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Income Taxes
 6 Months Ended
Jun. 30, 2025
Income Taxes [Abstract]  
Income Taxes

NOTE 12 – INCOME TAXES

At June 30, 2025 and December 31, 2024, the Company had a deferred tax asset recorded in the amount of $4,420 and $4,177, respectively. At June 30, 2025 and December 31, 2024, 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 2021.

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 June 30, 2025 that no valuation allowance was required against the net deferred tax asset.

In 2012, the Company completed a recapitalization program pursuant to which the Holding Company sold $22,500 in common stock, which 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 June 30, 2025, the Company had net operating loss carryforwards of $21,764, which expire at various dates from 2025 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 ASC 740, in August 2012 the Company reduced the carrying value of deferred tax assets, and the corresponding valuation allowance, by the $6,977 tax effect of this lost benefit.

The Company records income tax expense based on the federal statutory rate adjusted for the effect of low income housing credits, tax exempt interest, bank owned life insurance, dividends on equity securities and other miscellaneous items. The effective tax rate was 21.3% and 21.0%, respectively, for the three and six months ended June 30, 2025 and 12.3% and 16.4%, respectively, for the three and six months ended June 30, 2024, which management believes were reasonable estimates for the effective tax rates for such periods.

The following table summarizes the major components creating differences between income taxes at the federal statutory tax rate and the effective tax rate recorded in the Consolidated Statements of Income for the three and six months ended June 30, 2025 and 2024:

 

 

For the three months ended

 

 

For the six months ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

 

 

(unaudited)

 

 

(unaudited)

 

Statutory tax rate

 

 

21.0

%

 

 

21.0

%

 

 

21.0

%

 

 

21.0

%

Increase (decrease) resulting from:

 

 

 

 

 

 

 

 

 

 

 

 

Restricted stock

 

 

(0.1

%)

 

 

0.1

%

 

 

(0.4

%)

 

 

(0.3

%)

Tax exempt interest

 

 

(0.3

%)

 

 

0.0

%

 

 

(0.3

%)

 

 

0.0

%

Tax exempt earnings on bank owned life insurance

 

 

(0.8

%)

 

 

(2.3

%)

 

 

(0.8

%)

 

 

(1.5

%)

Dividends on equity securities

 

 

0.0

%

 

 

(0.6

%)

 

 

(0.1

%)

 

 

(0.4

%)

Tax credit investments

 

 

1.1

%

 

 

(6.4

%)

 

 

1.30

%

 

 

(2.6

%)

Other, net

 

 

0.4

%

 

 

0.5

%

 

 

0.3

%

 

 

0.2

%

Effective tax rate

 

 

21.3

%

 

 

12.3

%

 

 

21.0

%

 

 

16.4

%