10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-K

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

For the Fiscal Year ended December 31, 2020

Or

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

For the transition period from __________ to______________

Commission File Number 0-25045

CF BANKSHARES INC.

(Exact name of registrant as specified in its charter)

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

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	CFBK	Nasdaq® Capital Market
(Title of Class)	(Trading Symbol)	(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, every Interactive Data File required to be submitted 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 such files.)

YES[X]    NO [  ]

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

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

Emerging growth company [  ]

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

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

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, 2020was $68.3 million based upon the closing price as reported on the Nasdaq® Capital Market for that date.

As of March8, 2021, there were 5,385,256shares of the registrant’s (Voting) Common Stock outstanding and 1,260,700 shares of the registrant’s Non-Voting Common Stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s Annual Report to Stockholders  for its fiscal year ended December 31, 2020,  included as Exhibit 13.1 to this Form 10-K,and its Proxy Statement for the Annual Meeting of Stockholders  to be held on June 2,2021,  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	31
Item 1B.	Unresolved Staff Comments	42
Item 2.	Properties	43
Item 3.	Legal Proceedings	43
Item 4.	Mine Safety Disclosures	43
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	44
Item 6.	Selected Financial Data	44
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	44
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	44
Item 8.	Financial Statements and Supplementary Data	45
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	45
Item 9A.	Controls and Procedures	45
Item 9B.	Other Information	45
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	45
Item 11.	Executive Compensation	46
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	46
Item 13.	Certain Relationships and Related Transactions, and Director Independence	46
Item 14.	Principal Accounting Fees and Services	46
PART IV
Item 15.	Exhibits and Financial Statement Schedules	46
Item 16.	Form 10-K Summary	48
SIGNATURES		49

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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 share of common stock, capital structure and other financial items; (2) plans and objectives of the management or Boards of Directors of CF Bankshares, Inc. (the “Holding Company”) or CFBank, National Association (“CFBank”); (3) statements regarding future events, actions or economic performance; and (4) statements of assumptions underlying such statements.  Words such as "estimate," "strategy," "may," "believe," "anticipate," "expect," "predict," "will," "intend," "plan," "targeted," and the negative of these terms, or similar expressions, are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements.  Various risks and uncertainties may cause actual results to differ materially from those indicated by our forward-looking statements, including, without limitation, those risks set forth in the section captioned “RISK FACTORS” in Part I, Item 1A of this Form 10-K. 

Forward-looking statements are not guarantees of performance or results.  A forward-looking statement may include a statement of the assumptions or bases underlying the forward-looking statement.  We believe that we have chosen these assumptions or bases in good faith and that they are reasonable.  We caution you, however, that assumptions or bases almost always vary from actual results, and the differences between assumptions or bases and actual results can be material.  The forward-looking statements included in this earnings release speak only as of the date hereof.  We undertake no obligation to publicly release revisions to any forward-looking statements to reflect events or circumstances after the date of such statements, except to the extent required by law.

PART I

Item 1.  Business.

General

The Holding Company was organized as a Delaware corporation in September 1998 as the holding company for CFBank,in connection with CFBank’s conversion from a mutual to stock form of organization.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.  Effective as of July 27, 2020, the Holding Company changed its name from Central Federal Corporation to CF Bankshares Inc.  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 CF Bankshares, Inc. and its subsidiaries, unless the context indicates to the contrary.

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

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

Currently, the Company does not transact material business other than through CFBank.  At December 31, 2020, the Company’s assets totaled $1.5 billion and stockholders’ equity totaled $110.2 million. 

CFBank has a presence in four major metro Ohio markets – Columbus, Cleveland, Cincinnati and Akron – as well as its two branch locations in Columbiana County, Ohio.  CFBank provides personalized Business Banking products and services including commercial loans and leases, commercial and residential real estate loans, equipment leasing, SBA loans and treasury management depository services.  In addition, CFBank also has a national residential lending platform.  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.  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.

Our revenues are derived principally from the generation of interest and fees on loans originated and noninterest income generated on the sale of loans.  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 and our loan production office in Columbus, Ohio; Summit County through our office in Fairlawn, Ohio; Hamilton County through our offices in Glendale and Blue Ash, 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 business loans primarily throughout Ohio, and residential real estate loans on a national basis.

Pending Sale of Columbiana County, Ohio Branches

On December 29, 2020, CFBank entered into a Branch Purchase and Assumption Agreement (the “P&A Agreement”) with Consumers National Bank (“Consumers”) pursuant to which Consumers will acquire the two branches of CFBank in Columbiana County, Ohio – CFBank’s drive-up branch location in Wellsville, Ohio and CFBank’s branch location in Calcutta, Ohio (the “Branches”).

The P&A Agreement provides for the sale and transfer by CFBank to Consumers of the land, buildings and other associated assets of the Branches; approximately $100 million in deposits attributable to the Branches; $15 million in aggregate principal amount of subordinated debt securities issued by unrelated financial institutions and held in CFBank’s portfolio; all performing loans attributable to the Branches which are outstanding at closing (totaling approximately $3.1 million in aggregate principal amount as of November 30, 2020); and up to $13.5 million in aggregate principal amount of single family residential mortgage loans and home equity lines of credit to be identified by the parties prior to the closing principally from CFBank’s Northeast Ohio loan portfolio.  In exchange, Consumers will pay to CFBank the net book value of the land, building and associated assets of the Branches, a deposit premium equal to 1.75% of the average daily deposits of the Branches for the 30 days preceding the closing, and the par value of the subordinated debt securities and loans acquired by Consumers. 

The closing of the transactions contemplated by the P&A Agreement is subject to regulatory approval and satisfaction of other customary closing conditions.  The parties expect the closing of the transactions to occur in the third calendar quarter of 2021.

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 and Lease Portfolio Composition.Ourloan and lease portfolio consists primarily of commercial, commercial real estate and multi-family mortgage loans,mortgage loans secured by single-family residences and, to a lesser degree, consumer loans.It also consists of a portfolio of residential mortgage loans totaling $15.7 millionas a result of participation in the Northpointe Mortgage Purchase Program.  See Note 4 to the Consolidated Financial Statements included in our 2020 Annual Report to Stockholders (our “2020 Annual Report”), 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, 2020,grossloans receivable totaled  $912.4 million and increased approximately $242.0 million, or 36.1%, from $670.4 million at December 31, 2019.  Commercial, commercial real estate and multi-family mortgage loans, including related construction loans, totaled $729.8million in the aggregate and represented 80.0%  of the gross loan portfolio at December 31, 2020as compared to76.1% of the gross loan portfolioat December 31, 2019.Commercial, commercial real estate and multi-family mortgage loan balances, including related construction loans,increased  $219.8 million, or 43.1%, during 2020.Portfoliosingle-family residential mortgage loans, including related construction loans and residential mortgage loans originated throughthe Northpointe Mortgage Purchase Program, totaled $159.2 million and represented 17.4% of total gross loans at year-end 2020,compared to 20.2% at year-end 2019.The remainder of our loan portfolio consists ofconsumer loans, whichtotaled$23.4 million, or 2.6% of gross loans receivable, at year-end 2020.

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 FRB and legislative tax policies.

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The following table sets forth the composition of CFBank’sloan and lease portfolio in dollar amounts andas a percentage of the portfolio at the dates indicated.

	December 31,
	2020			2019			2018			2017			2016
			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	$	147,860	16.21%	$	120,256	17.94%	$	118,386	21.23%	$	95,578	23.12%	$	92,544	26.21%
Multi-family		45,375	4.97%		39,229	5.85%		47,651	8.54%		35,665	8.63%		34,291	9.71%
Construction		80,426	8.82%		67,652	10.09%		61,792	11.08%		42,862	10.37%		25,822	7.31%
Commercial real estate		277,028	30.36%		247,543	36.92%		173,435	31.10%		111,866	27.06%		105,313	29.83%
Total real estate mortgage loans		550,689	60.36%		474,680	70.80%		401,264	71.95%		285,971	69.18%		257,970	73.06%
Consumer loans:
Home equity loans		1,316	0.14%		4,023	0.61%		5,321	0.95%		224	0.05%		479	0.14%
Home equity lines of credit		20,962	2.30%		20,941	3.12%		23,961	4.30%		25,054	6.06%		23,109	6.55%
Other		1,113	0.12%		151	0.02%		262	0.05%		152	0.04%		158	0.04%
Total consumer loans		23,391	2.56%		25,115	3.75%		29,544	5.30%		25,430	6.15%		23,746	6.73%
Commercial loans (1)		338,286	37.08%		170,646	25.45%		126,887	22.75%		101,975	24.67%		71,334	20.21%
Total loans receivable		912,366	100.0%		670,441	100.0%		557,695	100.0%		413,376	100.0%		353,050	100.0%
Less:
Allowance for loan and lease losses		(17,022)			(7,138)			(7,012)			(6,970)			(6,925)
Loans receivable, net	$	895,344		$	663,303		$	550,683		$	406,406		$	346,125

⁽¹⁾ Includes commercial leases of$4,133 at December 31, 2020, $4,779 at December 31, 2019,  $5,403at December 31, 2018 and$6,008 at December 31, 2017.

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Loan Maturity.  The following table shows the remaining contractual maturity of CBank’s loan portfolio at December 31, 2020.  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, 2020
	Real Estate Mortgage Loans(1)		Consumer Loans		Commercial Loans		Total Loans Receivable
	(Dollars in thousands)
Amounts due:
Within one year	$	81,079	$	128	$	52,069	$	133,276
After one year:
More than one year to three years		109,714		14		140,914		250,642
More than three years to five years		83,675		165		46,813		130,653
More than five years to 10 years		126,385		1,117		95,354		222,856
More than 10 years to 15 years		10,421		4,909		3,136		18,466
More than 15 years		139,415		17,058		-		156,473
Total due after 2021		469,610		23,263		286,217		779,090
Total amount due	$	550,689	$	23,391	$	338,286	$	912,366

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

The following table sets forth at December 31, 2020, the dollar amount of total loans and leases receivable contractually due after one year (December 31, 2021), and whether such loans have fixed interest rates or adjustable interest rates.

	Due After December 31, 2020
	Fixed		Adjustable		Total
	(Dollars in thousands)
Real estate mortgage loans(1)	$	269,094	$	200,516	$	469,610
Consumer loans		5		23,258		23,263
Commercial loans		204,128		82,089		286,217
Total loans	$	473,227	$	305,863	$	779,090

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

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

Commercial, commercial real estate and multi-family loans are originated with fixed, floating and ARM interest rates.  Fixed-rate loans are typicallylimited to terms of three to five years.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 19to the Consolidated Financial Statementsincluded in our 2020 Annual Reportfor additional information on interest-rate swaps.  

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CFBank participates in various loan programs offered by the Small Business Administration (the “SBA”), enabling us to provide our customers and small business owners in our markets with access to funding to support their businesses, as well as reduce credit risk associated with these loans. Individual loans include SBA guarantees of up to 75%.

During 2020, CFBank also originated loans under the SBA’s new 7(a) loan program, the Paycheck Protection Program (“PPP”).  The CARES Act authorized the SBA to temporarily guarantee PPP loans to provide funding to small businesses to pay certain payroll costs and benefits, and other expenses, during the COVID-19 pandemic.  These loans are 100% guaranteed by the SBA and the full principal amount of the loans may qualify for forgiveness.  The loans we originated have a maturity of two years, an interest rate of 1.00% and loan payments are deferred for the initial six months (which the deferral period was subsequently extended to 10 months pursuant to the Paycheck Protection Program Flexibility Act of 2020).  The majority of these loans have been pledged as collateral on borrowings under the FRB Paycheck Protection Program Lending Facility (“PPPLF”).  See Note 10- FHLB Advances and Other Debt for additional information.

A majority of oursingle-family mortgage loan originations are fixed-rate loans.  A majority of our 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 through leads-based marketing and 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 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).  CFBank is approved by the Department of Veterans Affairs to originate and approve VA loans.

For the year ended December 31, 2020, single-family mortgage loansoriginated for saletotaled $2.2 billion,  anincrease of $1.5 billion, or 203.8%,compared to $733.7 million that was originated in 2019.The increase in originations was due to the expansion of our leads-based mortgage business and increased 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 in2020 and 2019.If market mortgage rates increase, our mortgage production, and the resultant gains on sales of loans, could decrease.

The performance of our national mortgage lending business is impacted by market conditions and competition.  Any changes could affect the value of our mortgage loans held for sale and mortgage banking derivatives and the performance of the mortgage lending business.

For the year endedDecember 31, 2020, portfolio single-family mortgage loans originated by CFBank totaled $52.3 million, or 5.7% of total loans.Our policy is to originate quality loans that are evaluated for risk based on the borrower’s ability to repay the loan.  Collateral positions are established by obtaining independent appraisal opinions.  Mortgage insurance is generally required when the LTV exceeds 80%.  In conjunction with competitive product offerings in the market, and the lack of availability for mortgage insurance, jumbo loans exceeding 80% are often originated without mortgage insurance.

Portfolio single-family residential ARM loanstotaled $64.0million, or 43.3% of the single-family mortgage loan portfolio, at December 31, 2020.  These 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. 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 2020 Annual Report.

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 $35.6 million to $322.4 million at December 31, 2020. This represented an increase of 12.4% over the $286.8million balance at December 31, 2019.  

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 $500,000.  In underwriting commercial real estate and multi-family residential mortgage loans,we consider the appraised value and net operating income of the property, the debt service ratio and the  property owner’s and/or guarantor’s financial strength, expertise and credit history.We offer both fixed and adjustable rate loans.Fixed rate loans are generally limited to three to five years, at which time they convert to adjustable rate loans.At times, CFBank accommodates 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 19to the Consolidated Financial Statements  included in our 2020 Annual Report 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 stress scenarios.

Commercial real estate and multi-family residential mortgage loans also have larger loan balances to single borrowers or groups of related borrowers compared to single-family residential mortgage loans.  Some of our borrowers also have more than one commercial real estate or multi-family residential mortgage loan outstanding with us.  Additionally, some loans may be collateralized by junior liens. Consequently, an adverse development involving one or more loans or credit relationships can expose us to significantly greater risk of loss compared to an adverse development involving a single-family residential mortgage loan.  We seek to minimize and mitigate these risks through underwriting policies which require such loans to be qualified at origination on the basis of the property’s income and debt coverage ratio and the financial strength of the propertyowners and/or guarantors.

Commercial Lending.  The origination of commercial loans continues to be a significant component of our lending activity.  During 2020, commercial loan balances increased by $167.6 million, or 98.2%, to $338.3 million at year-end 2020.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 typicallylimited to a maximum term of five years.  Adjustable-rate loans are tied to various market indices and generally adjust monthly or annually.  

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Included in Commercial loans at December 31, 2020, were $105.3 million of loans originated under the SBA’s PPP. The CARES Act authorized the SBA to temporarily guarantee PPP loans to provide funding to small businesses to pay certain payroll costs and benefits, and other expenses, during the COVID-19 pandemic.  These loans are 100% guaranteed by the SBA and the full principal amount of the loans may qualify for forgiveness.  The loans we originated have a maturity of two years, an interest rate of 1.00% and loan payments are deferred for the initial six months (which the deferral period was subsequently extended to 10 months pursuant to the Paycheck Protection Program Flexibility Act of 2020).  The majority of these loans have been pledged as collateral on borrowings under the FRB Paycheck Protection Program Lending Facility (“PPPLF”).  See Note 10- FHLB Advances and Other Debt for additional information

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 2020, construction loans increased by $12.7 million, or 18.9%, to $80.4 million compared to the $67.7million in the portfolio at year-end 2019.  CFBank’s strong capital levels has allowed CFBank to take advantage of select market opportunities in this area within the risk tolerances we have identified.

Construction loans are made to finance the construction of residential and commercial properties generally located within our primary market area.  Construction loans are fixed- or adjustable-rate loans which may convert to permanent loans with maturities of up to 30 years.  Our policies provide that construction loans may be made in amounts generally up to 80% of the appraised value of the property, and an independent appraisal of the property is required.  Loan proceeds are disbursed in increments as construction progresses and as inspections warrant and regular inspections are required to monitor the progress of construction.  Land development loans generally do not exceed 75% of the actual cost or current appraised value of the property, whichever is less.  Loans on raw land generally do not exceed 65% of the actual cost or current appraised value of the property, whichever is less.

Construction and land financing is considered to involve a higher degree of credit risk than long-term financing on improved, owner-occupied real estate.  Risk of loss on a construction loan is dependent largely upon the accuracy of the initial estimate of the property’s value at completion of construction or development compared to the estimated cost (including interest) of construction.  If the estimate of value proves to be inaccurate, 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,  home improvement loans, loans secured by deposits and purchased loans.  At December 31, 2020, the consumer loan portfolio totaled $23.4 million, which was 2.6% of gross loans receivable. During 2020, the consumer loan portfolio decreased  $1.7 million, or 6.9%, over the year-end 2019 balance of $25.1 million.

Home equity lines of credit include those loans we originate for our portfolioand purchased loans.  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.

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.

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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 exist 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 2020 Annual Reportfor detailed information on criticized and classified loans as of December 31, 2020 and 2019. 

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 interest at December 31, 2020, but exhibit weaknesses that could lead to nonaccrual status in the future.  

	# of Loans		Balance
Commercial	3	$	321
Multi-family residential real estate	1		126
Commercial real estate	3		3,594
Home equity lines of credit	1		14
Total	8	$	4,055

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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, 2020						December 31, 2019						December 31, 2018
	60-89 Days			90 Days or More			60-89 Days			90 Days or More			60-89 Days			90 Days or More
	Number of Loans	Balance of Loans		Number of Loans	Balance of Loans		Number of Loans	Balance of Loans		Number of Loans	Balance of Loans		Number of Loans	Balance of Loans		Number of Loans	Balance of Loans
	(Dollars in thousands)						(Dollars in thousands)						(Dollars in thousands)
Real estate loans:
Single-family	-	$	-	3	$	421	1	$	210	6	$	550	-	$	-	4	$	167
Commercial	1		78	-		-	-		-	1		1,689	-		-	-		-
Consumer loans:
Home equity lines of credit	-		-	3		84	-		-	4		115	-		-	2		89
Other	-		-	-		-	-		-	-		-	-		-	1		21
Commercial loans	-		-	1		190	1		71	1		85	-		-	1		100
Total delinquent loans	1	$	78	7	$	695	2	$	281	12	$	2,439	-	$	-	8	$	377
Delinquent loans as a percent of total loans			.01%			.08%			.04%			.36%			.00%			.07%

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	December 31, 2017						December 31, 2016
	60-89 Days			90 Days or More			60-89 Days			90 Days or More
	Number of Loans	Balance of Loans		Number of Loans	Balance of Loans		Number of Loans	Balance of Loans		Number of Loans	Balance of Loans
	(Dollars in thousands)						(Dollars in thousands)
Real estate loans:
Single-family	2	$	27	6	$	253	1	$	49	8	$	397
Commercial	-		-	-		-	1		600	-		-
Consumer loans:
Home equity lines of credit	-		-	2		102	1		15	1		44
Other	-		-	-		-	-		-	-		-
Commercial loans	-		-	1		115	-		-	3		263
Total delinquent loans	2	$	27	9	$	470	3	$	664	12	$	704
Delinquent loans as a percent of total loans			.01%			.11%			.19%			.20%

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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,
	2020		2019		2018		2017		2016
	(Dollars in thousands)
Loans past due over 90 days still on accrual	$	-	$	-	$	-	$	-	$	-
Nonaccrual loans:
Single-family real estate		421		550		167		253		397
Commercial real estate		-		1,689		-		-		-
Consumer		84		115		110		102		44
Commercial		190		85		100		115		263
Total nonaccrual loans		695		2,439		377		470		704
Total nonperforming loans		695		2,439		377		470		704
REO		-		-		38		-		204
Other foreclosed assets		-		-		-		-		-
Total nonperforming assets		695		2,439		415		470		908
Troubled Debt Restructurings (TDRs) (1)		2,900		2,838		3,061		3,271		2,986
Total nonperforming and troubled debt restructurings	$	3,595	$	5,277	$	3,476	$	3,741	$	3,894
Nonperforming loans to total loans		0.08%		0.36%		0.07%		0.11%		0.20%
Nonperforming assets to total assets		0.05%		0.28%		0.06%		0.10%		0.21%

⁽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 $1.7 million decrease in nonperforming loans in 2020compared to 2019was primarily due toa$1.7 million commercial real estate loan that was paid off.

For the year ended December 31, 2020, 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 $19,000.  There was no interest income recognized on nonaccrual loans in 2019, except for $30,000 of interest income that was collected from the payoff of a commercial loan.

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”). There was one commercial loan restructured in 2020 identified as a  TDR.

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

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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 $190,000in TDRs at December 31, 2020, while non-accrual loans included $85,000 of TDRs at December 31, 2019.

At year-end 2020, there were a total of $2.9million of TDRs,including$2.7 million in commercial real estate loans,$104,000 in single family residential loans and $79,000 in commercial 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 2020 Annual Reportfor additional information on nonperforming loans and TDRs as of December 31, 2020 and 2019. 

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 2020 Annual Reportfor a detailed discussion of management’s methodology for determining the appropriate level of the ALLL.

The ALLL totaled $17.0 million at December 31, 2020, and increased $9.9 million, or 138.5%, from $7.1million at December 31, 2019.  The increase in the ALLL is due $10.9 million in the provision for loan and lease losses expense, partially offset by net charge-offs of $1.0 million during the twelve months ended December 31, 2020.  The ratio of the ALLL to total loans was 1.87% at December 31, 2020, compared to 1.06% at December 31, 2019.The ratio of the ALLL to total loans, excluding loan balances subject to SBA guarantees, was 2.15% at December 31, 2020, compared to 1.07% at December 31, 2019.    

We believe the ALLL is adequate to absorb probable incurred credit losses in the loan portfolio as of December 31, 2020; 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.

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

	2020		2019		2018		2017		2016
ALLL, beginning of period	$	7,138	$	7,012	$	6,970	$	6,925	$	6,620
Charge-offs:
Real estate loans:
Single-family		425		-		6		-		147
Commercial real estate		-		-		-		-		-
Consumer loans:
Home equity		21		-		-		-		53
Other		-		36		-		-		1
Commercial loans		648		-		-		-		123
Total charge-offs		1,094		36		6		-		324
Recoveries on loans previously charged off:
Recoveries
Real estate loans:
Single-family		31		7		24		20		42
Multi-family		-		-		-		-		143
Commercial real estate		-		105		-		-		145
Consumer loans:
Home equity		17		50		22		23		69
Other		-		-		-		-		-
Commercial loans		15		-		2		2		-
Total recoveries		63		162		48		45		399
Net charge-offs (recoveries)		1,031		(126)		(42)		(45)		(75)
Provision for loan and lease losses		10,915		-		-		-		230
Reclassification of ALLL on loan-related commitments		-		-		-		-		-
ALLL, end of period	$	17,022	$	7,138	$	7,012	$	6,970	$	6,925
ALLL to total loans and leases		1.87%		1.06%		1.26%		1.69%		1.96%
ALLL to nonperforming loans		2449.21%		292.66%		1859.95%		1483.00%		983.66%
Net charge-offs (recoveries) to ALLL		6.06%		-1.77%		-0.60%		-0.65%		-1.08%
Net charge-offs (recoveries) to average loans and leases		0.13%		-0.02%		-0.01%		-0.01%		-0.02%

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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,
	2020				2019				2018
	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	$	1,299	7.63%	16.21%	$	948	13.28%	17.94%	$	1,061	15.13%	21.23%
Multi-family		467	2.74%	4.97%		447	6.26%	5.85%		612	8.73%	8.54%
Commercial real estate		9,184	53.95%	30.36%		2,604	36.48%	36.92%		2,274	32.43%	31.10%
Construction		2,254	13.24%	8.82%		759	10.63%	10.09%		739	10.54%	11.08%
Consumer loans:
Home equity lines of credit		276	1.62%	2.30%		265	3.71%	3.12%		410	5.85%	4.30%
Other		116	.69%	.26%		61	.86%	.63%		97	1.38%	1.00%
Commercial loans		3,426	20.13%	37.08%		2,054	28.78%	25.45%		1,819	25.94%	22.75%
Total ALLL	$	17,022	100.00%	100.00%	$	7,138	100.00%	100.00%	$	7,012	100.00%	100.00%

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	At December 31,
	2017				2016
	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	$	912	13.08%	23.12%	$	735	10.61%	26.21%
Multi-family		660	9.47%	8.63%		716	10.34%	9.71%
Commercial real estate		2,143	30.75%	27.06%		2,727	39.38%	29.83%
Construction		672	9.64%	10.37%		580	8.38%	7.31%
Consumer loans:
Home equity lines of credit		597	8.57%	6.06%		486	7.02%	6.55%
Other		2	.03%	.09%		34	.49%	.18%
Commercial loans		1,984	28.46%	24.67%		1,647	23.78%	20.21%
Total ALLL	$	6,970	100.00%	100.00%	$	6,925	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 $0  at December 31, 2020 and December 31, 2019.See the section titled “Financial Condition -Foreclosed Assets”and Note 5  to the Consolidated Financial Statementsin our 2020 Annual Reportfor information regarding foreclosed assets at December 31, 2020.  Foreclosure activities are closely tied with general economic conditions and the ability of our customers to continue to meet their loan payment obligations and, therefore, the level of foreclosed assets may increase in the future if, among other things, economic conditions in our market area decline.  

Investment Activities

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

The investment policy established by 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, 2020, the securities available for sale portfolio totaled $8.7million.  At December 31, 2020, all mortgage-backed securities in the securities portfolio were insured or guaranteed by Ginnie Mae, Freddie Mac or Fannie Mae.

Equity securities, consisting of preferred stock in another financial institution totaled $5.0 million at December 31, 2020 and $0 at December 31, 2019. 

Management evaluates debt securities for other-than-temporary impairment (OTTI) at least on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation.See Notes  1and 3  to the Consolidated Financial Statements

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contained in our 2020 Annual Reportfor 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,
	2020				2019				2018
Securities Available For Sale	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
Issued by U.S. government-sponsored entities and agencies:
U.S. Treasury	$	8,517	$	8,636	$	7,986	$	8,017	$	9,978	$	9,881
Mortgage-backed securities - residential		62		65		126		130		167		170
Collateralized mortgage obligations		-		-		27		27		62		63
Total	$	8,579	$	8,701	$	8,139	$	8,174	$	10,207	$	10,114

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The following table sets forth information regarding the amortized cost, weighted average yield and contractual maturity dates of debt securities as ofDecember 31, 2020.

				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	$	5,011	1.39%	$	3,506	1.71%	$	-	0.00%	$	-	0.00%	$	8,517	1.52%
Mortgage-backed securities - residential		1	6.50%		52	3.80%		-	0.00%		9	7.01%		62	4.30%
Total	$	5,012	1.39%	$	3,558	1.74%	$	-	0.00%	$	9	7.01%	$	8,579	1.54%

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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.  See Note 18to the Consolidated Financial Statements included in our 2020 Annual Report.

The Holding Company’s available cash and cash equivalents totaled $1.8 million at December 31, 2020.  Management believes that the Holding Company had adequate funds and liquidity sources at December 31, 2020 to meet its current and anticipated operating needs at this time.See the section titled “Liquidity and Capital Resources” contained in our 2020 Annual Reportfor 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 totaled48.4%of average deposit balances in 2020.  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, 2020, CFBank had $168.7million in brokered deposits with maturity dates from January 2021through August 2024. At December 31, 2020, cash, unpledged securities and deposits in other financial institutions totaled $212.7 million.

CFBank is a participant in the Certificate of Deposit Account Registry Service® (CDARS) and Insured Cash Sweep (ICS) programs offered through Promontory Interfinancial Network. Promontory works with a network of banks to offer products that can provide up to approximately $50 million of FDIC insurance coverage through these innovative products. CDARS one-way balances are considered brokered deposits by regulation.  Customer balances in the CDARS reciprocal and ICS programs, which no longer qualify as brokered, totaled $46.9 million at December 31, 2020 andincreased $18.9 million, or 67.5%, from $28.0 million at December 31, 2019. 

Certificate accounts in amounts of $100,000 or more totaled $461.4 million at December 31, 2020,  maturing as follows:

Maturity Period	Amount		Weighted Average Rate
	(Dollars in thousands)
Three months or less	$	63,147	1.97%
Over 3 through 6 months		64,109	1.23%
Over 6 through 12 months		159,068	1.03%
Over 12 months		175,077	1.50%
Total	$	461,401

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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,
	2020				2019				2018
	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	$	35,681	4.03%	1.45%	$	29,943	4.69%	1.80%	$	28,985	6.06%	1.34%
Money market accounts		254,033	28.65%	1.13%		166,721	26.13%	1.98%		117,773	24.63%	1.29%
Savings accounts		20,637	2.33%	0.11%		18,241	2.86%	0.10%		17,048	3.56%	0.10%
Certificates of deposit		429,111	48.41%	1.96%		310,913	48.74%	2.52%		220,145	46.03%	1.90%
Total Interest-bearing deposits		739,462	83.42%	1.60%		525,818	82.42%	2.22%		383,951	80.28%	1.59%
Noninterest-bearing deposits:
Demand deposits		146,935	16.58%	-		112,151	17.58%	-		94,333	19.72%	-
Total Average Deposits	$	886,397	100.00%		$	637,969	100.00%		$	478,284	100.00%

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, 2020.

	Period to Maturity from December 31, 2020								At December 31,
	Less than		One to		Two to		Over
	One Year		Two Years		Three Years		Three Years		2020		2019		2018
	(Dollars in thousands)
Certificate accounts:
0 to 0.99%	$	120,438	$	49,174	$	11,587	$	2,612	$	183,811	$	9,127	$	8,554
1.00 to 1.99%		152,357		45,051		2,451		5,631		205,490		91,105		62,992
2.00 to 2.99%		59,938		40,651		13,757		10,780		125,126		212,465		172,672
3.00 to 3.99%		25,779		8,582		8,885		747		43,993		51,453		29,427
4.00 to 4.99%		-		-		-		-		-		-		20
5.00% and above		-		-		-		-		-		-		-
Total certificate accounts	$	358,512	$	143,458	$	36,680	$	19,770	$	558,420	$	364,150	$	273,665

See the sections titled “Financial Condition – Deposits”  and “Liquidity and Capital Resources” contained in our 2020 Annual Report for additional information regarding deposits.

Borrowings. As part of our operating strategy, FHLB advances are used as an alternative to retail and brokered deposits to fund our asset growth.  The advances are collateralized primarily by single-family mortgage loans, multi-family mortgage loans, 1-4 family commercial real estate loans and home equity lines of credit loans,  securities and cash, and secondarily by CFBank’s investment in the

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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 $27.5 million at December 31, 2020.  Based on the collateral pledged, CFBank was eligible to borrow up to a total of $81.4 million at year-end 2020.

The Holding Company currently has a term loan in the original principal amount of $5.0 million with an additional $10.0 million revolving line-of-credit with a third-party bank.  The term loan requires quarterly principal payments of $125,000 plus accrued interest.  Any remaining principal is due and payable on the maturity date, which is December 23, 2022.  Loans under the credit facility bear interest at a rate equal to the Prime Rate plus 0.75%.  The purpose of the credit facility is to provide an additional source of liquidity for the Holding Company and to provide funds for the Holding Company to downstream as additional capital to CFBank to support growth.  As of December 31, 2020, the Company had an outstanding balance of $4.5 million on the term loan and $5.0 million outstanding balance on the revolving line-of-credit.  At December 31, 2019, the term loan had an outstanding balance of $5.0 million and no outstanding balance on the credit facility.

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 $81.5 million at year-end 2020.  There were no amounts outstanding from the Federal Reserve Bank at December 31, 2020. 

At December 31, 2020,  CFBank had $65.0 million of availability in unused lines of credit with two commercial banks.  There were no outstanding borrowings on these lines of credit at December 31, 2020 or December 31, 2019.  If CFBank were to borrow on these lines of credit, interest would accrue daily at a variable rate based on the commercial bank’s cost of funds and current market returns.

During the fourth quarter of 2019, CFBank entered into a $25.0 million warehouse facility with a commercial bank.  The warehouse facility is used to periodically fund loans held for sale from the close (funding) date until they are sold in the secondary market.  Borrowings on the facility bear interest at the greater of the 30 day LIBORplus 2.00% or 4.00% and are secured by the specific loans that were funded.  At December 31, 2020, the warehouse facility had no outstanding balance.  See Note 10 to the Consolidated Financial Statements in our 2020 Annual Report for additional information.

During the second quarter of 2020, CFBank entered into an additional $75 million warehouse facility with a commercial bank.  The warehouse facility is used to periodically fund loans held for sale from the close (funding) date until they are sold in the secondary market.  Borrowings on the facility bear interest at the greater of the 30-day LIBOR plus 1.75% or 3.50% and are secured by the specific loans that were funded.  This warehouse facility had a $70.0 million outstanding balance at December 31, 2020.  See Note 10 to the Consolidated Financial Statements in our 2020 Annual Report for additional information.

To support the effectiveness of the PPP, the Federal Reserve introduced the PPPLF to extend credit to financial institutions that made PPP loans, with the related PPP loans used as collateral on the borrowings.  The PPPLF borrowings have a fixed interest rate of 0.35% and a maturity equal to the maturity date of the related PPP loans, with the PPP loans maturing two years from the origination date of the PPP loan.  At December 31, 2020, the Company’s PPP loans and related PPPLF funding had a weighted average life of approximately 1.2 years.  At December 31, 2020, the principal balance of PPPLF advances outstanding was $107.4 million.

See the section titled “Financial Condition - Subordinated Debentures” contained in our 2020 Annual Reportfor information regarding subordinated debentures issued by the Company in 2003and 2018.

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,
	2020		2019		2018
Short-term FHLB advances and other borrowings:
Average balance outstanding	$	23,178	$	3,713	$	1,054
Maximum amount outstanding at any month-end during the period		70,013		23,500		17,500
Balance outstanding at end of period		70,013		-		-
Weighted average interest rate during the period		3.31%		2.11%		1.98%

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Subsidiary Activities

As of December 31, 2020,  we maintained CFBank and the Trust as wholly owned subsidiaries. 

Personnel

As of December 31, 2020,  the Company had164full-time and 13part-time employees. 

Regulation and Supervision

Set forth below is a brief description of certain laws and regulations that apply to us.  This description, as well as other descriptions of laws and regulations contained in this Form 10-K, is not complete and is qualified in its entirety by reference to the applicable laws and regulations.The laws and regulations applicable to the Company are continually under review by the United States Congress and state legislatures and federal and state regulatory agencies, and a change in statutes, regulations or regulatory policies applicable to the Company could have a material effect on the Company’s business.

Overview

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

As a 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 Securities Exchange Act of 1934, as amended (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”).  In addition, CFBank is subject to regulation and examination by the FDIC, which insures the deposits of CFBank to the maximum extent permitted by law, and certain other requirements established by the FDIC.

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) established the Consumer Financial Protection Bureau (the “CFPB”), which regulates consumer financial products and services and certain financial services providers. The CFPB is authorized to prevent unfair, deceptive or abusive acts or practices and ensures consistent enforcement of laws so that consumers have access to fair, transparent and competitive markets for consumer financial products and services. Since its establishment, the CFPB has exercised extensively its rulemaking and interpretative authority.

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

Regulation of the Holding Company

General.  As a 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.  A financial holding company is required by law and FRB policyto act as a source of financial strength to each subsidiary bank and to commit resources to support such subsidiary bank.  The FRB may require a 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.

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Prior FRB Approval.  The Bank Holding Company Act (the “BHCA”) requires the prior approval of the FRB in any case where a financial holding company proposes to:

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

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

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

In April 2020, the FRB adopted a final rule to revise its regulations related to determinations of whether a company has the ability to exercise a controlling influence over another company for purposes of the BHCA.  The final rule expands and codifies the presumptions for use in such determinations.  By codifying the presumptions, the final rule provides greater transparency on the types of relationships that the FRB generally views as supporting a facts-and-circumstances determination that one company controls another company. The FRB’s final rule applies to questions of control under the BHCA, but does not extend to the Change in Bank Control Act.

Financial 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 the holding company is “well managed” and “well capitalized” and each of its subsidiary banks is well capitalized under the Federal Deposit Insurance Corporation Act of 1991 prompt corrective action provisions, is well managed, and has at least a satisfactory rating under the Community Reinvestment Act (the “CRA”).  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 FRB.  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 FRB 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 CRA rating. If a financial holding company or a subsidiary bank fails to maintain all requirements for the holding company to maintain financial holding company status, material restrictions may be placed on the activities of the financial holding company and its subsidiaries and on the ability of the holding company to enter into certain transactions and obtain regulatory approvals for new activities and transactions.  The financial holding company could also be required to divest of subsidiaries that engage in activities that are not permitted for bank holding companies that are not financial holding companies.  If restrictions are imposed on the activities of a financial holding company, the existence of such restrictions may not be made publicly available pursuant to confidentiality regulations of the bank regulatory agencies.

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

Economic Growth, Regulatory Relief and Consumer Protection Act

On May 25, 2018, the Economic Growth, Regulatory Relief and Consumer Protection Act (the "Regulatory Relief Act") was signed into law. The Regulatory Relief Act repealed or modified certain provisions of the Dodd-Frank Act and eased restrictions on all but the largest banks (those with consolidated assets in excess of $250 billion).  Bank holding companies with consolidated assets of less than $100 billion, including the Company, are no longer subject to enhanced prudential standards.  The Regulatory Relief Act also relieves bank holding companies and banks with consolidated assets of less than $100 billion, including the Company, from certain record-keeping, reporting and disclosure requirements.  Certain other regulatory requirements applied only to banks with consolidated assets in excess of $50 billion and so did not apply to the Company even before the enactment of the Regulatory Relief Act.  

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Transactions with Affiliates, Directors, Executive Officers and Shareholders

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

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

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

· require that all such transactions be on terms(including interest rates charged and collateral required) substantially the same, or at least as favorable to the bank or subsidiary, as those provided to a non-affiliate.

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 anaffiliate, the purchase of assets from anaffiliate, the issuance of a guarantee on behalf of anaffiliate, the purchase of securities issued by anaffiliate and other similar types of transactions with an affiliate.

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

Regulation of CFBank

General. CFBank, as a national bank, is subject to regulation, periodic examination, enforcement authority and oversight by the OCC extending to all aspects of CFBank’s operations.  OCC regulations govern permissible activities, capital requirements, dividend limitations, investments, loans and other matters.  CFBank also is subject to regulation and examination by the FDIC, which insures the deposits of CFBank to the maximum extent permitted by law.  Furthermore, CFBank is subject, as a member bank, to certain rules and regulations of the FRB, many of which restrict activities and prescribe documentation to protect consumers.  In addition, the establishment of branches by CFBank is subject to prior approval of the OCC.  The OCC has broad enforcement powers over national banks, including the power to impose fines and other civil and criminal penalties and to appoint a conservator or receiver if any of a number of conditions are met.

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

Regulatory Capital.  National banks are required to maintain a minimum level of regulatory capital.  The OCC has adopted risked-based capital guidelines for national banks, which guidelines include both a definition of capital and a framework for calculating risk weighted assets by assigning assets and off-balance-sheet items to broad risk categories.   

In July 2013, the United States banking regulators issued new capital rules applicable to smaller banking organizations which also implement certain of the provisions of the Dodd-Frank Act (the “Basel III Capital Rules”).  Community banking organizations, including CFBank, began transitioning to the new rules on January 1, 2015.  The new minimum capital requirements became effective on January 1, 2015, whereas a new capital conservation buffer and deductions from common equity capital phased in from January 1, 2016 through January 1, 2019, and most deductions from common equity tier 1 capital were phased in from January 1, 2015 through January 1, 2019.

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

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

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

Tier 2 capital, which can be included in the total capital ratio, generally consists of other preferred stock and subordinated debt meeting certain conditions plus limited amounts of the allowance for loan and lease losses, subject to specified eligibility criteria, less applicable deductions.

The deductions from common equity tier 1 capital include goodwill and other intangibles, certain deferred tax assets, mortgage-

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servicing assets above certain levels, gains on sale in connection with a securitization, investments in a banking organization’s own capital instruments and investments in the capital of unconsolidated financial institutions (above certain levels).   

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

The Basel III Capital Rules also place restrictions on the payment of capital distributions, including dividends, and certain discretionary bonus payments to executive officers if the banking organizationdoes not hold a capital conservation buffer of greater than 2.5 percent composed of common equity tier 1 capital above its minimum risk-based capital requirements, or if its eligible retained income is negative in that quarter and its capital conservation buffer ratio was less than 2.5 percent at the beginning of the quarter.  

In September 2019, the FRB, along with other federal bank regulatory agencies, issued a final rule, effective January 1, 2020, that gave community banks, including CFBank, the option to calculate a simple leverage ratio to measure capital adequacy if the community banks met certain requirements.  Under the rule, a community bank is eligible to elect the Community Bank Leverage Ratio ("CBLR") framework if it had less than $10 billion in total consolidated assets, limited amounts of certain assets and off-balance sheet exposures, and a leverage ratio greater than 9.0%.  Qualifying institutions that elected to use the CBLR framework (each, a “CBLR Bank”) and that maintain a leverage ratio of greater than 9.0% will be considered to have satisfied the risk-based and leverage capital requirements in the regulatory agencies' generally applicable capital rules and to have met the well-capitalized ratio requirements.  No CBLR Bank was required to calculate or report risk-based capital, and each CBLR Bank could opt out of the framework at any time, without restriction, by reverting to the generally applicable risk-based capital rule.  Pursuant to the CARES Act, on August 26, 2020, the federal banking agencies adopted a final rule that temporarily lowered the CBLR threshold and provides a gradual transition back to the prior level. Specifically, the CBLR threshold was reduced to 8.0% for the remainder of 2020, increased to 8.5% for 2021, and will return to 9.0% beginning January 1, 2022. This final rule became effective on October 1, 2020.  The Company does not intend to elect utilization of the CBLR in assessing capital adequacy and intends to continue to follow existing capital rules.  

In December 2018, the federal banking agencies issued a final rule to address regulatory capital treatment of credit loss allowances under the current expected credit loss (“CECL”) model (accounting standard).  The rule revises the federal banking agencies’ regulatory capital rules to identify which credit loss allowances under the CECL model are eligible for inclusion in regulatory capital and to provide banking organizations the option to phase in over three years the day-one adverse effects on regulatory capital that may result from the adoption of the CECL model.

The federal banking agencies have established a system of prompt corrective action to resolve certain of the problems of undercapitalized institutions.  This system is based on five capital level categories for insured depository institutions:  “well capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized” and “critically undercapitalized.”

The federal banking agencies may (or in some cases must) take certain supervisory actions depending upon a bank’s capital level.  For example, the banking agencies must appoint a receiver or conservator for a bank within 90 days after the bank becomes “critically undercapitalized” unless the bank’s primary regulator determines, with the concurrence of the FDIC, that other action would better achieve regulatory purposes.  Banking operations otherwise may be significantly affected depending on a bank’s capital category.  For example, a bank that is not “well capitalized” generally is prohibited from accepting brokered deposits and offering interest rates on deposits higher than the prevailing rate in its market, and the holding company of any undercapitalized depository institution must guarantee, in part, specific aspects of the bank’s capital plan for the plan to be acceptable.

In order to be “well-capitalized”, a bank must have a common equity tier I capital ratio of at least 6.5%, a total risk-based capital of at least 10.0%, a Tier 1 risk-based capital ratio of at least 8.0% and a leverage ratio of at least 5.0%, and the bank must not be subject to any written agreement, order, capital directive or prompt corrective action directive to meet and maintain a specific capital level for any capital measure.  The Company’s management believes that CFBank met the ratio requirements to be deemed “well-capitalized” according to the guidelines described above as of December 31, 2020.

The Holding Company currently qualifies under the FRB’s Small Bank Holding Company Policy Statement for exemption from the FRB’s consolidated risk-based capital and leverage rules at the holding company level.  In April 2015, the FRB issued a final rule which increased the size limitation for qualifying bank holding companies under the Small Bank Holding Company Policy Statement from $500 million to $1 billion of total consolidated assets.In August 2018, the FRB issued an interim final rule, as required by the Regulatory Relief Act, to further increase the size limitation under the Small Bank Holding Company Policy Statement to $3 billion of total consolidated assets.

FDIC Regulation and Insurance of Accounts.CFBank’s deposits are insured up to the applicable limits by the FDIC, and such insurance is backed by the full faith and credit of the United States Government.  The general deposit insurance limit is $250,000 per

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separately insured depositor.  As insurer, the FDIC imposes deposit insurance premiums and is authorized to conduct examinations of and to require reporting by FDIC-insured institutions, to prohibit any insured institution from engaging in any activity the FDIC determines to pose a threat to the DIF, and to take enforcement actions against insured institutions.  The FDIC may terminate insurance of deposits of any insured institution if the FDIC finds that the insured institution has engaged in unsafe and unsound practices, is in an unsafe or unsound condition or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC or any other regulatory agency.

The FDIC assesses quarterly deposit insurance premiums on each insured institution based on risk characteristics of the insured institution and may also impose special assessments in emergency situations.  The premiums fund the DIF.  Pursuant to the Dodd-Frank Act, the FDIC has established 2.0% as the designated reserve ratio (“DRR”), which is the amount in the DIF as a percentage of all DIF insured deposits.  In March 2016, the FDIC adopted final rules designed to meet the statutory minimum DRR of 1.35% 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 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 reached 1.35%.  The DRR met the statutory minimum of 1.35% on September 30, 2018.  As a result, the previous surcharge imposed on banks with assets of $10 billion or more was lifted.  In addition, preliminary assessment credits have been determined by the FDIC for banks with assets of less than $10 billion, which had previously contributed to the increase of the DRR to 1.35%.  On June 30, 2019, the DRR reached 1.40%, and the FDIC applied credits for banks with assets of less than $10 billion ("small bank credits") beginning September 30, 2019.  The FDIC will continue to apply small bank credits so long as the DRR is at least 1.35%.  CFBank utilized its $115,000 assessment credit during the third quarter of 2019. The FDIC rules further changed the method of determining risk-based assessment rates for established banks with less than $10 billion in assets to better ensure that banks taking on greater risks pay more for deposit insurance than banks that take on less risk.

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.  In addition, to the extent that a national bank has a negative accumulated deficit, any distributions or dividends by the bank are subject to prior non-objection by the OCC. 

The ability of the Holding Company to pay dividends on its common stock is dependent upon the amount of cash and liquidity available at the Holding Company level, as well as the receipt of dividends and other distributions from CFBank to the extent necessary to fund such dividends.  As of December 31, 2020, the Holding Company a total of $1.8 million of cash at the Holding Company level.  At December 31, 2020, the Holding Company also had $5.0 million available on its revolving line-of-credit facility.

The Holding Company also is subject to various legal and regulatory policies and requirements impacting the Holding Company’s ability to pay dividends on its stock.  In addition, the Holding Company’s ability to pay dividends on its stock is conditioned upon the payment, on a current basis, of quarterly interest payments on the subordinated debentures underlying the Company’s trust preferred securities.  Finally, under the terms of the Company’s fixed-to-floating rate subordinated debt, the Holding Company’s ability to pay dividends on its stock is conditioned upon the Holding Company continuing to make required principal and interest payments, and not incurring an event of default, with respect to the subordinated debt.See Note 18-Regulatory Capital Matters to the Consolidated Financial Statements included in our 2020 Annual Reportfor additional information.

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 total $473,000at year-end 2020. 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.

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

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Community Reinvestment Act

The CRA requires CFBank’s primary federal regulatory agency, the OCC, to assess CFBank’s record in meeting the credit needs of the communities it serves.  The OCC assigns one of four ratings: outstanding, satisfactory, needs to improve or substantial noncompliance.  The rating assigned to a financial institution is considered in connection with various applications submitted by the financial institution or its holding company to its banking regulators, including applications to acquire another financial institution or to open or close a branch office.  In addition, all subsidiary banks of a financial holding company must maintain a satisfactory or outstanding rating in order for the financial holding company to avoid limitations on its activities.

Consumer Protection Laws and Regulations

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

· The Equal Credit Opportunity Act (prohibiting discrimination in any credit transaction on the basis of any of various criteria);

· The Truth in Lending Act (requiring that credit terms are disclosed in a manner that permits a consumer to understand and compare credit terms more readily and knowledgeably);

· The Fair Housing Act (making it unlawful for a lender to discriminate in its housing-related lending activities against any person on the basis of certain criteria);

· The Home Mortgage Disclosure Act (requiring financial institutions to collect data that enables regulatory agencies to determine whether financial institutions are serving the housing credit needs of the communities in which they are located); and

· The Real Estate Settlement Procedures Act (requiring that lenders provide borrowers with disclosures regarding the nature and cost of real estate settlements and prohibits abusive practices that increase borrowers’ costs).

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

The Coronavirus Aid, Relief, and Economic Security Act of 2020

In response to the novel COVID-19 pandemic (“COVID-19”), the Coronavirus Aid, Relief, and Economic Security Act of 2020, as amended (the “CARES Act”), was signed into law on March 27, 2020, to provide national emergency economic relief measures.  Many of the CARES Act’s programs are dependent upon the direct involvement of U.S. financial institutions, such as the Holding Company and CFBank, and have been implemented through rules and guidance adopted by federal departments and agencies, including the U.S. Department of Treasury, the FRB and other federal banking agencies, including those with direct supervisory jurisdiction over the Holding Company and CFBank.  Furthermore, as COVID-19 evolves, federal regulatory authorities continue to issue additional guidance with respect to the implementation, lifecycle, and eligibility requirements for the various CARES Act programs as well as industry-specific recovery procedures for COVID-19.  In addition, it is possible that Congress will enact supplementary COVID-19 response legislation, including amendments to the CARES Act or new bills comparable in scope to the CARES Act. For example, on December 27, 2020, the Consolidated Appropriations Act, 2021 (the “CAA”) was signed into law, which, among other things, allowed certain banks to temporarily postpone implementation of the current expected credit loss model (accounting standard), which is described above.  The Company is continuing to assess the impact of the CARES Act and other statues, regulations and supervisory guidance related to COVID-19.

The CARES Act createdthe PPP as a  new guaranteed, unsecured loan program to fund operational costs of eligible businesses, organizations and self-employed persons during COVID-19.  In June 2020, the Paycheck Protection Program Flexibility Act was enacted, which, among other things, gave borrowers additional time and flexibility to use PPP loan proceeds.  Shortly thereafter, and due to the evolving impact of COVID-19, additional legislation was enacted authorizing the SBA to resume accepting PPP applications on July 6, 2020, and extending the PPP application deadline to August 8, 2020.  As a participating lender in the PPP, CFBank continues to monitor legislative, regulatory, and supervisory developments related thereto.  On September 29, 2020, the federal bank regulatory agencies issued a final rule that neutralizes the regulatory capital and liquidity coverage ratio effects of participating in certain COVID-19 liquidity facilities due to the fact there is no credit or market risk in association with exposures pledged to such facilities.  As a result, the final rule supports the flow of credit to households and businesses affected by COVID-19.

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The CARES Act encouraged the FRB, in coordination with the Secretary of the Treasury, to establish or implement various programs to help mitigate the adverse effects of COVID-19 on midsize businesses, nonprofits, and municipalities.  In April 2020, the Federal Reserve established the Main Street Lending Program (“MSLP”) to implement certain of these recommendations.  The MSLP supported lending to small and medium-sized businesses that were in sound financial condition before the onset of COVID-19.  On November 19, 2020, Treasury Secretary Steven Mnuchin indicated that he would not reauthorize extending the MSLP past December 31, 2020. However, the FRB extended the program to January 8, 2021, in order to process loans that were submitted on or before December 14, 2020. The program ended on January 8, 2021.

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.

Office of Foreign Assets Control Regulation

The U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) administers and enforces economic and trade sanctions against targeted foreign countries and regimes, under authority of various laws, including designated foreign countries, nationals and others.  OFAC publishes lists of specially designated targets and countries.  CFBank is responsible for, among other things, blocking accounts of, and transactions with, such targets and countries, prohibiting unlicensed trade and financial transactions with them and reporting blocked transactions after their occurrence.  Failure to comply with these sanctions could have serious financial, legal and reputational consequences, including causing applicable bank regulatory authorities not to approve merger or acquisition transactions when regulatory approval is required or to prohibit such transactions even if approval is not required.  Regulatory authorities have imposed cease and desist orders and civil money penalties against institutions found to be violating these obligations.

Corporate Governance

As mandated by the Sarbanes-Oxley Act of 2002, the SEC has adopted rules and regulations governing, among other issues, corporate governance, auditing and accounting, executive compensation and enhanced and timely disclosure of corporate information.  The Nasdaq Stock Market has also adopted corporate governance rules. The Board of Directors of the Company has taken a series of actions to strengthen and improve the Company’s already strong corporate governance practices in light of the rules of the SEC and Nasdaq.  The Board of Directors has adopted charters for the Board’s various committees, including the Audit Committee, the Compensation Committee, and the Nominating and Corporate Governance Committee, as well as a Code of Business Conduct and Ethics governing the directors, officers and employees of the Company.

Executive and Incentive Compensation

The Dodd-Frank Act requires that the federal banking agencies, including the FRB and the FDIC, issue a rule related to incentive-based compensation.  No final rule implementing this provision of the Dodd-Frank Act has, as of the date of the filing of this Annual Report on Form 10-K, been adopted, but a proposed rule was published in 2016 that expanded upon a prior proposed rule published in 2011. The proposed rule is intended to: (i) prohibit incentive-based payment arrangements that the banking agencies determine could encourage certain financial institutions to take inappropriate risks by providing excessive compensation or that could lead to material financial loss; (ii) require the board of directors of those financial institutions to take certain oversight actions related to incentive-based compensation; and (iii) require those financial institutions to disclose information concerning incentive-based compensation arrangements to the appropriate federal regulator. Although a final rule has not been issued, the Company has undertaken efforts to ensure that the Company’s incentive compensation plans do not encourage inappropriate risks, consistent with the principles identified above.

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

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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.

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

Cybersecurity

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

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

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

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

Effect of Environmental Regulation

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

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

Federal and State Taxation

Federal 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.  When

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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, 2020 that no valuation allowance was required against the net deferred tax asset.

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 2020, the Company had net operating loss carryforwards of $22.4 million, which expire at various dates from 2024 to 2032. As a result of the ownership change, the Company's ability to utilize carryforwards that arose before the 2012 stock offering closed is limited to $163,000 per year. Due to this limitation, management determined it is more likely than not that $20.5 million of net operating loss carryforwards will expire unutilized. As required by accounting standards, the Company reduced the carrying value of deferred tax assets, and the corresponding valuation allowance, by the $7.0 million tax effect of this lost realizability.

Federal income tax laws provided additional deductions, totaling $2.3 million, for thrift bad debt reserves established before 1988.  Accounting standards do not require a deferred tax liability to be recorded on this amount, which otherwise would have totaled$473,000 at year-end 2020.  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.See Note 13 to the Consolidated Financial Statements included in our 2020 Annual Report,  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.

Ohio Taxation

The consolidated organization is  subject to the 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.

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.

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.

Economic, Market and Political Risks

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The outbreak of COVID-19, or an outbreak of another highly infectious or contagious disease, could adversely affect our business, financial condition and results of operations. 

In March 2020, the World Health Organization declared COVID-19 a pandemic and the President of the United States declared COVID-19 a national emergency.  COVID-19 has caused significant economic dislocation in the United States as many state and local governments have ordered non-essential businesses to close and residents to shelter in place at home.  This has resulted in an unprecedented slow-down in economic activity and a related increase in unemployment.  Various state governments and federal agencies are requiring lenders to provide forbearance and other relief to borrowers (e.g., waiving late payment and other fees).  The federal bank regulatory agencies have encouraged financial institutions to prudently work with affected borrowers, and new legislation has provided relief from reporting loan classifications due to modifications related to COVID-19.

Given the ongoing and dynamic nature of COVID-19, it is difficult to predict the full impact of the outbreak on our business.  The extent of such impact will depend on future developments, which are highly uncertain, including when COVID-19 can be controlled and abated and when and how the economy may be reopened.  As of December 31, 2020, we held and serviced PPP loans. These PPP loans are subject to the provisions of the CARES Act and to complex and evolving rules and guidance issued by the SBA and other government agencies. We expect that the great majority of our PPP borrowers will seek full or partial forgiveness of their loan obligations.  We have credit risk on the PPP loans if the SBA determines that there is a deficiency in the manner in which we originated, funded or serviced loans, including any issue with the eligibility of a borrower to receive a PPP loan.  We could face additional risks in our administrative capabilities to service our PPP loans, and risk with respect to the determination of loan forgiveness.  In the event of a loss resulting from a default on a PPP loan and a determination by the SBA that there was a deficiency in the manner in which we originated, funded or serviced the PPP loan, the SBA may deny its liability under the guaranty, reduce the amount of the guaranty or, if the SBA has already paid under the guaranty, seek recovery of any loss related to the deficiency.

The spread of COVID-19 has also caused us to modify our business practices, including employee travel, employee work locations, and cancellation of physical participation in meetings, events and conferences.  Further, technology in employees’ homes may not be as robust as in our offices and could cause the networks, information systems, applications, and other tools available to such employees to be more limited or less reliable.  The continuation of these work-from-home measures also introduces additional operational risk, including increased cybersecurity risk from phishing, malware, and other cybersecurity attacks, all of which could expose us to risks of data or financial loss and could seriously disrupt our operations and the operations of any impacted customers.

COVID-19 or a new pandemic could subject us to any of the following risks, any of which could, individually or in the aggregate, have a material adverse effect on our business, financial condition, liquidity, and results of operations:

· demand for our products and services may decline, making it difficult to grow assets and income;

· if the economy is unable to substantially reopen, and high levels of unemployment continue for an extended period of time, loan delinquencies, problem assets, and foreclosures may increase, resulting in increased charges and reduced income;

· collateral for loans, especially real estate, may decline in value, which could cause loan losses to increase;

· our allowance for loan losses may have to be increased if borrowers experience financial difficulties beyond forbearance periods, which will adversely affect our net income;

· the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us;

· as the result of the decline in the FRB’s target federal funds rate, the yield on our assets may decline to a greater extent than the decline in our cost of interest-bearing liabilities, reducing our net interest margin and spread and reducing net income;

· a material decrease in net income or a net loss over several quarters could result in a decrease in the rate of our quarterly cash dividend;

· a prolonged weakness in economic conditions resulting in a reduction of future projected earnings could result in our recording a valuation allowance against our current outstanding deferred tax assets;

· we rely on third party vendors for certain services and the unavailability of a critical service due to COVID-19 could have an adverse effect on us; and

· continued adverse economic conditions could result in protracted volatility in the price of our common shares.

Moreover, our future success and profitability substantially depend on the management skills of our executive officers and directors, many of whom have held officer and director positions with us for many years.  The unanticipated loss or unavailability of key employees due to COVID-19 or any similar pandemic could harm our ability to operate our business or execute our business strategy. We may not be successful in finding and integrating suitable successors in the event of key employee loss or unavailability.

Even after the COVID-19 pandemic subsides, the U.S. economy will likely require time to recover, the length of which is unknown

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and during which the United States may experience a recession.  Our business could be materially and adversely affected by such recession.

To the extent the effects of COVID-19 adversely impact our business, financial condition, liquidity or results of operations, it may also have the effect of heightening many of the other risks described in this section.

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.  Conditions such as inflation, recession, unemployment, changes in interest rates, fiscal and monetary policy, tariffs, a U.S. withdrawal from or significant renegotiation of trade agreements, trade wars, the election of a new U.S. President and changes in the membership of Congress in 2020, and other factors beyond our control may adversely affect CFBank’s deposit levels and composition, the quality of investment securities available for purchase, demand for loans, the ability of CFBank’s borrowers to repay their loans, and the value of the collateral securing loans made by CFBank.  Recent political developments have resulted in substantial changes in economic and political conditions for the U.S. and the remainder of the world.  Disruptions in U.S. and global financial markets, and changes in oil production in the Middle East also affect the economy and stock prices in the U.S., which can affect our earnings capital, as well as the ability of our customers to repay loans.  The potential effects of the United Kingdom leaving the European Union (Brexit) on the United States are still unknown. 

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, including those resulting from the ongoing COVID-19 pandemic, 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:  Franklin County, and contiguous counties through our office in Worthington, Ohio and loan production office in Columbus, Ohio, Cuyahoga County, and contiguous counties through our agency office in Woodmere, Ohio, Hamilton County, and contiguous counties through our office in Glendale, Ohio, Summit County, and contiguous counties through our office in Fairlawn, Ohio; Columbiana County, and contiguous counties through our offices in Wellsville and Calcutta, 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.

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 and refinancing volumes are affected by market interest rates on loans.  Rising interest rates generally are associated with a lower volume of loan originations and refinancings, while falling interest rates are usually associated with higher loan originations and refinancings.  Our ability to generate gains on sales of mortgage loans is significantly dependent on the level of originations.  Cash flows are affected by changes in market interest rates.  Generally, in rising interest rate environments, loan prepayment rates are likely to decline, and in falling interest rate environments, loan prepayment rates are likely to increase.  A majority of our commercial, commercial real estate and multi-family residential real estate loans are adjustable rate loans and an increase in the general level of interest rates may adversely affect the ability of some borrowers to pay the interest on and principal of their obligations, especially borrowers with loans that have adjustable rates of interest.  Changes in interest rates, prepayment speeds and other factors may also cause the value of our loans held for sale to change.  Accordingly, changes in levels of market interest rates could materially and adversely affect our net interest spread, loan volume, asset quality, value of loans held for sale and cash flows, as well as the market value of our securities portfolio and overall profitability.

A transition away from LIBOR as a reference rate for financial contracts could negatively affect our income and expenses and the value of various financial contracts.

LIBOR is used extensively in the U.S. and globally as a benchmark for various commercial and financial contracts, including adjustable rate mortgages, corporate debt, interest rate swaps and other derivatives.  LIBOR is set based on interest rate information reported by certain banks, which may stop reporting such information after 2021.  In November 2020, the FRB issued a statement

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supporting the release of a proposal and supervisory statements designed to provide a clear end date for U.S. Dollar LIBOR (“USD LIBOR”), and the federal banking agencies issued a release encouraging banks to stop entering into USD LIBOR contracts by the end of 2021, noting that most legacy contracts will mature prior to the date LIBOR ceases to be issued.  It is uncertain at this time the extent to which those entering into financial contracts will transition to any other particular benchmark.  Other benchmarks may perform differently than LIBOR or other alternative benchmarks or have other consequences that cannot currently be anticipated.  It is also uncertain what will happen with instruments that rely on LIBOR for future interest rate adjustments and which remain outstanding if LIBOR ceases to exist.

The FRB, in conjunction with the Alternative Reference Rates Committee, a steering committee comprised of large U.S. financial institutions, is considering replacing USD LIBOR with a new index calculated by short-term repurchase agreements, backed by U.S. Treasury securities, otherwise known as the Secured Overnight Financing Rate ("SOFR").  SOFR is observed and backward looking, which stands in contrast with LIBOR under the current methodology, which is an estimated forward-looking rate and relies, to some degree, on the expert judgment of submitting panel members.  Given that SOFR is a secured rate backed by government securities, it will be a rate that does not take into account bank credit risk (as is the case with LIBOR).  SOFR is therefore likely to be lower than LIBOR and is less likely to correlate with the funding costs of financial institutions.  Whether or not SOFR attains traction as a LIBOR replacement tool remains in question, although transactions using SOFR have been completed, including by Fannie Mae.  Both Fannie Mae and Freddie Mac ceased accepting adjustable rate mortgages tied to LIBOR and began accepting mortgages based on SOFR in 2020.

The Company’s primary exposure to LIBOR relates to its promissory notes with borrowers, swap contracts with clients, offsetting swap contracts with third parties related to the swap contracts with clients, the Company’s LIBOR-based borrowings and CFBank’s swap contracts which can be tied to LIBOR.  The Company’s contracts generally include a LIBOR term (for example, one month, three month, or one year) plus an incremental margin rate.  The Company is working through this transition via a multi-disciplinary project team.  We do not believe the change to a benchmark like SOFR will have a material impact on our financial condition, results of operations or cash flows.

Risks Related to Our Lending Activities

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 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.  A decline in the national economy or in 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.

In addition, bank regulators periodically review our allowance for loan losses and may require us to increase our allowance for loan losses or recognize further loan charge-offs. Moreover, the Financial Accounting Standards Board (“FASB”) has changed its requirements for establishing the allowance for loan losses.

On June 16, 2016, the FASB issued Accounting Standard Update (“ASU”) 2016-13 “Financial Instruments - Credit Losses”, which replaces the incurred loss model with an expected loss model, and is referred to as the current expected credit loss (“CECL”) model.  Under the incurred loss model, loans are recognized as impaired when there is no longer an assumption that future cash flows will be collected in full under the originally contracted terms.  The FASB voted to defer the effective date for this ASU for smaller reporting companies, such as the Company, to annual reporting periods and interim reporting periods within those annual periods, beginning after December 15, 2022.  Under the CECL model, financial institutions will be required to use historical information, current conditions and reasonable forecasts to estimate the expected loss over the life of the loan. The transition to the CECL model will bring with it significantly greater data requirements and changes to methodologies to accurately account for expected losses under the new parameters.  If the methodologies and assumptions that we use in the CECL model are proven to be incorrect, or inadequate, the

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allowance for credit losses may not be sufficient, resulting in the need for additional allowance for credit losses to be established, which could have a material adverse impact on our financial condition and results of operations.

We may further experience increased delinquencies, credit losses, and corresponding charges to capital, which could require us to increase our provision for loan losses associated with impacts related to the coronavirus outbreak due to quarantines, market downturns, increased unemployment rates, changes in consumer behavior related to pandemic fears, and related emergency response legislation. We cannot predict the full impact of the coronavirus outbreak or any other future global pandemic on our business, but we may experience increased delinquencies and credit losses as a result of the outbreak.  Further, if real estate markets or the economy in general deteriorate (due to the coronavirus outbreak or otherwise), CFBank may experience increased delinquencies and credit losses. The allowance for loan losses may not be sufficient to cover actual loan-related losses. Additionally, banking regulators may require CFBank to increase its allowance for loan losses in the future, which could have a negative effect on the Company’s financial condition and results of operations. Additions to the allowance for loan losses will result in a decrease in net earnings and capital and could hinder our ability to grow our assets.

Any increase in our allowance for loan losses or loan charge-offs, including increased required by applicable regulatory authorities, could have a material adverse effect on 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 may be required to repurchase loans we have sold or indemnify loan purchasers under the terms of the sale agreements, which could adversely affect our liquidity, results of operations and financial condition.

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

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

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

Risks Related to Our Business Operations

We may not be able to effectively manage our growth.

We have experienced significant growth in the amount of our total loans in the past several years.  Since January 1, 2016, our total net loans have grown by $598.3 million, or 201.4%, and our total assets have grown by $1.1 billion, or 320.4%.  Our continued growth

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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.

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

We conduct our business operations primarily in Franklin, Cuyahoga, Hamilton, Summit, and Columbiana Counties, Ohio, and make loans generally throughout Ohio, and residential mortgage loans on a national basis.  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.

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.

We are exposed to operational risk. 

Similar to any large organization, we are exposed to many types of operational risk, including those discussed in more detail elsewhere in this Item, such as reputational risk, legal and compliance risk, the risk of fraud or theft by employees or outsiders, unauthorized transactions by employees or operational errors, including clerical or record-keeping errors or those resulting from faulty or disabled computer or telecommunications systems.  These risks are heightened in light of COVID-19.

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

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

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

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

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

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

We could be adversely affected if one of our employees causes a significant operational break-down or failure, either as a result of human error or where an individual purposefully sabotages or fraudulently manipulates our operations or systems.  We are further exposed to the risk that the third-party service providers may be unable to fulfill their contractual obligations (or will be subject to the same risks as faced by us). These disruptions may interfere with service to our customers, cause additional regulatory scrutiny and result in a financial loss or liability.

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

In addition, there have been instances where financial institutions have been victims of fraudulent activity in which criminals pose as customers to initiate wire and automated clearinghouse transactions out of customer accounts.  The massive breach of the systems of a credit bureau in 2019 presents additional threats as criminals now have more information than ever before about a larger portion of our country's population, which could be used by criminals to pose as customers initiating transfers of money from customer accounts.  Although we have policies and procedures in place to verify the authenticity of our customers, we cannot assure that such policies and procedures will prevent all fraudulent transfers. 

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

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

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

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

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

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

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

One or more of the third parties utilized by us may experience a cybersecurity event or operational disruption and, if any such event does occur, it may not be adequately addressed, either operationally or financially, by such third party.  Further, the operations of our third-party vendors could fail or otherwise become delayed as a result of COVID-19.  Certain of these third parties may have limited indemnification obligations to us in the event of a cybersecurity event or operational disruption, or may not have the financial capacity to satisfy their indemnification obligations.

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

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

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

We are party to a number of derivative transactions. Many of these derivative instruments are individually negotiated and non-standardized, which can make exiting, transferring or settling the position difficult. We carry borrowings which contain embedded derivatives. These borrowing arrangements require that we deliver underlying securities to the counterparty as collateral.  We are dependent on the creditworthiness of the counterparties and are therefore susceptible to credit and operational risk in these situations.

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

Legislative, Legal and Regulatory Risks

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

The banking industry is highly regulated. We are subject to supervision, regulation and examination by various federal and state regulators, including the FRB, the SEC, the CFPB, the OCC, the FDIC, Financial Industry Regulatory Authority, Inc. (also known as FINRA), and various state regulatory agencies.  The statutory and regulatory framework that governs the Company is generally designed to protect depositors and customers, the DIF, the U.S. banking and financial system, and financial markets as a whole and

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not to protect shareholders.  These laws and regulations, among other matters, prescribe minimum capital requirements, impose limitations on our business activities (including foreclosure and collection practices), limit the dividends or distributions that we can pay, and impose certain specific accounting requirements that may be more restrictive and may result in greater or earlier charges to earnings or reductions in capital than would otherwise be required under generally accepted accounting principles in the United States of America.  Compliance with laws and regulations can be difficult and costly, and changes to laws and regulations often impose additional compliance costs.  Both the scope of the laws and regulations and the intensity of the supervision to which we are subject have increased in recent years in response to the perceived state of the financial services industry, as well as other factors such as technological and market changes. Such regulation and supervision may increase our costs and limit our ability to pursue business opportunities.  Further, our failure to comply with these laws and regulations, even if the failure was inadvertent or reflects a difference in interpretation, could subject the Company to restrictions on business activities, fines, and other penalties, any of which could adversely affect results of operations, the capital base, and the price of our common shares.  Further, any new laws, rules, or regulations could make compliance more difficult or expensive or otherwise adversely affect our business and financial condition.

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

Regulations affecting banks and financial services businesses are undergoing continuous change,particularly in light of COVID-19 and the stimulus programs issued in connection therewith, and management cannot predict the effect of those changes.  While such changes are generally intended to lessen the regulatory burden on financial institutions, the impact of any changes to laws and regulations or other actions by regulatory agencies could adversely affect our business.  Regulatory authorities have extensive discretion in connection with their supervisory and enforcement activities, including the ability to impose restrictions on the operation of an institution and the ability to determine the adequacy of an institution’s allowance for loan losses.  Failure to comply with applicable laws, regulations and policies could result in sanctions being imposed by the regulatory agencies, including the imposition of civil money penalties, which could have a material adverse effect on our operations and financial condition. Even the reduction of regulatory restrictions could have an adverse effect on us if such lessening of restrictions increases competition within our industry or market areas.

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.

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

The DIF maintained by the FDIC to resolve bank failures is funded by fees assessed on insured depository institutions.  The costs of resolving bank failures increased for a period of time and decreased the DIF.  The FDIC collected a special assessment in 2009 to replenish the DIF and also required a prepayment of an estimated amount of future deposit insurance premiums.  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.

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.

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

The Bank Secrecy Act and the USA Patriot Act contain anti-money laundering and financial transparency provisions intended to detect and prevent the use of the U.S. financial system for money laundering and terrorist financing activities. The Bank Secrecy Act, as amended by the USA Patriot Act, requires depository institutions and their holding companies to undertake activities including maintaining an anti-money laundering program, verifying the identity of clients, monitoring for and reporting suspicious transactions,

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reporting on cash transactions exceeding specified thresholds, and responding to requests for information by regulatory authorities and law enforcement agencies.  Financial Crimes Enforcement Network (also known as FinCEN), a unit of the Treasury Department that administers the Bank Secrecy Act, is authorized to impose significant civil money penalties for violations of those requirements and has recently engaged in coordinated enforcement efforts with the federal bank regulatory agencies, as well as the U.S. Department of Justice, Drug Enforcement Administration, and Internal Revenue Service.

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

Risks Related to our Capital and Capital Stock

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

The Holding Company is a legal entity separate and distinct from its subsidiaries and affiliates.  The Holding Company’s ability to support its operations, pay dividends on its common shares and service its debt is dependent upon the amount of cash and liquidity available at the Holding Company level, as well as the receipt of dividends and other distributions from CFBank to the extent necessary to fund such dividends.  As of December 31, 2020 the Holding Company a total of $1.8 million of cash at the Holding Company level.  

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

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

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

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

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

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

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

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The market price of our common stock may 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.

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

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

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

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

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

General Risk Factors

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

While we generally invest in securities issued by U.S. government agencies and sponsored entities and U.S. state and local governments with limited credit risk, certain investment securities we hold possess higher credit risk since they represent beneficial interests in structured investments collateralized by residential mortgages, debt obligations and other similar asset-backed assets.  Even securities issued by governmental agencies and entities may entail risk depending on political and economic changes.  Regardless of the level of credit risk, all investment securities are subject to changes in market value due to changing interest rates, implied credit spreads and credit ratings.

We are at risk of increased losses from fraud.

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

Changes in tax laws could adversely affect our performance.

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

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the value of mortgage-backed securities in which we have invested.

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

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

The preparation of consolidated financial statements in conformity with GAAP requires management to make significant estimates that affect the financial statements.  Due to the inherent nature of these estimates, actual results may vary materially from management’s estimates.  In June 2016, FASB issued a new accounting standard for recognizing current expected credit losses, commonly referred to as CECL.  CECL will result in earlier recognition of credit losses and requires consideration of not only past and current events but also reasonable and supportable forecasts that affect collectability.  The Company will be required to comply with the new standard beginning January 1, 2023.  Upon adoption of CECL, credit loss allowances may increase, which would decrease retained earnings and regulatory capital.  The federal banking regulators have adopted a regulation that will allow banks to phase in the day-one impact of CECL on regulatory capital over three years.  CECL implementation poses operational risk, including the failure to properly transition internal processes or systems, which could lead to call report errors, financial misstatements, or operational losses.

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

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

Item 1B.  Unresolved Staff Comments

Not Applicable

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Item 2.Properties.

We conducted our business through sixbranch offices located in Franklin, Hamilton, Summit and Columbiana Counties, Ohio, and through a loan production office located in Franklin County, Ohio and anagencyoffice located in Cuyahoga County, Ohio as of December 31, 2020.  The net book value of the Company’s properties totaled $2.9 million at December 31, 2020.  CFBank also leases its branch offices in Fairlawn, Ohio,  Glendale, Ohio and Blue Ash, Ohio,  its loan production office in Columbus, Ohio and its agency office located in Woodmere, Ohio in Cuyahoga County.  See Note 8 to the Consolidated Financial Statements included in our 2020 Annual Reportfor 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

Glendale Branch (leased facility)

38 Village Square

Glendale, Ohio 44122

Blue Ash Branch (leased facility)

10300 Alliance Rd. #150

Cincinnati, Oh 45242

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

Loan Production Office (leased facility):

8101 North High Street, Suite 180

Columbus, Ohio 43235

Agency Office (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

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PART II

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

(a) Information required by Item 201 of Regulation S-K is incorporated herein by reference from our 2020 Annual Report; the information appears under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations−Market and Dividend Information” therein.

(b) Not applicable.

(c) The following table provides information concerning purchases of the Holding Company’s shares of common stock made by or on behalf of the Company or any “affiliated purchaser” as defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934, as amended, during the three months ended December 31, 2020. 

Period	Total number of common shares purchased		Average price paid per common share			Total number of common shares purchased as part of publicly announced plans or programs
October 1 through October 31, 2020	-			-		-
November 1 through November 30, 2020	-			-		-
December 1 through December 31, 2020	289	(1)		18.00	(2)	-
Total	289		$	18.00		-

⁽¹⁾ Represents shares of common stock surrendered by officers and employees of the Company for payment of taxes upon vesting of restricted stock granted under the 2009 Equity Compensation Plan.

⁽²⁾ Represents the average closing price of the Company’s common stock on December 20, 2020, which was the vesting date of the restricted stock surrendered for payment of taxes.

Item 6.Selected Financial Data.

Information required by Item 301 of Regulation S-K is incorporated herein by reference from our 2020 Annual Report; 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 our 2020 Annual Report; the information appears under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations”therein.

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 2020 Annual Report; 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.

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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 2020 Annual Report; 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, 2020, an evaluation was performed under the supervision and with the participation of management, including the Chief Executive Officer and Senior 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, 2020were 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 2020 Annual Report;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 2020that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item  9B.Other Information.

None

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 our2020 Annual Meeting of Stockholders to be filed with the Commission pursuant to SEC Regulation 14A (the “2021 Proxy Statement”), under the caption “PROPOSAL 1.  ELECTION OF DIRECTORS.”

Executive Officers of the Registrant.  Information required by Item 401 of Regulation S-K with respect to our executive officers is incorporated herein by reference from our 2021 Proxy Statement under the caption “EXECUTIVE OFFICERS.”

Compliance with Section 16(a) of the Exchange Act.  Information required by Item 405 of Regulation S-K is incorporated herein by reference from our2021 ProxyStatement, under the caption “BENEFICIAL OWNERSHIP OF COMPANY COMMON STOCK–DELINQUENT SECTION 16(a) REPORTS.”Copies of Forms 3, 4 and 5 filed under section 16(a) of the Exchange Act are available on our 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.  We require all directors, officers and other employees to review and adhere to the Code of Ethics and Business Conduct in addressing the legal and ethical issues encountered in conducting their

45

work.  The Code of Ethics and Business Conduct requires that our employees avoid conflicts of interest, comply with all laws and other legal requirements, conduct business in an honest and ethical manner and otherwise act with integrity and in the Company’s best interest.The Code of Ethics and Business 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 2021 ProxyStatement, under the captions  “CORPORATE GOVERNANCE” and “AUDIT COMMITTEE MATTERS.”

Item  11.Executive Compensation.

Information required by Item 402 of Regulation S-K is incorporated herein by reference from our 2021Proxy Statement, under the captions “COMPENSATION OF EXECUTIVE OFFICERS” and “2020 COMPENSATION OF DIRECTORS.”

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 our2021 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 2021 Proxy Statement, under the caption “COMPENSATION OF EXECUTIVE OFFICERS-Equity  Compensation  Plan  Information,” and from our 2020 Annual Report, where the information appears under the caption “Note 15– 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 2021 Proxy Statement, under the caption“CORPORATEGOVERNANCE–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 our2021Proxy Statement, under the caption “AUDIT COMMITTEE MATTERS.”

PART IV

Item  15.Exhibits and Financial Statement Schedules

EXHIBIT INDEX

Exhibit No.	Description of Exhibit
3.1	Certificate of Incorporation of the registrant (incorporated by reference to Exhibit 3.1 to the registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, filed with the Commission on November 9, 2017 (File No. 0-25045))
3.2	Amendment to Certificate of Incorporation of the registrant (incorporated by reference to Exhibit 3.2 to the registrant’s Registration Statement on Form S-2 (File No. 333-129315), filed with the Commission on October28, 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 June30, 2009, filed with the commission on August14, 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 September30, 2011, filed with the Commission on November10, 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 May4, 2012)

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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 May7, 2014 and filed with the Commission on May13, 2014. (File No. 0-25045))
3.7	Amendment to Certificate of Incorporation of the registrant (incorporated by reference to Exhibit 3.1 to the registrant’s Current Report on Form 8-K dated August 20, 2018, filed with the commission on August 20, 2018 (File No. 0-25045)
3.8	Certificate of Designations to Certificate of Incorporation of the registrant (incorporated by reference to Exhibit 3.1 to the registrant’s Current Report on Form 8-K dated October 25, 2019, filed with the Commission on October 31, 2019 (File No. 0-25045))
3.9	Certificate of Amendment to Certificate of Incorporation of the registrant (incorporated by reference to Exhibit 3.1 to the registrant’s Current Report on Form 8-K dated May 29, 2020, filed with the Commission on June 2, 2020 (File No. 0-25045))
3.10	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 December31, 2007, filed with the Commission on March27, 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 September23, 1998)
4.2	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 May7, 2014 and filed with the Commission on May13, 2014 (File No. 0-25045))
4.3	Form of Subordinated Note Purchase Agreement by and between the Company and several Purchasers, dated December 20,2018 (incorporated by reference to Exhibit 10.1 to the registrants Current Report on Form 8-K filed with the Commission on December 21, 2018 (File No. 0-25045))
4.4	Form of 7.0% Fixed-to-Floating Rate Subordinated Note due 2028 (incorporated by reference to Exhibit 10.2 to the registrants Current Report on Form 8-K filed with the Commission on December 21, 2018 (File No. 0-25045))
4.5	Description of Capital Stock
4.6	Agreement to furnish instruments defining rights of holders of long-term debt
10.1*	Central Federal Corporation 2009 Equity Compensation Plan (incorporated by reference to Appendix A to the registrant’s Definitive Proxy Statement filed with the Commission on March31, 2009)
10.2*	First Amendment to the Central Federal Corporation 2009 Equity Compensation Plan (incorporated by reference to Appendix A to the registrant’s Definitive Proxy Statement filed with the Commission on April11, 2013)
10.3*	Central Federal Corporation 2019 Equity Compensation Plan (incorporated by reference to Annex A to the registrant’s Definitive Proxy Statement filed with the Commission on April 26, 2019)
10.4*	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 December31, 2012, filed with the Commission on April1, 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 December31, 2012, filed with the Commission on April1, 2013 (File No. 0-25045)
10.6*	Form of Employee Restricted Stock Award Agreement under the Central Federal Corporation 2009 Equity Compensation Plan (incorporated by reference to Exhibit 10.3 to the registrant’s Current Report on Form 8-K filed with the Commission on November3, 2015 (File No. 0-25045))
10.7*	Form of Director Restricted Stock Award Agreement under the Central Federal Corporation 2009 Equity Compensation Plan (incorporated by reference to Exhibit 10.4 to the registrant’s Current Report on Form 8-K filed with the Commission on November3, 2015 (File No. 0-25045))
10.8*	Form of Employee Restricted Stock Award Agreement under the Central Federal Corporation 2019 Equity Compensation Plan (incorporated by reference to Exhibit 10.8 to the registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed with the Commission on March 16, 2020 (File No. 0-25045))
10.9*	Form of Director Restricted Stock Award Agreement under the Central Federal Corporation 2019 Equity Compensation Plan (incorporated by reference to Exhibit 10.9 to the registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed with the Commission on March 16, 2020 (File No. 0-25045))
10.10*	Employment Agreement, dated April 22, 2019, by and among Central Federal Corporation, CFBank and Timothy T. O’Dell (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the Commission on April 26, 2019 (File No. 0-25045))

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10.11*	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 August16, 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 December31, 2020
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 Principal Financial Officer
32.1	Section 1350 Certifications of the Chief Executive Officer and Principal  Financial Officer
101.1	Interactive Data File (XBRL)

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

Item 16.  Form 10-K Summary

Not Applicable

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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

CF BANKSHARES INC.

/s/ Timothy T. O’Dell

Timothy T. O’Dell

President and Chief Executive Officer

Date: March 23, 2021

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 23, 2021
Robert E. Hoeweler
/s/ Timothy T. O’Dell	Director, President and Chief Executive Officer	March 23, 2021
Timothy T. O’Dell
/s/ Thomas P. Ash	Director	March 23, 2021
Thomas P. Ash
/s/ James H. Frauenberg II	Director	March 23, 2021
James H. Frauenberg II
/s/ Edward W. Cochran	Director	March 23, 2021
Edward W. Cochran
/s/ David L. Royer	Director	March 23, 2021
David L. Royer
/s/ John T. Pietrzak	Director	March 23,  2021
JohnT.  Pietrzak

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EX-4.5

Exhibit 4.5

DESCRIPTION OF CAPITAL STOCK

As of December 31, 2020, CF Bankshares Inc. (the “Company,” “we,”  “us” or “our”) had one class of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”):  our Voting Common Stock (as defined below).

The following is a summary of the material terms, limitations, voting powers and relative rights of our capital stock. This summary does not purport to be a complete description of the terms and conditions of our capital stock in all respects and is subject to and qualified in its entirety by reference to all of the provisions of our Certificate of Incorporation, as amended (our “Certificate of Incorporation”) and Second Amended and Restated Bylaws, which are incorporated by reference as exhibits to this Annual Report on Form 10-K, and the applicable provisions of the Delaware General Corporation Law.

Authorized Capital Stock

Under our Certificate of Incorporation, we are authorized to issue (a) up to 9,090,909 shares of common stock, par value $0.01 per share, of which 1,260,700 shares are designated as non-voting common stock (“Non-Voting Common Stock”), and the remainder of the authorized shares are (voting) common stock (“Voting Common Stock”); and (b) up to 1,000,000 shares of preferred stock, par value $0.01 per share (“Preferred Stock”). 

As of March 8, 2021, there were 5,385,256 shares of our Voting Common Stock issued and outstanding and 1,260,700 shares of our Non-Voting Common Stock issued and outstanding.  No shares of our Preferred Stock were outstanding as of March 8, 2021.

Description of Common Stock

General

The material terms, limitations and relative rights of our Voting Common Stock and Non-Voting Common Stock (collectively, our “Common Stock”) are identical in all respects except that (1) holders of our Non-Voting Common Stock are not entitled to any votes, except as may otherwise from time to time be required by law and (2) holders of our Non-Voting Common Stock are permitted to convert each share of Non-Voting Common Stock into one (1) share of Voting Common Stock, subject to limitations set forth in our Certificate of Incorporation (including that, following such conversion to Voting Common Stock, the holder will not own or control in the aggregate more than nine point nine percent (9.9%) of our Voting Common Stock).

Dividend rights

As a Delaware corporation, the Company may, in the discretion of our Board of Directors, generally pay dividends to our stockholders.  However, our ability to obtain funds for the payment of dividends and for other cash requirements largely depends on the amount of dividends that may be declared and paid by our subsidiary, CFBank.  Thus, as a practical matter, any restrictions on the ability of CFBank to pay dividends will act as restrictions on the amount of funds available for payment of dividends by the Company.  The ability of CFBank to pay dividends is subject to limitations under various laws and regulations and to prudent and sound banking principles.  Under these laws and regulations, the amount of dividends that may be paid 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, subject to compliance with applicable capital requirements.  The ability of CFBank to pay dividends to us is also subject to its profitability, financial condition, capital expenditures and other cash flow requirements and contractual obligations.

The dividend rights of holders of the Common Stock are also qualified by and subject to the dividend rights of holders of any Preferred Stock. 

The Company also is subject to various legal and regulatory policies and requirements impacting the Company’s ability to pay dividends on its Common Stock.  In addition, the Company’s ability to pay dividends on its stock is conditioned upon the payment, on a current basis, of quarterly interest payments on the subordinated

debentures underlying the Company’s trust preferred securities.  Finally, under the terms of the Company’s fixed-to-floating rate subordinated debt, the Company’s ability to pay dividends on its stock is conditioned upon the Company continuing to make required principal and interest payments, and not incurring an event of default, with respect to the subordinated debt.

The dividend rights of holders of the Common Stock are also qualified by and subject to the dividend rights of holders of any outstanding Preferred Stock. 

Voting rights

Holders of Voting Common Stock are entitled to vote for the election of directors and upon all other matters which may be submitted to a vote of stockholders generally, with each share being entitled to one vote.  Holders of Voting Common Stock do not possess cumulative voting rights.  This means that holders of more than 50% of the Voting Common Stock (on a fully diluted basis) voting for the election of directors can elect all of the directors, and holders of the remaining shares will not be able to elect any directors.  Our Certificate of Incorporation restricts the ability of any stockholder to vote more than 10% of the outstanding Voting Common Stock.  See “Provisions of Our Certificate of Incorporation and Bylaws” under “Restrictions on Acquisitions and Related Anti-Takeover Provisions” below.

Directors are elected by a plurality of the votes cast at each meeting of stockholders for the election of directors.  This means that the nominees receiving the highest number of votes will be elected regardless of whether those votes constitute a majority of the shares represented at the meeting.  Any other corporate action must be authorized by a majority of the votes cast at the meeting of stockholders unless otherwise provided by Delaware law, our Certificate of Incorporation or our Second Amended and Restated Bylaws.

Liquidation rights

In the event of any liquidation, dissolution or winding up of the Company, the holders of Common Stock would be entitled to receive, after payment or provision for payment of all of our debts and liabilities, all of our assets available for distribution, subject to the rights of the holders of any outstanding Preferred Stock. 

Preemptive rights

Holders of our Common Stock do not have preemptive rights to purchase additional securities that may be issued by us in the future.

Subscription, preference, conversion, exchange and redemption rights

The holders of shares of our Common Stock do not have subscription, preference, conversion or exchange rights  (except for the rights of holders of our Non-Voting Common Stock to convert shares of Non-Voting Common Stock into shares of Voting Common Stock as described above).  There are no mandatory redemption provisions applicable to shares of our Common Stock.

The rights, preferences and privileges of the holders of our Common stock are subject to, and may be adversely affected by, the rights, preferences and privileges of holders of any shares of Preferred Stock that our Board of Directors may designate and issue in the future.

Listing

Our Voting Common Stock trades on The NASDAQ Capital Market under the symbol “CFBK.”

Transfer agent and registrar

The transfer agent and registrar for our Common Stock is Computershare, Inc. located in Canton, Massachusetts.

-2-

Description of Preferred Stock

Our Certificate of Incorporation permits our Board of Directors to authorize the issuance of up to 1,000,000 shares of Preferred Stock, which are typically referred to as “blank check” preferred stock.  This term refers to preferred stock for which the rights and restrictions are determined by the board of directors of a corporation at the time the shares of preferred stock are issued.  Under our Certificate of Incorporation, our Board of Directors has the authority, without any further stockholder vote or action (except as may be required under the terms of any outstanding Preferred Stock and by the rules of the NASDAQ Stock Market or any other exchange or market on which our securities may then be listed or quoted), to issue the authorized shares of Preferred Stock in one or more series, from time to time, with voting, dividend, liquidation and conversion and other rights as may be provided in a certificate of designation to our Certificate of Incorporation adopted by our Board of Directors. 

Our Board of Directors may authorize the issuance of Preferred Stock with voting, liquidation, conversion or other rights that could adversely affect the voting power or other rights of the holders of our Common Stock.    This may have the effect of diluting the voting power or other rights or adversely affecting the market value of our Common Stock and may also assist management in impeding any unfriendly takeover or attempted change in control.  See “Restrictions on Acquisitions and Related Anti-Takeover Provisions” below.

Restrictions on Acquisitions and Related Anti-Takeover Provisions

Several provisions of our Certificate of Incorporation and Second Amended and Restated Bylaws, the Delaware General Corporation Law, and applicable federal laws and regulations limit the ability of any person to acquire a controlling interest in us and thus may be deemed to have an anti-takeover effect.  The following discussion is a general summary and is qualified in its entirety by reference to the relevant provisions of our Certificate of Incorporation and Second Amended and Restated Bylaws, which are incorporated by reference as exhibits to this Annual Report on Form 10-K, and the provisions of applicable Delaware and federal laws and regulations. 

Provisions of Our Certificate of Incorporation and Bylaws

Ability to Issue Preferred Stock 

Shares of our Preferred Stock may be issued at any time with such preferences and designations as the Board of Directors may determine.  The Board of Directors can, without stockholder approval (subject to the rules of the NASDAQ Stock Market or any other exchange or market on which our securities may then be listed or quoted), issue Preferred Stock with voting, dividend, liquidation and conversion rights which could dilute the voting strength of the holders of Common Stock and may assist management in impeding a takeover or attempted change in our control.

Limitation on Voting Rights 

Our Certificate of Incorporation provides that no beneficial owner of our outstanding Common Stock holding in excess of 10% of the then-outstanding shares of our Common Stock (the “Limit”) is permitted to vote any shares held in excess of the Limit.  Beneficial ownership is determined pursuant to Rule 13d-3 of the Exchange Act and includes (i) shares beneficially owned by such person or any affiliate (as defined in Rule 12b-2 of the Exchange Act), (ii) shares which such person or his affiliates have the right to acquire pursuant to any agreement or understanding, including without limitation upon the exercise of conversion rights or options and (iii) shares as to which such person or his affiliates are deemed to have beneficial ownership through any partnership, syndicate or group acting for the purpose of acquiring, holding, voting or disposing of shares of Common Stock.  Notwithstanding the foregoing, shares with respect to which a revocable proxy has been granted in connection with a meeting of stockholders and shares beneficially owned by any benefit plan of ours are not subject to the limitation, and none of our directors or officers (or any affiliate thereof) will be deemed to beneficially own shares of Common Stock of any other director or officer (or any affiliate thereof) solely by reason of service as a director or officer of the Company.

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Classified Board of Directors 

Our Board of Directors is divided into three classes, each of which contains approximately one-third of the whole number of members of the Board of Directors.  Each class serves a staggered term, with one-third of the total number of directors being elected each year.  Our Certificate of Incorporation provides that the size of the Board of Directors may be fixed from time to time by a majority of the directors.  Any vacancy occurring in the Board of Directors, including a vacancy resulting from death, resignation, retirement, disqualification, removal from office or other cause, may be filled for the remainder of the unexpired term exclusively by a majority vote of the directors then in office.  The classified board is intended to provide for continuity of the Board of Directors and to make it more difficult and time consuming for a stockholder group to use its voting power to gain full control of the board without the consent of the incumbent Board of Directors.

Nomination Procedure

Our Second Amended and Restated Bylaws provide that a stockholder may nominate any person to serve as a director, but notice of the nomination generally must be provided to us no later than 90 days prior to the date of the meeting of stockholders. 

Removal of Directors

Our Certificate of Incorporation provides that a director may be removed from the Board of Directors prior to the expiration of his term only for cause, upon the vote of 80% of the outstanding shares of voting stock.  In the absence of these provisions, the vote of the holders of a majority of the voting stock could remove the entire Board of Directors, with or without cause, and replace it with persons of the stockholders’ choice.

No Cumulative Voting; No Special Meetings Called by Stockholders; No Action by Written Consent 

Our Certificate of Incorporation does not provide for cumulative voting for any purpose.  Moreover, special meetings of our stockholders may be called only by the Board of Directors, subject to the rights of the holders of Preferred Stock.  Our Certificate of Incorporation and our Second Amended and Restated Bylaws provide that any action required or permitted to be taken by our stockholders may be taken only at an annual or special meeting and prohibit stockholder action by written consent in lieu of a meeting, subject to the rights of the holders of Preferred Stock.  In addition, at any special meeting of the stockholders, only such business shall be conducted as shall have been brought before the meeting by or at the direction of the Board of Directors.  An effect of these provisions, taken together, is that holders of our Common Stock cannot take action except at an annual meeting or at a special meeting called by the Board of Directors.

Availability of Authorized Shares 

Our Certificate of Incorporation authorizes the issuance of up to 9,090,909 shares of Common Stock and up to 1,000,000 shares of Preferred Stock.  The authorization of these shares gives the Board of Directors flexibility to effect financings, acquisitions, stock dividends, stock splits and employee stock options, among other transactions.  However, these additional authorized shares also may be used by the Board of Directors, to the extent consistent with its fiduciary duty, to deter future attempts to gain control of the Company.  The Board of Directors also has sole authority to determine the terms of any one or more series of Preferred Stock, including voting rights, conversion rates and liquidation preferences.  As a result of the ability to fix voting rights for a series of Preferred Stock, the Board of Directors has the power, to the extent consistent with its fiduciary duty, to issue a series of Preferred Stock to persons friendly to management in order to attempt to block a post-tender offer merger or other transaction by which a third party seeks control, and thereby assist management to retain its position.

Supermajority Stockholder Vote Required to Approve Business Combinations with Principal Stockholders 

Our Certificate of Incorporation requires the approval of the holders of at least 80% of our outstanding shares of voting stock to approve certain Business Combinations, as defined below, and related transactions.  Under Delaware law, absent this provision, business combinations, including mergers, consolidations and sales of all or substantially all of the assets of a corporation, must, subject to certain exceptions, be approved by the vote of the holders of only a

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majority of the outstanding shares of its common stock and any other affected class of stock.  Under our Certificate of Incorporation, the affirmative vote of stockholders holding at least 80% of the outstanding shares of our voting stock is required in connection with any transaction involving an Interested Stockholder (as defined below) except (i) in cases where the proposed transaction has been approved in advance by a majority of those members of the Board of Directors who are unaffiliated with the Interested Stockholder and were directors prior to the time when the Interested Stockholder became an Interested Stockholder or (ii) if the proposed transaction meets certain conditions set forth therein which are designed to afford the stockholders a fair price in consideration for their shares; in which case, if a stockholder vote is required, approval of only a majority of the outstanding shares of voting stock would be sufficient.  The term “Interested Stockholder” is defined in our Certificate of Incorporation to include any individual, corporation, partnership or other entity (other than the Company or its subsidiary) which owns beneficially or controls, directly or indirectly, 25% or more of the outstanding shares of our voting stock.  This provision of our Certificate of Incorporation applies to any “Business Combination,” which is defined to include (i) any merger or consolidation of the Company or any of its subsidiaries with or into any Interested Stockholder (or affiliate thereof, as defined in our Certificate of Incorporation) of an Interested Stockholder; (ii) any sale, lease, exchange, mortgage, pledge, transfer, or other disposition to or with any Interested Stockholder (or affiliate thereof) of 25% or more of our assets; (iii) our issuance or transfer to any Interested Stockholder (or affiliate thereof) of any of our securities in exchange for any assets, cash or securities, the value of which equals or exceeds 10% of the fair market value of our Common Stock; (iv) the adoption of any plan for our liquidation or dissolution proposed by or on behalf of any Interested Stockholder (or affiliate thereof) and (v) any reclassification of securities, recapitalization, merger or consolidation of the Company which has the effect of increasing the proportionate share of Common Stock or any class of our other equity or convertible securities owned directly or indirectly by an Interested Stockholder (or affiliate thereof).

Supermajority Stockholder Vote Required to Amend Our Certificate of Incorporation and Second Amended and Restated Bylaws

Amendment of our Certificate of Incorporation must be approved by a majority vote of our Board of Directors or by the affirmative vote of at least 80% of the outstanding shares of our voting stock entitled to vote (after giving effect to the provision limiting voting rights) in order to amend or repeal certain provisions of our Certificate of Incorporation, including the provisions relating to voting rights (Article Fourth, Part C), management of our business and conduct of our affairs and calling special meetings of stockholders (Article Fifth, Parts C and D), the number, classification and nominations of directors (Article Sixth), amendment of the Second Amended and Restated Bylaws (Article Seventh), approval of certain business combinations (Article Eighth), director and officer indemnification (Article Tenth) and amendment of our Certificate of Incorporation (Article Twelfth).  Article VIII of the Second Amended and Restated Bylaws specifies that the Second Amended and Restated Bylaws may be amended only by a majority of the members of the Board of Directors or by the affirmative vote of stockholders holding at least 80% of the outstanding shares of our voting stock.

Advance Notice Required to Nominate Candidates for Director or to Make a Proposal

Article Sixth of our Certificate of Incorporation incorporates by reference Article I, Section 6 of the Second Amended and Restated Bylaws, as it pertains to stockholder nominations for director.  As noted above, a stockholder who intends to nominate a candidate for election to the Board of Directors must give us at least 90-days’ advance notice.  Article I, Section 6 of the Second Amended and Restated Bylaws also requires a stockholder to give 90-days’ prior notice with respect to any new business to be brought before an annual meeting of stockholders; the stockholder also must provide certain information to us concerning the nature of the new business, the stockholder and the stockholder’s interest in the business matter.  Similarly, a stockholder wishing to nominate any person for election as a director must provide us with certain information concerning the nominee and the proposing stockholder.  In addition, at any special meeting of the stockholders, only such business shall be conducted as shall have been brought before the meeting by or at the direction of the Board of Directors.

Regulatory Restrictions

Federal law provides that no person or company, directly or indirectly or acting in concert with one or more persons, or through one or more subsidiaries, or through one or more transactions, may acquire control of a national banking association at any time without the prior approval of the OCC.  Federal law also provides that no person or company, directly or indirectly or acting in concert with one or more persons, or through one or more subsidiaries, or

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through one or more transactions, may acquire control of a bank holding company at any time without the prior approval of the FRB.  In addition, any company that acquires control of us becomes a bank holding company subject to registration, examination and regulation as a bank holding company.  Control in this context means ownership of, control of, or holding proxies representing more than 25% of the voting shares of a national bank or the power to control in any manner the election of a majority of the directors of such institution.

Delaware Law

Delaware law provides additional protection against hostile takeovers.  The Delaware takeover statute, which is codified in Section 203 of the Delaware General Corporation Law, is intended to discourage certain takeover practices by impeding the ability of a hostile acquirer to engage in certain transactions with the target company.

In general, Section 203 provides that a Person (as defined therein) who owns 15% or more of the outstanding voting stock of a Delaware corporation (an Interested Stockholder) may not consummate a merger or other business combination transaction with the corporation at any time during the three-year period following the date the Person became an Interested Stockholder.  The term “business combination” is defined broadly to cover a wide range of corporate transactions including mergers, sales of assets, issuances of stock, transactions with subsidiaries and the receipt of disproportionate financial benefits.

The statute exempts the following transactions from the requirements of Section 203: (i) any business combination if, prior to the date a person became an Interested Stockholder, the board of directors approved either the business combination or the transaction which resulted in the stockholder becoming an Interested Stockholder; (ii) any business combination involving a person who acquired at least 85% of the outstanding voting stock in the transaction in which he became an Interested Stockholder, with the number of shares outstanding calculated without regard to those shares owned by the corporation’s directors who are also officers and by certain employee stock plans; (iii) any business combination with an Interested Stockholder that is approved by the board of directors and by a two-thirds vote of the outstanding voting stock not owned by the Interested Stockholder; and (iv) certain business combinations that are proposed after the corporation had received other acquisition proposals and which are approved or not opposed by a majority of certain continuing members of the board of directors.  A corporation may exempt itself from the requirements of the statute by adopting an amendment to its certificate of incorporation or bylaws electing not to be governed by Section 203.  The Company has not so exempted itself from the requirements of the statute.

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EX-4.6

Exhibit 4.6

March 23, 2021

Securities and Exchange Commission

100 F Street, NE

Washington, D.C. 20549

Re: CF Bankshares Inc.—Annual Report on Form 10-K for the fiscal year ended December 31, 2020.

Ladies and Gentlemen:

CF Bankshares Inc., a Delaware  corporation,is today filing with the Securities and Exchange Commission (the "SEC") its Annual Report on Form 10-K of CF Bankshares Inc. for the fiscal year ended December 31, 2020.

Pursuant to the instructions relating to the Exhibits in Item 601(b)(4)(iii) of Regulation S-K, CF Bankshares Inc. hereby agrees to furnish to the SEC, upon request, copies of instrumentsdefining the rights of holders of long-term debt and of the long-term debt of its consolidated subsidiaries, which are not being filed as exhibits to CF Bankshares Inc.’s 2020 Annual Report on Form 10-K. None of such long-term debt exceeds 10% of the total assets of CF Bankshares Inc. and its subsidiaries on a consolidatedbasis.

Very truly yours,

CF BANKSHARES INC.

/s/Timothy T. O’Dell

Timothy T. O’Dell

President and Chief Executive Officer

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 2020 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 22 - Earnings (Loss) Per Common Share” therein.

EX-13.1

Exhibit 13.1

Annual Report to Security Holders For the Fiscal Year ended December 31, 2020

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	3
Financial Condition	4
Comparison of Results of Operations for 2020 and 2019	8
Comparison of Results of Operations for 2019 and 2018	10
Quantitative and Qualitative Disclosures about Market Risk	13
Liquidity and Capital Resources	14
Impact of Inflation	16
Critical Accounting Policies	16
Market and Dividend Information	17
FINANCIAL STATEMENTS
Management’s Report on Internal Control Over Financial Reporting	1
Report of Independent Registered Public Accounting Firm	2
Consolidated Financial Statements	4
Notes to Consolidated Financial Statements	9
BOARD OF DIRECTORS AND OFFICERS	49
CFBANK LOCATIONS	49
CORPORATE DATA	50
Annual Report	50
Annual Meeting	50
Shareholder Services	50

Dear fellow Shareholders,

2020 was a year of record-setting performance. Net income more than tripled during 2020 as compared to 2019.  Our CFBank team also achieved a record ROA of 2.59%, along with a record ROE of 32%,

Our Total Assets reached nearly $1.5 billion at year end 2020 (an increase of 68%), plus we originated more than $2 billion of Residential Mortgage Loans during 2020.

EPS for the year was $4.47 per common share, increasing by 120% over the prior year, resulting in an end-of-year Book Value of $16.79 per common share.

Pre-provision, Pre-Tax Revenue topped $47 million for the full year.

Also during 2020, we fortified our Loan Loss Provision to over 2% of Loans, excluding SBA and other government guaranteed loans, in response to COVID-19, even though our Credit Quality has remained strong.

We enter 2021 in strengthened condition along with being well-positioned to continue with our objectives of quality growth and expansion. Our Commercial Loan Pipelines are robust and well above the levels experienced at this same time last year.  Our Teams are deeper and more experienced.

We believe the ongoing investments we have made and are making in our Core Banking businesses, Commercial & Retail Banking, along with Residential Home Lending, will contribute to our strategic objective of achieving increased size and scale, with a near-term objective of achieving Total assets of $2 billion. All of these business initiatives and objectives are laser-focused on enhancing both shareholder and franchise value during 2021.

As a shareholder, we invite you to become a CFBank customer and experience for yourself the Boutique Banking difference. Please feel free to contact me directly at (614) 318-4660 to get the ball rolling.

On behalf of our CFBank colleagues and our Directors, we express our appreciation and sincere thanks to you for your continuing support!

We are just Revving Up!

/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,
	2020		2019		2018		2017		2016
		(Dollars in thousands)
Selected Financial Condition Data:
Total assets	$	1,476,995	$	880,545	$	665,025	$	481,425	$	436,112
Cash and cash equivalents		221,594		45,879		67,304		45,498		57,941
Securities available for sale		8,701		8,174		10,114		11,773		14,058
Equity securities		5,000		-		-		-		-
Loans held for sale		283,165		135,711		17,385		1,124		2,812
Loans and leases, net (1)		895,344		663,303		550,683		406,406		346,125
Allowance for loan and lease loss (ALLL)		17,022		7,138		7,012		6,970		6,925
Nonperforming assets		695		2,439		415		470		908
Foreclosed assets		-		-		38		-		204
Deposits		1,113,070		746,323		579,786		419,028		375,364
FHLB advances and other debt		214,426		29,017		19,500		13,500		13,500
Subordinated debentures		14,844		14,806		14,767		5,155		5,155
Total stockholders' equity		110,210		80,664		45,559		40,261		39,292

		For the year ended December 31,
	2020		2019		2018		2017		2016
		(Dollars in thousands)
Summary of Operations:
Total interest income	$	42,386	$	35,104	$	24,886	$	17,207	$	14,409
Total interest expense		14,578		13,404		6,997		3,534		3,096
Net interest income		27,808		21,700		17,889		13,673		11,313
Provision for loan and lease losses		10,915		-		-		-		230
Net interest income after provision for loan and lease losses		16,893		21,700		17,889		13,673		11,083
Noninterest income:
Net gain on sale of loans		58,366		10,767		1,927		75		134
Other		1,627		953		789		668		1,043
Total noninterest income		59,993		11,720		2,716		743		1,177
Noninterest expense		40,603		21,379		15,275		10,955		9,823
Income before income taxes		36,283		12,041		5,330		3,461		2,437
Income tax expense (benefit)		6,675		2,440		1,057		2,115		810
Net income	$	29,608	$	9,601	$	4,273	$	1,346	$	1,627

1

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

		At or for the year ended December 31,
	2020		2019		2018		2017		2016
		(Dollars in thousands)
Selected Financial Ratios and Other Data:
Performance Ratios (2)
Return on average assets		2.59%		1.30%		0.78%		0.31%		0.43%
Return on average equity		32.04%		17.57%		10.11%		3.36%		4.19%
Average yield on interest-earning assets (3)		3.89%		4.98%		4.75%		4.25%		4.09%
Average rate paid on interest-bearing liabilities		1.64%		2.38%		1.71%		1.14%		1.06%
Average interest rate spread (4)		2.25%		2.60%		3.04%		3.11%		3.03%
Net interest margin, fully taxable equivalent (5)		2.55%		3.08%		3.41%		3.38%		3.21%
Average interest-earning assets to interest bearing liabilities		122.64%		124.90%		128.04%		130.09%		121.04%
Efficiency ratio (6)		46.24%		63.97%		74.13%		75.99%		78.65%
Noninterest expenses to average assets		3.55%		2.89%		2.78%		2.54%		2.60%
Common stock dividend payout ratio		0.67%		n/m		n/m		n/m		n/m
Capital Ratios: (2)
Equity to total assets at end of period		7.46%		9.16%		6.85%		8.36%		9.01%
Average equity to average assets		8.07%		7.39%		7.68%		9.28%		10.27%
Tier 1 (core) capital to adjusted total assets (Leverage ratio) (7)		9.74%		10.58%		10.13%		9.37%		9.66%
Total capital to risk weighted assets (7)		14.31%		12.96%		12.37%		11.91%		12.46%
Tier 1 (core) capital to risk weighted assets (7)		13.05%		11.97%		11.12%		10.65%		11.20%
Common equity tier 1 capital to risk weighted assets (7)		13.05%		11.97%		11.12%		10.65%		11.20%
Asset Quality Ratios: (2)
Nonperforming loans to total loans (8)		0.08%		0.36%		0.07%		0.11%		0.20%
Nonperforming assets to total assets (9)		0.05%		0.28%		0.06%		0.10%		0.21%
Allowance for loan and lease losses to total loans		1.87%		1.06%		1.26%		1.69%		1.96%
Allowance for loan and lease losses to nonperforming loans (8)		2449.21%		292.66%		1859.95%		1482.98%		983.66%
Net charge-offs (recoveries) to average loans		0.13%		(0.02%)		(0.01%)		(0.01%)		(0.02%)
Per Share Data: (10)
Basic earnings per common share	$	4.53	$	2.05	$	1.02	$	0.21	$	0.28
Diluted earnings per common share		4.47		2.03		1.00		0.19		0.28
Dividends declared per common share		0.03		-		-		-		-
Tangible book value per common share at end of period		16.79		12.40		10.51		9.48		9.19

(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.
(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)	Adjusted to reflect the 1-for-5.5 reverse stock split effected on August 20, 2018.
	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 CF Bankshares Inc. (the “Holding Company”) or CFBank, National Association (“CFBank” and, together with the Holding Company, the “Company”); (3) statements regarding future events, actions or economic performance; and (4) statements of assumptions underlying such statements.  Words such as "estimate," "strategy," "may," "believe," "anticipate," "expect," "predict," "will," "intend," "plan," "targeted," and the negative of these terms, or similar expressions, are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements.  Various risks and uncertainties may cause actual results to differ materially from those indicated by our forward-looking statements, including, without limitation,those risks detailed from time to time in our reports filed with the SEC, including those identified in “Item 1A. Risk Factors” of Part I of our Form 10-K filed with the SEC for the year ended December 31, 2020. 

Forward-looking statements are not guarantees of performance or results.  A forward-looking statement may include a statement of the assumptions or bases underlying the forward-looking statement.  We believe that we have chosen these assumptions or bases in good faith and that they are reasonable.  We caution you, however, that assumptions or bases almost always vary from actual results, and the differences between assumptions or bases and actual results can be material.  The forward-looking statements included in this quarterly report speak only as of the date of the report.  We undertake no obligation to publicly release revisions to any forward-looking statements to reflect events or circumstances after the date of such statements, except to the extent required by law.

Business Overview

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

CFBank is a boutique commercial bank headquartered in Columbus, Ohio. CFBank has focused on bettering the Ohio economy and serving the financial needs of closely held businesses since 1892. Over a century has passed, and yet, our focus remains the same: guide fellow Ohioans to financial stability and success with agility, ease, and care.  As CFBank has expanded, we have maintained our penchant for individualized service and direct customer access to decision makers. CFBank now has locations in four major metro Ohio markets - Columbus, Cleveland, Cincinnati, and Akron, as well as branch locations in Columbiana Country (two locations).  In every location, CFBank provides commercial loans and leases, commercial and residential real estate loans and treasury management depository services, corporate treasury management, residential lending, and full-service retail banking services and products. In addition, CFBank also has a national residential lending platform.  CFBank also offers its clients the convenience of online internet banking, mobile banking, and remote deposit.

Most of our deposits and loans come from our market area.  Our principal market area for loans and deposits includes the following Ohio counties: Franklin County through our office in Worthington, Ohio and our loan production office in Columbus, Ohio; Summit County through our office in Fairlawn, Ohio; Hamilton County through our offices in Glendale and Blue Ash, Ohio; Columbiana County through our offices in Calcutta and Wellsville, Ohio; and Cuyahoga County, through our agency office in Woodmere, Ohio. Because of CFBank’s concentration of business activities in Ohio, the Company’s financial condition and results of operations depend in large part upon economic conditions in Ohio.   

COVID-19 Impact. The World Health Organization declared the coronavirus COVID-19 a pandemic in March 2020.  The impacts of the COVID-19 pandemic have resulted in, among other things, stock and global market declines, disruption in business and leisure activities as stay-at-home orders were mandated by state and local governments, significant strain on the health care industry as it addressed the severity of the health crisis, and shifts in the general economy (such as high unemployment, negative GDP expectations, a 150 bps decline in Federal funds rates, and unprecedented government stimulus), triggering a 2020 recession.  The dramatic events surrounding the pandemic and the uncertainty about the longevity of the pandemic’s affects will continue to impact future expectations about credit costs and margins and noninterest expenses.

Given the extent of uncertainty, we guided numerous existing and new customers through our participation in the Paycheck Protection Program (“PPP”) and by providing temporary loan modifications to loan customers.  CFBank originated approximately $126 million of PPP loans during the second quarter of 2020 to over 550 borrowers.  The PPP loans provided low interest rates (1%) and potentially forgivable funds to small businesses and are fully guaranteed by the SBA, warranting no credit loss provision.  Using the PPP loans as collateral, CFBank funded nearly all of the PPP loans through loans obtained under the Federal Reserve’s Paycheck Protection

3

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

Program Liquidity Facility (“PPPLF”), which carry a low interest rate of 0.35%.  CFBank’s loans through the PPPLF totaled $107.4 million at December 31, 2020.  PPP loans are given a zero risk-weight in regulatory risk-based capital ratios.  Also, to the extent the PPP loans are funded through the PPPLF, they are also excluded from average assets for purposes of calculating CFBank’s regulatory leverage ratio.  Since the pandemic started, CFBank has granted payment modifications on loans totaling approximately $100 million (or approximately 12% of outstanding loan balances).  At December 31, 2020, loans on payment deferrals totaled approximately $528,000 (or approximately .06% of outstanding loan balances).

Amid the uncertainty related to the COVID-19 pandemic, CFBank significantly increased the allowance for loan and lease losses during the year ended December 30, 2020 for the dramatically changing circumstances that continue to evolve. 

Also in response to COVID-19, the Company has modified its business practices with a portion of employees working remotely from their homes to limit interruptions to operations as much as possible and to help reduce the risk of COVID-19 infecting entire departments.  The Company is promoting social distancing, frequent hand washing and thorough disinfection of all surfaces.  CFBank’s financial service location lobbies were closed for periods of time except for advance appointments only. 

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, advertising and marketing, data processing, professional fees, FDIC insurance premiums and other general and administrative expenses.  Our results of operations are significantly affected by general economic and competitive conditions, changes in market interest rates and real estate values, government policies and actions of regulatory authorities.  Our regulators have extensive discretion in their supervisory and enforcement activities, including the authority to impose restrictions on our operations, to classify our assets and to require us to increase the level of our allowance for 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.

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 $1.5 billion at December 31, 2020 and increased $596.5 million, or 67.7%, from $880.5 million at December 31, 2019.  The increase was primarily due to a $232.0 million increase in net loan balances, a $175.7 million increase in cash and cash equivalents, and a $147.5 million increase in loans held for sale.

Cash and cash equivalents.Cash and cash equivalents totaled $221.6 million at December 31, 2020, and increased $175.7 million, or 383.0%, from $45.9 million at December 31, 2019.  The increase in cash and cash equivalents was primarily attributed to increases in deposits, FHLB advances and other borrowings, partially offset by an increase in net loans and loans held for sale.

Securities.Securities available for sale totaled $8.7 million at December 31, 2020, and increased $527,000, or 6.5%, compared to $8.2 million at December 31, 2019.  The increase was due to security purchases, partially offset by principal maturities. Equity securities totaled $5.0 million at December 31, 2020.  The increase was due to a purchase during the fourth quarter of 2020.

Loans held for sale.Loans held for sale totaled $283.2 million at December 31, 2020 and increased $147.5 million, or 108.7%, from $135.7 million at December 31, 2019. 

Loans and Leases.Net loans and leases totaled $895.3 million at December 31, 2020, and increased $232.0 million, or 35.0%, from $663.3 million at December 31, 2019.  The increase was primarily due to a $167.6 million increase in commercial loan balances, a $29.5 million increase in commercial real estate loan balances, a $27.6 million increase in single-family residential loan balances, a $12.8 million increase in construction loans balances, and a $6.1 million increase in multi-family loan balances, partially offset by a $9.9 million increase in the allowance for loan losses and a $1.7 million decrease in consumer loan balances.  The increase in the aforementioned commercial loan balances includes $107.0 million of PPP loans, coupled with increased sales activity and new relationships.

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

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

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.  During the twelve months ended December 31, 2020 and December 31, 2019, loan origination activity totaled $423.7 million and $844.7 million, respectively, and payoffs for the same period totaled $434.0 million and $855.5 million, respectively.  At December 31, 2020 and December 31, 201, CFBank held $15.7 million and $26.0 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 $17.0 million at December 31, 2020, and increased $9.9 million, or 138.5%, from $7.1 million at December 31, 2019.  The increase in the ALLL is due to $10.9 million in the provision for loan and lease losses expense, partially offset by net charge-offs of $1.0 million during the year ended December 31, 2020.  The ratio of the ALLL to total loans was 1.87% at December 31, 2020, compared to 1.06% at December 31, 2019.  The ratio of the ALLL to total loans, excluding loan balances subject to SBA guarantees, was 2.15% at December 31, 2020, compared to 1.07% at December 31, 2019.    

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. Substandard loans of all classes within the commercial, commercial real estate, construction and multi-family residential loan segments, regardless of size, 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 $3.1 million at December 31, 2020, and decreased $1.5 million, or 33.0%, from $4.6 million at December 31, 2019.  The decrease was primarily due to a payoff of a commercial real estate loan during the first quarter.  The amount of the ALLL specifically allocated to individually impaired loans totaled $23,000 at December 31, 2020 and $35,000 at December 31, 2019.  The decrease in the ALLL specifically allocated to impaired loans was primarily due to management’s updated analysis.

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.

Nonperforming loans, which are nonaccrual loans and loans 90 days past due but still accruing interest, totaled $695,000 at December 31, 2020, and decreased $1.7 million from $2.4 million at December 31, 2019.  The decrease was primarily due to a payoff of a

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

commercial real estate loan during the first quarter of 2020.  The ratio of nonperforming loans to total loans was 0.08% at December 31, 2020, compared to 0.36% at December 31, 2019. 

The following table presents information regarding the number and balance of nonperforming loans at December 31, 2020 and December 31, 2019.  

	December 31, 2020			December 31, 2019
	# of loans	Balance			# of loans	Balance
	(dollars in thousands)
Commercial	1	$	190		1	$	85
Single-family residential real estate	3		421		6		550
Commercial real estate	-		-		1		1,689
Home equity lines of credit	3		84		4		115
Total	7	$	695		12	$	2,439

Nonaccrual loans include some nonperforming loans that were previously modified and identified as TDRs.  TDRs included in nonaccrual loans totaled $190,000 at December 31, 2020 and $85,000 at December 31, 2019.  The increase in TDRs included a commercial loan that was modified during the fourth quarter of 2020, offset by a commercial loan that was returned to accrual status during the first quarter of 2020.

Nonaccrual loans at December 31, 2020 and December 31, 2019 do not include $2.9 million and $2.8 million, respectively, of TDRs where customers have established a sustained period of repayment performance, generally six months, loans are current according to their modified terms and repayment of the remaining contractual payments is expected.  These loans are included in total impaired loans.  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 of our ALLL covers non-impaired loans of all classes and is based on historical loss experience adjusted for current factors.  The historical loss experience is determined by loan class and is based on the actual loss history experienced by CFBank over a three-year period.  The general component is calculated based on CFBank’s loan balances and actual three-year historical loss rates.  For loans with little or no actual loss experience, industry estimates are used based on loan segment. This 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 generally 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.

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 increased by $3.3 million, or 30.4%, during the twelve months ended December 31, 2020 primarily due toloan downgrades.  Loans designated as special mention increased $4.4 million, or 87.9%, and totaled $9.4 million at December 31, 2020, compared to $5.0 million at December 31, 2019.  Loans classified as substandard decreased $1.3  million, or 22.1%, and totaled $4.6 million at December 31, 2020, compared to $5.9 million at December 31, 2019.  One commercial loan totaling $190 was classified as doubtful at December 31, 2020 and no loans were classified as doubtful at December 31, 2019.  See Note 4 to our consolidated financial statements included in this annual report for additional information regarding risk classification of loans.

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

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 decreased $3.0 million, and totaled $2.2 million at December 31, 2020, compared to $5.2 million at December 31, 2019.  Past due loans totaled 0.2% of the loan portfolio at December 31, 2020, compared to 0.8% at December 31, 2019. See Note 4 to our consolidated financial statements included in this annual report for additional information regarding loan delinquencies.

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

Loans that contain interest only payments may present a higher risk than those loans with an amortizing payment that includes periodic principal reductions. Interest only loans are primarily commercial lines of credit secured by business assets and inventory, and consumer home equity lines of credit secured by the borrower’s primary residence. Due to the fluctuations in business assets and inventory of our commercial borrowers, CFBank has increased risk due to a potential decline in collateral values without a corresponding decrease in the outstanding principal.  Interest only commercial lines of credit totaled $83.1 million, or 24.6%, of CFBank’s commercial portfolio at December 31, 2020, compared to $82.5 million, or 48.4%, at December 31, 2019.  Interest only home equity lines of credit totaled $20.2 million, or 96.5%, of the total home equity lines of credit at December 31, 2020 compared to $19.4 million, or 92.7%, at December 31, 2019.

We believe the ALLL is adequate to absorb probable incurred credit losses in the loan portfolio as of December 31, 2020; 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, including any of the foregoing that may result from the ongoing COVID-19 pandemic and/or the effects of various governmental responses to the pandemic, including stimulus packages and programs.  Additionally, various regulatory agencies, as an integral part of their examination process, periodically review the ALLL.  Such agencies may require additional provisions for loan losses based on judgments and estimates that differ from those used by management, or on information available at the time of their review.  Management continues to diligently monitor credit quality in the existing portfolio and analyze potential loan opportunities carefully in order to manage credit risk.  An increase in loan losses could occur if economic conditions and factors which affect credit quality, real estate values and general business conditions worsen or do not improve.

Foreclosed assets.  There were no foreclosed assets at December 31, 2020 and at December 31, 2019.  The level of foreclosed assets and charges to foreclosed assets expense may change in the future in connection with workout efforts related to foreclosed assets, nonperforming loans and other loans with credit issues.

Premises and equipment.  Premises and equipment, net, totaled $3.7 million at December 31, 2020, and decreased $261,000, or 6.5%, from $4.0 million at December 31, 2019.  See Note 8 – Premises and Equipment to our consolidated financial statements included in this annual report for additional information.

Deposits.  Deposits totaled $1.1 billion at December 31, 2020, an increase of $366.7 million, or 49.1%, from $746.3 million at December 31, 2019.   The increase is due to a $283.6 million increase in interest-bearing deposit accounts and an $83.1 million increase in noninterest-bearing account balances.  Interest-bearing deposit accounts increased to $914.4 million at December 31, 2020, from $630.8 million at December 31, 2019.  The increase in interest-bearing accounts is primarily attributed to a $194.3 million increase in certificate of deposit account balances, a $70.1 million increase in money market account balances, and a $16.4 million increase in interest-bearing checking account balances. The increase in certificate of deposit account balances was due to increases in retail, brokered, and listing service certificates of deposits. The increases in retail certificate of deposits and money market account balances were primarily due to increases in customer relationships and balances from on-going sales and marketing activities. The increase in interest-bearing checking is primarily related to the balances in the Insured Cash Sweep (ICS) programs offered through Promontory Interfinancial Network.   

CFBank is a participant in the Certificate of Deposit Account Registry Service® (CDARS) and Insured Cash Sweep (ICS) programs offered through Promontory Interfinancial Network.  Promontory works with a network of banks to offer products that can provide up to approximately $50 million of FDIC insurance coverage through these innovative products.  Brokered deposits, including CDARS deposits that qualify as brokered, totaled $168.7 million at December 31, 2020, and increased $43.8 million, or 35.1% from $124.9 million at December 31, 2019.  Customer balances in the CDARS reciprocal and ICS reciprocal programs, which do not qualify as brokered, totaled $46.9 million at December 31, 2020 and increased $18.9 million, or 67.5%, from $28.0 million at December 31, 2019. 

FHLB advances and other debt.  FHLB advances and other debt totaled $214.4 million at December 31, 2020 and increased $185.4 million, or 639.0%, compared to $29.0 million at December 31, 2019.  The Holding Company currently has a term loan in the original

7

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

principal amount of $5.0 million with an additional $10.0 million revolving line-of-credit with a third-party bank.  The term loan requires quarterly principal payments of $125,000 plus accrued interest.  Any remaining principal is due and payable on the maturity date, which is December 23, 2022. Loans under the credit facility bear interest at a rate equal to the Prime Rate plus 0.75%. The purpose of the credit facility is to provide an additional source of liquidity for the Holding Company and to provide funds for the Holding Company to downstream as additional capital to CFBank to support growth.  As of December 31, 2020, the Company had an outstanding balance of $4.5 million on the term loan and $5.0 million outstanding balance on the revolving line-of-credit.  At December 31, 2019, the term loan had an outstanding balance of $5.0 million and no outstanding balance on the credit facility.

At December 31, 2020, CFBank had availability in unused lines of credit at two commercial banks in the amounts of $50.0 million and $15.0 million.  There were no outstanding borrowings on either line at December 31, 2020 and December 31, 2019. 

During the fourth quarter of 2019, CFBank entered into a $25.0 million warehouse facility with a commercial bank.  The warehouse facility is used to periodically fund loans held for sale from the close (funding) date until they are sold in the secondary market.  Borrowings on the facility bear interest at the greater of the 30-day LIBOR plus 2.00% or 4.00% and are secured by the specific loans that were funded.  This warehouse facility had no outstanding balance at December 31, 2020 and $7.5 million at December 31, 2019. 

During the second quarter of 2020, CFBank entered into an additional $75 million warehouse facility with a commercial bank.  The warehouse facility is used to periodically fund loans held for sale from the close (funding) date until they are sold in the secondary market.  Borrowings on the facility bear interest at the greater of the 30-day LIBOR plus 1.75% or 3.50% and are secured by the specific loans that were funded.  This warehouse facility had a $70.0 million outstanding balance at December 31, 2020 and no outstanding balance at December 31, 2019.

CFBank has participated in the PPPLF, which provides liquidity through term financing backed by PPP loans.  At December 31, 2020, the principal balance of PPPLF advances outstanding was $107.4 million.  Principal payments are due on the PPPLF advances when the related PPP loans are repaid or forgiven by the SBA.See the section titled “Liquidity and Capital Resources” for additional information regarding FHLB advances and other debt.

Subordinated debenturesSubordinated debentures totaled $14.8 million at December 31, 2020 and at December 31, 2019.  In December 2018, the Holding Company entered into subordinated note purchase agreements with certain qualified institutional buyers and completed a private placement of $10 million of fixed-to-floating rate subordinated notes, net of unamortized debt issuance costs of approximately $388,000.  In 2003, the Holding Company issued subordinated debentures in exchange for the proceeds of a $5.0 million trust preferred securities offering issued by a trust formed by the Holding Company.  The terms of the subordinated debentures allow for the Holding Company to defer interest payments for a period not to exceed five years.  Interest payments were current at December 31, 2020 and December 31, 2019.  See Note 11-Subordinated Debentures to our consolidated financial statements included in this annual report for additional information.

Stockholders’ equity.  Stockholders’ equity totaled $110.2 million at December 31, 2020, an increase of $29.5 million, or 36.6%, from $80.7 million at December 31, 2019.  The increase in total stockholders’ equity was primarily attributed to net income. 

Management continues to proactively monitor capital levels and ratios in its on-going capital planning process.  CFBank has leveraged its capital to support balance sheet growth and drive increased net interest income.  Management remains focused on growing capital though improving results from operations; however, should the need arise, CFBank has additional sources of capital and alternatives it could utilize as further discussed in the “Liquidity and Capital Resources” section in this report. 

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

Comparison of Results of Operations for 2020 and 2019

General.Net income for the year ended December 31, 2020 totaled $29.6 million (or $4.47 per diluted common share) and increased $20.0 million, or 208.4%, compared to net income of $9.6 million (or $2.03 per diluted common share) for the year ended December 31, 2019.    Net income for the year ended December 31, 2020 is net of provision for loan loss expense of $10.9 million versus no provision expense during 2019.

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.

8

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

Net interest income totaled $27.8 million for the year ended December 31, 2020 and increased $6.1 million, or 28.1%, compared to net interest income of $21.7 million for the year ended December 31, 2019.  The increase in net interest income was primarily due to a $7.3 million, or 20.7%, increase in interest income, partially offset by a $1.2 million, or 8.8%, increase in interest expense.  The increase in interest income was primarily attributed to a $385.2 million, or 54.7%, increase in average interest-earning assets outstanding, resulting primarily from an increase in net loans and loans held for sale, partially offset by a 109bps decrease in average yield on interest-earning assets.  The increase in interest expense was attributed to a $324.5 million, or 57.6%, increase in average interest-bearing liabilities, partially offset by a 74bps decrease in the average cost of funds on interest-bearing liabilities.  The net interest margin of 2.55% for the year ended December 31, 2020 decreased 53bps compared to the net interest margin of 3.08% for the year ended December 31, 2019.

Interest income totaled $42.4 million for the twelve months ended December 31, 2020, and increased $7.3 million, or 20.7%, compared to $35.1 million for the twelve months ended December 31, 2019. The increase in interest income was primarily attributed to a $202.0 million, or 33.9%, increase in average loans outstanding and a $152.9 million, or 249.3%, increase in loans held for sale outstanding, partially offset by an 84bp decrease in average yield on loans. 

Interest expense totaled $14.6 million for the twelve months ended December 31, 2020, and increased $1.2 million, or 8.8%, compared to $13.4 million for the twelve months ended December 31, 2019.  The increase in interest expense was primarily attributed to a $213.6 million, or 40.6%, increase in average interest-bearing deposits, partially offset by a 61bps decrease in the average yield of interest-bearing deposits.

Provision for loan and lease losses.The provision for loan and lease losses expense for the year ended December 31, 2020 was $10.9 million compared to no provision for loan and lease losses expense for the year ended December 31, 2019.  As noted above, the increase in the provision for loan and lease losses was a reflection of the increased economic stress associated with the pandemic and specific consideration of its impact on certain industries.  Net charge-offs for the year ended December 31, 2020 totaled $1.0 million, compared to net recoveries of $126,000 for the year ended December 31, 2019.  

The following table presents information regarding net charge-offs (recoveries) for 2020 and 2019.

	2020		2019
(Dollars in thousands)	Net charge-offs (recoveries)
Commercial	$	633	$	-
Single-family residential real estate		394		(7)
Commercial real estate		-		(105)
Home equity lines of credit		4		(50)
Other consumer loans		-		36
Total	$	1,031	$	(126)

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, 2020 totaled $60.0 million and increased $48.3 million, or 411.9%, compared to $11.7 million for the year ended December 31, 2019.  The increase was primarily due to a $47.6 million increase in net gain on sale of loans, coupled with a $489,000 increase in swap fee income.  The increase in net gain on sale of loans was primarily a result of increased sales volume related to our residential mortgage lending business.  The increase in swap fee income was due to an increase in customer swap transactions. 

Noninterest expense.Noninterest expense for the year ended December 31, 2020 totaled $40.6 million and increased $19.2 million, or 89.9%, compared to $21.4 million for the year ended December 31, 2019.  The increase in noninterest expense during the year ended December 31, 2020 was primarily due to a $10.8 million increase in salaries and employee benefits expense, a $3.2 million increase in professional fees expense, and a $2.8 million increase in advertising and marketing expense. The increase in salaries and employee benefits expense was primarily due to the expansion of our residential mortgage lending business, consistent with our focus on driving noninterest income, coupled with an increase in personnel to support our growth, infrastructure and risk management practices.  The increase in professional fees was related to increased activities, volumes and outsourcing in our residential mortgage business.  The increase in advertising and marketing expense was primarily due to increased expenditures related to leads-based marketing to drive revenue growth in our residential mortgage lending business, coupled with increased advertising focused on increasing core deposits.

Income taxes.Income tax expense was $6.7 million for the year ended December 31, 2020, an increase of $4.3 million, compared to $2.4 million for the year ended December 31, 2019.  The effective tax rate for the year ended December 31, 2020 was approximately 18.4%, as compared to approximately 20.3% for the year ended December 31, 2019.  The effective tax rate for the year ended December 31, 2020 was favorably impacted by the recognition of approximately $1.0 million of historic tax credits.

9

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

Our deferred tax assets are composed of  U.S. net operating losses (“NOLs”), and other temporary book to tax differences.  When determining the amount of deferred tax assets that are more-likely-than-not to be realized, and therefore recorded as a benefit, the Company conducts a regular assessment of all available information. This information includes, but is not limited to, taxable income in prior periods, projected future income and projected future reversals of deferred tax items.  Based on these criteria, the Company determined as of December 31, 2020 that no valuation allowance was required against the net deferred tax asset.

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

Comparison of Results of Operations for 2019 and 2018

General.  Net income for the year ended December 31, 2019 totaled $9.6 million (or $2.03 per diluted common share) and increased $5.3 million, or 124.7%, compared to net income of $4.3 million (or $1.00 per diluted common share) for the year ended December 31, 2018.

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 $21.7 million for the year ended December 31, 2019 and increased $3.8 million, or 21.3%, compared to net interest income of $17.9 million for the year ended December 31, 2018.  The increase in net interest income was primarily due to a $10.2 million, or 41.1%, increase in interest income, partially offset by a $6.4 million, or 91.6%, increase in interest expense.  The increase in interest income was primarily attributed to a $180.0 million, or 34.3%, increase in average interest-earning assets outstanding, resulting primarily from an increase in net loans and loans held for sale, and a 23bps increase in average yield on interest-earning assets.  The increase in interest expense was attributed to a $154.4 million, or 37.7%, increase in average interest-bearing liabilities and a 67bps increase in the average cost of funds on interest-bearing liabilities.  As a result, the net interest margin of 3.08% for the year ended December 31, 2019 decreased 33bps compared to the net interest margin of 3.41% for the year ended December 31, 2018.

Interest income totaled $35.1 million and increased $10.2 million, or 41.1%, for the twelve months ended December 31, 2019, compared to $24.9 million for the twelve months ended December 31, 2018. The increase in interest income was primarily due to a $176.1 million, or 36.6%, increase in average loans and loans held for sale balances from $481.7 million for the year ended December 31, 2018, to $657.8 million for the year ended December 31, 2019. 

Interest expense totaled $13.4 million and increased $6.4 million, or 91.6%, for the year ended December 31, 2019, compared to $7.0 million for the year ended December 31, 2018.  The increase in interest expense resulted primarily from increased deposit costs due to a 63bps increase in the cost of funds on total interest-bearing deposits to 222bps at December 31, 2019 compared to 159bps at December 31, 2018, coupled with a $141.9 million, or 36.9%, increase in average interest-bearing deposit balances.

Provision for loan and lease losses.  There was no provision for loan and lease losses for the year ended December 31, 2019 or the year ended December 31, 2018, which is due to strong credit quality and net recoveries.  Net recoveries for the year ended December 31, 2019 totaled $126,000, compared to net recoveries of $42,000 for the year ended December 31, 2018.

The following table presents information regarding net charge-offs (recoveries) for 2019 and 2018.

	2019		2018
(Dollars in thousands)	Net charge-offs (recoveries)
Commercial	$	-	$	(2)
Single-family residential real estate		(7)		(18)
Commercial real estate		(105)		-
Home equity lines of credit		(50)		(22)
Other consumer loans		36		-
Total	$	(126)	$	(42)

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, 2019 totaled $11.7 million and increased $9.0 million, or 331.5%, compared to $2.7 million for the year ended December 31, 2018.  The increase was primarily due to a $8.8 million increase in net gain on sale of loans.  The increase in net gain on sale of loans was primarily a result of increased sales volume related to our residential mortgage lending business. 

10

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

Noninterest expense.Noninterest expense for the year ended December 31, 2019 totaled $21.4 million and increased $6.1 million, or 40.0%, compared to $15.3 million for the year ended December 31, 2018.  The increase in noninterest expense during the year ended December 31, 2019 was primarily due to a $3.0 million increase in salaries and employee benefits expense, a $1.4 million increase in advertising and marketing expense and a $580,000 increase in professional fee expense. The increase in salaries and employee benefits expense was primarily due to the expansion of our residential mortgage lending business, consistent with our focus on driving noninterest income, coupled with increases in personnel due to our geographic expansion and to support our growth, infrastructure and risk management practices.  The increase in advertising and marketing expense is primarily due to increased expenditures related to leads-based marketing expense to drive revenue growth in our residential mortgage lending business.  The increase in professional fees was related to increased activities and volumes in our residential mortgage business.

Income taxes.  Income tax expense was $2.4 million for the year ended December 31, 2019, an increase of $1.3 million, compared to $1.1 million for the year ended December 31, 2018.  The effective tax rate for the year ended December 31, 2019 was approximately 20.3%, as compared to approximately 19.8% for the year ended December 31, 2018.

Our deferred tax assets are composed of  U.S. net operating losses (“NOLs”), and other temporary book to tax differences.  When determining the amount of deferred tax assets that are more-likely-than-not to be realized, and therefore recorded as a benefit, the Company conducts a regular assessment of all available information. This information includes, but is not limited to, taxable income in prior periods, projected future income and projected future reversals of deferred tax items.  Based on these criteria, the Company determined as of December 31, 2019 that no valuation allowance was required against the net deferred tax asset.

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

11

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,
	2020					2019					2018
	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)	$	10,285	$	161	1.59%	$	9,460	$	172	1.82%	$	11,413	$	185	1.60%
Loans held for sale		214,177		6,231	2.91%		61,311		2,153	3.51%		19,939		655	3.29%
Loans  (3)		798,572		35,620	4.46%		596,532		31,625	5.30%		461,784		23,200	5.02%
Other earning assets		61,451		175	0.28%		33,169		947	2.86%		27,811		650	2.34%
FHLB and FRB stock		5,006		199	3.98%		3,790		207	5.46%		3,308		196	5.93%
Total interest-earning assets		1,089,491		42,386	3.89%		704,262		35,104	4.98%		524,255		24,886	4.75%
Noninterest-earning assets		55,597					35,081					25,822
Total assets	$	1,145,088				$	739,343				$	550,077
Interest-bearing liabilities:
Deposits	$	739,462		11,911	1.61%	$	525,818		11,684	2.22%	$	383,951		6,102	1.59%
FHLB advances and other borrowings		148,887		2,667	1.79%		38,021		1,720	4.52%		25,501		895	3.51%
Total interest-bearing liabilities		888,349		14,578	1.64%		563,839		13,404	2.38%		409,452		6,997	1.71%
Noninterest-bearing liabilities		164,337					120,858					98,378
Total liabilities		1,052,686					684,697					507,830
Equity		92,402					54,646					42,247
Total liabilities and equity	$	1,145,088				$	739,343				$	550,077
Net interest-earning assets	$	201,142				$	140,423				$	114,803
Net interest income/interest rate spread			$	27,808	2.25%			$	21,700	2.60%			$	17,889	3.04%
Net interest margin					2.55%					3.08%					3.41%
Average interest-earning assets to average interest-bearing liabilities		122.64%					124.90%					128.04%
(1) Average balance is computed using the carrying value of securities.
Average yield is computed using the historical amortized cost average balance for available for sale securities.
(2) Average yields and interest earned are stated on a fully taxable equivalent basis.
(3) Average balance is computed using the recorded investment in loans net of the ALLL and includes nonperforming loans.

12

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, 2020						December 31, 2019
	Compared to Year Ended						Compared to Year Ended
	December 31, 2019						December 31, 2018
	Increase (decrease) due to						Increase (decrease) due to
	Rate		Volume		Net		Rate		Volume		Net
	(Dollars in thousands)
Interest-earning assets:
Securities (1)	$	(24)	$	13	$	(11)	$	21	$	(34)	$	(13)
Loans held for sale		(428)		4,506		4,078		48		1,450		1,498
Loans		(5,559)		9,554		3,995		1,341		7,084		8,425
Other earning assets		(1,226)		454		(772)		159		138		297
FHLB and FRB stock		(64)		56		(8)		(16)		27		11
Total interest-earning assets		(7,301)		14,583		7,282		1,553		8,665		10,218
Interest-bearing liabilities:
Deposits		(3,741)		3,968		227		2,895		2,687		5,582
FHLB advances and other borrowings		(1,559)		2,506		947		306		519		825
Total interest-bearing liabilities		(5,300)		6,474		1,174		3,201		3,206		6,407
Net change in net interest income	$	(2,001)	$	8,109	$	6,108	$	(1,648)	$	5,459	$	3,811

⁽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 19 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, 2020, 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.

13

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	6.5%
+300	6.9%
+200	7.3%
+100	7.7%
0	8.0%
-100	8.3%
-200	8.3%

In evaluating CFBank’s exposure to interest rate risk, certain limitations inherent in the method of analysis presented in the foregoing table must be considered.  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, multi-family residential and single family residential real estate mortgage loans for our portfolio, which, in many cases, have adjustable interest rates.  Many of these loans have interest-rate floors, which protect income to CFBank should rates fall.  While adjustable-rate loans better offset the adverse effects of an increase in interest rates as compared to fixed-rate loans, the increased payments required of adjustable-rate loan borrowers upon an interest rate adjustment in a rising interest rate environment could cause an increase in delinquencies and defaults.  The marketability of the underlying property also may be adversely affected in a rising interest rate environment. 

Cash flows are affected by changes in market interest rates.  Generally, in rising interest rate environments, loan prepayment rates are likely to decline, and in falling interest rate environments, loan prepayment rates are likely to increase.

Liquidity and Capital Resources

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

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

14

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

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

The following table summarizes CFBank’s cash available from liquid assets and borrowing capacity at December 31, 2020 and 2019.

	December 31, 2020		December 31, 2019
	(Dollars in thousands)
Cash, unpledged securities and deposits in other financial institutions	$	212,654	$	44,080
Additional borrowing capacity at the FHLB		53,609		72,153
Additional borrowing capacity at the FRB		81,508		65,614
Unused commercial bank lines of credit		65,000		23,000
Total	$	412,771	$	204,847

Cash, unpledged securities and deposits in other financial institutions increased $168.6 million, or 382.4%, to $212.7 million at December 31, 2020, compared to $44.1 million at December 31, 2019.  The increase is primarily attributed to an increase in deposits, FHLB advances and other borrowings, partially offset by an increase in loans and leases and loans held for sale

CFBank’s additional borrowing capacity with the FHLB decreased $18.6 million, or 25.7%, to $53.6 million at December 31, 2020, compared to $72.2 million at December 31, 2019.  The decrease is primary attributed to an increase in FHLB fixed rate advances. 

CFBank’s additional borrowing capacity at the FRB increased $15.9, or 24.2%, to $81.5 million at December 31, 2020 from $65.6 million at December 31, 2019. CFBank is eligible to participate in the FRB’s primary credit program, providing CFBank access to short-term funds at any time, for any reason, based on the collateral pledged. 

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

CFBank had $65.0 million of availability in unused lines of credit with two commercial banks at December 31, 2020 and $23.0 million available at December 31, 2019. 

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

CFBank relies on competitive interest rates, customer service,and relationships with customers toretain deposits.In 2010, 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 has more limited sources of liquidity than CFBank.  In general, in addition to its existing liquid assets, sources of liquidity include funds raised in the securities markets through debt or equity offerings, funds borrowed from third party banks or other lenders, dividends received from CFBank or the sale of assets.

Management believes that the Holding Company had adequate funds at December 31, 2020 to meet its current and anticipated operating needs at this time.  The Holding Company’s current cash requirements include operating expenses and interest on subordinated debentures and other debt.  The Company may also pay dividends on its common stock, if and when declared by the Board of Directors.  On October 16, 2020, the Board of Directors declared a quarterly cash dividend in the amount of $0.03 per share, which was payable on November 16, 2020 to holders of record of the Company’s voting and nonvoting common stock as of the close of business on November 5, 2020.

Currently, annual debt service on the subordinated debentures underlying the Company’s trust preferred securities is approximately $200,000.  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 3.09% atDecember 31, 2020. 

Currently, the annual debt service on the Company’s $10 million of fixed-to-floating rate subordinated notes is $700,000.  The subordinated notes have a fixed rate of 7.00% until December 2023 at which time the interest rate will reset quarterly to a rate equal to the then current three-month LIBOR plus 4.14%.

15

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

The Holding Company currently has a term loan in the original principal amount of $5.0 million with an additional $10.0 million revolving line-of-credit with a third-party bank.  The new term loan requires quarterly principal payments of $125,000 plus accrued interest.  Any remaining principal is due and payable on the maturity date, which is December 23, 2022.  Loans under the credit facility bear interest at a rate equal to the Prime Rate plus 0.75%.  The purpose of the credit facility is to provide an additional source of liquidity for the Holding Company and to provide funds for the Holding Company to downstream as additional capital to CFBank to support growth.  As of December 31, 2020, the Company had an outstanding balance of $4.5 million on the term loan and $5.0 million outstanding balance on the revolving line-of-credit.  At December 31, 2019, the term loan had an outstanding balance of $5.0 million and no outstanding balance on the credit facility. 

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

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

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

Federal income tax laws provided deductions, totaling $2.3 million, for thrift bad debt reserves established before 1988. Accounting standards do not require a deferred tax liability to be recorded on this amount, which otherwise would have totaled $473,000 at year-end 2020.  However, if CFBank were wholly or partially liquidated or otherwise ceases to be a bank, or if tax laws were to change, this amount would have to be recaptured and a tax liability recorded. Additionally, any distributions in excess of CFBank’s current or accumulated earnings and profits would reduce amounts allocated to its bad debt reserve and create a tax liability for CFBank

Impact of Inflation

The financial statements and related data presented herein have been prepared in accordance with 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 and Estimates

We follow financial accounting and reporting policies that are in accordance with U.S. generally accepted accounting principles and conform to general practices within the banking industry.  These policies are presented in Note 1 to our consolidated financial statements.  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.

16

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

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.

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.

Mortgage banking derivatives.  Another critical accounting policy relates to the fair value of mortgage banking derivatives.  Mortgage banking derivatives include two types of commitments: rate lock commitments and forward loan commitments.  The fair values of these mortgage derivatives are based on anticipated gains on the underlying loans and are based on valuation models using observable market data as of the measurement date.  Changes in the fair value of the derivatives are reported currently in earnings, as other noninterest income.  Changes in assumptions or in market conditions could significantly affect the estimates.  Additional information is included in Notes 1, 6 and 19 to our consolidated financial statements.

Market and Dividend Information

The (voting)common stock of CF Bankshares Inc. trades on the Nasdaq® Capital Market under the symbol “CFBK.”  As of December 31, 2020, there were 5,303,604 shares of (voting)common stock outstanding and held by approximately 377 shareholders of record.  As of December 31, 2020, the Company also had an aggregate of 1,260,700 shares of non-voting common stock outstanding which were held by two shareholders of record.

A common dividend in the amount of $0.03 per share was declared on October 16, 2020 and paid to the holders of our outstanding shares of voting and non-voting common stock on November 16, 2020.  There were  no dividends declared or paid on our common stock during 2019.  The Holding Company is subject to various legal and regulatory policies and guidelines impacting the Holding Company’s ability to pay dividends on its stock.  In addition, banking regulations limit the amount of dividends that can be paid to the Holding Company by CFBank without prior regulatory approval and, thus, can limit the availability of funds available to the Holding Company for the payment of dividends on its stock.  The Holding Company’s ability to pay dividends on its common stock is also conditioned upon the Holding Company continuing to make certain payments on, and no event of default occurring under, the Company’s fixed-to-floating rate subordinated debt and the subordinated debentures underlying the Holding Company’s trust preferred securities.  Additional information is contained in the sections above titled “Financial Condition - Stockholders’ equity” and “Liquidity and Capital Resources” and in Notes 16 and 18 to our consolidated financial statements.

17

CF BANKSHARES INC.

Worthington, Ohio

ANNUAL REPORT

December 31, 2020 and 2019

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

CF BANKSHARES INC.

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

The management of CF Bankshares Inc. is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities and Exchange Act of 1934, as amended.  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, 2020.  In making this assessment, management used the criteria for effective internal control over financial reporting as described in the 2013 Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on our assessment and those criteria, management concluded that the Company maintained effective internal control over financial reporting as of December 31, 2020.  

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/ Kevin J. Beerman

Kevin J. Beerman

Senior Vice President and Senior Financial Officer

March 23, 2021

1

Report of Independent Registered Public Accounting Firm

To the Shareholders, Board of Directors and Audit Committee

CF Bankshares Inc.

Worthington, Ohio

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of CF Bankshares Inc. (the "Company") as of December 31, 2020 and 2019, the related consolidated statements of income, comprehensive income, changes in stockholders' equity and changes of  cash flows for each of the years in the two-year period ended December 31, 2020, and the related notes (collectively referred to as the "financial statements").  In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2020, and 2019, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

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

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

We conducted our audits in accordance with the standards of the PCAOB.  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.  The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  As part of our audits we are required to obtain an understanding of internal control over financial reporting 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 included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.  Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.  Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.  The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

As described in Note 4 to the consolidated financial statements, the Company’s consolidated allowance for loan and lease losses (ALLL) was $17.0 million at December 31, 2020.  The Company also describes in Note 1 of the consolidated financial statements the "Allowance for Loan Losses" accounting policy around this estimate.  The allowance for loan losses is evaluated on a regular basis by management and is based on management’s periodic review of the collectability of the loans in light of historical experiences, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, and prevailing economic conditions.  The allowance consists of specific, and general components.  The specific component relates to loans that are classified as impaired and an allowance is established when the discounted cash flows (or collateral value) of the impaired loan is lower than the carrying

2

Report of Independent Registered Public Accounting Firm

value of that loan.  The general component covers non-classified loans and is based on historical loss experience adjusted for qualitative factors. 

The primary reason for our determination that the allowance for loan losses is a critical audit matter is that it involved significant judgement and complex review as there is a high degree of subjectivity in evaluating management’s estimate,such as evaluating management's assessment of economic conditions and other environmental factors, evaluating the adequacy of specific allowances associated with impaired loans and assessing the appropriateness of loan grades.

Our audit procedures related to the estimated allowance for loan losses included:

· Testing the design effectiveness of internal controls, including those related to technology, over the ALLL including data completeness and accuracy, classifications of loans by loan segment, historical loss data, the calculation of a loss rate, the establishment of qualitative adjustments, grading and risk classification of loans and establishment of specific reserves on impaired loans.

· Testing clerical and computational accuracy of the formulas within the Company’s ALLL calculation.

· Testing of completeness and accuracy of the underlying data utilized in the ALLL.

· Testing of the loan review function and the accuracy of loan grades determined.  Specifically, utilizing internal loan review professionals to assist us in evaluating the appropriateness of loan grades and to assess the reasonableness of specific impairments on loans.

· Evaluating the overall reasonableness of qualitative factor adjustments including economic conditions and other environmental factors to historical loss and the appropriateness of their direction and magnitude and the Company’s support for the direction and magnitude compared to previous years.

/s/ BKD, LLP

BKD, LLP

We have served as the Company's auditor since 2014.

Indianapolis, Indiana

March 23, 2021

3

CF BANKSHARES INC.

CONSOLIDATED BALANCE SHEETS

December 31, 2020 and 2019

(Dollars in thousands, except per share data)

	December 31,		December 31,
	2020		2019
ASSETS
Cash and cash equivalents	$	221,594	$	45,879
Interest-bearing deposits in other financial institutions		100		100
Securities available for sale		8,701		8,174
Equity securities		5,000		-
Loans held for sale, at fair value		283,165		135,711
Loans and leases, net of allowance of $17,022 and $7,138		895,344		663,303
FHLB and FRB stock		5,847		4,008
Premises and equipment, net		3,730		3,991
Operating lease right-of-use assets		1,387		1,780
Bank owned life insurance		17,490		5,345
Accrued interest receivable and other assets		34,637		12,254
Total assets	$	1,476,995	$	880,545
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Noninterest bearing	$	198,675	$	115,530
Interest bearing		914,395		630,793
Total deposits		1,113,070		746,323
FHLB advances and other debt		214,426		29,017
Advances by borrowers for taxes and insurance		1,029		929
Operating lease liabilities		1,532		1,960
Accrued interest payable and other liabilities		21,884		6,846
Subordinated debentures		14,844		14,806
Total liabilities		1,366,785		799,881
Commitments and contingent liabilities		-		-
Stockholders' equity
Common stock, $.01 par value;
shares authorized: 9,090,909, including 1,260,700 non-voting common stock
Voting common stock, $.01 par value; shares issued: 5,399,702 at December 31, 2020 and 5,409,394 at December 31, 2019		54		54
Non-voting common stock, $.01 par value;
shares authorized: 1,260,700;
shares issued: 1,260,700 at December 31, 2020 and 0 at December 31, 2019		13		-
Series B preferred stock, $0.01 par value; 480,000 shares authorized;
0 issued at December 31, 2020 and 0 at December 31, 2019		-		-
Series C preferred stock, $0.01 par value; 12,607 shares authorized;
0 issued at December 31, 2020 and 12,337 shares issued at December 31, 2019		-		-
Additional paid-in capital		87,637		86,903
Retained earnings (accumulated deficit)		26,479		(2,932)
Accumulated other comprehensive income		96		28
Treasury stock, at cost; 96,098 shares of common stock at December 31, 2020 and 32,940 shares of common stock at December 31, 2019		(4,069)		(3,389)
Total stockholders' equity		110,210		80,664
Total liabilities and stockholders' equity	$	1,476,995	$	880,545

See accompanying notes to consolidated financial statements.

4

CF BANKSHARES INC.

CONSOLIDATED STATEMENTS OF INCOME

Years ended December 31, 2020 and 2019

(Dollars in thousands, except per share data)

	2020		2019
Interest and dividend income
Loans and leases, including fees	$	41,851	$	33,778
Securities		161		172
FHLB and FRB stock dividends		199		207
Federal funds sold and other		175		947
		42,386		35,104
Interest expense
Deposits		11,911		11,684
FHLB advances and other debt		1,729		704
Subordinated debentures		938		1,016
		14,578		13,404
Net interest income		27,808		21,700
Provision for loan and lease losses		10,915		-
Net interest income after provision for loan and lease losses		16,893		21,700
Noninterest income
Service charges on deposit accounts		633		553
Net gains on sales of loans		58,366		10,767
Earnings on bank owned life insurance		145		142
Swap fee income		651		162
Other		198		96
		59,993		11,720
Noninterest expense
Salaries and employee benefits		21,987		11,170
Occupancy and equipment		1,077		965
Data processing		1,812		1,350
Franchise and other taxes		740		454
Professional fees		5,070		1,855
Director fees		648		547
Postage, printing and supplies		172		225
Advertising and marketing		5,624		2,829
Telephone		219		201
Loan expenses		304		232
Foreclosed assets, net		-		(9)
Depreciation		381		316
FDIC premiums		588		529
Regulatory assessment		181		165
Other insurance		106		99
Other		1,694		451
		40,603		21,379
Income before incomes taxes		36,283		12,041
Income tax expense		6,675		2,440
Net income		29,608		9,601
Accretion of discount and value of warrants exercised related to Series B preferred stock		-		219
Earnings allocated to participating securities (Series C preferred stock)		(2,280)		(430)
Net income attributable to common stockholders	$	27,328	$	9,390
Earnings per common share:
Basic	$	4.53	$	2.05
Diluted	$	4.47	$	2.03

See accompanying notes to consolidated financial statements.

5

CF BANKSHARES INC.

CONSOLIDATED STATEMENTS OF COMREHENSIVE INCOME

Years ended December 31, 2020 and 2019

(Dollars in thousands, except per share data)

	2020		2019
Net income	$	29,608	$	9,601
Other comprehensive income:
Unrealized holding gains arising during the period related to investment securities available for sale, net of tax of $18 and $27:		68		101
Other comprehensive income, net of tax		68		101
Comprehensive income	$	29,676	$	9,702

See accompanying notes to consolidated financial statements.

6

CF BANKSHARES INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

Years ended December 31, 2020 and 2019

(Dollars in thousands, except per share data)

			Non-voting		Additional		Retained Earnings		Accumulated Other				Total
	Common		Common		Paid-In		(Accumulated		Comprehensive		Treasury		Stockholders'
	Stock		Stock		Capital		Deficit)		Income (Loss)		Stock		Equity
Balance at January 1, 2019	$	44		-		61,706		(12,752)		(73)		(3,366)		45,559
Net income								9,601						9,601
Other comprehensive income										101				101
Issuance of 73,738 stock based incentive plan shares, net of forfeitures		1				(1)								-
Restricted stock expense, net of forfeitures						527								527
Acquisition of 1,705 treasury shares surrendered upon vesting of restricted stock for payment of taxes												(23)		(23)
Exercise of warrants to common stock		1				1,257								1,258
Accretion of discount and value of warrants exercised						(219)		219						-
Proceeds from the issuance of 12,337 shares from the preferred stock private placement, net of $805 in offering expenses.						14,000								14,000
Proceeds from the issuance of 849,615 shares from the  common stock private placement, net of $554 in offering expenses		8				9,633								9,641
Balance at December 31, 2019		54		-		86,903		(2,932)		28		(3,389)		80,664
Net income								29,608						29,608
Other comprehensive income										68				68
Issuance of 19,660 stock based incentive plan shares, net of forfeitures		-				-								-
Restricted stock expense, net of forfeitures						711								711
Stock options exercised						36								36
Acquisition of 2,158 treasury shares surrendered upon vesting of restricted stock for payment of taxes												(32)		(32)
Purchase of 61,000 treasury shares												(648)		(648)
Conversion of 12,607 shares of Series C preferred stock to 1,260,700 shares of non-voting common stock				13		(13)								-
Dividends declared ($0.03 per share)								(197)						(197)
Balance at December 31, 2020	$	54	$	13	$	87,637	$	26,479	$	96	$	(4,069)	$	110,210

See accompanying notes to consolidated financial statements.

7

CF BANKSHARES INC.

CONSOLIDATED STATEMENTS OF CHANGES OF CASH FLOWS

Years ended December 31, 2020 and 2019

(Dollars in thousands, except per share data)

	2020		2019
Net income	$	29,608	$	9,601
Adjustments to reconcile net income to net cash from operating activities:
Provision for loan and lease losses		10,915		-
Depreciation		381		316
Amortization, net		(1,510)		(96)
Deferred income tax (benefit)		(3,045)		(187)
Originations of loans held for sale		(2,229,042)		(726,208)
Proceeds from sale of loans held for sale		2,130,712		625,509
Net gains on sales of loans		(58,366)		(10,767)
Write-down of premises and equipment		265		-
Gain on sale of foreclosed assets		-		(12)
Earnings on bank owned life insurance		(145)		(142)
Stock-based compensation expense		711		527
Net change in:
Accrued interest receivable and other assets		(18,451)		(3,412)
Operating lease right-of-use asset		393		404
Operating lease right-of-use liability		(428)		(408)
Accrued interest payable and other liabilities		14,537		1,337
Net cash used by operating activities		(123,465)		(103,538)
Cash flows from investing activities:
Available-for-sale securities:
Maturities, prepayments and calls		5,091		3,576
Purchases		(5,552)		(1,494)
Purchase of equity securities		(5,000)		-
Purchase of bank owned life insurance		(12,000)		-
Loan and lease originations and payments, net		(241,102)		(118,467)
Proceeds from the sale of loans		1,439		6,547
Additions to premises and equipment		(385)		(443)
Purchase of FRB and FHLB Stock		(1,839)		(532)
Purchase of other investments		(1,000)		(734)
Return of investment- joint ventures		594		95
Proceeds from the sale of foreclosed assets		-		50
Net cash used by investing activities		(259,754)		(111,402)
Cash flows from financing activities:
Net change in deposits		366,747		166,537
Proceeds from FHLB advances and other debt		575,137		766,700
Repayments on FHLB advances and other debt		(452,224)		(764,700)
Net change in warehouse line of credit		70,013		-
Net change in advances by borrowers for taxes and insurance		100		102
Cash dividends paid on common stock		(195)		-
Proceeds from exercise of stock options		36		-
Net proceeds from issuance of Series C preferred stock in private placement		-		14,000
Net proceeds from issuance of common stock in private placement		-		9,641
Exercise of warrants to common stock		-		1,258
Acquisition of treasury shares surrendered upon vesting of restricted stock for payment of taxes		(32)		(23)
Purchase of treasury shares		(648)		-
Net cash from financing activities		558,934		193,515
Net change in cash and cash equivalents		175,715		(21,425)
Beginning cash and cash equivalents		45,879		67,304
Ending cash and cash equivalents	$	221,594	$	45,879
Supplemental cash flow information:
Interest paid	$	14,296	$	13,427
Income tax paid		10,300		2,510
Supplemental noncash disclosures:
Loans transferred from held for sale to portfolio	$	1,725	$	657
Investment payable on limited liability corporation and limited partnership		500		1,170
Transfer of other liability to operating lease right-of-use asset		-		184
Initial recognition of operating right-of-use lease asset		-		2,368
Initial recognition of operating right-of-use lease liability		-		2,368
Loans held for sale funded with other debt		(7,517)		7,517
Dividends payable		2		-

See accompanying notes to consolidated financial statements.

8

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 CF Bankshares, Inc. (the “Holding Company”) and its wholly-owned subsidiary, CFBank, National Association (“CFBank”).  On December 1, 2016, CFBank converted from a federal savings institution to a national bank.  Prior to December 1, 2016, the Holding Company was a registered savings and loan holding company.  Effective as of December 1, 2016 and in conjunction with the conversion of CFBank to a national bank, the Holding Company became a registered bank holding company and elected financial holding status with the FRB.  Effective as of July 27, 2020, the Company changed its name from Central Federal Corporation to CF Bankshares Inc.  The Holding Company and CFBank are sometimes collectively referred to herein as the “Company”.  Intercompany transactions and balances are eliminated in consolidation. 

CFBank provides financial services through its six full-service banking offices in Worthington, Fairlawn, Glendale, Blue Ash, Calcutta, and Wellsville, Ohio, and through its loan production office in Columbus, Ohio and 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.

Cash in Excess of FDIC Limits:  At December 31, 2020, the Company’s cash accounts exceeded federally insured limits by approximately $215.7 million.  Approximately $203.0 million of that amount was held by either the Federal Reserve Bank or the Federal Home Loan Bank of Cincinnati, which is not federally insured.

Interest-Bearing Deposits in Other Financial Institution:  Interest-bearing deposits in other financial institutions mature in April, 2022 and are carried at cost.  As of December 31, 2020 and December 31, 2019, there was $100 in an interest-bearing deposit in other financial institutions.

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

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

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.

Equity Securities:  Equity securities without a readily determinable fair value are held at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.  For equity securities measured under the practicability exception under Accounting Standards Update (“ASU”) 2016-01, the Company performs a qualitative assessment for equity securities without readily determinable fair values considering impairment indicators to evaluate whether an impairment exists.  If an impairment exists, the Company will recognize a loss based on the difference between carrying value and fair value.

9

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 each loan placed on nonaccrual is reversed against interest income in the period in which it is placed in a nonaccrual status.  Interest received on such loans is accounted for on the cash-basis or cost recovery method, until qualifying for return to accrual status.  Loans are considered for return to accrual status provided all the principal and interest amounts that are contractually due are brought current, there is a current and well documented credit analysis, there is reasonable assurance of repayment of principal and interest, and the customer has demonstrated sustained, amortizing payment performance of at least six months.

Concentration of Credit Risk:  Most of the Company’s primary business activity is with customers located within the Ohio counties of Franklin, Hamilton, Cuyahoga, Summit, Columbiana 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 substandard loans within the commercial, multi-family residential,  commercial real estate and construction segmentsare 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.

10

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

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 three-year historical loss rates.  For loans with little or no actual loss experience, industry estimates are used based on loan segment. This loss experience is supplemented with other economic and judgmental factors based on the risks present for each loan class.  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 and direct financing leases include loans and leases to businesses generally located within our primary market area. Those loans and leases are typically secured by business equipment, inventory, accounts receivable and other business assets.  In underwriting commercial loans, we consider the net operating income of the borrower, the debt service ratio and the financial strength, expertise and credit history of the business owners and/or guarantors.  Because payments on commercial loans are dependent on successful operation of the business enterprise, repayment of such loans may be subject to a greater extent to adverse conditions in the economy.  We seek to mitigate these risks through underwriting policies which require such loans to be qualified at origination on the basis of the borrower’s financial performance and the financial strength of the business owners and/or guarantors.

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

Multi-family residential real estate loans:  Multi-family residential real estate loans include loans secured by apartment buildings, condominiums and multi-family residential houses generally located within our primary market area. Underwriting policies provide that multi-family residential real estate loans generally may be made in amounts up to 85% of the lower of the appraised value or purchase price of the property.  In underwriting multi-family residential real estate loans, we consider the appraised value and net operating income of the property, the debt service ratio and the property owner’s and/or guarantor’s financial strength, expertise and credit history. We offer both fixed-rate and adjustable-rate loans. Fixed-rate loans are generally limited to three 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

11

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

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 generally be made in amounts up to 80% of the appraised value of the property, and an independent appraisal of the property is required.  Loan proceeds are disbursed in increments as construction progresses and as inspections warrant, and regular inspections are required to monitor the progress of construction.  In underwriting construction loans, we consider the property owner’s and/or guarantor’s financial strength, expertise and credit history. Construction financing is considered to involve a higher degree of credit risk than long-term financing on improved, owner occupied real estate.  Risk of loss on a construction loan is dependent largely upon the accuracy of the initial estimate of the property’s value at completion of construction or development compared to the estimated cost (including interest) of construction.  If the estimate of value proves to be inaccurate, we may be confronted with a project, when completed, having a value which is insufficient to assure full repayment.  We attempt to reduce such risks on construction loans through inspections of construction progress on the property and by requiring personal guarantees and reviewing current personal financial statements and tax returns, as well as other projects of the developer.

Home equity lines of credit:  Home equity lines of credit include both loans we originate for portfolio and purchased loans.  We originate home equity lines of credit to customers generally within our primary market area.  Home equity lines of credit are variable rate loans and the interest rate adjusts monthly at various margins to the prime rate of interest as disclosed in The Wall Street Journal. The margin is based on certain factors including the loan balance, value of collateral, election of auto-payment, and the borrower’s FICO® score.  The amount of the line is based on the borrower’s credit, income and equity in the home.  When combined with the balance of the prior mortgage liens, these lines generally may not exceed 89.9% of the appraised value of the property at the time of the loan commitment.  The lines are secured by a subordinate lien on the underlying real estate and are, therefore, vulnerable to declines in property values in the geographic areas where the properties are located.  Credit approval for home equity lines of credit requires income sufficient to repay principal and interest due, stability of employment, an established credit record and sufficient collateral.  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.  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, auto, credit card loans and any purchased loans to consumers generally located within our primary market area.  Credit approval for other consumer loans requires income sufficient to repay principal and interest due, stability of employment, an established credit record and sufficient collateral for secured loans.  Consumer loans typically have shorter terms and lower balances with higher yields as compared to real estate mortgage loans, but generally carry higher risks of default. Consumer loan collections are dependent on the borrower's continuing financial stability, and thus are more likely to be affected by adverse personal circumstances.

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

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

12

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

to sell.  If fair value declines subsequent to foreclosure, an adjustment is recorded through expense.  Operating costs after acquisition are expensed.

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

Historic Tax Credits:In June 2019, the Company made an equity investment as a non-managing member in an entity that is expected to receive historic tax credits (HTC) pursuant to Section 47 of the Internal Revenue Code.  The Company expects to receive a return through the realization of federal income tax credits, as well as other tax benefits, such as tax deductions from net operating losses of the investment over a period of time.  The HTC investment is accounted for under the equity method of accounting and is included in accrued interest receivable and other assets on the consolidated balance sheets.  The Company’s recorded investment in this entity was $0 at December 31, 2020 and $894 at December 31, 2019.  The maximum exposure to loss related to these investments was $0 at December 31, 2020, representing the Company’s investment balance. 

Joint Ventures:  The Holding Company has contributed funds into a series of joint ventures (equity stake) for the purpose of allocating excess liquidity into higher earning assets while diversifying its revenue sources.  The joint ventures are engaged in shorter term operating activities related to single family real estate developments.  Income is recognized based on a rate of return on the outstanding investment balance.  As units are sold, the Holding Company receives an additional incentive payment, which is recognized as income. Under ASU 2016-15, the Company has elected the nature of distribution approach to recognize returns from equity method investments.  Returns on investment are classified as cash flows from operating activities and returns of investment are classified as investing activities. The balance outstanding in joint ventures at December 31, 2020 and December 31, 2019 was $1,406 and $1,000, respectively.  Income recognized on the joint ventures was $173 and $57, respectively, for 2020 and 2019.  

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 FHLB stock based on the level of borrowings and other factors, and may invest in additional amounts.  FHLB stock is carried at cost, classified as a restricted security, and periodically evaluated for impairment based on ultimate recovery of par value.  Both cash and stock dividends are reported as income.

Federal Reserve Bank (FRB) stock:  CFBank is a member of the FRB system and is required to own a certain amount of stock.  FRB stock is carried at cost, classified as a restricted security, and periodically evaluated for impairment based on ultimate recovery of par value.  Both cash and stock dividends are reported as income.

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

Loan Commitments and Related Financial Instruments:  Financial instruments include off‑balance-sheet credit instruments, such as commitments to make loans and 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.  Mortgage banking activities include two types of commitments: rate lock commitments and forward loan commitments.  Fair values of these mortgage derivatives are based on anticipated gains on the underlying loans.  Changes in the fair values of these derivatives are included in net gains on sales of loans.

Stock-Based Compensation:  Compensation cost is recognized for stock options and restricted stock awards issued to directors and employees, based on the fair value of these awards at the date of grant. A Black-Scholes model is utilized to estimate the fair value of

13

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

stock options, while the market price of the Company’s common stock at the date of grant is used for restricted stock awards. Compensation cost is recognized over the required service period, generally defined as the vesting period.  For awards with graded vesting, compensation cost is recognized on a straight-line basis over the required service period for each separately vesting portion of the award.  Forfeitures are recognized as incurred.

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

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

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

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

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

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.  Reclassifications from accumulated other comprehensive income are conducted on a specific identification method.

Loss Contingencies:  Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated.  Management does not believe there are any such matters that will have a material effect on the financial statements.  See Note 23 – 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, 2020 and December 31, 2019 was $0 and $5,164, respectively.  Cash on deposit with the FHLB includes $3,300 pledged as collateral for FHLB advances. 

Equity:  Treasury stock is carried at cost. Shares sold out of treasury are valued based on the weighted average cost.  The carrying value of preferred stock and common stock warrants is based on allocation of issuance proceeds, net of issuance costs, in proportion to their relative fair values. 

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

Fair Value of Financial Instruments:  Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed in Note 6 – Fair Value.  Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments, and other factors, especially in the absence of broad markets for particular items.  Changes in assumptions or in market conditions could significantly affect these estimates.

14

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

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

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 income or stockholders’ equity.

Future Accounting Matters:

In June 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.  Once effective, ASU 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 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 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 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.  In October 2019, the FASB voted to extend the implementation of ASU No. 2016-13 for certain financial institutions including smaller reporting companies.  As a result, ASU 2016-13 will be effective for the Company for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022.  While the Company generally expects that the implementation of ASU 2016-13 has the potential to increase its allowance for loan losses balance, the Company is continuing to evaluate the potential impact on the Company’s financial statements and disclosures.  Management has been running and evaluating various scenarios.  At this time, the estimated impact on the Company’s consolidated financial statements, including disclosures, cannot be reasonably determined.  

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. These amendments provide temporary optional guidance to ease the potential burden in accounting for reference rate reform. The ASU provides optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. It is intended to help stakeholders during the global market-wide reference rate transition period. The guidance is effective for all entities as of March 12, 2020 through December 31, 2022. The Company is implementing a transition plan to identify and modify its loans and other financial instruments with attributes that are either directly or indirectly influenced by LIBOR. The Company is assessing ASU 2020-04 and its impact on the Company's transition away from LIBOR for its loan and other financial instruments.

NOTE 2- REVENUE RECOGNITION

Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers ("ASC 606"), establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity's contracts to provide goods or services to customers. The core principle requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized as performance obligations are satisfied.

The majority of our revenue-generating transactions are not subject to ASC 606, including revenue generated from financial instruments, such as our loans, letters of credit, derivatives and investment securities, as well as revenue related to our mortgage activities related to net gains on sale of loans.

15

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

All of the Company’s revenue from contracts with customers in the scope of ASC 606 is recognized within noninterest income.  Descriptions of our revenue-generating activities that are within the scope of ASC 606, which are presented in our income statements as components of noninterest income are as follows:

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

NOTE 3 – SECURITIES

The following table summarizes the amortized cost and fair value of the available-for-sale securities portfolio at December 31, 2020 and December 31, 2019 and the corresponding amounts of unrealized gains and losses recognized in accumulated other comprehensive income (loss):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
December 31, 2020
Issued by U.S. government-sponsored entities and agencies:
U.S. Treasury	$	8,517	$	119	$	-	$	8,636
Mortgage-backed securities - residential		62		3		-		65
Total	$	8,579	$	122	$	-	$	8,701

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
December 31, 2019
Issued by U.S. government-sponsored entities and agencies:
U.S. Treasury	$	7,986	$	32	$	1	$	8,017
Mortgage-backed securities - residential		126		4		-		130
Collateralized mortgage obligations		27		-		-		27
Total	$	8,139	$	36	$	1	$	8,174

There was no other-than-temporary impairment recognized in accumulated other comprehensive income (loss) for securities available for sale at December 31, 2020 or December 31, 2019.

There were no sales of securities during the years ended December 31, 2020 or December 31, 2019.

The amortized cost and fair value of debt securities at December 31, 2020 and December 31, 2019 are shown in the table below by contractual maturity.  Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties.  Securities not due at a single maturity date are shown separately.

	December 31, 2020				December 31, 2019
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	5,011	$	5,033	$	5,001	$	5,000
Due from one to five years		3,506		3,603		2,985		3,017
Mortgage-backed securities - residential		62		65		126		130
Collateralized mortgage obligations		-		-		27		27
Total	$	8,579	$	8,701	$	8,139	$	8,174

16

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

Fair value of securities pledged was as follows:

	2020		2019
Pledged as collateral for:
FHLB advances	$	1,017	$	3,074
Public deposits		3,060		2,015
Mortgage banking derivatives		3,016		1,500
Interest-rate swaps		-		77
Total	$	7,093	$	6,666

At year end 2020 and 2019, 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.

There were no securities with unrealized losses at December 31, 2020.

The following table summarizes securities with unrealized losses at December 31, 2019 aggregated by major security type and length of time in a continuous unrealized loss position.

December 31, 2019	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 (1)	$	499	$	-	$	2,501	$	1	$	3,000	$	1
Total temporarily impaired	$	499	$	-	$	2,501	$	1	$	3,000	$	1

⁽¹⁾ Unrealized loss is less than $1 resulting in rounding to zero

The unrealized losses in U.S. Treasuries at December 31, 2019were related to multiple securities.  Because the decline in fair value was attributable to changes in market conditions, and not credit quality, and because the Company did not have the intent to sell these securities and would unlikely be required to sell these securities before their anticipated recovery, the Company did not consider these securities to be other-than-temporarily impaired at December 31, 2019.

Equity securities totaled $5.0 million at December 31, 2020 and $0 at December 31, 2019.  The increase was due to a purchase of preferred stock during the fourth quarter of 2020.

NOTE 4 – LOANS AND LEASES

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

	December 31, 2020		December 31, 2019
Commercial (1)	$	338,286	$	170,646
Real estate:
Single-family residential		147,860		120,256
Multi-family residential		45,375		39,229
Commercial		277,028		247,543
Construction		80,426		67,652
Consumer:
Home equity lines of credit		20,962		20,941
Other		2,429		4,174
Subtotal		912,366		670,441
Less: ALLL		(17,022)		(7,138)
Loans and Leases, net	$	895,344	$	663,303

⁽¹⁾ Includes $4,133 and $4,779 of commercial leases at December 31, 2020 and December 31, 2019, respectively.

17

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

Included in Commercial loans at December 31, 2020, were $105,269 of loans originated under the Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”).  The Coronavirus Aid, Relief, and Economic Security Act of 2020, as amended (the “CARES Act”), authorized the SBA to temporarily guarantee PPP loans to provide funding to small businesses to pay certain payroll costs and benefits, and other expenses, during the COVID-19 pandemic.  These loans are 100% guaranteed by the SBA and the full principal amount of the loans may qualify for forgiveness.  The loans we originated have a maturity of two years, an interest rate of 1.00% and loan payments are deferred for the initial six months (which deferral period was subsequently extended to 10 months pursuant to the Paycheck Protection Program Flexibility Act of 2020).  The majority of these loans have been pledged as collateral on borrowings under the FRB Paycheck Protection Program Lending Facility (“PPPLF”).  See Note 10- FHLB Advances and Other Debt for additional information.

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 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.  At December 31, 2020 and 2019, CFBank held $15,713 and $26,046, 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.

The following tables present the activity in the ALLL by portfolio segment for the years ended December 31, 2020 and 2019:

	December 31, 2020
			Real Estate								Consumer
	Commercial		Single-family		Multi-family		Commercial		Construction		Home Equity lines of credit		Other		Total
Beginning balance	$	2,054	$	948	$	447	$	2,604	$	759	$	265	$	61	$	7,138
Addition to (reduction in) provision for loan losses		2,005		745		20		6,580		1,495		15		55		10,915
Charge-offs		(648)		(425)		-		-		-		(21)		-		(1,094)
Recoveries		15		31		-		-		-		17		-		63
Ending balance	$	3,426	$	1,299	$	467	$	9,184	$	2,254	$	276	$	116	$	17,022

	December 31, 2019
			Real Estate								Consumer
	Commercial		Single-family		Multi-family		Commercial		Construction		Home Equity lines of credit		Other		Total
Beginning balance	$	1,819	$	1,061	$	612	$	2,274	$	739	$	410	$	97	$	7,012
Addition to (reduction in) provision for loan losses		235		(120)		(165)		225		20		(195)		-		-
Charge-offs		-		-		-		-		-		-		(36)		(36)
Recoveries		-		7		-		105		-		50		-		162
Ending balance	$	2,054	$	948	$	447	$	2,604	$	759	$	265	$	61	$	7,138

18

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, 2020:  

			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	$	-	$	-	$	-	$	23	$	-	$	-	$	-	$	23
Collectively evaluated for impairment		3,426		1,299		467		9,161		2,254		276		116		16,999
Total ending allowance balance	$	3,426	$	1,299	$	467	$	9,184	$	2,254	$	276	$	116	$	17,022
Loans:
Individually evaluated for impairment	$	268	$	104	$	-	$	2,718	$	-	$	-	$	-	$	3,090
Collectively evaluated for impairment		338,018		147,756		45,375		274,310		80,426		20,962		2,429		909,276
Total ending loan balance	$	338,286	$	147,860	$	45,375	$	277,028	$	80,426	$	20,962	$	2,429	$	912,366

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, 2019:  

			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	$	1	$	-	$	33	$	-	$	-	$	-	$	35
Collectively evaluated for impairment		2,053		947		447		2,571		759		265		61		7,103
Total ending allowance balance	$	2,054	$	948	$	447	$	2,604	$	759	$	265	$	61	$	7,138
Loans:
Individually evaluated for impairment		85	$	107	$	-	$	4,420	$	-	$	-	$	-	$	4,612
Collectively evaluated for impairment		170,561		120,149		39,229		243,123		67,652		20,941		4,174		665,829
Total ending loan balance	$	170,646	$	120,256	$	39,229	$	247,543	$	67,652	$	20,941	$	4,174	$	670,441

19

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, 2020. The unpaid principal balance is the contractual principal balance outstanding. The recorded investment is the unpaid principal balance adjusted for partial charge-offs, purchase premiums and discounts, deferred loan fees and costs. Cash payments of interest on these loans during the twelve months ended December 31, 2020 totaled $159.

	Unpaid Principal Balance		Recorded Investment		ALLL Allocated		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Real estate:
Commercial:
Owner occupied	$	-	$	-	$	-	$	-	$	-
Total with no allowance recorded		-		-		-		-		-
With an allowance recorded:
Commercial (1)		533		268		-		489		10
Real estate:
Single-family residential (1)		104		104		-		106		4
Commercial:
Non-owner occupied		2,718		2,718		23		2,728		150
Total with an allowance recorded		3,355		3,090		23		3,323		164
Total	$	3,355	$	3,090	$	23	$	3,323	$	164

⁽¹⁾ Allowance recorded is less than $1 resulting in rounding to zero

The following table presents loans individually evaluated for impairment by class of loans as of and for the year ended December 31, 2019. The unpaid principal balance is the contractual principal balance outstanding. The recorded investment is the unpaid principal balance adjusted for partial charge-offs, purchase premiums and discounts, deferred loan fees and costs. Cash payments of interest on these loans during the twelve months ended December 31, 2019 totaled $168.

	Unpaid Principal Balance		Recorded Investment		ALLL Allocated		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Real estate:
Commercial:
Owner occupied	$	-	$	-	$	-	$	111	$	6
Total with no allowance recorded		-		-		-		111		6
With an allowance recorded:
Commercial		85		85		1		92		-
Real estate:
Single-family residential		107		107		1		108		6
Commercial:
Non-owner occupied		4,420		4,420		33		4,194		154
Total with an allowance recorded		4,612		4,612		35		4,394		160
Total	$	4,612	$	4,612	$	35	$	4,505	$	166

20

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

The following table presents the recorded investment in nonperforming loans by class of loans as of December 31, 2020 and 2019:

	2020		2019
Loans past due over 90 days still on accrual	$	-	$	-
Nonaccrual loans:
Commercial		190		85
Real estate:
Single-family residential		421		550
Commercial:
Non-owner occupied		-		1,689
Consumer:
Home equity lines of credit:
Originated for portfolio		12		36
Purchased for portfolio		72		79
Other consumer		-		-
Total nonaccrual		695		2,439
Total nonperforming loans	$	695	$	2,439

Nonaccrual loans include both 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, 2020 or December 31, 2019.  

The following table presents the aging of the recorded investment in past due loans and leases by class of loans as of December 31, 2020:

	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	$	-	$	-	$	-	$	-	$	338,286	$	190
Real estate:
Single-family residential		1,747		-		315		2,062		145,798		106
Multi-family residential		-		-		-		-		45,375		-
Commercial:
Non-owner occupied		-		78		-		78		159,835		-
Owner occupied		-		-		-		-		90,049		-
Land		-		-		-		-		27,066		-
Construction		-		-		-		-		80,426		-
Consumer:
Home equity lines of credit:
Originated for portfolio		-		-		-		-		20,773		12
Purchased for portfolio		-		-		46		46		143		26
Other		-		-		-		-		2,429		-
Total	$	1,747	$	78	$	361	$	2,186	$	910,180	$	334

21

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

The following table presents the aging of the recorded investment in past due loans and leases by class of loans as of December 31, 2019:  

	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	$	-	$	71	$	-	$	71	$	170,575	$	85
Real estate:
Single-family residential		2,453		261		426		3,140		117,116		124
Multi-family residential		-		-		-		-		39,229		-
Commercial:
Non-owner occupied		-		-		1,689		1,689		138,762		-
Owner occupied		-		-		-		-		81,871		-
Land		-		-		-		-		25,221		-
Construction		304		-		-		304		67,348		-
Consumer:
Home equity lines of credit:
Originated for portfolio		-		-		22		22		20,713		14
Purchased for portfolio		-		-		-		-		206		79
Other		-		-		-		-		4,174		-
Total	$	2,757	$	332	$	2,137	$	5,226	$	665,215	$	302

Short-term Loan Deferrals

Under the CARES Act, financial institutions are permitted to not classify loan modifications as TDRs that were related to the impact of COVID-19 if:

· The modifications were made between March 1, 2020 and the earlier of December 31, 2020 or 60 days after the end of the public health emergency, and

· The underlying loans were not more than 30 days past due as of December 31, 2019.

We implemented a loan modification program in accordance with the CARES Act to provide temporary relief to borrowers that meet the requirements under the CARES Act.  The program allows for deferral of payments for up to 90 days, which we may extend for up to an additional 90 days at our option.  The deferred payments and accrued interest during the deferral period are due and payable on or before the maturity of the loans.  At December 31, 2020, loans with an outstanding balance of approximately $528 were on temporary deferrals. Under the provisions of the CARES Act, none of these loans were considered a TDR at December 31, 2020.

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, 2020 and December 31, 2019, TDR’s totaled $3,090 and $2,923, respectively.  The Company allocated $23 and $22 of specific reserves to loans modified in TDRs as of December 31, 2020 and 2019, respectively. The Company had not committed to lend any additional amounts as of December 31, 2020 or 2019 to customers with outstanding loans that were classified as nonaccrual TDRs.

During the year ended December 31, 2020, one commercial loan in the amount of $190 was modified as a TDR, where concessions were granted to a borrower experiencing financial difficulties. There were no loans modified as a TDR during the year ended December 31, 2019. 

The TDR described above resulted in a $264 charge off during the year ended December 31, 2020 and no charge-offs during the year ended December 31, 2019.

There were no TDR’s that went into payment default during the years ended December 31, 2020 and December 31, 2019.  

22

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

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, 2020 and 2019, nonaccrual TDRs were as follows: 

	2020		2019
Commercial	$	190	$	85
Total	$	190	$	85

Nonaccrual loans at December 31, 2020 and 2019 did not include $2,900 and $2,838, respectively, of TDRs where customers had established a sustained period of repayment performance, generally six months, the loans were current according to their modified terms and repayment of the remaining contractual payments was expected.  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.

23

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

The recorded investment in loans and leases by risk category and by class of loans as of December 31, 2020 and based on the most recent analysis performed follows.  

	Not Rated		Pass		Special Mention		Substandard		Doubtful		Total
Commercial	$	1	$	337,110	$	664	$	321	$	190	$	338,286
Real estate:
Single-family residential		147,439		-		-		421		-		147,860
Multi-family residential		-		45,249		-		126		-		45,375
Commercial:
Non-owner occupied		57		150,084		7,054		2,718		-		159,913
Owner occupied		-		87,636		1,537		876		-		90,049
Land		-		27,066		-		-		-		27,066
Construction		-		80,247		179		-		-		80,426
Consumer:
Home equity lines of credit:
Originated for portfolio		20,746		-		-		27		-		20,773
Purchased for portfolio		118		-		-		71		-		189
Other		2,429		-		-		-		-		2,429
	$	170,790	$	727,392	$	9,434	$	4,560	$	190	$	912,366

The recorded investment in loans and leases by risk category and class of loans as of December 31, 2019 follows.  There were no loans rated doubtful at December 31, 2019.

	Not Rated		Pass		Special Mention		Substandard		Total
Commercial	$	-	$	168,617	$	1,424	$	605	$	170,646
Real estate:
Single-family residential		119,707		-		-		549		120,256
Multi-family residential		-		39,081		-		148		39,229
Commercial:
Non-owner occupied		67		134,466		1,498		4,420		140,451
Owner occupied		-		79,773		2,098		-		81,871
Land		-		25,221		-		-		25,221
Construction		1,855		65,797		-		-		67,652
Consumer:
Home equity lines of credit:
Originated for portfolio		20,681		-		-		54		20,735
Purchased for portfolio		127		-		-		79		206
Other		4,174		-		-		-		4,174
	$	146,611	$	512,955	$	5,020	$	5,855	$	670,441

Leases:

The following lists the components of the net investment in direct financing leases (1):

	December 31, 2020		December 31, 2019
Total minimum lease payments to be received	$	4,459	$	5,252
Less: unearned income		(326)		(473)
Net investment in direct financing leases	$	4,133	$	4,779

⁽¹⁾ There were no initial direct costs associated with these leases

24

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

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

2021		793
2022		793
2023		1,563
2024		1,310
	$	4,459

NOTE 5 – FORECLOSED ASSETS

There were no foreclosed assets at December 31, 2020 and December 31, 2019.

There was no activity in the valuation allowance account or any write-downs during the years ended December 31, 2020 and 2019.

Expenses related to foreclosed assets include:

	2020		2019
Net loss (gain) on sales	$	-	$	(12)
Operating expenses, net of rental income		-		3
	$	-	$	(9)

Foreclosed asset expenses incurred during 2019 were related to maintenance expense to ready the property to sell.  

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).

TBA mortgage – back securities:  To mitigate the effect of the interest rate risk inherent in providing rate lock commitments to borrowers, the Company enters into either a forward sales contract to sell loans to investors when using best efforts or a trade of “to be announced (TBA)” mortgage-backed securities for mandatory delivery.  The forward sales contracts lock in a price for the sale of loans with similar characteristics to the specific rate lock commitments based on a valuation model using observable market data for pricing commitments (Level 2).

Impaired loans:  The fair value of 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

25

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

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). 

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, 2020 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	$	8,636
Mortgage-backed securities - residential		65
Total securities available for sale	$	8,701
Loans held for sale	$	283,165
Yield maintenance provisions (embedded derivatives)	$	1,944
Interest rate lock commitments	$	18,101
Financial Liabilities:
Interest-rate swaps	$	1,944
TBA mortgage-backed securities	$	2,690

26

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

	Fair Value Measurements at December 31, 2019 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	$	8,017
Mortgage-backed securities - residential		130
Collateralized mortgage obligations		27
Total securities available for sale	$	8,174
Loans held for sale	$	135,711
Yield maintenance provisions (embedded derivatives)	$	12
Interest rate lock commitments	$	3,104
Financial Liabilities:
Interest-rate swaps	$	12
TBA mortgage-backed securities	$	350

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, 2020 or December 31, 2019.  There were no transfers of assets or liabilities measured at fair value between levels during 2020 or 2019.

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

Fair Value Measurements at December 31, 2020 Using
Significant Unobservable Inputs (Level 3)
Impaired loans:
Commercial	$	190
Total impaired loans	$	190

Fair Value Measurements at December 31, 2019 Using
Significant Unobservable Inputs (Level 3)
Impaired loans:
Commercial	$	84
Real Estate:
Single-family residential		106
Commercial:
Non-owner occupied		4,387
Total impaired loans	$	4,577

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, 2020 or December 31, 2019.

Impaired loans that are measured for impairment using the fair value of the collateral for collateral dependent loans, had a principal balance of $190, with a valuation allowance of $0 at December 31, 2020.  Impaired loans that are measured for impairment using the fair value of the collateral for collateral dependent loans, had a principal balance of $4,612 with a valuation allowance of $35 at December 31, 2019. 

27

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, 2020:  

	Fair Value		Valuation Technique(s)	Unobservable Inputs	(Range) Weighted Average
Impaired loans:
Commercial	$	190	Comparable sales approach	Adjustment for differences between the stated value and net realizable value	65.00%

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, 2019:

	Fair Value		Valuation Technique(s)	Unobservable Inputs	(Range) Weighted Average
Impaired loans:
Commercial	$	84	Comparable sales approach	Adjustment for differences between the comparable market transactions	2.06%
Real estate:
Single -family residential		106	Comparable sales approach	Adjustment for differences between the comparable market transactions	3.61%
Commercial:
Non-owner occupied		4,387	Comparable sales approach	Adjustment for differences between the comparable market transactions	(-2.58%, 14.00%) 2.44%

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 of cost or market and are not included.  Interest income is recorded based on the contractual terms of the loan and in accordance with the Company’s policy on loans held for investment.  None of these loans were 90 days or more past due or on nonaccrual as of December 31, 2020 or December 31, 2019. 

As of December 31, 2020 and December 31, 2019, the aggregate fair value, contractual balance and gain or loss of loans held for sale were as follows:

	December 31, 2020		December 31, 2019
Aggregate fair value	$	283,165	$	135,711
Contractual balance		274,401		133,993
Gain		8,764		1,718

28

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

The total amount of gains and losses from changes in fair value included in earnings for the year ended December 31, 2020 and 2019 for loans held for sale were:

	2020		2019
Interest income	$	6,231	$	2,153
Interest expense		-		-
Change in fair value		7,046		1,341
Total change in fair value	$	13,277	$	3,494

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

	Fair Value Measurements at December 31, 2020 Using:
	Carrying
	Value		Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	221,594	$	221,594	$	-	$	-	$	221,594
Interest-bearing deposits in other financial institutions		100		100		-		-		100
Securities available for sale		8,701		-		8,701		-		8,701
Equity securities		5,000		-		-		5,000		5,000
Loans held for sale		283,165		-		283,165		-		283,165
Loans and leases, net		895,344		-		-		905,030		905,030
FHLB and FRB stock		5,847		n/a		n/a		n/a		n/a
Accrued interest receivable		4,584		1		36		4,547		4,584
Yield maintenance provisions (embedded derivatives)		1,944		-		1,944		-		1,944
Interest rate lock commitments		18,101		-		18,101		-		18,101
Financial liabilities
Deposits	$	(1,113,070)	$	(554,650)	$	(565,089)	$	-	$	(1,119,739)
FHLB advances and other debt		(214,426)		-		(215,531)		-		(215,531)
Advances by borrowers for taxes and insurance		(1,029)		-		-		(1,029)		(1,029)
Subordinated debentures		(14,844)		-		(16,325)		-		(16,325)
Accrued interest payable		(498)		-		(498)		-		(498)
Interest-rate swaps		(1,944)		-		(1,944)		-		(1,944)
TBA mortgage-backed securities		(2,690)		-		(2,690)		-		(2,690)

29

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

The carrying amounts and estimated fair values of financial instruments at December 31, 2019 were as follows:

	Fair Value Measurements at December 31, 2019 Using:
	Carrying
	Value		Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	45,879	$	45,879	$	-	$	-	$	45,879
Interest-bearing deposits in other financial institutions		100		100		-		-		100
Securities available for sale		8,174		-		8,174		-		8,174
Loans held for sale		135,711		-		135,711		-		135,711
Loans and leases, net		663,303		-		-		664,152		664,152
FHLB stock		4,008		n/a		n/a		n/a		n/a
Accrued interest receivable		2,749		25		40		2,684		2,749
Yield maintenance provisions (embedded derivatives)		12		-		12		-		12
Interest rate lock commitments		3,104		-		3,104		-		3,104
Financial liabilities
Deposits	$	(746,323)	$	(382,173)	$	(367,375)	$	-	$	(749,548)
FHLB advances and other debt		(29,017)		-		(29,669)		-		(29,669)
Advances by borrowers for taxes and insurance		(929)		-		-		(929)		(929)
Subordinated debentures		(14,806)		-		(15,940)		-		(15,940)
Accrued interest payable		(208)		-		(208)		-		(208)
Interest-rate swaps		(12)		-		(12)		-		(12)
TBA mortgage-backed securities		(350)		-		(350)		-		(350)

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

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

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

Equity Securities

Equity securities without a readily determinable fair value are held at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.  For equity securities measured under the practicability exception under Accounting Standards Update (“ASU”) 2016-01, the Company performs a qualitative assessment for equity securities without readily determinable fair values considering impairment indicators to evaluate whether an impairment exists.  If an impairment exists, the Company will recognize a loss based on the difference between carrying value and fair value.  This method results in a Level 3 classification.

FHLB and FRB Stock

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

Loans and Leases

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

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.

30

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

FHLB Advances and Other Debt

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

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

Accrued Interest Receivable/Payable

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

Advances by Borrowers for Taxes and Insurance

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

Off-Balance-Sheet Instruments

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

NOTE 7 – LOAN SERVICING

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

	December 31, 2020		December 31, 2019
Mortgage loans serviced for Freddie Mac	$	1,875	$	2,649

Custodial escrow balances maintained in connection with serviced loans were $94 and $59 at year-end 2020 and 2019, respectively. 

NOTE 8- PREMISES AND EQUIPMENT AND OPERATING LEASES

Year-end premises and equipment were as follows:

	December 31, 2020		December 31, 2019
Land and land improvements	$	1,293	$	1,293
Buildings		4,140		4,294
Furniture, fixtures and equipment		2,971		2,729
		8,404		8,316
Less: accumulated depreciation		(4,674)		(4,325)
	$	3,730	$	3,991

Depreciation expense for 2020 and 2019 totaled $381 and $316, respectively.

Operating Leases:

A lease is defined as a contract, or part of a contract, that conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. On January 1, 2019, the Company adopted ASU No. 2016-02, Leases (Topic 842) and all subsequent ASUs that modified Topic 842. For the Company, Topic 842 primarily affected the accounting treatment for operating lease agreements in which the Company is the lessee.

The leases in which the Company is the lessee are comprised of real estate property for branches and offices and for equipment with terms extending through 2024. All of our leases are classified as operating leases, and therefore, were previously not recognized on the Company’s consolidated balance sheets. With the adoption of Topic 842, operating lease agreements are required to be recognized on the consolidated balance sheets as a right-of-use (“ROU”) asset and a corresponding operating lease liability.  The Company does not have any leases classified as finance leases.

The calculated amounts of the ROU assets and lease liabilities are impacted by the length of the lease term and the discount rate used to present value the minimum lease payments. The Company’s lease agreements often include one or more options to renew at the Company’s discretion which were considered, as applicable, in the calculation of the ROU assets and lease liabilities.  If at lease inception, the Company considers the exercising of a renewal option to be reasonably certain, the Company will include the extended term in the calculation of the ROU asset and lease liability. Regarding the discount rate, Topic 842 requires the use of the rate implicit

31

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

in the lease whenever this rate is readily determinable. As this rate is not readily determinable in our operating leases, the Company utilizes its incremental borrowing rate at lease inception, on a collateralized basis, over a similar term.  At December 31, 2020, the weighted-average remaining lease term for the Company’s operating leases was 3.3 years and the weighted-average discount rate was 6.59%.

The Company’s operating lease costs were $393and $404 for the years ended December 31, 2020 and December 31, 2019, respectively.  The variable lease costs totaled $244and $231 for the years ended December 31, 2020 and December 31, 2019, respectively. As the Company elected not to separate lease and non-lease components for all classes of underlying assets and instead to account for them as a single lease component, the variable lease cost primarily represents variable payments such as common area maintenance and utilities.

Future minimum operating lease payments as of December 31, 2020 are as follows:

2021	$	548
2022		536
2023		377
2024		250
Thereafter		-
Total future minimum rental commitments		1,711
Less - amounts representing interest		(179)
Total operating lease liabilities	$	1,532

NOTE 9 – DEPOSITS

Time deposits of $100 or more were $461,401 and $294,452at year-end 2020 and 2019, respectively.  Time deposits of $250 or more were $244,840 and $148,473 at year-end 2020 and 2019, respectively.

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

2021	$	358,512
2022		143,458
2023		36,680
2024		19,671
2025		99
Thereafter		-
Total	$	558,420

Brokered deposits at year-end 2020 and 2019 totaled $168,708 and $124,884, respectively.   

32

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

NOTE 10 –FHLB ADVANCES AND OTHER DEBT

FHLB advances and other debt were as follows:

	Weighted
	Average Rate	December 31, 2020		December 31, 2019
FHLB fixed rate advances
Maturities:
2020			-		4,500
2021	1.63%		7,500		4,000
2022	1.16%		10,000		1,500
2023	0.92%		3,500		6,500
2024	1.90%		6,500		-
Total FHLB fixed rate advances			27,500		16,500
Fixed rate other debt:
FRB PPPLF advances	0.35%		107,413		-
Variable rate other debt:
Holding Company credit facility	4.00%		9,500		5,000
Warehouse facility	3.50%		70,013		7,517
Total variable rate other debt			79,513		12,517
Total		$	214,426	$	29,017

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

The advances were collateralized as follows:

	December 31, 2020		December 31, 2019
Single-family mortgage loans	$	87,076	$	79,144
Multi-family mortgage loans		10,970		21,258
Commercial real estate loans (1-4 family)		5,750		6,639
Home equity lines of credit		2,838		5,028
Securities		1,017		3,074
Cash		3,300		3,300
Total	$	110,951	$	118,443

Based on the collateral pledged to the FHLB, CFBank was eligible to borrow up to a total of $81,409 from the FHLB at December 31, 2020.  

Payments due on FHLB advances and other debt over the next five years are as follows:
	December 31, 2020
2021	$	78,013
2022		126,413
2023		3,500
2024		6,500
2025		-
	$	214,426

33

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

The Holding Company has a term loan in the original principal amount of $5,000 with an additional $10,000 revolving line-of-credit with a third-party bank.  Theterm loan requires quarterly principal payments of $125 plus accrued interest.  Any remaining principal is due and payable on the maturity date, which is December 23, 2022.  Loans under the credit facility bear interest at a rate equal to the Prime Rate plus 0.75%.  The purpose of the credit facility is to provide an additional source of liquidity for the Holding Company and to provide funds for the Holding Company to downstream as additional capital to CFBank to support growth.  As of December 31, 2020, the Company had an outstanding balance of $4,500 on the term loan and a $5,000 outstanding balance on the revolving line-of-credit.  At December 31, 2019, the term loan had an outstanding balance of $5,000 and no outstanding balance on the line of credit facility.

At December 31, 2020, CFBank had availability in unused lines of credit at two commercial banks in amounts of $50,000 and $15,000.  There were no outstanding borrowings on either line at December 31, 2020 and December 31, 2019.  Interest on any principal amounts outstanding from time to time under these lines accrues daily at a variable rate based on the commercial bank’s cost of funds and current market returns.

During the fourth quarter of 2019, CFBank entered into a $25,000 warehouse facility with a commercial bank.  The warehouse facility is used to periodically fund loans held for sale from the close (funding) date until they are sold in the secondary market.  Borrowings on the facility bear interest at the greater of 30 Day Libor plus 2.00% or 4.00% and are secured by the specific loans that were funded.  This warehouse facility had an no outstanding balance at December 31, 2020 and an outstanding balance of $7,517 at December 31,2019.

During the second quarter of 2020, CFBank entered into an additional $75,000 warehouse facility with a commercial bank.  The warehouse facility is used to periodically fund loans held for sale from the close (funding) date until they are sold in the secondary market.  Borrowings on the facility bear interest at the greater of (a) the 30-day LIBOR plus 1.75% or (b) 3.50% and are secured by the specific loans that were funded.  This warehouse facility had an outstanding balance of $70,013 at December 31, 2020, and no outstanding balance at December 31, 2019.

To support the effectiveness of the PPP, the Federal Reserve Board (the “FRB”) introduced the PPPLF to extend credit to financial institutions that made PPP loans, with the related PPP loans used as collateral on the borrowings.  The PPPLF borrowings have a fixed interest rate of 0.35% and a maturity equal to the maturity date of the related PPP loans, with the PPP loans maturing two years from the origination date of the PPP loan.  If a PPP loan pays off early, the corresponding PPPLF borrowing must be paid off as well.  At December 31, 2020, the Company’s PPP loans and related PPPLF funding had a weighted average life of approximately 1.2 years.  At December 31, 2020, the principal balance of PPPLF advances outstanding was $107,413.  

Other than the PPPLF borrowing, there were no outstanding borrowings with the FRB at December 31, 2020.  There were no outstanding borrowings with the FRB at December 31, 2019.

Assets pledged as collateral with the FRB were as follows:

	2020		2019
Commercial loans	$	39,914	$	38,317
Commercial real estate loans		85,655		77,733
	$	125,569	$	116,050

Based on the collateral pledged, CFBank was eligible to borrow up to $81,508 from the FRB at year-end 2020.

NOTE 11 – SUBORDINATED DEBENTURES

2003 Subordinated Debentures:

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

The Holding Company may redeem the subordinated debentures, in whole or in part, in a principal amount with integral multiples of $1, at 100% of the principal amount, plus accrued and unpaid interest.  The subordinated debentures mature on December 30, 2033.  The subordinated debentures are also redeemable in whole or in part from time to time, upon the occurrence of specific events defined

34

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

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 subordinated debentures have a variable rate of interest, reset quarterly, equal to the three-month London Interbank Offered Rate plus 2.85%, which was 3.09% at year-end 2020 and 4.81% at year-end 2019.

2018 Fixed-to-floating rate subordinated notes:

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

The Notes initially bear interest at 7.00%, from and including December 20, 2018, to but excluding December 30, 2023, payable semi-annually in arrears on June 30 and December 30 of each year. From and including December 30, 2023, to but excluding December 30, 2028 or the earlier redemption of the notes, the interest rate will reset quarterly to an interest rate equal to the then current three-month LIBOR (but not less than zero) plus 4.14%, payable quarterly in arrears on March 30, June 30, September 30, and December 30 of each year.  The Holding Company may, at its option, redeem the notes beginning on December 30, 2023 and on any scheduled interest payment date thereafter.  After payment of approximately $388 of debt issuance costs, the Holding Company’s net proceeds were approximately $9,612.  At December 31, 2020, the balance of the subordinated notes, net of unamortized debt issuance costs, was $9,689.

NOTE 12 – BENEFIT PLANS

Multi-employer pension plan:

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

The unfunded liability under the Pentegra DB Plan at June 30, 2020 totaled $104 and at June 30, 2019 was $110.  CFBank’s contributions for the plan years ending June 30, 2020 and June 30, 2019, totaled $29 and $59, 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, 2020 and 2019 was 90.19% and 89.69%, respectively. 

Total contributions made to the Pentegra DB Plan, as reported on Form 5500 of the Pentegra DB Plan, totaled $138,322 and $164,570 for the plan years ended June 30, 2019 and June 30, 2018, 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 50% of the first 6% of the compensation contributed.  Total expense for matching contributions for 2020 and 2019 was $293 and $188, respectively.

35

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

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 $7 and $8 in 2020 and 2019, respectively. The accrual is included in accrued interest payable and other liabilities in the consolidated balance sheets and totaled $152 at year-end 2020 and $170 at year-end 2019. 

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 ($16) and ($12) in 2020 and 2019, 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 $154 at year-end 2020 and $171 at year-end 2019.

NOTE 13 – INCOME TAXES

Income tax expense was as follows:

	December 31, 2020		December 31, 2019
Current federal	$	9,720	$	2,627
Deferred federal (1)		(3,045)		(187)
Total	$	6,675	$	2,440

⁽¹⁾ Includes tax benefit of operating loss carryforwards of $34 and $34 for the years ended December 31, 2020 and 2019, respectively.

Effective tax rates differ from the federal statutory rate of 21% for 2020 and 2019 applied to income before income taxes due to the following:

	December 31, 2020		December 31, 2019
Federal statutory rate times financial statement income	$	7,619	$	2,529
Effect of:
Stock compensation		(19)		(18)
Bank owned life insurance income		(30)		(30)
Historic tax credits		(807)		-
Low income housing tax credits		(106)		(59)
Other		18		18
	$	6,675	$	2,440
Effective tax rate		18%		20%

36

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

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

	2020		2019
Deferred tax assets:
Allowance for loan and lease losses	$	3,407	$	1,170
Compensation related issues		1,815		433
Deferred loan fees		293		-
Nonaccrual interest		57		55
Net operating loss carry forward		398		432
Operating lease liabilities		322		412
		6,292		2,502
Deferred tax liabilities:
FHLB stock dividend		226		226
Deferred loan costs		-		7
Depreciation		15		73
Operating lease right-of-use assets		291		374
Unrealized mark-to-market gain		935		32
Other		2		4
Prepaid expenses		76		65
		1,545		781
Net deferred tax asset	$	4,747	$	1,721

At December 31, 2020, the Company had a deferred tax asset recorded of approximately $4,700.  At December 31, 2019, the Company had a deferred tax asset recorded of approximately $1,700.  At December 31, 2020 and December 31, 2019, 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 2017. 

Our deferred tax assets are composed of U.S. net operating losses (“NOLs”), and other temporary book to tax differences.  When determining the amount of deferred tax assets that are more-likely-than-not to be realized, and therefore recorded as a benefit, the Company conducts a regular assessment of all available information. This information includes, but is not limited to, taxable income in prior periods, projected future income and projected future reversals of deferred tax items.  Based on these criteria, the Company determined as of December 31, 2020 that no valuation allowance was required against the net deferred tax asset.

In 2012, a recapitalization program through the sale of $22,500 in common stock improved the capital levels of CFBank and provided working capital for the Holding Company.  The result of the change in stock ownership associated with the stock offering, however, was that the Company incurred an ownership change within the guidelines of Section 382 of the Internal Revenue Code of 1986.  At year-end 2020, the Company had net operating loss carryforwards of $22,416, which expire at various dates from 2024 to 2032.  As a result of the ownership change, the Company's ability to utilize carryforwards that arose before the 2012 stock offering closed is limited to $163 per year.  Due to this limitation, management determined it is more likely than not that $20,520 of net operating loss carryforwards will expire unutilized.  As required by accounting standards, the Company reduced the carrying value of deferred tax assets, and the corresponding valuation allowance, by the $6,977 tax effect of this lost realizability.

Federal income tax laws provided additional deductions, totaling $2,250, for thrift bad debt reserves established before 1988.  Accounting standards do not require a deferred tax liability to be recorded on this amount, which otherwise would have totaled $473 at year-end 2020.  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. 

37

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

NOTE 14 – RELATED-PARTY TRANSACTIONS

Loans to principal officers, directors and their affiliates during 2020and 2019 were as follows:

	Year ended December 31,
	2020		2019
Beginning balance	$	6,113	$	3,672
New loans		4,193		3,062
Repayments		(29)		(621)
Ending balance	$	10,277	$	6,113

All loans to related parties were made by CFBank in the ordinary course of business under terms equivalent to those prevailing in the market for arm’s length transactions at the time of origination. 

Deposits from principal officers, directors, and their affiliates totaled$3,844  and $976 at year-end 2020 and 2019, respectively.

NOTE 15 – STOCK-BASED COMPENSATION

The Company has  two stock-based compensation plans (collectively, the “Plans”), as described below, under which awards are outstanding or may be granted in the future.  Total compensation cost that has been charged against income for those Plans totaled $711 and $527 for 2020 and 2019, respectively.  The total income tax benefit was $149 and $111 for 2020 and 2019, respectively.

Both Plans are stockholder-approved and authorize stock option grants and restricted stock awards to be made to directors, officers and employees.  The 2009 Equity Compensation Plan (the “2009 Plan”), which was approved by stockholders on May 21, 2009, replaced the Company’s 2003 equity compensation plan (the “2003 Plan”) and provided for 36,363 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 272,727.  The 2019 Equity Incentive Plan (the “2019 Plan”), which was approved by stockholders on May 29, 2019, authorizes up to 300,000 shares (plus any shares that are subject to grants under the 2009 Plan and that are later forfeited or expire), to be awarded as stock option grants, stock appreciation rights, restricted stock awards or restricted stock units.

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 during the years ended December 31, 2020 and December 31, 2019.  There were 4,545 options exercised during the year ended December 31, 2020 and no options exercised during the year ended December 31, 2019.

38

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

A summary of stock option activity in the Plans for 2020 follows:

	Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Intrinsic Value
Outstanding at beginning of year	95,438	$	7.64
Exercised	(4,545)		7.98
Expired	(437)		17.33
Cancelled or forfeited	(14)		17.33
Outstanding at end of period	90,442	$	7.57	2.4	$	915
Exercisable at end of period	90,442	$	7.57	2.4	$	915

During the year ended December 31, 2020,stock options to purchase a total of 451common shares were canceled, forfeited or expired.  Stock options to purchase a total of 941 common shares were cancelled, forfeited or expired during the year ended December 31, 2019.   Expense associated with unvested forfeited shares is reversed.  As of December 31, 2020 and 2019, 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 19,660 shares of restricted stock granted in 2020 and 73,738 shares of restricted stock granted in 2019. 

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, 2020	102,916	$	13.11
Granted	19,660		10.02
Vested	(55,877)		13.18
Forfeited	(6,897)		12.35
Nonvested at December 31, 2020	59,802	$	12.12

As of December 31, 2020 and 2019, the unrecognized compensation cost related to nonvested shares granted under the Plans was $623 and $1,221, respectively.  

There were 55,877 shares that vested during the year ended December 31, 2020 and 36,288 shares that vested during the year ended December 31, 2019.  There were 6,897 and 3,858 shares of restricted stock forfeited during the years ended December 31, 2020 and December 31, 2019, respectively.

The 2009 Plan terminated in accordance with its terms on March 19, 2019 and, as a result, no further awards may be granted under the 2009 Plan.  There were 251,014 shares remaining available for awards of stock option grants, stock appreciation rights, restricted stock awards or restricted stock units under the 2019 Plan at December 31, 2020. 

NOTE 16 – 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 “2014 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.  After payment of approximately $482 in placement fees 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.  

39

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

For each share of Series B Preferred Stock sold in the Private Placement, the Company also issued, at no additional charge, a Warrant to purchase common stock of the Company.  See Note 17-Common Stock Warrants for additional information.

Conversion of Series B Preferred Stock to Common Stock:

On September 29, 2017, the Company announced the conversion of its Series B Preferred Stock into shares of Common Stock of the Company.  The conversion was effective October 6, 2017, and resulted in the conversion of all 480,000 of the Company’s issued and outstanding shares of Series B Preferred Stock into approximately 6,857,143 shares of Common Stock (prior to the 1-for-5.5 reverse stock split effective August 20, 2018), or approximately 1,246,753 shares of Common Stock on a post-reverse-split basis.

The conversion of the Series B Preferred Stock resulted in the elimination of the non-cumulative preferred dividend payments on the Series B Preferred Stock in the aggregate amount of approximately $188 quarterly ($750 annually) beginning with the 4th quarter of 2017.

Series C Preferred Stock:

On October 25, 2019, the Company entered into a Securities Purchase Agreement with certain accredited investors in a private placement for an aggregate offering price of approximately $25 million, pursuant to which on October 31, 2019, the Holding Company sold (i) 849,615 shares of the Company’s common stock, at a purchase price of $12.00 per share and (ii) 12,337 shares of a new series of the Company’s non-voting convertible perpetual preferred stock, series C, par value $0.01 per share (the “Series C Preferred Stock”), at a purchase price of $1,200.00 per share. 

Each share of Series C Preferred Stock was convertible either (i) automatically into 100 shares of the Company’s non-voting common stock, par value $0.01 per share (which is alsoconvertible into Common Stock) (the “Non-Voting Common Stock”), effective as of the close of business on the date that the Company obtained stockholder approval for, and filed, a Certificate of Amendment to the Company’s Certificate of Incorporation to authorize such class of Non-Voting Common Stock; or (ii) unless previously converted into shares of Non-Voting Common Stock, into 100 shares of the Company’s common stock upon transfer of such shares of Series C Preferred Stock to a non-affiliate of the holder in specified permitted transactions.

On March 30, 2020, the Company entered into an Exchange Agreement providing for the exchange of 27,000 of the shares of common stock purchased in the private placement for 270 additional shares of Series C Preferred Stock (at the Series C Preferred Stock’s current conversion ratio of 100 shares of common stock for each share of Series C Preferred Stock).  The exchange of common stock for Series C Preferred Stock was effected in order to accommodate and facilitate the Company’s stock repurchase program announced on March 13, 2020.  The exchange resulted in an increase in the number of outstanding shares of Series C Preferred Stock from 12,337 to 12,607.

Conversion of Series C Preferred Stock to Non-Voting Common Stock:

On May 27, 2020, an amendment to the Company’s Certificate of Incorporation, as amended (the “Certificate of Incorporation”), to authorize a separate class of Non-Voting Common Stock was approved by the stockholders of the Company at the Company’s 2020 annual meeting of stockholders.  On May 28, 2020, the Company filed with the Delaware Secretary of State a Certificate of Amendment to the Company’s Certificate of Incorporation to authorize 1,260,700 shares of Non-Voting Common Stock. Effective as of the close of business on May 28, 2020, all 1,260,700 authorized shares of Non-Voting Common Stock were issued upon conversion of the 12,607 outstanding shares of the Company’s Series C Preferred Stock. Pursuant to the terms of the Series C Preferred Stock, each outstanding share of Series C Preferred Stock converted automatically into 100 shares of Non-Voting Common Stock at such time.

NOTE 17 – COMMON STOCK WARRANTS

Series B Preferred Stock – Warrants:

For each share of Series B Preferred Stock issued by the Company in the 2014 Private Placement, the Company also issued, at no additional charge, a Warrant to purchase shares of common stock of the Company.  Warrants to purchase an aggregate of 1,152,125 shares of common stock (or 209,477 shares on a post-reverse-split basis) were issued by the Company to the purchasers of the 480,000 shares of Series B Preferred Stock sold in the Private Placement.  The Warrants were exercisable for a period of approximately five (5) years expiring on July 15, 2019, at an exercise price of $10.18 (on a post-reverse-split basis) per share of common stock.  As of December 31, 2020 and December 31, 2019, there were no outstanding warrants as all of the unexercised warrants expired on July 15, 2019.

40

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

NOTE 18 – 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 was phased in over time, became fully effective on January 1, 2019, and consists 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 were fully phased in effective 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”).  CFBank’s implementation of the new rules on January 1, 2015 did not have a material impact on our capital needs or classification.

The Basel III Capital Rules require CFBank to maintain: 1) a minimum ratio of Common Equity Tier 1 capital to risk-weighted assets of 4.5%, plus a 2.5% “capital conservation buffer” (resulting in a minimum ratio of Common Equity Tier 1 capital to risk-weighted assets of 7.0% 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 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 the 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 capital conservation buffer is designed to absorb losses during periods of economic stress.  Failure to maintain the minimum Common Equity Tier 1 capital ratio plus the capital conservation buffer will result in potential restrictions on a banking institution’s ability to pay dividends, repurchase stock and/or pay discretionary compensation to its employees.

The following tables present actual and required capital ratios as of December 31, 2020 and December 31, 2019 for CFBank under the Basel III Capital Rules.  Capital levels required to be considered well capitalized are based upon prompt corrective action regulations, as amended to reflect the changes under the Basel III Capital Rules.

	Actual			Minimum Capital Required-Basel III Fully Phased-In			To Be Well Capitalized Under Applicable Regulatory Capital Standards
	Amount		Ratio	Amount		Ratio	Amount		Ratio
December 31, 2020
Total Capital to risk weighted assets	$	136,683	14.31%	$	100,298	10.50%	$	95,522	10.00%
Tier 1 (Core) Capital to risk weighted assets		124,678	13.05%		81,194	8.50%		76,418	8.00%
Common equity tier 1 capital to risk-weighted assets		124,678	13.05%		66,866	7.00%		62,089	6.50%
Tier 1 (Core) Capital to adjusted total assets (Leverage ratio)		124,678	9.74%		51,187	4.00%		63,984	5.00%

41

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

	Actual			Minimum Capital Required-Basel III Fully Phased-In			To Be Well Capitalized Under Applicable Regulatory Capital Standards
	Amount		Ratio	Amount		Ratio	Amount		Ratio
December 31, 2019
Total Capital to risk weighted assets	$	95,164	12.96%	$	77,097	10.50%	$	73,425	10.00%
Tier 1 (Core) Capital to risk weighted assets		87,857	11.97%		62,412	8.50%		58,740	8.00%
Common equity tier 1 capital to risk-weighted assets		87,857	11.97%		51,398	7.00%		47,726	6.50%
Tier 1 (Core) Capital to adjusted total assets (Leverage ratio)		87,857	10.58%		33,221	4.00%		41,526	5.00%

CFBank converted from a mutual to a stock institution in 1998, and a “liquidation account” was established with an initial balance of $14,300, which was the net worth reported in the conversion prospectus. The liquidation account represents a calculated amount for the purposes described below, and it does not represent actual funds included in the consolidated financial statements of the Company.  Eligible depositors who have maintained their accounts, less annual reductions to the extent they have reduced their deposits, would be entitled to a priority distribution from this account if CFBank liquidated and its assets exceeded its liabilities. Dividends may not reduce CFBank’s stockholder’s equity below the required liquidation account balance.

Dividend Restrictions:

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

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

NOTE 19 – 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 $46,474 at December 31, 2020 and $12,039 at December 31, 2019.

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. 

The counterparty to CFBank’s interest-rate swaps is exposed to credit risk whenever the interest-rate swaps are in a liability position.  At December 31, 2020, CFBank had $2,392 in securities and cash pledged as collateral for these derivatives. Should the liability increase beyond the collateral value, CFBank may be required to pledge additional collateral. 

42

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

Additionally, CFBank’s interest-rate swap instruments contain provisions that require CFBank to remain well capitalized under regulatory capital standards and to comply with certain other regulatory requirements.  The interest-rate swaps may be called by the counterparty if CFBank fails to maintain well-capitalized status under regulatory capital standards or becomes subject to certain adverse regulatory events such as a regulatory cease and desist order.  As of December 31, 2020, CFBank was well-capitalized under regulatory capital standards and was not subject to any adverse regulatory events specified in CFBank’s interest-rate swap instruments.

Summary information about the derivative instruments is as follows:

	2020		2019
Notional amount	$	46,474	$	12,039
Weighted average pay rate on interest-rate swaps		4.19%		4.66%
Weighted average receive rate on interest-rate swaps		3.08%		4.63%
Weighted average maturity (years)		7.4		7.3
Fair value of interest-rate swaps	$	(1,944)	$	(12)
Fair value of yield maintenance provisions	$	1,944	$	12

As of December 31, 2020, CFBank had minimum collateral posting thresholds with certain of its interest-rate swap counterparties and has posted cash collateral of $2,392.

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 2020 or 2019.

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 $1,048,613 and $297,454 of interest rate lock commitments related to residential mortgage loans at December 31, 2020 and December 31, 2019, respectively.  The fair value of these mortgage banking derivatives was reflected by a derivative asset of $18,100 and $3,104 at December 31, 2020 and December 31, 2019, 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.

Mortgage banking activities include two types of commitments: rate lock commitments and forward loan commitments. Rate lock commitments are loans in our pipeline that have an interest rate locked with the customer. The commitments are generally for periods of 30-60 days and are at market rates. In order to mitigate the effect of the interest rate risk inherent in providing rate lock commitments, we economically hedge our commitments by entering into either a forward loan sales contract under best efforts or a trade of “to be announced (TBA)” mortgage-backed securities (“notional securities”) for mandatory delivery. The Company had approximately $506,750 and $225,500 of TBA mortgage-backed securities at December 31, 2020 and December 31, 2019, respectively.  The fair value of these TBA mortgage-backed securities was ($2,690) and ($350) at December 31, 2020 and December 31, 2019, respectively, which is included in other liabilities on the consolidated balance sheet.  The changes in fair value related to movements in market rates of the rate lock commitments and the forward loan sales contracts and notional securities generally move in opposite directions, and the net impact of changes in these valuations on net income during the loan commitment period is generally inconsequential. The Company has not formally designated these derivatives as a qualifying hedge relationship and, accordingly, accounts for such forward contracts as freestanding derivatives with changes in fair value recorded to earnings each period.

The following table reflects the amount and market value of mortgage banking derivatives included in the consolidated balance sheet as of the period end:

	December 31, 2020				December 31, 2019
	Notional Amount		Fair Value		Notional Amount		Fair Value
Assets (Liabilities):
Interest rate commitments	$	1,048,613	$	18,100	$	297,454	$	3,104
TBA mortgage-back securities		506,750		(2,690)		225,500		(350)

43

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

As of December 31, 2020, CFBank had minimum collateral posting thresholds with certain of its derivative counterparties and has posted cash collateral of $4,847.

The following table represents the notional amount of loans sold during the years ended December 31, 2020 and 2019:

	2020		2019
Notional amount of loans sold	$	2,229,042	$	411,257

The following table represents the revenue recognized on mortgage activities for the years ended December 31, 2020 and 2019:

	December 31, 2020		December 31, 2019
Gain on loans sold		61,146		9,603
Gain (loss) from change in fair value of loans held-for-sale		7,046		1,341
Gain (loss) from change in fair value of derivatives		(9,895)		(490)
	$	58,297	$	10,454

NOTE 20 – 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:

	2020				2019
	Fixed Rate		Variable Rate		Fixed Rate		Variable Rate
Commitments to make loans	$	1,072,963	$	31,239	$	314,705	$	43,979
Unused lines of credit	$	20,395	$	65,788	$	10,678	$	55,684
Standby letters of credit	$	3,997	$	-	$	1,415	$	-

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 2.00% to 6.50% and maturities ranging from 1 months to 30 years at December 31, 2020. The fixed-rate loan commitments had interest rates ranging from 2.00% to 8.75% and maturities ranging from 3 months to 30 years at December 31, 2019.

44

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

NOTE 21 – PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION

Condensed financial information of CF Bankshares Inc. follows:

	2020		2019
Assets
Cash and cash equivalents	$	1,785	$	10,037
Equity securities		5,000		-
Investment in banking subsidiary		125,172		88,317
Investment in and advances to other subsidiary		241		238
Other assets		2,533		2,045
Total assets	$	134,731	$	100,637
Liabilities and Equity
Subordinated debentures	$	14,844	$	14,806
Other borrowings		9,500		5,000
Accrued expenses and other liabilities		177		167
Stockholders' equity		110,210		80,664
Total liabilities and stockholders' equity	$	134,731	$	100,637

	2020		2019
Interest income	$	-	$	-
Other income		178		70
Interest expense		1,209		1,353
Other expense		830		758
Loss before income tax and before undistributed subsidiary income		(1,861)		(2,041)
Tax effect		390		427
Loss after income tax and before undistributed subsidiary income		(1,471)		(1,614)
Equity in undistributed subsidiary income		31,079		11,215
Net income	$	29,608	$	9,601
Comprehensive income	$	29,676	$	9,702

45

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

	2020		2019
Cash flows from operating activities
Net Income	$	29,608	$	9,601
Adjustments:
Effect of subsidiaries' operations		(31,079)		(11,215)
Amortization, net		38		39
Change in other assets and other liabilities		(480)		(939)
Net cash used by operating activities		(1,913)		(2,514)
Cash flows from investing activities
Investments in banking subsidiary		(5,000)		(14,000)
Purchase of equity securities		(5,000)		-
Net cash used by investing activities		(10,000)		(14,000)
Cash flows from financing activities
Proceeds from other borrowings		15,000		4,000
Repayments of other borrowings		(10,500)		(5,000)
Net proceeds from the issuance of preferred stock private placement		-		14,000
Net proceeds from the issuance of common stock private placement		-		9,641
Proceeds from exercise of stock options		36		-
Acquisition of treasury shares surrendered upon vesting of restricted stock for payment of taxes		(32)		(23)
Purchase of treasury shares		(648)		-
Exercise of warrants to common stock		-		1,258
Dividends paid		(195)		-
Net cash from financing activities		3,661		23,876
Net change in cash and cash equivalents		(8,252)		7,362
Beginning cash and cash equivalents		10,037		2,675
Ending cash and cash equivalents	$	1,785	$	10,037

46

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

NOTE 22 – EARNINGS PER COMMON SHARE

The two-class method is used in the calculation of basic and diluted earnings per share.  Under the two-class method, earnings available to common stockholders for the period are allocated between common stockholders and participating securities (certain unvested share-based awards and Series C preferred stock outstanding) according to dividends declared (or accumulated) and participation rights in undistributed earnings.  The factors used in the earnings per share computation follow:

	December 31, 2020		December 31, 2019
Basic
Net income	$	29,608	$	9,601
Accretion of discount and value of warrants exercised related to Series B preferred stock (1)		-		219
Earnings allocated to participating securities (Series C preferred stock) (2)		(2,280)		(430)
Net income allocated to common stockholders	$	27,328	$	9,390
Weighted average common shares outstanding including unvested share-based payment awards		6,072,829		4,582,997
Less: Unvested share-based payment awards-2019 Plan		(43,732)		(1,532)
Average shares		6,029,097		4,581,465
Basic earnings per common share	$	4.53	$	2.05
Diluted
Net earnings allocated to common stockholders	$	27,328	$	9,390
Add back: Preferred Dividends on Series B stock and accretion of discount		-		-
Net earnings allocated to common stockholders	$	27,328	$	9,390
Weighted average common shares outstanding for basic earnings per common share		6,029,097		4,581,465
Add: Dilutive effects of assumed exercises of stock options		34,158		38,620
Add: Dilutive effects of assumed exercises of stock warrants		-		6,947
Add:  Dilutive effects of unvested share-based payment awards-2019 Plan		43,732		1,532
Average shares and dilutive potential common shares		6,106,987		4,628,564
Diluted earnings per common share	$	4.47	$	2.03

⁽¹⁾ All outstanding warrants expired on July 15, 2019.

⁽²⁾ All 12,607 outstanding shares of Series C preferred stock were converted into a total of 1,260,700 shares of the Company’s Non-Voting Common Stock effective as of the close of business on May 28, 2020.

The following securities were anti-dilutive and not considered in computing diluted earnings per common share.

	2020	2019
Stock options	331	463

NOTE 23 - 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.

47

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

NOTE 24 - ACCUMULATED OTHER COMPREHENSIVE INCOME

The following table summarizes the changes within each classification of accumulated other comprehensive income, net of tax, for the years ended December 31, 2020 and December 31, 2019 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, 2020 and 2019  (1)
	Unrealized Gains and Losses on Available-for-Sale Securities
	2020		2019
Accumulated other comprehensive gain/(loss), beginning of period	$	28	$	(73)
Other comprehensive gain before reclassifications		68		101
Less amount reclassified from accumulated other comprehensive loss (2)		-		-
Net current-period other comprehensive income		68		101
Accumulated other comprehensive income, end of period	$	96	$	28

⁽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 years ended December 31, 2020 and December 31, 2019.

NOTE 25- SUBSEQUENT EVENTS

On December 29, 2020, CFBankentered into a Branch Purchase and Assumption Agreement (the “P&A Agreement”) with Consumers National Bank (“Consumers”) pursuant to which Consumers will acquire the two branches of CFBank in Columbiana County, Ohio – CFBank’s drive-up branch location in Wellsville, Ohio and CFBank’s branch location in Calcutta, Ohio (the “Branches”).

The P&A Agreement provides for the sale and transfer by CFBank to Consumers of the land, buildings and other associated assets of the Branches; approximately $100 million in deposits attributable to the Branches; $15 million in aggregate principal amount of subordinated debt securities issued by unrelated financial institutions and held in CFBank’s portfolio; all performing loans attributable to the Branches which are outstanding at closing (totaling approximately $3.1 million in aggregate principal amount as of November 30, 2020); and up to $13.5 million in aggregate principal amount of single family residential mortgage loans and home equity lines of credit to be identified by the parties prior to the closing principally from CFBank’s Northeast Ohio loan portfolio.  In exchange, Consumers will pay to CFBank the net book value of the land, building and associated assets of the Branches, a deposit premium equal to 1.75% of the average daily deposits of the Branches for the 30 days preceding the closing, and the par value of the subordinated debt securities and loans acquired by Consumers.  The determination of the actual amount of deposit liabilities and the identification of the actual loans to be sold to Consumers is still being finalized.

The closing of the transactions contemplated by the P&A Agreement is subject to regulatory approval and satisfaction of other customary closing conditions.  The parties expect the closing of the transactions to occur in the third calendar quarter of 2021. 

On January 28,2021,  the Board of Directors of the Company authorized a new stock repurchase program pursuant to which the Company may repurchase up to 250,000 of the Company’s outstanding common stock on or before February 27, 2022.  Under the stock repurchase program, the Company may purchase shares of its common stock from time to time through various means, including open market transactions and privately negotiated transactions.  Open market repurchases will be made in accordance with applicable securities laws and regulations, including Rule 10b-18 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and may be effected pursuant to Rule 10b5-1 under the Exchange Act.  The manner, timing and amount of any stock repurchases will be determined by the Company’s management in its discretion based on its evaluation of various factors, including the trading price of the Company’s common stock, market and economic conditions, regulatory requirements and other corporate considerations.  The repurchase program may be suspended or discontinued at any time.

48

CF Bankshares Inc. and CFBank	CF Bankshares Inc. Officers
Board of Directors
	Timothy T. O’Dell
Robert E. Hoeweler	President and Chief Executive Officer
Chief Executive Officer, Hoeweler Holdings
Chairman of the Board, CF Bankshares Inc. and CFBank	Kevin J. Beerman
	Senior Vice President and Senior Financial Officer
Thomas P. Ash
Retired, formerly Director of Governmental Relations	Barbara Pyke
Buckeye Association of School Administrators	Corporate Secretary
Edward W. Cochran	CFBank Executive Officers
Attorney
	Timothy T. O’Dell
James H. Frauenberg II	President and Chief Executive Officer
Principal Owner,
Addison Holdings LLC,	Kevin J. Beerman
	Senior Vice President and Senior Financial Officer
John T. Pietrzak
Managing Principal	Bradley J. Ringwald
Castle Creek Capital	Chief Commercial Banking Officer
David L. Royer
Executive Vice President of Development,
Continental Real Estate Companies
Timothy T. O’Dell
President and Chief Executive Officer,
CF Bankshares Inc. and CFBank
CFBank Office Locations
(Markets Served)
Worthington, Ohio (Greater Columbus)*	Glendale, Ohio (Cincinnati)*
7000 North High Street	38 Village Square
Worthington, Ohio 43085	Glendale, Ohio 45246
614-334-7979	513-772-0263
Columbus, Ohio (Greater Columbus)***	Blue Ash, Ohio (Cincinnati)*
8101 North High Street, Suite 180	10300 Alliance Road #150
Columbus, Ohio 43235	Cincinnati, Ohio 45242
614-639-6333	513-427-3005
Woodmere, Ohio (Greater Cleveland)**	Wellsville, Ohio (Columbiana County)*
28879 Chagrin Blvd.	601 Main Street
Woodmere, Ohio 44122	Wellsville, Ohio 43968
216-468-3100	330-532-1517
Fairlawn, Ohio (Akron/Canton)*	Calcutta, Ohio (Columbiana County)*
3009 Smith Road, Suite 100	49028 Foulks Drive
Fairlawn, Ohio 44333	Calcutta, Ohio 43920
330-666-7979	330-385-4323

*   Full service branch

**  Agency office

*** Loan production office

49

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:

Kevin J. Beerman

Senior Vice President and Senior Financial Officer

CF Bankshares Inc.

7000 North High Street

Worthington, Ohio 43085

Phone: 614-505-5770

Fax: 614-505-5761

Email: Kevinbeerman@cfbankmail.com

Annual Meeting

The Annual Meeting of Shareholders of CF Bankshares Inc. will be held “virtually” through a live webcast at 10:00 a.m., local time, on Wednesday, June 2, 2021.

Shareholder Services

Computershare, Inc. serves as transfer agent for CF Bankshares Inc. 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

50

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 CF Bankshares Inc. on Form S-8 (File Nos. 333-84817, 333-114025, 333-163102, 333-207354 and 333-234817), and Form S 3 (File Nos. 333-216922, 333-221607, 333-110218, 333-124323 and 333-156564) of our report dated March 23, 2021, on our audits of the consolidated financial statements of CF Bankshares Inc. as of December 31, 2020 and 2019, and for each of the two years in the period ended December 31, 2020, which report is included in this Annual Report on Form 10-K. 

/s/ BKD, LLP

BKD, LLP

Indianapolis, Indiana

March 23, 2021

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 CF Bankshares Inc.;

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

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the 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 23, 2021	/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, Kevin J. Beerman, certify, that:

1. I have reviewed this report on Form 10-K of CF Bankshares Inc.;

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

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the 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 23, 2021	/s/ Kevin J. Beerman
	Kevin J. Beerman
	Senior Vice President and Senior Financial Officer

EX-32.1

Exhibit 32.1

Section 1350 Certifications

In connection with the Annual Report of CF Bankshares Inc. (the “Company”) on Form 10-K for the fiscal year ended December 31, 2020 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 Kevin J. Beerman,Senior Vice President and Senior 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/ Kevin J. Beerman

Kevin J. Beerman

Senior Vice President and Senior Financial Officer

Date:March 23, 2021

XML

Document And Entity Information - USD ($)
$ in Millions

12 Months Ended

Dec. 31, 2020

Mar. 08, 2021

Jun. 30, 2020

Document Type

10-K

Document Annual Report

true

Document Fiscal Period Focus

FY

Current Fiscal Year End Date

--12-31

Document Fiscal Year Focus

2020

Document Period End Date

Dec. 31, 2020

Document Transition Report

false

Entity File Number

0-25045

Entity Registrant Name

CF BANKSHARES INC.

Entity Incorporation, State or Country Code

DE

Entity Tax Identification Number

34-1877137

Entity Address, Address Line One

7000 N. High Street

Entity Address, City or Town

Worthington

Entity Address, State or Province

OH

Entity Address, Postal Zip Code

43085

City Area Code

614

Local Phone Number

334-7979

Title of 12(b) Security

Common Stock, par value $.01 per share

Trading Symbol

cfbk

Security Exchange Name

NASDAQ

Entity Well-known Seasoned Issuer

No

Entity Voluntary Filers

No

Entity Current Reporting Status

Yes

Entity Interactive Data Current

Yes

Entity Filer Category

Non-accelerated Filer

Entity Small Business

true

Entity Emerging Growth Company

false

ICFR Auditor Attestation Flag

false

Entity Shell Company

false

Entity Public Float

$ 68.3

Documents Incorporated By Reference

Portions of the registrant’s Annual Report to Stockholders for its fiscal year ended December 31, 2020, included as Exhibit 13.1 to this Form 10-K, and its Proxy Statement for the Annual Meeting of Stockholders to be held on June 2, 2021, are incorporated herein by reference into Parts II and III, respectively, of this Form 10-K.

Entity Central Index Key

0001070680

Amendment Flag

false

Common Stock [Member]

Entity Common Stock, Shares Outstanding

5,385,256

Non-Voting Common Stock [Member]

Entity Common Stock, Shares Outstanding

1,260,700

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
ASSETS
Cash and cash equivalents	$ 221,594	$ 45,879
Interest-bearing deposits in other financial institutions	100	100
Securities available for sale	8,701	8,174
Equity securities	5,000
Loans held for sale, at fair value	283,165	135,711
Loans and leases, net of allowance of $17,022 and $7,138	895,344	663,303
FHLB and FRB stock	5,847	4,008
Premises and equipment, net	3,730	3,991
Operating lease right-of-use assets	1,387	1,780
Bank owned life insurance	17,490	5,345
Accrued interest receivable and other assets	34,637	12,254
Total assets	1,476,995	880,545
Deposits
Noninterest bearing	198,675	115,530
Interest bearing	914,395	630,793
Total deposits	1,113,070	746,323
FHLB advances and other debt	214,426	29,017
Advances by borrowers for taxes and insurance	1,029	929
Operating lease liabilities	1,532	1,960
Accrued interest payable and other liabilities	21,884	6,846
Subordinated debentures	14,844	14,806
Total liabilities	1,366,785	799,881
Commitments and contingent liabilities
Stockholders' equity
Common stock	54	54
Additional paid-in capital	87,637	86,903
Retained earnings (accumulated deficit)	26,479	(2,932)
Accumulated other comprehensive income	96	28
Treasury stock, at cost; 96,098 shares of common stock at December 31, 2020 and 32,940 shares of common stock at December 31, 2019	(4,069)	(3,389)
Total stockholders' equity	110,210	80,664
Total liabilities and stockholder's equity	1,476,995	880,545
Non-Voting Common Stock [Member]
Stockholders' equity
Common stock	13
Total stockholders' equity	13
Series B Preferred Stock [Member]
Stockholders' equity
Preferred stock
Series C Preferred Stock [Member]
Stockholders' equity
Preferred stock

XML

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Allowance for loans and leases	$ 17,022	$ 7,138
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	9,090,909	9,090,909
Common stock, shares issued	5,399,702	5,409,394
Treasury stock, shares	96,098	32,940
Non-Voting Common Stock [Member]
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	1,260,700	1,260,700
Common stock, shares issued	1,260,700	0
Series B Preferred Stock [Member]
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	480,000	480,000
Preferred stock, shares issued	0	0
Series C Preferred Stock [Member]
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	12,607	12,607
Preferred stock, shares issued	0	12,337

XML

Consolidated Statements Of Income - USD ($) $ in Thousands		12 Months Ended
		Dec. 31, 2020	Dec. 31, 2019
Interest and dividend income
Loans and leases, including fees		$ 41,851	$ 33,778
Securities		161	172
FHLB and FRB stock dividends		199	207
Federal funds sold and other		175	947
Total interest and dividend income		42,386	35,104
Interest expense
Deposits		11,911	11,684
FHLB advances and other debt		1,729	704
Subordinated debentures		938	1,016
Total interest expense		14,578	13,404
Net interest income		27,808	21,700
Provision for loan and lease losses		10,915
Net interest income after provision for loan and lease losses		16,893	21,700
Noninterest income
Service charges on deposit accounts		633	553
Net gains on sales of loans		58,366	10,767
Earnings on bank owned life insurance		145	142
Swap fee income		651	162
Other		198	96
Total noninterest income		59,993	11,720
Noninterest expense
Salaries and employee benefits		21,987	11,170
Occupancy and equipment		1,077	965
Data processing		1,812	1,350
Franchise and other taxes		740	454
Professional fees		5,070	1,855
Director fees		648	547
Postage, printing and supplies		172	225
Advertising and marketing		5,624	2,829
Telephone		219	201
Loan expenses		304	232
Foreclosed assets, net			(9)
Depreciation		381	316
FDIC premiums		588	529
Regulatory assessment		181	165
Other insurance		106	99
Other		1,694	451
Total noninterest expense		40,603	21,379
Loss before income tax and before undistributed subsidiary income		36,283	12,041
Income tax expense		6,675	2,440
Net income		29,608	9,601
Accretion of discount and value of warrants exercised related to Series B preferred stock	[1]		219
Earnings allocated to participating securities (Series C preferred stock)	[2]	(2,280)	(430)
Net income attributable to common stockholders		$ 27,328	$ 9,390
Earnings per common share:
Basic		$ 4.53	$ 2.05
Diluted		$ 4.47	$ 2.03

[1] All outstanding warrants expired on July 15, 2019.

[2] All 12,607 outstanding shares of Series C preferred stock were converted into a total of 1,260,700 shares of the Company's Non-Voting Common Stock effective as of the close of business on May 28, 2020.

XML

Consolidated Statements Of Comprehensive Income - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Consolidated Statements Of Comprehensive Income [Abstract]
Net income	$ 29,608	$ 9,601
Other comprehensive income:
Unrealized holding gains arising during the period related to investment securities available for sale, net of tax of $18 and $27:	68	101
Net current-period other comprehensive income	68	101
Comprehensive income	$ 29,676	$ 9,702

XML

Consolidated Statements Of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Consolidated Statements Of Comprehensive Income [Abstract]
Unrealized holding gains (losses) arising during the period related to securities available for sale, tax	$ 18	$ 27

XML

Consolidated Statements Of Changes In Stockholders' Equity - USD ($) $ in Thousands	Common Stock [Member]	Additional Paid-In Capital [Member]	Retained Earnings (Accumulated Deficit) [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Treasury Stock [Member]	Non-Voting Common Stock [Member]	Total
Balance at Dec. 31, 2018	$ 44	$ 61,706	$ (12,752)	$ (73)	$ (3,366)		$ 45,559
Net income			9,601				9,601
Other comprehensive income				101			101
Issuance of stock based incentive plan shares, net of forfeitures	1	(1)
Restricted stock expense, net of forfeitures		527					527
Acquisition of treasury shares surrendered upon vesting of restricted stock for payment of taxes					(23)		(23)
Exercise of warrants to common stock	1	1,257					1,258
Accretion of discount and value of warrants exercised		(219)	219
Proceeds from the issuance of shares from the preferred stock private placement, net of offering expenses		14,000					14,000
Proceeds from the issuance of shares from the common stock private placement, net of offering expenses	8	9,633					9,641
Balance at Dec. 31, 2019	54	86,903	(2,932)	28	(3,389)		80,664
Net income			29,608				29,608
Other comprehensive income				68			68
Issuance of stock based incentive plan shares, net of forfeitures
Restricted stock expense, net of forfeitures		711					711
Stock options exercised		36					36
Acquisition of treasury shares surrendered upon vesting of restricted stock for payment of taxes					(32)		(32)
Purchase of treasury shares					(648)		(648)
Conversion of 12,607 shares of Series C preferred stock to 1,260,700 shares of non-voting common stock		(13)				13
Dividends declared ($0.03 per share)			(197)				(197)
Balance at Dec. 31, 2020	$ 54	$ 87,637	$ 26,479	$ 96	$ (4,069)	$ 13	$ 110,210

XML

Consolidated Statements Of Changes In Stockholders' Equity (Parenthetical) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Issuance of stock based incentive plan, shares	19,660	73,738
Treasury shares, acquisition	2,158	1,705
Treasury shares, purchase	61,000
Dividends declared, per share	$ 0.03
Preferred Stock [Member]
Issuance of shares from private placement		12,337
Offering expenses		$ 805
Common Stock [Member]
Issuance of shares from private placement		849,615
Offering expenses		$ 554
Series C Preferred Stock [Member]
Conversion of Series C preferred stock, shares	12,607
Non-Voting Common Stock [Member]
Non-voting common stock, shares	1,260,700

XML

Consolidated Statements Of Changes Of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Consolidated Statements Of Changes Of Cash Flows [Abstract]
Net income	$ 29,608	$ 9,601
Adjustments to reconcile net income to net cash from operating activities:
Provision for loan and lease losses	10,915
Depreciation	381	316
Amortization, net	(1,510)	(96)
Deferred income tax (benefit)	(3,045)	(187)
Originations of loans held for sale	(2,229,042)	(726,208)
Proceeds from sale of loans held for sale	2,130,712	625,509
Net gains on sales of loans	(58,366)	(10,767)
Write-down of premises and equipment	265
Gain on sale of foreclosed assets		(12)
Earnings on bank owned life insurance	(145)	(142)
Stock-based compensation expense	711	527
Net change in:
Accrued interest receivable and other assets	(18,451)	(3,412)
Operating lease right-of-use asset	393	404
Operating lease right-of-use liability	(428)	(408)
Accrued interest payable and other liabilities	14,537	1,337
Net cash used by operating activities	(123,465)	(103,538)
Cash flows from investing activities
Available-for-sale securities: Maturities, prepayments and calls	5,091	3,576
Available-for-sale securities: Purchases	(5,552)	(1,494)
Purchase of equity securities	(5,000)
Purchase of bank owned life insurance	(12,000)
Loan and lease originations and payments, net	(241,102)	(118,467)
Proceeds from the sale of loans	1,439	6,547
Additions to premises and equipment	(385)	(443)
Purchase of FRB and FHLB Stock	(1,839)	(532)
Purchase of other investments	(1,000)	(734)
Return of investment- joint ventures	594	95
Proceeds from the sale of foreclosed assets		50
Net cash used by investing activities	(259,754)	(111,402)
Cash flows from financing activities:
Net change in deposits	366,747	166,537
Proceeds from FHLB advances and other debt	575,137	766,700
Repayments on FHLB advances and other debt	(452,224)	(764,700)
Net change in warehouse line of credit	70,013
Net change in advances by borrowers for taxes and insurance	100	102
Cash dividends paid on common stock	(195)
Proceeds from exercise of stock options	36
Net proceeds from issuance of Series C preferred stock in private placement		14,000
Net proceeds from issuance of common stock in private placement		9,641
Exercise of warrants to common stock		1,258
Acquisition of treasury shares surrendered upon vesting of restricted stock for payment of taxes	(32)	(23)
Purchase of treasury shares	(648)
Net cash from financing activities	558,934	193,515
Net change in cash and cash equivalents	175,715	(21,425)
Beginning cash and cash equivalents	45,879	67,304
Ending cash and cash equivalents	221,594	45,879
Supplemental cash flow information:
Interest paid	14,296	13,427
Income tax paid	10,300	2,510
Supplemental noncash disclosures:
Loans transferred from held for sale to portfolio	1,725	657
Investment payable on limited liability corporation and limited partnership	500	1,170
Transfer of other liability to operating lease right-of-use asset		184
Initial recognition of operating right-of-use lease asset		2,368
Initial recognition of operating right-of-use lease liability		2,368
Loans held for sale funded with other debt	(7,517)	$ 7,517
Dividends payable	$ 2

XML

Summary Of Significant Accounting Policies

12 Months Ended

Dec. 31, 2020

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 CF Bankshares, Inc. (the “Holding Company”) and its wholly-owned subsidiary, CFBank, National Association (“CFBank”).  On December 1, 2016, CFBank converted from a federal savings institution to a national bank.  Prior to December 1, 2016, the Holding Company was a registered savings and loan holding company.  Effective as of December 1, 2016 and in conjunction with the conversion of CFBank to a national bank, the Holding Company became a registered bank holding company and elected financial holding status with the FRB.  Effective as of July 27, 2020, the Company changed its name from Central Federal Corporation to CF Bankshares Inc.  The Holding Company and CFBank are sometimes collectively referred to herein as the “Company”.  Intercompany transactions and balances are eliminated in consolidation. 

CFBank provides financial services through its six full-service banking offices in Worthington, Fairlawn, Glendale, Blue Ash, Calcutta, and Wellsville, Ohio, and through its loan production office in Columbus, Ohio and 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.

Cash in Excess of FDIC Limits:  At December 31, 2020, the Company’s cash accounts exceeded federally insured limits by approximately $215.7 million.  Approximately $203.0 million of that amount was held by either the Federal Reserve Bank or the Federal Home Loan Bank of Cincinnati, which is not federally insured.

Interest-Bearing Deposits in Other Financial Institution:  Interest-bearing deposits in other financial institutions mature in April, 2022 and are carried at cost.  As of December 31, 2020 and December 31, 2019, there was $100 in an interest-bearing deposit in other financial institutions.

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

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

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.

Equity Securities:  Equity securities without a readily determinable fair value are held at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.  For equity securities measured under the practicability exception under Accounting Standards Update (“ASU”) 2016-01, the Company performs a qualitative assessment for equity securities without readily determinable fair values considering impairment indicators to evaluate whether an impairment exists.  If an impairment exists, the Company will recognize a loss based on the difference between carrying value and fair value.

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 each loan placed on nonaccrual is reversed against interest income in the period in which it is placed in a nonaccrual status.  Interest received on such loans is accounted for on the cash-basis or cost recovery method, until qualifying for return to accrual status.  Loans are considered for return to accrual status provided all the principal and interest amounts that are contractually due are brought current, there is a current and well documented credit analysis, there is reasonable assurance of repayment of principal and interest, and the customer has demonstrated sustained, amortizing payment performance of at least six months.

Concentration of Credit Risk:  Most of the Company’s primary business activity is with customers located within the Ohio counties of Franklin, Hamilton, Cuyahoga, Summit, Columbiana 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 substandard loans within the commercial, multi-family residential, commercial real estate and construction segments 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 three-year historical loss rates.  For loans with little or no actual loss experience, industry estimates are used based on loan segment. This loss experience is supplemented with other economic and judgmental factors based on the risks present for each loan class.  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 and direct financing leases include loans and leases to businesses generally located within our primary market area. Those loans and leases are typically secured by business equipment, inventory, accounts receivable and other business assets.  In underwriting commercial loans, we consider the net operating income of the borrower, the debt service ratio and the financial strength, expertise and credit history of the business owners and/or guarantors.  Because payments on commercial loans are dependent on successful operation of the business enterprise, repayment of such loans may be subject to a greater extent to adverse conditions in the economy.  We seek to mitigate these risks through underwriting policies which require such loans to be qualified at origination on the basis of the borrower’s financial performance and the financial strength of the business owners and/or guarantors.

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

Multi-family residential real estate loans:  Multi-family residential real estate loans include loans secured by apartment buildings, condominiums and multi-family residential houses generally located within our primary market area. Underwriting policies provide that multi-family residential real estate loans generally may be made in amounts up to 85% of the lower of the appraised value or purchase price of the property.  In underwriting multi-family residential real estate loans, we consider the appraised value and net operating income of the property, the debt service ratio and the property owner’s and/or guarantor’s financial strength, expertise and credit history. We offer both fixed-rate and adjustable-rate loans. Fixed-rate loans are generally limited to three 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 generally be made in amounts up to 80% of the appraised value of the property, and an independent appraisal of the property is required.  Loan proceeds are disbursed in increments as construction progresses and as inspections warrant, and regular inspections are required to monitor the progress of construction.  In underwriting construction loans, we consider the property owner’s and/or guarantor’s financial strength, expertise and credit history. Construction financing is considered to involve a higher degree of credit risk than long-term financing on improved, owner occupied real estate.  Risk of loss on a construction loan is dependent largely upon the accuracy of the initial estimate of the property’s value at completion of construction or development compared to the estimated cost (including interest) of construction.  If the estimate of value proves to be inaccurate, we may be confronted with a project, when completed, having a value which is insufficient to assure full repayment.  We attempt to reduce such risks on construction loans through inspections of construction progress on the property and by requiring personal guarantees and reviewing current personal financial statements and tax returns, as well as other projects of the developer.

Home equity lines of credit:  Home equity lines of credit include both loans we originate for portfolio and purchased loans.  We originate home equity lines of credit to customers generally within our primary market area.  Home equity lines of credit are variable rate loans and the interest rate adjusts monthly at various margins to the prime rate of interest as disclosed in The Wall Street Journal. The margin is based on certain factors including the loan balance, value of collateral, election of auto-payment, and the borrower’s FICO® score.  The amount of the line is based on the borrower’s credit, income and equity in the home.  When combined with the balance of the prior mortgage liens, these lines generally may not exceed 89.9% of the appraised value of the property at the time of the loan commitment.  The lines are secured by a subordinate lien on the underlying real estate and are, therefore, vulnerable to declines in property values in the geographic areas where the properties are located.  Credit approval for home equity lines of credit requires income sufficient to repay principal and interest due, stability of employment, an established credit record and sufficient collateral.  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.  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, auto, credit card loans and any purchased loans to consumers generally located within our primary market area.  Credit approval for other consumer loans requires income sufficient to repay principal and interest due, stability of employment, an established credit record and sufficient collateral for secured loans.  Consumer loans typically have shorter terms and lower balances with higher yields as compared to real estate mortgage loans, but generally carry higher risks of default. Consumer loan collections are dependent on the borrower's continuing financial stability, and thus are more likely to be affected by adverse personal circumstances.

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

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

Foreclosed Assets:  Assets acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis.  These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell.  If fair value declines subsequent to foreclosure, an adjustment is recorded through expense.  Operating costs after acquisition are expensed.

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

Historic Tax Credits:In June 2019, the Company made an equity investment as a non-managing member in an entity that is expected to receive historic tax credits (HTC) pursuant to Section 47 of the Internal Revenue Code.  The Company expects to receive a return through the realization of federal income tax credits, as well as other tax benefits, such as tax deductions from net operating losses of the investment over a period of time.  The HTC investment is accounted for under the equity method of accounting and is included in accrued interest receivable and other assets on the consolidated balance sheets.  The Company’s recorded investment in this entity was $0 at December 31, 2020 and $894 at December 31, 2019.  The maximum exposure to loss related to these investments was $0 at December 31, 2020, representing the Company’s investment balance. 

Joint Ventures:  The Holding Company has contributed funds into a series of joint ventures (equity stake) for the purpose of allocating excess liquidity into higher earning assets while diversifying its revenue sources.  The joint ventures are engaged in shorter term operating activities related to single family real estate developments.  Income is recognized based on a rate of return on the outstanding investment balance.  As units are sold, the Holding Company receives an additional incentive payment, which is recognized as income. Under ASU 2016-15, the Company has elected the nature of distribution approach to recognize returns from equity method investments.  Returns on investment are classified as cash flows from operating activities and returns of investment are classified as investing activities. The balance outstanding in joint ventures at December 31, 2020 and December 31, 2019 was $1,406 and $1,000, respectively.  Income recognized on the joint ventures was $173 and $57, respectively, for 2020 and 2019.

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 FHLB stock based on the level of borrowings and other factors, and may invest in additional amounts.  FHLB stock is carried at cost, classified as a restricted security, and periodically evaluated for impairment based on ultimate recovery of par value.  Both cash and stock dividends are reported as income.

Federal Reserve Bank (FRB) stock:  CFBank is a member of the FRB system and is required to own a certain amount of stock.  FRB stock is carried at cost, classified as a restricted security, and periodically evaluated for impairment based on ultimate recovery of par value.  Both cash and stock dividends are reported as income.

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

Loan Commitments and Related Financial Instruments:  Financial instruments include off‑balance-sheet credit instruments, such as commitments to make loans and 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.  Mortgage banking activities include two types of commitments: rate lock commitments and forward loan commitments.  Fair values of these mortgage derivatives are based on anticipated gains on the underlying loans.  Changes in the fair values of these derivatives are included in net gains on sales of loans.

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

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

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

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

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

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

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.  Reclassifications from accumulated other comprehensive income are conducted on a specific identification method.

Loss Contingencies:  Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated.  Management does not believe there are any such matters that will have a material effect on the financial statements.  See Note 23 – 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, 2020 and December 31, 2019 was $0 and $5,164, respectively.  Cash on deposit with the FHLB includes $3,300 pledged as collateral for FHLB advances. 

Equity:  Treasury stock is carried at cost. Shares sold out of treasury are valued based on the weighted average cost.  The carrying value of preferred stock and common stock warrants is based on allocation of issuance proceeds, net of issuance costs, in proportion to their relative fair values. 

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

Fair Value of Financial Instruments:  Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed in Note 6 – Fair Value.  Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments, and other factors, especially in the absence of broad markets for particular items.  Changes in assumptions or in market conditions could significantly affect these estimates.

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

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 income or stockholders’ equity.

Future Accounting Matters:

In June 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.  Once effective, ASU 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 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 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 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.  In October 2019, the FASB voted to extend the implementation of ASU No. 2016-13 for certain financial institutions including smaller reporting companies.  As a result, ASU 2016-13 will be effective for the Company for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022.  While the Company generally expects that the implementation of ASU 2016-13 has the potential to increase its allowance for loan losses balance, the Company is continuing to evaluate the potential impact on the Company’s financial statements and disclosures.  Management has been running and evaluating various scenarios.  At this time, the estimated impact on the Company’s consolidated financial statements, including disclosures, cannot be reasonably determined.  

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. These amendments provide temporary optional guidance to ease the potential burden in accounting for reference rate reform. The ASU provides optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. It is intended to help stakeholders during the global market-wide reference rate transition period. The guidance is effective for all entities as of March 12, 2020 through December 31, 2022. The Company is implementing a transition plan to identify and modify its loans and other financial instruments with attributes that are either directly or indirectly influenced by LIBOR. The Company is assessing ASU 2020-04 and its impact on the Company's transition away from LIBOR for its loan and other financial instruments.

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Revenue Recognition

12 Months Ended

Dec. 31, 2020

Revenue Recognition [Abstract]

Revenue Recognition

NOTE 2- REVENUE RECOGNITION

Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers ("ASC 606"), establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity's contracts to provide goods or services to customers. The core principle requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized as performance obligations are satisfied.

The majority of our revenue-generating transactions are not subject to ASC 606, including revenue generated from financial instruments, such as our loans, letters of credit, derivatives and investment securities, as well as revenue related to our mortgage activities related to net gains on sale of loans.

All of the Company’s revenue from contracts with customers in the scope of ASC 606 is recognized within noninterest income.  Descriptions of our revenue-generating activities that are within the scope of ASC 606, which are presented in our income statements as components of noninterest income are as follows:

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

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Securities

12 Months Ended

Dec. 31, 2020

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, 2020 and December 31, 2019 and the corresponding amounts of unrealized gains and losses recognized in accumulated other comprehensive income (loss):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
December 31, 2020
Issued by U.S. government-sponsored entities and agencies:
U.S. Treasury	$	8,517	$	119	$	-	$	8,636
Mortgage-backed securities - residential		62		3		-		65
Total	$	8,579	$	122	$	-	$	8,701

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
December 31, 2019
Issued by U.S. government-sponsored entities and agencies:
U.S. Treasury	$	7,986	$	32	$	1	$	8,017
Mortgage-backed securities - residential		126		4		-		130
Collateralized mortgage obligations		27		-		-		27
Total	$	8,139	$	36	$	1	$	8,174

There was no other-than-temporary impairment recognized in accumulated other comprehensive income (loss) for securities available for sale at December 31, 2020 or December 31, 2019.

There were no sales of securities during the years ended December 31, 2020 or December 31, 2019.

The amortized cost and fair value of debt securities at December 31, 2020 and December 31, 2019 are shown in the table below by contractual maturity.  Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties.  Securities not due at a single maturity date are shown separately.

	December 31, 2020				December 31, 2019
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	5,011	$	5,033	$	5,001	$	5,000
Due from one to five years		3,506		3,603		2,985		3,017
Mortgage-backed securities - residential		62		65		126		130
Collateralized mortgage obligations		-		-		27		27
Total	$	8,579	$	8,701	$	8,139	$	8,174

Fair value of securities pledged was as follows:

	2020		2019
Pledged as collateral for:
FHLB advances	$	1,017	$	3,074
Public deposits		3,060		2,015
Mortgage banking derivatives		3,016		1,500
Interest-rate swaps		-		77
Total	$	7,093	$	6,666

At year end 2020 and 2019, 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.

There were no securities with unrealized losses at December 31, 2020.

The following table summarizes securities with unrealized losses at December 31, 2019 aggregated by major security type and length of time in a continuous unrealized loss position.

December 31, 2019	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 (1)	$	499	$	-	$	2,501	$	1	$	3,000	$	1
Total temporarily impaired	$	499	$	-	$	2,501	$	1	$	3,000	$	1

⁽¹⁾ Unrealized loss is less than $1 resulting in rounding to zero

The unrealized losses in U.S. Treasuries at December 31, 2019 were related to multiple securities.  Because the decline in fair value was attributable to changes in market conditions, and not credit quality, and because the Company did not have the intent to sell these securities and would unlikely be required to sell these securities before their anticipated recovery, the Company did not consider these securities to be other-than-temporarily impaired at December 31, 2019.

Equity securities totaled $5.0 million at December 31, 2020 and $0 at December 31, 2019.  The increase was due to a purchase of preferred stock during the fourth quarter of 2020.

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Loans And Leases

12 Months Ended

Dec. 31, 2020

Loans And Leases [Abstract]

Loans And Leases

NOTE 4 – LOANS AND LEASES

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

	December 31, 2020		December 31, 2019
Commercial (1)	$	338,286	$	170,646
Real estate:
Single-family residential		147,860		120,256
Multi-family residential		45,375		39,229
Commercial		277,028		247,543
Construction		80,426		67,652
Consumer:
Home equity lines of credit		20,962		20,941
Other		2,429		4,174
Subtotal		912,366		670,441
Less: ALLL		(17,022)		(7,138)
Loans and Leases, net	$	895,344	$	663,303

⁽¹⁾ Includes $4,133 and $4,779 of commercial leases at December 31, 2020 and December 31, 2019, respectively.

Included in Commercial loans at December 31, 2020, were $105,269 of loans originated under the Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”).  The Coronavirus Aid, Relief, and Economic Security Act of 2020, as amended (the “CARES Act”), authorized the SBA to temporarily guarantee PPP loans to provide funding to small businesses to pay certain payroll costs and benefits, and other expenses, during the COVID-19 pandemic.  These loans are 100% guaranteed by the SBA and the full principal amount of the loans may qualify for forgiveness.  The loans we originated have a maturity of two years, an interest rate of 1.00% and loan payments are deferred for the initial six months (which deferral period was subsequently extended to 10 months pursuant to the Paycheck Protection Program Flexibility Act of 2020).  The majority of these loans have been pledged as collateral on borrowings under the FRB Paycheck Protection Program Lending Facility (“PPPLF”).  See Note 10 - FHLB Advances and Other Debt for additional information.

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 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.  At December 31, 2020 and 2019, CFBank held $15,713 and $26,046, 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.

The following tables present the activity in the ALLL by portfolio segment for the years ended December 31, 2020 and 2019:

	December 31, 2020
			Real Estate								Consumer
	Commercial		Single-family		Multi-family		Commercial		Construction		Home Equity lines of credit		Other		Total
Beginning balance	$	2,054	$	948	$	447	$	2,604	$	759	$	265	$	61	$	7,138
Addition to (reduction in) provision for loan losses		2,005		745		20		6,580		1,495		15		55		10,915
Charge-offs		(648)		(425)		-		-		-		(21)		-		(1,094)
Recoveries		15		31		-		-		-		17		-		63
Ending balance	$	3,426	$	1,299	$	467	$	9,184	$	2,254	$	276	$	116	$	17,022

	December 31, 2019
			Real Estate								Consumer
	Commercial		Single-family		Multi-family		Commercial		Construction		Home Equity lines of credit		Other		Total
Beginning balance	$	1,819	$	1,061	$	612	$	2,274	$	739	$	410	$	97	$	7,012
Addition to (reduction in) provision for loan losses		235		(120)		(165)		225		20		(195)		-		-
Charge-offs		-		-		-		-		-		-		(36)		(36)
Recoveries		-		7		-		105		-		50		-		162
Ending balance	$	2,054	$	948	$	447	$	2,604	$	759	$	265	$	61	$	7,138

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, 2020:

			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	$	-	$	-	$	-	$	23	$	-	$	-	$	-	$	23
Collectively evaluated for impairment		3,426		1,299		467		9,161		2,254		276		116		16,999
Total ending allowance balance	$	3,426	$	1,299	$	467	$	9,184	$	2,254	$	276	$	116	$	17,022
Loans:
Individually evaluated for impairment	$	268	$	104	$	-	$	2,718	$	-	$	-	$	-	$	3,090
Collectively evaluated for impairment		338,018		147,756		45,375		274,310		80,426		20,962		2,429		909,276
Total ending loan balance	$	338,286	$	147,860	$	45,375	$	277,028	$	80,426	$	20,962	$	2,429	$	912,366

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, 2019:

			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	$	1	$	-	$	33	$	-	$	-	$	-	$	35
Collectively evaluated for impairment		2,053		947		447		2,571		759		265		61		7,103
Total ending allowance balance	$	2,054	$	948	$	447	$	2,604	$	759	$	265	$	61	$	7,138
Loans:
Individually evaluated for impairment		85	$	107	$	-	$	4,420	$	-	$	-	$	-	$	4,612
Collectively evaluated for impairment		170,561		120,149		39,229		243,123		67,652		20,941		4,174		665,829
Total ending loan balance	$	170,646	$	120,256	$	39,229	$	247,543	$	67,652	$	20,941	$	4,174	$	670,441

The following table presents loans individually evaluated for impairment by class of loans as of and for the year ended December 31, 2020. The unpaid principal balance is the contractual principal balance outstanding. The recorded investment is the unpaid principal balance adjusted for partial charge-offs, purchase premiums and discounts, deferred loan fees and costs. Cash payments of interest on these loans during the twelve months ended December 31, 2020 totaled $159.

	Unpaid Principal Balance		Recorded Investment		ALLL Allocated		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Real estate:
Commercial:
Owner occupied	$	-	$	-	$	-	$	-	$	-
Total with no allowance recorded		-		-		-		-		-
With an allowance recorded:
Commercial (1)		533		268		-		489		10
Real estate:
Single-family residential (1)		104		104		-		106		4
Commercial:
Non-owner occupied		2,718		2,718		23		2,728		150
Total with an allowance recorded		3,355		3,090		23		3,323		164
Total	$	3,355	$	3,090	$	23	$	3,323	$	164

⁽¹⁾ Allowance recorded is less than $1 resulting in rounding to zero

The following table presents loans individually evaluated for impairment by class of loans as of and for the year ended December 31, 2019. The unpaid principal balance is the contractual principal balance outstanding. The recorded investment is the unpaid principal balance adjusted for partial charge-offs, purchase premiums and discounts, deferred loan fees and costs. Cash payments of interest on these loans during the twelve months ended December 31, 2019 totaled $168.

	Unpaid Principal Balance		Recorded Investment		ALLL Allocated		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Real estate:
Commercial:
Owner occupied	$	-	$	-	$	-	$	111	$	6
Total with no allowance recorded		-		-		-		111		6
With an allowance recorded:
Commercial		85		85		1		92		-
Real estate:
Single-family residential		107		107		1		108		6
Commercial:
Non-owner occupied		4,420		4,420		33		4,194		154
Total with an allowance recorded		4,612		4,612		35		4,394		160
Total	$	4,612	$	4,612	$	35	$	4,505	$	166

The following table presents the recorded investment in nonperforming loans by class of loans as of December 31, 2020 and 2019:

	2020		2019
Loans past due over 90 days still on accrual	$	-	$	-
Nonaccrual loans:
Commercial		190		85
Real estate:
Single-family residential		421		550
Commercial:
Non-owner occupied		-		1,689
Consumer:
Home equity lines of credit:
Originated for portfolio		12		36
Purchased for portfolio		72		79
Other consumer		-		-
Total nonaccrual		695		2,439
Total nonperforming loans	$	695	$	2,439

Nonaccrual loans include both 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, 2020 or December 31, 2019.

The following table presents the aging of the recorded investment in past due loans and leases by class of loans as of December 31, 2020:

	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	$	-	$	-	$	-	$	-	$	338,286	$	190
Real estate:
Single-family residential		1,747		-		315		2,062		145,798		106
Multi-family residential		-		-		-		-		45,375		-
Commercial:
Non-owner occupied		-		78		-		78		159,835		-
Owner occupied		-		-		-		-		90,049		-
Land		-		-		-		-		27,066		-
Construction		-		-		-		-		80,426		-
Consumer:
Home equity lines of credit:
Originated for portfolio		-		-		-		-		20,773		12
Purchased for portfolio		-		-		46		46		143		26
Other		-		-		-		-		2,429		-
Total	$	1,747	$	78	$	361	$	2,186	$	910,180	$	334

The following table presents the aging of the recorded investment in past due loans and leases by class of loans as of December 31, 2019:

	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	$	-	$	71	$	-	$	71	$	170,575	$	85
Real estate:
Single-family residential		2,453		261		426		3,140		117,116		124
Multi-family residential		-		-		-		-		39,229		-
Commercial:
Non-owner occupied		-		-		1,689		1,689		138,762		-
Owner occupied		-		-		-		-		81,871		-
Land		-		-		-		-		25,221		-
Construction		304		-		-		304		67,348		-
Consumer:
Home equity lines of credit:
Originated for portfolio		-		-		22		22		20,713		14
Purchased for portfolio		-		-		-		-		206		79
Other		-		-		-		-		4,174		-
Total	$	2,757	$	332	$	2,137	$	5,226	$	665,215	$	302

Short-term Loan Deferrals

Under the CARES Act, financial institutions are permitted to not classify loan modifications as TDRs that were related to the impact of COVID-19 if:

· The modifications were made between March 1, 2020 and the earlier of December 31, 2020 or 60 days after the end of the public health emergency, and

· The underlying loans were not more than 30 days past due as of December 31, 2019.

We implemented a loan modification program in accordance with the CARES Act to provide temporary relief to borrowers that meet the requirements under the CARES Act.  The program allows for deferral of payments for up to 90 days, which we may extend for up to an additional 90 days at our option.  The deferred payments and accrued interest during the deferral period are due and payable on or before the maturity of the loans.  At December 31, 2020, loans with an outstanding balance of approximately $528 were on temporary deferrals. Under the provisions of the CARES Act, none of these loans were considered a TDR at December 31, 2020.

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, 2020 and December 31, 2019, TDR’s totaled $3,090 and $2,923, respectively.  The Company allocated $23 and $22 of specific reserves to loans modified in TDRs as of December 31, 2020 and 2019, respectively. The Company had not committed to lend any additional amounts as of December 31, 2020 or 2019 to customers with outstanding loans that were classified as nonaccrual TDRs.

During the year ended December 31, 2020, one commercial loan in the amount of $190 was modified as a TDR, where concessions were granted to a borrower experiencing financial difficulties. There were no loans modified as a TDR during the year ended December 31, 2019. 

The TDR described above resulted in a $264 charge off during the year ended December 31, 2020 and no charge-offs during the year ended December 31, 2019.

There were no TDR’s that went into payment default during the years ended December 31, 2020 and December 31, 2019.  

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, 2020 and 2019, nonaccrual TDRs were as follows: 

	2020		2019
Commercial	$	190	$	85
Total	$	190	$	85

Nonaccrual loans at December 31, 2020 and 2019 did not include $2,900 and $2,838, respectively, of TDRs where customers had established a sustained period of repayment performance, generally six months, the loans were current according to their modified terms and repayment of the remaining contractual payments was expected.  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 and leases by risk category and by class of loans as of December 31, 2020 and based on the most recent analysis performed follows.  

	Not Rated		Pass		Special Mention		Substandard		Doubtful		Total
Commercial	$	1	$	337,110	$	664	$	321	$	190	$	338,286
Real estate:
Single-family residential		147,439		-		-		421		-		147,860
Multi-family residential		-		45,249		-		126		-		45,375
Commercial:
Non-owner occupied		57		150,084		7,054		2,718		-		159,913
Owner occupied		-		87,636		1,537		876		-		90,049
Land		-		27,066		-		-		-		27,066
Construction		-		80,247		179		-		-		80,426
Consumer:
Home equity lines of credit:
Originated for portfolio		20,746		-		-		27		-		20,773
Purchased for portfolio		118		-		-		71		-		189
Other		2,429		-		-		-		-		2,429
	$	170,790	$	727,392	$	9,434	$	4,560	$	190	$	912,366

The recorded investment in loans and leases by risk category and class of loans as of December 31, 2019 follows.  There were no loans rated doubtful at December 31, 2019.

	Not Rated		Pass		Special Mention		Substandard		Total
Commercial	$	-	$	168,617	$	1,424	$	605	$	170,646
Real estate:
Single-family residential		119,707		-		-		549		120,256
Multi-family residential		-		39,081		-		148		39,229
Commercial:
Non-owner occupied		67		134,466		1,498		4,420		140,451
Owner occupied		-		79,773		2,098		-		81,871
Land		-		25,221		-		-		25,221
Construction		1,855		65,797		-		-		67,652
Consumer:
Home equity lines of credit:
Originated for portfolio		20,681		-		-		54		20,735
Purchased for portfolio		127		-		-		79		206
Other		4,174		-		-		-		4,174
	$	146,611	$	512,955	$	5,020	$	5,855	$	670,441

Leases:

The following lists the components of the net investment in direct financing leases (1):

	December 31, 2020		December 31, 2019
Total minimum lease payments to be received	$	4,459	$	5,252
Less: unearned income		(326)		(473)
Net investment in direct financing leases	$	4,133	$	4,779

⁽¹⁾ There were no initial direct costs associated with these leases

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

2021		793
2022		793
2023		1,563
2024		1,310
	$	4,459

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Foreclosed Assets

12 Months Ended

Dec. 31, 2020

Foreclosed Assets [Abstract]

Foreclosed Assets

NOTE 5 – FORECLOSED ASSETS

There were no foreclosed assets at December 31, 2020 and December 31, 2019.

There was no activity in the valuation allowance account or any write-downs during the years ended December 31, 2020 and 2019.

Expenses related to foreclosed assets include:

	2020		2019
Net loss (gain) on sales	$	-	$	(12)
Operating expenses, net of rental income		-		3
	$	-	$	(9)

Foreclosed asset expenses incurred during 2019 were related to maintenance expense to ready the property to sell.  

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Fair Value

12 Months Ended

Dec. 31, 2020

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).

TBA mortgage – back securities:  To mitigate the effect of the interest rate risk inherent in providing rate lock commitments to borrowers, the Company enters into either a forward sales contract to sell loans to investors when using best efforts or a trade of “to be announced (TBA)” mortgage-backed securities for mandatory delivery.  The forward sales contracts lock in a price for the sale of loans with similar characteristics to the specific rate lock commitments based on a valuation model using observable market data for pricing commitments (Level 2).

Impaired loans:  The fair value of 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). 

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, 2020 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	$	8,636
Mortgage-backed securities - residential		65
Total securities available for sale	$	8,701
Loans held for sale	$	283,165
Yield maintenance provisions (embedded derivatives)	$	1,944
Interest rate lock commitments	$	18,101
Financial Liabilities:
Interest-rate swaps	$	1,944
TBA mortgage-backed securities	$	2,690

	Fair Value Measurements at December 31, 2019 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	$	8,017
Mortgage-backed securities - residential		130
Collateralized mortgage obligations		27
Total securities available for sale	$	8,174
Loans held for sale	$	135,711
Yield maintenance provisions (embedded derivatives)	$	12
Interest rate lock commitments	$	3,104
Financial Liabilities:
Interest-rate swaps	$	12
TBA mortgage-backed securities	$	350

The Company had noassets or liabilities measured at fair value on a recurring basis that were measured using Level 1 or Level 3 inputs at December 31, 2020 or December 31, 2019.  There were no transfers of assets or liabilities measured at fair value between levels during 2020 or 2019.

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

Fair Value Measurements at December 31, 2020 Using
Significant Unobservable Inputs (Level 3)
Impaired loans:
Commercial	$	190
Total impaired loans	$	190

Fair Value Measurements at December 31, 2019 Using
Significant Unobservable Inputs (Level 3)
Impaired loans:
Commercial	$	84
Real Estate:
Single-family residential		106
Commercial:
Non-owner occupied		4,387
Total impaired loans	$	4,577

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, 2020 or December 31, 2019.

Impaired loans that are measured for impairment using the fair value of the collateral for collateral dependent loans, had a principal balance of $190, with a valuation allowance of $0 at December 31, 2020.  Impaired loans that are measured for impairment using the fair value of the collateral for collateral dependent loans, had a principal balance of $4,612 with a valuation allowance of $35 at December 31, 2019. 

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, 2020:

	Fair Value		Valuation Technique(s)	Unobservable Inputs	(Range) Weighted Average
Impaired loans:
Commercial	$	190	Comparable sales approach	Adjustment for differences between the stated value and net realizable value	65.00%

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, 2019:

	Fair Value		Valuation Technique(s)	Unobservable Inputs	(Range) Weighted Average
Impaired loans:
Commercial	$	84	Comparable sales approach	Adjustment for differences between the comparable market transactions	2.06%
Real estate:
Single -family residential		106	Comparable sales approach	Adjustment for differences between the comparable market transactions	3.61%
Commercial:
Non-owner occupied		4,387	Comparable sales approach	Adjustment for differences between the comparable market transactions	(-2.58%,  14.00%) 2.44%

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 of cost or market and are not included.  Interest income is recorded based on the contractual terms of the loan and in accordance with the Company’s policy on loans held for investment.  None of these loans were 90 days or more past due or on nonaccrual as of December 31, 2020 or December 31, 2019. 

As of December 31, 2020 and December 31, 2019, the aggregate fair value, contractual balance and gain or loss of loans held for sale were as follows:

	December 31, 2020		December 31, 2019
Aggregate fair value	$	283,165	$	135,711
Contractual balance		274,401		133,993
Gain		8,764		1,718

The total amount of gains and losses from changes in fair value included in earnings for the year ended December 31, 2020 and 2019 for loans held for sale were:

	2020		2019
Interest income	$	6,231	$	2,153
Interest expense		-		-
Change in fair value		7,046		1,341
Total change in fair value	$	13,277	$	3,494

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

	Fair Value Measurements at December 31, 2020 Using:
	Carrying
	Value		Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	221,594	$	221,594	$	-	$	-	$	221,594
Interest-bearing deposits in other financial institutions		100		100		-		-		100
Securities available for sale		8,701		-		8,701		-		8,701
Equity securities		5,000		-		-		5,000		5,000
Loans held for sale		283,165		-		283,165		-		283,165
Loans and leases, net		895,344		-		-		905,030		905,030
FHLB and FRB stock		5,847		n/a		n/a		n/a		n/a
Accrued interest receivable		4,584		1		36		4,547		4,584
Yield maintenance provisions (embedded derivatives)		1,944		-		1,944		-		1,944
Interest rate lock commitments		18,101		-		18,101		-		18,101
Financial liabilities
Deposits	$	(1,113,070)	$	(554,650)	$	(565,089)	$	-	$	(1,119,739)
FHLB advances and other debt		(214,426)		-		(215,531)		-		(215,531)
Advances by borrowers for taxes and insurance		(1,029)		-		-		(1,029)		(1,029)
Subordinated debentures		(14,844)		-		(16,325)		-		(16,325)
Accrued interest payable		(498)		-		(498)		-		(498)
Interest-rate swaps		(1,944)		-		(1,944)		-		(1,944)
TBA mortgage-backed securities		(2,690)		-		(2,690)		-		(2,690)

The carrying amounts and estimated fair values of financial instruments at December 31, 2019 were as follows:

	Fair Value Measurements at December 31, 2019 Using:
	Carrying
	Value		Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	45,879	$	45,879	$	-	$	-	$	45,879
Interest-bearing deposits in other financial institutions		100		100		-		-		100
Securities available for sale		8,174		-		8,174		-		8,174
Loans held for sale		135,711		-		135,711		-		135,711
Loans and leases, net		663,303		-		-		664,152		664,152
FHLB stock		4,008		n/a		n/a		n/a		n/a
Accrued interest receivable		2,749		25		40		2,684		2,749
Yield maintenance provisions (embedded derivatives)		12		-		12		-		12
Interest rate lock commitments		3,104		-		3,104		-		3,104
Financial liabilities
Deposits	$	(746,323)	$	(382,173)	$	(367,375)	$	-	$	(749,548)
FHLB advances and other debt		(29,017)		-		(29,669)		-		(29,669)
Advances by borrowers for taxes and insurance		(929)		-		-		(929)		(929)
Subordinated debentures		(14,806)		-		(15,940)		-		(15,940)
Accrued interest payable		(208)		-		(208)		-		(208)
Interest-rate swaps		(12)		-		(12)		-		(12)
TBA mortgage-backed securities		(350)		-		(350)		-		(350)

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

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

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

Equity Securities

Equity securities without a readily determinable fair value are held at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.  For equity securities measured under the practicability exception under Accounting Standards Update (“ASU”) 2016-01, the Company performs a qualitative assessment for equity securities without readily determinable fair values considering impairment indicators to evaluate whether an impairment exists.  If an impairment exists, the Company will recognize a loss based on the difference between carrying value and fair value.  This method results in a Level 3 classification.

FHLB and FRB Stock

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

Loans and Leases

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

Deposits

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

FHLB Advances and Other Debt

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

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

Accrued Interest Receivable/Payable

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

Advances by Borrowers for Taxes and Insurance

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

Off-Balance-Sheet Instruments

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

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Loan Servicing

12 Months Ended

Dec. 31, 2020

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, 2020		December 31, 2019
Mortgage loans serviced for Freddie Mac	$	1,875	$	2,649

Custodial escrow balances maintained in connection with serviced loans were $94 and $59 at year-end 2020 and 2019, respectively. 

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Premises And Equipment And Operating Leases

12 Months Ended

Dec. 31, 2020

Premises And Equipment And Operating Leases [Abstract]

Premises And Equipment And Operating Leases

NOTE 8- PREMISES AND EQUIPMENT AND OPERATING LEASES

Year-end premises and equipment were as follows:

	December 31, 2020		December 31, 2019
Land and land improvements	$	1,293	$	1,293
Buildings		4,140		4,294
Furniture, fixtures and equipment		2,971		2,729
		8,404		8,316
Less: accumulated depreciation		(4,674)		(4,325)
	$	3,730	$	3,991

Depreciation expense for 2020 and 2019 totaled $381 and $316, respectively.

Operating Leases:

A lease is defined as a contract, or part of a contract, that conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. On January 1, 2019, the Company adopted ASU No. 2016-02, Leases (Topic 842) and all subsequent ASUs that modified Topic 842. For the Company, Topic 842 primarily affected the accounting treatment for operating lease agreements in which the Company is the lessee.

The leases in which the Company is the lessee are comprised of real estate property for branches and offices and for equipment with terms extending through 2024. All of our leases are classified as operating leases, and therefore, were previously not recognized on the Company’s consolidated balance sheets. With the adoption of Topic 842, operating lease agreements are required to be recognized on the consolidated balance sheets as a right-of-use (“ROU”) asset and a corresponding operating lease liability.  The Company does not have any leases classified as finance leases.

The calculated amounts of the ROU assets and lease liabilities are impacted by the length of the lease term and the discount rate used to present value the minimum lease payments. The Company’s lease agreements often include one or more options to renew at the Company’s discretion which were considered, as applicable, in the calculation of the ROU assets and lease liabilities.  If at lease inception, the Company considers the exercising of a renewal option to be reasonably certain, the Company will include the extended term in the calculation of the ROU asset and lease liability. Regarding the discount rate, Topic 842 requires the use of the rate implicit in the lease whenever this rate is readily determinable. As this rate is not readily determinable in our operating leases, the Company utilizes its incremental borrowing rate at lease inception, on a collateralized basis, over a similar term.  At December 31, 2020, the weighted-average remaining lease term for the Company’s operating leases was 3.3 years and the weighted-average discount rate was 6.59%.

The Company’s operating lease costs were $393 and $404 for the years ended December 31, 2020 and December 31, 2019, respectively.  The variable lease costs totaled $244 and $231 for the years ended December 31, 2020 and  December 31, 2019, respectively. As the Company elected not to separate lease and non-lease components for all classes of underlying assets and instead to account for them as a single lease component, the variable lease cost primarily represents variable payments such as common area maintenance and utilities.

Future minimum operating lease payments as of December 31, 2020 are as follows:

2021	$	548
2022		536
2023		377
2024		250
Thereafter		-
Total future minimum rental commitments		1,711
Less - amounts representing interest		(179)
Total operating lease liabilities	$	1,532

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Deposits

12 Months Ended

Dec. 31, 2020

Deposits [Abstract]

Deposits

NOTE 9 – DEPOSITS

Time deposits of $100 or more were $461,401 and $294,452 at year-end 2020 and 2019, respectively.  Time deposits of $250 or more were $244,840 and $148,473 at year-end 2020 and 2019, respectively.

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

2021	$	358,512
2022		143,458
2023		36,680
2024		19,671
2025		99
Thereafter		-
Total	$	558,420

Brokered deposits at year-end 2020 and 2019 totaled $168,708 and $124,884, respectively.   

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FHLB Advances And Other Debt

12 Months Ended

Dec. 31, 2020

FHLB Advances And Other Debt [Abstract]

FHLB Advances And Other Debt

NOTE 10 –FHLB ADVANCES AND OTHER DEBT

FHLB advances and other debt were as follows:

	Weighted
	Average Rate	December 31, 2020		December 31, 2019
FHLB fixed rate advances
Maturities:
2020			-		4,500
2021	1.63%		7,500		4,000
2022	1.16%		10,000		1,500
2023	0.92%		3,500		6,500
2024	1.90%		6,500		-
Total FHLB fixed rate advances			27,500		16,500
Fixed rate other debt:
FRB PPPLF advances	0.35%		107,413		-
Variable rate other debt:
Holding Company credit facility	4.00%		9,500		5,000
Warehouse facility	3.50%		70,013		7,517
Total variable rate other debt			79,513		12,517
Total		$	214,426	$	29,017

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

The advances were collateralized as follows:

	December 31, 2020		December 31, 2019
Single-family mortgage loans	$	87,076	$	79,144
Multi-family mortgage loans		10,970		21,258
Commercial real estate loans (1-4 family)		5,750		6,639
Home equity lines of credit		2,838		5,028
Securities		1,017		3,074
Cash		3,300		3,300
Total	$	110,951	$	118,443

Based on the collateral pledged to the FHLB, CFBank was eligible to borrow up to a total of $81,409 from the FHLB at December 31, 2020.

Payments due on FHLB advances and other debt over the next five years are as follows:
	December 31, 2020
2021	$	78,013
2022		126,413
2023		3,500
2024		6,500
2025		-
	$	214,426

The Holding Company has a term loan in the original principal amount of $5,000 with an additional $10,000 revolving line-of-credit with a third-party bank.  The term loan requires quarterly principal payments of $125 plus accrued interest.  Any remaining principal is due and payable on the maturity date, which is December 23, 2022.  Loans under the credit facility bear interest at a rate equal to the Prime Rate plus 0.75%.  The purpose of the credit facility is to provide an additional source of liquidity for the Holding Company and to provide funds for the Holding Company to downstream as additional capital to CFBank to support growth.  As of December 31, 2020, the Company had an outstanding balance of $4,500 on the term loan and a $5,000 outstanding balance on the revolving line-of-credit.  At December 31, 2019, the term loan had an outstanding balance of $5,000 and no outstanding balance on the line of credit facility.

At December 31, 2020, CFBank had availability in unused lines of credit at two commercial banks in amounts of $50,000 and $15,000.  There were no outstanding borrowings on either line at December 31, 2020 and December 31, 2019.  Interest on any principal amounts outstanding from time to time under these lines accrues daily at a variable rate based on the commercial bank’s cost of funds and current market returns.

During the fourth quarter of 2019, CFBank entered into a $25,000 warehouse facility with a commercial bank.  The warehouse facility is used to periodically fund loans held for sale from the close (funding) date until they are sold in the secondary market.  Borrowings on the facility bear interest at the greater of 30 Day Libor plus 2.00% or 4.00% and are secured by the specific loans that were funded.  This warehouse facility had an no outstanding balance at December 31, 2020 and an outstanding balance of $7,517 at December 31,2019.

During the second quarter of 2020, CFBank entered into an additional $75,000 warehouse facility with a commercial bank.  The warehouse facility is used to periodically fund loans held for sale from the close (funding) date until they are sold in the secondary market.  Borrowings on the facility bear interest at the greater of (a) the 30-day LIBOR plus 1.75% or (b) 3.50% and are secured by the specific loans that were funded.  This warehouse facility had an outstanding balance of $70,013 at December 31, 2020, and no outstanding balance at December 31, 2019.

To support the effectiveness of the PPP, the Federal Reserve Board (the “FRB”) introduced the PPPLF to extend credit to financial institutions that made PPP loans, with the related PPP loans used as collateral on the borrowings.  The PPPLF borrowings have a fixed interest rate of 0.35% and a maturity equal to the maturity date of the related PPP loans, with the PPP loans maturing two years from the origination date of the PPP loan.  If a PPP loan pays off early, the corresponding PPPLF borrowing must be paid off as well.  At December 31, 2020, the Company’s PPP loans and related PPPLF funding had a weighted average life of approximately 1.2 years.  At December 31, 2020, the principal balance of PPPLF advances outstanding was $107,413.  

Other than the PPPLF borrowing, there were no outstanding borrowings with the FRB at December 31, 2020.  There were no outstanding borrowings with the FRB at December 31, 2019.

Assets pledged as collateral with the FRB were as follows:

	2020		2019
Commercial loans	$	39,914	$	38,317
Commercial real estate loans		85,655		77,733
	$	125,569	$	116,050

Based on the collateral pledged, CFBank was eligible to borrow up to $81,508 from the FRB at year-end 2020.

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Subordinated Debentures

12 Months Ended

Dec. 31, 2020

Subordinated Debentures [Abstract]

Subordinated Debentures

NOTE 11 – SUBORDINATED DEBENTURES

2003 Subordinated Debentures:

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

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

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 3.09% at year-end 2020 and 4.81% at year-end 2019.

2018 Fixed-to-floating rate subordinated notes:

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

The Notes initially bear interest at 7.00%, from and including December 20, 2018, to but excluding December 30, 2023, payable semi-annually in arrears on June 30 and December 30 of each year. From and including December 30, 2023, to but excluding December 30, 2028 or the earlier redemption of the notes, the interest rate will reset quarterly to an interest rate equal to the then current three-month LIBOR (but not less than zero) plus 4.14%, payable quarterly in arrears on March 30, June 30, September 30, and December 30 of each year.  The Holding Company may, at its option, redeem the notes beginning on December 30, 2023 and on any scheduled interest payment date thereafter.  After payment of approximately $388 of debt issuance costs, the Holding Company’s net proceeds were approximately $9,612.  At December 31, 2020, the balance of the subordinated notes, net of unamortized debt issuance costs, was $9,689.

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Benefit Plans

12 Months Ended

Dec. 31, 2020

Benefit Plans [Abstract]

Benefit Plans

NOTE 12 – BENEFIT PLANS

Multi-employer pension plan:

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

The unfunded liability under the Pentegra DB Plan at June 30, 2020 totaled $104 and at June 30, 2019 was $110.  CFBank’s contributions for the plan years ending June 30, 2020 and June 30, 2019, totaled $29 and $59, 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, 2020 and 2019 was 90.19% and 89.69%, respectively. 

Total contributions made to the Pentegra DB Plan, as reported on Form 5500 of the Pentegra DB Plan, totaled $138,322 and $164,570 for the plan years ended June 30, 2019 and June 30, 2018, 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 50% of the first 6% of the compensation contributed.  Total expense for matching contributions for 2020 and 2019 was $293 and $188, 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 $7 and $8 in 2020 and 2019, respectively. The accrual is included in accrued interest payable and other liabilities in the consolidated balance sheets and totaled $152 at year-end 2020 and $170 at year-end 2019. 

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 ($16) and ($12) in 2020 and 2019, 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 $154 at year-end 2020 and $171 at year-end 2019. 

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Income Taxes

12 Months Ended

Dec. 31, 2020

Income Taxes [Abstract]

Income Taxes

NOTE 13 – INCOME TAXES

Income tax expense was as follows:

	December 31, 2020		December 31, 2019
Current federal	$	9,720	$	2,627
Deferred federal (1)		(3,045)		(187)
Total	$	6,675	$	2,440

⁽¹⁾ Includes tax benefit of operating loss carryforwards of $34 and $34 for the years ended December 31, 2020 and 2019, respectively.

Effective tax rates differ from the federal statutory rate of 21% for 2020 and 2019 applied to income before income taxes due to the following:

	December 31, 2020		December 31, 2019
Federal statutory rate times financial statement income	$	7,619	$	2,529
Effect of:
Stock compensation		(19)		(18)
Bank owned life insurance income		(30)		(30)
Historic tax credits		(807)		-
Low income housing tax credits		(106)		(59)
Other		18		18
	$	6,675	$	2,440
Effective tax rate		18%		20%

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

	2020		2019
Deferred tax assets:
Allowance for loan and lease losses	$	3,407	$	1,170
Compensation related issues		1,815		433
Deferred loan fees		293		-
Nonaccrual interest		57		55
Net operating loss carry forward		398		432
Operating lease liabilities		322		412
		6,292		2,502
Deferred tax liabilities:
FHLB stock dividend		226		226
Deferred loan costs		-		7
Depreciation		15		73
Operating lease right-of-use assets		291		374
Unrealized mark-to-market gain		935		32
Other		2		4
Prepaid expenses		76		65
		1,545		781
Net deferred tax asset	$	4,747	$	1,721

At December 31, 2020, the Company had a deferred tax asset recorded of approximately $4,700.  At December 31, 2019, the Company had a deferred tax asset recorded of approximately $1,700.  At December 31, 2020 and December 31, 2019, 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 2017. 

Our deferred tax assets are composed of U.S. net operating losses (“NOLs”), and other temporary book to tax differences.  When determining the amount of deferred tax assets that are more-likely-than-not to be realized, and therefore recorded as a benefit, the Company conducts a regular assessment of all available information. This information includes, but is not limited to, taxable income in prior periods, projected future income and projected future reversals of deferred tax items.  Based on these criteria, the Company determined as of December 31, 2020 that no valuation allowance was required against the net deferred tax asset.

In 2012, a recapitalization program through the sale of $22,500 in common stock improved the capital levels of CFBank and provided working capital for the Holding Company.  The result of the change in stock ownership associated with the stock offering, however, was that the Company incurred an ownership change within the guidelines of Section 382 of the Internal Revenue Code of 1986.  At year-end 2020, the Company had net operating loss carryforwards of $22,416, which expire at various dates from 2024 to 2032.  As a result of the ownership change, the Company's ability to utilize carryforwards that arose before the 2012 stock offering closed is limited to $163 per year.  Due to this limitation, management determined it is more likely than not that $20,520 of net operating loss carryforwards will expire unutilized.  As required by accounting standards, the Company reduced the carrying value of deferred tax assets, and the corresponding valuation allowance, by the $6,977 tax effect of this lost realizability.

Federal income tax laws provided additional deductions, totaling $2,250, for thrift bad debt reserves established before 1988.  Accounting standards do not require a deferred tax liability to be recorded on this amount, which otherwise would have totaled $473 at year-end 2020.  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. 

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Related-Party Transactions

12 Months Ended

Dec. 31, 2020

Related-Party Transactions [Abstract]

Related-Party Transactions

NOTE 14 – RELATED-PARTY TRANSACTIONS

Loans to principal officers, directors and their affiliates during 2020 and 2019 were as follows:

	Year ended December 31,
	2020		2019
Beginning balance	$	6,113	$	3,672
New loans		4,193		3,062
Repayments		(29)		(621)
Ending balance	$	10,277	$	6,113

All loans to related parties were made by CFBank in the ordinary course of business under terms equivalent to those prevailing in the market for arm’s length transactions at the time of origination. 

Deposits from principal officers, directors, and their affiliates totaled $3,844 and $976 at year-end 2020 and 2019, respectively.

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Stock-Based Compensation

12 Months Ended

Dec. 31, 2020

Stock-Based Compensation [Abstract]

Stock-Based Compensation

NOTE 15 – STOCK-BASED COMPENSATION

The Company has two stock-based compensation plans (collectively, the “Plans”), as described below, under which awards are outstanding or may be granted in the future.  Total compensation cost that has been charged against income for those Plans totaled $711 and $527 for 2020 and 2019, respectively.  The total income tax benefit was $149 and $111 for 2020 and 2019, respectively.

Both Plans are stockholder-approved and authorize stock option grants and restricted stock awards to be made to directors, officers and employees.  The 2009 Equity Compensation Plan (the “2009 Plan”), which was approved by stockholders on May 21, 2009, replaced the Company’s 2003 equity compensation plan (the “2003 Plan”) and provided for 36,363 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 272,727.  The 2019 Equity Incentive Plan (the “2019 Plan”), which was approved by stockholders on May 29, 2019, authorizes up to 300,000 shares (plus any shares that are subject to grants under the 2009 Plan and that are later forfeited or expire), to be awarded as stock option grants, stock appreciation rights, restricted stock awards or restricted stock units.

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 during the years ended December 31, 2020 and December 31, 2019.  There were 4,545 options exercised during the year ended December 31, 2020 and no options exercised during the year ended December 31, 2019.

A summary of stock option activity in the Plans for 2020 follows:

	Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Intrinsic Value
Outstanding at beginning of year	95,438	$	7.64
Exercised	(4,545)		7.98
Expired	(437)		17.33
Cancelled or forfeited	(14)		17.33
Outstanding at end of period	90,442	$	7.57	2.4	$	915
Exercisable at end of period	90,442	$	7.57	2.4	$	915

During the year ended December 31, 2020, stock options to purchase a total of 451 common shares were canceled, forfeited or expired.  Stock options to purchase a total of 941 common shares were cancelled, forfeited or expired during the year ended December 31, 2019.   Expense associated with unvested forfeited shares is reversed.  As of December 31, 2020 and 2019, 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 19,660 shares of restricted stock granted in 2020 and 73,738 shares of restricted stock granted in 2019. 

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, 2020	102,916	$	13.11
Granted	19,660		10.02
Vested	(55,877)		13.18
Forfeited	(6,897)		12.35
Nonvested at December 31, 2020	59,802	$	12.12

As of December 31, 2020 and 2019, the unrecognized compensation cost related to nonvested shares granted under the Plans was $623 and $1,221, respectively.  

There were 55,877 shares that vested during the year ended December 31, 2020 and 36,288 shares that vested during the year ended December 31, 2019.  There were 6,897 and 3,858 shares of restricted stock forfeited during the years ended December 31, 2020 and December 31, 2019, respectively.

The 2009 Plan terminated in accordance with its terms on March 19, 2019 and, as a result, no further awards may be granted under the 2009 Plan.  There were 251,014 shares remaining available for awards of stock option grants, stock appreciation rights, restricted stock awards or restricted stock units under the 2019 Plan at December 31, 2020. 

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Preferred Stock

12 Months Ended

Dec. 31, 2020

Preferred Stock [Abstract]

Preferred Stock

NOTE 16 – 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 “2014 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.  After payment of approximately $482 in placement fees 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 issued, at no additional charge, a Warrant to purchase common stock of the Company.  See Note 17-Common Stock Warrants for additional information.

Conversion of Series B Preferred Stock to Common Stock:

On September 29, 2017, the Company announced the conversion of its Series B Preferred Stock into shares of Common Stock of the Company.  The conversion was effective October 6, 2017, and resulted in the conversion of all 480,000 of the Company’s issued and outstanding shares of Series B Preferred Stock into approximately 6,857,143 shares of Common Stock (prior to the 1-for-5.5 reverse stock split effective August 20, 2018), or approximately 1,246,753 shares of Common Stock on a post-reverse-split basis.

The conversion of the Series B Preferred Stock resulted in the elimination of the non-cumulative preferred dividend payments on the Series B Preferred Stock in the aggregate amount of approximately $188 quarterly ($750 annually) beginning with the 4th quarter of 2017.

Series C Preferred Stock:

On October 25, 2019, the Company entered into a Securities Purchase Agreement with certain accredited investors in a private placement for an aggregate offering price of approximately $25 million, pursuant to which on October 31, 2019, the Holding Company sold (i) 849,615 shares of the Company’s common stock, at a purchase price of $12.00 per share and (ii) 12,337 shares of a new series of the Company’s non-voting convertible perpetual preferred stock, series C, par value $0.01 per share (the “Series C Preferred Stock”), at a purchase price of $1,200.00 per share. 

Each share of Series C Preferred Stock was convertible either (i) automatically into 100 shares of the Company’s non-voting common stock, par value $0.01 per share (which is also convertible into Common Stock) (the “Non-Voting Common Stock”), effective as of the close of business on the date that the Company obtained stockholder approval for, and filed, a Certificate of Amendment to the Company’s Certificate of Incorporation to authorize such class of Non-Voting Common Stock; or (ii) unless previously converted into shares of Non-Voting Common Stock, into 100 shares of the Company’s common stock upon transfer of such shares of Series C Preferred Stock to a non-affiliate of the holder in specified permitted transactions.

On March 30, 2020, the Company entered into an Exchange Agreement providing for the exchange of 27,000 of the shares of common stock purchased in the private placement for 270 additional shares of Series C Preferred Stock (at the Series C Preferred Stock’s current conversion ratio of 100 shares of common stock for each share of Series C Preferred Stock).  The exchange of common stock for Series C Preferred Stock was effected in order to accommodate and facilitate the Company’s stock repurchase program announced on March 13, 2020.  The exchange resulted in an increase in the number of outstanding shares of Series C Preferred Stock from 12,337 to 12,607.

Conversion of Series C Preferred Stock to Non-Voting Common Stock:

On May 27, 2020, an amendment to the Company’s Certificate of Incorporation, as amended (the “Certificate of Incorporation”), to authorize a separate class of Non-Voting Common Stock was approved by the stockholders of the Company at the Company’s 2020 annual meeting of stockholders.  On May 28, 2020, the Company filed with the Delaware Secretary of State a Certificate of Amendment to the Company’s Certificate of Incorporation to authorize 1,260,700 shares of Non-Voting Common Stock. Effective as of the close of business on May 28, 2020, all 1,260,700 authorized shares of Non-Voting Common Stock were issued upon conversion of the 12,607 outstanding shares of the Company’s Series C Preferred Stock. Pursuant to the terms of the Series C Preferred Stock, each outstanding share of Series C Preferred Stock converted automatically into 100 shares of Non-Voting Common Stock at such time.

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Common Stock Warrants

12 Months Ended

Dec. 31, 2020

Common Stock Warrants [Abstract]

Common Stock Warrants

NOTE 17 – COMMON STOCK WARRANTS

Series B Preferred Stock – Warrants:

For each share of Series B Preferred Stock issued by the Company in the 2014 Private Placement, the Company also issued, at no additional charge, a Warrant to purchase shares of common stock of the Company.  Warrants to purchase an aggregate of 1,152,125 shares of common stock (or 209,477 shares on a post-reverse-split basis) were issued by the Company to the purchasers of the 480,000 shares of Series B Preferred Stock sold in the Private Placement.  The Warrants were exercisable for a period of approximately five (5) years expiring on July 15, 2019, at an exercise price of $10.18 (on a post-reverse-split basis) per share of common stock.  As of December 31, 2020 and December 31, 2019, there were no outstanding warrants as all of the unexercised warrants expired on July 15, 2019.

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Regulatory Capital Matters

12 Months Ended

Dec. 31, 2020

Regulatory Capital Matters [Abstract]

Regulatory Capital Matters

NOTE 18 – 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 was phased in over time, became fully effective on January 1, 2019, and consists 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 were fully phased in effective 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”).  CFBank’s implementation of the new rules on January 1, 2015 did not have a material impact on our capital needs or classification.

The Basel III Capital Rules require CFBank to maintain: 1) a minimum ratio of Common Equity Tier 1 capital to risk-weighted assets of 4.5%, plus a 2.5% “capital conservation buffer” (resulting in a minimum ratio of Common Equity Tier 1 capital to risk-weighted assets of 7.0% 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 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 the 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 capital conservation buffer is designed to absorb losses during periods of economic stress.  Failure to maintain the minimum Common Equity Tier 1 capital ratio plus the capital conservation buffer will result in potential restrictions on a banking institution’s ability to pay dividends, repurchase stock and/or pay discretionary compensation to its employees.

The following tables present actual and required capital ratios as of December 31, 2020 and December 31, 2019 for CFBank under the Basel III Capital Rules.  Capital levels required to be considered well capitalized are based upon prompt corrective action regulations, as amended to reflect the changes under the Basel III Capital Rules.

	Actual			Minimum Capital Required-Basel III Fully Phased-In			To Be Well Capitalized Under Applicable Regulatory Capital Standards
	Amount		Ratio	Amount		Ratio	Amount		Ratio
December 31, 2020
Total Capital to risk weighted assets	$	136,683	14.31%	$	100,298	10.50%	$	95,522	10.00%
Tier 1 (Core) Capital to risk weighted assets		124,678	13.05%		81,194	8.50%		76,418	8.00%
Common equity tier 1 capital to risk-weighted assets		124,678	13.05%		66,866	7.00%		62,089	6.50%
Tier 1 (Core) Capital to adjusted total assets (Leverage ratio)		124,678	9.74%		51,187	4.00%		63,984	5.00%

	Actual			Minimum Capital Required-Basel III Fully Phased-In			To Be Well Capitalized Under Applicable Regulatory Capital Standards
	Amount		Ratio	Amount		Ratio	Amount		Ratio
December 31, 2019
Total Capital to risk weighted assets	$	95,164	12.96%	$	77,097	10.50%	$	73,425	10.00%
Tier 1 (Core) Capital to risk weighted assets		87,857	11.97%		62,412	8.50%		58,740	8.00%
Common equity tier 1 capital to risk-weighted assets		87,857	11.97%		51,398	7.00%		47,726	6.50%
Tier 1 (Core) Capital to adjusted total assets (Leverage ratio)		87,857	10.58%		33,221	4.00%		41,526	5.00%

CFBank converted from a mutual to a stock institution in 1998, and a “liquidation account” was established with an initial balance of $14,300, which was the net worth reported in the conversion prospectus. The liquidation account represents a calculated amount for the purposes described below, and it does not represent actual funds included in the consolidated financial statements of the Company.  Eligible depositors who have maintained their accounts, less annual reductions to the extent they have reduced their deposits, would be entitled to a priority distribution from this account if CFBank liquidated and its assets exceeded its liabilities. Dividends may not reduce CFBank’s stockholder’s equity below the required liquidation account balance.

Dividend Restrictions:

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

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

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Derivative Instruments

12 Months Ended

Dec. 31, 2020

Derivative Instruments [Abstract]

Derivative Instruments

NOTE 19 – 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 $46,474 at December 31, 2020 and $12,039 at December 31, 2019.

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. 

The counterparty to CFBank’s interest-rate swaps is exposed to credit risk whenever the interest-rate swaps are in a liability position.  At December 31, 2020, CFBank had $2,392 in securities and cash pledged as collateral for these derivatives. Should the liability increase beyond the collateral value, CFBank may be required to pledge additional collateral. 

Additionally, CFBank’s interest-rate swap instruments contain provisions that require CFBank to remain well capitalized under regulatory capital standards and to comply with certain other regulatory requirements.  The interest-rate swaps may be called by the counterparty if CFBank fails to maintain well-capitalized status under regulatory capital standards or becomes subject to certain adverse regulatory events such as a regulatory cease and desist order.  As of December 31, 2020, CFBank was well-capitalized under regulatory capital standards and was not subject to any adverse regulatory events specified in CFBank’s interest-rate swap instruments.

Summary information about the derivative instruments is as follows:

	2020		2019
Notional amount	$	46,474	$	12,039
Weighted average pay rate on interest-rate swaps		4.19%		4.66%
Weighted average receive rate on interest-rate swaps		3.08%		4.63%
Weighted average maturity (years)		7.4		7.3
Fair value of interest-rate swaps	$	(1,944)	$	(12)
Fair value of yield maintenance provisions	$	1,944	$	12

As of December 31, 2020, CFBank had minimum collateral posting thresholds with certain of its interest-rate swap counterparties and has posted cash collateral of $2,392.

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 2020 or 2019.

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 $1,048,613 and $297,454 of interest rate lock commitments related to residential mortgage loans at December 31, 2020 and December 31, 2019, respectively.  The fair value of these mortgage banking derivatives was reflected by a derivative asset of $18,100 and $3,104 at December 31, 2020 and December 31, 2019, 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.

Mortgage banking activities include two types of commitments: rate lock commitments and forward loan commitments. Rate lock commitments are loans in our pipeline that have an interest rate locked with the customer. The commitments are generally for periods of 30-60 days and are at market rates. In order to mitigate the effect of the interest rate risk inherent in providing rate lock commitments, we economically hedge our commitments by entering into either a forward loan sales contract under best efforts or a trade of “to be announced (TBA)” mortgage-backed securities (“notional securities”) for mandatory delivery. The Company had approximately $506,750 and $225,500 of TBA mortgage-backed securities at December 31, 2020 and December 31, 2019, respectively.  The fair value of these TBA mortgage-backed securities was ($2,690) and ($350) at December 31, 2020 and December 31, 2019, respectively, which is included in other liabilities on the consolidated balance sheet.  The changes in fair value related to movements in market rates of the rate lock commitments and the forward loan sales contracts and notional securities generally move in opposite directions, and the net impact of changes in these valuations on net income during the loan commitment period is generally inconsequential. The Company has not formally designated these derivatives as a qualifying hedge relationship and, accordingly, accounts for such forward contracts as freestanding derivatives with changes in fair value recorded to earnings each period.

The following table reflects the amount and market value of mortgage banking derivatives included in the consolidated balance sheet as of the period end:

	December 31, 2020				December 31, 2019
	Notional Amount		Fair Value		Notional Amount		Fair Value
Assets (Liabilities):
Interest rate commitments	$	1,048,613	$	18,100	$	297,454	$	3,104
TBA mortgage-back securities		506,750		(2,690)		225,500		(350)

As of December 31, 2020, CFBank had minimum collateral posting thresholds with certain of its derivative counterparties and has posted cash collateral of $4,847.

The following table represents the notional amount of loans sold during the years ended December 31, 2020 and 2019:

	2020		2019
Notional amount of loans sold	$	2,229,042	$	411,257

The following table represents the revenue recognized on mortgage activities for the years ended December 31, 2020 and 2019:

	December 31, 2020		December 31, 2019
Gain on loans sold		61,146		9,603
Gain (loss) from change in fair value of loans held-for-sale		7,046		1,341
Gain (loss) from change in fair value of derivatives		(9,895)		(490)
	$	58,297	$	10,454

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Loan Commitments And Other Related Activities

12 Months Ended

Dec. 31, 2020

Loan Commitments And Other Related Activities [Abstract]

Loan Commitments And Other Related Activities

NOTE 20 – 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:

	2020				2019
	Fixed Rate		Variable Rate		Fixed Rate		Variable Rate
Commitments to make loans	$	1,072,963	$	31,239	$	314,705	$	43,979
Unused lines of credit	$	20,395	$	65,788	$	10,678	$	55,684
Standby letters of credit	$	3,997	$	-	$	1,415	$	-

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 2.00% to 6.50% and maturities ranging from 1 months to 30 years at December 31, 2020. The fixed-rate loan commitments had interest rates ranging from 2.00% to 8.75%and maturities ranging from 3 months to 30 years at December 31, 2019.

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Parent Company Only Condensed Financial Information

12 Months Ended

Dec. 31, 2020

Parent Company Only Condensed Financial Information [Abstract]

Parent Company Only Condensed Financial Information

NOTE 21 – PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION

Condensed financial information of CF Bankshares Inc. follows:

	2020		2019
Assets
Cash and cash equivalents	$	1,785	$	10,037
Equity securities		5,000		-
Investment in banking subsidiary		125,172		88,317
Investment in and advances to other subsidiary		241		238
Other assets		2,533		2,045
Total assets	$	134,731	$	100,637
Liabilities and Equity
Subordinated debentures	$	14,844	$	14,806
Other borrowings		9,500		5,000
Accrued expenses and other liabilities		177		167
Stockholders' equity		110,210		80,664
Total liabilities and stockholders' equity	$	134,731	$	100,637

	2020		2019
Interest income	$	-	$	-
Other income		178		70
Interest expense		1,209		1,353
Other expense		830		758
Loss before income tax and before undistributed subsidiary income		(1,861)		(2,041)
Tax effect		390		427
Loss after income tax and before undistributed subsidiary income		(1,471)		(1,614)
Equity in undistributed subsidiary income		31,079		11,215
Net income	$	29,608	$	9,601
Comprehensive income	$	29,676	$	9,702

	2020		2019
Cash flows from operating activities
Net Income	$	29,608	$	9,601
Adjustments:
Effect of subsidiaries' operations		(31,079)		(11,215)
Amortization, net		38		39
Change in other assets and other liabilities		(480)		(939)
Net cash used by operating activities		(1,913)		(2,514)
Cash flows from investing activities
Investments in banking subsidiary		(5,000)		(14,000)
Purchase of equity securities		(5,000)		-
Net cash used by investing activities		(10,000)		(14,000)
Cash flows from financing activities
Proceeds from other borrowings		15,000		4,000
Repayments of other borrowings		(10,500)		(5,000)
Net proceeds from the issuance of preferred stock private placement		-		14,000
Net proceeds from the issuance of common stock private placement		-		9,641
Proceeds from exercise of stock options		36		-
Acquisition of treasury shares surrendered upon vesting of restricted stock for payment of taxes		(32)		(23)
Purchase of treasury shares		(648)		-
Exercise of warrants to common stock		-		1,258
Dividends paid		(195)		-
Net cash from financing activities		3,661		23,876
Net change in cash and cash equivalents		(8,252)		7,362
Beginning cash and cash equivalents		10,037		2,675
Ending cash and cash equivalents	$	1,785	$	10,037

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Earnings Per Common Share

12 Months Ended

Dec. 31, 2020

Earnings Per Common Share [Abstract]

Earnings Per Common Share

NOTE 22 – EARNINGS PER COMMON SHARE

The two-class method is used in the calculation of basic and diluted earnings per share.  Under the two-class method, earnings available to common stockholders for the period are allocated between common stockholders and participating securities (certain unvested share-based awards and Series C preferred stock outstanding) according to dividends declared (or accumulated) and participation rights in undistributed earnings.  The factors used in the earnings per share computation follow:

	December 31, 2020		December 31, 2019
Basic
Net income	$	29,608	$	9,601
Accretion of discount and value of warrants exercised related to Series B preferred stock (1)		-		219
Earnings allocated to participating securities (Series C preferred stock) (2)		(2,280)		(430)
Net income allocated to common stockholders	$	27,328	$	9,390
Weighted average common shares outstanding including unvested share-based payment awards		6,072,829		4,582,997
Less: Unvested share-based payment awards-2019 Plan		(43,732)		(1,532)
Average shares		6,029,097		4,581,465
Basic earnings per common share	$	4.53	$	2.05
Diluted
Net earnings allocated to common stockholders	$	27,328	$	9,390
Add back: Preferred Dividends on Series B stock and accretion of discount		-		-
Net earnings allocated to common stockholders	$	27,328	$	9,390
Weighted average common shares outstanding for basic earnings per common share		6,029,097		4,581,465
Add: Dilutive effects of assumed exercises of stock options		34,158		38,620
Add: Dilutive effects of assumed exercises of stock warrants		-		6,947
Add:  Dilutive effects of unvested share-based payment awards-2019 Plan		43,732		1,532
Average shares and dilutive potential common shares		6,106,987		4,628,564
Diluted earnings per common share	$	4.47	$	2.03

⁽¹⁾ All outstanding warrants expired on July 15, 2019.

⁽²⁾ All 12,607 outstanding shares of Series C preferred stock were converted into a total of 1,260,700 shares of the Company’s Non-Voting Common Stock effective as of the close of business on May 28, 2020.

The following securities were anti-dilutive and not considered in computing diluted earnings per common share.

	2020	2019
Stock options	331	463

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Contingent Liabilities

12 Months Ended

Dec. 31, 2020

Contingent Liabilities [Abstract]

Contingent Liabilities

NOTE 23 - 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, 2020

Accumulated Other Comprehensive Income [Abstract]

Accumulated Other Comprehensive Income

NOTE 24 - ACCUMULATED OTHER COMPREHENSIVE INCOME

The following table summarizes the changes within each classification of accumulated other comprehensive income, net of tax, for the years ended December 31, 2020 and December 31, 2019 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, 2020 and 2019  (1)
	Unrealized Gains and Losses on Available-for-Sale Securities
	2020		2019
Accumulated other comprehensive gain/(loss), beginning of period	$	28	$	(73)
Other comprehensive gain before reclassifications		68		101
Less amount reclassified from accumulated other comprehensive loss (2)		-		-
Net current-period other comprehensive income		68		101
Accumulated other comprehensive income, end of period	$	96	$	28

⁽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 years ended December 31, 2020 and December 31, 2019.

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Subsequent Events

12 Months Ended

Dec. 31, 2020

Subsequent Events [Abstract]

Subsequent Events

NOTE 25- SUBSEQUENT EVENTS

On December 29, 2020, CFBank entered into a Branch Purchase and Assumption Agreement (the “P&A Agreement”) with Consumers National Bank (“Consumers”) pursuant to which Consumers will acquire the two branches of CFBank in Columbiana County, Ohio – CFBank’s drive-up branch location in Wellsville, Ohio and CFBank’s branch location in Calcutta, Ohio (the “Branches”).

The P&A Agreement provides for the sale and transfer by CFBank to Consumers of the land, buildings and other associated assets of the Branches; approximately $100 million in deposits attributable to the Branches; $15 million in aggregate principal amount of subordinated debt securities issued by unrelated financial institutions and held in CFBank’s portfolio; all performing loans attributable to the Branches which are outstanding at closing (totaling approximately $3.1 million in aggregate principal amount as of November 30, 2020); and up to $13.5 million in aggregate principal amount of single family residential mortgage loans and home equity lines of credit to be identified by the parties prior to the closing principally from CFBank’s Northeast Ohio loan portfolio.  In exchange, Consumers will pay to CFBank the net book value of the land, building and associated assets of the Branches, a deposit premium equal to 1.75% of the average daily deposits of the Branches for the 30 days preceding the closing, and the par value of the subordinated debt securities and loans acquired by Consumers.  The determination of the actual amount of deposit liabilities and the identification of the actual loans to be sold to Consumers is still being finalized.

The closing of the transactions contemplated by the P&A Agreement is subject to regulatory approval and satisfaction of other customary closing conditions.  The parties expect the closing of the transactions to occur in the third calendar quarter of 2021. 

On January 28, 2021, the Board of Directors of the Company authorized a new stock repurchase program pursuant to which the Company may repurchase up to 250,000 of the Company’s outstanding common stock on or before February 27, 2022.  Under the stock repurchase program, the Company may purchase shares of its common stock from time to time through various means, including open market transactions and privately negotiated transactions.  Open market repurchases will be made in accordance with applicable securities laws and regulations, including Rule 10b-18 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and may be effected pursuant to Rule 10b5-1 under the Exchange Act.  The manner, timing and amount of any stock repurchases will be determined by the Company’s management in its discretion based on its evaluation of various factors, including the trading price of the Company’s common stock, market and economic conditions, regulatory requirements and other corporate considerations.  The repurchase program may be suspended or discontinued at any time.

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Summary Of Significant Accounting Policies (Policy)

12 Months Ended

Dec. 31, 2020

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 CF Bankshares, Inc. (the “Holding Company”) and its wholly-owned subsidiary, CFBank, National Association (“CFBank”).  On December 1, 2016, CFBank converted from a federal savings institution to a national bank.  Prior to December 1, 2016, the Holding Company was a registered savings and loan holding company.  Effective as of December 1, 2016 and in conjunction with the conversion of CFBank to a national bank, the Holding Company became a registered bank holding company and elected financial holding status with the FRB.  Effective as of July 27, 2020, the Company changed its name from Central Federal Corporation to CF Bankshares Inc.  The Holding Company and CFBank are sometimes collectively referred to herein as the “Company”.  Intercompany transactions and balances are eliminated in consolidation. 

CFBank provides financial services through its six full-service banking offices in Worthington, Fairlawn, Glendale, Blue Ash, Calcutta, and Wellsville, Ohio, and through its loan production office in Columbus, Ohio and 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.

Cash In Excess Of FDIC Limits

Cash in Excess of FDIC Limits:  At December 31, 2020, the Company’s cash accounts exceeded federally insured limits by approximately $215.7 million.  Approximately $203.0 million of that amount was held by either the Federal Reserve Bank or the Federal Home Loan Bank of Cincinnati, which is not federally insured.

Interest-Bearing Deposits In Other Financial Institution

Interest-Bearing Deposits in Other Financial Institution:  Interest-bearing deposits in other financial institutions mature in April, 2022 and are carried at cost.  As of December 31, 2020 and December 31, 2019, there was $100 in an interest-bearing deposit in other financial institutions.

Securities

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

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

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.

Equity Securities

Equity Securities:  Equity securities without a readily determinable fair value are held at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.  For equity securities measured under the practicability exception under Accounting Standards Update (“ASU”) 2016-01, the Company performs a qualitative assessment for equity securities without readily determinable fair values considering impairment indicators to evaluate whether an impairment exists.  If an impairment exists, the Company will recognize a loss based on the difference between carrying value and fair value.

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 Leases

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 each loan placed on nonaccrual is reversed against interest income in the period in which it is placed in a nonaccrual status.  Interest received on such loans is accounted for on the cash-basis or cost recovery method, until qualifying for return to accrual status.  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 Franklin, Hamilton, Cuyahoga, Summit, Columbiana 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)

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 substandard loans within the commercial, multi-family residential, commercial real estate and construction segments 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 three-year historical loss rates.  For loans with little or no actual loss experience, industry estimates are used based on loan segment. This loss experience is supplemented with other economic and judgmental factors based on the risks present for each loan class.  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 and direct financing leases include loans and leases to businesses generally located within our primary market area. Those loans and leases are typically secured by business equipment, inventory, accounts receivable and other business assets.  In underwriting commercial loans, we consider the net operating income of the borrower, the debt service ratio and the financial strength, expertise and credit history of the business owners and/or guarantors.  Because payments on commercial loans are dependent on successful operation of the business enterprise, repayment of such loans may be subject to a greater extent to adverse conditions in the economy.  We seek to mitigate these risks through underwriting policies which require such loans to be qualified at origination on the basis of the borrower’s financial performance and the financial strength of the business owners and/or guarantors.

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

Multi-family residential real estate loans:  Multi-family residential real estate loans include loans secured by apartment buildings, condominiums and multi-family residential houses generally located within our primary market area. Underwriting policies provide that multi-family residential real estate loans generally may be made in amounts up to 85% of the lower of the appraised value or purchase price of the property.  In underwriting multi-family residential real estate loans, we consider the appraised value and net operating income of the property, the debt service ratio and the property owner’s and/or guarantor’s financial strength, expertise and credit history. We offer both fixed-rate and adjustable-rate loans. Fixed-rate loans are generally limited to three 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 generally be made in amounts up to 80% of the appraised value of the property, and an independent appraisal of the property is required.  Loan proceeds are disbursed in increments as construction progresses and as inspections warrant, and regular inspections are required to monitor the progress of construction.  In underwriting construction loans, we consider the property owner’s and/or guarantor’s financial strength, expertise and credit history. Construction financing is considered to involve a higher degree of credit risk than long-term financing on improved, owner occupied real estate.  Risk of loss on a construction loan is dependent largely upon the accuracy of the initial estimate of the property’s value at completion of construction or development compared to the estimated cost (including interest) of construction.  If the estimate of value proves to be inaccurate, we may be confronted with a project, when completed, having a value which is insufficient to assure full repayment.  We attempt to reduce such risks on construction loans through inspections of construction progress on the property and by requiring personal guarantees and reviewing current personal financial statements and tax returns, as well as other projects of the developer.

Home equity lines of credit:  Home equity lines of credit include both loans we originate for portfolio and purchased loans.  We originate home equity lines of credit to customers generally within our primary market area.  Home equity lines of credit are variable rate loans and the interest rate adjusts monthly at various margins to the prime rate of interest as disclosed in The Wall Street Journal. The margin is based on certain factors including the loan balance, value of collateral, election of auto-payment, and the borrower’s FICO® score.  The amount of the line is based on the borrower’s credit, income and equity in the home.  When combined with the balance of the prior mortgage liens, these lines generally may not exceed 89.9% of the appraised value of the property at the time of the loan commitment.  The lines are secured by a subordinate lien on the underlying real estate and are, therefore, vulnerable to declines in property values in the geographic areas where the properties are located.  Credit approval for home equity lines of credit requires income sufficient to repay principal and interest due, stability of employment, an established credit record and sufficient collateral.  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.  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, auto, credit card loans and any purchased loans to consumers generally located within our primary market area.  Credit approval for other consumer loans requires income sufficient to repay principal and interest due, stability of employment, an established credit record and sufficient collateral for secured loans.  Consumer loans typically have shorter terms and lower balances with higher yields as compared to real estate mortgage loans, but generally carry higher risks of default. Consumer loan collections are dependent on the borrower's continuing financial stability, and thus are more likely to be affected by adverse personal circumstances.

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

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.

Low Income Housing Tax Credits (LIHTC)

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

Historic Tax Credits

Historic Tax Credits:In June 2019, the Company made an equity investment as a non-managing member in an entity that is expected to receive historic tax credits (HTC) pursuant to Section 47 of the Internal Revenue Code.  The Company expects to receive a return through the realization of federal income tax credits, as well as other tax benefits, such as tax deductions from net operating losses of the investment over a period of time.  The HTC investment is accounted for under the equity method of accounting and is included in accrued interest receivable and other assets on the consolidated balance sheets.  The Company’s recorded investment in this entity was $0 at December 31, 2020 and $894 at December 31, 2019.  The maximum exposure to loss related to these investments was $0 at December 31, 2020, representing the Company’s investment balance. 

Joint Ventures

Joint Ventures:  The Holding Company has contributed funds into a series of joint ventures (equity stake) for the purpose of allocating excess liquidity into higher earning assets while diversifying its revenue sources.  The joint ventures are engaged in shorter term operating activities related to single family real estate developments.  Income is recognized based on a rate of return on the outstanding investment balance.  As units are sold, the Holding Company receives an additional incentive payment, which is recognized as income. Under ASU 2016-15, the Company has elected the nature of distribution approach to recognize returns from equity method investments.  Returns on investment are classified as cash flows from operating activities and returns of investment are classified as investing activities. The balance outstanding in joint ventures at December 31, 2020 and December 31, 2019 was $1,406 and $1,000, respectively.  Income recognized on the joint ventures was $173 and $57, respectively, for 2020 and 2019.

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 FHLB stock based on the level of borrowings and other factors, and may invest in additional amounts.  FHLB stock is carried at cost, classified as a restricted security, and periodically evaluated for impairment based on ultimate recovery of par value.  Both cash and stock dividends are reported as income.

Federal Reserve Bank (FRB) Stock

Federal Reserve Bank (FRB) stock:  CFBank is a member of the FRB system and is required to own a certain amount of stock.  FRB stock is carried at cost, classified as a restricted security, and periodically evaluated for impairment based on ultimate recovery of par value.  Both cash and stock dividends are reported as income.

Bank Owned Life Insurance

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

Loan Commitments And Related Financial Instruments

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.  Mortgage banking activities include two types of commitments: rate lock commitments and forward loan commitments.  Fair values of these mortgage derivatives are based on anticipated gains on the underlying loans.  Changes in the fair values of these derivatives are included in net gains on sales of loans.

Stock-Based Compensation

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

Income Taxes

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

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

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

Retirement Plans

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

Earnings Per Common Share

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

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.  Reclassifications from accumulated other comprehensive income are conducted on a specific identification method.

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 23 – 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, 2020 and December 31, 2019 was $0 and $5,164, respectively.  Cash on deposit with the FHLB includes $3,300 pledged as collateral for FHLB advances. 

Equity

Equity:  Treasury stock is carried at cost. Shares sold out of treasury are valued based on the weighted average cost.  The carrying value of preferred stock and common stock warrants is based on allocation of issuance proceeds, net of issuance costs, in proportion to their relative fair values. 

Dividend Restrictions

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

Fair Value Of Financial Instruments

Fair Value of Financial Instruments:  Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed in Note 6 – Fair Value.  Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments, and other factors, especially in the absence of broad markets for particular items.  Changes in assumptions or in market conditions could significantly affect these estimates.

Advertising And Marketing Expense

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

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 income or stockholders’ equity.

Future Accounting Matters

Future Accounting Matters:

In June 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.  Once effective, ASU 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 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 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 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.  In October 2019, the FASB voted to extend the implementation of ASU No. 2016-13 for certain financial institutions including smaller reporting companies.  As a result, ASU 2016-13 will be effective for the Company for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022.  While the Company generally expects that the implementation of ASU 2016-13 has the potential to increase its allowance for loan losses balance, the Company is continuing to evaluate the potential impact on the Company’s financial statements and disclosures.  Management has been running and evaluating various scenarios.  At this time, the estimated impact on the Company’s consolidated financial statements, including disclosures, cannot be reasonably determined.  

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. These amendments provide temporary optional guidance to ease the potential burden in accounting for reference rate reform. The ASU provides optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. It is intended to help stakeholders during the global market-wide reference rate transition period. The guidance is effective for all entities as of March 12, 2020 through December 31, 2022. The Company is implementing a transition plan to identify and modify its loans and other financial instruments with attributes that are either directly or indirectly influenced by LIBOR. The Company is assessing ASU 2020-04 and its impact on the Company's transition away from LIBOR for its loan and other financial instruments.

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Securities (Tables)

12 Months Ended

Dec. 31, 2020

Securities [Abstract]

Amortized Cost And Fair Value Of Available-For-Sale Securities Portfolio

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
December 31, 2020
Issued by U.S. government-sponsored entities and agencies:
U.S. Treasury	$	8,517	$	119	$	-	$	8,636
Mortgage-backed securities - residential		62		3		-		65
Total	$	8,579	$	122	$	-	$	8,701

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
December 31, 2019
Issued by U.S. government-sponsored entities and agencies:
U.S. Treasury	$	7,986	$	32	$	1	$	8,017
Mortgage-backed securities - residential		126		4		-		130
Collateralized mortgage obligations		27		-		-		27
Total	$	8,139	$	36	$	1	$	8,174

Securities Classified By Maturity Date

	December 31, 2020				December 31, 2019
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	5,011	$	5,033	$	5,001	$	5,000
Due from one to five years		3,506		3,603		2,985		3,017
Mortgage-backed securities - residential		62		65		126		130
Collateralized mortgage obligations		-		-		27		27
Total	$	8,579	$	8,701	$	8,139	$	8,174

Fair Value Of Securities Pledged

	2020		2019
Pledged as collateral for:
FHLB advances	$	1,017	$	3,074
Public deposits		3,060		2,015
Mortgage banking derivatives		3,016		1,500
Interest-rate swaps		-		77
Total	$	7,093	$	6,666

Securities With Unrealized Losses

December 31, 2019	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 (1)	$	499	$	-	$	2,501	$	1	$	3,000	$	1
Total temporarily impaired	$	499	$	-	$	2,501	$	1	$	3,000	$	1

⁽¹⁾ Unrealized loss is less than $1 resulting in rounding to zero

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Loans And Leases (Tables)

12 Months Ended

Dec. 31, 2020

Loans And Leases [Abstract]

Recorded Investment In Loans By Portfolio Segment

	December 31, 2020		December 31, 2019
Commercial (1)	$	338,286	$	170,646
Real estate:
Single-family residential		147,860		120,256
Multi-family residential		45,375		39,229
Commercial		277,028		247,543
Construction		80,426		67,652
Consumer:
Home equity lines of credit		20,962		20,941
Other		2,429		4,174
Subtotal		912,366		670,441
Less: ALLL		(17,022)		(7,138)
Loans and Leases, net	$	895,344	$	663,303

⁽¹⁾ Includes $4,133 and $4,779 of commercial leases at December 31, 2020 and December 31, 2019, respectively.

Activity In ALLL By Portfolio Segment

	December 31, 2020
			Real Estate								Consumer
	Commercial		Single-family		Multi-family		Commercial		Construction		Home Equity lines of credit		Other		Total
Beginning balance	$	2,054	$	948	$	447	$	2,604	$	759	$	265	$	61	$	7,138
Addition to (reduction in) provision for loan losses		2,005		745		20		6,580		1,495		15		55		10,915
Charge-offs		(648)		(425)		-		-		-		(21)		-		(1,094)
Recoveries		15		31		-		-		-		17		-		63
Ending balance	$	3,426	$	1,299	$	467	$	9,184	$	2,254	$	276	$	116	$	17,022

	December 31, 2019
			Real Estate								Consumer
	Commercial		Single-family		Multi-family		Commercial		Construction		Home Equity lines of credit		Other		Total
Beginning balance	$	1,819	$	1,061	$	612	$	2,274	$	739	$	410	$	97	$	7,012
Addition to (reduction in) provision for loan losses		235		(120)		(165)		225		20		(195)		-		-
Charge-offs		-		-		-		-		-		-		(36)		(36)
Recoveries		-		7		-		105		-		50		-		162
Ending balance	$	2,054	$	948	$	447	$	2,604	$	759	$	265	$	61	$	7,138

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, 2020:

			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	$	-	$	-	$	-	$	23	$	-	$	-	$	-	$	23
Collectively evaluated for impairment		3,426		1,299		467		9,161		2,254		276		116		16,999
Total ending allowance balance	$	3,426	$	1,299	$	467	$	9,184	$	2,254	$	276	$	116	$	17,022
Loans:
Individually evaluated for impairment	$	268	$	104	$	-	$	2,718	$	-	$	-	$	-	$	3,090
Collectively evaluated for impairment		338,018		147,756		45,375		274,310		80,426		20,962		2,429		909,276
Total ending loan balance	$	338,286	$	147,860	$	45,375	$	277,028	$	80,426	$	20,962	$	2,429	$	912,366

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, 2019:

			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	$	1	$	-	$	33	$	-	$	-	$	-	$	35
Collectively evaluated for impairment		2,053		947		447		2,571		759		265		61		7,103
Total ending allowance balance	$	2,054	$	948	$	447	$	2,604	$	759	$	265	$	61	$	7,138
Loans:
Individually evaluated for impairment		85	$	107	$	-	$	4,420	$	-	$	-	$	-	$	4,612
Collectively evaluated for impairment		170,561		120,149		39,229		243,123		67,652		20,941		4,174		665,829
Total ending loan balance	$	170,646	$	120,256	$	39,229	$	247,543	$	67,652	$	20,941	$	4,174	$	670,441

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, 2020. The unpaid principal balance is the contractual principal balance outstanding. The recorded investment is the unpaid principal balance adjusted for partial charge-offs, purchase premiums and discounts, deferred loan fees and costs. Cash payments of interest on these loans during the twelve months ended December 31, 2020 totaled $159.

	Unpaid Principal Balance		Recorded Investment		ALLL Allocated		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Real estate:
Commercial:
Owner occupied	$	-	$	-	$	-	$	-	$	-
Total with no allowance recorded		-		-		-		-		-
With an allowance recorded:
Commercial (1)		533		268		-		489		10
Real estate:
Single-family residential (1)		104		104		-		106		4
Commercial:
Non-owner occupied		2,718		2,718		23		2,728		150
Total with an allowance recorded		3,355		3,090		23		3,323		164
Total	$	3,355	$	3,090	$	23	$	3,323	$	164

⁽¹⁾ Allowance recorded is less than $1 resulting in rounding to zero

The following table presents loans individually evaluated for impairment by class of loans as of and for the year ended December 31, 2019. The unpaid principal balance is the contractual principal balance outstanding. The recorded investment is the unpaid principal balance adjusted for partial charge-offs, purchase premiums and discounts, deferred loan fees and costs. Cash payments of interest on these loans during the twelve months ended December 31, 2019 totaled $168.

	Unpaid Principal Balance		Recorded Investment		ALLL Allocated		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Real estate:
Commercial:
Owner occupied	$	-	$	-	$	-	$	111	$	6
Total with no allowance recorded		-		-		-		111		6
With an allowance recorded:
Commercial		85		85		1		92		-
Real estate:
Single-family residential		107		107		1		108		6
Commercial:
Non-owner occupied		4,420		4,420		33		4,194		154
Total with an allowance recorded		4,612		4,612		35		4,394		160
Total	$	4,612	$	4,612	$	35	$	4,505	$	166

Recorded Investment In Nonaccrual Loans By Class Of Loans

	2020		2019
Loans past due over 90 days still on accrual	$	-	$	-
Nonaccrual loans:
Commercial		190		85
Real estate:
Single-family residential		421		550
Commercial:
Non-owner occupied		-		1,689
Consumer:
Home equity lines of credit:
Originated for portfolio		12		36
Purchased for portfolio		72		79
Other consumer		-		-
Total nonaccrual		695		2,439
Total nonperforming loans	$	695	$	2,439

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 and leases by class of loans as of December 31, 2020:

	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	$	-	$	-	$	-	$	-	$	338,286	$	190
Real estate:
Single-family residential		1,747		-		315		2,062		145,798		106
Multi-family residential		-		-		-		-		45,375		-
Commercial:
Non-owner occupied		-		78		-		78		159,835		-
Owner occupied		-		-		-		-		90,049		-
Land		-		-		-		-		27,066		-
Construction		-		-		-		-		80,426		-
Consumer:
Home equity lines of credit:
Originated for portfolio		-		-		-		-		20,773		12
Purchased for portfolio		-		-		46		46		143		26
Other		-		-		-		-		2,429		-
Total	$	1,747	$	78	$	361	$	2,186	$	910,180	$	334

The following table presents the aging of the recorded investment in past due loans and leases by class of loans as of December 31, 2019:

	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	$	-	$	71	$	-	$	71	$	170,575	$	85
Real estate:
Single-family residential		2,453		261		426		3,140		117,116		124
Multi-family residential		-		-		-		-		39,229		-
Commercial:
Non-owner occupied		-		-		1,689		1,689		138,762		-
Owner occupied		-		-		-		-		81,871		-
Land		-		-		-		-		25,221		-
Construction		304		-		-		304		67,348		-
Consumer:
Home equity lines of credit:
Originated for portfolio		-		-		22		22		20,713		14
Purchased for portfolio		-		-		-		-		206		79
Other		-		-		-		-		4,174		-
Total	$	2,757	$	332	$	2,137	$	5,226	$	665,215	$	302

Nonaccrual Loans As Troubled Debt Restructuring

	2020		2019
Commercial	$	190	$	85
Total	$	190	$	85

Recorded Investment In Loans By Risk Category And Class Of Loans

The recorded investment in loans and leases by risk category and by class of loans as of December 31, 2020 and based on the most recent analysis performed follows.  

	Not Rated		Pass		Special Mention		Substandard		Doubtful		Total
Commercial	$	1	$	337,110	$	664	$	321	$	190	$	338,286
Real estate:
Single-family residential		147,439		-		-		421		-		147,860
Multi-family residential		-		45,249		-		126		-		45,375
Commercial:
Non-owner occupied		57		150,084		7,054		2,718		-		159,913
Owner occupied		-		87,636		1,537		876		-		90,049
Land		-		27,066		-		-		-		27,066
Construction		-		80,247		179		-		-		80,426
Consumer:
Home equity lines of credit:
Originated for portfolio		20,746		-		-		27		-		20,773
Purchased for portfolio		118		-		-		71		-		189
Other		2,429		-		-		-		-		2,429
	$	170,790	$	727,392	$	9,434	$	4,560	$	190	$	912,366

The recorded investment in loans and leases by risk category and class of loans as of December 31, 2019 follows.  There were no loans rated doubtful at December 31, 2019.

	Not Rated		Pass		Special Mention		Substandard		Total
Commercial	$	-	$	168,617	$	1,424	$	605	$	170,646
Real estate:
Single-family residential		119,707		-		-		549		120,256
Multi-family residential		-		39,081		-		148		39,229
Commercial:
Non-owner occupied		67		134,466		1,498		4,420		140,451
Owner occupied		-		79,773		2,098		-		81,871
Land		-		25,221		-		-		25,221
Construction		1,855		65,797		-		-		67,652
Consumer:
Home equity lines of credit:
Originated for portfolio		20,681		-		-		54		20,735
Purchased for portfolio		127		-		-		79		206
Other		4,174		-		-		-		4,174
	$	146,611	$	512,955	$	5,020	$	5,855	$	670,441

Components Of Net Investment In Direct Financing Leases

	December 31, 2020		December 31, 2019
Total minimum lease payments to be received	$	4,459	$	5,252
Less: unearned income		(326)		(473)
Net investment in direct financing leases	$	4,133	$	4,779

⁽¹⁾ There were no initial direct costs associated with these leases

Summary Of Future Minimum Lease Payments Receivable

2021		793
2022		793
2023		1,563
2024		1,310
	$	4,459

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Foreclosed Assets (Tables)

12 Months Ended

Dec. 31, 2020

Foreclosed Assets [Abstract]

Expenses Related To Foreclosed Assets

	2020		2019
Net loss (gain) on sales	$	-	$	(12)
Operating expenses, net of rental income		-		3
	$	-	$	(9)

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Fair Value (Tables)

12 Months Ended

Dec. 31, 2020

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, 2020 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	$	8,636
Mortgage-backed securities - residential		65
Total securities available for sale	$	8,701
Loans held for sale	$	283,165
Yield maintenance provisions (embedded derivatives)	$	1,944
Interest rate lock commitments	$	18,101
Financial Liabilities:
Interest-rate swaps	$	1,944
TBA mortgage-backed securities	$	2,690

	Fair Value Measurements at December 31, 2019 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	$	8,017
Mortgage-backed securities - residential		130
Collateralized mortgage obligations		27
Total securities available for sale	$	8,174
Loans held for sale	$	135,711
Yield maintenance provisions (embedded derivatives)	$	12
Interest rate lock commitments	$	3,104
Financial Liabilities:
Interest-rate swaps	$	12
TBA mortgage-backed securities	$	350

Assets Measured At Fair Value On A Non-Recurring Basis

Fair Value Measurements at December 31, 2020 Using
Significant Unobservable Inputs (Level 3)
Impaired loans:
Commercial	$	190
Total impaired loans	$	190

Fair Value Measurements at December 31, 2019 Using
Significant Unobservable Inputs (Level 3)
Impaired loans:
Commercial	$	84
Real Estate:
Single-family residential		106
Commercial:
Non-owner occupied		4,387
Total impaired loans	$	4,577

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, 2020:

	Fair Value		Valuation Technique(s)	Unobservable Inputs	(Range) Weighted Average
Impaired loans:
Commercial	$	190	Comparable sales approach	Adjustment for differences between the stated value and net realizable value	65.00%

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, 2019:

	Fair Value		Valuation Technique(s)	Unobservable Inputs	(Range) Weighted Average
Impaired loans:
Commercial	$	84	Comparable sales approach	Adjustment for differences between the comparable market transactions	2.06%
Real estate:
Single -family residential		106	Comparable sales approach	Adjustment for differences between the comparable market transactions	3.61%
Commercial:
Non-owner occupied		4,387	Comparable sales approach	Adjustment for differences between the comparable market transactions	(-2.58%,  14.00%) 2.44%

Aggregate Fair Value, Contractual Balance And Gain Or Loss

	December 31, 2020		December 31, 2019
Aggregate fair value	$	283,165	$	135,711
Contractual balance		274,401		133,993
Gain		8,764		1,718

Total Amount Of Gains And Losses From Changes In Fair Value Included In Earnings

	2020		2019
Interest income	$	6,231	$	2,153
Interest expense		-		-
Change in fair value		7,046		1,341
Total change in fair value	$	13,277	$	3,494

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, 2020 Using:
	Carrying
	Value		Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	221,594	$	221,594	$	-	$	-	$	221,594
Interest-bearing deposits in other financial institutions		100		100		-		-		100
Securities available for sale		8,701		-		8,701		-		8,701
Equity securities		5,000		-		-		5,000		5,000
Loans held for sale		283,165		-		283,165		-		283,165
Loans and leases, net		895,344		-		-		905,030		905,030
FHLB and FRB stock		5,847		n/a		n/a		n/a		n/a
Accrued interest receivable		4,584		1		36		4,547		4,584
Yield maintenance provisions (embedded derivatives)		1,944		-		1,944		-		1,944
Interest rate lock commitments		18,101		-		18,101		-		18,101
Financial liabilities
Deposits	$	(1,113,070)	$	(554,650)	$	(565,089)	$	-	$	(1,119,739)
FHLB advances and other debt		(214,426)		-		(215,531)		-		(215,531)
Advances by borrowers for taxes and insurance		(1,029)		-		-		(1,029)		(1,029)
Subordinated debentures		(14,844)		-		(16,325)		-		(16,325)
Accrued interest payable		(498)		-		(498)		-		(498)
Interest-rate swaps		(1,944)		-		(1,944)		-		(1,944)
TBA mortgage-backed securities		(2,690)		-		(2,690)		-		(2,690)

The carrying amounts and estimated fair values of financial instruments at December 31, 2019 were as follows:

	Fair Value Measurements at December 31, 2019 Using:
	Carrying
	Value		Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	45,879	$	45,879	$	-	$	-	$	45,879
Interest-bearing deposits in other financial institutions		100		100		-		-		100
Securities available for sale		8,174		-		8,174		-		8,174
Loans held for sale		135,711		-		135,711		-		135,711
Loans and leases, net		663,303		-		-		664,152		664,152
FHLB stock		4,008		n/a		n/a		n/a		n/a
Accrued interest receivable		2,749		25		40		2,684		2,749
Yield maintenance provisions (embedded derivatives)		12		-		12		-		12
Interest rate lock commitments		3,104		-		3,104		-		3,104
Financial liabilities
Deposits	$	(746,323)	$	(382,173)	$	(367,375)	$	-	$	(749,548)
FHLB advances and other debt		(29,017)		-		(29,669)		-		(29,669)
Advances by borrowers for taxes and insurance		(929)		-		-		(929)		(929)
Subordinated debentures		(14,806)		-		(15,940)		-		(15,940)
Accrued interest payable		(208)		-		(208)		-		(208)
Interest-rate swaps		(12)		-		(12)		-		(12)
TBA mortgage-backed securities		(350)		-		(350)		-		(350)

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Loan Servicing (Tables)

12 Months Ended

Dec. 31, 2020

Loan Servicing [Abstract]

Principal Balances Of Mortgage Loans At Year-End

	December 31, 2020		December 31, 2019
Mortgage loans serviced for Freddie Mac	$	1,875	$	2,649

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Premises And Equipment And Operating Leases (Tables)

12 Months Ended

Dec. 31, 2020

Premises And Equipment And Operating Leases [Abstract]

Year-End Premises And Equipment

	December 31, 2020		December 31, 2019
Land and land improvements	$	1,293	$	1,293
Buildings		4,140		4,294
Furniture, fixtures and equipment		2,971		2,729
		8,404		8,316
Less: accumulated depreciation		(4,674)		(4,325)
	$	3,730	$	3,991

Future Minimum Operating Lease Payments

2021	$	548
2022		536
2023		377
2024		250
Thereafter		-
Total future minimum rental commitments		1,711
Less - amounts representing interest		(179)
Total operating lease liabilities	$	1,532

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Deposits (Tables)

12 Months Ended

Dec. 31, 2020

Deposits [Abstract]

Scheduled Maturities Of Time Deposits

2021	$	358,512
2022		143,458
2023		36,680
2024		19,671
2025		99
Thereafter		-
Total	$	558,420

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FHLB Advances And Other Debt (Tables)

12 Months Ended

Dec. 31, 2020

FHLB Advances And Other Debt [Abstract]

Schedule Of FHLB Advances And Other Debt

	Weighted
	Average Rate	December 31, 2020		December 31, 2019
FHLB fixed rate advances
Maturities:
2020			-		4,500
2021	1.63%		7,500		4,000
2022	1.16%		10,000		1,500
2023	0.92%		3,500		6,500
2024	1.90%		6,500		-
Total FHLB fixed rate advances			27,500		16,500
Fixed rate other debt:
FRB PPPLF advances	0.35%		107,413		-
Variable rate other debt:
Holding Company credit facility	4.00%		9,500		5,000
Warehouse facility	3.50%		70,013		7,517
Total variable rate other debt			79,513		12,517
Total		$	214,426	$	29,017

Schedule Of Federal Home Loan Advances Pledged By Assets

	December 31, 2020		December 31, 2019
Single-family mortgage loans	$	87,076	$	79,144
Multi-family mortgage loans		10,970		21,258
Commercial real estate loans (1-4 family)		5,750		6,639
Home equity lines of credit		2,838		5,028
Securities		1,017		3,074
Cash		3,300		3,300
Total	$	110,951	$	118,443

FHLB Advances And Other Debt Outstanding Maturity Period

Payments due on FHLB advances and other debt over the next five years are as follows:
	December 31, 2020
2021	$	78,013
2022		126,413
2023		3,500
2024		6,500
2025		-
	$	214,426

Assets Pledged As Collateral With FRB

	2020		2019
Commercial loans	$	39,914	$	38,317
Commercial real estate loans		85,655		77,733
	$	125,569	$	116,050

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2020

Income Taxes [Abstract]

Income Tax Expense

	December 31, 2020		December 31, 2019
Current federal	$	9,720	$	2,627
Deferred federal (1)		(3,045)		(187)
Total	$	6,675	$	2,440

⁽¹⁾ Includes tax benefit of operating loss carryforwards of $34 and $34 for the years ended December 31, 2020 and 2019, respectively.

Effective Tax Rates Differ From Federal Statutory Rate

	December 31, 2020		December 31, 2019
Federal statutory rate times financial statement income	$	7,619	$	2,529
Effect of:
Stock compensation		(19)		(18)
Bank owned life insurance income		(30)		(30)
Historic tax credits		(807)		-
Low income housing tax credits		(106)		(59)
Other		18		18
	$	6,675	$	2,440
Effective tax rate		18%		20%

Deferred Tax Assets And Liabilities

	2020		2019
Deferred tax assets:
Allowance for loan and lease losses	$	3,407	$	1,170
Compensation related issues		1,815		433
Deferred loan fees		293		-
Nonaccrual interest		57		55
Net operating loss carry forward		398		432
Operating lease liabilities		322		412
		6,292		2,502
Deferred tax liabilities:
FHLB stock dividend		226		226
Deferred loan costs		-		7
Depreciation		15		73
Operating lease right-of-use assets		291		374
Unrealized mark-to-market gain		935		32
Other		2		4
Prepaid expenses		76		65
		1,545		781
Net deferred tax asset	$	4,747	$	1,721

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Related-Party Transactions (Tables)

12 Months Ended

Dec. 31, 2020

Related-Party Transactions [Abstract]

Loans To Principal Officers, Directors And Affiliates

	Year ended December 31,
	2020		2019
Beginning balance	$	6,113	$	3,672
New loans		4,193		3,062
Repayments		(29)		(621)
Ending balance	$	10,277	$	6,113

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Stock-Based Compensation (Tables)

12 Months Ended

Dec. 31, 2020

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	95,438	$	7.64
Exercised	(4,545)		7.98
Expired	(437)		17.33
Cancelled or forfeited	(14)		17.33
Outstanding at end of period	90,442	$	7.57	2.4	$	915
Exercisable at end of period	90,442	$	7.57	2.4	$	915

Summary Of Changes In Company's Nonvested Restricted Shares

Nonvested Shares	Shares	Weighted Average Grant-Date Fair Value
Nonvested at January 1, 2020	102,916	$	13.11
Granted	19,660		10.02
Vested	(55,877)		13.18
Forfeited	(6,897)		12.35
Nonvested at December 31, 2020	59,802	$	12.12

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Regulatory Capital Matters (Tables)

12 Months Ended

Dec. 31, 2020

Regulatory Capital Matters [Abstract]

Actual And Required Capital Amounts And Ratios Of CFBank

	Actual			Minimum Capital Required-Basel III Fully Phased-In			To Be Well Capitalized Under Applicable Regulatory Capital Standards
	Amount		Ratio	Amount		Ratio	Amount		Ratio
December 31, 2020
Total Capital to risk weighted assets	$	136,683	14.31%	$	100,298	10.50%	$	95,522	10.00%
Tier 1 (Core) Capital to risk weighted assets		124,678	13.05%		81,194	8.50%		76,418	8.00%
Common equity tier 1 capital to risk-weighted assets		124,678	13.05%		66,866	7.00%		62,089	6.50%
Tier 1 (Core) Capital to adjusted total assets (Leverage ratio)		124,678	9.74%		51,187	4.00%		63,984	5.00%

	Actual			Minimum Capital Required-Basel III Fully Phased-In			To Be Well Capitalized Under Applicable Regulatory Capital Standards
	Amount		Ratio	Amount		Ratio	Amount		Ratio
December 31, 2019
Total Capital to risk weighted assets	$	95,164	12.96%	$	77,097	10.50%	$	73,425	10.00%
Tier 1 (Core) Capital to risk weighted assets		87,857	11.97%		62,412	8.50%		58,740	8.00%
Common equity tier 1 capital to risk-weighted assets		87,857	11.97%		51,398	7.00%		47,726	6.50%
Tier 1 (Core) Capital to adjusted total assets (Leverage ratio)		87,857	10.58%		33,221	4.00%		41,526	5.00%

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Derivative Instruments (Tables)

12 Months Ended

Dec. 31, 2020

Derivative Instruments [Abstract]

Summary Of Derivative Instruments

	2020		2019
Notional amount	$	46,474	$	12,039
Weighted average pay rate on interest-rate swaps		4.19%		4.66%
Weighted average receive rate on interest-rate swaps		3.08%		4.63%
Weighted average maturity (years)		7.4		7.3
Fair value of interest-rate swaps	$	(1,944)	$	(12)
Fair value of yield maintenance provisions	$	1,944	$	12

Schedule Of Mortgage Banking Derivatives

	December 31, 2020				December 31, 2019
	Notional Amount		Fair Value		Notional Amount		Fair Value
Assets (Liabilities):
Interest rate commitments	$	1,048,613	$	18,100	$	297,454	$	3,104
TBA mortgage-back securities		506,750		(2,690)		225,500		(350)

Schedule Of Notional Amount Of Loans Sold

	2020		2019
Notional amount of loans sold	$	2,229,042	$	411,257

Schedule Of Revenue Recognized On Mortgage Activities

	December 31, 2020		December 31, 2019
Gain on loans sold		61,146		9,603
Gain (loss) from change in fair value of loans held-for-sale		7,046		1,341
Gain (loss) from change in fair value of derivatives		(9,895)		(490)
	$	58,297	$	10,454

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Loan Commitments And Other Related Activities (Tables)

12 Months Ended

Dec. 31, 2020

Loan Commitments And Other Related Activities [Abstract]

Contractual Amounts Of Financial Instruments With Off-Balance-Sheet Risk

	2020				2019
	Fixed Rate		Variable Rate		Fixed Rate		Variable Rate
Commitments to make loans	$	1,072,963	$	31,239	$	314,705	$	43,979
Unused lines of credit	$	20,395	$	65,788	$	10,678	$	55,684
Standby letters of credit	$	3,997	$	-	$	1,415	$	-

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Parent Company Only Condensed Financial Information (Tables)

12 Months Ended

Dec. 31, 2020

Parent Company Only Condensed Financial Information [Abstract]

Condensed Balance Sheets

	2020		2019
Assets
Cash and cash equivalents	$	1,785	$	10,037
Equity securities		5,000		-
Investment in banking subsidiary		125,172		88,317
Investment in and advances to other subsidiary		241		238
Other assets		2,533		2,045
Total assets	$	134,731	$	100,637
Liabilities and Equity
Subordinated debentures	$	14,844	$	14,806
Other borrowings		9,500		5,000
Accrued expenses and other liabilities		177		167
Stockholders' equity		110,210		80,664
Total liabilities and stockholders' equity	$	134,731	$	100,637

Condensed Statements Of Operations

	2020		2019
Interest income	$	-	$	-
Other income		178		70
Interest expense		1,209		1,353
Other expense		830		758
Loss before income tax and before undistributed subsidiary income		(1,861)		(2,041)
Tax effect		390		427
Loss after income tax and before undistributed subsidiary income		(1,471)		(1,614)
Equity in undistributed subsidiary income		31,079		11,215
Net income	$	29,608	$	9,601
Comprehensive income	$	29,676	$	9,702

Condensed Statements Of Cash Flows

	2020		2019
Cash flows from operating activities
Net Income	$	29,608	$	9,601
Adjustments:
Effect of subsidiaries' operations		(31,079)		(11,215)
Amortization, net		38		39
Change in other assets and other liabilities		(480)		(939)
Net cash used by operating activities		(1,913)		(2,514)
Cash flows from investing activities
Investments in banking subsidiary		(5,000)		(14,000)
Purchase of equity securities		(5,000)		-
Net cash used by investing activities		(10,000)		(14,000)
Cash flows from financing activities
Proceeds from other borrowings		15,000		4,000
Repayments of other borrowings		(10,500)		(5,000)
Net proceeds from the issuance of preferred stock private placement		-		14,000
Net proceeds from the issuance of common stock private placement		-		9,641
Proceeds from exercise of stock options		36		-
Acquisition of treasury shares surrendered upon vesting of restricted stock for payment of taxes		(32)		(23)
Purchase of treasury shares		(648)		-
Exercise of warrants to common stock		-		1,258
Dividends paid		(195)		-
Net cash from financing activities		3,661		23,876
Net change in cash and cash equivalents		(8,252)		7,362
Beginning cash and cash equivalents		10,037		2,675
Ending cash and cash equivalents	$	1,785	$	10,037

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Earnings Per Common Share (Tables)

12 Months Ended

Dec. 31, 2020

Earnings Per Common Share [Abstract]

Computation Of Earnings Per Share

	December 31, 2020		December 31, 2019
Basic
Net income	$	29,608	$	9,601
Accretion of discount and value of warrants exercised related to Series B preferred stock (1)		-		219
Earnings allocated to participating securities (Series C preferred stock) (2)		(2,280)		(430)
Net income allocated to common stockholders	$	27,328	$	9,390
Weighted average common shares outstanding including unvested share-based payment awards		6,072,829		4,582,997
Less: Unvested share-based payment awards-2019 Plan		(43,732)		(1,532)
Average shares		6,029,097		4,581,465
Basic earnings per common share	$	4.53	$	2.05
Diluted
Net earnings allocated to common stockholders	$	27,328	$	9,390
Add back: Preferred Dividends on Series B stock and accretion of discount		-		-
Net earnings allocated to common stockholders	$	27,328	$	9,390
Weighted average common shares outstanding for basic earnings per common share		6,029,097		4,581,465
Add: Dilutive effects of assumed exercises of stock options		34,158		38,620
Add: Dilutive effects of assumed exercises of stock warrants		-		6,947
Add:  Dilutive effects of unvested share-based payment awards-2019 Plan		43,732		1,532
Average shares and dilutive potential common shares		6,106,987		4,628,564
Diluted earnings per common share	$	4.47	$	2.03

⁽¹⁾ All outstanding warrants expired on July 15, 2019.

⁽²⁾ All 12,607 outstanding shares of Series C preferred stock were converted into a total of 1,260,700 shares of the Company’s Non-Voting Common Stock effective as of the close of business on May 28, 2020.

Summary Of Anti-Dilutive Options Or Warrants

	2020	2019
Stock options	331	463

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Accumulated Other Comprehensive Income (Tables)

12 Months Ended

Dec. 31, 2020

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, 2020 and 2019  (1)
	Unrealized Gains and Losses on Available-for-Sale Securities
	2020		2019
Accumulated other comprehensive gain/(loss), beginning of period	$	28	$	(73)
Other comprehensive gain before reclassifications		68		101
Less amount reclassified from accumulated other comprehensive loss (2)		-		-
Net current-period other comprehensive income		68		101
Accumulated other comprehensive income, end of period	$	96	$	28

⁽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 years ended December 31, 2020 and December 31, 2019.

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Summary of Significant Accounting Policies (Narrative) (Details) $ in Thousands			12 Months Ended
	Dec. 31, 2020 USD ($) store	Dec. 31, 2019 USD ($)	Dec. 31, 2020 USD ($) store	Dec. 31, 2019 USD ($)
Significant Accounting Policies [Line Items]
Number of full-service banking offices | store	6		6
Cash exceeded federally insured limits	$ 215,700		$ 215,700
Cash held, not federally insured	203,000		203,000
Interest-bearing deposits in other financial institutions	100	$ 100	100	$ 100
Balance outstanding in joint ventures	1,406	1,000	1,406	1,000
Income recognized on joint ventures			$ 173	57
Tax benefit greater than being realized on examination			50.00%
FRB regulatory reserve requirement	0	5,164	$ 0	5,164
Collateral pledged for advances	110,951	118,443	110,951	118,443
Investment	0	894
Maximum exposure to loss related to investments	0
Cash [Member]
Significant Accounting Policies [Line Items]
Collateral pledged for advances	$ 3,300	3,300	$ 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%		89.90%
Maturity of cash, deposits with other financial institutions			90 days
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 Residential [Member]
Significant Accounting Policies [Line Items]
Collateral pledged for advances	$ 87,076	79,144	$ 87,076	79,144
Single-Family Residential [Member] | Maximum [Member]
Significant Accounting Policies [Line Items]
Lending amount up to the percentage of collateral	80.00%		80.00%
Multi-Family Residential [Member]
Significant Accounting Policies [Line Items]
Collateral pledged for advances	$ 10,970	21,258	$ 10,970	21,258
Multi-Family Residential [Member] | Minimum [Member]
Significant Accounting Policies [Line Items]
Fixed rates loans limit, period			3 years
Multi-Family Residential [Member] | Maximum [Member]
Significant Accounting Policies [Line Items]
Lending amount up to the percentage of collateral	85.00%		85.00%
Fixed rates loans limit, period			5 years
Real Estate Commercial [Member]
Significant Accounting Policies [Line Items]
Collateral pledged for advances	$ 5,750	$ 6,639	$ 5,750	$ 6,639
Real Estate Commercial [Member] | Minimum [Member]
Significant Accounting Policies [Line Items]
Fixed rates loans limit, period			3 years
Real Estate Commercial [Member] | Maximum [Member]
Significant Accounting Policies [Line Items]
Lending amount up to the percentage of collateral	85.00%		85.00%
Fixed rates loans limit, period			5 years
Construction [Member] | Maximum [Member]
Significant Accounting Policies [Line Items]
Lending amount up to the percentage of collateral	80.00%		80.00%
Maturity of construction loans convert to permanent loans			30 years

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Securities (Narrative) (Details)	12 Months Ended
	Dec. 31, 2020 USD ($) security	Dec. 31, 2019 USD ($) security
Schedule of Available-for-sale Securities [Line Items]
Other-than-temporary impairment	$ 0	$ 0
Sales of securities	$ 0	$ 0
Holdings of securities greater than 10% of stockholders' equity | security	0	0
Securities with unrealized losses | security	0
Equity securities	$ 5,000,000
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%

XML

Securities (Amortized Cost And Fair Value Of Available-For-Sale Securities Portfolio) (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 8,579	$ 8,139
Gross Unrealized Gains	122	36
Gross Unrealized Losses		1
Available-for-sale Securities Total, Fair Value	8,701	8,174
U.S. Treasury [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	8,517	7,986
Gross Unrealized Gains	119	32
Gross Unrealized Losses		1
Available-for-sale Securities Total, Fair Value	8,636	8,017
Mortgage-Backed Securities - Residential [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	62	126
Gross Unrealized Gains	3	4
Gross Unrealized Losses
Available-for-sale Securities Total, Fair Value	$ 65	130
Collateralized Mortgage Obligations [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost		27
Available-for-sale Securities Total, Fair Value		$ 27

XML

Securities (Securities Classified By Maturity Date) (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Schedule Of Available For Sale Securities [Line Items]
Due in one year or less, Amortized Cost	$ 5,011	$ 5,001
Due from one to five years, Amortized Cost	3,506	2,985
Amortized Cost	8,579	8,139
Due in one year or less, Fair Value	5,033	5,000
Due from one to five years, Fair Value	3,603	3,017
Available-for-sale Securities Total, Fair Value	8,701	8,174
Mortgage-Backed Securities - Residential [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized Cost	62	126
Available-for-sale Securities Total, Fair Value	$ 65	130
Collateralized Mortgage Obligations [Member]
Schedule Of Available For Sale Securities [Line Items]
Amortized Cost		27
Available-for-sale Securities Total, Fair Value		$ 27

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Securities (Fair Value Of Securities Pledged) (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Pledged as collateral for:
FHLB advances	$ 1,017	$ 3,074
Public deposits	3,060	2,015
Mortgage banking derivatives	3,016	1,500
Interest-rate swaps		77
Total	$ 7,093	$ 6,666

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Securities (Securities With Unrealized Losses) (Details) $ in Thousands	Dec. 31, 2019 USD ($)
Schedule of Available-for-sale Securities [Line Items]
Less than 12 Months, Fair Value	$ 499
12 Months or More, Fair Value	2,501
12 Months or More, Unrealized Loss	1
Total, Fair Value	3,000
Total, Unrealized Loss	1
U.S. Treasury [Member]
Schedule of Available-for-sale Securities [Line Items]
Less than 12 Months, Fair Value	499	[1]
12 Months or More, Fair Value	2,501	[1]
12 Months or More, Unrealized Loss	1	[1]
Total, Fair Value	3,000	[1]
Total, Unrealized Loss	1	[1]
Maximum [Member] | U.S. Treasury [Member]
Schedule of Available-for-sale Securities [Line Items]
Total, Unrealized Loss	$ 1

[1] Unrealized loss is less than $1 resulting in rounding to zero

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Loans And Leases (Narrative) (Details)		12 Months Ended
		Dec. 31, 2020 USD ($) loan	Dec. 31, 2019 USD ($) loan
Accounts Notes And Loans Receivable [Line Items]
Loans		$ 895,344,000	$ 663,303,000
Loans 90 days or more past due and still accruing interest
Total TDR's		3,090,000	2,923,000
Allocated specific reserves to modified TDRs		$ 23,000	$ 22,000
Number of TDRs in payment default | loan		0	0
Loans rated doubtful | loan			0
Cash payments of interest		$ 159,000	$ 168,000
Loans		912,366,000	670,441,000
Deferral loans outstanding balance		$ 528,000
Northpointe [Member] | Mortgage Purchase Program [Member]
Accounts Notes And Loans Receivable [Line Items]
Average days		14 days
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 Residential [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans		147,860,000	120,256,000
Single-Family Residential [Member] | Northpointe [Member] | Mortgage Purchase Program [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans		15,713,000	$ 26,046,000
Commercial Real Estate [Member]
Accounts Notes And Loans Receivable [Line Items]
Total TDR's		$ 190,000
Number of loans modified as a TDR | loan		1	0
TDR's charge-offs		$ 264,000	$ 0
Loans	[1]	338,286,000	170,646,000
Accruing [Member]
Accounts Notes And Loans Receivable [Line Items]
Total TDR's		2,900,000	$ 2,838,000
Commercial Loans - Paycheck Protection Program [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans		$ 105,269,000
Maturity term		2 years
Stated interest rate		1.00%

[1] Includes $4,133 and $4,779 of commercial leases at December 31, 2020 and December 31, 2019, respectively.

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Loans And Leases (Recorded Investment In Loans By Portfolio Segment) (Details) - USD ($) $ in Thousands		Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Accounts Notes And Loans Receivable [Line Items]
Subtotal		$ 912,366	$ 670,441
Less: ALLL		(17,022)	(7,138)	$ (7,012)
Loans and Leases, net		895,344	663,303
Commercial Real Estate [Member]
Accounts Notes And Loans Receivable [Line Items]
Subtotal	[1]	338,286	170,646
Less: ALLL		(3,426)	(2,054)	(1,819)
Single-Family Residential [Member]
Accounts Notes And Loans Receivable [Line Items]
Subtotal		147,860	120,256
Less: ALLL		(1,299)	(948)	(1,061)
Multi-Family Residential [Member]
Accounts Notes And Loans Receivable [Line Items]
Subtotal		45,375	39,229
Less: ALLL		(467)	(447)	(612)
Real Estate Commercial [Member]
Accounts Notes And Loans Receivable [Line Items]
Subtotal		277,028	247,543
Less: ALLL		(9,184)	(2,604)	(2,274)
Construction [Member]
Accounts Notes And Loans Receivable [Line Items]
Subtotal		80,426	67,652
Less: ALLL		(2,254)	(759)	(739)
Home Equity Line Of Credit [Member]
Accounts Notes And Loans Receivable [Line Items]
Subtotal		20,962	20,941
Less: ALLL		(276)	(265)	(410)
Other Consumer [Member]
Accounts Notes And Loans Receivable [Line Items]
Subtotal		2,429	4,174
Less: ALLL		(116)	(61)	$ (97)
Commercial Leases [Member]
Accounts Notes And Loans Receivable [Line Items]
Subtotal		$ 4,133	$ 4,779

[1] Includes $4,133 and $4,779 of commercial leases at December 31, 2020 and December 31, 2019, respectively.

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Loans And Leases (Activity In ALLL By Portfolio Segment) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	$ 7,138	$ 7,012
Addition to (reduction in) provision for loan losses	10,915
Charge-offs	(1,094)	(36)
Recoveries	63	162
Ending balance	17,022	7,138
Commercial Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	2,054	1,819
Addition to (reduction in) provision for loan losses	2,005	235
Charge-offs	(648)
Recoveries	15
Ending balance	3,426	2,054
Single-Family Residential [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	948	1,061
Addition to (reduction in) provision for loan losses	745	(120)
Charge-offs	(425)
Recoveries	31	7
Ending balance	1,299	948
Multi-Family Residential [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	447	612
Addition to (reduction in) provision for loan losses	20	(165)
Charge-offs
Recoveries
Ending balance	467	447
Real Estate Commercial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	2,604	2,274
Addition to (reduction in) provision for loan losses	6,580	225
Charge-offs
Recoveries		105
Ending balance	9,184	2,604
Construction [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	759	739
Addition to (reduction in) provision for loan losses	1,495	20
Charge-offs
Recoveries
Ending balance	2,254	759
Home Equity Line Of Credit [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	265	410
Addition to (reduction in) provision for loan losses	15	(195)
Charge-offs	(21)
Recoveries	17	50
Ending balance	276	265
Other Consumer [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	61	97
Addition to (reduction in) provision for loan losses	55
Charge-offs		(36)
Recoveries
Ending balance	$ 116	$ 61

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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, 2020	Dec. 31, 2019	Dec. 31, 2018
Financing Receivable, Allowance for Credit Losses [Line Items]
Individually evaluated for impairment		$ 23	$ 35
Collectively evaluated for impairment		16,999	7,103
Total ending allowance balance		17,022	7,138	$ 7,012
Individually evaluated for impairment		3,090	4,612
Collectively evaluated for impairment		909,276	665,829
Total ending loan balance		912,366	670,441
Commercial Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Individually evaluated for impairment			1
Collectively evaluated for impairment		3,426	2,053
Total ending allowance balance		3,426	2,054	1,819
Individually evaluated for impairment		268	85
Collectively evaluated for impairment		338,018	170,561
Total ending loan balance	[1]	338,286	170,646
Single-Family Residential [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Individually evaluated for impairment			1
Collectively evaluated for impairment		1,299	947
Total ending allowance balance		1,299	948	1,061
Individually evaluated for impairment		104	107
Collectively evaluated for impairment		147,756	120,149
Total ending loan balance		147,860	120,256
Multi-Family Residential [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Collectively evaluated for impairment		467	447
Total ending allowance balance		467	447	612
Collectively evaluated for impairment		45,375	39,229
Total ending loan balance		45,375	39,229
Real Estate Commercial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Individually evaluated for impairment		23	33
Collectively evaluated for impairment		9,161	2,571
Total ending allowance balance		9,184	2,604	2,274
Individually evaluated for impairment		2,718	4,420
Collectively evaluated for impairment		274,310	243,123
Total ending loan balance		277,028	247,543
Construction [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Collectively evaluated for impairment		2,254	759
Total ending allowance balance		2,254	759	739
Collectively evaluated for impairment		80,426	67,652
Total ending loan balance		80,426	67,652
Home Equity Line Of Credit [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Collectively evaluated for impairment		276	265
Total ending allowance balance		276	265	410
Collectively evaluated for impairment		20,962	20,941
Total ending loan balance		20,962	20,941
Other Consumer [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Collectively evaluated for impairment		116	61
Total ending allowance balance		116	61	$ 97
Collectively evaluated for impairment		2,429	4,174
Total ending loan balance		$ 2,429	$ 4,174

[1] Includes $4,133 and $4,779 of commercial leases at December 31, 2020 and December 31, 2019, respectively.

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Loans And Leases (Individually Evaluated For Impairment By Class Of Loans) (Details) - USD ($) $ in Thousands		12 Months Ended
		Dec. 31, 2020	Dec. 31, 2019
Financing Receivable, Impaired [Line Items]
Impaired Financing Receivable, with Related Allowance, Unpaid Principal Balance		$ 3,355	$ 4,612
Impaired Financing Receivable, Unpaid Principal Balance, Total		3,355	4,612
Impaired Financing Receivable, with Related Allowance, Recorded Investment		3,090	4,612
Impaired Financing Receivable, Recorded Investment, Total		3,090	4,612
Impaired Financing Receivable, ALLL Allocated		23	35
Impaired Financing Receivable, with No Related Allowance, Average Recorded Investment			111
Impaired Financing Receivable, with Related Allowance, Average Recorded Investment		3,323	4,394
Impaired Financing Receivable, Average Recorded Investment, Total		3,323	4,505
Impaired Financing Receivable, with No Related Allowance, Interest Income Recognized			6
Impaired Financing Receivable, with Related Allowance, Interest Income Recognized		164	160
Impaired Financing Receivable, Interest Income Recognized, Total		164	166
Commercial Real Estate [Member]
Financing Receivable, Impaired [Line Items]
Impaired Financing Receivable, with Related Allowance, Unpaid Principal Balance	[1]	533	85
Impaired Financing Receivable, with Related Allowance, Recorded Investment	[1]	268	85
Impaired Financing Receivable, ALLL Allocated	[1]		1
Impaired Financing Receivable, with Related Allowance, Average Recorded Investment	[1]	489	92
Impaired Financing Receivable, with Related Allowance, Interest Income Recognized	[1]	10
Commercial Real Estate [Member] | Maximum [Member]
Financing Receivable, Impaired [Line Items]
Impaired Financing Receivable, ALLL Allocated		1
Single-Family Residential [Member]
Financing Receivable, Impaired [Line Items]
Impaired Financing Receivable, with Related Allowance, Unpaid Principal Balance	[1]	104	107
Impaired Financing Receivable, with Related Allowance, Recorded Investment	[1]	104	107
Impaired Financing Receivable, ALLL Allocated	[1]		1
Impaired Financing Receivable, with Related Allowance, Average Recorded Investment	[1]	106	108
Impaired Financing Receivable, with Related Allowance, Interest Income Recognized	[1]	4	6
Single-Family Residential [Member] | Maximum [Member]
Financing Receivable, Impaired [Line Items]
Impaired Financing Receivable, ALLL Allocated		1
Non-Owner Occupied [Member]
Financing Receivable, Impaired [Line Items]
Impaired Financing Receivable, with Related Allowance, Unpaid Principal Balance		2,718	4,420
Impaired Financing Receivable, with Related Allowance, Recorded Investment		2,718	4,420
Impaired Financing Receivable, ALLL Allocated		23	33
Impaired Financing Receivable, with Related Allowance, Average Recorded Investment		2,728	4,194
Impaired Financing Receivable, with Related Allowance, Interest Income Recognized		$ 150	154
Owner Occupied [Member]
Financing Receivable, Impaired [Line Items]
Impaired Financing Receivable, with No Related Allowance, Average Recorded Investment			111
Impaired Financing Receivable, with No Related Allowance, Interest Income Recognized			$ 6

[1] Allowance recorded is less than $1 resulting in rounding to zero

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Loans And Leases (Recorded Investment In Nonaccrual Loans By Class Of Loans) (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due over 90 days still on accrual
Total nonaccrual and nonperforming loans	695	2,439
Commercial Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total nonaccrual and nonperforming loans	190	85
Single-Family Residential [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total nonaccrual and nonperforming loans	421	550
Non-Owner Occupied [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total nonaccrual and nonperforming loans		1,689
Originated For Portfolio [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total nonaccrual and nonperforming loans	12	36
Purchased For Portfolio [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total nonaccrual and nonperforming loans	72	79
Nonaccrual [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total nonaccrual and nonperforming loans	$ 695	$ 2,439

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Loans And Leases (Aging Of Recorded Investment In Past Due Loans By Class Of Loans) (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	$ 2,186	$ 5,226
Loans Not Past Due	910,180	665,215
Nonaccrual Loans Not > 90 Days Past Due	334	302
30 - 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	1,747	2,757
60 - 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	78	332
Greater Than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	361	2,137
Commercial Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		71
Loans Not Past Due	338,286	170,575
Nonaccrual Loans Not > 90 Days Past Due	190	85
Commercial Real Estate [Member] | 60 - 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		71
Single-Family Residential [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	2,062	3,140
Loans Not Past Due	145,798	117,116
Nonaccrual Loans Not > 90 Days Past Due	106	124
Single-Family Residential [Member] | 30 - 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	1,747	2,453
Single-Family Residential [Member] | 60 - 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		261
Single-Family Residential [Member] | Greater Than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	315	426
Multi-Family Residential [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans Not Past Due	45,375	39,229
Non-Owner Occupied [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	78	1,689
Loans Not Past Due	159,835	138,762
Non-Owner Occupied [Member] | 60 - 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	78
Non-Owner Occupied [Member] | Greater Than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		1,689
Owner Occupied [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans Not Past Due	90,049	81,871
Land [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans Not Past Due	27,066	25,221
Construction [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		304
Loans Not Past Due	80,426	67,348
Construction [Member] | 30 - 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		304
Originated For Portfolio [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		22
Loans Not Past Due	20,773	20,713
Nonaccrual Loans Not > 90 Days Past Due	12	14
Originated For Portfolio [Member] | Greater Than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		22
Purchased For Portfolio [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	46
Loans Not Past Due	143	206
Nonaccrual Loans Not > 90 Days Past Due	26	79
Purchased For Portfolio [Member] | Greater Than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	46
Other Consumer [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans Not Past Due	$ 2,429	$ 4,174

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Loans And Leases (Nonaccrual Loans As Troubled Debt Restructuring) (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Financing Receivable, Modifications [Line Items]
Total nonaccrual and nonperforming loans	$ 695	$ 2,439
Commercial Real Estate [Member]
Financing Receivable, Modifications [Line Items]
Total nonaccrual and nonperforming loans	190	85
Nonaccrual TDRs, Total	$ 190	$ 85

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Loans And Leases (Recorded Investment In Loans By Risk Category And Class Of Loans) (Details) - USD ($) $ in Thousands		Dec. 31, 2020	Dec. 31, 2019
Financing Receivable, Recorded Investment [Line Items]
Loans		$ 912,366	$ 670,441
Not Rated [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		170,790	146,611
Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		727,392	512,955
Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		9,434	5,020
Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		4,560	5,855
Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		190
Commercial Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	[1]	338,286	170,646
Commercial Real Estate [Member] | Not Rated [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		1
Commercial Real Estate [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		337,110	168,617
Commercial Real Estate [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		664	1,424
Commercial Real Estate [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		321	605
Commercial Real Estate [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		190
Single-Family Residential [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		147,860	120,256
Single-Family Residential [Member] | Not Rated [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		147,439	119,707
Single-Family Residential [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		421	549
Multi-Family Residential [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		45,375	39,229
Multi-Family Residential [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		45,249	39,081
Multi-Family Residential [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		126	148
Real Estate Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		277,028	247,543
Non-Owner Occupied [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		159,913	140,451
Non-Owner Occupied [Member] | Not Rated [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		57	67
Non-Owner Occupied [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		150,084	134,466
Non-Owner Occupied [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		7,054	1,498
Non-Owner Occupied [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		2,718	4,420
Owner Occupied [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		90,049	81,871
Owner Occupied [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		87,636	79,773
Owner Occupied [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		1,537	2,098
Owner Occupied [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		876
Land [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		27,066	25,221
Land [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		27,066	25,221
Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		80,426	67,652
Construction [Member] | Not Rated [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans			1,855
Construction [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		80,247	65,797
Construction [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		179
Home Equity Line Of Credit [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		20,962	20,941
Originated For Portfolio [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		20,773	20,735
Originated For Portfolio [Member] | Not Rated [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		20,746	20,681
Originated For Portfolio [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		27	54
Purchased For Portfolio [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		189	206
Purchased For Portfolio [Member] | Not Rated [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		118	127
Purchased For Portfolio [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		71	79
Other Consumer [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		2,429	4,174
Other Consumer [Member] | Not Rated [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		$ 2,429	$ 4,174

[1] Includes $4,133 and $4,779 of commercial leases at December 31, 2020 and December 31, 2019, respectively.

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Loans And Leases (Components Of Net Investment In Direct Financing Leases) (Details) - USD ($) $ in Thousands		Dec. 31, 2020	Dec. 31, 2019
Loans And Leases [Abstract]
Total minimum lease payments to be received	[1]	$ 4,459	$ 5,252
Less: unearned income	[1]	(326)	(473)
Net investment in direct financing leases	[1]	$ 4,133	$ 4,779

[1] There were no initial direct costs associated with these leases

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Loans And Leases (Summary Of Future Minimum Lease Payments Receivable) (Details) $ in Thousands	Dec. 31, 2020 USD ($)
Loans And Leases [Abstract]
2021	$ 793
2022	793
2023	1,563
2024	1,310
Future minimum lease payments	$ 4,459

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Foreclosed Assets (Expenses Related To Foreclosed Assets) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Foreclosed Assets [Abstract]
Net loss (gain) on sales		$ (12)
Operating expenses, net of rental income		3
Foreclosed assets, net		$ (9)

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Fair Value (Narrative) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Unpaid principal balance of impairment loan at collateral	$ 190	$ 4,612
Valuation allowance	0	35
Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Transfer of assets and liabilities measured at fair value between levels	0	0
Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value	0	0
Liabilities measured at fair value	0	0
Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Non-Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value	0	0
Liabilities measured at fair value	0	0
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Non-Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value	0	0
Liabilities measured at fair value	0	0
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value	0	0
Liabilities measured at fair value	$ 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, 2020	Dec. 31, 2019
Financial Assets:
Total securities available for sale	$ 8,701	$ 8,174
Loans held for sale	283,165	135,711
Fair Value, Inputs, Level 2 [Member]
Financial Assets:
Total securities available for sale	8,701	8,174
Loans held for sale	283,165	135,711
Yield maintenance provisions (embedded derivatives)	1,944	12
Interest rate lock commitments	18,101	3,104
Financial Liabilities:
Interest-rate swaps	1,944	12
TBA Mortgage-backed securities	2,690	350
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Financial Assets:
Total securities available for sale	8,701	8,174
Loans held for sale	283,165	135,711
Fair Value, Measurements, Recurring [Member] | U.S. Treasury [Member] | Fair Value, Inputs, Level 2 [Member]
Financial Assets:
Total securities available for sale	8,636	8,017
Fair Value, Measurements, Recurring [Member] | Mortgage-Backed Securities - Residential [Member] | Fair Value, Inputs, Level 2 [Member]
Financial Assets:
Total securities available for sale	65	130
Fair Value, Measurements, Recurring [Member] | Collateralized Mortgage Obligations [Member] | Fair Value, Inputs, Level 2 [Member]
Financial Assets:
Total securities available for sale		27
Fair Value, Measurements, Recurring [Member] | Yield Maintenance Provisions (Embedded Derivatives) [Member] | Fair Value, Inputs, Level 2 [Member]
Financial Assets:
Yield maintenance provisions (embedded derivatives)	1,944	12
Fair Value, Measurements, Recurring [Member] | Interest Rate Lock Commitments [Member] | Fair Value, Inputs, Level 2 [Member]
Financial Assets:
Interest rate lock commitments	18,101	3,104
Fair Value, Measurements, Recurring [Member] | Interest Rate Swap [Member] | Fair Value, Inputs, Level 2 [Member]
Financial Liabilities:
Interest-rate swaps	1,944	12
Fair Value, Measurements, Recurring [Member] | TBA Mortgage-Back Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Financial Liabilities:
TBA Mortgage-backed securities	$ 2,690	$ 350

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Fair Value (Assets Measured At Fair Value On A Non-Recurring Basis) (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total impaired loans	$ 3,355	$ 4,612
Fair Value, Measurements, Non-Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total impaired loans	190	4,577
Commercial Real Estate [Member] | Fair Value, Measurements, Non-Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total impaired loans	$ 190	84
Single-Family Residential [Member] | Fair Value, Measurements, Non-Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total impaired loans		106
Non-Owner Occupied [Member] | Fair Value, Measurements, Non-Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total impaired loans		$ 4,387

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Fair Value (Financial Instruments Measured At Fair Value On A Non-Recurring Basis) (Details) - Unobservable Input, Comparability Adjustment [Member] - Fair Value, Measurements, Non-Recurring [Member] - Market Approach [Member] - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Commercial Real Estate [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Fair Value	$ 190	$ 84
(Range) Weighted Average	65.00%	2.06%
Single-Family Residential [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Fair Value		$ 106
(Range) Weighted Average		3.61%
Non-Owner Occupied [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Fair Value		$ 4,387
Non-Owner Occupied [Member] | Minimum [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
(Range) Weighted Average		(2.58%)
Non-Owner Occupied [Member] | Maximum [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
(Range) Weighted Average		14.00%
Non-Owner Occupied [Member] | Weighted Average [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
(Range) Weighted Average		2.44%

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Fair Value (Aggregate Fair Value, Contractual Balance And Gain Or Loss) (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Fair Value [Abstract]
Aggregate fair value	$ 283,165	$ 135,711
Contractual balance	274,401	133,993
Gain	$ 8,764	$ 1,718

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Fair Value (Total Amount Of Gains And Losses From Changes In Fair Value Included In Earnings) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Fair Value [Abstract]
Interest income	$ 6,231	$ 2,153
Interest expense
Change in fair value	7,046	1,341
Total change in fair value	$ 13,277	$ 3,494

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Fair Value (Carrying Amounts And Estimated Fair Values Of Financial Instruments) (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Financial assets
Securities available for sale	$ 8,701	$ 8,174
Equity securities	5,000
Loans held for sale	283,165	135,711
Financial liabilities
FHLB advances and other borrowings	(214,426)	(29,017)
Advances by borrowers for taxes and insurance	(1,029)	(929)
Fair Value, Inputs, Level 1 [Member]
Financial assets
Cash and cash equivalents	221,594	45,879
Interest-bearing deposits in other financial institutions	100	100
Accrued interest receivable	1	25
Financial liabilities
Deposits	(554,650)	(382,173)
Fair Value, Inputs, Level 2 [Member]
Financial assets
Interest-bearing deposits in other financial institutions
Securities available for sale	8,701	8,174
Loans held for sale	283,165	135,711
Accrued interest receivable	36	40
Yield maintenance provisions (embedded derivatives)	1,944	12
Interest rate lock commitments	18,101	3,104
Financial liabilities
Deposits	(565,089)	(367,375)
FHLB advances and other borrowings	(215,531)	(29,669)
Subordinated debentures	(16,325)	(15,940)
Accrued interest payable	(498)	(208)
Interest-rate swaps	(1,944)	(12)
TBA mortgage-backed securities	(2,690)	(350)
Fair Value, Inputs, Level 3 [Member]
Financial assets
Interest-bearing deposits in other financial institutions
Equity securities	5,000
Loans and leases, net	905,030	664,152
Accrued interest receivable	4,547	2,684
Financial liabilities
Advances by borrowers for taxes and insurance	(1,029)	(929)
Carrying Value [Member]
Financial assets
Cash and cash equivalents	221,594	45,879
Interest-bearing deposits in other financial institutions	100	100
Securities available for sale	8,701	8,174
Equity securities	5,000
Loans held for sale	283,165	135,711
Loans and leases, net	895,344	663,303
FHLB and FRB stock	5,847
FHLB stock		4,008
Accrued interest receivable	4,584	2,749
Yield maintenance provisions (embedded derivatives)	1,944	12
Interest rate lock commitments	18,101	3,104
Financial liabilities
Deposits	(1,113,070)	(746,323)
FHLB advances and other borrowings	(214,426)	(29,017)
Advances by borrowers for taxes and insurance	(1,029)	(929)
Subordinated debentures	(14,844)	(14,806)
Accrued interest payable	(498)	(208)
Interest-rate swaps	(1,944)	(12)
TBA mortgage-backed securities	(2,690)	(350)
Fair Value [Member]
Financial assets
Cash and cash equivalents	221,594	45,879
Interest-bearing deposits in other financial institutions	100	100
Securities available for sale	8,701	8,174
Equity securities	5,000
Loans held for sale	283,165	135,711
Loans and leases, net	905,030	664,152
Accrued interest receivable	4,584	2,749
Yield maintenance provisions (embedded derivatives)	1,944	12
Interest rate lock commitments	18,101	3,104
Financial liabilities
Deposits	(1,119,739)	(749,548)
FHLB advances and other borrowings	(215,531)	(29,669)
Advances by borrowers for taxes and insurance	(1,029)	(929)
Subordinated debentures	(16,325)	(15,940)
Accrued interest payable	(498)	(208)
Interest-rate swaps	(1,944)	(12)
TBA mortgage-backed securities	$ (2,690)	$ (350)

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Loan Servicing (Narrative) (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Loan Servicing [Abstract]
Custodial escrow balances maintained in connection with serviced loans	$ 94	$ 59

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Loan Servicing (Principal Balances Of Mortgage Loans At Year-End) (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Loan Servicing [Abstract]
Mortgage loans serviced for Freddie Mac	$ 1,875	$ 2,649

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Premises And Equipment And Operating Leases (Narrative) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Premises And Equipment And Operating Leases [Abstract]
Depreciation	$ 381	$ 316
Operating lease, Weighted average remaining lease term	3 years 3 months 18 days
Operating lease, Weighted average discount rate	6.59%
Operating lease costs	$ 393	404
Variable lease costs	$ 244	$ 231

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Premises And Equipment And Operating Leases (Year-End Premises And Equipment) (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Premises And Equipment And Operating Leases [Abstract]
Land and land improvements	$ 1,293	$ 1,293
Buildings	4,140	4,294
Furniture, fixtures and equipment	2,971	2,729
Premises and equipment, gross	8,404	8,316
Less: accumulated depreciation	(4,674)	(4,325)
Premises and equipment, net	$ 3,730	$ 3,991

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Premises And Equipment And Operating Leases (Future Minimum Operating Lease Payments) (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Premises And Equipment And Operating Leases [Abstract]
2021	$ 548
2022	536
2023	377
2024	250
Thereafter
Total future minimum rental commitments	1,711
Less - amounts representing interest	(179)
Total operating lease liabilities	$ 1,532	$ 1,960

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Deposits (Narrative) (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Deposits [Abstract]
Time deposits, $100,000 or more	$ 461,401	$ 294,452
Time deposits, $250,000 or more	244,840	148,473
Brokered deposits	$ 168,708	$ 124,884

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Deposits (Scheduled Maturities Of Time Deposits) (Details) $ in Thousands	Dec. 31, 2020 USD ($)
Deposits [Abstract]
2021	$ 358,512
2022	143,458
2023	36,680
2024	19,671
2025	99
Thereafter
Total	$ 558,420

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FHLB Advances And Other Debt (Narrative) (Details) - USD ($)	3 Months Ended		12 Months Ended
	Jun. 30, 2020	Dec. 31, 2019	Dec. 31, 2020	Dec. 31, 2018
Amount available of FHLB			$ 81,409,000
Federal Reserve Bank Advances [Member]
Outstanding borrowings		$ 0	0
Debt instrument maximum borrowing capacity amount			81,508,000
Line Of Credit [Member] | Third-Party Bank [Member]
Line of credit, borrowing capacity				$ 10,000,000
Line of credit outstanding		0	5,000,000
Line Of Credit [Member] | Third-Party Bank [Member] | Term Loan [Member]
Principal payments			$ 125,000
Variable rate spread			0.75%
Line of credit, expiration date			Dec. 23, 2022
Line of credit outstanding		5,000,000	$ 4,500,000
Line Of Credit [Member] | Commercial Bank One [Member]
Unused line of credit			50,000,000
Line Of Credit [Member] | Commercial Bank Two [Member]
Unused line of credit			15,000,000
Line Of Credit [Member] | Commercial Bank One And Two [Member]
Line of credit outstanding		0	$ 0
FRB PPPLF Advances [Member]
PPPLF fixed rate			0.35%
Weighted average life			1 year 2 months 12 days
Outstanding borrowings			$ 107,413,000
Warehouse Facility One [Member] | Commercial Bank [Member]
Line of credit, borrowing capacity		25,000,000
Line of credit outstanding		7,517,000	0
Warehouse Facility Two [Member] | Commercial Bank [Member]
Line of credit, borrowing capacity	$ 75,000,000
Line of credit outstanding		$ 0	$ 70,013,000
Minimum [Member] | Warehouse Facility One [Member] | Commercial Bank [Member] | London Interbank Offered Rate [Member]
Variable rate spread		2.00%
Minimum [Member] | Warehouse Facility Two [Member] | Commercial Bank [Member] | London Interbank Offered Rate [Member]
Variable rate spread	1.75%
Maximum [Member] | Warehouse Facility One [Member] | Commercial Bank [Member] | London Interbank Offered Rate [Member]
Variable rate spread		4.00%
Maximum [Member] | Warehouse Facility Two [Member] | Commercial Bank [Member] | London Interbank Offered Rate [Member]
Variable rate spread	3.50%

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FHLB Advances And Other Debt (Schedule Of FHLB Advances And Other Debt) (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
2020, FHLB Weighted Average Rate
2021, FHLB Weighted Average Rate	1.63%
2022, FHLB Weighted Average Rate	1.16%
2023, FHLB Weighted Average Rate	0.92%
2024, FHLB Weighted Average Rate	1.90%
FRB PPPLF advances, Weighted Average Rate	0.35%
2020, FHLB fixed rate advances		$ 4,500
2021, FHLB fixed rate advances	7,500	4,000
2022, FHLB fixed rate advances	10,000	1,500
2023, FHLB fixed rate advances	3,500	6,500
2024, FHLB fixed rate advances	6,500
Total FHLB fixed rate advances	27,500	16,500
FRB PPPLF advances	107,413
Total variable rate other debt	79,513	12,517
Total	$ 214,426	29,017
Holding Company Credit Facility [Member]
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Variable rate other debt, Weighted Average Rate	4.00%
Total variable rate other debt	$ 9,500	5,000
Warehouse Facility One [Member]
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Variable rate other debt, Weighted Average Rate	3.50%
Total variable rate other debt	$ 70,013	$ 7,517

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FHLB Advances And Other Debt (Schedule Of Federal Home Loan Advances Pledged By Assets) (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Collateral pledged for secure advances	$ 110,951	$ 118,443
Securities [Member]
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Collateral pledged for secure advances	1,017	3,074
Cash [Member]
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Collateral pledged for secure advances	3,300	3,300
Single-Family Residential [Member]
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Collateral pledged for secure advances	87,076	79,144
Multi-Family Residential [Member]
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Collateral pledged for secure advances	10,970	21,258
Real Estate Commercial [Member]
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Collateral pledged for secure advances	5,750	6,639
Home Equity Line Of Credit [Member]
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Collateral pledged for secure advances	$ 2,838	$ 5,028

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FHLB Advances And Other Debt (FHLB Advances And Other Debt Outstanding Maturity Period) (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
FHLB Advances And Other Debt [Abstract]
2021	$ 78,013
2022	126,413
2023	3,500
2024	6,500
2025
Total	$ 214,426	$ 29,017

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FHLB Advances And Other Debt (Assets Pledged As Collateral With FRB) (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Assets Pledged As Collateral [Line Items]
Assets pledged as collateral with the FRB	$ 125,569	$ 116,050
Commercial Real Estate [Member]
Assets Pledged As Collateral [Line Items]
Assets pledged as collateral with the FRB	39,914	38,317
Real Estate Commercial [Member]
Assets Pledged As Collateral [Line Items]
Assets pledged as collateral with the FRB	$ 85,655	$ 77,733

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Subordinated Debentures (Narrative) (Details) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2003
Subsidiary, Sale of Stock [Line Items]
Subordinated debentures		$ 14,844	$ 14,806
Holding Company's investment in the common stock		$ 155
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]
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%
Maturity date		Dec. 30, 2033
Trust preferred securities and subordinated debentures have a stated percentage		3.09%	4.81%
Subordinated Debentures [Member]
Subsidiary, Sale of Stock [Line Items]
Subordinated debentures				$ 5,155
Subordinated Debentures [Member] | Subordinated Debentures Maturing On December 30, 2033 [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
Subordinated Debentures [Member] | Fixed-To-Floating Rate Subordinated Notes [Member] | Private Placement [Member]
Subsidiary, Sale of Stock [Line Items]
Maturity date	Dec. 30, 2028
Subordinated notes	$ 10,000
Debt issuance costs	388
Debt issuance costs, net	$ 9,612	$ 9,689
Subordinated Debentures [Member] | Fixed-To-Floating Rate Subordinated Notes [Member] | Private Placement [Member] | From December 20, 2018 To But Excluding December 30, 2023 [Member]
Subsidiary, Sale of Stock [Line Items]
Interest rate	7.00%
London Interbank Offered Rate [Member] | Subordinated Debentures Maturing On December 30, 2033 [Member]
Subsidiary, Sale of Stock [Line Items]
Variable rate of interest		2.85%	2.85%
London Interbank Offered Rate [Member] | Subordinated Debentures [Member] | Fixed-To-Floating Rate Subordinated Notes [Member] | Private Placement [Member] | From December 30, 2023 To But Excluding December 30, 2028 [Member]
Subsidiary, Sale of Stock [Line Items]
Variable rate of interest	4.14%

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Benefit Plans (Narrative) (Details) - USD ($) $ in Thousands			12 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2020	Jun. 30, 2020	Dec. 31, 2019	Jun. 30, 2019	Jun. 30, 2018	Jul. 01, 2020	Jul. 01, 2019
Life Insurance Benefits [Member]
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Benefit plan expense			$ (16)		$ (12)
Accrued interest payable and other liabilities Total			154		171
401 (k) plan [Member]
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Total contributions			$ 293		188
Percentage of amount allowable under federal tax regulations			50.00%
Percentage of compensation contributed under federal tax regulations			6.00%
Salary Continuation Agreement [Member]
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Benefit plan expense			$ 7		8
Accrued interest payable and other liabilities Total			152		$ 170
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	$ 110			$ 104		$ 110
CFBank's contributions				$ 29		59
Funded status								90.19%	89.69%
Total contributions						$ 138,322	$ 164,570
Percentage of amount allowable under federal tax regulations	5.00%	5.00%

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Income Taxes (Narrative) (Details) - USD ($)	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2012
Proceeds from sale of common stock			$ 22,500,000
Net operating loss carry forwards	$ 22,416,000
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	$ 473,000
Effective tax rate	18.00%	20.00%
Additional bad debt deductions	$ 2,250,000
Deferred tax asset	4,747,000	$ 1,721,000
Deferred tax asset, valuation allowance	0
Unrecognized tax benefits	$ 0	$ 0
Minimum [Member]
Net operating loss carryforwards, expiration date	Jan. 01, 2024
Maximum [Member]
Net operating loss carryforwards, expiration date	Dec. 31, 2032

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Income Taxes (Income Tax Expense) (Details) - USD ($) $ in Thousands		12 Months Ended
		Dec. 31, 2020	Dec. 31, 2019
Operating Loss Carryforwards [Line Items]
Current federal		$ 9,720	$ 2,627
Deferred federal	[1]	(3,045)	(187)
Total		6,675	2,440
Operating Loss Carryforwards [Member]
Operating Loss Carryforwards [Line Items]
Deferred federal		$ 34	$ 34

[1] Includes tax benefit of operating loss carryforwards of $34 and $34 for the years ended December 31, 2020 and 2019, respectively.

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Income Taxes (Effective Tax Rates Differ From Federal Statutory Rate) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Income Taxes [Abstract]
Federal statutory income tax rate	21.00%	21.00%
Federal statutory rate times financial statement income	$ 7,619	$ 2,529
Stock compensation	(19)	(18)
Bank owned life insurance income	(30)	(30)
Historic tax credits	(807)
Low income housing tax credits	(106)	(59)
Other	18	18
Total	$ 6,675	$ 2,440
Effective tax rate	18.00%	20.00%

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Income Taxes (Deferred Tax Assets and Liabilities) (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Deferred tax assets:
Allowance for loan and lease losses	$ 3,407	$ 1,170
Compensation related issues	1,815	433
Deferred loan fees	293
Nonaccrual interest	57	55
Net operating loss carryforward	398	432
Operating lease liabilities	322	412
Gross deferred tax assets	6,292	2,502
Deferred tax liabilities:
FHLB stock dividend	226	226
Deferred loan costs		7
Depreciation	15	73
Operating lease right-of-use assets	291	374
Unrealized mark-to-market gain	935	32
Other	2	4
Prepaid expenses	76	65
Deferred tax liabilities	1,545	781
Net deferred tax asset	$ 4,747	$ 1,721

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Related-Party Transactions (Narrative) (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Related-Party Transactions [Abstract]
Deposits from principal officers, directors, and their affiliates	$ 3,844	$ 976

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Related-Party Transactions (Loans To Principal Officers, Directors And Affiliates) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Related-Party Transactions [Abstract]
Beginning balance	$ 6,113	$ 3,672
New loans	4,193	3,062
Repayments	(29)	(621)
Ending balance	$ 10,277	$ 6,113

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Stock-Based Compensation (Narrative) (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2020 USD ($) ShareBasedCompensationPlan shares	Dec. 31, 2019 USD ($) shares	May 29, 2019 shares	May 16, 2013 shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of stock-based compensation plans | ShareBasedCompensationPlan	2
Compensation cost | $	$ 711	$ 527
Total income tax (expense) benefit | $	$ 149	$ 111
Options exercised	4,545	0
Shares granted	0	0
2009 Equity Compensation Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares available to be issued				272,727
Shares remaining available	251,014
Maximum [Member] | 2019 Equity Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized			300,000
Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting periods exercisable from date of grant	10 years
Shares cancelled, forfeited or expired	451	941
Stock Options [Member] | 2009 Equity Compensation Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized	36,363
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	19,660	73,738
Shares vested	55,877	36,288
Shares cancelled, forfeited or expired	6,897	3,858
Unrecognized compensation cost | $	$ 623	$ 1,221

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Stock-Based Compensation (Summary Of Stock Option Activity) (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Stock-Based Compensation [Abstract]
Shares, Outstanding at beginning of year	95,438
Shares, Exercised	(4,545)	0
Shares, Expired	(437)
Shares Cancelled or forfeited	(14)
Shares, Outstanding at end of period	90,442	95,438
Shares, Exercisable at end of period	90,442
Weighted Average Exercise Price, Outstanding at beginning of year	$ 7.64
Weighted Average Exercise Price, Exercised	7.98
Weighted Average Exercise Price, Expired	17.33
Weighted Average Exercise Price, Cancelled or forfeited	17.33
Weighted Average Exercise Price, Outstanding at end of period	7.57	$ 7.64
Weighted Average Exercise Price, Exercisable at end of period	$ 7.57
Weighted Average Remaining Contractual Term (Years), Outstanding at end of period	2 years 4 months 24 days
Weighted Average Remaining Contractual Term (Years), Exercisable at end of period	2 years 4 months 24 days
Intrinsic Value, Outstanding at end of period	$ 915
Intrinsic Value, Exercisable at end of period	$ 915

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Stock-Based Compensation (Summary Of Changes In Company's Nonvested Restricted Shares) (Details) - Restricted Stock [Member] - $ / shares	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Shares, Nonvested at, Beginning	102,916
Shares, Granted	19,660
Shares, Vested	(55,877)	(36,288)
Shares, Forfeited	(6,897)
Shares, Nonvested at, Ending	59,802	102,916
Weighted Average Grant date Fair Value, Nonvested at, Beginning	$ 13.11
Weighted Average Grant date Fair Value, Granted	10.02
Weighted Average Grant date Fair Value, Vested	13.18
Weighted Average Grant date Fair Value, Forfeited	12.35
Weighted Average Grant date Fair Value, Nonvested at, Ending	$ 12.12	$ 13.11

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Preferred Stock (Narrative) (Details) - USD ($) $ / shares in Units, $ in Thousands				1 Months Ended	3 Months Ended	12 Months Ended
	Mar. 30, 2020	Oct. 31, 2019	Oct. 06, 2017	Apr. 30, 2014	Dec. 31, 2017	Dec. 31, 2014	Dec. 31, 2020	May 28, 2020	Dec. 31, 2019	Oct. 25, 2019
Schedule of Capitalization, Equity [Line Items]
Common stock, par value							$ 0.01		$ 0.01
Shares authorized							9,090,909		9,090,909
Series B Preferred Stock [Member]
Schedule of Capitalization, Equity [Line Items]
Issuance of preferred stock							0		0
Aggregate value
Number of shares converted			480,000
Stock conversion, estimated preferred stock dividends eliminated quarterly					$ 188
Stock conversion, estimated preferred stock dividends eliminated annually					$ 750
Preferred stock, par value							$ 0.01		$ 0.01
Series B Preferred Stock [Member] | Private Placement [Member]
Schedule of Capitalization, Equity [Line Items]
Issuance of preferred stock				480,000
Debt Conversion, Original Debt, Interest Rate of Debt				6.25%
Price per share				$ 25.00
Aggregate value						$ 12,000
Placement fees						482
Other offering expenses						149
Net proceeds from issuance of Series B preferred stock						$ 11,369
Series C Preferred Stock [Member]
Schedule of Capitalization, Equity [Line Items]
Issuance of preferred stock							0		12,337
Aggregate value
Preferred stock, par value							$ 0.01		$ 0.01
Number of outstanding shares	12,607
Series C Preferred Stock [Member] | Private Placement [Member]
Schedule of Capitalization, Equity [Line Items]
Issuance of preferred stock		12,337
Aggregate value										$ 25,000
Purchase price per share		$ 1,200.00
Shares upon conversion	270
Preferred stock, par value		$ 0.01
Common Stock [Member]
Schedule of Capitalization, Equity [Line Items]
Number of shares converted	100
Shares issued upon conversion			6,857,143
Shares post-reverse-split			1,246,753
Number of shares exchange	27,000
Common Stock [Member] | Private Placement [Member]
Schedule of Capitalization, Equity [Line Items]
Shares sold		849,615
Purchase price per share		$ 12.00
Non-Voting Common Stock [Member]
Schedule of Capitalization, Equity [Line Items]
Shares upon conversion								100
Common stock, par value							$ 0.01		$ 0.01
Shares authorized							1,260,700	1,260,700	1,260,700
Non-Voting Common Stock [Member] | Private Placement [Member]
Schedule of Capitalization, Equity [Line Items]
Shares upon conversion		100
Common stock, par value		$ 0.01

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Common Stock Warrants (Narrative) (Details) - $ / shares	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Apr. 30, 2014
Class of Warrant or Right [Line Items]
Warrant, shares	0	0
Series B Preferred Stock [Member]
Class of Warrant or Right [Line Items]
Issuance of preferred stock	0	0
Common Stock [Member]
Class of Warrant or Right [Line Items]
Warrants, issued	1,152,125
Warrants, exercise period	5 years
Common Stock [Member] | Post-Reverse-Split Basis [Member]
Class of Warrant or Right [Line Items]
Warrants, issued	209,477
Exercise price of warrant	$ 10.18
Private Placement [Member] | Series B Preferred Stock [Member]
Class of Warrant or Right [Line Items]
Issuance of preferred stock			480,000

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Regulatory Capital Matters (Narrative) (Details) - USD ($) $ in Thousands	Jan. 01, 2019	Dec. 31, 2020
Regulatory Capital Matters [Abstract]
Future percent of common equity to risk-weighted assets	2.50%
Common Equity Tier 1 capital to risk-weighted assets, ratio	4.50%
Capital conservation buffer	2.50%
Common Equity Tier 1 capital to risk weighted assets, upon full implementation, ratio	7.00%
Tier 1 Capital To Risk Weighted Assets Ratio	6.00%
Tier 1 Capital To Risk Weighted Assets Upon Full Implementation Ratio	8.50%
Total Capital To Risk Weighted Assets Ratio	8.00%
Total Capital To Risk Weighted Assets Upon Full Implementation Ratio	10.50%
Minimum Leverage Ratio Based On Required Basel 3 Rules	4.00%
Opening balance in liquidation account		$ 14,300

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Regulatory Capital Matters (Actual And Required Capital Amounts And Ratios Of CFBank) (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Total Capital to risk weighted assets, Actual Amount	$ 136,683	$ 95,164
Tier 1 (Core) Capital to risk weighted assets, Actual Amount	124,678	87,857
Common equity tier 1 capital to risk-weighted assets, Actual Amount	124,678	87,857
Tier 1 (Core) Capital to adjusted total assets (Leverage ratio), Actual Amount	$ 124,678	$ 87,857
Total Capital to risk weighted assets, Actual Ratio	0.1431	0.1296
Tier 1 (Core) Capital to risk weighted assets, Actual Ratio	0.1305	0.1197
Common equity tier 1 capital to risk-weighted assets, Actual Ratio	0.1305%	0.1197%
Tier 1 (Core) Capital to adjusted total assets, Actual Ratio	0.0974	0.1058
Total Capital to risk weighted assets, To Be Well Capitalized Under Applicable Regulatory Capital Standards Amount	$ 95,522	$ 73,425
Tier 1 (Core) Capital to risk weighted assets, To Be Well Capitalized Under Applicable Regulatory Capital Standards Amount	76,418	58,740
Common equity tier 1 capital to risk-weighted assets, To Be Well Capitalized Under Applicable Regulatory Capital Standards Amount	62,089	47,726
Tier 1 (Core) Capital to adjusted total assets, To Be Well Capitalized Under Applicable Regulatory Capital Standards Amount	$ 63,984	$ 41,526
Total Capital to risk weighted assets, To Be Well Capitalized Under Applicable Regulatory Capital Standards Ratio	0.1000	0.1000
Tier 1 (Core) Capital to risk weighted assets, To Be Well Capitalized Under Applicable Regulatory Capital Standards Ratio	0.0800	0.0800
Common equity tier 1 capital to risk-weighted assets, To Be Well Capitalized Under Applicable Regulatory Capital Standards Ratio	0.065%	0.065%
Tier 1 (Core) Capital to adjusted total assets, To Be Well Capitalized Under Applicable Regulatory Capital Standards Ratio	0.0500	0.0500
Basel III Fully Phased-In [Member]
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Total Capital to risk weighted assets, Minimum Capital Required-Basel III Fully Phased-In Amount	$ 100,298	$ 77,097
Tier 1 (Core) Capital to risk weighted assets, Minimum Capital Required-Basel III Fully Phased-In Amount	81,194	62,412
Common equity tier 1 capital to risk-weighted assets, Minimum Capital Required-Basel III Fully Phased-In Amount	66,866	51,398
Tier 1 (Core) Capital to adjusted total assets, Minimum Capital Required-Basel III Fully Phased-In Amount	$ 51,187	$ 33,221
Total Capital to risk weighted assets, Minimum Capital Required-Basel III Fully Phased-In Ratio	0.1050	0.1050
Tier 1 (Core) Capital to risk weighted assets, Minimum Capital Required-Basel III Fully Phased-In Ratio	0.0850	0.0850
Common equity tier 1 capital to risk-weighted assets, Minimum Capital Required-Basel III Fully Phased-In Ratio	0.07%	0.07%
Tier 1 (Core) Capital to adjusted total assets, Minimum Capital Required-Basel III Fully Phased-In Ratio	0.0400	0.0400

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Derivative Instruments (Narrative) (Details) - USD ($)	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Derivative [Line Items]
Net gains or losses recognized in earnings related to yield maintenance provisions and interest-rate swaps	$ 0	$ 0
Interest Rate Swap [Member]
Derivative [Line Items]
Notional amount	46,474,000	12,039,000
Interest-rate swaps	2,392,000
Posted cash collateral	2,392,000
Interest Rate Lock Commitments [Member]
Derivative [Line Items]
Notional amount	1,048,613,000	297,454,000
Fair value, Derivative assets	$ 18,100,000	3,104,000
Interest Rate Lock Commitments [Member] | Minimum [Member]
Derivative [Line Items]
Commitments period	30 days
Interest Rate Lock Commitments [Member] | Maximum [Member]
Derivative [Line Items]
Commitments period	60 days
TBA Mortgage-Back Securities [Member]
Derivative [Line Items]
Posted cash collateral	$ 4,847,000
Notional amount	506,750,000	225,500,000
Fair value	$ (2,690,000)	$ (350,000)

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Derivative Instruments (Summary Of Derivative Instruments) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Interest Rate Swap [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Notional amount	$ 46,474	$ 12,039
Weighted average pay rate on interest-rate swaps	4.19%	4.66%
Weighted average receive rate on interest-rate swaps	3.08%	4.63%
Weighted average maturity (years)	7 years 4 months 24 days	7 years 3 months 18 days
Fair value of interest-rate swaps	$ (1,944)	$ (12)
Yield Maintenance Provisions [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Fair value of yield maintenance provisions	$ 1,944	$ 12

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Derivative Instruments (Schedule Of Mortgage Banking Derivatives) (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Interest Rate Commitments [Member]
Derivatives, Fair Value [Line Items]
Notional Amount, Assets	$ 1,048,613	$ 297,454
Fair value, Derivative assets	18,100	3,104
TBA Mortgage-Back Securities [Member]
Derivatives, Fair Value [Line Items]
Notional Amount, Assets	506,750	225,500
Fair Value, Derivative	$ (2,690)	$ (350)

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Derivative Instruments (Schedule Of Notional Amount Of Loans Sold) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Derivative Instruments [Abstract]
Notional amount of loans sold	$ 2,229,042	$ 411,257

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Derivative Instruments (Schedule Of Revenue Recognized On Mortgage Activities) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Derivative Instruments [Abstract]
Gain on loans sold	$ 61,146	$ 9,603
Gain (loss) from change in fair value of loans held-for-sale	7,046	1,341
Gain (loss) from change in fair value of derivatives	(9,895)	(490)
Revenue recognized on mortgage activities	$ 58,297	$ 10,454

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Loan Commitments And Other Related Activities (Narrative) (Details)	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Contractual Commitments Contingencies And Off Balance Sheet Arrangements [Line Items]
Period for commitments and construction loan commitments	60 days
Construction [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	2.00%	2.00%
Maturities for fixed rate loan commitments	1 month	3 months
Maximum [Member]
Contractual Commitments Contingencies And Off Balance Sheet Arrangements [Line Items]
Interest rates for fixed rate loan commitments	6.50%	8.75%
Maturities for fixed rate loan commitments	30 years	30 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, 2020	Dec. 31, 2019
Commitments to make loans [Member]
Other Contingencies And Commitments [Line Items]
Fixed Rate	$ 1,072,963	$ 314,705
Variable Rate	31,239	43,979
Unused lines of credit [Member]
Other Contingencies And Commitments [Line Items]
Fixed Rate	20,395	10,678
Variable Rate	65,788	55,684
Standby letters of credit [Member]
Other Contingencies And Commitments [Line Items]
Fixed Rate	$ 3,997	$ 1,415

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Parent Company Only Condensed Financial Information (Condensed Balance Sheets) (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
ASSETS
Cash and cash equivalents	$ 221,594	$ 45,879	$ 67,304
Equity securities	5,000
Other assets	34,637	12,254
Total assets	1,476,995	880,545
Liabilities and Equity
Subordinated debentures	14,844	14,806
Stockholders' equity	110,210	80,664	45,559
Total liabilities and stockholder's equity	1,476,995	880,545
Parent Company [Member]
ASSETS
Cash and cash equivalents	1,785	10,037	$ 2,675
Equity securities	5,000
Investment in banking subsidiary	125,172	88,317
Investment in and advances to other subsidiary	241	238
Other assets	2,533	2,045
Total assets	134,731	100,637
Liabilities and Equity
Subordinated debentures	14,844	14,806
Other borrowings	9,500	5,000
Accrued expenses and other liabilities	177	167
Stockholders' equity	110,210	80,664
Total liabilities and stockholder's equity	$ 134,731	$ 100,637

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Parent Company Only Condensed Financial Information (Condensed Statements Of Operations) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Interest income	$ 42,386	$ 35,104
Other income	198	96
Interest expense	14,578	13,404
Loss before income tax and before undistributed subsidiary income	36,283	12,041
Tax effect	6,675	2,440
Net income	29,608	9,601
Comprehensive income	29,676	9,702
Parent Company [Member]
Other income	178	70
Interest expense	1,209	1,353
Other expense	830	758
Loss before income tax and before undistributed subsidiary income	(1,861)	(2,041)
Tax effect	390	427
Loss after income tax and before undistributed subsidiary income	(1,471)	(1,614)
Equity in undistributed subsidiary income	31,079	11,215
Net income	29,608	9,601
Comprehensive income	$ 29,676	$ 9,702

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Parent Company Only Condensed Financial Information (Condensed Statements Of Cash Flows) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Cash flows from operating activities
Net income	$ 29,608	$ 9,601
Amortization, net	(1,510)	(96)
Net cash used by operating activities	(123,465)	(103,538)
Cash flows from investing activities
Purchase of equity securities	(5,000)
Net cash used by investing activities	(259,754)	(111,402)
Cash flows from financing activities:
Net proceeds from the issuance of preferred stock private placement		14,000
Net proceeds from issuance of common stock in private placement		9,641
Proceeds from exercise of stock options	36
Acquisition of treasury shares surrendered upon vesting of restricted stock for payment of taxes	(32)	(23)
Purchase of treasury shares	(648)
Exercise of warrants to common stock		1,258
Dividends paid	(195)
Net cash from financing activities	558,934	193,515
Net change in cash and cash equivalents	175,715	(21,425)
Beginning cash and cash equivalents	45,879	67,304
Ending cash and cash equivalents	221,594	45,879
Parent Company [Member]
Cash flows from operating activities
Net income	29,608	9,601
Effect of subsidiaries' operations	(31,079)	(11,215)
Amortization, net	38	39
Change in other assets and other liabilities	(480)	(939)
Net cash used by operating activities	(1,913)	(2,514)
Cash flows from investing activities
Investments in banking subsidiary	(5,000)	(14,000)
Purchase of equity securities	(5,000)
Net cash used by investing activities	(10,000)	(14,000)
Cash flows from financing activities:
Proceeds from other borrowings	15,000	4,000
Repayments of other borrowings	(10,500)	(5,000)
Net proceeds from the issuance of preferred stock private placement		14,000
Net proceeds from issuance of common stock in private placement		9,641
Proceeds from exercise of stock options	36
Acquisition of treasury shares surrendered upon vesting of restricted stock for payment of taxes	(32)	(23)
Purchase of treasury shares	(648)
Exercise of warrants to common stock		1,258
Dividends paid	(195)
Net cash from financing activities	3,661	23,876
Net change in cash and cash equivalents	(8,252)	7,362
Beginning cash and cash equivalents	10,037	2,675
Ending cash and cash equivalents	$ 1,785	$ 10,037

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Earnings Per Common Share (Computation Of Earnings Per Share) (Details) - USD ($) $ / shares in Units, $ in Thousands		12 Months Ended
		Dec. 31, 2020	Dec. 31, 2019
Basic
Net income		$ 29,608	$ 9,601
Accretion of discount and value of warrants exercised related to Series B preferred stock	[1]		219
Earnings allocated to participating securities (Series C preferred stock)	[2]	(2,280)	(430)
Net income attributable to common stockholders		$ 27,328	$ 9,390
Weighted average common shares outstanding including unvested share-based payment awards		6,072,829	4,582,997
Less: Unvested share-based payment awards-2019 Plan		(43,732)	(1,532)
Average shares		6,029,097	4,581,465
Basic earnings per common share		$ 4.53	$ 2.05
Diluted
Net earnings allocated to common stockholders		$ 27,328	$ 9,390
Weighted average common shares outstanding for basic earnings per common share		6,029,097	4,581,465
Add: Dilutive effects of assumed exercises of stock options		34,158	38,620
Add: Dilutive effects of assumed exercises of stock warrants			6,947
Add: Dilutive effects of unvested share-based payment awards-2019 Plan		43,732	1,532
Average shares and dilutive potential common shares		6,106,987	4,628,564
Diluted earnings per common share		$ 4.47	$ 2.03

[1] All outstanding warrants expired on July 15, 2019.

[2] All 12,607 outstanding shares of Series C preferred stock were converted into a total of 1,260,700 shares of the Company's Non-Voting Common Stock effective as of the close of business on May 28, 2020.

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Earnings Per Common Share (Summary Of Anti-Dilutive Options Or Warrants) (Details) - shares	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Stock Options [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive shares	331	463

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Accumulated Other Comprehensive Income (Schedule Of Accumulated Other Comprehensive Income) (Details) - USD ($) $ in Thousands		12 Months Ended
		Dec. 31, 2020	Dec. 31, 2019
Accumulated Other Comprehensive Income (Loss) [Line Items]
Accumulated other comprehensive gain/(loss), beginning of period		$ 28
Net current-period other comprehensive income		68	$ 101
Accumulated other comprehensive income, end of period		96	28
Unrealized Gains and Losses on Available-for-Sale Securities [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Accumulated other comprehensive gain/(loss), beginning of period	[1]	28	(73)
Other comprehensive gain before reclassifications	[1]	68	101
Less amount reclassified from accumulated other comprehensive loss	[1],[2]
Net current-period other comprehensive income	[1]	68	101
Accumulated other comprehensive income, end of period	[1]	$ 96	$ 28

[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 years ended December 31, 2020 and December 31, 2019.

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Subsequent Events (Narrative) (Details) - USD ($) $ in Thousands	Jan. 28, 2021	Dec. 31, 2020	Dec. 29, 2020	Nov. 30, 2020	Dec. 31, 2019
Subsequent Event [Line Items]
Deposits		$ 1,113,070			$ 746,323
Subordinated debt		$ 14,844			$ 14,806
Branch Purchase And Assumption Agreement [Member]
Subsequent Event [Line Items]
Deposits			$ 100,000
Subordinated debt			$ 15,000	$ 3,100
Percent of deposit premium to the average daily deposits			1.75%
Single Family Residential Mortgage And Home Equity Line [Member] | Branch Purchase And Assumption Agreement [Member]
Subsequent Event [Line Items]
Subordinated debt			$ 13,500
Subsequent Event [Member]
Subsequent Event [Line Items]
Stock Repurchase Program, Number of shares authorized to be repurchased	250,000
Stock Repurchase Program, Expiration date	Feb. 27, 2022