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REGULATORY CAPITAL MATTERS | 9 Months Ended
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Sep. 30, 2012
REGULATORY CAPITAL MATTERS | NOTE 13 – REGULATORY CAPITAL MATTERS CFBank is subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and, additionally for banks, 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: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. Actual and required capital amounts and ratios of CFBank are presented below:
|  |  |  |  |  |  |  |  |  |  |  |  |  | Required |
|  |  |  |  |  |  |  | For Capital |  |  | By Terms Of |
|  | Actual |  |  | Adequacy Purposes |  |  | CFBank Order |
|  | Amount |  |  | Ratio |  |  | Amount |  |  | Ratio |  |  | Amount |  |  | Ratio |
September 30, 2012 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Total Capital to risk weighted assets |  | $ | 24,816 |  |  |  | 20.00 | % |  | $ | 9,926 |  |  |  | 8.00 | % |  | $ | 14,890 |  |  |  | 12.00 | %
Tier 1 (Core) Capital to risk weighted assets |  |  | 23,217 |  |  |  | 18.71 | % |  |  | 4,963 |  |  |  | 4.00 | % |  |  | N/A |  |  |  | N/A |
Tier 1 (Core) Capital to adjusted total assets |  |  | 23,217 |  |  |  | 10.52 | % |  |  | 8,844 |  |  |  | 4.00 | % |  |  | 17,687 |  |  |  | 8.00 | %
Tangible Capital to adjusted total assets |  |  | 23,217 |  |  |  | 10.52 | % |  |  | 3,316 |  |  |  | 1.50 | % |  |  | N/A |  |  |  | N/A |
|  |  |  |  |  |  |  |  |  |  |  |  |  | Required |
|  |  |  |  |  |  |  | For Capital |  |  | By Terms Of |
|  | Actual |  |  | Adequacy Purposes |  |  | CFBank Order |
|  | Amount |  |  | Ratio |  |  | Amount |  |  | Ratio |  |  | Amount |  |  | Ratio |
December 31, 2011 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Total Capital to risk weighted assets |  | $ | 15,351 |  |  |  | 10.30 | % |  | $ | 11,918 |  |  |  | 8.00 | % |  | $ | 17,876 |  |  |  | 12.00 | %
Tier 1 (Core) Capital to risk weighted assets |  |  | 13,436 |  |  |  | 9.02 | % |  |  | 5,959 |  |  |  | 4.00 | % |  |  | N/A |  |  |  | N/A |
Tier 1 (Core) Capital to adjusted total assets |  |  | 13,436 |  |  |  | 5.39 | % |  |  | 9,968 |  |  |  | 4.00 | % |  |  | 19,937 |  |  |  | 8.00 | %
Tangible Capital to adjusted total assets |  |  | 13,436 |  |  |  | 5.39 | % |  |  | 3,738 |  |  |  | 1.50 | % |  |  | N/A |  |  |  | N/A |
The CFBank Order required CFBank to have by September 30, 2011, and maintain thereafter, 8% Tier 1 (Core) Capital to adjusted total assets and 12% Total Capital to risk weighted assets, which it did not meet at September 30, 2011, December 31, 2011 or June 30, 2012. CFBank met the capital requirement at September 30, 2012 as a result of a $13,500 capital contribution from the Holding Company resulting from the net proceeds of the stock offering. However, CFBank will not be considered “well-capitalized” under applicable regulatory capital standards as long as it is subject to individual minimum capital requirements under the CFBank Order. See Note 2 – Going Concern Considerations and Management’s Plans for additional information regarding the CFBank Order. The Qualified Thrift Lender test requires at least 65% of assets be maintained in housing-related finance and other specified areas. If this test is not met, limits are placed on growth, branching, new investments, FHLB advances and dividends, or CFBank must convert to a commercial bank charter. Management believes that CFBank met the Qualified Thrift Lender test at September 30, 2012. CFBank converted from a mutual to a stock institution in 1998, and a “liquidation account” was established at $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 receive a distribution from this account if CFBank liquidated and sufficient funds were available after payment of all CFBank liabilities. Dividends may not reduce CFBank’s stockholder’s equity below the required liquidation account balance. Dividend Restrictions The Holding Company’s principal source of funds for dividend payments is dividends received from CFBank. Banking regulations limit the amount of dividends that may be paid without prior approval of regulatory agencies. Under these regulations, the amount of dividends that may be paid in any calendar year is limited to the current year’s net profits, combined with the retained net profits of the preceding two years, subject to the capital requirements described above. Under the terms of the CFBank Order, CFBank must receive regulatory approval prior to any dividend payments. See Note 2 – Going Concern Considerations and Management’s Plans for additional information on the Orders.

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- Definition The entire disclosure for banks, savings institutions, and credit unions, for regulatory capital requirements imposed by the Federal Reserve System (FRB), the Federal Deposit Insurance Corporation (FDIC), the Office of Thrift Supervision (OTS) or for any state imposed capital requirements, as applicable. The disclosure may include (1) a description of regulatory capital requirements (a) for capital adequacy purposes and (b) established by the prompt corrective action provisions of Section 38 of the Federal Depository Insurance Act; (2) the actual or possible material effects of noncompliance with such requirements; (3) whether the entity is in compliance with the regulatory capital requirements including (a) required and actual ratios and amounts of Tier 1 leverage, Tier 1 risk-based, and total risk-based capital, tangible capital (for savings institutions), and Tier 3 capital for market risk (for certain banks and bank holding companies), (b) factors that may significantly affect capital adequacy; (4) the prompt corrective action category in which the entity was classified as of its most recent notification; (5) whether management believes any conditions or events since notification have changed the entity's category. Also may include additional information that might be disclosed in situations where substantial doubt about the entity's ability to continue as a going concern for a reasonable period of time. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 505 -Section 50 -Paragraph 1C -URI http://asc.fasb.org/extlink&oid=7881181&loc=SL5958572-112826 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 505 -Section 50 -Paragraph 1D -URI http://asc.fasb.org/extlink&oid=7881181&loc=SL5958573-112826 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Audit and Accounting Guide (AAG) -Number AAG-DEP -Paragraph 15, 16, 17 -IssueDate 2006-05-01 -Chapter 17 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 505 -Section 50 -Paragraph 1E -URI http://asc.fasb.org/extlink&oid=7881181&loc=SL5958574-112826 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 505 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=7881181&loc=SL5958568-112826 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 505 -Section 50 -Paragraph 1B -URI http://asc.fasb.org/extlink&oid=7881181&loc=SL5958570-112826 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 505 -Section 50 -Paragraph 1H -URI http://asc.fasb.org/extlink&oid=7881181&loc=d3e65071-112826 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 505 -Section 50 -Paragraph 1A -URI http://asc.fasb.org/extlink&oid=7881181&loc=SL5958569-112826 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 505 -Section 50 -Paragraph 1F -URI http://asc.fasb.org/extlink&oid=7881181&loc=SL5958575-112826 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 505 -Section 50 -Paragraph 1G -URI http://asc.fasb.org/extlink&oid=7881181&loc=SL5958577-112826 + Details
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