock of the Company into which the Series B Preferred Stock may be converted or for which the Warrants may be exercised, may be resold for a period of at least six months from the date of issue without registration or an exemption from registration under the Securities Act and applicable state securities laws.  However, the Company has agreed to provide certain registration rights to the holders of the Warrants pursuant to the terms of a Registration Rights Agreement between the Company and each purchaser of Series B Preferred Stock and Warrants in the Private Placement.

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Common Stock Warrants

12 Months Ended

Dec. 31, 2016

Common Stock Warrants [Abstract]

Common Stock Warrants

NOTE 18 – COMMON STOCK WARRANTS

Series B Preferred Stock – Warrants:

For each share of Series B Preferred Stock issued by the Company in the Private Placement, the Company also issued, at no additional charge, a Warrant to purchase (i) 2.00 shares of common stock of the Company if the purchaser purchased less than $700  (28,000 shares) of Series B Preferred Stock in the Private Placement, or (ii) 3.25 shares of common stock if the purchaser purchased $700  (28,000 shares) or more of Series B Preferred Stock in the Private Placement.  Warrants to purchase an aggregate of 1,152,125 shares of common stock were issued by the Company to the purchasers of the 480,000 shares of Series B Preferred Stock sold in the Private Placement.  Subject to certain limitations, the Warrants are exercisable for a period of approximately five (5) years expiring on July 15, 2019, at a cash purchase price of $1.85 per share of common stock.

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Regulatory Capital Matters

12 Months Ended

Dec. 31, 2016

Regulatory Capital Matters [Abstract]

Regulatory Capital Matters

NOTE 19 – 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.

In July 2013, the Holding Company’s primary federal regulator, the FRB, published final rules (the “Basel III Capital Rules”) establishing a new comprehensive capital framework for U.S. banking organizations.  The rules implement the Basel Committee's December 2010 framework known as “Basel III” for strengthening international capital standards as well as certain provisions of the Dodd-Frank Act.  The Basel III Capital Rules provide higher capital requirements and more restrictive leverage and liquidity ratios than those previously in place.  In addition, in order to avoid limitations on capital distributions, such as dividend payments and certain bonus payments to executive officers, the Basel III Capital Rules require insured financial institutions to hold a capital conservation buffer of common equity tier 1 capital above the minimum risk-based capital requirements.  The capital conservation buffer will be phased in over time, becoming fully effective on January 1, 2019, and will consist of an additional amount of common equity equal to 2.5% of risk-weighted assets.  The Basel III Capital Rules revise the regulatory agencies' prompt corrective action framework by incorporating the new regulatory capital minimums and updating the definition of common equity.  The Basel III Capital Rules became effective for the Company on January 1, 2015, and will be fully phased in by January 1, 2019.  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”).  CBank’s implementation of the new rules on January 1, 2015 did not have a material impact on our capital needs or classifications.

When fully phased in on January 1, 2019, the Basel III Capital Rules will 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% upon full implementation); 2) a minimum ratio of Tier 1 capital to risk-weighted assets of 6.0%, plus the capital conservation buffer (resulting in a minimum of Tier 1 capital ratio of 8.5% upon full implementation); 3) a minimum ratio of Total capital to risk-weighted assets of 8.0%, plus a capital conservation buffer (resulting in a minimum Total capital ratio of 10.5% upon full implementation); and 4) a minimum Leverage Ratio of 4.0%.

The implementation of the capital conservation buffer began on January 1, 2016 at the 0.625% level and will be phased in over a four year period increasing by increments of that amount on each subsequent January 1 until it reaches 2.5% on January 1, 2019.  The capital conservation buffer is designed to absorb losses during periods of economic stress.  Failure to maintain the minimum Common Equity Tier 1 capital ratio plus the capital conservation buffer will result in potential restrictions on a banking institution’s ability to pay dividends, repurchase stock and/or pay discretionary compensation to its employees.

The CFBank Order required CFBank to have an 8% Tier 1 (Core) Capital to adjusted total assets and 12% Total Capital to risk weighted assets.CFBank remained subject to the heightened capital requirements imposed by the OCC and was required to maintain an 8% Tier 1 (core) Capital ratio to adjusted total assets and 12% Total Capital to risk weighted assets, until December 23, 2015.See Note 2.-Regulatory Matters for additional information.

Actual and required capital amounts and ratios are presented below at year end:

											To Be Well
					Minimum Capital			Minimum Capital			Capitalized Under
					Required-Basel III			Required-Basel III			Applicable Regulatory
		Actual			Phase-In Schedule			Fully Phased-In			Capital Standards
		Amount	Ratio		Amount	Ratio		Amount	Ratio		Amount	Ratio
December 31, 2016
Total Capital to risk
weighted assets	$	45,118	12.46%	$	31,256	8.63%	$	38,029	10.50%	$	36,218	10.00%
Tier 1 (Core) Capital to risk
weighted assets		40,556	11.20%		24,013	6.63%		30,785	8.50%		28,974	8.00%
Common equity tier 1 capital
to risk-weighted assets		40,556	11.20%		18,580	5.13%		25,353	7.00%		23,542	6.50%
Tier 1 (Core) Capital to
adjusted total assets (Leverage ratio)		40,556	9.66%		16,792	4.00%		16,792	4.00%		20,991	5.00%

								To Be Well
								Capitalized Under			Required
					For Capital			Applicable Regulatory			Pursuant to
		Actual			Adequacy Purposes			Capital Standards			OCC Commitment (1)
		Amount	Ratio		Amount	Ratio		Amount	Ratio		Amount	Ratio
December 31,2015
Total Capital to risk
weighted assets	$	41,528	13.67%	$	24,310	8.00%	$	30,388	10.00%	$	N/A	N/A
Tier 1 (Core) Capital to risk
weighted assets		37,694	12.40%		18,233	6.00%		24,310	8.00%		N/A	N/A
Common equity tier 1 capital
to risk-weighted assets		37,694	12.40%		13,675	4.50%		19,752	6.50%		N/A	N/A
Tier 1 (Core) Capital to
adjusted total assets		37,694	11.12%		13,557	4.00%		16,946	5.00%		N/A	N/A

⁽¹⁾ The heightened capital requirements were applicable to CFBank until December 23, 2015, under the CFBank Order and the subsequent commitments made by CFBank to the OCC.See Note 2- Regulatory Matters for additional information.

The Qualified Thrift Lender (QTL) test requires savings associations to maintain at least 65% of assets in housing-related finance and other specified areas.  If this test is not met, limits are placed on growth, branching, new investments, FHLB advances and dividends. Management believes that this test was met by CFBank at December 31, 2015.  Effective December 1, 2016, CFBank converted from a federal savings association to a national bankand, as a result, is no longer subject to the QTL requirements.

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 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:

The Holding Company’s principal source of funds for dividend payments is dividends received from CFBank. Banking regulations limit the amount of dividends that may be paid without prior approval of regulatory agencies. Under these regulations, the amount of dividends that may be paid in any calendar year is limited to the current year’s net profits, combined with the retained net profits of the preceding two years, subject to the capital requirements described above.  Any future dividend payments by CFBank to the Holding Company would be based on future earnings and, if necessary, regulatory approval. 

Prior to January 8, 2016, any dividends by the Holding Company on its common stock or Series B Preferred Stock, and any dividends or capital contributions by CFBank to the Holding Company, were also subject to the commitments made by the Holding Company and CFBank in connection with the release of the Orders.  The Holding Company received prior approval from the FRB for the payment of quarterly cash dividends on its Series B Preferred Stock in each of the previous quarters commencing with the first dividend payment on July 15, 2014 through the dividend payment on January 15, 2016. 

The Holding Company’s ability to pay dividends on its stock is also conditioned upon the payment, on a current basis, of quarterly interest payments on the subordinated debentures underlying the Company’s trust preferred securities.  Additionally, so long as the Company’s Series B Preferred Stock remains outstanding, the Holding Company will be prohibited from paying dividends (other than dividends payable solely in shares) on the Company’s common stock for the then-current dividend period, unless full dividends on the Series B Preferred Stock have been paid or set aside for payment.  Dividends on the Series B Preferred Stock are non-cumulative, which means that if for any reason we do not declare cash dividends on the Series B Preferred Stock for a quarterly dividend period we will have no obligation to pay any dividends for that period (i.e., the dividends will not accrueor cumulate), whether or not we declare dividends on the Series B Preferred Stock for any subsequent dividend period.

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 14-Income taxes.

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Derivative Instruments

12 Months Ended

Dec. 31, 2016

Derivative Instruments [Abstract]

Derivative Instruments

NOTE 20 – DERIVATIVE INSTRUMENTS

Interest-rate swaps:

CFBank utilizes interest-rate swaps as part of its asset liability management strategy to help manage its interest rate risk position and does not use derivatives for trading purposes.  The notional amount of the interest-rate swaps does not represent amounts exchanged by the parties.  The amount exchanged is determined by reference to the notional amount and the other terms of the individual interest-rate swap agreements.  CFBank was party to interest-rate swaps with a combined notional amount of $2,280 at December 31, 2016 and $2,877 at December 31, 2015.

The objective of the interest-rate swaps is to protect the related fixed-rate commercial real estate loans from changes in fair value due to changes in interest rates.  CFBank has a program whereby it lends to its borrowers at a fixed-rate with the loan agreement containing a two-way yield maintenance provision, which will be invoked in the event of prepayment of the loan, and is expected to exactly offset the fair value of unwinding the swap.  The yield maintenance provision represents an embedded derivative which is bifurcated from the host loan contract and, as such, the swaps and embedded derivatives are not designated as hedges.  Accordingly, both instruments are carried at fair value and changes in fair value are reported in current period earnings.CFBank currently does not have any derivatives designated as hedges. 

Contingent Features:Thecounterparty to CFBank’sinterest-rate swaps is exposed to credit risk whenever the interest-rate swaps are inaliability position. At December 31, 2016, CFBankhad $695 in securities and cash pledged as collateral for these derivatives. Shouldthe liability increase beyond the collateral value, CFBank will be required to pledge additional collateral. 

Additionally, CFBank’s interest-rate swap instruments contain provisions that require CFBank to remain well capitalized under regulatory capital standards. The interest-rate swaps may be called by the counterparty if CFBank fails to maintain well-capitalized status under regulatory capital standards.  As of December 31, 2016, CFBank was well-capitalized under regulatory capital standards.

Summary information about the derivative instruments is as follows:

	2016		2015
Notional amount	$	2,280	$	2,877
Weighted average pay rate on interest-rate swaps		3.74%		3.67%
Weighted average receive rate on interest-rate swaps		0.75%		0.39%
Weighted average maturity (years)		3.1		4.0
Fair value of interest-rate swaps	$	(122)	$	(213)
Fair value of yield maintenance provisions	$	122	$	213

The fair value of the yield maintenance provisions and interest-rate swaps is recorded in other assets and other liabilities, respectively, in the consolidated balance sheet.  Changes in the fair value of the yield maintenance provisions and interest-rate swaps are reported currently in earnings, as other noninterest income in the consolidated statements of income.  There were no net gains or losses recognized in earnings related to yield maintenance provisions and interest-rate swaps in 2016 or 2015.

Mortgage banking derivatives:

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 approximately $2,164 and $1,560 of interest rate lock commitments related to residential mortgage loans at December 31, 2016 and 2015, respectively.  The fair value of these mortgage banking derivatives was reflected by a derivative asset of $8 and $8 at December 31, 2016 and 2015, respectively, which was included in other assets in the consolidated balance sheet. Fair values were estimated based on anticipated gains on the sale of the underlying loans. Changes in the fair values of these mortgage banking derivatives are included in net gains on sales of loans. Net gains (losses) recognized in earnings related to these mortgage banking derivatives totaled $7 and($28) in 2016 and2015, respectively.

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Loan Commitments And Other Related Activities

12 Months Ended

Dec. 31, 2016

Loan Commitments And Other Related Activities [Abstract]

Loan Commitments And Other Related Activities

NOTE 21 – 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. Off‑balance-sheet risk to credit loss exists up to the face amount of these instruments, although material losses are not anticipated.  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:

	2016				2015
	Fixed Rate		Variable Rate		Fixed Rate		Variable Rate
Commitments to make loans	$	21,335	$	22,171	$	4,623	$	15,187
Unused lines of credit	$	3,714	$	29,621	$	647	$	19,764
Standby letters of credit	$	991	$	-	$	1,154	$	-

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 year, and loans under a specific drawdown schedule, which are based on the individual contracts.  The fixed-rate loan commitments had interest rates ranging from 1.75% to 6.50% and maturities ranging from 2months to 30 years at December 31, 2016. The fixed-rate loan commitments had interest rates ranging from 4.25% to 6.50%and maturities ranging from3 months to 14 years at December 31, 2015.

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Parent Company Only Condensed Financial Information

12 Months Ended

Dec. 31, 2016

Parent Company Only Condensed Financial Information [Abstract]

Parent Company Only Condensed Financial Information

NOTE 22 – PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION

Condensed financial information of Central Federal Corporation follows:

	2016		2015
Assets
Cash and cash equivalents	$	2,197	$	2,673
Investment in banking subsidiary		41,448		37,745
Investment in and advances to other subsidiary		225		222
Other assets		901		3,112
Total assets	$	44,771	$	43,752
Liabilities and Equity
Subordinated debentures	$	5,155	$	5,155
Accrued expenses and other liabilities		324		285
Stockholders' equity		39,292		38,312
Total liabilities and stockholders' equity	$	44,771	$	43,752

	2016		2015
Interest income	$	2	$	1
Other income		131		291
Interest expense		185		164
Other expense		646		548
Loss before income tax and undistributed subsidiary income		(698)		(420)
Tax effect		236		1,798
Gain (loss) after income tax and undistributed subsidiary income		(462)		1,378
Equity in undistributed subsidiary income		2,089		3,099
Net income	$	1,627	$	4,477
Comprehensive income	$	1,638	$	4,417

	2016		2015
Cash flows from operating activities
Net Income	$	1,627	$	4,477
Adjustments:
Effect of subsidiaries' operations		(2,089)		(3,099)
Change in other assets and other liabilities		766		(980)
Net cash from (used by) operating activities		304		398
Cash flows from financing activities
Purchase of treasury shares		(30)		-
Dividends paid on Series B preferred stock		(750)		(750)
Net cash from (used by) financing activities		(780)		(750)
Net change in cash and cash equivalents		(476)		(352)
Beginning cash and cash equivalents		2,673		3,025
Ending cash and cash equivalents	$	2,197	$	2,673

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Earnings (Loss) Per Common Share

12 Months Ended

Dec. 31, 2016

Earnings (Loss) Per Common Share [Abstract]

Earnings (Loss) Per Common Share

NOTE 23 – EARNINGS (LOSS) 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 unvested share-based payment awards according to dividends declared (or accumulated) and participation rights in undistributed earnings.  The factors used in the earnings per share computation follow:

	December 31, 2016		December 31, 2015
Basic
Net income	$	1,627	$	4,477
Dividends on Series B  preferred stock and accretion of discount		(857)		(857)
Net income allocated to common stockholders	$	770	$	3,620
Weighted average common shares outstanding including unvested share-based payment awards		16,020,847		15,857,127
Less: Unvested share-based payment awards		-		-
Average shares		16,020,847		15,857,127
Basic earnings per common share	$	0.05	$	0.23
Diluted
Net earnings allocated to common stockholders	$	770	$	3,620
Add back: Preferred Dividends on Series B stock		-		857
Net earnings allocated to fully-diluted	$	770	$	4,477
Weighted average common shares outstanding for basic earnings per common share		16,020,847		15,857,127
Add: Dilutive effects of assumed exercises of stock options		38,184		8,473
Add: Dilutive effects of assumed exercises of Series B preferred stock		-		6,857,143
Average shares and dilutive potential common shares		16,059,031		22,722,743
Diluted earnings per common share	$	0.05	$	0.20

The following potential common shares were anti-dilutive and not considered in computing diluted earnings (loss) per common share.

	2016	2015
Stock options	282,971	417,058
Series B preferred stock	6,857,143	-
Stock warrants	1,152,125	1,152,125

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Contingent Liabilities

12 Months Ended

Dec. 31, 2016

Contingent Liabilities [Abstract]

Contingent Liabilities

NOTE 24 - 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.

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Accumulated Other Comprehensive Income

12 Months Ended

Dec. 31, 2016

Accumulated Other Comprehensive Income [Abstract]

Accumulated Other Comprehensive Income

NOTE 25 - ACCUMULATED OTHER COMPREHENSIVE INCOME

The following table summarizes the changes within each classification of accumulated other comprehensive income, net of tax, for the year ended December 31, 2016 and December 31, 2015 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, 2016 and 2015  (1)
	Unrealized Gains and Losses on Available-for-Sale Securities
	2016		2015
Accumulated other comprehensive income (loss), beginning of period	$	(9)	$	51
Other comprehensive gain (loss) before reclassifications		11		(72)
Less amount reclassified from accumulated other comprehensive loss (2)		-		12
Net current-period other comprehensive income (loss)		11		(60)
Accumulated other comprehensive income (loss), end of period	$	2	$	(9)

⁽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 year ended December 31, 2016.  There was $12 reclassified out of other comprehensive income for year ended December 31, 2015 due to an early redemption of a municipal security.

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Summary of Significant Accounting Policies (Policy)

12 Months Ended

Dec. 31, 2016

Summary Of Significant Accounting Policies [Abstract]

Nature of Operations and Principles of Consolidation

Nature of Operations and Principles of Consolidation: 

The consolidated financial statements include Central Federal Corporation (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.  The Holding Company and CFBank are sometimes collectively referred to herin as the “Company”.  Intercompany transactions and balances are eliminated in consolidation. 

CFBank provides financial services through its four full-service banking offices in Fairlawn, Calcutta, Wellsville and Worthington, Ohio, and through its agency office in Woodmere, Ohio.  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

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 loan and lease losses (ALLL), deferred tax assets and fair values of financial instruments are particularly subject to change.

Cash Flows

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.

Interest-Bearing Deposits in Other Financial Institutions

Interest-Bearing Deposits in Other Financial Institutions:  Interest‑bearing deposits in other financial institutions mature in April, 2019 and are carried at cost.  As of December 31, 2016, there was $100 inan interest-bearing deposit in other financial institutions.

Securities

Securities:  Debt securities are classified as available for sale when they might be sold before maturity. Equity securities with readily determinable fair values are classified as available for sale.  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 without anticipating prepayments, 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.

Management evaluates securities for other-than-temporary impairment (OTTI) at least on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation.  For securities in an unrealized loss position, management considers the extent and duration of the unrealized loss and the financial condition and near-term prospects of the issuer.  Management also assesses whether it intends to sell, or will more likely than not be required to sell, a security in an unrealized loss position before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the entire difference between amortized cost and fair value is recognized as impairment through earnings.  For debt securities that do not meet the aforementioned criteria, the amount of impairment is split into two components as follows: 1) OTTI related to credit loss, which must be recognized in the income statement and 2) OTTI related to other factors, which is recognized in other comprehensive income.  The credit loss is defined as the difference between the present value of the cash flows expected to be collected and the amortized cost basis. For equity securities, the entire amount of impairment is recognized through earnings.

Loans Held for Sale

Loans Held for Sale:  Mortgage loans originated and intended for sale in the secondary market are carried at fair value, 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.  Loans originated as construction loans, that were subsequently transferred to held for sale, are carried at the lower of cost or market.  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 Lease

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 loan and lease losses (ALLL).  Interest income is accrued on the unpaid principal balance.  Loan origination fees, net of certain direct origination costs, are deferred and recognized in interest income using the level‑yield method without anticipating prepayments. 

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

All interest accrued but not received for loans placed on nonaccrual is reversed against interest income in the period in which it is placed in a nonaccrual status.  Interest received on such loans is accounted for on the cash-basis or cost‑recovery method, until qualifying for return to accrual status.  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

Concentration of Credit Risk:  Most of the Company’s primary business activity is with customers located within the Ohio counties of Columbiana, Franklin, Summit, Cuyahoga 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 Loan Losses (ALLL)

Allowance for Loan and Lease Losses (ALLL):  The ALLL is a valuation allowance for probable incurred credit losses.  Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed.  Subsequent recoveries, if any, are credited to the allowance.  Management estimates the allowance balance required using past loan loss experience, the nature and volume of the portfolio, information about specific borrower situations and estimated collateral values, economic conditions, and other factors.  Allocations of the allowance may be made for specific loans, but the entire allowance is available for any loan that, in management’s judgment, should be charged off.

The allowance consists of specific and general components.  The specific component relates to loans that are individually classified as impaired. A loan is impaired when, based on current information and events, it is probable that CFBank will be unable to collect all amounts due according to the contractual terms of the loan agreement.  Loans within any loan class for which the terms have been modified resulting in a concession, and for which the borrower is experiencing financial difficulties, are considered troubled debt restructurings (TDRs) and classified as impaired.  

Factors considered by management in determining impairment for all loan classes include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired.  Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record and the amount of the shortfall in relation to the principal and interest owed.

All loans within the commercial, multi-family residential and commercial real estate segments, regardless of size, and loans of all other classes with balances over $250 are individually evaluated for impairment when they are 90 days past due, or earlier than 90 days past due if information regarding the payment capacity of the borrower indicates that payment in full according to the loan terms is doubtful.  If a loan is impaired, a portion of the allowance is allocated so that the loan is reported, net, at the present value of estimated future cash flows using the loan’s existing rate, or at the fair value of collateral, less costs to sell, if repayment is expected solely from the collateral.  Large groups of smaller balance homogeneous loans, such as consumer and single-family residential real estate loans, are collectively evaluated for impairment, and accordingly, they are not separately identified for impairment disclosures.

TDRs of all classes of loans are separately identified for impairment disclosures and are measured at the present value of estimated future cash flows using each loan’s effective rate at inception.  If a TDR is considered to be a collateral dependent loan, the loan is reported, net, at the fair value of the collateral. If the payment of the loan is dependent on the sale of the collateral, then costs to liquidate the collateral are included when determining the impairment.  For TDRs that subsequently default, the amount of reserve is determined in accordance with the accounting policy for the ALLL.

Interest income on all classes of impaired loans that are on nonaccrual status is recognized in accordance with the accounting policy for nonaccrual loans.  Cash receipts on all classes of impaired loans that are on nonaccrual status are generally applied to the principal balance outstanding.  Interest income on all classes of impaired loans that are not on nonaccrual status is recognized on the accrual method. TDRs may be classified as accruing if the borrower has been current for a period of at least six months with respect to loan payments and management expects that the borrower will be able to continue to make payments in accordance with the terms of the restructured note.

The general reserve component covers non‑impaired loans of all classes and is based on historical loss experience adjusted for current factors.  The historical loss experience is determined by loan class and is based on the actual loss history experienced by the Company over a three-year period.  The general component is calculated based on CFBank’s loan balances and actual historical three-year historical loss rates.  For loans with little or no actual loss experience, industry estimates are used based on loan segment. This actual loss experience is supplemented with other economic and judgmental factors based on the risks present for each loan class.  These economic and judgmental factors include consideration of the following:  levels of and trends in delinquencies and impaired loans; levels of and trends in charge-offs and recoveries; trends in volume and terms of loans; effects of any changes in risk selection and underwriting standards; other changes in lending policies, procedures, and practices; experience, ability, and depth of lending management and other relevant staff; national and local economic trends and conditions; industry conditions; and effects of changes in credit concentrations.

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 include loans to businesses generally located within our primary market area. Those 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.  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 located within and outside of 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 single-family residential real estate loans for portfolio in amounts up to 85% of the lower of the appraised value or the purchase price of the property securing the loan, without requiring private mortgage insurance.  Loans in excess of 85% of the lower of the appraised value or purchase price of the property securing the loan require private mortgage insurance.  CFBank has not engaged in subprime lending, used option adjustable-rate mortgage products or made loans with initial teaser rates.

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 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 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 and adjustable-rate loans. Fixed-rate loans are generally limited to three 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 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 above the prime rate of interest as disclosed in The Wall Street Journal. The margin is based on certain factors including the loan balance, value of collateral, election of auto-payment, and the borrower’s FICO® score.  The 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.  Collectability 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. In 2005 and 2006, we purchased home equity lines of credit collateralized by properties located throughout the United States. The purchased home equity lines of credit may present higher risk than the home equity lines of credit we originate for our portfolio as they include properties in geographic areas that have experienced significant declines in housing values, such as California, Florida and Virginia.  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.

Other consumer loans:  Other consumer loans include closed-end home equity, home improvement, and auto and credit card 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.

Transfers of Financial Assets

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

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.

Joint Ventures

Joint Ventures:  The Holding Company contributed funds into a series of joint ventures (equity stake) for the purpose of allocating excess liquidity into higher earning assets while diversifying its revenue sources.  The funding for the joint ventures is related to shorter term operating activities and is related to the development of single family real estate in the form of condominiums.  Income is recognized based on a rate of return on the outstanding investment balance.  As units are sold, the Holding Company receives an additional incentive payment; the incentive payment is recognized as income. The balance outstanding in joint ventures at December 31, 2016 and December 31, 2015 was $325 and $1,285, respectively.  Income recognized on the joint ventures was $100 and $265, respectively, for 2016 and 2015.

Premises and Equipment

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 to 40 years. Furniture, fixtures and equipment are depreciated using the straight‑line method with useful lives ranging from 2 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

Federal Home Loan Bank (FHLB) stock:  CFBank is a member of the FHLB system.  Members are required to own a certain amount of 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.

Bank Owned Life Insurance

Bank Owned Life Insurance:  CFBank purchased life insurance policies on certain directors and employees in 2002.  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

Loan Commitments and Related Financial Instruments:  Financial instruments include off‑balance-sheet credit instruments, such as commitments to make loans and commercial letters of credit, issued to meet customer financing needs.  The face amount for these items represents the exposure to loss, before considering customer collateral or ability to repay.  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

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 considered instruments with no hedging designation, otherwise known as stand-alone derivatives.  Changes in the fair value of the derivatives are reported currently in earnings, as other noninterest income.

Mortgage Banking Derivatives

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.  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

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.

Income Taxes

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 full valuation allowance was recorded in 2009 to reduce the carrying amount of the Company’s net deferred tax asset to zero.  This valuation allowance was reversed in the fourth quarter of 2015.  See Note 14 – Income Taxes.

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

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.

Reverse Stock Split

Reverse Stock Split:    Reclassifications did not impact prior period net loss or total stockholders' equity.  On May 4, 2012, the Company completed a 1-for-5 reverse stock split, whereby every 5 shares of the Company’s common stock were reclassified into one share of common stock.All share and per share amounts for all periods presented have been adjusted to reflect the reverse split as though it had occurred prior to the earliest period presented.

Earnings (Loss) Per Common Share

Earnings Per Common Share:  Basic earnings per common share is net income available to common stockholders divided by the weighted average number of common shares outstanding during the period.  All outstanding unvested share-based payment awards that contain rights to nonforfeitable dividends are considered participating securities for this calculation.  Diluted earnings per common share includes the dilutive effect of additional potential common shares issuable under stock options.  Earnings and dividends per share are restated for all reverse stock splits through the date of issuance of the financial statements.

Comprehensive Income (Loss)

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

Loss Contingencies

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 believe there are any such matters that will have a material effect on the financial statements.  See Note 24 – Contingent Liabilities.

Restrictions on Cash

Restrictions on Cash:  Cash on hand or on deposit with the Federal Reserve Bank (FRB) is required to meet regulatory reserve and clearing requirements. The reserve requirement at December 31, 2016 was $267.  Cash on deposit with the FHLB includes $3,300 pledged as collateral for FHLB advances. 

Equity

Equity:  Treasury stock is carried at cost. The carrying value of preferred stock and the common stock warrant is based on allocation of issuance proceeds, net of issuance costs, in proportion to their relative fair values.  Preferred stock is carried net of the discount established through the allocation of proceeds.

Dividend Restriction

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 and Series B Preferred Stock is generally dependent upon the receipt of dividends and other distributions from CFBank.  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.  Prior to January 8, 2016, pursuant to the commitments made to the FRB in connection with the termination of the Holding Company Order (as further discussed in Note 2), the Holding Company was not permitted to declare or pay dividends on its stock without the prior approval or written non-objection of the FRB.  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, so long as the Company’s Series B Preferred Stock remains outstanding, the Holding Company will be prohibited from paying dividends on (other than dividends payable solely in shares) the Company’s common stock, for the then-current dividend period, unless full dividends on the Series B Preferred Stock have been paid or set aside for payment.  Dividends on the Series B Preferred Stock are non-cumulative, which means that if for any reason we do not declare cash dividends on the Series B Preferred Stock for a quarterly dividend period we will have no obligation to pay any dividends for that period (i.e., the dividends will not accrue or cumulate), whether or not we declare dividends on the Series B Preferred Stock for any subsequent dividend period.

Fair Value of Financial Instruments

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.

Operating Segments

Operating Segments:  While management monitors and analyzes the revenue streams of the Company’s various products and services, the operations and financial performance is evaluated on a Company‑wide basis.  Operating results are not reviewed by senior management to make resource allocation or performance decisions.  Accordingly, all of the financial service operations are considered by management to be aggregated in one reportable operating segment. 

Reclassifications

Reclassifications:  Some items in the prior year financial statements were reclassified to conform to the current presentation.  Reclassifications had no effect on prior period net loss or stockholders’ equity.

Adoption of New Accounting Standards

Adoption of New Accounting Standards:

As extended by ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date,Accounting Standards update (ASU) No. 2014-09 and the clarifying ASUs are effective for public companies for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period.  Transitional guidance is included in the updates.  Earlier adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period.  While interest income is specifically out of scope of this standard, management is currently evaluating the revenue streams within “noninterest income” to assess the applicability of this standard.  Since the Company’s products are substantially financial in nature, adoption of ASU No. 2015-14is not expected to have a material impact on the Company’s consolidated financial statements.

In June 2014 the FASB issued ASU No. 2014-12, Compensation - Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (June 2014).  This Update defines the accounting treatment for share-based payments and “resolves the diverse accounting treatment of those awards in practice.” The new requirement mandates that “a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition.”  Compensation cost will now be recognized in the period in which it becomes likely that the performance target will be met.   The amendments in this Update are effective for annual reporting periods beginning after December 15, 2015. Early adoption is permitted.    Adoption of the ASU 2014-12 on January 1, 2016 did not have an impact on the Company's accounting disclosures.

The FASB has issued ASU No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes, which changes how deferred taxes are classified on organizations’ balance sheets.  The ASU eliminates the current requirement for organizations to present deferred tax liabilities and assets as current and noncurrent in a classified balance sheet. Instead, organizations will be required to classify all deferred tax assets and liabilities as noncurrent.  The amendments apply to all organizations that present a classified balance sheet. For public companies, the amendments are effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Adoption of the ASU is not expected to have a significant effect on the Company's consolidated financial statements.

In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.  ASU 2016-01 amends the guidance in U.S. GAAP on the accounting for equity investments, financial liabilities under the fair value option and the presentations and disclosure requirements of financial instruments.  ASU 2016-01 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years.  Early adoption is permitted for the accounting guidance on financial liabilities under the fair value option.  The Company will adopt the methodologies prescribed by the ASU by the date required.  The Company continues to evaluate this standard, however, adoption of the ASU is not expected to have a significant impact on the Company’s consolidated financial statements.

On February 25, 2016, FASB issued ASU No. 2016-02, Leases (Topic 842).  Under the new ASU, lessees will recognize lease assets and liabilities on their balance sheet for all leases with terms of more than 12 months.  The new lessee accounting model retains two types of leases, and is consistent with the lessee accounting model under existing GAAP.  One type of lease (finance leases) will be accounted for in substantially the same manner as capital leases are accounted for today.  The other type of lease (operating leases) will be accounted for (both in the income statement and statement of cash flows) in a manner consistent with today’s operating leases.  Lessor accounting under the new standard is fundamentally consistent with existing GAAP.  Lessees and lessors would be required to provide additional qualitative and quantitative disclosures to help financial statement users assess the amount, timing, and uncertainty of cash flows arising from leases.  These disclosures are intended to supplement the amounts recorded in the financial statements so that users can understand more about the nature of an organization’s leasing activities.  For public business entities, the final leases standard will be effective for fiscal years beginning after December 15, 2018 including interim periods within those fiscal years.  Early application is permitted.  The Company continues to evaluate the provision of the new lease standard but, due to the small number of lease agreements presently in effect for the Company, believes the new guidance will not have a significant impact on the Company’s consolidated financial statements.

The FASB has issued ASU No. 2015-03, Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs.  The amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts.  The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU.  For public business entities, the amendments are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years.  The amendments should be applied on a retrospective basis, wherein the balance sheet of each individual period presented should be adjusted to reflect the period-specific effects of applying the new guidance.  Upon transition, an entity is required to comply with the applicable disclosures for a change in an accounting principle. These disclosures include the nature of and reason for the change in accounting principle, the transition method, a description of the prior-period information that has been retrospectively adjusted and the effect of the change on the financial statement line items, i.e., debt issuance cost asset and the debt liability.  The Company has adopted the methodologies prescribed by this ASU.  Adoption of the ASU did not have a significant effect on the Company's consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-07, Investments—Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting.  ASU No. 2016-07 affects all entities that have an investment that becomes qualified for the equity method of accounting as a result of an increase in the level of ownership interest or degree of influence.  The amendments in this update eliminate the requirement that, when an investment qualifies for use of the equity method, an investor must adjust the investment, results of operations, and retained earnings retroactively on a step-by-step basis as if the equity method had been in effect during all previous periods that the investment had been held.  ASU No. 2016-07 requires that the equity method investor add the cost of acquiring the additional interest in the investee to the current basis of the investor’s previously held interest and adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting.  The amendments also require that an entity that has an available-for-sale equity security that becomes qualified for the equity method of accounting recognize through earnings the unrealized holding gain or loss in accumulated other comprehensive income at the date the investment becomes qualified for use of the equity method.  The amendments in ASU No. 2016-07 are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016.  Earlier application is permitted.  Adoption of ASU No. 2016-07 is not expected to have a material impact on the Company’sconsolidated financial statements.

In March 2016, the FASB issuedASU No. 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.  ASU No. 2016-09 affects all entities that issue share-based payment awards to their employees.  The new guidance involves several aspects of the accounting for share-based payment transactions, including income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows.  Under ASU No. 2016-09, any excess tax benefits or tax deficiencies should be recognized as income tax expense or benefit in the income statement.  Excess tax benefits are to be classified as an operating activity in the statement of cash flows.  In accruing compensation cost, an entity can make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest, as required under current guidance, or account for forfeitures when they occur.  For an award to qualify for equity classification, an entity cannot partially settle the award in excess of the employer's maximum statutory withholding requirements.  Such cash paid by an employer when directly withholding shares for tax withholding purposes should be classified as a financing activity in the statement of cash flows.  The amendments in ASU No. 2016-09 are effective for public business entities for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2016.  Early adoption is permitted. Adoption of ASU No. 2016-07 is not expected to have a material impact on the Company’s consolidated financial statements.

The FASB has issued ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. The amendments clarify the following two aspects of Topic 606: (a) identifying performance obligations; and (b) the licensing implementation guidance. The amendments do not change the core principle of the guidance in Topic 606.  The effective date and transition requirements for the amendments are the same as the effective date and transition requirements in Topic 606. Public entities should apply the amendments for annual reporting periods beginning after December 15, 2017, including interim reporting periods therein (i.e., January 1, 2018, for a calendar year entity). Early application for public entities is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period.  While interest income is specifically out of scope of this standard, management is currently evaluating the revenue streams within “noninterest income’ to assess the applicability of this standard.Since the Company’s products are substantially financial in nature, adoption of ASU No. 2016-10is not expected to have a material impact on the Company’s consolidated financial statements.

The FASB has issued ASU No. 2016-11, Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting. This ASU rescinds SEC paragraphs pursuant to two SEC Staff Announcements at the March 3, 2016 Emerging Issues Task Force (EITF) meeting.  SEC Staff Announcement, “Rescission of Certain SEC Staff Observer Comments upon Adoption of Topic 606, Revenue from Contracts with Customers,” was announced at the March 3, 2016, EITF meeting. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). The SEC Staff is rescinding the following SEC Staff Observer comments that are codified in Topic 605, Revenue Recognition, and Topic 932, Extractive Activities—Oil and Gas, effective upon adoption of Topic 606, Revenue from Contracts with Customers. Specifically, registrants should not rely on the following SEC Staff Observer comments upon adoption of Topic 606: 

· Revenue and Expense Recognition for Freight Services in Process, which is codified in paragraph 605-20-S99-2;

· Accounting for Shipping and Handling Fees and Costs, which is codified in paragraph 605-45-S99-1;

· Accounting for Consideration Given by a Vendor to a Customer (including Reseller of the Vendor’s Products), which is codified in paragraph 605-50-S99-1; and

· Accounting for Gas-Balancing Arrangements (i.e., use of the “entitlements method”), which is codified in paragraph 932-10-S99-5.

While interest income is specifically out of scope of this standard, management is currently evaluating the revenue streams within “noninterest income’ to assess the applicability of this standard.Adoption of ASU No. 2016-11 is not expected to have a material impact on the Company’s consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.  Once effective,ASU No. 2016-13 will significantly change current guidance for recognizing impairment of financial instruments.  Current guidance requires an "incurred loss" methodology for recognizing credit losses that delays recognition until it is probable a loss has been incurred.  ASU No. 2016-13 replaces the incurred loss impairment methodology with a new methodology that reflects expected credit losses over the lives of the loans and requires consideration of a broader range of information to inform credit loss estimates.  The ASU requires an organization to estimate all expected credit losses for financial assets measured at amortized cost, including loans and held-to-maturity debt securities, based on historical experience, current conditions, and reasonable and supportable forecasts.  Additional disclosures are required.  ASU No. 2016-13 also amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration.  Under the new guidance, entities will determine whether all or a portion of the unrealized loss on an available-for-sale debt security is a credit loss.  Any credit loss will be recognized as an allowance for credit losses on available-for-sale debt securities rather than as a direct reduction of the amortized cost basis of the investment, as is currently required.  As a result, entities will recognize improvements to estimated credit losses on available-for-sale debt securities immediately in earnings rather than as interest income over time, as currently required.  ASU No. 2016-13 eliminates the current accounting model for purchased credit impaired loans and debt securities.  Instead, purchased financial assets with credit deterioration will be recorded gross of estimated credit losses as of the date of acquisition and the estimated credit losses amounts will be added to the allowance for credit losses.  Thereafter, entities will account for additional impairment of such purchased assets using the models listed above.  ASU No. 2016-13 will take effect for U.S. Securities and Exchange Commission (SEC) filers for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019.  Early application will be permitted for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018.  While the Company generally expects that the implementation of ASU 2016-13 has the potential to increase their allowance for loan losses balance, the Company is continuing to evaluate the potential impact on the Company’s financial statements.  Presentations have been made to the Board of Directors, and management is currently assessing any additional data and system requirements necessary for adoption.

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Securities (Tables)

12 Months Ended

Dec. 31, 2016

Securities [Abstract]

Amortized cost and fair value of available-for-sale securities portfolio

			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
December 31, 2016
Issued by U.S. government-sponsored entities and agencies:
U.S. Treasury	$	13,521	$	11	$	27	$	13,505
Mortgage-backed securities - residential		345		12		-		357
Collateralized mortgage obligations		189		7		-		196
Total	$	14,055	$	30	$	27	$	14,058

			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
December 31, 2015
Issued by U.S. government-sponsored entities and agencies:
U.S. Treasury	$	8,575	$	4	$	43	$	8,536
Mortgage-backed securities - residential		463		18		-		481
Collateralized mortgage obligations		339		12		-		351
Total	$	9,377	$	34	$	43	$	9,368

Securities classified by maturity date

	December 31, 2016				December 31, 2015
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
Due in one year or less	$	2,518	$	2,518	$	1,002	$	1,000
Due from one to five years		11,003		10,987		7,573		7,536
Mortgage-backed securities - residential		345		357		463		481
Collateralized mortgage obligations		189		196		339		351
Total	$	14,055	$	14,058	$	9,377	$	9,368

Fair value of securities pledged

	2016		2015
Pledged as collateral for:
FHLB advances	$	2,327	$	3,530
Public deposits		2,043		2,055
Interest-rate swaps		195		261
Total	$	4,565	$	5,846

Securities with unrealized losses

December 31, 2016	Less than 12 Months				12 Months or More				Total
Description of Securities	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Issued by U.S. government-sponsored entities and agencies:
U.S. Treasury	$	10,492	$	27	$	-	$	-	$	10,492	$	27
Mortgage-backed securities - residential (1)		1		-		-		-		1		-
Total temporarily impaired	$	10,493	$	27	$	-	$	-	$	10,493	$	27

⁽¹⁾ Securities with an unrealized loss were less than $1 resulting in rounding to zero.

December 31, 2015	Less than 12 Months				12 Months or More				Total
Description of Securities	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Issued by U.S. government-sponsored entities and agencies:
U.S. Treasury	$	6,541	$	43	$	-	$	-	$	6,541	$	43
Mortgage-backed securities - residential		-		-		-		-		-		-
Total temporarily impaired	$	6,541	$	43	$	-	$	-	$	6,541	$	43

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Loans And Leases (Tables)

12 Months Ended

Dec. 31, 2016

Loans And Leases [Abstract]

Schedule of loan portfolio segments

	December 31, 2016		December 31, 2015
Commercial (1)	$	71,334	$	43,744
Real estate:
Single-family residential		92,544		81,985
Multi-family residential		34,291		28,950
Commercial		105,313		96,488
Construction		25,822		24,662
Consumer:
Home equity lines of credit		23,109		21,837
Other		637		6,018
Subtotal		353,050		303,684
Less: ALLL		(6,925)		(6,620)
Loans and Leases, net	$	346,125	$	297,064

⁽¹⁾ Includes $2,874 of commercial leases.

Activity in ALLL by portfolio segment

	December 31, 2016
			Real Estate								Consumer
	Commercial		Single-family		Multi-family		Commercial		Construction		Home Equity lines of credit		Other		Total
Beginning balance	$	1,380	$	691	$	705	$	2,710	$	561	$	474	$	99	$	6,620
Addition to (reduction in) provision for loan losses		390		149		(132)		(128)		19		(4)		(64)		230
Charge-offs		(123)		(147)		-		-		-		(53)		(1)		(324)
Recoveries		-		42		143		145		-		69		-		399
Ending balance	$	1,647	$	735	$	716	$	2,727	$	580	$	486	$	34	$	6,925

	December 31, 2015
			Real Estate								Consumer
	Commercial		Single-family		Multi-family		Commercial		Construction		Home Equity lines of credit		Other		Total
Beginning balance	$	1,346	$	634	$	818	$	2,541	$	442	$	441	$	94	$	6,316
Addition to (reduction in) provision for loan losses		17		96		(113)		161		119		(39)		9		250
Charge-offs		(8)		(40)		-		(25)		-		(41)		(10)		(124)
Recoveries		25		1		-		33		-		113		6		178
Ending balance	$	1,380	$	691	$	705	$	2,710	$	561	$	474	$	99	$	6,620

Balance in ALLL and recorded investment in loans by portfolio segment and based on impairment method

The following table presents the balance in the ALLL and the recorded investment in loans and leases by portfolio segment and based on impairment method as of December 31, 2016:  

			Real Estate								Consumer
	Commercial		Single- family		Multi- family		Commercial		Construction		Home Equity lines of credit		Other		Total
ALLL:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	1	$	-	$	-	$	21	$	-	$	-	$	-	$	22
Collectively evaluated for impairment		1,646		735		716		2,706		580		486		34		6,903
Total ending allowance balance	$	1,647	$	735	$	716	$	2,727	$	580	$	486	$	34	$	6,925
Loans:
Individually evaluated for impairment	$	557	$	122	$	37	$	2,732	$	-	$	-	$	-	$	3,448
Collectively evaluated for impairment		70,777		92,422		34,254		102,581		25,822		23,109		637		349,602
Total ending loan balance	$	71,334	$	92,544	$	34,291	$	105,313	$	25,822	$	23,109	$	637	$	353,050

The following table presents the balance in the ALLL and the recorded investment in loans and leases by portfolio segment and based on impairment method as of December 31, 2015:  

			Real Estate								Consumer
	Commercial		Single- family		Multi- family		Commercial		Construction		Home Equity lines of credit		Other		Total
ALLL:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	5	$	1	$	-	$	14	$	-	$	-	$	-	$	20
Collectively evaluated for impairment		1,375		690		705		2,696		561		474		99		6,600
Total ending allowance balance	$	1,380	$	691	$	705	$	2,710	$	561	$	474	$	99	$	6,620
Loans:
Individually evaluated for impairment		422	$	289	$	1,590	$	3,449	$	-	$	-	$	-	$	5,750
Collectively evaluated for impairment		43,322		81,696		27,360		93,039		24,662		21,837		6,018		297,934
Total ending loan balance	$	43,744	$	81,985	$	28,950	$	96,488	$	24,662	$	21,837	$	6,018	$	303,684

Individually evaluated for impairment by class of loans

The following table presents loans individually evaluated for impairment by class of loans as of and for the year ended December 31, 2016. The unpaid principal balance is the contractual principal balance outstanding. The recorded investment is the unpaid principal balance adjusted for partial charge-offs, purchase premiums and discounts, deferred loan fees and costs.

	Unpaid Principal Balance		Recorded Investment		ALLL Allocated		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial	$	476	$	358	$	-	$	436	$	13
Real estate:
Single-family residential		-		-		-		-		-
Multi-family residential		37		37		-		41		2
Commercial:
Non-owner occupied		112		112		-		114		8
Owner occupied		871		350		-		360		46
Land		-		-		-		-		-
Total with no allowance recorded		1,496		857		-		951		69
With an allowance recorded:
Commercial		199		199		1		232		9
Real estate:
Single-family residential		122		122		-		125		7
Multi-family residential		-		-		-		-		-
Commercial:
Non-owner occupied		2,068		2,068		19		2,086		126
Owner occupied		202		202		2		208		10
Land		-		-		-		-		-
Total with an allowance recorded		2,591		2,591		22		2,651		152
Total	$	4,087	$	3,448	$	22	$	3,602	$	221

The following table presents loans individually evaluated for impairment by class of loans as of and for the year ended December 31, 2015. The unpaid principal balance is the contractual principal balance outstanding. The recorded investment is the unpaid principal balance adjusted for partial charge-offs, purchase premiums and discounts, deferred loan fees and costs.

	Unpaid Principal Balance		Recorded Investment		ALLL Allocated		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial	$	36	$	28	$	-	$	65	$	1
Real estate:
Single-family residential		322		161		-		166		-
Multi-family residential		1,545		1,545		-		1,561		95
Commercial:
Non-owner occupied		546		446		-		455		-
Owner occupied		688		167		-		174		39
Land		-		-		-		-		-
Total with no allowance recorded		3,137		2,347		-		2,421		135
With an allowance recorded:
Commercial		394		394		5		439		12
Real estate:
Single-family residential		128		128		1		130		7
Multi-family residential		45		45		-		48		3
Commercial:
Non-owner occupied		2,224		2,224		9		2,242		136
Owner occupied		363		363		1		371		20
Land		294		249		4		274		18
Total with an allowance recorded		3,448		3,403		20		3,504		196
Total	$	6,585	$	5,750	$	20	$	5,925	$	331

Recorded investment in nonaccrual loans by class of loans

	2016		2015
Loans past due over 90 days still on accrual	$	-	$	-
Nonaccrual loans:
Commercial		263		224
Real estate:
Single-family residential		397		640
Commercial:
Non-owner occupied		-		446
Consumer:
Home equity lines of credit:
Originated for portfolio		44		20
Purchased for portfolio		-		95
Total nonaccrual		704		1,425
Total nonperforming loans	$	704	$	1,425

Aging of recorded investment in past due loans by class of loans

The following table presents the aging of the recorded investment in past due loans by class of loans as of December 31, 2016:

	30 - 59 Days Past Due		60 - 89 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Loans Not Past Due		Nonaccrual Loans Not > 90 days Past Due
Commercial	$	-	$	-	$	119	$	119	$	71,215	$	144
Real estate:
Single-family residential		284		49		106		439		92,105		291
Multi-family residential		-		-		-		-		34,291		-
Commercial:
Non-owner occupied		-		-		-		-		60,936		-
Owner occupied		269		600		-		869		34,891		-
Land		-		-		-		-		8,617		-
Construction		48		-		-		48		25,774		-
Consumer:
Home equity lines of credit:
Originated for portfolio		-		15		-		15		22,440		44
Purchased for portfolio		69		-		-		69		585		-
Other		-		-		-		-		637		-
Total	$	670	$	664	$	225	$	1,559	$	351,491	$	479

The following table presents the aging of the recorded investment in past due loans by class of loans as of December 31, 2015:  

	30 - 59 Days Past Due		60 - 89 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Loans Not Past Due		Nonaccrual Loans Not > 90 days Past Due
Commercial	$	-	$	9	$	28	$	37	$	43,707	$	196
Real estate:
Single-family residential		598		161		148		907		81,078		492
Multi-family residential		-		-		-		-		28,950		-
Commercial:
Non-owner occupied		-		446		-		446		57,573		446
Owner occupied		-		-		-		-		30,169		-
Land		-		-		-		-		8,300		-
Construction		-		-		-		-		24,662		-
Consumer:
Home equity lines of credit:
Originated for portfolio		-		-		-		-		20,789		20
Purchased for portfolio		-		-		-		-		1,048		95
Other		-		-		-		-		6,018		-
Total	$	598	$	616	$	176	$	1,390	$	302,294	$	1,249

Loans modified as TDRs by class of loans

The following table presents loans modified as TDRs by class of loans during the year ended December 31, 2016:

	Number of Loans		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commercial		1	$	339	$	339
		1	$	339	$	339

The following table presents loans modified as TDRs by class of loans during the year ended December 31, 2015:

	Number of Loans		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Real estate:
Single-family residential		1	$	9	$	9
Consumer:
Home equity lines of credit:
Originated for portfolio		1		9		9
		2	$	18	$	18

Schedule of debtor troubled debt restructuring, subsequent periods

	2016		2015
Commercial	$	144	$	195
Real estate:
Single-family residential		-		161
Total	$	144	$	356

Financing receivable credit quality indicators

The recorded investment in loans by risk category and by class of loans as of December 31, 2016 and based on the most recent analysis performed follows.  There were no loans rated doubtful at December 31, 2016. 

	Not Rated		Pass		Special Mention		Substandard		Total
Commercial	$	47	$	70,444	$	286	$	557	$	71,334
Real estate:
Single-family residential		92,130		-		-		414		92,544
Multi-family residential		-		33,615		505		171		34,291
Commercial:
Non-owner occupied		115		58,183		1,782		856		60,936
Owner occupied		-		33,493		1,048		1,219		35,760
Land		-		6,380		-		2,237		8,617
Construction		1,997		23,825		-		-		25,822
Consumer:
Home equity lines of credit:
Originated for portfolio		22,328		-		-		127		22,455
Purchased for portfolio		512		-		-		142		654
Other		637		-		-		-		637
	$	117,766	$	225,940	$	3,621	$	5,723	$	353,050

The recorded investment in loans by risk category and class of loans as of December 31, 2015 follows.  There were no loans rated doubtful at December 31, 2015.

	Not Rated		Pass		Special Mention		Substandard		Total
Commercial	$	83	$	41,473	$	1,892	$	296	$	43,744
Real estate:
Single-family residential		81,318		-		-		667		81,985
Multi-family residential		2,777		25,466		528		179		28,950
Commercial:
Non-owner occupied		125		54,674		1,852		1,368		58,019
Owner occupied		-		26,923		3,079		167		30,169
Land		-		5,720		-		2,580		8,300
Construction		11,252		13,410		-		-		24,662
Consumer:
Home equity lines of credit:
Originated for portfolio		20,677		-		-		112		20,789
Purchased for portfolio		802		-		-		246		1,048
Other		2,172		3,846		-		-		6,018
	$	119,206	$	171,512	$	7,351	$	5,615	$	303,684

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Foreclosed Assets (Tables)

12 Months Ended

Dec. 31, 2016

Foreclosed Assets [Abstract]

Foreclosed assets

	2016		2015
Commercial real estate	$	-	$	1,636
Single-family residential		204		-
Subtotal		204		1,636
Valuation Allowance		-		-
Total	$	204	$	1,636

Expenses related to foreclosed assets

	2016		2015
Net loss (gain) on sales	$	(4)	$	-
Operating expenses, net of rental income		69		137
	$	65	$	137

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Fair Value (Tables)

12 Months Ended

Dec. 31, 2016

Fair Value [Abstract]

Assets and liabilities measured at fair value on a recurring basis, including financial assets and liabilities

	Fair Value Measurements at December 31, 2016 Using Significant Other Observable Inputs
	(Level 2)
Financial Assets:
Securities available for sale:
Issued by U.S. government-sponsored entities and agencies:
U.S. Treasury	$	13,505
Mortgage-backed securities - residential		357
Collateralized mortgage obligations		196
Total securities available for sale	$	14,058
Loans held for sale	$	2,812
Yield maintenance provisions (embedded derivatives)	$	122
Interest rate lock commitments	$	9
Financial Liabilities:
Interest-rate swaps	$	122

	Fair Value Measurements at December 31, 2015 Using Significant Other Observable Inputs
	(Level 2)
Financial Assets:
Securities available for sale:
Issued by U.S. government-sponsored entities and agencies:
U.S. Treasury	$	8,536
Mortgage-backed securities - residential		481
Collateralized mortgage obligations		351
Total securities available for sale	$	9,368
Loans held for sale	$	889
Yield maintenance provisions (embedded derivatives)	$	213
Interest rate lock commitments	$	8
Financial Liabilities:
Interest-rate swaps	$	213

Assets measured at fair value on a non-recurring basis

Fair Value Measurements at December 31, 2016 Using
Significant Unobservable Inputs (Level 3)
Impaired loans:
Commercial	$	130
Real Estate:
Single-family residential		122
Multi-family residential		37
Commercial:
Non-owner occupied		2,161
Owner occupied		200
Land		-
Total impaired loans	$	2,650

Fair Value Measurements at December 31, 2015 Using
Significant Unobservable Inputs (Level 3)
Impaired loans:
Commercial	$	143
Real Estate:
Single-family residential		128
Multi-family residential		45
Commercial:
Non-owner occupied		2,215
Owner occupied		213
Land		245
Total impaired loans	$	2,989

Financial instruments measured at fair value on a non-recurring basis

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, 2016:  

	Fair Value		Valuation Technique(s)	Unobservable Inputs	(Range) Weighted Average
Impaired loans:
Commercial	$	130	Comparable sales approach	Adjustment for differences between the comparable market transactions	3.48%
Real estate:
Single-family residential		122	Comparable sales approach	Adjustment for differences between the comparable market transactions	(1.81% , 3.61%)  2.91%
Multi-family residential		37	Comparable sales approach	Adjustment for differences between the comparable market transactions	9.64%
Commercial:
Non-owner occupied		2,161	Comparable sales approach	Adjustment for differences between the comparable market transactions	(1.10%,  5.74%) 1.35%
Owner occupied		200	Comparable sales approach	Adjustment for differences between the comparable market transactions	-4.46%

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, 2015:

	Fair Value		Valuation Technique(s)	Unobservable Inputs	(Range) Weighted Average
Impaired loans:
Commercial	$	143	Comparable sales approach	Adjustments by management to reflect current discount rates	1.10%
Real estate:
Single -family residential		128	Comparable sales approach	Adjustment for differences between the comparable market transactions	(-1.23% , 4.63%)  -.17%
Multi-family residential		45	Comparable sales approach	Adjustment for differences between the comparable market transactions	5.74%
Commercial:
Non-owner occupied		2,215	Comparable sales approach	Adjustment for differences between the comparable market transactions	(1.10%,  5.74%) 1.35%
Owner occupied		213	Comparable sales approach	Adjustment for differences between the comparable market transactions	-29.30%
Land		245	Comparable sales approach	Adjustment for differences between the comparable market transactions	(-1.89%,  2.54%) .08%

Aggregate fair value, contractual balance (including accrued interest) and gain or loss

	December 31, 2016		December 31, 2015
Aggregate fair value	$	2,812	$	889
Contractual balance		2,801		884
Gain (loss)		11		5

Amount of gains and losses from changes in fair value included in earnings

	2016		2015
Interest income	$	60	$	56
Interest expense		-		-
Change in fair value		6		(10)
Total change in fair value	$	66	$	46

Carrying amounts and estimated fair values of financial instruments

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

	Fair Value Measurements at December 31, 2016 Using:
	Carrying
	Value		Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	57,941	$	57,941	$	-	$	-	$	57,941
Interest-bearing deposits in other financial institutions		100		100		-		-		100
Securities available for sale		14,058		-		14,058		-		14,058
Loans held for sale		2,812		-		2,812		-		2,812
Loans, net		346,125		-		-		343,523		343,523
FHLB stock		1,942		n/a		n/a		n/a		n/a
Accrued interest receivable		1,054		13		40		1,001		1,054
Yield maintenance provisions (embedded derivatives)		122		-		122		-		122
Interest rate lock commitments		9		-		9		-		9
Financial liabilities
Deposits	$	(375,364)	$	(202,158)	$	(171,967)	$	-	$	(374,125)
FHLB advances and other borrowings		(13,500)		-		(13,597)		-		(13,597)
Advances by borrowers for taxes and insurance		(408)		-		-		(408)		(408)
Subordinated debentures		(5,155)		-		(3,411)		-		(3,411)
Accrued interest payable		(78)		(2)		(76)		-		(78)
Interest-rate swaps		(122)		-		(122)		-		(122)

The carrying amounts and estimated fair values of financial instruments at December 31, 2015 were as follows:

	Fair Value Measurements at December 31, 2015 Using:
	Carrying
	Value		Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	25,895	$	25,895	$	-	$	-	$	25,895
Interest-bearing deposits in other financial institutions		-		-		-		-		-
Securities available for sale		9,368		-		9,368		-		9,368
Loans held for sale		889		-		889		-		889
Loans, net		297,064		-		-		295,498		295,498
FHLB stock		1,942		n/a		n/a		n/a		n/a
Accrued interest receivable		831		1		21		809		831
Yield maintenance provisions (embedded derivatives)		213		-		213		-		213
Interest rate lock commitments		8		-		8		-		8
Financial liabilities
Deposits	$	(290,467)	$	(147,523)	$	(143,236)	$	-	$	(290,759)
FHLB advances and other borrowings		(14,500)		-		(14,693)		-		(14,693)
Advances by borrowers for taxes and insurance		(656)		-		-		(656)		(656)
Subordinated debentures		(5,155)		-		(2,269)		-		(2,269)
Accrued interest payable		(44)		-		(44)		-		(44)
Interest-rate swaps		(213)		-		(213)		-		(213)

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Loan Servicing (Tables)

12 Months Ended

Dec. 31, 2016

Loan Servicing [Abstract]

Principal Balances of Mortgage Loans at Year-End

	December 31, 2016		December 31, 2015
Mortgage loans serviced for Freddie Mac	$	4,261	$	5,593

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Premises And Equipment (Tables)

12 Months Ended

Dec. 31, 2016

Premises And Equipment [Abstract]

Year-End Premises and Equipment

	December 31, 2016		December 31, 2015
Land and land improvements	$	1,293	$	1,293
Buildings		3,832		3,827
Furniture, fixtures and equipment		2,150		2,655
		7,275		7,775
Less: Accumulated Depreciation		(3,846)		(4,166)
	$	3,429	$	3,609

Rent Commitments

2017	$	320
2018		321
2019		322
2020		324
2021		325
Thereafter		858
	$	2,470

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Deposits (Tables)

12 Months Ended

Dec. 31, 2016

Deposits [Abstract]

Scheduled Maturities of Time Deposits

2017	$	108,620
2018		33,617
2019		7,749
2020		14,626
2021		7,697
Thereafter		-
Total	$	172,309

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FHLB Advances (Tables)

12 Months Ended

Dec. 31, 2016

FHLB Advances [Abstract]

Advances from the FHLB

	Weighted
	Average Rate	December 31, 2016		December 31, 2015
Fixed Rate Advances
Maturities:
2016		$	-	$	5,000
2017	1.12%		2,500		1,500
2019	1.62%		3,500		2,500
2020	2.02%		3,500		2,500
2021	2.32%		4,000		3,000
Total		$	13,500	$	14,500

Schedule of federal home loan advances pledged by assets

	December 31, 2016		December 31, 2015
Single-family mortgage loans	$	38,342	$	29,490
Multi-family mortgage loans		14,854		8,185
Commercial real estate loans (1-4 family)		2,793		3,155
Securities		2,327		3,530
Cash		3,300		3,300
Total	$	61,616	$	47,660

Federal home loan advances outstanding maturity period

	December 31, 2016
2017	$	2,500
2018		-
2019		3,500
2020		3,500
2021		4,000
	$	13,500

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Other Borrowings (Tables)

12 Months Ended

Dec. 31, 2016

Other Borrowings [Abstract]

Assets pledged as collateral with FRB

	2016		2015
Commercial loans	$	16,380	$	19,696
Commercial real estate loans		39,230		37,702
	$	55,610	$	57,398

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2016

Income Taxes [Abstract]

Income Tax Expense

	December 31, 2016		December 31, 2015
Current Federal	$	187	$	58
Deferred Federal (1)		623		(3,251)
Total	$	810	$	(3,193)

(1) Includes tax benefit of operating loss carryforwards of $717 and $531 for the years ended December 31, 2016 and 2015.

Effective Tax Rates Differ from Federal Statutory Rate

	December 31, 2016		December 31, 2015
Federal Statutory rate times financial statement income (loss)	$	829	$	436
Effect of:
Incentive Stock Options		6		33
Bank owned life insurance income		(45)		(45)
Increase (decrease) in deferred tax valuation allowance		-		(3,656)
Other		20		39
	$	810	$	(3,193)
Effective tax rate		33%		-249%

Deferred Tax Assets and Liabilities

	2016		2015
Deferred tax assets:
Allowance for loan and lease losses	$	1,575	$	1,497
Compensation related issues		353		314
Deferred loan fees		155		118
AMT Credit		50		105
Nonaccrual interest		41		132
Net operating loss carry forward		863		1,580
Other		70		2
		3,107		3,748
Deferred tax liability:
FHLB stock dividend		366		366
Mortgage servicing rights		2		4
Depreciation		47		43
Prepaid expenses		63		78
Mark-to-market Loans		2		3
		480		494
Net deferred tax asset	$	2,627	$	3,254

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Related-Party Transactions (Tables)

12 Months Ended

Dec. 31, 2016

Related-Party Transactions [Abstract]

Loans to Principal Officers, Directors and Affiliates

Beginning balance	$	635
New loans		1,826
Effect of changes in composition of related parties		-
Repayments		(62)
Ending balance	$	2,399

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Stock-Based Compensation (Tables)

12 Months Ended

Dec. 31, 2016

Stock-Based Compensation [Abstract]

Summary Of Stock Option Activity

	Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Intrinsic Value
Outstanding at beginning of year	566,696	$	1.48
Cancelled or Forfeited	(23,950)		2.01
Outstanding at end of period	542,746	$	1.46	6.4	$	198,040
Expected to vest	-	$	-	-	$	-
Exercisable at end of period	542,746	$	1.46	6.4	$	198,040

Summary of changes in the Company's nonvested restricted shares

Nonvested Shares	Shares	Weighted Average Grant-Date Fair Value
Nonvested at January 1, 2016	200,500	$	1.37
Granted	292,000		1.64
Vested	(66,834)		1.37
Forfeited	-		-
Nonvested at December 31, 2016	425,666	$	1.56

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Regulatory Capital Matters (Tables)

12 Months Ended

Dec. 31, 2016

Regulatory Capital Matters [Abstract]

Actual and required capital amounts and ratios of CFBank

											To Be Well
					Minimum Capital			Minimum Capital			Capitalized Under
					Required-Basel III			Required-Basel III			Applicable Regulatory
		Actual			Phase-In Schedule			Fully Phased-In			Capital Standards
		Amount	Ratio		Amount	Ratio		Amount	Ratio		Amount	Ratio
December 31, 2016
Total Capital to risk
weighted assets	$	45,118	12.46%	$	31,256	8.63%	$	38,029	10.50%	$	36,218	10.00%
Tier 1 (Core) Capital to risk
weighted assets		40,556	11.20%		24,013	6.63%		30,785	8.50%		28,974	8.00%
Common equity tier 1 capital
to risk-weighted assets		40,556	11.20%		18,580	5.13%		25,353	7.00%		23,542	6.50%
Tier 1 (Core) Capital to
adjusted total assets (Leverage ratio)		40,556	9.66%		16,792	4.00%		16,792	4.00%		20,991	5.00%

								To Be Well
								Capitalized Under			Required
					For Capital			Applicable Regulatory			Pursuant to
		Actual			Adequacy Purposes			Capital Standards			OCC Commitment (1)
		Amount	Ratio		Amount	Ratio		Amount	Ratio		Amount	Ratio
December 31,2015
Total Capital to risk
weighted assets	$	41,528	13.67%	$	24,310	8.00%	$	30,388	10.00%	$	N/A	N/A
Tier 1 (Core) Capital to risk
weighted assets		37,694	12.40%		18,233	6.00%		24,310	8.00%		N/A	N/A
Common equity tier 1 capital
to risk-weighted assets		37,694	12.40%		13,675	4.50%		19,752	6.50%		N/A	N/A
Tier 1 (Core) Capital to
adjusted total assets		37,694	11.12%		13,557	4.00%		16,946	5.00%		N/A	N/A

⁽¹⁾ The heightened capital requirements were applicable to CFBank until December 23, 2015, under the CFBank Order and the subsequent commitments made by CFBank to the OCC.See Note 2- Regulatory Matters for additional information.

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Derivative Instruments (Tables)

12 Months Ended

Dec. 31, 2016

Derivative Instruments [Abstract]

Summary of derivative instruments

	2016		2015
Notional amount	$	2,280	$	2,877
Weighted average pay rate on interest-rate swaps		3.74%		3.67%
Weighted average receive rate on interest-rate swaps		0.75%		0.39%
Weighted average maturity (years)		3.1		4.0
Fair value of interest-rate swaps	$	(122)	$	(213)
Fair value of yield maintenance provisions	$	122	$	213

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Loan Commitments And Other Related Activities (Tables)

12 Months Ended

Dec. 31, 2016

Loan Commitments And Other Related Activities [Abstract]

Contractual Amounts of Financial Instruments with Off-Balance-Sheet Risk

	2016				2015
	Fixed Rate		Variable Rate		Fixed Rate		Variable Rate
Commitments to make loans	$	21,335	$	22,171	$	4,623	$	15,187
Unused lines of credit	$	3,714	$	29,621	$	647	$	19,764
Standby letters of credit	$	991	$	-	$	1,154	$	-

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Parent Company Only Condensed Financial Information (Tables)

12 Months Ended

Dec. 31, 2016

Parent Company Only Condensed Financial Information [Abstract]

Condensed Balance Sheets

	2016		2015
Assets
Cash and cash equivalents	$	2,197	$	2,673
Investment in banking subsidiary		41,448		37,745
Investment in and advances to other subsidiary		225		222
Other assets		901		3,112
Total assets	$	44,771	$	43,752
Liabilities and Equity
Subordinated debentures	$	5,155	$	5,155
Accrued expenses and other liabilities		324		285
Stockholders' equity		39,292		38,312
Total liabilities and stockholders' equity	$	44,771	$	43,752

Condensed Statements of Operations

	2016		2015
Interest income	$	2	$	1
Other income		131		291
Interest expense		185		164
Other expense		646		548
Loss before income tax and undistributed subsidiary income		(698)		(420)
Tax effect		236		1,798
Gain (loss) after income tax and undistributed subsidiary income		(462)		1,378
Equity in undistributed subsidiary income		2,089		3,099
Net income	$	1,627	$	4,477
Comprehensive income	$	1,638	$	4,417

Condensed Statements of Cash Flows

	2016		2015
Cash flows from operating activities
Net Income	$	1,627	$	4,477
Adjustments:
Effect of subsidiaries' operations		(2,089)		(3,099)
Change in other assets and other liabilities		766		(980)
Net cash from (used by) operating activities		304		398
Cash flows from financing activities
Purchase of treasury shares		(30)		-
Dividends paid on Series B preferred stock		(750)		(750)
Net cash from (used by) financing activities		(780)		(750)
Net change in cash and cash equivalents		(476)		(352)
Beginning cash and cash equivalents		2,673		3,025
Ending cash and cash equivalents	$	2,197	$	2,673

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Earnings (Loss) Per Common Share (Tables)

12 Months Ended

Dec. 31, 2016

Earnings (Loss) Per Common Share [Abstract]

Computation of Earnings Per Share

	December 31, 2016		December 31, 2015
Basic
Net income	$	1,627	$	4,477
Dividends on Series B  preferred stock and accretion of discount		(857)		(857)
Net income allocated to common stockholders	$	770	$	3,620
Weighted average common shares outstanding including unvested share-based payment awards		16,020,847		15,857,127
Less: Unvested share-based payment awards		-		-
Average shares		16,020,847		15,857,127
Basic earnings per common share	$	0.05	$	0.23
Diluted
Net earnings allocated to common stockholders	$	770	$	3,620
Add back: Preferred Dividends on Series B stock		-		857
Net earnings allocated to fully-diluted	$	770	$	4,477
Weighted average common shares outstanding for basic earnings per common share		16,020,847		15,857,127
Add: Dilutive effects of assumed exercises of stock options		38,184		8,473
Add: Dilutive effects of assumed exercises of Series B preferred stock		-		6,857,143
Average shares and dilutive potential common shares		16,059,031		22,722,743
Diluted earnings per common share	$	0.05	$	0.20

Summary of Anti-Dilutive Options or Warrants

	2016	2015
Stock options	282,971	417,058
Series B preferred stock	6,857,143	-
Stock warrants	1,152,125	1,152,125

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Accumulated Other Comprehensive Income (Tables)

12 Months Ended

Dec. 31, 2016

Accumulated Other Comprehensive Income [Abstract]

Schedule of Accumulated Other Comprehensive Income

Changes in Accumulated Other Comprehensive Income by Component
For the Year Ended December 31, 2016 and 2015  (1)
	Unrealized Gains and Losses on Available-for-Sale Securities
	2016		2015
Accumulated other comprehensive income (loss), beginning of period	$	(9)	$	51
Other comprehensive gain (loss) before reclassifications		11		(72)
Less amount reclassified from accumulated other comprehensive loss (2)		-		12
Net current-period other comprehensive income (loss)		11		(60)
Accumulated other comprehensive income (loss), end of period	$	2	$	(9)

⁽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 year ended December 31, 2016.  There was $12 reclassified out of other comprehensive income for year ended December 31, 2015 due to an early redemption of a municipal security.

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Summary of Significant Accounting Policies (Details) $ in Thousands		12 Months Ended
	May 04, 2012	Dec. 31, 2016 USD ($) store	Dec. 31, 2015 USD ($)
Significant Accounting Policies [Line Items]
Number of full-service banking offices | store		4
Interest-bearing deposits in other financial institutions		$ 100
Minimum balance of loans individually evaluated for impairment		250
Total original investment into joint ventures		325	$ 1,285
Incentive payment recognized as income		$ 100	265
Tax benefit greater than being realized on examination		50.00%
Stock split description		On May 4, 2012, the Company completed a 1-for-5 reverse stock split, whereby every 5 shares of the Company's common stock were reclassified into one share of common stock.
Reverse stock split ratio	0.2
FRB regulatory reserve requirement		$ 267
Collateral pledged to secure advances		61,616	47,660
Cash [Member]
Significant Accounting Policies [Line Items]
Collateral pledged to secure advances		$ 3,300	3,300
Minimum [Member] | Buildings and related components [Member]
Significant Accounting Policies [Line Items]
Estimated useful life		3 years
Minimum [Member] | Furniture, fixtures and equipment [Member]
Significant Accounting Policies [Line Items]
Estimated useful life		2 years
Maximum [Member]
Significant Accounting Policies [Line Items]
Home equity lines of credit combined with the balance of the prior mortgage liens		89.90%
Maximum [Member] | Buildings and related components [Member]
Significant Accounting Policies [Line Items]
Estimated useful life		40 years
Maximum [Member] | Furniture, fixtures and equipment [Member]
Significant Accounting Policies [Line Items]
Estimated useful life		25 years
Single-Family Mortgage Loans [Member]
Significant Accounting Policies [Line Items]
Collateral pledged to secure advances		$ 38,342	29,490
Single-Family Mortgage Loans [Member] | Maximum [Member]
Significant Accounting Policies [Line Items]
Lending amount up to the percentage of collateral		85.00%
Multi-Family Mortgage Loans [Member]
Significant Accounting Policies [Line Items]
Collateral pledged to secure advances		$ 14,854	8,185
Multi-Family Mortgage Loans [Member] | Minimum [Member]
Significant Accounting Policies [Line Items]
Fixed rates loans limit, period		3 years
Multi-Family Mortgage Loans [Member] | Maximum [Member]
Significant Accounting Policies [Line Items]
Lending amount up to the percentage of collateral		85.00%
Fixed rates loans limit, period		5 years
Commercial Real Estate [Member]
Significant Accounting Policies [Line Items]
Collateral pledged to secure advances		$ 2,793	$ 3,155
Commercial Real Estate [Member] | Minimum [Member]
Significant Accounting Policies [Line Items]
Fixed rates loans limit, period		3 years
Commercial Real Estate [Member] | Maximum [Member]
Significant Accounting Policies [Line Items]
Lending amount up to the percentage of collateral		85.00%
Fixed rates loans limit, period		5 years
Construction Loans [Member] | Maximum [Member]
Significant Accounting Policies [Line Items]
Lending amount up to the percentage of collateral		80.00%
Maturity of construction loans convert to permanent loans		30 years

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Regulatory Matters (Details)	Dec. 31, 2016	Dec. 31, 2015
Regulatory Order Considarations [Line Items]
Core capital	5.00%	5.00%
Total risk-based capital	10.00%	10.00%
CF Bank [Member]
Regulatory Order Considarations [Line Items]
Core capital	8.00%	8.00%
Total risk-based capital	12.00%	12.00%

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Securities (Narrative) (Details) - USD ($)	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Schedule of Available-for-sale Securities [Line Items]
Other-than-temporary impairment	$ 0	$ 0
Sales of securities	$ 0	$ 0
Issued by U.S. Government-Sponsored Entities and Agencies [Member]
Schedule of Available-for-sale Securities [Line Items]
Minimum percentage of securities held	10.00%	10.00%

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Securities (Amortized Cost And Fair Value Of Available-For-Sale Securities Portfolio) (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 14,055	$ 9,377
Gross Unrealized Gains	30	34
Gross Unrealized Losses	27	43
Fair Value	14,058	9,368
U.S. Treasury [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	13,521	8,575
Gross Unrealized Gains	11	4
Gross Unrealized Losses	27	43
Fair Value	13,505	8,536
Mortgage-Backed Securities - Residential [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	345	463
Gross Unrealized Gains	12	18
Fair Value	357	481
Collateralized Mortgage Obligations [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	189	339
Gross Unrealized Gains	7	12
Fair Value	$ 196	$ 351

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Securities (Amortized Cost and Fair Value of Debt Securities by Contractual Maturity) (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Schedule Of Available For Sale Securities [Line Items]
Due in one year or less, Amortized Cost	$ 2,518	$ 1,002
Due from one to five years, Amortized Cost	11,003	7,573
Amortized Cost	14,055	9,377
Due in one year or less, Fair Value	2,518	1,000
Due from one to five years, Fair Value	10,987	7,536
Available-for-sale Securities, Total	14,058	9,368
Mortgage-Backed Securities - Residential [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized Cost	345	463
Available-for-sale Securities, Total	357	481
Collateralized Mortgage Obligations [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized Cost	189	339
Available-for-sale Securities, Total	$ 196	$ 351

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Securities (Fair value Of Securities Pledged) (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Pledged as collateral for:
FHLB advances	$ 2,327	$ 3,530
Public deposits	2,043	2,055
Interest-rate swaps	195	261
Total	$ 4,565	$ 5,846

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Securities (Securities With Unrealized Losses) (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Schedule of Available-for-sale Securities [Line Items]
Less than 12 Months, Fair Value	$ 10,493	$ 6,541
Less than 12 Months, Unrealized Loss	27	43
12 Months or More, Fair Value
12 Months or More, Unrealized Loss
Total, Fair Value	10,493	6,541
Total, Unrealized Loss	27	43
U.S. Treasury [Member]
Schedule of Available-for-sale Securities [Line Items]
Less than 12 Months, Fair Value	10,492	6,541
Less than 12 Months, Unrealized Loss	27	43
12 Months or More, Fair Value
12 Months or More, Unrealized Loss
Total, Fair Value	10,492	6,541
Total, Unrealized Loss	27	43
Mortgage-Backed Securities - Residential [Member]
Schedule of Available-for-sale Securities [Line Items]
Less than 12 Months, Fair Value	1
Less than 12 Months, Unrealized Loss
12 Months or More, Fair Value
12 Months or More, Unrealized Loss
Total, Fair Value	1
Total, Unrealized Loss

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Loans And Leases (Narrative) (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2016 USD ($) loan	Dec. 31, 2015 USD ($) loan
Accounts Notes And Loans Receivable [Line Items]
Loans	$ 346,125	$ 297,064
Loans 90 days or more past due and still accruing interest
Total TDR's	3,130	5,276
Allocated specific reserves to modified TDRs	$ 22	$ 20
Number of loans modified as a TDR | loan	1	2
TDR's charge-offs	$ 0	$ 0
Number of TDRs in payment default | loan	1	0
Northpointe [Member] | Mortgage Purchase Program [Member]
Accounts Notes And Loans Receivable [Line Items]
Percent of loans risk rated for capital adequacy	100.00%
Percent of participation agreement interest	95.00%
Ownership interest in each loan is participates	5.00%
Nonaccrual [Member] | Commitments to Lend Additional Amounts [Member]
Accounts Notes And Loans Receivable [Line Items]
Total TDR's	$ 0	$ 0
Single-Family Mortgage Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
Number of loans modified as a TDR | loan	1	1
Single-Family Mortgage Loans [Member] | Northpointe [Member] | Mortgage Purchase Program [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans	$ 46,919	$ 43,517
Home Equity Line of Credit, Originated Portfolio [Member]
Accounts Notes And Loans Receivable [Line Items]
Number of loans modified as a TDR | loan	1	1
Other Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
Total TDR's	$ 33,294	$ 19,097
Accruing [Member]
Accounts Notes And Loans Receivable [Line Items]
Total TDR's	$ 2,986	$ 4,920
Commercial [Member]
Accounts Notes And Loans Receivable [Line Items]
Number of loans modified as a TDR | loan	1
TDR's charge-offs	$ 239

XML

Loans And Leases (Recorded Investment In Loans By Portfolio Segment) (Details) - USD ($) $ in Thousands		Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Accounts Notes And Loans Receivable [Line Items]
Subtotal		$ 353,050	$ 303,684
Less: ALLL		(6,925)	(6,620)	$ (6,316)
Loans and leases, net		346,125	297,064
Commercial [Member]
Accounts Notes And Loans Receivable [Line Items]
Subtotal	[1]	71,334	43,744
Less: ALLL		(1,647)	(1,380)	(1,346)
Single-Family Mortgage Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
Subtotal		92,544	81,985
Less: ALLL		(735)	(691)	(634)
Multi-Family Mortgage Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
Subtotal		34,291	28,950
Less: ALLL		(716)	(705)	(818)
Commercial Real Estate [Member]
Accounts Notes And Loans Receivable [Line Items]
Subtotal		105,313	96,488
Less: ALLL		(2,727)	(2,710)	(2,541)
Construction Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
Subtotal		25,822	24,662
Less: ALLL		(580)	(561)	(442)
Home Equity Lines of Credit [Member]
Accounts Notes And Loans Receivable [Line Items]
Subtotal		23,109	21,837
Less: ALLL		(486)	(474)	(441)
Other Financing Receivable [Member]
Accounts Notes And Loans Receivable [Line Items]
Subtotal		637	6,018
Less: ALLL		(34)	$ (99)	$ (94)
Commercial Leases [Member]
Accounts Notes And Loans Receivable [Line Items]
Subtotal		$ 2,874

[1] Includes $2,874 of commercial leases.

XML

Loans And Leases (Activity In ALLL By Portfolio Segment) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	$ 6,620	$ 6,316
Addition to (reduction in) provision for loan losses	230	250
Charge-offs	(324)	(124)
Recoveries	399	178
Ending balance	6,925	6,620
Commercial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	1,380	1,346
Addition to (reduction in) provision for loan losses	390	17
Charge-offs	(123)	(8)
Recoveries		25
Ending balance	1,647	1,380
Single-Family Mortgage Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	691	634
Addition to (reduction in) provision for loan losses	149	96
Charge-offs	(147)	(40)
Recoveries	42	1
Ending balance	735	691
Multi-Family Mortgage Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	705	818
Addition to (reduction in) provision for loan losses	(132)	(113)
Recoveries	143
Ending balance	716	705
Commercial Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	2,710	2,541
Addition to (reduction in) provision for loan losses	(128)	161
Charge-offs		(25)
Recoveries	145	33
Ending balance	2,727	2,710
Construction Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	561	442
Addition to (reduction in) provision for loan losses	19	119
Ending balance	580	561
Home Equity Lines of Credit [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	474	441
Addition to (reduction in) provision for loan losses	(4)	(39)
Charge-offs	(53)	(41)
Recoveries	69	113
Ending balance	486	474
Other Financing Receivable [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	99	94
Addition to (reduction in) provision for loan losses	(64)	9
Charge-offs	(1)	(10)
Recoveries		6
Ending balance	$ 34	$ 99

XML

Loans And Leases (Balance In ALLL And Recorded Investment In Loans By Portfolio Segment And Based On Impairment Method) (Details) - USD ($) $ in Thousands		Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Financing Receivable, Allowance for Credit Losses [Line Items]
Individually evaluated for impairment		$ 22	$ 20
Collectively evaluated for impairment		6,903	6,600
Total ending allowance balance		6,925	6,620	$ 6,316
Individually evaluated for impairment		3,448	5,750
Collectively evaluated for impairment		349,602	297,934
Subtotal		353,050	303,684
Commercial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Individually evaluated for impairment		1	5
Collectively evaluated for impairment		1,646	1,375
Total ending allowance balance		1,647	1,380	1,346
Individually evaluated for impairment		557	422
Collectively evaluated for impairment		70,777	43,322
Subtotal	[1]	71,334	43,744
Single-Family Mortgage Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Individually evaluated for impairment			1
Collectively evaluated for impairment		735	690
Total ending allowance balance		735	691	634
Individually evaluated for impairment		122	289
Collectively evaluated for impairment		92,422	81,696
Subtotal		92,544	81,985
Multi-Family Mortgage Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Collectively evaluated for impairment		716	705
Total ending allowance balance		716	705	818
Individually evaluated for impairment		37	1,590
Collectively evaluated for impairment		34,254	27,360
Subtotal		34,291	28,950
Commercial Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Individually evaluated for impairment		21	14
Collectively evaluated for impairment		2,706	2,696
Total ending allowance balance		2,727	2,710	2,541
Individually evaluated for impairment		2,732	3,449
Collectively evaluated for impairment		102,581	93,039
Subtotal		105,313	96,488
Construction Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Collectively evaluated for impairment		580	561
Total ending allowance balance		580	561	442
Collectively evaluated for impairment		25,822	24,662
Subtotal		25,822	24,662
Home Equity Lines of Credit [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Collectively evaluated for impairment		486	474
Total ending allowance balance		486	474	441
Collectively evaluated for impairment		23,109	21,837
Subtotal		23,109	21,837
Other Financing Receivable [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Collectively evaluated for impairment		34	99
Total ending allowance balance		34	99	$ 94
Collectively evaluated for impairment		637	6,018
Subtotal		$ 637	$ 6,018

[1] Includes $2,874 of commercial leases.

XML

Loans And Leases (Individually Evaluated For Impairment By Class Of Loans) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Financing Receivable, Impaired [Line Items]
Impaired Financing Receivable, with No Related Allowance, Unpaid Principal Balance	$ 1,496	$ 3,137
Impaired Financing Receivable, with Related Allowance, Unpaid Principal Balance	2,591	3,448
Impaired Financing Receivable, Unpaid Principal Balance, Total	4,087	6,585
Impaired Financing Receivable, with No Related Allowance, Recorded Investment	857	2,347
Impaired Financing Receivable, with Related Allowance, Recorded Investment	2,591	3,403
Impaired Financing Receivable, Recorded Investment, Total	3,448	5,750
Impaired Financing Receivable, Allocated Loans and Leases	22	20
Impaired Financing Receivable, with No Related Allowance, Average Recorded Investment	951	2,421
Impaired Financing Receivable, with Related Allowance, Average Recorded Investment	2,651	3,504
Impaired Financing Receivable, Average Recorded Investment, Total	3,602	5,925
Impaired Financing Receivable, with no Related Allowance, Interest Income Recognized	69	135
Impaired Financing Receivable, with Related Allowance, Interest Income Recognized	152	196
Impaired Financing Receivable, Interest Income Recognized, Total	221	331
Commercial [Member]
Financing Receivable, Impaired [Line Items]
Impaired Financing Receivable, with No Related Allowance, Unpaid Principal Balance	476	36
Impaired Financing Receivable, with Related Allowance, Unpaid Principal Balance	199	394
Impaired Financing Receivable, with No Related Allowance, Recorded Investment	358	28
Impaired Financing Receivable, with Related Allowance, Recorded Investment	199	394
Impaired Financing Receivable, Allocated Loans and Leases	1	5
Impaired Financing Receivable, with No Related Allowance, Average Recorded Investment	436	65
Impaired Financing Receivable, with Related Allowance, Average Recorded Investment	232	439
Impaired Financing Receivable, with no Related Allowance, Interest Income Recognized	13	1
Impaired Financing Receivable, with Related Allowance, Interest Income Recognized	9	12
Single-Family Mortgage Loans [Member]
Financing Receivable, Impaired [Line Items]
Impaired Financing Receivable, with No Related Allowance, Unpaid Principal Balance		322
Impaired Financing Receivable, with Related Allowance, Unpaid Principal Balance	122	128
Impaired Financing Receivable, with No Related Allowance, Recorded Investment		161
Impaired Financing Receivable, with Related Allowance, Recorded Investment	122	128
Impaired Financing Receivable, Allocated Loans and Leases		1
Impaired Financing Receivable, with No Related Allowance, Average Recorded Investment		166
Impaired Financing Receivable, with Related Allowance, Average Recorded Investment	125	130
Impaired Financing Receivable, with Related Allowance, Interest Income Recognized	7	7
Multi-Family Mortgage Loans [Member]
Financing Receivable, Impaired [Line Items]
Impaired Financing Receivable, with No Related Allowance, Unpaid Principal Balance	37	1,545
Impaired Financing Receivable, with Related Allowance, Unpaid Principal Balance		45
Impaired Financing Receivable, with No Related Allowance, Recorded Investment	37	1,545
Impaired Financing Receivable, with Related Allowance, Recorded Investment		45
Impaired Financing Receivable, with No Related Allowance, Average Recorded Investment	41	1,561
Impaired Financing Receivable, with Related Allowance, Average Recorded Investment		48
Impaired Financing Receivable, with no Related Allowance, Interest Income Recognized	2	95
Impaired Financing Receivable, with Related Allowance, Interest Income Recognized		3
Real Estate, Commercial, Non-Owner Occupied [Member]
Financing Receivable, Impaired [Line Items]
Impaired Financing Receivable, with No Related Allowance, Unpaid Principal Balance	112	546
Impaired Financing Receivable, with Related Allowance, Unpaid Principal Balance	2,068	2,224
Impaired Financing Receivable, with No Related Allowance, Recorded Investment	112	446
Impaired Financing Receivable, with Related Allowance, Recorded Investment	2,068	2,224
Impaired Financing Receivable, Allocated Loans and Leases	19	9
Impaired Financing Receivable, with No Related Allowance, Average Recorded Investment	114	455
Impaired Financing Receivable, with Related Allowance, Average Recorded Investment	2,086	2,242
Impaired Financing Receivable, with no Related Allowance, Interest Income Recognized	8
Impaired Financing Receivable, with Related Allowance, Interest Income Recognized	126	136
Real Estate, Commercial, Owner Occupied [Member]
Financing Receivable, Impaired [Line Items]
Impaired Financing Receivable, with No Related Allowance, Unpaid Principal Balance	871	688
Impaired Financing Receivable, with Related Allowance, Unpaid Principal Balance	202	363
Impaired Financing Receivable, with No Related Allowance, Recorded Investment	350	167
Impaired Financing Receivable, with Related Allowance, Recorded Investment	202	363
Impaired Financing Receivable, Allocated Loans and Leases	2	1
Impaired Financing Receivable, with No Related Allowance, Average Recorded Investment	360	174
Impaired Financing Receivable, with Related Allowance, Average Recorded Investment	208	371
Impaired Financing Receivable, with no Related Allowance, Interest Income Recognized	46	39
Impaired Financing Receivable, with Related Allowance, Interest Income Recognized	$ 10	20
Real Estate, Commercial, Land [Member]
Financing Receivable, Impaired [Line Items]
Impaired Financing Receivable, with Related Allowance, Unpaid Principal Balance		294
Impaired Financing Receivable, with Related Allowance, Recorded Investment		249
Impaired Financing Receivable, Allocated Loans and Leases		4
Impaired Financing Receivable, with Related Allowance, Average Recorded Investment		274
Impaired Financing Receivable, with Related Allowance, Interest Income Recognized		$ 18

XML

Loans And Leases (Recorded Investment In Nonaccrual Loans By Class Of Loans) (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due over 90 days still on accrual
Total nonaccrual and nonperforming loans	704	1,425
Commercial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total nonaccrual and nonperforming loans	263	224
Single-Family Mortgage Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total nonaccrual and nonperforming loans	397	640
Real Estate, Commercial, Non-Owner Occupied [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total nonaccrual and nonperforming loans		446
Home Equity Line of Credit, Originated Portfolio [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total nonaccrual and nonperforming loans	44	20
Home Equity Line of Credit, Purchased Portfolio [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total nonaccrual and nonperforming loans		95
Nonaccrual [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total nonaccrual and nonperforming loans	$ 704	$ 1,425

XML

Loans And Leases (Aging Of Recorded Investment In Past Due Loans By Class Of Loans) (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	$ 1,559	$ 1,390
Loans Not Past Due	351,491	302,294
Nonaccrual Loans Not > 90 Days Past Due	479	1,249
30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	670	598
60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	664	616
Greater Than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	225	176
Commercial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	119	37
Loans Not Past Due	71,215	43,707
Nonaccrual Loans Not > 90 Days Past Due	144	196
Commercial [Member] | 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		9
Commercial [Member] | Greater Than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	119	28
Single-Family Mortgage Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	439	907
Loans Not Past Due	92,105	81,078
Nonaccrual Loans Not > 90 Days Past Due	291	492
Single-Family Mortgage Loans [Member] | 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	284	598
Single-Family Mortgage Loans [Member] | 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	49	161
Single-Family Mortgage Loans [Member] | Greater Than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	106	148
Multi-Family Mortgage Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans Not Past Due	34,291	28,950
Real Estate, Commercial, Non-Owner Occupied [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		446
Loans Not Past Due	60,936	57,573
Nonaccrual Loans Not > 90 Days Past Due		446
Real Estate, Commercial, Non-Owner Occupied [Member] | 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		446
Real Estate, Commercial, Owner Occupied [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	869
Loans Not Past Due	34,891	30,169
Real Estate, Commercial, Owner Occupied [Member] | 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	269
Real Estate, Commercial, Owner Occupied [Member] | 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	600
Real Estate, Commercial, Land [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans Not Past Due	8,617	8,300
Construction Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	48
Loans Not Past Due	25,774	24,662
Construction Loans [Member] | 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	48
Home Equity Line of Credit, Originated Portfolio [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	15
Loans Not Past Due	22,440	20,789
Nonaccrual Loans Not > 90 Days Past Due	44	20
Home Equity Line of Credit, Originated Portfolio [Member] | 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	15
Home Equity Line of Credit, Purchased Portfolio [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	69
Loans Not Past Due	585	1,048
Nonaccrual Loans Not > 90 Days Past Due		95
Home Equity Line of Credit, Purchased Portfolio [Member] | 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	69
Other Financing Receivable [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans Not Past Due	$ 637	$ 6,018

XML

Loans And Leases (Loans Modified As TDRs By Class Of Loans) (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2016 USD ($) loan	Dec. 31, 2015 USD ($) loan
Financing Receivable, Modifications [Line Items]
Number of Loans | loan	1	2
Pre-Modification Outstanding Recorded Investment	$ 339	$ 18
Post-Modification Outstanding Recorded Investment	$ 339	$ 18
Commercial [Member]
Financing Receivable, Modifications [Line Items]
Number of Loans | loan	1
Pre-Modification Outstanding Recorded Investment	$ 339
Post-Modification Outstanding Recorded Investment	$ 339
Single-Family Mortgage Loans [Member]
Financing Receivable, Modifications [Line Items]
Number of Loans | loan	1	1
Pre-Modification Outstanding Recorded Investment		$ 9
Post-Modification Outstanding Recorded Investment		$ 9
Home Equity Line of Credit, Originated Portfolio [Member]
Financing Receivable, Modifications [Line Items]
Number of Loans | loan	1	1
Pre-Modification Outstanding Recorded Investment		$ 9
Post-Modification Outstanding Recorded Investment		$ 9

XML

Loans And Leases (Schedule of Debtor Troubled Debt Restructuring, Subsequent Periods) (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Financing Receivable, Modifications [Line Items]
Nonaccrual Troubled Debt Restructurings, Total	$ 144	$ 356
Commercial [Member]
Financing Receivable, Modifications [Line Items]
Nonaccrual Troubled Debt Restructurings, Total	$ 144	195
Single-Family Mortgage Loans [Member]
Financing Receivable, Modifications [Line Items]
Nonaccrual Troubled Debt Restructurings, Total		$ 161

XML

Loans And Leases (Financing Receivables Credit Quality Indicators) (Details) - USD ($) $ in Thousands		Dec. 31, 2016	Dec. 31, 2015
Financing Receivable, Recorded Investment [Line Items]
Loans		$ 353,050	$ 303,684
Not Rated [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		117,766	119,206
Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		225,940	171,512
Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		3,621	7,351
Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		5,723	5,615
Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		0	0
Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	[1]	71,334	43,744
Commercial [Member] | Not Rated [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		47	83
Commercial [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		70,444	41,473
Commercial [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		286	1,892
Commercial [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		557	296
Single-Family Mortgage Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		92,544	81,985
Single-Family Mortgage Loans [Member] | Not Rated [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		92,130	81,318
Single-Family Mortgage Loans [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		414	667
Multi-Family Mortgage Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		34,291	28,950
Multi-Family Mortgage Loans [Member] | Not Rated [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans			2,777
Multi-Family Mortgage Loans [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		33,615	25,466
Multi-Family Mortgage Loans [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		505	528
Multi-Family Mortgage Loans [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		171	179
Commercial Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		105,313	96,488
Real Estate, Commercial, Non-Owner Occupied [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		60,936	58,019
Real Estate, Commercial, Non-Owner Occupied [Member] | Not Rated [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		115	125
Real Estate, Commercial, Non-Owner Occupied [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		58,183	54,674
Real Estate, Commercial, Non-Owner Occupied [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		1,782	1,852
Real Estate, Commercial, Non-Owner Occupied [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		856	1,368
Real Estate, Commercial, Owner Occupied [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		35,760	30,169
Real Estate, Commercial, Owner Occupied [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		33,493	26,923
Real Estate, Commercial, Owner Occupied [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		1,048	3,079
Real Estate, Commercial, Owner Occupied [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		1,219	167
Real Estate, Commercial, Land [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		8,617	8,300
Real Estate, Commercial, Land [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		6,380	5,720
Real Estate, Commercial, Land [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		2,237	2,580
Construction Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		25,822	24,662
Construction Loans [Member] | Not Rated [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		1,997	11,252
Construction Loans [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		23,825	13,410
Home Equity Lines of Credit [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		23,109	21,837
Home Equity Line of Credit, Originated Portfolio [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		22,455	20,789
Home Equity Line of Credit, Originated Portfolio [Member] | Not Rated [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		22,328	20,677
Home Equity Line of Credit, Originated Portfolio [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		127	112
Home Equity Line of Credit, Purchased Portfolio [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		654	1,048
Home Equity Line of Credit, Purchased Portfolio [Member] | Not Rated [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		512	802
Home Equity Line of Credit, Purchased Portfolio [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		142	246
Other Financing Receivable [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		637	6,018
Other Financing Receivable [Member] | Not Rated [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		$ 637	2,172
Other Financing Receivable [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans			$ 3,846

[1] Includes $2,874 of commercial leases.

XML

Foreclosed Assets (Narrative) (Details) - property	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Multi-Family Mortgage Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Number of properties		1
Single-Family Mortgage Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Number of Properties transferred into REO	1

XML

Foreclosed Assets (Foreclosed Assets) (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Accounts, Notes, Loans and Financing Receivable [Line Items]
Real estate	$ 204	$ 1,636
Valuation Allowance
Foreclosed assets, net	204	1,636
Commercial Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Real estate		$ 1,636
Single-Family Mortgage Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Real estate	$ 204

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Foreclosed Assets (Expenses Related To Foreclosed Assets) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Foreclosed Assets [Abstract]
Net loss (gain) on sales	$ (4)
Operating expenses, net of rental income	69	137
Foreclosed assets, net	$ 65	$ 137

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Fair Value (Narrative) (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015	Jun. 30, 2015
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans held for sale	$ 2,812	$ 889
Unpaid principal balance of impairment loan at collateral	2,672	3,050
Valuation allowance	21	16
Credit Card Portfolio [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans held for sale			$ 175
Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value on a nonrecurring basis	0	0
Liabilities measured at fair value on a nonrecurring basis	0	0
Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value on a recurring basis	0	0
Liabilities measured at fair value on a recurring basis	0	0
Assets measured at fair value on a nonrecurring basis	0	0
Liabilities measured at fair value on a nonrecurring basis	0	0
Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value on a recurring basis	0	0
Liabilities measured at fair value on a recurring basis	$ 0	$ 0

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Fair Value (Assets And Liabilities Measured At Fair Value On A Recurring Basis, Including Financial Assets And Liabilities) (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Financial Assets:
Total securities available for sale	$ 14,058	$ 9,368
Loans held for sale	2,812	889
Yield maintenance provisions	122	213
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Financial Assets:
Total securities available for sale	14,058	9,368
Loans held for sale	2,812	889
Fair Value, Measurements, Recurring [Member] | U.S. Treasury [Member] | Fair Value, Inputs, Level 2 [Member]
Financial Assets:
Total securities available for sale	13,505	8,536
Fair Value, Measurements, Recurring [Member] | Mortgage-Backed Securities - Residential [Member] | Fair Value, Inputs, Level 2 [Member]
Financial Assets:
Total securities available for sale	357	481
Fair Value, Measurements, Recurring [Member] | Collateralized Mortgage Obligations [Member] | Fair Value, Inputs, Level 2 [Member]
Financial Assets:
Total securities available for sale	196	351
Fair Value, Measurements, Recurring [Member] | Yield maintenance provisions (embedded derivatives) [Member] | Fair Value, Inputs, Level 2 [Member]
Financial Assets:
Yield maintenance provisions	122	213
Fair Value, Measurements, Recurring [Member] | Interest Rate Lock Commitments [Member] | Fair Value, Inputs, Level 2 [Member]
Financial Assets:
Interest rate lock commitments	9	8
Fair Value, Measurements, Recurring [Member] | Interest Rate Swap [Member] | Fair Value, Inputs, Level 2 [Member]
Financial Liabilities:
Interest-rate swaps	$ 122	$ 213

XML

Fair Value (Assets Measured At Fair Value On A Non-Recurring Basis) (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total impaired loans	$ 4,087	$ 6,585
Financial instruments measured at fair value on a non-recurring basis [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total impaired loans	2,650	2,989
Commercial [Member] | Financial instruments measured at fair value on a non-recurring basis [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total impaired loans	130	143
Single-Family Mortgage Loans [Member] | Financial instruments measured at fair value on a non-recurring basis [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total impaired loans	122	128
Multi-Family Mortgage Loans [Member] | Financial instruments measured at fair value on a non-recurring basis [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total impaired loans	37	45
Real Estate, Commercial, Non-Owner Occupied [Member] | Financial instruments measured at fair value on a non-recurring basis [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total impaired loans	2,161	2,215
Real Estate, Commercial, Owner Occupied [Member] | Financial instruments measured at fair value on a non-recurring basis [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total impaired loans	$ 200	213
Real Estate, Commercial, Land [Member] | Financial instruments measured at fair value on a non-recurring basis [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total impaired loans		$ 245

XML

Fair Value (Financial Instruments Measured At Fair Value On A Non-Recurring Basis) (Details) - Financial instruments measured at fair value on a non-recurring basis [Member] - Comparable Sales Approach [Member] - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Commercial [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Fair Value	$ 130	$ 143
Valuation Technique(s)	Comparable sales approach
Unobservable Inputs	Adjustment for differences between the comparable market transactions
Commercial [Member] | Weighted Average [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
(Range) Weighted Average	3.48%	1.10%
Single-Family Mortgage Loans [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Fair Value	$ 122	$ 128
Valuation Technique(s)	Comparable sales approach
Unobservable Inputs	Adjustment for differences between the comparable market transactions
Single-Family Mortgage Loans [Member] | Minimum [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
(Range) Weighted Average	1.81%	(1.23%)
Single-Family Mortgage Loans [Member] | Maximum [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
(Range) Weighted Average	3.61%	4.63%
Single-Family Mortgage Loans [Member] | Weighted Average [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
(Range) Weighted Average	2.91%	(0.17%)
Multi-Family Mortgage Loans [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Fair Value	$ 37	$ 45
Valuation Technique(s)	Comparable sales approach
Unobservable Inputs	Adjustment for differences between the comparable market transactions
Multi-Family Mortgage Loans [Member] | Weighted Average [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
(Range) Weighted Average	9.64%	5.74%
Real Estate, Commercial, Non-Owner Occupied [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Fair Value	$ 2,161	$ 2,215
Valuation Technique(s)	Comparable sales approach
Unobservable Inputs	Adjustment for differences between the comparable market transactions
Real Estate, Commercial, Non-Owner Occupied [Member] | Minimum [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
(Range) Weighted Average	1.10%	1.10%
Real Estate, Commercial, Non-Owner Occupied [Member] | Maximum [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
(Range) Weighted Average	5.74%	5.74%
Real Estate, Commercial, Non-Owner Occupied [Member] | Weighted Average [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
(Range) Weighted Average	1.35%	1.35%
Real Estate, Commercial, Owner Occupied [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Fair Value	$ 200	$ 213
Valuation Technique(s)	Comparable sales approach
Unobservable Inputs	Adjustment for differences between the comparable market transactions
Real Estate, Commercial, Owner Occupied [Member] | Weighted Average [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
(Range) Weighted Average	(4.46%)	(29.30%)
Real Estate, Commercial, Land [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Fair Value		$ 245
Real Estate, Commercial, Land [Member] | Minimum [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
(Range) Weighted Average		(1.89%)
Real Estate, Commercial, Land [Member] | Maximum [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
(Range) Weighted Average		2.54%
Real Estate, Commercial, Land [Member] | Weighted Average [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
(Range) Weighted Average		0.08%

XML

Fair Value (Aggregate Fair Value, Contractual Balance (Including Accrued Interest) And Gain Or Loss) (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Fair Value [Abstract]
Aggregate fair value	$ 2,812	$ 889
Contractual balance	2,801	884
Gain (loss)	$ 11	$ 5

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Fair Value (Amount Of Gains And Losses From Changes In Fair Value Included In Earnings) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Fair Value [Abstract]
Interest income	$ 60	$ 56
Interest expense
Change in fair value	6	(10)
Total change in fair value	$ 66	$ 46

XML

Fair Value (Carrying Amounts And Estimated Fair Values Of Financial Instruments) (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Financial assets
Securities available for sale	$ 14,058	$ 9,368
Loans held for sale	2,812	889
Yield maintenance provisions	122	213
Financial liabilities
Advances by borrowers for taxes and insurance	(408)	(656)
Carrying Value [Member]
Financial assets
Cash and cash equivalents	57,941	25,895
Interest-bearing deposits in other financial institutions	100
Securities available for sale	14,058	9,368
Loans held for sale	2,812	889
Loans, net	346,125	297,064
FHLB stock	1,942	1,942
Accrued interest receivable	1,054	831
Yield maintenance provisions	122	213
Interest rate lock commitments	9	8
Financial liabilities
Deposits	(375,364)	(290,467)
FHLB advances and other borrowings	(13,500)	(14,500)
Advances by borrowers for taxes and insurance	(408)	(656)
Subordinated debentures	(5,155)	(5,155)
Accrued interest payable	(78)	(44)
Interest-rate swaps	(122)	(213)
Fair Value [Member]
Financial assets
Cash and cash equivalents	57,941	25,895
Interest-bearing deposits in other financial institutions	100
Securities available for sale	14,058	9,368
Loans held for sale	2,812	889
Loans, net	343,523	295,498
Accrued interest receivable	1,054	831
Yield maintenance provisions	122	213
Interest rate lock commitments	9	8
Financial liabilities
Deposits	(374,125)	(290,759)
FHLB advances and other borrowings	(13,597)	(14,693)
Advances by borrowers for taxes and insurance	(408)	(656)
Subordinated debentures	(3,411)	(2,269)
Accrued interest payable	(78)	(44)
Interest-rate swaps	(122)	(213)
Fair Value [Member] | Fair Value, Inputs, Level 1 [Member]
Financial assets
Cash and cash equivalents	57,941	25,895
Interest-bearing deposits in other financial institutions	100
Accrued interest receivable	13	1
Financial liabilities
Deposits	(202,158)	(147,523)
Accrued interest payable	(2)
Fair Value [Member] | Fair Value, Inputs, Level 2 [Member]
Financial assets
Interest-bearing deposits in other financial institutions
Securities available for sale	14,058	9,368
Loans held for sale	2,812	889
Accrued interest receivable	40	21
Yield maintenance provisions	122	213
Interest rate lock commitments	9	8
Financial liabilities
Deposits	(171,967)	(143,236)
FHLB advances and other borrowings	(13,597)	(14,693)
Subordinated debentures	(3,411)	(2,269)
Accrued interest payable	(76)	(44)
Interest-rate swaps	(122)	(213)
Fair Value [Member] | Fair Value, Inputs, Level 3 [Member]
Financial assets
Interest-bearing deposits in other financial institutions
Loans, net	343,523	295,498
Accrued interest receivable	1,001	809
Financial liabilities
Advances by borrowers for taxes and insurance	$ (408)	$ (656)

XML

Loan Servicing (Narrative) (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Loan Servicing [Abstract]
Custodial escrow balances maintained in connection with serviced loans	$ 119	$ 132

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Loan Servicing (Principal Balances of Mortgage Loans at Year-End) (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Loan Servicing [Abstract]
Mortgage loans serviced for Freddie Mac	$ 4,261	$ 5,593

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Premises And Equipment (Narrative) (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2016 USD ($) contract	Dec. 31, 2015 USD ($)
Property, Plant and Equipment [Line Items]
Depreciation	$ 211	$ 211
Number of operating leases | contract	2
Lease expenses	$ 311	$ 319
Woodmere Lease [Member]
Property, Plant and Equipment [Line Items]
Operating lease term	128 months
Fairlawn Branch [Member]
Property, Plant and Equipment [Line Items]
Operating lease term	10 years
Renewal option term	5 years

XML

Premises And Equipment (Year-End Premises and Equipment) (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Premises And Equipment [Abstract]
Land and land improvements	$ 1,293	$ 1,293
Buildings	3,832	3,827
Furniture, fixtures and equipment	2,150	2,655
Premises and equipment, gross	7,275	7,775
Less: Accumulated Depreciation	(3,846)	(4,166)
Premises and equipment, net	$ 3,429	$ 3,609

XML

Premises And Equipment (Rent Commitments) (Details) $ in Thousands	Dec. 31, 2016 USD ($)
Premises And Equipment [Abstract]
2017	$ 320
2018	321
2019	322
2020	324
2021	325
Thereafter	858
Total	$ 2,470

XML

Deposits (Narrative) (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Deposits [Abstract]
Time deposits, $100,000 or more	$ 128,185	$ 106,574
Time deposits, $250,000 or more	38,575	23,970
Brokered deposits	$ 29,738	$ 22,073

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Deposits (Scheduled Maturities of Time Deposits) (Details) $ in Thousands	Dec. 31, 2016 USD ($)
Deposits [Abstract]
2017	$ 108,620
2018	33,617
2019	7,749
2020	14,626
2021	7,697
Thereafter
Total	$ 172,309

XML

FHLB Advances (Narrative) (Details) $ in Thousands	Dec. 31, 2016 USD ($)
FHLB Advances [Abstract]
Amount available of FHLB	$ 44,498

XML

FHLB Advances (Advances From FHLB) (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
FHLB Advances [Abstract]
2017, Weighted Average Rate	1.12%
2019, Weighted Average Rate	1.62%
2020, Weighted Average Rate	2.02%
2021, Weighted Average Rate	2.32%
Due in one year	$ 2,500	$ 5,000
Due in two years		1,500
Due in three years	3,500
Due in four years	3,500	2,500
Due in five years	4,000	2,500
Due after year five		3,000
Total	$ 13,500	$ 14,500

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FHLB Advances (Schedule Of Federal Home Loan Advances Pledged By Assets) (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Collateral pledged to secure advances	$ 61,616	$ 47,660
Securities [Member]
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Collateral pledged to secure advances	2,327	3,530
Cash [Member]
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Collateral pledged to secure advances	3,300	3,300
Single-Family Mortgage Loans [Member]
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Collateral pledged to secure advances	38,342	29,490
Multi-Family Mortgage Loans [Member]
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Collateral pledged to secure advances	14,854	8,185
Commercial Real Estate [Member]
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Collateral pledged to secure advances	$ 2,793	$ 3,155

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FHLB Advances - Federal Home Loan Advances Outstanding Maturity Period (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
FHLB Advances [Abstract]
2017	$ 2,500	$ 5,000
2018		1,500
2019	3,500
2020	3,500	2,500
2021	4,000	2,500
Thereafter		3,000
Total	$ 13,500	$ 14,500

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Other Borrowings (Narrative) (Details) - USD ($)	Dec. 31, 2016	Dec. 31, 2015
Debt Disclosure [Line Items]
Line of credit with a commercial bank	$ 1,000,000	$ 1,000,000
Federal Reserve Bank Advances [Member]
Debt Disclosure [Line Items]
Outstanding borrowings	0	0
Debt instrument maximum borrowing capacity amount	31,846,000
Credit Card Portfolio [Member]
Debt Disclosure [Line Items]
Outstanding borrowings	$ 0	$ 0

XML

Other Borrowings (Assets Pledged As Collateral With FRB) (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Accounts, Notes, Loans and Financing Receivable [Line Items]
Assets pledged as collateral with the FRB	$ 55,610	$ 57,398
Commercial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Assets pledged as collateral with the FRB	16,380	19,696
Commercial Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Assets pledged as collateral with the FRB	$ 39,230	$ 37,702

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Subordinated Debentures (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2008	Dec. 31, 2003
Subsidiary, Sale of Stock [Line Items]
Subordinated debentures	$ 5,155	$ 5,155		$ 5,155
Holding Company's investment in the common stock	155
Holding Company may redeem the subordinated debentures in a principal amount with integral multiples			$ 1
Percentage in which holding company redeem subordinated debentures			100.00%
Current interest paid	$ 3,061	$ 2,612
Private Placement [Member]
Subsidiary, Sale of Stock [Line Items]
Holding Company, closed a pooled private offering				5,000
Trust preferred securities with a liquidation amount				$ 1
Subordinated Debentures Maturing On December 30,2033 [Member]
Subsidiary, Sale of Stock [Line Items]
Maturity date of subordinated debentures	Dec. 30, 2033
Trust preferred securities and subordinated debentures have a stated percentage	3.85%	3.45%
Subordinated [Member]
Subsidiary, Sale of Stock [Line Items]
Number of years with no principal repayment	5 years
Maximum number of years for deferred interest payments	5 years
London Interbank Offered Rate [Member]
Subsidiary, Sale of Stock [Line Items]
Trust preferred securities and subordinated debentures have a variable rate of interest	2.85%	2.85%

XML

Benefit Plans (Details) - USD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2017	Dec. 31, 2016	Jun. 30, 2016	Dec. 31, 2015	Jun. 30, 2015	Jun. 30, 2014
Life Insurance Benefits [Member]
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Benefit plan expense		$ (3)		$ (2)
Accrued interest payable and other liabilities Total		$ 210		213
401 (k) plan [Member]
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Percentage of amount allowable under federal tax regulations		25.00%
Percentage of compensation contributed under federal tax regulations		8.00%
Benefit plan expense		$ 49		52
Salary Continuation Agreement [Member]
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Benefit plan expense		10		11
Accrued interest payable and other liabilities Total		218		$ 233
Annual benefit for 20 years		$ 25
Duration of Annual benefit		20 years
Multi-employer pension plan [Member]
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Unfunded liability			$ 53		$ 36
CFBank's contributions			$ 22
Funded status			94.90%		96.52%
Total contributions made to Pentegra DB Plan					$ 163	$ 191
Percentage of amount allowable under federal tax regulations					5.00%	5.00%
Multi-employer pension plan [Member] | Scenario, Forecast [Member]
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
CFBank's contributions	$ 42

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Income Taxes (Narrative) (Details)	9 Months Ended	12 Months Ended
	Sep. 30, 2015 USD ($)	Dec. 31, 2016 USD ($) item	Dec. 31, 2015 USD ($)	Dec. 31, 2014	Dec. 31, 2012 USD ($)	Dec. 31, 2009 USD ($)
Tax effect	$ 0	$ 810,000	$ (3,193,000)
Number of consecutive quarters of pretax income | item		7
Proceeds from sale of common stock					$ 22,500,000
Net operating loss carry forwards		$ 23,059,000
Alternative minimum tax credit carryforwards		50,000	$ 105,000
Carryforwards utilize limit before the stock offering closed		163,000
Unutilized operating loss carryforwards that will expire		20,520,000
Reduced deferred tax assets and valuation allowance		6,977,000
Deferred tax liability to be recorded		$ 765,000
Federal income tax rate		34.00%	34.00%	34.00%
Additional bad debt deductions provided by Federal income tax laws		$ 2,250,000
Deferred tax asset		2,627,000	$ 3,254,000
Deferred tax asset						$ 0
Unrecognized tax benefits		$ 0	$ 0
Minimum [Member]
Net operating loss carryforwards expiration year		2024
Maximum [Member]
Net operating loss carryforwards expiration year		2033

XML

Income Taxes (Income Tax Expense) (Details) - USD ($)		9 Months Ended	12 Months Ended
		Sep. 30, 2015	Dec. 31, 2016	Dec. 31, 2015
Operating Loss Carryforwards [Line Items]
Current federal			$ 187,000	$ 58,000
Deferred federal	[1]		623,000	(3,251,000)
Income tax (expense) benefit		$ 0	810,000	(3,193,000)
Operating Loss Carryforwards [Member]
Operating Loss Carryforwards [Line Items]
Deferred federal			717,000	531,000
Parent Company [Member]
Operating Loss Carryforwards [Line Items]
Income tax (expense) benefit			$ 236,000	$ 1,798,000

[1] Includes tax benefit of operating loss carryforwards of $717 and $531 for the years ended December 31, 2016 and 2015.

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Income Taxes (Effective Tax Rates Differ from Federal Statutory Rate) (Details) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2015	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Federal income tax rate		34.00%	34.00%	34.00%
Federal statutory rate times financial statement income (loss)		$ 829,000	$ 436,000
Incentive Stock Options		6,000	33,000
Bank owned life insurance income		(45,000)	(45,000)
Increase (decrease) in deferred tax valuation allowance			(3,656,000)
Other		20,000	39,000
Income tax (expense) benefit	$ 0	$ 810,000	$ (3,193,000)
Effective tax rate		33.00%	(249.00%)
Parent Company [Member]
Income tax (expense) benefit		$ 236,000	$ 1,798,000

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Income Taxes (Deferred Tax Assets and Liabilities) (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Deferred tax assets:
Allowance for loan and lease losses	$ 1,575	$ 1,497
Compensation related issues	353	314
Deferred loan fees	155	118
ATM Credit	50	105
Nonaccrual interest	41	132
Net operating loss carryforward	863	1,580
Other	70	2
Gross deferred tax assets	3,107	3,748
Deferred tax liabilities:
FHLB stock dividend	366	366
Mortgage servicing rights	2	4
Depreciation	47	43
Prepaid expenses	63	78
Mark-to-market Loans	2	3
Deferred tax liabilities	480	494
Net deferred tax asset	$ 2,627	$ 3,254

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Related-Party Transactions (Narrative) (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Related-Party Transactions [Abstract]
Deposits from principal officers, directors, and their affiliates	$ 274	$ 262

XML

Related-Party Transactions (Loans to Principal Officers, Directors and Affiliates) (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2016 USD ($)
Related-Party Transactions [Abstract]
Beginning balance	$ 635
New loans	1,826
Effect of changes in composition of related parties
Repayments	(62)
Ending balance	$ 2,399

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Stock-Based Compensation (Narrative) (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2016 USD ($) ShareBasedCompensationPlan shares	Dec. 31, 2015 USD ($) shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of stock-based compensation plans | ShareBasedCompensationPlan	3
Compensation cost | $	$ 122	$ 134
Total income tax (expense) benefit | $	$ 35	$ 13
Shares cancelled or forfeited	23,950
Shares Granted	0	0
Shares, Vested	66,834
2003 Equity Compensation Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of Shares Authorized	100,000
2009 Equity Compensation Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares available to be issued	1,500,000
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant	539,792
Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting periods exercisable from date of grant	10 years
Stock Options [Member] | 1999 Stock-Based Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of Shares Authorized	38,778
Stock Options [Member] | 2009 Equity Compensation Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of Shares Authorized	200,000
Stock Options [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting periods	1 year
Stock Options [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting periods	3 years
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares available to be issued	292,000	200,500
Unrecognized compensation cost | $	$ 642	$ 272
Restricted Stock [Member] | 1999 Stock-Based Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of Shares Authorized	15,511
Restricted Stock [Member] | 2003 Equity Compensation Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of Shares Authorized	30,000
Restricted Stock [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting periods	1 year
Restricted Stock [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting periods	3 years

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Stock-Based Compensation (Summary Of Stock Option Activity) (Details) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2016 USD ($) $ / shares shares
Stock-Based Compensation [Abstract]
Shares, Outstanding at beginning of year | shares	566,696
Shares Cancelled or Forfeited | shares	(23,950)
Shares, Outstanding at end of year | shares	542,746
Shares, Exercisable at end of period | shares	542,746
Weighted Average Exercise Price, Beginning Balance | $ / shares	$ 1.48
Weighted Average Exercise Price, Cancelled or Forfeited | $ / shares	2.01
Weighted Average Exercise Price, Ending Balance | $ / shares	1.46
Weighted Average Exercise Price, Exercisable at end of period | $ / shares	$ 1.46
Outstanding at end of period	6 years 4 months 24 days
Exercisable at end of period	6 years 4 months 24 days
Intrinsic value, Outstanding at end of year | $	$ 198,040
Intrinsic Value Exercisable at end of period | $	$ 198,040

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Stock-Based Compensation (Summary Of Changes In Company's Nonvested Restricted Shares) (Details)	12 Months Ended
	Dec. 31, 2016 $ / shares shares
Stock-Based Compensation [Abstract]
Shares, Nonvested at January 1, 2015 | shares	200,500
Shares, Granted | shares	292,000
Shares, Vested | shares	(66,834)
Shares, Nonvested at December 31, 2015 | shares	425,666
Weighted Average Grant date Fair Value, Nonvested at January 1, 2015 | $ / shares	$ 1.37
Weighted Average Grant date Fair Value, Granted | $ / shares	1.64
Weighted Average Grant date Fair Value, Vested | $ / shares	1.37
Weighted Average Grant date Fair Value, Nonvested at December 31, 2015 | $ / shares	$ 1.56

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Preferred Stock (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2003
Schedule of Capitalization, Equity [Line Items]
Aggregate value	$ 5	$ 5
Private Placement [Member]
Schedule of Capitalization, Equity [Line Items]
Liquidation preference			$ 1
Series B Preferred Stock [Member]
Schedule of Capitalization, Equity [Line Items]
Issuance of preferred stock	480,000	480,000
Series B Preferred Stock [Member] | McDonald Partners, LLC [Member] | Private Placement [Member]
Schedule of Capitalization, Equity [Line Items]
Issuance of preferred stock	480,000
Preferred stock rate	6.25%
Share Price	$ 25.00
Aggregate value	$ 12,000
Placement fees	482
Other offering expenses	149
Net proceeds from issuance of Series B preferred stock	$ 11,369
Warrants issued	2.00
Warrant, value	$ 700
Warrant, shares	28,000
Common Stock [Member]
Schedule of Capitalization, Equity [Line Items]
Warrants issued		1,152,125
Common Stock [Member] | McDonald Partners, LLC [Member] | Private Placement [Member]
Schedule of Capitalization, Equity [Line Items]
Warrants issued	3.25
Warrant, value	$ 700
Warrant, shares	28,000

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Common Stock Warrants (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Series B Preferred Stock [Member]
Class of Warrant or Right [Line Items]
Issuance of preferred stock	480,000	480,000
Common Stock [Member]
Class of Warrant or Right [Line Items]
Warrants issued	1,152,125
Warrant exercise period	5 years
Exercise price of warrant	$ 1.85
Private Placement [Member] | McDonald Partners, LLC [Member] | Series B Preferred Stock [Member]
Class of Warrant or Right [Line Items]
Warrants issued		2.00
Warrant, value		$ 700
Warrant, shares		28,000
Issuance of preferred stock		480,000
Private Placement [Member] | McDonald Partners, LLC [Member] | Common Stock [Member]
Class of Warrant or Right [Line Items]
Warrants issued		3.25
Warrant, value		$ 700
Warrant, shares		28,000

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Regulatory Capital Matters (Narrative) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Future percent of common equity to risk-weighted assets	2.50%
Tier 1 (Core) Capital	5.00%	5.00%
Total capital to risk weighted assets	10.00%	10.00%
Percent of Qualified Thrift Lender test requires		65.00%
Opening balance in liquidation account	$ 14,300
CF Bank [Member]
Tier 1 (Core) Capital	8.00%	8.00%
Total capital to risk weighted assets	12.00%	12.00%

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Regulatory Capital Matters (Actual And Required Capital Amounts And Ratios Of CFBank) (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Total Capital to risk weighted assets, Actual Amount	$ 45,118	$ 41,528
Tier 1 (Core) Capital to risk weighted assets, Actual Amount	40,556	37,694
Common equity tier 1 capital to risk-weighted assets, Actual Amount	40,556	37,694
Tier 1 (Core) Capital to adjusted total assets, Actual Amount	$ 40,556	$ 37,694
Total Capital to risk weighted assets, Actual Ratio	12.46%	13.67%
Tier 1 (Core) Capital to risk weighted assets, Actual Ratio	11.20%	12.40%
Common equity tier 1 capital to risk-weighted assets, Actual Ratio	11.20%	12.40%
Tier 1 (Core) Capital to adjusted total assets, Actual Ratio	9.66%	11.12%
Total Capital to risk weighted assets, For Capital Adequacy Purposes Amount		$ 24,310
Tier 1 (Core) Capital to risk weighted assets, For Capital Adequacy Purposes Amount		18,233
Common equity tier 1 capital to risk-weighted assets, For Capital Adequacy Purposes Amount		13,675
Tier 1 (Core) Capital to adjusted total assets, For Capital Adequacy Purposes Amount		$ 13,557
Total Capital to risk weighted assets, For Capital Adequacy Purposes Ratio		8.00%
Tier 1 (Core) Capital to risk weighted assets, For Capital Adequacy Purposes Ratio		6.00%
Common equity tier 1 capital to risk-weighted assets, For Capital Adequacy Purposes Ratio		4.50%
Tier 1 (Core) Capital to adjusted total assets, For Capital Adequacy Purposes Ratio		4.00%
Capital Required to be Well Capitalized	$ 36,218	$ 30,388
Tier One Risk Based Capital Required to be Well Capitalized	28,974	24,310
Common equity tier 1 capital to risk-weighted assets, To Be Well Capitalized Under Applicable Regulatory Action Regulations Amount	23,542	19,752
Tier One Leverage Capital Required to be Well Capitalized	$ 20,991	$ 16,946
Capital Required to be Well Capitalized to Risk Weighted Assets	10.00%	10.00%
Tier One Risk Based Capital Required to be Well Capitalized to Risk Weighted Assets	8.00%	8.00%
Common equity tier 1 capital to risk-weighted assets, To Be Well Capitalized Under Applicable Regulatory Action Regulations Ratio	6.50%	6.50%
Tier One Leverage Capital Required to be Well Capitalized to Average Assets	5.00%	5.00%
Basel III Phase-In Schedule [Member]
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Total Capital to risk weighted assets, For Capital Adequacy Purposes Amount	$ 31,256
Tier 1 (Core) Capital to risk weighted assets, For Capital Adequacy Purposes Amount	24,013
Common equity tier 1 capital to risk-weighted assets, For Capital Adequacy Purposes Amount	18,580
Tier 1 (Core) Capital to adjusted total assets, For Capital Adequacy Purposes Amount	$ 16,792
Total Capital to risk weighted assets, For Capital Adequacy Purposes Ratio	8.63%
Tier 1 (Core) Capital to risk weighted assets, For Capital Adequacy Purposes Ratio	6.63%
Common equity tier 1 capital to risk-weighted assets, For Capital Adequacy Purposes Ratio	5.13%
Tier 1 (Core) Capital to adjusted total assets, For Capital Adequacy Purposes Ratio	4.00%
Basel III Fully Phased-In [Member]
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Total Capital to risk weighted assets, For Capital Adequacy Purposes Amount	$ 38,029
Tier 1 (Core) Capital to risk weighted assets, For Capital Adequacy Purposes Amount	30,785
Common equity tier 1 capital to risk-weighted assets, For Capital Adequacy Purposes Amount	25,353
Tier 1 (Core) Capital to adjusted total assets, For Capital Adequacy Purposes Amount	$ 16,792
Total Capital to risk weighted assets, For Capital Adequacy Purposes Ratio	10.50%
Tier 1 (Core) Capital to risk weighted assets, For Capital Adequacy Purposes Ratio	8.50%
Common equity tier 1 capital to risk-weighted assets, For Capital Adequacy Purposes Ratio	7.00%
Tier 1 (Core) Capital to adjusted total assets, For Capital Adequacy Purposes Ratio	4.00%

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Derivative Instruments (Narrative) (Details) - USD ($)	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Derivative [Line Items]
Notional amount	$ 2,280,000	$ 2,877,000
Derivative assets	122,000	213,000
Net gain/loss recognised of fair value of yield maintenance provisions	0	0
Net gains (losses) recognized in earnings	7,000	(28,000)
Interest Rate Swap [Member]
Derivative [Line Items]
Notional amount	2,280,000	2,877,000
Interest-rate swaps	695,000
Interest Rate Lock Commitments [Member]
Derivative [Line Items]
Derivative assets	8,000	8,000
Interest rate lock commitments related to residential mortgage loans	$ 2,164,000	$ 1,560,000

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Derivative Instruments (Summary Of Derivative Instruments) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Derivative Instruments [Abstract]
Notional amount	$ 2,280	$ 2,877
Weighted average pay rate on interest-rate swaps	3.74%	3.67%
Weighted average receive rate on interest-rate swaps	0.75%	0.39%
Weighted average maturity (years)	3 years 1 month 6 days	4 years
Fair value of interest-rate swaps	$ (122)	$ (213)
Yield maintenance provisions	$ 122	$ 213

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Loan Commitments and Other Related Activities (Narrative) (Details)	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Contractual Commitments Contingencies And Off Balance Sheet Arrangements [Line Items]
Period for commitments and construction loan commitments	60 days
Construction Loans [Member]
Contractual Commitments Contingencies And Off Balance Sheet Arrangements [Line Items]
Period for commitments and construction loan commitments	1 year
Minimum [Member]
Contractual Commitments Contingencies And Off Balance Sheet Arrangements [Line Items]
Interest rates for fixed rate loan commitments	1.75%	4.25%
Maturities for fixed rate loan commitments	2 months	3 months
Maximum [Member]
Contractual Commitments Contingencies And Off Balance Sheet Arrangements [Line Items]
Interest rates for fixed rate loan commitments	6.50%	6.50%
Maturities for fixed rate loan commitments	30 years	14 years

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Loan Commitments and Other Related Activities (Contractual Amounts of Financial Instruments with Off-Balance-Sheet Risk) (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Commitments To Make Loans [Member]
Other Contingencies And Commitments [Line Items]
Fixed Rate	$ 21,335	$ 4,623
Variable Rate	22,171	15,187
Unused Lines Of Credit [Member]
Other Contingencies And Commitments [Line Items]
Fixed Rate	3,714	647
Variable Rate	29,621	19,764
Standby Letters Of Credit [Member]
Other Contingencies And Commitments [Line Items]
Fixed Rate	$ 991	$ 1,154

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Parent Company Only Condensed Financial Information (Condensed Balance Sheets) (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2003
ASSETS
Cash and cash equivalents	$ 57,941	$ 25,895	$ 28,207
Other assets	4,571	6,093
Total assets	436,112	351,293
Liabilities and Equity
Subordinated debentures	5,155	5,155		$ 5,155
Stockholders' equity	39,292	38,312	34,509
Total liabilities and stockholder's equity	436,112	351,293
Parent Company [Member]
ASSETS
Cash and cash equivalents	2,197	2,673	$ 3,025
Investment in banking subsidiary	41,448	37,745
Investment in and advances to other subsidiary	225	222
Other assets	901	3,112
Total assets	44,771	43,752
Liabilities and Equity
Subordinated debentures	5,155	5,155
Accrued expenses and other liabilities	324	285
Stockholders' equity	39,292	38,312
Total liabilities and stockholder's equity	$ 44,771	$ 43,752

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Parent Company Only Condensed Financial Information (Condensed Statements Of Operations) (Details) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2015	Dec. 31, 2016	Dec. 31, 2015
Interest income		$ 14,409,000	$ 12,405,000
Other income		169,000	412,000
Interest expense		3,096,000	2,608,000
Loss before income tax and undistributed subsidiary income		2,437,000	1,284,000
Tax effect	$ 0	810,000	(3,193,000)
Net income		1,627,000	4,477,000
Comprehensive income		1,638,000	4,417,000
Parent Company [Member]
Interest income		2,000	1,000
Other income		131,000	291,000
Interest expense		185,000	164,000
Other expense		646,000	548,000
Loss before income tax and undistributed subsidiary income		(698,000)	(420,000)
Tax effect		236,000	1,798,000
Gain (loss) after income tax and undistributed subsidiary income		(462,000)	1,378,000
Equity in undistributed subsidiary income		2,089,000	3,099,000
Net income		1,627,000	4,477,000
Comprehensive income		$ 1,638,000	$ 4,417,000

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Parent Company Only Condensed Financial Information (Condensed Statements Of Cash Flows) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Cash flows from operating activities
Net income	$ 1,627	$ 4,477
Net cash from operating activities	1,792	5,102
Cash flows from financing activities:
Purchase of treasury shares	(30)
Dividends paid on Series B preferred stock	(750)	(750)
Net cash from financing activities	82,853	31,633
Net change in cash and cash equivalents	32,046	(2,312)
Beginning cash and cash equivalents	25,895	28,207
Ending cash and cash equivalents	57,941	25,895
Parent Company [Member]
Cash flows from operating activities
Net income	1,627	4,477
Effect of subsidiaries' operations	(2,089)	(3,099)
Change in other assets and other liabilities	766	(980)
Net cash from operating activities	304	398
Cash flows from financing activities:
Purchase of treasury shares	(30)
Dividends paid on Series B preferred stock	(750)	(750)
Net cash from financing activities	(780)	(750)
Net change in cash and cash equivalents	(476)	(352)
Beginning cash and cash equivalents	2,673	3,025
Ending cash and cash equivalents	$ 2,197	$ 2,673

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Earnings (Loss) Per Common Share (Computation of Earnings Per Share) (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Basic
Net earnings (loss)	$ 1,627	$ 4,477
Dividends on Series B preferred stock and accretion of discount	(857)	(857)
Net income attributable to common stockholders	$ 770	$ 3,620
Weighted average common shares outstanding including unvested share-based payment awards	16,020,847	15,857,127
Less: Unvested share-based payment awards
Average shares	16,020,847	15,857,127
Basic earnings per common share	$ 0.05	$ 0.23
Diluted
Add back: Preferred Dividends on Series B stock	$ 857	$ 857
Net loss allocated to common stockholders	$ 770	$ 4,477
Add: Dilutive effects of assumed exercises of stock options	38,184	8,473
Add: Dilutive effects of assumed exercises of Series B preferred stock		6,857,143
Average shares and dilutive potential common shares	16,059,031	22,722,743
Diluted loss per common share	$ 0.05	$ 0.20

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Earnings (Loss) Per Common Share (Summary of Anti-Dilutive Options or Warrants) (Details) - shares	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Stock Options [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive shares	282,971	417,058
Series B Preferred Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive shares	6,857,143
Stock Warrants [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive shares	1,152,125	1,152,125

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Accumulated Other Comprehensive Income (Details) - USD ($) $ in Thousands		12 Months Ended
		Dec. 31, 2016	Dec. 31, 2015
Accumulated Other Comprehensive Income (Loss) [Line Items]
Accumulated other comprehensive income (loss), beginning of period		$ (9)
Other comprehensive income (loss), net of tax		11	$ (60)
Accumulated other comprehensive income (loss), end of period		2	(9)
Unrealized Gains and Losses on Available-for-Sale Securities [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Accumulated other comprehensive income (loss), beginning of period	[1]	(9)	51
Other comprehensive gain (loss) before reclassifications	[1]	11	(72)
Less amount reclassified from accumulated other comprehensive loss	[1],[2]		12
Other comprehensive income (loss), net of tax	[1]	11	(60)
Accumulated other comprehensive income (loss), end of period	[1]	$ 2	$ (9)

[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 year ended December 31, 2016. There was $12 reclassified out of other comprehensive income for year ended December 31, 2015 due to an early redemption of a municipal security.