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Loans And Leases | 12 Months Ended
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Dec. 31, 2021
Loans And Leases [Abstract] |
Loans And Leases | NOTE 4 – LOANS AND LEASESThe 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, 2021 December 31, 2020Commercial (1)$ 336,881 $ 338,286Real estate: Single-family residential 346,797 147,860Multi-family residential 76,785 45,375Commercial 359,562 277,028Construction 83,360 80,426Consumer: Home equity lines of credit 24,228 20,962Other 2,044 2,429Subtotal 1,229,657 912,366Less: ALLL (15,508) (17,022)Loans and Leases, net$ 1,214,149 $ 895,344 (1)Includes $23,157 and $4,133 of commercial leases at December 31, 2021 and December 31, 2020, respectively. Included in Commercial loans at December 31, 2021 and December 31, 2020, were $445 and $105,269, respectively, 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’s Paycheck Protection Program Lending Facility (“PPPLF”). See Note 10 - FHLB Advances and Other Debt for additional information.Mortgage Purchase Program:CFBank previously participated in a Mortgage Purchase Program with Northpointe Bank (Northpointe), a Michigan banking corporation, from December 2012 until CFBank discontinued its participation in the program in the first quarter of 2021. Pursuant to the terms of a participation agreement, CFBank purchased 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 were individually (MERS) registered loans which were held until funded by the end investor. The mortgage loan investors included Fannie Mae and Freddie Mac, and other major financial institutions. This process on average took 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) were substantially reduced. Therefore, no allowance was allocated by CFBank to these loans. These loans were 100% risk rated for CFBank capital adequacy purposes. Under the participation agreement, CFBank agreed to purchase a 95% ownership/participation interest in each of the aforementioned loans, and Northpointe maintained a 5% ownership interest in each loan it participated. CFBank exited this program during the first quarter of 2021. At December 31, 2021 and 2020, CFBank held $0 and $15,713, respectively, of such loans which have been included in single-family residential loan totals above.Allowance for Loan and Lease Losses:The ALLL is a valuation allowance for probable incurred credit losses in the loan and lease portfolio based on management’s evaluation of various factors including past loan loss experience, the nature and volume of the portfolio, information about specific borrower situations and estimated collateral values, economic conditions and other factors. A provision for loan and lease losses is charged to operations based on management’s periodic evaluation of these and other pertinent factors described in Note 1. The following tables present the activity in the ALLL by portfolio segment for the years ended December 31, 2021, 2020 and 2019: December 31, 2021 Real Estate Consumer Commercial Single-family Multi-family Commercial Construction Home Equity lines of credit Other TotalBeginning balance$ 3,426 $ 1,299 $ 467 $ 9,184 $ 2,254 $ 276 $ 116 $ 17,022Addition to (reduction in)‎provision for loan losses 645 2,040 360 (4,150) (510) (25) 40 (1,600)Charge-offs - (17) - - - - - (17)Recoveries 56 26 - - - 21 - 103Ending balance$ 4,127 $ 3,348 $ 827 $ 5,034 $ 1,744 $ 272 $ 156 $ 15,508 December 31, 2020 Real Estate Consumer Commercial Single-family Multi-family Commercial Construction Home Equity lines of credit Other TotalBeginning balance$ 2,054 $ 948 $ 447 $ 2,604 $ 759 $ 265 $ 61 $ 7,138Addition to (reduction in)‎provision for loan losses 2,005 745 20 6,580 1,495 15 55 10,915Charge-offs (648) (425) - - - (21) - (1,094)Recoveries 15 31 - - - 17 - 63Ending 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 TotalBeginning balance$ 1,819 $ 1,061 $ 612 $ 2,274 $ 739 $ 410 $ 97 $ 7,012Addition to (reduction in)‎provision for loan losses 235 (120) (165) 225 20 (195) - - Charge-offs - - - - - - (36) (36)Recoveries - 7 - 105 - 50 - 162Ending 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, 2021: Real Estate Consumer Commercial Single-‎family Multi-‎family Commercial Construction Home Equity‎lines of credit Other Total ALLL: Ending allowance balance attributable to loans: Individually evaluated for impairment $ - $ - $ - $ 20 $ - $ - $ - $ 20 Collectively evaluated for impairment 4,127 3,348 827 5,014 1,744 272 156 15,488 Total ending allowance balance $ 4,127 $ 3,348 $ 827 $ 5,034 $ 1,744 $ 272 $ 156 $ 15,508 Loans: Individually evaluated for impairment $ 221 $ 99 $ - $ 2,658 $ - $ - $ - $ 2,978 Collectively evaluated for impairment 336,660 346,698 76,785 356,904 83,360 24,228 2,044 1,226,679 Total ending loan balance $ 336,881 $ 346,797 $ 76,785 $ 359,562 $ 83,360 $ 24,228 $ 2,044 $ 1,229,657 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 Equity‎lines of credit Other TotalALLL: Ending allowance balance attributable to loans: Individually evaluated for impairment $ - $ - $ - $ 23 $ - $ - $ - $ 23Collectively evaluated for impairment 3,426 1,299 467 9,161 2,254 276 116 16,999Total 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 $ - $ - $ - $ 3,090Collectively evaluated for impairment 338,018 147,756 45,375 274,310 80,426 20,962 2,429 909,276Total ending loan balance $ 338,286 $ 147,860 $ 45,375 $ 277,028 $ 80,426 $ 20,962 $ 2,429 $ 912,366 The following tables present loans individually evaluated for impairment by class of loans as of and for the year ended December 31, 2021, 2020 and 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, 2021, 2020 and 2019 totaled $169, $159 and $168, respectively. At or for the year ended December 31, 2021: Unpaid Principal Balance Recorded Investment ALLL Allocated Average Recorded Investment Interest Income RecognizedWith no related allowance recorded: Real estate: Commercial: Owner occupied$ - $ - $ - $ - $ - Total with no allowance recorded - - - - - With an allowance recorded: Commercial (1) 485 221 - 241 9 Real estate: Single-family residential (1) 99 99 - 101 6 Commercial: Non-owner occupied 2,658 2,658 20 2,688 150 Total with an allowance recorded 3,242 2,978 20 3,030 165 Total$ 3,242 $ 2,978 $ 20 $ 3,030 $ 165 (1)Allowance recorded is less than $1 resulting in rounding to zero At or for the year ended December 31, 2020: Unpaid Principal Balance Recorded Investment ALLL Allocated Average Recorded Investment Interest Income RecognizedWith no related allowance recorded: Real estate: Commercial: Owner occupied$ - $ - $ - $ - $ - 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 $1 resulting in rounding to zero‎ At or for the year ended December 31, 2019: Unpaid Principal Balance Recorded Investment ALLL Allocated Average Recorded Investment Interest Income RecognizedWith no related allowance recorded: Real estate: Commercial: Owner occupied$ - $ - $ - $ 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 Multi-family residential - - - - - 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, 2021 and 2020: 2021 2020Loans past due over 90 days still on accrual$ - $ - Nonaccrual loans: Commercial 147 190Real estate: Single-family residential 656 421Commercial: Consumer: Home equity lines of credit: Originated for portfolio 153 12Purchased for portfolio 41 72Total nonaccrual 997 695Total nonperforming loans$ 997 $ 695 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, 2021 or December 31, 2020. The following table presents the aging of the recorded investment in past due loans and leases by class of loans as of December 31, 2021: 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 DueCommercial$ - $ - $ - $ - $ 336,881 $ 147Real estate: Single-family residential 2,144 652 563 3,359 343,438 93Multi-family residential - - - - 76,785 - Commercial: Non-owner occupied - - - - 185,130 - Owner occupied - - - - 134,352 - Land - - - - 40,080 - Construction - - - - 83,360 - Consumer: Home equity lines of credit: Originated for portfolio 2 - 153 155 23,909 - Purchased for portfolio - - 41 41 123 - Other - - - - 2,044 - Total$ 2,146 $ 652 $ 757 $ 3,555 $ 1,226,102 $ 240 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 DueCommercial$ - $ - $ - $ - $ 338,286 $ 190Real estate: Single-family residential 1,747 - 315 2,062 145,798 106Multi-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 12Purchased for portfolio - - 46 46 143 26Other - - - - 2,429 - Total$ 1,747 $ 78 $ 361 $ 2,186 $ 910,180 $ 334 Short-term Loan DeferralsUnder 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, 2021, there were no loans remaining on temporary deferrals under this program. At December 31, 2020, loans with an outstanding balance of approximately $528 were on temporary deferrals. 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, 2021 and December 31, 2020, TDR’s totaled $2,978 and $3,090, respectively. The Company allocated $20 and $23 of specific reserves to loans modified in TDRs as of December 31, 2021 and 2020, respectively. The Company had not committed to lend any additional amounts as of December 31, 2021 or 2020 to customers with outstanding loans that were classified as nonaccrual TDRs. During the year ended December 31, 2021, there were no loans modified as a TDR. 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. The TDR described above resulted in a $264 charge off during the year ended December 31, 2020.There were no TDR’s that went into payment default during the years ended December 31, 2021 and December 31, 2020. In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed under the Company’s internal underwriting policy.Nonaccrual loans include loans that were modified and identified as TDRs and the loans are not performing. At December 31, 2021 and 2020, nonaccrual TDRs were as follows: 2021 2020Commercial$ 147 $ 190Total$ 147 $ 190 Nonaccrual loans at December 31, 2021 and 2020 did not include $2,831 and $2,900, 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 typically performed 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, 2021 and based on the most recent analysis performed follows. Not Rated Pass Special Mention Substandard Doubtful TotalCommercial$ - $ 336,660 $ - $ 74 $ 147 $ 336,881Real estate: Single-family residential 346,141 - - 656 - 346,797 Multi-family residential - 76,785 - - - 76,785 Commercial: Non-owner occupied - 182,472 - 2,658 - 185,130 Owner occupied - 132,470 1,882 - - 134,352 Land - 40,080 - - - 40,080 Construction - 82,825 535 - - 83,360Consumer: Home equity lines of credit: Originated for portfolio 23,911 - - 153 - 24,064 Purchased for portfolio 123 - - 41 - 164 Other 2,044 - - - - 2,044 $ 372,219 $ 851,292 $ 2,417 $ 3,582 $ 147 $ 1,229,657 The recorded investment in loans and leases by risk category and class of loans as of December 31, 2020 follows. Not Rated Pass Special Mention Substandard Doubtful TotalCommercial$ 1 $ 337,110 $ 664 $ 321 $ 190 $ 338,286Real 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 - - 80,426Consumer: 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 Leases:The following lists the components of the net investment in direct financing leases: December 31, 2021 December 31, 2020Total minimum lease payments to be received$ 25,488 $ 4,459Less: unearned income (2,385) (326)Plus: Indirect initial costs 54 -Net investment in direct financing leases$ 23,157 $ 4,133 The following summarizes the future minimum lease payments receivable in subsequent fiscal years: 2022 6,3032023 6,1862024 5,7802025 4,8442026 2,101Thereafter 274 $ 25,488

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