Annual Report - 2024

2024

Annual Report

CF Bankshares Inc.

TABLE OF CONTENTS

Page

MESSAGE TO SHAREHOLDERS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Selected Financial and Other Data 1

Forward-Looking Statements 3

Business Overview 3

Critical Accounting Policies and Estimates 4

General 5

Financial Condition 5

Comparison of Results of Operations for 2024 and 2023 8

Comparison of Results of Operations for 2023 and 2022 9

Liquidity and Capital Resources 12

Impact of Inflation 14

Quantitative and Qualitative Disclosures about Market Risk 14

FINANCIAL STATEMENTS

Management's Report on Internal Control Over Financial Reporting 16

Report of Independent Registered Public Accounting Firm 17

Consolidated Financial Statements 22

Notes to Consolidated Financial Statements 28

BOARD OF DIRECTORS AND OFFICERS 68 CFBANK LOCATIONS 69 CORPORATE DATA 70

Annual Report 70

Annual Meeting 70

Shareholder Services 70

Dear Fellow Shareholders,

Throughout 2024, we faced challenges arising from the elevated interest rate environment and credit losses on two loan participations originated in previous years. While these issues impacted our overall 2024 results, they did not overshadow the significant achievements and skilled navigation of interest rate volatility demonstrated by our experienced CFBank Team. We believe that through the expertly executed business adjustments by our CFBank Team, we are well-positioned for improved operating results moving forward. Consistent with this belief, our fourth Quarter 2024 results began to reflect improved margins and operational stability.

Our core strengths and fundamentals remained robust throughout 2024, enabling us to achieve targeted quality growth across key business areas, including loans, deposits, and fee income. Initiatives focused on expanding our Commercial Banking franchise, growing non-interest bearing and other low-cost deposits, and enhancing fee income through products and services such as Cash Management and Credit Cards are translating into improved revenue and earnings growth. Net growth rates were tempered by substantial loan payoffs, as well as a focused strategy to incentivize the refinancing of low-rate Residential Mortgage Loans to saleable loans. Additionally, our efforts to reduce lower-rate Portfolio Residential Mortgage Loans culminated in sales to two buyers during the first quarter of 2025. Proceeds from these sales will be redeployed into higher-yielding Commercial and Business loan relationships as we continue to execute our strategy of shrinking the Residential portfolio while expanding the Commercial Relationship Banking business.

Looking Ahead to 2025

We are gaining business momentum as we enter 2025, operating with greater stability in loan pricing, deposit costs, and funding. Our cost of funds and incremental deposit expenses are declining more rapidly than those of many competitors, positioning us to capitalize on emerging business opportunities.

Furthermore, we are expanding and strengthening our banking teams by recruiting experienced top talent from regional banks. The addition of experienced Bankers enhances our capacity and deepens our presence in all five (5) regional markets, providing a solid foundation for sustained business development. Our pipelines continue to be very strong, driven by our success in attracting high-quality Commercial Banking relationships aligned with our strategic business mix.

We have also seen interest from other banks in acquiring portfolios of Residential Mortgage Loans. These efforts support an optimized business mix while improving capital efficiency and operating leverage, enabling us to focus on building comprehensive Commercial Banking relationships as opposed to primarily loan-only Residential Mortgages.

Community Reinvestment Act ("CRA") activities are progressing well as we expand loan volumes and investments across all our regional market locations, including Greater Columbus, Cleveland, Cincinnati, Indianapolis, and Akron. Our upcoming CRA exam is scheduled for 2026.

Additionally, our Board of Directors has adopted a stock buyback program, allowing for opportunistic repurchases of up to 325,000 shares, or approximately 5% of total shares outstanding, on or before January 31, 2026.

We believe that our core businesses and opportunities remain healthy. We foresee continued strengthening of our Business. Near term risks include interest rates which remain somewhat elevated, also tariff uncertainty, along with underlying economic conditions, which in turn may ultimately impact upon Credit losses.

Optimistic Outlook

We are more optimistic than ever about our business prospects in 2025. With stabilized interest rates, strengthened teams, and robust pipelines, CFBank is poised to deliver improved results while further enhancing the value of our banking franchise.

On behalf of our Board of Directors and CFBank Team members, we sincerely thank you, our Shareholders, for your confidence and continued support.

Indeed, our best days lie ahead!

Timothy T. O'Dell Robert E. Hoeweler

President and CEO Chairman of the Board

CF Bankshares Inc. CF Bankshares Inc.

CONDENSED CONSOLIDATED FINANCIAL DATA

The following information is derived from and should be read in conjunction with our audited Consolidated Financial Statements, the related Notes and Management's Discussion and Analysis of Financial Condition and Results of Operations.

At December 31,

2024 2023 2022 2021 2020

(Dollars in thousands)

For the year ended December 31,

2024 2023 2022 2021 2020

(Dollars in thousands)

At or for the year ended December 31,

2024 2023 2022 2021 2020

(Dollars in thousands)

(1) Loans and leases, net represents the recorded investment in loans net of the allowance for credit losses on loans and leases (ACL - Loans).

(2) Asset quality ratios and capital ratios are end-of-period ratios. All other ratios are based on average monthly balances during the indicated periods.

(3) Calculations of yield are presented on a taxable equivalent basis using the federal income tax rate of 21%.

(4) The average interest rate spread represents the difference between the weighted average yield on average interest-earning assets and the weighted average cost of average interest-bearing liabilities.

(5) The net interest margin represents net interest income as a percent of average interest-earning assets.

(6) The efficiency ratio equals noninterest expense (excluding amortization of intangibles and foreclosed asset write-downs) divided by net interest income plus noninterest income (excluding gains or losses on securities transactions).

(7) Regulatory capital ratios of CFBank.

(8) Nonperforming loans consist of nonaccrual loans and other loans 90 days or more past due.

(9) Nonperforming assets consist of nonperforming loans and foreclosed assets.

n/m - not meaningful

Statements in this Annual Report that are not statements of historical fact are forward-looking statements which are made in good faith by us. Forward-looking statements include, but are not limited to: (1) projections of revenues, income or loss, earnings or loss per share of common stock, capital structure and other financial items; (2) plans and objectives of the management or Boards of Directors of Holding Company or CFBank; (3) statements regarding future events, actions or economic performance; and (4) statements of assumptions underlying such statements. Words such as "estimate," "strategy," "may," "believe," "anticipate," "expect," "predict," "will," "intend," "plan," "targeted," and the negative of these terms, or similar expressions, are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements. Various risks and uncertainties may cause actual results to differ materially from those indicated by our forward-looking statements, including, without limitation, those risks set forth in the section captioned "RISK FACTORS" in Part I, Item 1A of the Company's Form 10-K for the year ended December 31, 2024.

Forward-looking statements are not guarantees of performance or results. A forward-looking statement may include a statement of the assumptions or bases underlying the forward-looking statement. We believe that we have chosen these assumptions or bases in good faith and that they are reasonable. We caution you, however, that assumptions or bases almost always vary from actual results, and the differences between assumptions or bases and actual results can be material. The forward-looking statements included in this Annual Report speak only as of the date hereof. We undertake no obligation to publicly release revisions to any forward-looking statements to reflect events or circumstances after the date of such statements, except to the extent required by law.

Business Overview

The Holding Company is a financial holding company that owns 100% of the stock of CFBank, which was formed in Ohio in 1892 and converted from a federal savings association to a national bank on December 1, 2016. Prior to December 1, 2016, the Holding Company was a registered savings and loan holding company. Effective as of December 1, 2016 and in conjunction with the conversion of CFBank to a national bank, the Holding Company became a registered bank holding company and elected financial holding company status with the FRB. Effective as of July 27, 2020, the Company changed its name from Central Federal Corporation to CF Bankshares Inc.

CFBank 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, CFBank 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. CFBank seeks to differentiate itself from its competitors by providing individualized service coupled with direct customer access to decision-makers, and ease of doing business. We believe that CFBank matches the sophistication of much larger banks, without the bureaucracy. CFBank also offers its clients the convenience of online banking, mobile banking and remote deposit capabilities.

Most of our deposits and loans come from our market area. Our principal market area for deposits and loans includes the following counties in Ohio and Indiana: Franklin County, Ohio through our offices in Columbus, Ohio; Delaware County, Ohio through our Polaris office in Columbus, Ohio; Cuyahoga County, Ohio through our office in Orange Village, Ohio and our Ohio City office in Cleveland, Ohio; Summit County, Ohio through our office in Fairlawn, Ohio; Hamilton County, Ohio through our offices in Blue Ash, Ohio and our Red Bank office in Cincinnati, Ohio; and Marion County, Indiana through our office in Indianapolis. Because of CFBank's concentration of business activities in Ohio, the Company's financial condition and results of operations depend in large part upon economic conditions in Ohio.

CECL Implementation. In June 2016, the FASB issued Accounting Standards Update ("ASU") No. 2016-13 "Financial Instruments -Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments." This ASU requires a new Current Expected Credit Losses ("CECL") methodology that replaced the previous "incurred loss" model for measuring credit losses, which encompassed allowances for current known and inherent losses within the portfolio. CECL provides for an "expected loss" model for measuring credit losses, which encompasses allowances for losses expected to be incurred over the life of the portfolio. The CECL model requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations now use forward-looking information to better inform their credit loss estimates. Many of the loss estimation techniques applied historically are still permitted, although the inputs to those techniques reflect the full amount of expected credit losses. Organizations continue to use judgment to determine which loss estimation method is appropriate for their circumstances. ASU 2016-13 requires enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization's portfolio. These disclosures include qualitative and quantitative requirements that provide additional information about the amounts recorded in the financial statements. In addition, ASU 2016-13 amended the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. ASU 2016-13 was effective for the Company on January 1, 2023.

The CECL methodology required under ASU 2016-13 applies to loans held for investment, held to maturity debt securities, and off balance-sheet credit exposures. The ASU allows for several different methods of computing the allowance for credit losses. Based on its analysis of observable data, the Company concluded the average charge-off method to be the most appropriate and statistically relevant. A lookback to March 31, 2000 was utilized as the historical loss period due to its inclusion of several economic cycles and relevance to real estate secured assets.

The expected loss estimate is made up of a historical lookback of actual losses applied over the life of the loan portfolio and adjusted for qualitative factors and forecasted losses based on economic and forward-looking data applied over a reasonable and supportable forecast period.

The impact of the Company's adoption of ASU 2016-13 effective January 1, 2023 was a one-time cumulative-effect adjustment increasing our reserves for loans and unfunded commitments by $49,000.

The qualitative impact of the accounting standard is still directed by many of the same factors that impacted the previous methodology for computing the allowance for loan and lease losses (ALLL) including, but not limited to, economic conditions, quality and experience of staff, changes in the value of collateral, concentrations of credit in loan types or industries and changes to lending policies. In addition to this, the Company also uses reasonable and supportable forecasts. Examples of this are regression analyses of data from the Federal Open Market Committee quarterly economic projections for change in real GDP and of national unemployment.

Critical Accounting Policies and Estimates

We follow financial accounting and reporting policies that are in accordance with GAAP and conform to general practices within the banking industry. These policies are presented in Note 1 to our Consolidated Financial Statements. Some of these accounting policies are considered to be critical accounting policies, which are those policies that are both most important to the portrayal of the Company's financial condition and results of operations, and require management's most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Application of assumptions different than those used by management could result in material changes in our financial condition or results of operations. These policies, current assumptions and estimates utilized, and the related disclosure of this process, are determined by management and routinely reviewed with the Audit Committee of the Board of Directors. We believe that the judgments, estimates and assumptions used in the preparation of the Consolidated Financial Statements were appropriate given the factual circumstances at the time.

We have identified the following accounting policy that it is the critical accounting policy, and an understanding of this policy is necessary to understand our financial statements. The following discussion details the critical accounting policy and the nature of the estimates made by management.

Determination of the allowance for credit losses on loans (ACL - Loans) . The ACL - Loans represents the Company's best estimate of current expected credit losses (CECL) on loans and leases using relevant available information, from internal and external sources, related to past events, current conditions, and reasonable and supportable forecasts. Historical credit loss experience provides the basis for the estimation of expected credit losses. The CECL calculation is performed and evaluated quarterly and losses are estimated over the expected life of the loan. The level of the ACL - Loans is believed to be adequate to absorb all expected future losses inherent in the loan portfolio at the measurement date.

In calculating the ACL - Loans, the loan portfolio was pooled into loan segments with similar risk characteristics. Common characteristics include the type or purpose of the loan, underlying collateral and historical/expected credit loss patterns. In developing the loan segments, the Company analyzed the degree of correlation in how loans within each portfolio respond when subjected to varying economic conditions and scenarios as well as other portfolio stress factors.

The expected credit losses are measured over the life of each loan segment utilizing the average charge-off methodology combined with economic forecast models to estimate the current expected credit loss inherent in the loan portfolio. This approach is also leveraged to estimate the expected credit losses associated with unfunded loan commitments incorporating expected utilization rates.

The Company sub-segmented certain commercial portfolios by risk level where appropriate. The Company utilized a one-year reasonable and supportable economic forecast period.

The Company qualitatively adjusts model results for risk factors that are not inherently considered in the historical losses, but are nonetheless relevant in assessing the expected credit losses within the loan portfolio. These adjustments may increase or decrease the estimate of expected credit losses based upon the assessed level of risk for each qualitative factor. The various risks that may be considered in making qualitative adjustments include, among other things, the impact of (i) changes in economic conditions, (ii) changes in the nature and volume of the loan portfolio, (iii) changes in the existence, growth and effect of any concentrations in credit,

(iv) changes in lending policies and procedures, including changes in underwriting standards and practices for collections, write-offs, and recoveries, (v) changes in the quality of the credit review function, (vi) changes in the experience, ability and depth of lending management and staff, (vii) changes in the volume and severity of past due and adversely classified loans and the volume of non-

accrual loans, (viii) changes in the value of underlying collateral for collateral-dependent loans, and (ix) other environmental factors such as regulatory, legal and technological considerations, as well as competition.

In some cases, management may determine that an individual loan exhibits unique risk characteristics which differentiate the loan from other loans within the loan segments. In such cases, the loans are evaluated for expected credit losses on an individual basis and excluded from the collective evaluation. Specific reserve allocations of the allowance for credit losses are determined by analyzing the borrower's ability to repay amounts owed, collateral deficiencies, the relative risk grade of the loan and economic conditions affecting the borrower's industry, among other things. A loan is considered to be collateral dependent when, based upon management's assessment, the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. In such cases, expected credit losses are based on the fair value of the collateral at the measurement date, adjusted for estimated selling costs if satisfaction of the loan depends on the sale of the collateral. The fair value of collateral supporting collateral dependent loans is evaluated on a quarterly basis. Based on the variables involved and the fact that management must make judgments about outcomes that are inherently uncertain, the determination of the ACL - Loans is considered to be a critical accounting policy. Additional information regarding this policy is included in the section titled "Financial Condition - Allowance for Credit Losses on Loans" and in Notes 1, 4 and 6 in the accompanying Notes to Consolidated Financial Statements.

General

Our net income is dependent primarily on net interest income, which is the difference between the interest income earned on loans and securities and our cost of funds, consisting of interest paid on deposits and borrowed funds. Net interest income is affected by regulatory, economic and competitive factors that influence interest rates, loan demand, the level of nonperforming assets and deposit flows.

Net income is also affected by, among other things, provisions for loan and lease losses, loan fee income, service charges, gains on loan sales, operating expenses, and taxes. Operating expenses principally consist of employee compensation and benefits, occupancy, advertising and marketing, data processing, professional fees, FDIC insurance premiums and other general and administrative expenses. Our results of operations are significantly affected by general economic and competitive conditions, changes in market interest rates and real estate values, government policies and actions of regulatory authorities. Our regulators have extensive discretion in their supervisory and enforcement activities, including the authority to impose restrictions on our operations, to classify our assets and to require us to increase the level of our allowance for credit losses. Any change in such regulation and oversight, whether in the form of regulatory policy, regulations, legislation or supervisory action, may have a material impact on our business, financial condition, results of operations and/or cash flows.

Management's discussion and analysis represents a review of our consolidated financial condition and results of operations for the periods presented. This review should be read in conjunction with our Consolidated Financial Statements and related Notes.

Financial Condition

General. Assets totaled $2.1 billion at December 31, 2024 and increased $6.9 million, or 0.3%, from $2.1 billion at December 31, 2023. The increase was primarily due to a $27.9 million increase in net loan balances, partially offset by a $26.3 million decrease in cash and cash equivalents.

Cash and cash equivalents. Cash and cash equivalents totaled $235.3 million at December 31, 2024, and decreased $26.3 million, or 10.1%, from $261.6 million at December 31, 2023. The decrease in cash and cash equivalents was primarily attributed to an increase in net loan balances.

Securities. Securities available for sale totaled $8.7 million at December 31, 2024, and increased $591,000, or 7.3%, compared to

$8.1 million at December 31, 2023. The increase was primarily due to the purchase of new securities, partially offset by principal maturities. Equity securities totaled $5.0 million at both December 31, 2024 and December 31, 2023.

Loans held for sale. Loans held for sale totaled $2.6 million at December 31, 2024 and increased $774,000, or 41.9%, from $1.8 million at December 31, 2023.

Loans and Leases. Net loans and leases totaled $1.7 billion at December 31, 2024 and increased $27.9 million, or 1.6%, from $1.7 billion at December 31, 2023. The increase in net loans and leases from December 31, 2023, was primarily due to a $27.0 million increase in commercial real estate loan balances, a $19.7 million increase in multi-family loan balances, an $11.4 million increase in construction loan balances, and a $3.6 million increase in home equity lines of credit, partially offset by a $21.1 million decrease in commercial and industrial (C&I) loan balances, and a $12.7 million decrease in single-family residential loan balances. The increases in the aforementioned loan balances were primarily related to increased sales activity and new relationships.

Allowance for Credit Losses on Loans (ACL - Loans). The ACL - Loans totaled $17.5 million at December 31, 2024, and increased

$609,000, or 3.6%, from $16.9 million at December 31, 2023. The increase in the ACL - Loans is due to $6.1 million in loan provision expense, partially offset by $5.5 million in net charge-offs during the year ended December 31, 2024. The ratio of the ACL

- Loans to total loans was 1.00% at December 31, 2024, compared to 0.99% at December 31, 2023.

The ACL - Loans is a valuation account that is deducted from the loans' amortized cost basis to present the net amount expected to be collected on loans over the contractual term. Loans are charged off against the allowance when the uncollectibility of the loan is confirmed. Expected recoveries do not exceed the aggregate of amounts previously charged off and expected to be charged off.

Adjustments to the ACL- Loans are reported in the income statement as a component of provision for credit loss. The Company has made the accounting policy election to exclude accrued interest receivable on loans from the estimate of credit losses. Further information regarding the policies and methodology used to estimate the ACL - Loans is detailed in the accompanying notes to the Consolidated Financial Statements included in this Form 10-K.

Individually evaluated loans totaled $12.8 million at December 31, 2024, and increased $9.3 million, or 268.6%, from $3.5 million at December 31, 2023. The increase was primarily due to newly identified commercial loans during 2024 totaling $12.7 million, partially offset by charge-offs and principal payments. The amount of the ACL - Loans specifically calculated for individually evaluated loans totaled $2.3 million at December 31, 2024 and $697,000 at December 31, 2023.

The reserve on individually evaluated loans is based on management's estimate of the present value of estimated future cash flows using the loan's effective rate or the fair value of collateral, if repayment is expected solely from the collateral. On at least a quarterly basis, management reviews each individually evaluated loan to determine whether it should have a reserve or partial charge-off.

Management relies on appraisals or internal evaluations to help make this determination. Determination of whether to use an updated appraisal or internal evaluation is based on factors including, but not limited to, the age of the loan and the most recent appraisal, condition of the property and whether we expect the collateral to go through the foreclosure or liquidation process. Management considers the need for a downward adjustment to the valuation based on current market conditions and on management's analysis, judgment and experience. The amount ultimately charged-off for these loans may be different from the reserve, as the ultimate liquidation of the collateral and/or projected cash flows may be different from management's estimates.

Nonperforming loans, which are nonaccrual loans and loans at least 90 days past due but still accruing interest, totaled $15.0 million at December 31, 2024, and increased $9.3 million from $5.7 million at December 31, 2023. The increase in nonaccrual loans was primarily driven by three commercial loans, totaling $11.3 million, one commercial equipment lease, totaling $85,000, and three single-family residential loans, totaling $1.1 million, becoming nonaccrual during the year ended December 31, 2024, partially offset by paydowns and approximately $3.5 million in charges-offs on loans that were in nonaccrual at December 31, 2023. The ratio of nonperforming loans to total loans was 0.87% at December 31, 2024 compared to 0.33% at December 31, 2023.

The following table presents information regarding the number and balance of nonperforming loans at December 31, 2024 and December 31, 2023.

December 31, 2024 December 31, 2023

# of loans Balance # of loans Balance (dollars in thousands)

During the year ended December 31, 2024, the Company modified one commercial loan, with an amortized cost basis of $4.3 million at December 31, 2024, where the borrower was experiencing financial difficulty. The loan was modified to defer principal and interest payments, increase the interest rate, extend the maturity date and institute a minimum EBITDA covenant. During the year ended December 31, 2023, the Company modified one commercial loan, totaling $2.9 million, where the borrower was experiencing financial difficulty. The loan was modified to defer principal and interest payments for up to one year. For any period where the payments are deferred, the note will accrue at a higher rate of interest.

We have incorporated the regulatory asset classifications as a part of our credit monitoring and internal loan risk rating system. In accordance with regulations, problem loans are classified as special mention, substandard, doubtful or loss, and the classifications are subject to review by the regulators. Assets designated as special mention are considered criticized assets. Assets designated as substandard, doubtful or loss are considered classified assets. See Note 4 in the accompanying Notes to Consolidated Financial Statements included in this Form 10-K for additional information regarding the regulatory asset classifications.

The level of total criticized and classified loans increased by $19.9 million, or 151.2%, during the year ended December 31, 2024. Loans designated as special mention increased $14.4 million, or 352.8%, and totaled $18.5 million at December 31, 2024, compared to $4.1 million at December 31, 2023. Loans classified as substandard increased $5.6 million and totaled $14.2 million at December 31, 2024, compared to $8.6 million at December 31, 2023. Loans designated as doubtful declined $63,000 and totaled $385,000 at December 31, 2024, compared to $448,000 and December 31, 2023. See Note 4 in the accompanying Notes to Consolidated Financial Statements included in this Form 10-K for additional information regarding risk classification of loans.

In addition to credit monitoring through our internal loan risk rating system, we also monitor past due information for all loan segments. Loans that are not rated under our internal credit rating system include groups of homogenous loans, such as single-family residential real estate loans and consumer loans. The primary credit indicator for these groups of homogenous loans is past due information.

Total past due loans increased $10.1 million and totaled $12.1 million at December 31, 2024, compared to $2.0 million at December 31, 2023. Past due loans totaled 0.7% of the loan portfolio at December 31, 2024, compared to 0.1% at December 31, 2023. See Note 4 in the accompanying Notes to Consolidated Financial Statements for additional information regarding loan delinquencies.

All lending activity involves risk of loss. Certain types of loans, such as option adjustable-rate mortgage ("ARM") products, junior lien mortgages, high loan-to-value ratio mortgages, interest only loans, subprime loans and loans with initial teaser rates, can have a greater risk of non-collection than other loans. CFBank has not engaged in subprime lending or used option ARM products.

Loans that contain interest-only payments may present a higher risk than those loans with an amortizing payment that includes periodic principal reductions. Interest only loans are primarily commercial lines of credit secured by business assets and inventory, and consumer home equity lines of credit secured by the borrower's primary residence. Due to the fluctuations in business assets and inventory of our commercial borrowers, CFBank has increased risk due to a potential decline in collateral values without a corresponding decrease in the outstanding principal. Interest only commercial lines of credit totaled $131.2 million, or 31.3% of CFBank's commercial portfolio at December 31, 2024, compared to $147.5 million, or 33.5%, at December 31, 2023. Interest only home equity lines of credit totaled $38.8 million, or 98.1% of the total home equity lines of credit, at December 31, 2024 compared to

$33.6 million, or 93.4%, at December 31, 2023.

We believe the ACL - Loans is adequate to absorb current expected credit losses in the loan portfolio as of December 31, 2024; however, future additions to the allowance may be necessary based on factors including, but not limited to, deterioration in client business performance, recessionary economic conditions, declines in borrowers' cash flows and market conditions which result in lower real estate values. Additionally, various regulatory agencies, as an integral part of their examination process, periodically review the ACL - Loans. Such agencies may require additional provisions for loan losses based on judgments and estimates that differ from those used by management, or on information available at the time of their review. Management continues to diligently monitor credit quality in the existing portfolio and analyze potential loan opportunities carefully in order to manage credit risk. An increase in loan losses could occur if economic conditions and factors which affect credit quality, real estate values and general business conditions worsen or do not improve.

Foreclosed assets. There were no foreclosed assets at December 31, 2024 or December 31, 2023. The level of foreclosed assets and charges to foreclosed assets expense may change in the future in connection with workout efforts related to foreclosed assets, nonperforming loans and other loans with credit issues.

Premises and equipment. Premises and equipment, net, totaled $3.5 million at December 31, 2024, and decreased $276,000, or 7.2%, from $3.8 million at December 31, 2023. See Note 8 in the accompanying Notes to Consolidated Financial Statements for additional information.

Deposits. Deposits totaled $1.76 billion at December 31, 2024, an increase of $11.7 million, or 0.7%, from $1.74 billion at December 31, 2023. The increase was primarily due to a $37.8 million increase in noninterest-bearing account balances, partially offset by a

$26.0 million decrease in interest-bearing account balances. The decrease in interest-bearing account balances when compared to December 31, 2023, included a $19.6 million reduction in brokered deposits.

At December 31, 2024, approximately 29.8% of our deposit balances exceeded the FDIC insurance limit of $250,000, as compared to approximately 29.2% at December 31, 2023.

CFBank is a participant in the Certificate of Deposit Account Registry Service® (CDARS) and Insured Cash Sweep (ICS) programs offered through IntraFi Network. IntraFi works with a network of banks to offer products that can provide FDIC insurance coverage in excess of $250,000 through these innovative products. Brokered deposits, including CDARS and ICS deposits that qualify as brokered, totaled $420.8 million at December 31, 2024, and decreased $19.6 million, or 4.4%, from $440.4 million at December 31, 2023. Customer balances in the CDARS reciprocal and ICS reciprocal programs, which do not qualify as brokered, totaled

$271.7 million at December 31, 2024 and increased $33.9 million, or 14.3%, from $237.8 million at December 31, 2023.

FHLB advances and other debt. FHLB advances and other debt totaled $92.7 million at December 31, 2024, a decrease of $17.3 million when compared to $110.0 million at December 31, 2023. The decrease was primarily due an $18.5 million decrease in FHLB fixed rate advances.

The Holding Company has a $35.0 million credit facility. The credit facility was revolving until May 21, 2024, at which time the outstanding balance was converted to a 10-year term note on a graduated 10-year amortization. Borrowings on the credit facility bear interest at a fixed rate of 3.85% until May 21, 2026, and the interest rate then converts to a floating rate equal to PRIME with a floor of 3.25%. As of December 31, 2024, the Company had an outstanding balance, net of unamortized debt issuance costs, of $34.7 million on the facility.

At December 31, 2024 and 2023, CFBank had availability in unused lines of credit at two commercial banks in the amounts of $50.0 million and $15.0 million, respectively. There were no outstanding borrowings on either line at December 31, 2024 or December 31, 2023.

Subordinated debentures Subordinated debentures totaled $15.0 million at December 31, 2024 and $15.0 million at December 31, 2023. In December 2018, the Holding Company entered into subordinated note purchase agreements with certain qualified institutional buyers and completed a private placement of $10.0 million of fixed-to-floating rate subordinated notes, resulting in net proceeds of $9,612,000 after deducting unamortized debt issuance costs of approximately $388,000. In 2003, the Holding Company issued subordinated debentures in exchange for the proceeds of a $5.0 million trust preferred securities offering issued by a trust formed by the Holding Company. The terms of the subordinated debentures allow for the Holding Company to defer interest payments for a period not to exceed five years. Interest payments on the subordinated debentures were current at December 31, 2024 and December 31, 2023. See Note 11 in the accompanying Notes to Consolidated Financial Statements for additional information.

Stockholders' equity. Stockholders' equity totaled $168.4 million at December 31, 2024, an increase of $13.0 million, or 8.4%, from

$155.4 million at December 31, 2023. The increase in total stockholders' equity was primarily attributed to net income, partially offset by $1.6 million in dividend payments.

Management continues to proactively monitor capital levels and ratios in its on-going capital planning process. CFBank has leveraged its capital to support balance sheet growth and drive increased net interest income. Management remains focused on growing capital though improving results from operations; however, should the need arise, CFBank has additional sources of capital and alternatives it could utilize as further discussed in the "Liquidity and Capital Resources" section below.

Comparison of Results of Operations for 2024 and 2023

General. Net income for the year ended December 31, 2024 totaled $13.4 million (or $2.06 per diluted common share) and decreased

$3.5 million, or 21.0%, compared to net income of $16.9 million (or $2.63 per diluted common share) for the year ended December 31, 2023. The decrease in net income was primarily due to an increase in provision expense, a decrease in net interest income and an increase in noninterest expense, which was partially offset by an increase in noninterest interest.

Net interest income. Net interest income is a significant component of net income, and consists of the difference between interest income generated on interest-earning assets and interest expense incurred on interest-bearing liabilities. Net interest income is primarily affected by the volumes, interest rates and composition of interest-earning assets and interest-bearing liabilities. The tables below titled "Average Balances, Interest Rates and Yields" and "Rate/Volume Analysis of Net Interest Income" provide important information on factors impacting net interest income and should be read in conjunction with this discussion of net interest income.

Net interest income totaled $46.6 million for the year ended December 31, 2024 and decreased $996,000, or 2.1%, compared to net interest income of $47.6 million for the year ended December 31, 2023. The decrease in net interest income was primarily due to a

$11.1 million, or 18.3%, increase in interest expense, partially offset by a $10.1 million, or 9.3%, increase in interest income. The increase in interest expense was attributed to a 55bps increase in the average cost of funds on interest-bearing liabilities, coupled with a $57.5 million, or 3.8%, increase in average interest-bearing liabilities. The increase in interest income was primarily attributed to a 28bps increase in the average yield on interest-earning assets, coupled with a $79.3 million, or 4.3%, increase in average interest-earning assets outstanding. The net interest margin of 2.43% for the year ended December 31, 2024 decreased 16bps compared to the net interest margin of 2.59% for the year ended December 31, 2023.

Interest income totaled $118.4 million for the twelve months ended December 31, 2024, and increased $10.1 million, or 9.3%, compared to $108.3 million for the twelve months ended December 31, 2023. The increase in interest income was primarily attributed to a 31bps increase in the average yield on loans and leases and loans held for sale, coupled with a $67.3 million, or 4.1%, increase in average loans and leases and loans held for sale.

Interest expense totaled $71.7 million for the twelve months ended December 31, 2024, and increased $11.1 million, or 18.3%, compared to $60.6 million for the twelve months ended December 31, 2023. The increase in interest expense was primarily attributed to a 58bps increase in the average rate of interest-bearing deposits, coupled with a $58.1 million, or 4.2%, increase in average interest-bearing deposits.

Provision for credit losses. The provision for credit losses expense for the year ended December 31, 2024 was $6.7 million, and increased $4.4 million, or 190.8%, compared to $2.3 million for the year ended December 31, 2023. Net charge-offs for the year ended December 31, 2024 totaled $5.5 million, compared to net charge-offs of $646,000 for the year ended December 31, 2023.

The following table presents information regarding net charge-offs (recoveries) for 2024 and 2023.

2024 2023

(Dollars in thousands) Net charge-offs (recoveries)

See the section above titled "Financial Condition - Allowance for Credit Losses on Loans" for additional information.

Noninterest income. Noninterest income for the year ended December 31, 2024 totaled $5.2 million and increased $1.2 million, or 28.4%, compared to $4.0 million for the year ended December 31, 2023. The increase was primarily due to a $939,000, or 60.0%, increase in service charges on deposit accounts.

Noninterest expense. Noninterest expense for the year ended December 31, 2024 totaled $28.9 million and increased $569,000, or 2.0%, compared to $28.4 million for the year ended December 31, 2023. The increase in noninterest expense during the year ended December 31, 2024 was primarily due to a $781,000 increase in loan expense.

Income taxes. Income tax expense was $2.8 million for the year ended December 31, 2024, a decrease of $1.2 million, compared to

$4.0 million for the year ended December 31, 2023. The effective tax rate for the year ended December 31, 2024 was approximately 17.1%, as compared to approximately 19.3% for the year ended December 31, 2023. The reduction in the effective tax rate for the year ended December 31, 2024 was a result of a decrease in pre-tax net income combined with an increase in the benefits received from tax-credit investments and tax exempt income.

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 December 31, 2024 that no valuation allowance was required against the net deferred tax asset.

The Company records income tax expense based on the federal statutory rate adjusted for the effect of other items such as low income housing credits, historic tax credits, bank owned life insurance and other miscellaneous items.

Comparison of Results of Operations for 2023 and 2022

General. Net income for the year ended December 31, 2023 totaled $16.9 million (or $2.63 per diluted common share) and decreased

$1.3 million, or 6.8%, compared to net income of $18.2 million (or $2.78 per diluted common share) for the year ended December 31, 2022. The decrease in net income was primarily due to a decrease in net interest income and an increase in provision expense, which was partially offset by an increase in noninterest interest income and a decrease in noninterest expense.

Net interest income. Net interest income is a significant component of net income, and consists of the difference between interest income generated on interest-earning assets and interest expense incurred on interest-bearing liabilities. Net interest income is primarily affected by the volumes, interest rates and composition of interest-earning assets and interest-bearing liabilities. The tables below titled "Average Balances, Interest Rates and Yields" and "Rate/Volume Analysis of Net Interest Income" provide important information on factors impacting net interest income and should be read in conjunction with this discussion of net interest income.

Net interest income totaled $47.6 million for the year ended December 31, 2023 and decreased $1.2 million, or 2.4%, compared to net interest income of $48.8 million for the year ended December 31, 2022. The decrease in net interest income was primarily due to a

$41.6 million, or 219.6%, increase in interest expense, partially offset by a $40.5 million, or 59.8%, increase in interest income. The increase in interest expense was attributed to a 244bps increase in the average cost of funds on interest-bearing liabilities, coupled with a $298.5 million, or 24.4%, increase in average interest-bearing liabilities. The increase in interest income was primarily attributed to a 152bps increase in the average yield on interest-earning assets, coupled with a $286.5 million, or 18.5%, increase in average interest-earning assets outstanding. The net interest margin of 2.59% for the year ended December 31, 2023 decreased 56bps compared to the net interest margin of 3.15% for the year ended December 31, 2022.

Interest income totaled $108.3 million for the twelve months ended December 31, 2023, and increased $40.5 million, or 59.8%, compared to $67.8 million for the twelve months ended December 31, 2022. The increase in interest income was primarily attributed to a 136bps increase in the average yield on loans and leases and loans held for sale, coupled with a $249.5 million, or 18.0%, increase in average loans and leases and loans held for sale.

Interest expense totaled $60.6 million for the twelve months ended December 31, 2023, and increased $41.6 million, or 219.6%, compared to $19.0 million for the twelve months ended December 31, 2022. The increase in interest expense was primarily attributed to a 262bps increase in the average rate of interest-bearing deposits, coupled with a $275.3 million, or 24.6%, increase in average interest-bearing deposits.

Provision for credit losses. The provision for credit losses expense for the year ended December 31, 2023 was $2.3 million, and increased $1.5 million, or 194.4%, compared to $787,000 for the year ended December 31, 2022. Net charge-offs for the year ended December 31, 2023 totaled $646,000, compared to net charge-offs of $233,000 for the year ended December 31, 2022.

The following table presents information regarding net charge-offs (recoveries) for 2023 and 2022

2023 2022

(Dollars in thousands) Net charge-offs (recoveries)

See the section above titled "Financial Condition - Allowance for Credit Losses on Loans" for additional information.

Noninterest income. Noninterest income for the year ended December 31, 2023 totaled $4.0 million and increased $821,000, or 25.6%, compared to $3.2 million for the year ended December 31, 2022. The increase was primarily due to a $525,000 increase in swap fee income and a $431,000 increase in service charges on deposit accounts.

Noninterest expense. Noninterest expense for the year ended December 31, 2023 totaled $28.4 million and decreased $252,000, or 0.9%, compared to $28.6 million for the year ended December 31, 2022. The decrease in noninterest expense during the year ended December 31, 2023 was primarily due to a $635,000 decrease in data processing expense and a $612,000 decrease in salaries and employee benefits expense, partially offset by a $1.1 million increase in FDIC premiums. The decrease in data processing expense was due to the core processing system conversion that occurred in the third quarter of 2022, which included some one-time conversion costs. The decrease in salaries and employee benefits expense was primarily due to a decrease in the number of employees. The increase in FDIC expense was related to increased assets and deposit levels and assessment rates.

Income taxes. Income tax expense was $4.0 million for the year ended December 31, 2023, a decrease of $380,000, compared to $4.4 million for the year ended December 31, 2022. The effective tax rate for the year ended December 31, 2023 was approximately 19.3%, as compared to approximately 19.6% for the year ended December 31, 2022.

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 December 31, 2023 that no valuation allowance was required against the net deferred tax asset.

The Company records income tax expense based on the federal statutory rate adjusted for the effect of other items such as low income housing credits, historic tax credits, bank owned life insurance and other miscellaneous items.

Average Balances, Interest Rates and Yields. The following table presents, for the periods indicated, the total dollar amount of fully taxable equivalent interest income from average interest-earning assets and the resultant yields, as well as the interest expense on average interest-bearing liabilities, expressed in both dollars and rates. Average balances are computed using month-end balances.

For the Years Ended December 31,

2024 2023 2022

Average Interest Average Average Interest Average Average Interest Average Outstanding Earned/ Yield/ Outstanding Earned/ Yield/ Outstanding Earned/ Yield/

Balance Paid Rate Balance Paid Rate Balance Paid Rate (Dollars in thousands)

Interest-bearing liabilities:

FHLB advances and other borrowings 124,417 4,587 3.69% 124,999 4,276 3.42% 101,757 3,022 2.97%

Total interest-bearing liabilities 1,578,770 71,745 4.54% 1,521,297 60,639 3.99% 1,222,760 18,974 1.55% Noninterest-bearing liabilities 271,756 260,060 273,789

Total liabilities

1,850,526

1,781,357

1,496,549

Equity

161,543

147,812

132,642

Total liabilities and equity $ 2,012,069 $ 1,929,169 $ 1,629,191

Net interest-earning assets $ 336,781 $ 314,915 $ 326,964

Net interest income/interest rate spread

$ 46,644 1.63% $ 47,640 1.90% $ 48,790 2.82% Net interest margin 2.43% 2.59% 3.15%

Average interest-earning assets to

average interest-bearing liabilities 121.33% 120.70% 126.74%

(1) Average balance is computed using the carrying value of securities.

(2) Average yields and interest earned are stated on a fully taxable equivalent basis.

(3) Average balance is computed using the recorded investment in loans net of the ACL - Loans/ALLL and includes nonperforming loans.

Comparison of Results of Operations (continued)

Rate/Volume Analysis of Net Interest Income. The following table presents the dollar amount of changes in interest income and interest expense for major components of interest-earning assets and interest-bearing liabilities. It distinguishes between the increase and decrease related to changes in balances and/or changes in interest rates. For each category of interest-earning assets and interest-bearing liabilities, information is provided on changes attributable to (i) changes in volume (i.e., changes in volume multiplied by the prior rate) and (ii) changes in rate (i.e., changes in rate multiplied by the prior volume). For purposes of this table, changes attributable to both rate and volume which cannot be segregated have been allocated proportionately to the change due to volume and the change due to rate.

Year Ended Year Ended

December 31, 2024 December 31, 2023 Compared to Year Ended Compared to Year Ended December 31, 2023 December 31, 2022

Increase (decrease) due to Increase (decrease) due to

Rate Volume Net Rate Volume Net (Dollars in thousands)

Net change in net interest income

$ (3,379) $ 2,383 $

(996)

$ (9,330) $ 8,180 $ (1,150)

(1)Securities amounts are presented on a fully taxable equivalent basis.

Liquidity and Capital Resources

In general terms, liquidity is a measurement of an enterprise's ability to meet cash needs. The primary objective in liquidity management is to maintain the ability to meet loan commitments and to repay deposits and other liabilities in accordance with their terms without an adverse impact on current or future earnings. Principal sources of funds are deposits; amortization and prepayments of loans; maturities, sales and principal receipts of securities available for sale; borrowings; and operations. While maturities and scheduled amortization of loans are predictable sources of funds, deposit flows and loan prepayments are greatly influenced by general interest rates, economic conditions and competition.

CFBank is required by regulation to maintain sufficient liquidity to ensure its safe and sound operation. Thus, adequate liquidity may vary depending on CFBank's overall asset/liability structure, market conditions, the activities of competitors, the requirements of our own deposit and loan customers and regulatory considerations. Management believes that each of the Holding Company's and CFBank's current liquidity is sufficient to meet its daily operating needs and fulfill its strategic planning.

Liquidity management is both a daily and long-term responsibility of management. We adjust our investments in liquid assets, primarily cash, short-term investments and other assets that are widely traded in the secondary market, based on our ongoing assessment of expected loan demand, expected deposit flows, yields available on interest-earning deposits and securities and the objective of our asset/liability management program. In addition to liquid assets, we have other sources of liquidity available including, but not limited to, access to advances from the FHLB and borrowings from the FRB and our commercial bank lines of credit.

The following table summarizes CFBank's cash available from liquid assets and borrowing capacity at December 31, 2024 and 2023.

December 31, 2024 December 31, 2023 (Dollars in thousands)

Cash, unpledged securities and deposits in other financial institutions decreased $24.1 million, or 9.2%, to $237.9 million at December 31, 2024, compared to $262.0 million at December 31, 2023. The decrease was primarily attributed to an increase in loans, partially offset by a decrease in FHLB borrowings and other debt and an increase in deposits.

CFBank's additional borrowing capacity with the FHLB increased $2.6 million, or 1.4%, to $186.3 million at December 31, 2024, compared to $183.7 million at December 31, 2023.

CFBank's additional borrowing capacity at the FRB decreased $8.8 million, or 6.5%, to $127.4 million at December 31, 2024 from

$136.2 million at December 31, 2023. CFBank is eligible to participate in the FRB's primary credit program, providing CFBank access to short-term funds at any time, for any reason, based on the collateral pledged.

CFBank's borrowing capacity with both the FHLB and FRB may be negatively impacted by changes such as, but not limited to, further tightening of credit policies by the FHLB or FRB, deterioration in the credit performance of CFBank's loan portfolio or CFBank's financial performance, or a decrease in the balance of pledged collateral.

CFBank had $65.0 million of availability in unused lines of credit with two commercial banks at December 31, 2024 and December 31, 2023.

Deposits are obtained predominantly from the markets in which CFBank's offices are located. We rely primarily on a willingness to pay market-competitive interest rates to attract and retain retail deposits. Accordingly, rates offered by competing financial institutions may affect our ability to attract and retain deposits. CFBank relies on competitive interest rates, customer service, and relationships with customers to retain deposits.

The Holding Company has more limited sources of liquidity than CFBank. In general, in addition to its existing liquid assets, sources of liquidity include funds raised in the securities markets through debt or equity offerings, funds borrowed from third party banks or other lenders, dividends received from CFBank or the sale of assets.

Management believes that the Holding Company had adequate funds and sources of liquidity at December 31, 2024 to meet its current and anticipated operating needs at this time. The Holding Company's current cash requirements include operating expenses and interest on subordinated debentures and other debt. The Company may also pay dividends on its common stock, if and when declared by the Board of Directors.

Currently, annual debt service on the subordinated debentures underlying the Company's trust preferred securities is approximately

$385,000. Prior to July 1, 2023, the subordinated debentures had a variable rate of interest, which reset quarterly, equal to the three-month London Interbank Offered Rate (LIBOR) plus 2.85%. Effective July 1, 2023, the rate of interest on the subordinated debentures resets quarterly to the three-month Secured Overnight Financing Rate (SOFR) plus 3.112%, which was 7.44% at December 31, 2024.

Currently, the annual debt service on the Company's $10 million of fixed-to-floating rate subordinated notes is approximately

$875,000. The subordinated notes initially bore a fixed rate of 7.00% until December 2023, and now the interest rate resets quarterly to a rate equal to the current three-month SOFR plus 4.402%, which was 8.73% at December 31, 2024.

The Holding Company has a $35.0 million credit facility with a third-party bank. The credit facility was revolving until May 21, 2024, at which time the outstanding balance was converted to a 10-year term note on a graduated 10-year amortization. Borrowings on the credit facility bear interest at a fixed rate of 3.85% until May 21, 2026, and the interest rate then converts to a floating rate equal to PRIME with a floor of 3.75%. At December 31, 2024, the Company had an outstanding balance, net of unamortized debt issuance costs, of $34.7 million on the facility.

The ability of the Holding Company to pay dividends on its common stock is dependent upon the amount of cash and liquidity available at the Holding Company level, as well as the receipt of dividends and other distributions from CFBank to the extent necessary to fund such dividends.

The Holding Company is a legal entity that is separate and distinct from CFBank, which has no obligation to make any dividends or other funds available for the payment of dividends by the Holding Company. Banking regulations limit the amount of dividends that can be paid to the Holding Company by CFBank without prior regulatory approval. Generally, financial institutions may pay dividends without prior regulatory approval as long as the dividend does not exceed the total of the current calendar year-to-date earnings plus any earnings from the previous two years not already paid out in dividends, and as long as the financial institution remains well capitalized after the dividend payment.

The Holding Company also is subject to various legal and regulatory policies and requirements impacting the Holding Company's ability to pay dividends on its stock. In addition, the Holding Company's ability to pay dividends on its stock is conditioned upon the payment, on a current basis, of quarterly interest payments on the subordinated debentures underlying the Company's trust preferred securities. Finally, under the terms of the Company's fixed-to-floating rate subordinated debt, the Holding Company's ability to pay dividends on its stock is conditioned upon the Holding Company continuing to make required principal and interest payments, and not incurring an event of default, with respect to the subordinated debt.

Federal income tax laws provided deductions, totaling $2.3 million, for thrift bad debt reserves established before 1988. Accounting standards do not require a deferred tax liability to be recorded on this amount, which otherwise would have totaled $473,000 at year-end 2024. However, if CFBank were wholly or partially liquidated or otherwise ceases to be a bank, or if tax laws were to change, this amount would have to be recaptured and a tax liability recorded. Additionally, any distributions in excess of CFBank's current or accumulated earnings and profits would reduce amounts allocated to its bad debt reserve and create a tax liability for CFBank.

Impact of Inflation

The financial statements and related data presented herein have been prepared in accordance with GAAP, which presently require us to measure financial position and results of operations primarily in terms of historical dollars. Changes in the relative value of money due to inflation are generally not considered. In our opinion, changes in interest rates affect our financial condition to a far greater degree than changes in the inflation rate. While interest rates are generally influenced by changes in the inflation rate, they do not move concurrently. Rather, interest rate volatility is based on changes in the expected rate of inflation, as well as changes in monetary and fiscal policy. A financial institution's ability to be relatively unaffected by changes in interest rates is a good indicator of its ability to perform in a volatile economic environment. In an effort to protect performance from the effects of interest rate volatility, we review interest rate risk frequently and take steps to minimize detrimental effects on profitability.

Quantitative and Qualitative Disclosures about Market Risk

Market risk is the risk of loss from adverse changes in market prices and interest rates. We have not engaged in and, accordingly, have no risk related to trading accounts, commodities or foreign exchange. Our hedging policy allows economic hedging activities, such as interest-rate swaps, up to a notional amount of 10% of total assets and a value at risk of 10% of core capital. Disclosures about our economic hedging activities are set forth in Note 17 to our Consolidated Financial Statements. The Company's market risk arises primarily from interest rate risk inherent in our lending, investing, deposit gathering and borrowing activities. The measurement of market risk associated with financial instruments is meaningful only when all related and offsetting on- and off-balance-sheet transactions are aggregated and the resulting net positions are identified. Disclosures about fair value are set forth in Note 6 to our Consolidated Financial Statements.

Management actively monitors and manages interest rate risk. The primary objective in managing interest rate risk is to limit, within established guidelines, the adverse impact of changes in interest rates on our net interest income and capital. We measure the effect of interest rate changes on CFBank's economic value of equity (EVE), which is the difference between the estimated market value of CFBank's assets and liabilities under different interest rate scenarios. The change in the EVE ratio is a long-term measure of what might happen to the market value of financial assets and liabilities over time if interest rates changed instantaneously and CFBank did not change existing strategies. At December 31, 2024, CFBank's EVE ratios, using interest rate shocks ranging from a 400 bps rise in rates to a 400 bps decline in rates, are shown in the following table. All values are within the acceptable range established by CFBank's Board of Directors.

Economic Value of Equity as a Percent of Assets (CFBank only)

In evaluating CFBank's exposure to interest rate risk, certain limitations inherent in the method of analysis presented in the foregoing table must be considered. For example, the table indicates results based on changes in the level of interest rates, but not changes in the shape of the yield curve. CFBank also has exposure to changes in the shape of the yield curve. Although certain assets and liabilities may have similar maturities or periods to which they reprice, they may react in different degrees to changes in market interest rates.

The interest rates on certain types of assets and liabilities may fluctuate in advance of changes in market interest rates, while interest rates on other types may lag behind changes in market rates. In the event of a change in interest rates, prepayments and early withdrawal levels would likely deviate significantly from those assumed in calculating the table. The ability of many borrowers to service their debt may decrease when interest rates rise. As a result, the actual effect of changing interest rates may differ materially from that presented in the foregoing table.

Changes in levels of market interest rates could materially and adversely affect our net interest income, loan volume, asset quality, value of loans held for sale and cash flows, as well as the market value of our securities portfolio and overall profitability.

Residential mortgage loan origination volumes are affected by market interest rates on loans. Rising interest rates generally are associated with a lower volume of loan originations, while falling interest rates are usually associated with higher loan originations. Our ability to generate gains on sales of mortgage loans is significantly dependent on the level of originations. Changes in interest rates, prepayment speeds and other factors may also cause the value of our loans held for sale to change.

We originate commercial, commercial real estate, multi-family residential and single family residential real estate mortgage loans for our portfolio, which, in many cases, have adjustable interest rates. Many of these loans have interest-rate floors, which protect income to CFBank should rates fall. While adjustable-rate loans better offset the adverse effects of an increase in interest rates as compared to fixed-rate loans, the increased payments required of adjustable-rate loan borrowers upon an interest rate adjustment in a rising interest rate environment could cause an increase in delinquencies and defaults. The marketability of the underlying property also may be adversely affected in a rising interest rate environment.

Cash flows are affected by changes in market interest rates. Generally, in rising interest rate environments, loan prepayment rates are likely to decline, and in falling interest rate environments, loan prepayment rates are likely to increase.

MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

The management of CF Bankshares Inc. (the "Company") is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules l 3a-l 5(f) and 1 Sd-1S(t) under the Securities and Exchange Act of 1934, as amended. The Company's internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles.

The Company's internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2024. In making this assessment, management used the criteria for effective internal control over financial reporting as described in the 2013 Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on our assessment and those criteria, management concluded that the Company maintained effective internal control over financial reporting as of December 31, 2024.

Forvis Mazars, LLP, independent registered public accounting firm, has issued an audit report on the effectiveness of the Company's internal control over financial reporting as of December 31, 2024.

Timothy T. O'Dell

President and Chief Executive Officer

Kevin J. Beerman

Executive Vice President and Chief Financial Officer

March 14, 2025

Page 16

Report of Independent Registered Public Accounting Firm

Shareholders, Board of Directors, and Audit Committee CF Bankshares Inc.

Columbus, Ohio

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of CF Bankshares Inc. (the "Company") as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, changes in stockholders' equity, and cash flows for each of the years in the three-year period ended December 31, 2024, and the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) ("PCAOB"), the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 14, 2025, expressed an unqualified opinion thereon.

Change in Accounting Principle

As discussed in Notes 1 and 4 to the consolidated financial statements, in 2023, the Company changed its method of accounting for credit losses on financial instruments due to the adoption of Accounting Standard Codification Topic 326: Financial Instruments - Credit Losses.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Forvis Mazars, LLP is an independent member of Forvis Mazars Global Limited

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

Allowance for Credit Losses (ACL) - Qualitative Adjustments

As described in Note 4 to the consolidated financial statements, the Company's allowance for credit losses on loans (ACL-Loans) was approximately $17,474,000 as of December 31, 2024. The ACL represents the Company's best estimate of current expected credit losses in the loan portfolio. Estimates of expected credit losses are based on relevant available information, from internal and external sources, related to past events, current conditions, and reasonable and supportable forecasts. The Company utilized an average charge-off model combined with economic forecast models to estimate the current expected credit loss inherent in identified loan segments. The ACL-Loans includes a component that qualitatively adjusts model results for risk factors that are not inherently considered in the historical losses. The ACL-Loans also includes specific reserves for individual loans that exhibit unique risk characteristics which differentiate them from other loans within the loan segments.

We identified the qualitative adjustments component of the ACL-Loans as a critical audit matter. The qualitative adjustments component involves a high degree of auditor subjectivity in evaluating management's estimates, such as evaluating management's assessment of economic conditions and other environmental factors used to adjust loss rates.

How We Addressed the Matter in Our Audit

The primary procedures we performed to address this critical audit matter included:

• Gaining an understanding of and testing the effectiveness of controls over the qualitative adjustments used in the ACL-Loan calculation including controls addressing the:

  • Significant assumptions and judgments applied in the development of the qualitative adjustments.

  • Accuracy of the inputs to the qualitative adjustments applied to each loan segment in the ACL-Loan calculation.

• Substantively testing management's determination of the qualitative adjustments used in the ACL-Loan estimate, including:

  • Testing management's process for developing the qualitative adjustments, which included assessing the relevance and reliability of data used to develop the qualitative adjustments, including evaluating their judgments and assumptions for reasonableness. Among other procedures, our evaluation considered evidence from internal and external sources and involved firm modeling specialists to test the appropriateness of the design and operation of the model.

  • Performing a qualitative factor sensitivity analysis.

  • Analytically evaluating the qualitative adjustments for directional consistency, testing for reasonableness, and obtaining evidence for significant changes.

  • Testing the mathematical accuracy of the qualitative adjustments applied to the loan segments in the ACL-Loan calculation.

Forvis Mazars, LLP

We have served as the Company's auditor since 2014.

Indianapolis, Indiana March 14, 2025

Report of Independent Registered Public Accounting Firm

Shareholders, Board of Directors, and Audit Committee CF Bankshares Inc.

Columbus, Ohio

Opinion on the Internal Control Over Financial Reporting

We have audited CF Bankshares Inc.'s (the "Company") internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework: (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework: (2013) issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) ("PCAOB"), the consolidated financial statements of the Company as of December 31, 2024 and 2023, and for each of the three years in the period ended December 31, 2024, and our report dated March 14, 2025, expressed an unqualified opinion on those financial statements.

Basis for Opinion

The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report of Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Forvis Mazars, LLP is an independent member of Forvis Mazars Global Limited

Definitions and Limitations of Internal Control Over Financial Reporting

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of reliable financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

Forvis Mazars, LLP

Indianapolis, Indiana March 14, 2025

CONSOLIDATED BALANCE SHEETS

December 31, 2024 and 2023 (Dollars in thousands, except per share data)

December 31, December 31,

2024 2023

Deposits

CONSOLIDATED STATEMENTS OF INCOME

Years ended December 31, 2024, 2023 and 2022 (Dollars in thousands, except per share data)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Years ended December 31, 2024, 2023 and 2022 (Dollars in thousands, except per share data)

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

Years ended December 31, 2024, 2023 and 2022 (Dollars in thousands, except per share data)

Voting

Non-

voting Series D Additional

Accumulated

Other Total

Common Common Preferred Paid-In Retained Comprehensive Treasury Stockholders'

Stock Stock Stock Capital Earnings Loss Stock Equity Balance at January 1, 2022 $ 55 $ 13 $ - $ 88,528 $ 44,084 $ (170) $ (7,180) $ 125,330 Net income - - - - 18,164 - - 18,164

Other comprehensive loss - - - - - (1,867) - (1,867)

Issuance of 69,648 stock-based incentive plan

shares, net of forfeitures 1 - - (1) - - - -Restricted stock expense, net of forfeitures - - - 899 - - - 899

Stock options exercised - - - 387 - - - 387

Acquisition of 3,424 treasury shares surrendered upon vesting of restricted stock for payment of

taxes - - - - - - (73) (73)

Acquisition of 4,366 treasury shares surrendered upon exercise of stock options for payment of

exercise price - - - - - - (100) (100) Purchase of 110,998 treasury shares - - - - - - (2,339) (2,339) Dividends declared ($0.18 per share) - - - - (1,153) - (1,153)

Balance at December 31, 2022 56 13 - 89,813 61,095 (2,037) (9,692) 139,248

Cumulative effect of ASC 326 adoption - - - - (39) - - (39)

Net income - - - - 16,937 - - 16,937

Other comprehensive loss - - - - - (253) - (253)

Issuance of 59,784 stock-based incentive plan

shares, net of forfeitures 1 - - (1) - - - -Restricted stock expense, net of forfeitures - - - 1,172 - - - 1,172 Stock options exercised - - - 84 - - - 84

Acquisition of 4,875 treasury shares surrendered upon vesting of restricted stock for payment of

taxes - - - - - - (95) (95)

Acquisition of 1,555 treasury shares surrendered upon exercise of stock options for payment of

exercise price - - - - - - (27) (27) Purchase of 9,503 treasury shares - - - - - - (177) (177) Dividends declared ($0.23 per share) - - - - (1,476) - (1,476)

Balance at December 31, 2023 57 13 - 91,068 76,517 (2,290) (9,991) 155,374 Net income - - - - 13,387 - - 13,387

Other comprehensive income - - - - - 487 - 487

Issuance of 75,618 stock-based incentive plan

shares, net of forfeitures - - - - - - - -Restricted stock expense, net of forfeitures - - - 1,155 - - - 1,155 Acquisition of 6,007 treasury shares surrendered

upon vesting of restricted stock for payment of

taxes - - - - - - (129) (129)

Purchase of 11,095 treasury shares - - - - - - (223) (223)

Conversion of 200,000 shares of voting common

stock to 2,000 shares of Series D Stock (2) - - 2 - - - -

Cash dividends declared on common stock ($0.25

per share) - - - - (1,574) - - (1,574)

Cash dividends declared on Series D preferred

stock ($19.00 per share) - - - - (40) - (40)

Balance at December 31, 2024 $ 55 $ 13 $ - $ 92,225 $ 88,290 $ (1,803) $ (10,343) $ 168,437