Puree the cherries in a blender, then simmer in a saucepan over medium heat for 15 to 20 minutes until reduced by half. Let cool completely.
Preheat the oven to 350°F (175°C) and prepare two 8-inch round cake pans with parchment paper.
Mix the flour, granulated sugar, baking powder, and salt. Cut in the 3/4 cup softened butter with a mixer until sandy.
Whisk the eggs, milk, vanilla, and 3/4 cup of the cooled cherry reduction in a separate bowl. Add to the dry ingredients in three batches, mixing just until combined.
Bake the divided batter for 30 to 35 minutes. Cool the layers completely on wire racks.
Beat the cream cheese and remaining butter until fluffy. Gradually add powdered sugar, then the remaining cherry reduction to finish the frosting.
Assemble the cake by stacking the layers with frosting in between, then covering the top and sides.
