About CF Bankshares

CF Bankshares Inc. operates as the bank holding company for CFBank, National Association that provides various financial services. The bank is a nationally chartered boutique commercial bank operating primarily in four major metro markets: Columbus, Cleveland, and Cincinnati, Ohio, and Indianapolis, Indiana. Th bank focuses on serving the financial needs of closely held businesses and entrepreneurs, by providing comprehensive Commercial, Retail and Mortgage Lending services presence. In all regional markets, the bank provides commercial loans and equipment leases, commercial and residential real estate loans and treasury management depository services, residential mortgage lending, and full-service commercial and retail banking services and products. The bank seeks to differentiate itself from its competitors by providing individualized service coupled with direct customer access to decision makers, and ease of doing business. The bank matches the sophistication of much larger banks, without the bureaucracy. The bank also offers its clients the convenience of online internet banking, mobile banking, and remote deposit capabilities. The company’s revenues are derived principally from the generation of interest and fees on loans originated and noninterest income generated on the sale of loans. The company’s primary sources of funds are retail and business deposit accounts and certificates of deposit, brokered certificates of deposit and, to a lesser extent, principal and interest payments on loans and securities, Federal Home Loan Bank (FHLB) advances, other borrowings and proceeds from the sale of loans. Most of the company’s deposits and loans come from its market area. The company’s principal market area for loans and deposits includes the following Ohio counties: Franklin County through its offices in Columbus, Ohio; Delaware County; Ohio; through its Polaris office in Columbus, Ohio; Cuyahoga County, through its office in Woodmere, Ohio and its Ohio City office in Cleveland, Ohio; Summit County through its office in Fairlawn, Ohio; Hamilton County through its offices in Blue Ash, Ohio and its Red Bank office in Cincinnati, Ohio; and Marion County, Indiana through its office in Indianapolis. Lending Activities Repositioning of Residential Mortgage Business Model: In early 2021, a shift in the mortgage industry resulted in significantly fewer refinance opportunities and lower margins on residential mortgage loans. In response, the company strategically scaled down and repositioned its Residential Mortgage Business and exited the direct-to-consumer mortgage business in favor of lending in its regional markets. Loan and Lease Portfolio Composition: The company’s loan and lease portfolio consist 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. The company also finances a variety of commercial and residential construction projects. Commercial, commercial real estate and multi-family mortgage loans, including related construction loans. Commercial, commercial real estate and multi-family mortgage loan balances, including related construction loans. Portfolio single-family residential mortgage loans, including related construction loans. 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. Origination of Loans and Leases: Lending activities are conducted through the company’s offices located in Franklin, Cuyahoga, Delaware, Summit, and Hamilton Counties, Ohio and in Marion County, Indiana. The company originates commercial, commercial real estate, multi-family and single-family residential mortgage loans and also expanded into business financial services in the Columbus, Cleveland, Cincinnati, and Akron, Ohio and Indianapolis, Indiana markets. Commercial, commercial real estate and multi-family loans are originated with fixed, floating and ARM interest rates. Fixed-rate loans are typically limited to terms of three to five years. The bank has also utilized interest-rate swaps to protect the related fixed-rate loans from changes in value due to changes in interest rates. The bank participates in various loan programs offered by the Small Business Administration (the SBA), enabling it to provide its customers and small business owners in its 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, the bank also originated loans under the SBA’s new 7(a) loan program, the 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. The company 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). 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 the company’s primary market area. Loan originations are primarily obtained from the company’s loan officers and their contacts within the local real estate industry and with existing or past customers and members of the local communities. The company offers both fixed-rate and adjustable-rate mortgage (ARM) loans with maturities generally up to 30 years, priced competitively with current market rates. The company offers 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. 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. The bank is a direct endorsed underwriter, a designation by the Department of Housing and Urban Development that allows it to offer loans insured by the Federal Housing Authority (FHA). The bank is approved by the Department of Veterans Affairs (VA) to originate and approve VA loans. Commercial Real Estate and Multi-Family Residential Mortgage Lending: Origination of commercial real estate and multi-family residential mortgage loans continues to be a significant portion of the company’s lending activity. The company originates commercial real estate loans that are secured by properties used for business purposes, such as manufacturing facilities, office buildings or retail facilities. The company originates multi-family residential mortgage loans that are secured by apartment buildings, condominiums, and multi-family residential houses. Commercial real estate and multi-family residential mortgage loans are secured by properties generally located in the company’s primary market area. Underwriting policies provide that commercial real estate and multi-family residential mortgage loans may be made in amounts up to 85% of the lower of the appraised value or purchase price of the property. An independent appraisal of the property is required on all loans greater than or equal to $500,000. In underwriting commercial real estate and multi-family residential mortgage loans, the company considers 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. The company offers 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, the bank accommodates loans to borrowers who desire fixed-rate loans for longer than three to five years. 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 the company’s borrowers also have more than one commercial real estate or multi-family residential mortgage loan outstanding with it. Additionally, some loans may be collateralized by junior liens. Consequently, an adverse development involving one or more loans or credit relationships can expose the company to significantly greater risk of loss compared to an adverse development involving a single-family residential mortgage loan. Commercial Lending: Commercial loans are generally secured by business equipment, inventory, accounts receivable and other business assets. The company offers both fixed- and adjustable-rate commercial loans. Fixed-rate loans are typically limited to a maximum term of five years. Adjustable-rate loans are tied to various market indices and generally adjust monthly or annually. Construction and Land Lending: Construction loans are made to finance the construction of residential and commercial properties generally located within the company’s primary market area. The company’s 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. 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. Home equity lines of credit include those loans the company originates for its portfolio and purchased loans. The company offers a variable rate home equity line of credit product which it originates for its portfolio. Investment Portfolio As of December 31, 2022, the company’s investment portfolio included corporate debt; and issued by U.S. government-sponsored entities and agencies (U.S. Treasury and Mortgage-backed securities – residential). Sources of Funds The company offers a variety of deposit accounts with a range of interest rates and terms, including savings accounts, retail and business checking accounts, money market accounts and certificates of deposit. Regulation and Supervision The company and the bank 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. As a financial holding company, the company is subject to regulation by the Board of Governors of the Federal Reserve Board (the FRB) under the Bank Holding Company Act of 1956, as amended (the BHCA) and to inspection, examination and supervision by the FRB. The company is also subject to the disclosure and regulatory requirements of the Securities Act of 1933, as amended (the Securities Act), and the Securities Exchange Act of 1934, as amended (the Exchange Act), as administered by the Securities and Exchange Commission (the SEC). The 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. The bank, 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, the bank is subject to regulation and examination by the FDIC, which insures the deposits of the bank 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. 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. As a financial holding company, thecompany’s activities are subject to extensive regulation by the FRB. The 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). The bank, as a national bank, is subject to regulation, periodic examination, enforcement authority and oversight by the OCC extending to all aspects of its operations. OCC regulations govern permissible activities, capital requirements, dividend limitations, investments, loans and other matters. The bank also is subject to regulation and examination by the FDIC, which insures the deposits of the bank to the maximum extent permitted by law. Furthermore, thebank 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 bank 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 the bank through interpretations designed to protect consumers. The bank’s deposits are insured up to the applicable limits by the FDIC, and such insurance is backed by the full faith and credit of the United States Government. The general deposit insurance limit is $250,000 per separately insured depositor. As insurer, the FDIC imposes deposit insurance premiums and is authorized to conduct examinations of and to require reporting by FDIC-insured institutions, to prohibit any insured institution from engaging in any activity the FDIC determines to pose a threat to the DIF, and to take enforcement actions against insured institutions. The bank is a member of the FHLB of Cincinnati. As an FHLB member, the bank must maintain an investment in the capital stock of the FHLB of Cincinnati. The bank has established policies and procedures that are believed to be compliant with the requirements of the Patriot Act. 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 CRA requires the bank’s primary federal regulatory agency, the OCC, to assess the bank’s record in meeting the credit needs of the communities it serves. History The company was founded in 1892. It was incorporated as a Delaware corporation in 1998. The company was formerly known as Central Federal Corporation and changed its name to CF Bankshares Inc. in 2020.