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Regulatory Capital Matters | 9 Months Ended
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Sep. 30, 2016
Regulatory Capital Matters [Abstract] |
Regulatory Capital Matters | ﻿ NOTE 8 – REGULATORY CAPITAL MATTERS CFBank is subject to regulatory capital requirements administered by federal banking agencies. Prompt corrective action regulations involve quantitative measures of assets, liabilities, and certain off balance-sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action. Prompt corrective action regulations provide five classifications for banking organizations: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If a banking organization is classified as adequately capitalized, regulatory approval is required to accept brokered deposits. If a banking organization is classified as undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. In July 2013, the Holding Company’s primary federal regulator, the FRB, published final rules (the “Basel III Capital Rules”) establishing a new comprehensive capital framework for U.S. banking organizations. The rules implement the Basel Committee's December 2010 framework known as “Basel III” for strengthening international capital standards as well as certain provisions of the Dodd-Frank Act. The Basel III Capital Rules provide higher capital requirements and more restrictive leverage and liquidity ratios than those previously in place. In addition, in order to avoid limitations on capital distributions, such as dividend payments and certain bonus payments to executive officers, the Basel III Capital Rules require insured financial institutions to hold a capital conservation buffer of common equity tier 1 capital above the minimum risk-based capital requirements. The capital conservation buffer will be phased in over time, becoming effective on January 1, 2019, and will consist of an additional amount of common equity equal to 2.5% of risk-weighted assets. The Basel III Capital Rules revise the regulatory agencies' prompt corrective action framework by incorporating the new regulatory capital minimums and updating the definition of common equity. The Basel III Capital Rules became effective for CFBank on January 1, 2015, and will be fully phased in by January 1, 2019. Quantitative measures established by the Basel III Capital Rules to ensure capital adequacy require the maintenance of minimum amounts and ratios of Common Equity Tier 1 capital, Tier 1 capital and Total capital, as defined in the regulations, to risk-weighted assets, and of Tier 1 capital to adjusted quarterly average assets (“Leverage Ratio”). CFBank’s implementation of the new rules on January 1, 2015 did not have a material impact on our capital needs or classifications. When fully phased in on January 1, 2019, the Basel III Capital Rules will require CFBank to maintain: 1) a minimum ratio of Common Equity Tier 1 capital to risk-weighted assets of 4.5%, plus a 2.5% “capital conservation buffer” (resulting in a minimum ratio of Common Equity Tier 1 capital to risk-weighted assets of 7.0% upon full implementation); 2) a minimum ratio of Tier 1 capital to risk-weighted assets of 6.0%, plus the capital conservation buffer (resulting in a minimum 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 implementation of the capital conservation buffer began on January 1, 2016 at the 0.625% level and will be phased in over a four-year period increasing by increments of that amount on each subsequent January 1 until it reaches 2.5% on January 1, 2019. The capital conservation buffer is designed to absorb losses during periods of economic stress. Failure to maintain the minimum Common Equity Tier 1 capital ratio plus the capital conservation buffer will result in potential restrictions on a banking institution’s ability to pay dividends, repurchase stock and/or pay discretionary compensation to its employees. The CFBank Order previously required CFBank to maintain an 8% Tier 1 (Core) Capital to adjusted total assets and 12% Total Capital to risk weighted assets. Although the CFBank Order was terminated by the OCC effective January 23, 2014, CFBank remained subject to the heightened capital requirements imposed by the OCC and was required to maintain an 8% Tier 1 (core) Capital ratio to adjusted total assets and 12% Total Capital to risk weighted assets, until December 23, 2015. CFBank met these heightened capital requirements imposed by the OCC for all applicable periods. See Note 2-Regulatory Order Considerations for additional information. The following tables present actual and required capital ratios as of September 30, 2016 and December 31, 2015 for CFBank under the Basel III Capital Rules. The minimum required capital amounts presented include the minimum required capital levels as of September 30, 2016, based on the phase-in provisions of the Basel III Capital Rules and the minimum required capital levels as of January 1, 2019 when the Basel III Capital Rules have been fully phased-in. 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. ﻿
﻿ |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿ |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿ |  |  |  |  |  |  |  |  |  |  |  |  |  | To Be Well
﻿ |  |  |  |  |  | Minimum Capital |  |  | Minimum Capital |  |  | Capitalized Under
﻿ |  |  |  |  |  | Required-Basel III |  |  | Required-Basel III |  |  | Applicable Regulatory
﻿ |  | Actual |  |  | Phase-In Schedule |  |  | Fully Phased-In |  |  | Capital Standards
﻿ |  | Amount | Ratio |  |  | Amount | Ratio |  |  | Amount | Ratio |  |  | Amount | Ratio
﻿ |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿September 30, 2016 (unaudited) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿Total Capital to risk |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿ weighted assets | $ | 43,557 | 13.11% |  | $ | 28,676 | 8.63% |  | $ | 34,889 | 10.50% |  | $ | 33,228 | 10.00%
﻿ |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿Tier 1 (Core) Capital to risk |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿ weighted assets |  | 39,369 | 11.85% |  |  | 22,030 | 6.63% |  |  | 28,244 | 8.50% |  |  | 26,582 | 8.00%
﻿ |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿Common equity tier 1 capital |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿to risk-weighted assets |  | 39,369 | 11.85% |  |  | 17,046 | 5.13% |  |  | 23,260 | 7.00% |  |  | 21,598 | 6.50%
﻿ |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿Tier 1 (Core) Capital to |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿ adjusted total assets (Leverage ratio) |  | 39,369 | 10.28% |  |  | 15,313 | 4.00% |  |  | 15,313 | 4.00% |  |  | 19,141 | 5.00%
﻿ ﻿ ﻿
﻿ |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿ |  |  |  |  |  |  |  |  |  | To Be Well |  |  |  |
﻿ |  |  |  |  |  |  |  |  |  | Capitalized Under |  |  | Required
﻿ |  |  |  |  |  | For Capital |  |  | Applicable Regulatory |  |  | Pursuant to
﻿ |  | Actual |  |  | Adequacy Purposes |  |  | Capital Standards |  |  | OCC Commitment (1)
﻿ |  | Amount | Ratio |  |  | Amount | Ratio |  |  | Amount | Ratio |  |  | Amount | Ratio
﻿ |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿December 31,2015 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿Total Capital to risk |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿ weighted assets | $ | 41,528 | 13.67% |  | $ | 24,310 | 8.00% |  | $ | 30,388 | 10.00% |  | $ | N/A | N/A
﻿ |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿Tier 1 (Core) Capital to risk |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿ weighted assets |  | 37,694 | 12.40% |  |  | 18,233 | 6.00% |  |  | 24,310 | 8.00% |  |  | N/A | N/A
﻿ |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿Common equity tier 1 capital |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿to risk-weighted assets |  | 37,694 | 12.40% |  |  | 13,675 | 4.50% |  |  | 19,752 | 6.50% |  |  | N/A | N/A
﻿ |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿Tier 1 (Core) Capital to |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿ adjusted total assets |  | 37,694 | 11.12% |  |  | 13,557 | 4.00% |  |  | 16,946 | 5.00% |  |  | N/A | N/A
﻿
| (1) |  | The heightened capital requirements were applicable to CFBank until December 23, 2015, under the CFBank Order and the subsequent commitments made by CFBank to the OCC. See Note 2- Regulatory Order Considerations for additional information.
﻿ The Qualified Thrift Lender test requires CFBank to maintain at least 65% of assets in housing‑related finance and other specified areas. If this test is not met, limits are placed on growth, branching, new investments, FHLB advances and dividends. Management believes that this test was met by CFBank at September 30, 2016 and December 31, 2015. CFBank converted from a mutual to a stock institution in 1998, and a “liquidation account” was established in the amount 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 receive a distribution from this account if CFBank liquidated and its assets exceeded its liabilities. Dividends may not reduce CFBank’s stockholder’s equity below the required liquidation account balance. Dividend Restrictions: The Holding Company’s principal source of funds for dividend payments is dividends received from CFBank. Banking regulations limit the amount of dividends that may be paid without prior approval of regulatory agencies. Under these regulations, the amount of dividends that may be paid in any calendar year is limited to the current year’s net profits, combined with the retained net profits of the preceding two years, subject to the capital requirements described above. Any future dividend payments by CFBank to the Holding Company would be based on future earnings and, if necessary, regulatory approval. Prior to January 8, 2016, any dividends by the Holding Company on its common stock or Series B Preferred Stock, and any dividends or capital contributions by CFBank to the Holding Company, were also subject to prior regulatory approval pursuant to the Orders and the commitments made by the Holding Company and CFBank in connection with the release of the Orders. The Holding Company received prior approval from the FRB for the payment of quarterly cash dividends on its Series B Preferred Stock in each of the previous quarters commencing with the first dividend payment on July 15, 2014 through the dividend payment on January 15, 2016. The Holding Company’s ability to pay dividends on its stock is also conditioned upon the payment, on a current basis, of quarterly interest payments on the subordinated debentures underlying the Company’s trust preferred securities. Additionally, so long as the Company’s Series B Preferred Stock remains outstanding, the Holding Company will be prohibited from paying dividends (other than dividends payable solely in shares) on the Company’s common stock for the then-current dividend period, unless full dividends on the Series B Preferred Stock have been paid or set aside for payment. Dividends on the Series B Preferred Stock are non-cumulative, which means that if for any reason we do not declare cash dividends on the Series B Preferred Stock for a quarterly dividend period we will have no obligation to pay any dividends for that period (i.e., the dividends will not accrue or cumulate), whether or not we declare dividends on the Series B Preferred Stock for any subsequent dividend period. Additionally, CFBank does not intend to make distributions to the Holding Company that would result in a recapture of any portion of its thrift bad debt reserve as discussed in Note 10-Income Taxes.

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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 1G -URI http://asc.fasb.org/extlink&oid=35709795&loc=SL5958577-112826 Reference 2: 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=35709795&loc=SL5958572-112826 Reference 3: 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=35709795&loc=SL5958574-112826 Reference 4: 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=35709795&loc=d3e65071-112826 Reference 5: 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=35709795&loc=SL5958569-112826 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=35709795&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 1F -URI http://asc.fasb.org/extlink&oid=35709795&loc=SL5958575-112826 Reference 8: 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=35709795&loc=SL5958568-112826 Reference 9: 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=35709795&loc=SL5958573-112826 + Details
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