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CF BANKSHARES INC., PARENT OF CFBANK NA, REPORTS RESULTS FOR THE 2nd QUARTER 2024

CFBK

COLUMBUS, Ohio, Aug. 6, 2024 /PRNewswire/ -- CF Bankshares Inc. (NASDAQ: CFBK) (the "Company"), the parent of CFBank, National Association ("CFBank"), today announced financial results for the second quarter ended June 30, 2024.

Second Quarter 2024 and YTD Highlights

  • Net income for Q2 2024 was $1.7 million($0.26earnings per diluted common share). Pre-provision, pre-tax net revenue (PPNR) for Q2 2024 was $5.5 million. Q2 2024 net income was negatively impacted by $3.1 million of additional specific reserves placed on two loan participations acquired from regional banks.
  • Return on Average Equity (ROE) was 4.23% and PPNR ROE was 13.71% for Q2 2024, while Return on Average Assets (ROA) was 0.34% and PPNR ROA was 1.10%.
  • Excluding the impact of the additional specific reserves on noncore assets in Q2 2024, second quarter adjusted core performance metrics would have been: Adjusted ROA: 0.89%, Adjusted ROE: 10.25% and Adjusted earnings per diluted common share: $0.65.
  • Net Interest Margin (NIM) increased 3bps when compared to the previous quarter.
  • Service charge income increased $244,000 (64%) when compared to Q2 2023 and $64,000 (11%) when compared to the previous quarter. Year to date, income from service charges is up $499,000 (73%) when compared to the first six months of 2023.
  • New commercial loan production totaled $16.8million during Q2 2024. Loan and business pipelines along with quality new business opportunities in our four major regional markets (Columbus, Cleveland, Cincinnati & Indianapolis) are expanding.

Recent Developments

  • On July 1, 2024, the Company's Board of Directors declared a cash dividend of $0.06 per share on its common stock and a corresponding cash dividend of $6.00 per share on its Series D Preferred Stock. The dividend was paid on July 19, 2024 to shareholders of record as of the close of business on July 11, 2024.

CEO and Board Chair Commentary

Timothy T. O'Dell, President and CEO, commented: "Net After Tax Consolidated Earnings for Q2 were $1.7 million (or $0.26 per diluted common share), which included the impact from $3.6 million in elevated loan provision expense. The increased provisioning was related mostly to two acquired loan participations whose performance we have been tracking closely. Both are loan participations led by regional banks.

The two loan participations mentioned are not considered core assets because no underlying customer relationship exists. These earning assets were purchased in 2021 to hedge the earning asset loan runoff impact and redeploy excess liquidity following our exit of the DTC Mortgage Lending business and payoffs of PPP loans.

Including noncore assets as of June 30, 2024, loans past due 30+ days equaled 0.45% of total loans, classified assets equaled 0.48% of total assets and we held no OREO.

Our core customer loan book continues to perform well as evidenced by the following metrics as of June 30, 2024: core loans past due 30+ days equaled 0.23% of core loans and core classified assets equaled 0.13% of core assets.

Commercial loan generation and loan pipelines remain strong and are increasing. To date, commercial real estate loan payoffs received are offsetting net loan growth.

In the coming quarters, we foresee lessening amounts of loan payoff's, which would contribute to stronger net loan growth performance.

Earlier investment in strengthening our Regional Banking teams is producing increased business opportunities including loans, deposits and fee income business across our entire footprint. For example, new leadership in Treasury Management has increased fee income by 64% year over year. Additionally, as of this quarter end, we now have a fully staffed, well-seasoned Commercial Banking team in our Indianapolis Market.

We remain bullish about our business opportunities for the second half of 2024 and believe Our Best is Yet Ahead!"

Robert E. Hoeweler, Chairman of the Board, added: "Our underpinning business fundamentals remain very strong. We are buoyed by our continuing success attracting quality new business and banking talent, as our business model and delivery of commercial banking services resonates strongly with entrepreneurs and closely held businesses."

Overview of Results

Net income for the three months ended June 30, 2024 totaled $1.7 million (or $0.26 per diluted common share) compared to net income of $3.1 million (or $0.47 per diluted common share) for the three months ended March 31, 2024 and net income of $4.2 million (or $0.66 per diluted common share) for the three months ended June 30, 2023. Pre-provision, pre-tax net revenue ("PPNR") for the three months ended June 30, 2024 was $5.5 million compared to PPNR of $5.0 million for the three months ended March 31, 2024 and PPNR of $5.3 million for the three months ended June 30, 2023.

Net income for the six months ended June 30, 2024 totaled $4.8 million (or $0.74 per diluted common share) compared to net income of $8.7 million (or $1.35 per diluted common share) for the six months ended June 30, 2023. Pre-provision, pre-tax net revenue ("PPNR") for the six months ended June 30, 2024 was $10.5 million compared to PPNR of $11.1 million for the six months ended June 30, 2023.

Net Interest Income and Net Interest Margin

Net interest income totaled $11.4 million for the quarter ended June 30, 2024 and increased $83,000, or 0.7%, compared to $11.3 million for the prior quarter, and decreased $119,000, or 1.0%, compared to $11.5 million for the second quarter of 2023.

The increase in net interest income compared to the prior quarter was primarily due to a $229,000, or 0.8%, increase in interest income, partially offset by a $146,000, or 0.8%, increase in interest expense. The increase in interest income was primarily attributed to a 9bps increase in the average yield on interest-earning assets, partially offset by an $11.6 million, or 0.6%, decrease in average interest-earning assets. The increase in interest expense when compared to the prior quarter was attributed to a 6bps increase in the average cost of funds on interest-bearing liabilities, partially offset by an $8.3 million, or 0.5%, decrease in average interest-bearing liabilities. The net interest margin of 2.39% for the quarter ended June 30, 2024 increased 3bps compared to the net interest margin of 2.36% for the prior quarter.

The decrease in net interest income compared to the second quarter of 2023 was primarily due to a $3.2 million, or 21.8%, increase in interest expense, partially offset by a $3.1 million, or 11.8%, increase in interest income. The increase in interest expense was attributed to a 68bps increase in the average cost of funds on interest-bearing liabilities, coupled with a $56.6 million, or 3.7%, increase in average interest-bearing liabilities. The increase in interest income was primarily attributed to a 40bps increase in the average yield on interest-earning assets, coupled with a $84.4 million, or 4.6%, increase in average interest-earning assets outstanding. The net interest margin of 2.39% for the quarter ended June 30, 2024 decreased 13bps compared to the net interest margin of 2.52% for the second quarter of 2023.

Noninterest Income

Noninterest income for the quarter ended June 30, 2024 totaled $1.2 million and increased $313,000, or 34.6%, compared to $905,000 for the prior quarter. The increase was primarily due to a $419,000 increase in other noninterest income, partially offset by a $167,000 decrease in net gain on sales of commercial loans.

Noninterest income for the quarter ended June 30, 2024 increased $240,000, or 24.5%, compared to $978,000 for the quarter ended June 30, 2023. The increase was primarily due to a $244,000 increase in service charges on deposit accounts.

The following table represents the notional amount of loans sold during the three months ended June 30, 2024, March 31, 2024, and June 30, 2023 (in thousands).











Three Months ended


June 30, 2024


March 31, 2024


June 30, 2023

Notional amount of loans sold

$

10,837


$

9,037


$

3,171

Noninterest Expense

Noninterest expense for the quarter ended June 30, 2024 totaled $7.1 million and decreased $95,000, or 1.3%, compared to $7.2 million for the prior quarter. The decrease in noninterest expense was primarily due to a $188,000 decrease in loan expense, partially offset by a $70,000 increase in franchise taxes.

Noninterest expense for the quarter ended June 30, 2024 decreased $81,000, or 1.1%, compared to $7.2 million for the quarter ended June 30, 2023. The decrease in noninterest expense was primarily due to a $208,000 decrease in salaries and employee benefits, partially offset by a $162,000 increase in data processing expense. The decrease in salaries and employee benefits was primarily related to a $62,000 decrease in payroll related taxes, due to a one-time tax rate adjustment payment of approximately $54,000 that occurred in the second quarter of 2023, a $50,000 decrease in incentive expense, and a $36,000 decrease in the deferred compensation plan expense. The increase in data processing expense was primarily due to an increase in our average monthly core processing charges of approximately $26,000 per month coupled with a $37,000 one-time implementation fee.

Income Tax Expense

Income tax expense was $237,000 for the quarter ended June 30, 2024 (effective tax rate of 12.3%), compared to $695,000 for the prior quarter (effective tax rate of 18.5%) and $1.1 million for the quarter ended June 30, 2023 (effective tax rate of 20.0%).

Loans and Loans Held For Sale

Net loans and leases totaled $1.7 billion at June 30, 2024 and decreased $8.0 million, or 0.5%, from the prior quarter and decreased $6.4 million, or 0.4%, from December 31, 2023. The decrease in net loans and leases during the quarter was primarily due to a $6.9 million decrease in loans and leases balances coupled with a $1.1 million increase in the allowance for credit losses. The decrease in loans and leases balances was primarily due to an $8.5 million decrease in commercial loan balances, a $7.4 million decrease in single-family residential loan balances, $2.0 million decrease in commercial real estate loan balances, and a $447,000 decrease in multi-family loan balances, partially offset by a $6.5 million increase in construction loan balances and a $4.8 million increase in home equity lines of credit. The increase in the allowance for credit losses was primarily driven by the provision for credit losses of $3.2 million, partially offset by net charge-offs of $2.1 million.

The decrease in net loans and leases from December 31, 2023, was primarily due to $4.0 million decrease in loans and leases balances coupled with a $2.4 million increase in the allowance for credit losses. The decrease in loans and leases balances was primarily due to a $17.9 million decrease in commercial loan balances, a $10.4 million decrease in single-family residential loan balances, a $5.8 million decrease in construction loan balances, and a $2.4 million decrease in multi-family loan balances, partially offset by a $26.8 million increase in commercial real estate loan balances and a $4.9 million increase in home equity lines of credit. The increase in the allowance for credit losses was primarily driven by the provision for credit losses of $4.5 million, partially offset by net charge-offs of $2.1 million.

The following table presents the recorded investment in loans and leases for certain non-owner-occupied loan types (in thousands).







June 30, 2024

March 31, 2024

Construction – 1-4 family*

$

22,877

$

23,622

Construction – Multi-family*


118,815


106,251

Construction – Non-residential*


41,271


46,594

Hotel/Motel


12,144


12,214

Industrial / Warehouse


57,368


57,837

Land/Land Development


17,139


16,348

Medical/Healthcare/Senior Housing


318


346

Multi-family


180,511


189,539

Office


40,312


44,819

Retail


53,397


53,701

Other


30,856


31,316

*CFBank possesses a core competency and deep expertise in Construction Lending. The construction lending business sector has produced many full banking relationships with proven developers with long successful track records.

Asset Quality

Nonaccrual loans were $10.9 million, or 0.64%, of total loans at June 30, 2024, an increase of $3.0 million from $7.9 million at March 31, 2024 and an increase of $5.2 million from $5.7 million at December 31, 2023. The increase in nonaccrual loans when compared to the prior quarter end was primarily due to two commercial loans, totaling $4.7 million, and one single-family residential loan, totaling $547,000, becoming nonaccrual during the second quarter of 2024, partially offset by charge-offs of $1.8 million on loans that went into nonaccrual status during the first quarter of 2024.

The increase in nonaccrual loans when compared to December 31, 2023 was primarily driven by five commercial loans, totaling $4.9 million, and two single-family residential loans, totaling $919,000, becoming nonaccrual during the six months ended June 30, 2024. Loans past due more than 30 days totaled $7.6 million at June 30, 2024 compared to $5.4 million at March 31, 2024 and $2.0 million at December 31, 2023.

The allowance for credit losses on loans and leases totaled $19.3 million at June 30, 2024 compared to $18.2 million at March 31, 2024 and $16.9 million at December 31, 2023. The ratio of the allowance for credit losses on loans and leases to total loans and leases was 1.13% at June 30, 2024 compared to 1.06% at March 31, 2024 and 0.99% at December 31, 2023. The increase in the allowance for credit losses during the quarter ended June 30, 2024 was primarily driven by additional reserves placed on two individually-evaluated commercial loan participations, totaling $3.1 million, which were acquired from regional banks, partially offset by charge-offs of $2.1 million.

There was $3.6 million in provision for credit losses expense for the quarter ended June 30, 2024, compared to $1.2 million for the quarter ended March 31, 2024 and $12,000 for the quarter ended June 30, 2023. The increase in the provision for credit losses was primarily driven by additional reserves placed on two individually-evaluated commercial loan participations which were acquired from regional banks. Net charge-offs for the quarter ended June 30, 2024 totaled $2.1 million compared to net recoveries of $16,000 for the prior quarter and net recoveries of $108,000 for the quarter ended June 30, 2023.

Deposits

Deposits totaled $1.7 billion at June 30, 2024, a decrease of $26.6 million, or 1.5%, compared to $1.7 billion at March 31, 2024, and a decrease of $47.6 million, or 2.7%, when compared to $1.7 billion at December 31, 2023. The decrease when compared to March 31, 2024 was primarily due to a $19.1 million decrease in noninterest-bearing account balances, coupled with a $7.5 million decrease in interest-bearing accounts balances. The decrease when compared to December 31, 2023, was primarily due to a $29.4 million decrease in interest-bearing account balances, coupled with a $18.2 million decrease in noninterest-bearing account balances. The decrease in interest-bearing account balances when compared to December 31, 2023 included a $14.2 million reduction in brokered deposits.

At June 30, 2024, approximately 28.6% of our deposit balances exceeded the FDIC insurance limit of $250,000, as compared to approximately 29.8% at March 31, 2024 and approximately 29.2% at December 31, 2023.

Borrowings

FHLB advances and other debt totaled $137.2 million at June 30, 2024 and increased $26.2 million, or 23.6%, when compared to $111.0 million at March 31, 2024 and increased $27.2 million when compared to $110.0 million at December 31, 2023. The increase when compared to March 31, 2024 and to December 31, 2023 was primarily due to a $26.0 million short-term borrowing.

Capital

Stockholders' equity totaled $159.6 million at June 30 2024, an increase of $1.6 million, or 1.0%, when compared to $158.0 million at March 31, 2024, and an increase of $4.2 million, or 2.7%, from $155.4 million at December 31, 2023. The increase in total stockholders' equity during the three months ended June 30, 2024 was primarily attributed to net income, partially offset by $387,000 in dividend payments. The increase in stockholders' equity during the six months ended June 30, 2024 was primarily attributed to net income, partially offset by $773,000 in dividend payments.

USE OF NON-GAAP FINANCIAL MEASURES

This earnings release contains financial information and performance measures determined by methods other than in accordance with accounting principles generally accepted in the United States of America ("GAAP"). Non-GAAP financial measures included in this earnings release include Pre-Provision, Pre-Tax Net Revenue (PPNR), PPNR Return on Average Assets (PPNR ROA), PPNR Return on Average Equity (PPNR ROE), as well as Net income adjusted for impairment expenses (additional specific reserves) on noncore assets and certain credit quality metrics for core assets (Adjusted Core Net Income), Adjusted Return on Average Assets (Adjusted ROA), Adjusted Return on Average Equity (Adjusted ROE) and Adjusted Diluted Earnings Per Share (Adjusted EPS). Management uses these "non-GAAP" financial measures in its analysis of the Company's performance and believes that these non-GAAP financial measures provide a greater understanding of ongoing operations and enhance comparability of results with prior periods and peers. Additionally, Management believes these financial measures provide additional clarity regarding the performance of the Company's core assets. These disclosures should not be viewed as substitutes for financial measures determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures is included at the end of this earnings release under the heading " NON-GAAP FINANCIAL MEASURES."

About CF Bankshares Inc. and CFBank

CF Bankshares Inc. (the "Company") is a holding company that owns 100% of the stock of CFBank, National Association ("CFBank"). CFBank is a nationally chartered boutique Commercial bank operating primarily in Four (4) Major Metro Markets: Columbus, Cleveland, and Cincinnati, Ohio, and Indianapolis, Indiana. The current Leadership Team and Board recapitalized the Company and CFBank in 2012 during the financial crisis, repositioning CFBank as a full-service Commercial Bank model. Since the 2012 recapitalization, CFBank has achieved a CAGR in excess of 20%.

CFBank focuses on serving the financial needs of closely held businesses and entrepreneurs, by providing a 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 is differentiated by our penchant for individualized service coupled with direct customer access to decision-makers, and ease of doing business. CFBank matches the sophistication of much larger banks, without the bureaucracy.

CFBank was named one of Piper Sandler's "Bank & Thrift Sm-All Stars" for 2023. This recognition places us among the top 10% of small-cap banks and thrifts in the United States. In addition, CFBank ranked #7 on American Banker's listing of Top 200 Publicly Traded Community Banks based on 3-year average return on equity as of December 31, 2022.

Additional information about the Company and CFBank is available at www.CF.Bank

FORWARD LOOKING STATEMENTS

This press release and other materials we have filed or may file with the Securities and Exchange Commission ("SEC") contain or may contain forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Reform Act of 1995, 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 common share, capital structure and other financial items; (2) plans and objectives of the management or Boards of Directors of CF Bankshares Inc. 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 detailed from time to time in our reports filed with the SEC, including those risk factors identified in "Item 1A. Risk Factors" of Part I of our Annual Report on Form 10-K filed with SEC for the year ended December 31, 2023.

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 press release 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.

















Consolidated Statements of Income
















($ in thousands, except share data)
















(unaudited)

Three months ended




Six months ended




June 30,




June 30,




2024


2023


%
change


2024


2023


%
change

Total interest income

$

29,315


$

26,225


12 %


$

58,401



50,401


16 %

Total interest expense


17,948



14,739


22 %



35,750



26,182


37 %

Net interest income


11,367



11,486


-1 %



22,651



24,219


-6 %

















Provision for credit losses
















Provision for credit losses-loans


3,195



(63)


n/m



4,512



204


2112 %

Provision for credit losses-unfunded commitments


366



75


388 %



286



45


536 %



3,561



12


29575 %



4,798



249


1827 %

Net interest income after provision for credit losses


7,806



11,474


-32 %



17,853



23,970


-26 %

















Noninterest income
















Service charges on deposit accounts


623



379


64 %



1,182



683


73 %

Net gain (loss) on sales of residential mortgage loans


87



40


118 %



177



37


378 %

Net gains on sale of commercial loans


-



-


n/m



167



-


n/m

Swap fee income


-



142


-100 %



-



172


-100 %

Other


508



417


22 %



597



805


-26 %

Noninterest income


1,218



978


25 %



2,123



1,697


25 %

















Noninterest expense
















Salaries and employee benefits


3,570



3,778


-6 %



7,078



7,764


-9 %

Occupancy and equipment


471



456


3 %



905



837


8 %

Data processing


649



487


33 %



1,264



1,036


22 %

Franchise and other taxes


356



328


9 %



642



627


2 %

Professional fees


590



632


-7 %



1,253



1,238


1 %

Director fees


143



164


-13 %



268



334


-20 %

Postage, printing, and supplies


42



37


14 %



86



92


-7 %

Advertising and marketing


38



71


-46 %



52



254


-80 %

Telephone


52



72


-28 %



103



136


-24 %

Loan expenses


259



187


39 %



706



359


97 %

Depreciation


122



148


-18 %



252



281


-10 %

FDIC premiums


499



519


-4 %



1,099



1,022


8 %

Regulatory assessment


66



60


10 %



131



118


11 %

Other insurance


51



52


-2 %



107



99


8 %

Other


184



182


1 %



333



667


-50 %

Noninterest expense


7,092



7,173


-1 %



14,279



14,864


-4 %

















Income before income taxes


1,932



5,279


-63 %



5,697



10,803


-47 %

Income tax expense


237



1,056


-78 %



932



2,132


-56 %

Net income


1,695



4,223


-60 %



4,765



8,671


-45 %

Earnings allocated to participating securities (Series D preferred stock)


(54)



-


n/m



(121)



-


n/m

Net Income attributable to common stockholders

$

1,641


$

4,223


-61 %


$

4,644


$

8,671


-46 %

















Share Data
















Basic earnings per common share

$

0.26


$

0.66




$

0.74


$

1.35



Diluted earnings per common share

$

0.26


$

0.66




$

0.74


$

1.35



















Average common shares outstanding - basic


6,256,457



6,418,305





6,293,178



6,410,624



Average common shares outstanding - diluted


6,256,457



6,433,623





6,306,878



6,431,508



















n/m - not meaningful
































Consolidated Statements of Financial Condition
































($ in thousands)

Jun 30,


Mar 31,


Dec 31,


Sept 30,


Jun 30,


(unaudited)

2024


2024


2023


2023


2023


Assets
















Cash and cash equivalents

$

241,775


$

236,892


$

261,595


$

229,763


$

231,600


Interest-bearing deposits in other financial institutions


100



100



100



100



100


Securities available for sale


8,323



7,597



8,092



8,480



8,966


Equity securities


5,000



5,000



5,000



5,000



5,000


Loans held for sale


3,187



2,241



1,849



1,355



1,355


Loans and leases


1,706,980



1,713,929



1,710,998



1,676,806



1,647,103


Less allowance for credit losses on loans and leases


(19,285)



(18,198)



(16,865)



(17,032)



(15,960)


Loans and leases, net


1,687,695



1,695,731



1,694,133



1,659,774



1,631,143


FHLB and FRB stock


9,830



8,491



8,482



8,499



8,736


Premises and equipment, net


3,571



3,685



3,812



3,940



4,085


Operating lease right of use assets


4,858



5,041



5,221



5,138



5,313


Bank owned life insurance


26,683



26,470



26,266



26,103



25,946


Accrued interest receivable and other assets


49,612



48,225



44,065



44,300



40,605


Total assets

$

2,040,634


$

2,039,473


$

2,058,615


$

1,992,452


$

1,962,849


































Liabilities and Stockholders' Equity
















Deposits
















Noninterest bearing

$

217,771


$

236,841


$

235,916


$

214,334


$

216,966


Interest bearing


1,478,705



1,486,229



1,508,141



1,470,659



1,443,117


Total deposits


1,696,476



1,723,070



1,744,057



1,684,993



1,660,083


FHLB advances and other debt


137,163



111,004



109,995



109,987



109,978


Advances by borrowers for taxes and insurance


154



1,093



2,179



1,737



2,034


Operating lease liabilities


4,949



5,127



5,302



5,216



5,388


Accrued interest payable and other liabilities


27,322



26,209



26,747



24,298



23,084


Subordinated debentures


14,980



14,971



14,961



14,951



14,941


Total liabilities


1,881,044



1,881,474



1,903,241



1,841,182



1,815,508


















Stockholders' equity


159,590



157,999



155,374



151,270



147,341


Total liabilities and stockholders' equity

$

2,040,634


$

2,039,473


$

2,058,615


$

1,992,452


$

1,962,849





























Average Balance Sheet and Yield Analysis





















































For Three Months Ended


June 30, 2024


March 31, 2024


June 30, 2023


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-earning assets:



























Securities (1) (2)

$

12,902


$

133



3.37 %


$

13,077


$

129



3.23 %


$

14,406


$

213



4.94 %

Loans and leases and loans held for sale (3)


1,688,522



26,339



6.24 %



1,694,701



26,010



6.14 %



1,627,516



23,684



5.82 %

Other earning assets


191,199



2,679



5.60 %



196,600



2,782



5.66 %



165,843



2,190



5.28 %

FHLB and FRB stock


8,646



164



7.59 %



8,488



165



7.78 %



9,133



138



6.04 %

Total interest-earning assets


1,901,269



29,315



6.16 %



1,912,866



29,086



6.07 %



1,816,898



26,225



5.76 %

Noninterest-earning assets


96,107









91,328









92,456







Total assets

$

1,997,376








$

2,004,194








$

1,909,354


































Interest-bearing liabilities:



























Deposits

$

1,443,860



16,784



4.65 %


$

1,453,397



16,650



4.58 %


$

1,388,672



13,660



3.93 %

FHLB advances and other borrowings


126,918



1,164



3.67 %



125,724



1,152



3.67 %



125,505



1,079



3.44 %

Total interest-bearing liabilities


1,570,778



17,948



4.57 %



1,579,121



17,802



4.51 %



1,514,177



14,739



3.89 %




























Noninterest-bearing liabilities


266,393









267,714









249,608







Total liabilities


1,837,171









1,846,835









1,763,785


































Equity


160,205









157,359









145,569







Total liabilities and equity

$

1,997,376








$

2,004,194








$

1,909,354


































Net interest-earning assets

$

330,491








$

333,745








$

302,721







Net interest income/interest rate spread




$

11,367



1.59 %





$

11,284



1.56 %





$

11,486



1.87 %

Net interest margin








2.39 %









2.36 %









2.52 %

Average interest-earning assets



























to average interest-bearing liabilities


121.04 %









121.13 %









119.99 %









(1)

Average balance is computed using the carrying value of securities. Average yield is computed using the historical amortized cost average balance for available for sale 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 allowance for credit losses on loans and leases and includes nonperforming loans and leases.























Consolidated Financial Highlights





















At or for the three months ended


At or for the six months ended

($ in thousands except per share data)


Jun 30,


Mar 31,


Dec 31,


Sept 30,


Jun 30,



June 30,

(unaudited)


2024


2024


2023


2023


2023



2024



2023

Earnings and Dividends






















Net interest income


$

11,367


$

11,284


$

11,754


$

11,667


$

11,486


$

22,651


$

24,219

Provision for credit losses


$

3,561


$

1,237


$

875


$

1,193


$

12


$

4,798


$

249

Noninterest income


$

1,218


$

905


$

1,033


$

1,301


$

978


$

2,123


$

1,697

Noninterest expense


$

7,092


$

7,187


$

6,745


$

6,760


$

7,173


$

14,279


$

14,864

Net income


$

1,695


$

3,070


$

4,235


$

4,031


$

4,223


$

4,765


$

8,671

Basic earnings per common share


$

0.26


$

0.48


$

0.66


$

0.63


$

0.66


$

0.74


$

1.35

Diluted earnings per common share


$

0.26


$

0.47


$

0.65


$

0.62


$

0.66


$

0.74


$

1.35

Dividends declared per share


$

0.06


$

0.06


$

0.06


$

0.06


$

0.06


$

0.12


$

0.11























Performance Ratios (annualized)






















Return on average assets



0.34 %



0.61 %



0.84 %



0.82 %



0.88 %



0.48 %



0.93 %

Return on average equity



4.23 %



7.80 %



11.02 %



10.75 %



11.60 %



6.00 %



12.07 %

Average yield on interest-earning assets



6.16 %



6.07 %



6.16 %



6.04 %



5.76 %



6.12 %



5.66 %

Average rate paid on interest-bearing liabilities



4.57 %



4.51 %



4.49 %



4.24 %



3.89 %



4.54 %



3.58 %

Average interest rate spread



1.59 %



1.56 %



1.67 %



1.80 %



1.87 %



1.58 %



2.08 %

Net interest margin, fully taxable equivalent



2.39 %



2.36 %



2.44 %



2.50 %



2.52 %



2.37 %



2.72 %

Efficiency ratio (3)



56.35 %



58.96 %



52.75 %



52.13 %



57.55 %



57.64 %



57.35 %

Noninterest expense to average assets



1.42 %



1.43 %



1.33 %



1.38 %



1.50 %



1.43 %



1.59 %























Capital






















Tier 1 capital leverage ratio (1)



10.11 %



10.05 %



9.76 %



9.83 %



9.82 %



10.11 %



9.82 %

Total risk-based capital ratio (1)



13.48 %



13.50 %



13.30 %



13.36 %



13.24 %



13.48 %



13.24 %

Tier 1 risk-based capital ratio (1)



12.23 %



12.31 %



12.17 %



12.22 %



12.15 %



12.23 %



12.15 %

Common equity tier 1 capital to risk weighted assets (1)



12.23 %



12.31 %



12.17 %



12.22 %



12.15 %



12.23 %



12.15 %

Equity to total assets at end of period



7.82 %



7.75 %



7.55 %



7.59 %



7.51 %



7.82 %



7.51 %

Book value per common share


$

24.17


$

24.17


$

23.74


$

23.10


$

22.49


$

24.17


$

22.49

Tangible book value per common share (2)


$

24.17


$

24.17


$

23.74


$

23.10


$

22.49


$

24.17


$

22.49

Period-end market value per common share


$

18.76


$

19.97


$

19.50


$

16.75


$

15.00


$

18.76


$

15.00

Period-end common shares outstanding



6,387,655



6,338,115



6,545,560



6,549,609



6,550,950



6,387,655



6,550,950

Average basic common shares outstanding



6,256,457



6,329,898



6,433,568



6,429,198



6,418,305



6,293,178



6,410,624

Average diluted common shares outstanding



6,256,457



6,357,298



6,469,862



6,456,575



6,433,623



6,306,878



6,431,508























Asset Quality






















Nonperforming loans


$

10,909


$

7,895


$

5,722


$

4,594


$

799


$

10,909


$

799

Nonperforming loans to total loans



0.64 %



0.46 %



0.33 %



0.27 %



0.05 %



0.64 %



0.05 %

Nonperforming assets to total assets



0.53 %



0.39 %



0.28 %



0.23 %



0.04 %



0.53 %



0.04 %

Allowance for credit losses on loans and
leases to total loans and leases



1.13 %



1.06 %



0.99 %



1.02 %



0.97 %



1.13 %



0.97 %

Allowance for credit losses on loans and
leases to nonperforming loans and leases



176.78 %



230.50 %



294.74 %



370.74 %



1997.50 %



176.78 %



1997.50 %

Net charge-offs (recoveries)


$

2,108


$

(16)


$

623


$

126


$

(108)


$

2,092


$

(103)

Annualized net charge-offs (recoveries)
to average loans



0.49 %



0.00 %



0.15 %



0.03 %



(0.03 %)



0.25 %



(0.01 %)























Average Balances






















Loans


$

1,704,118


$

1,710,057


$

1,699,323


$

1,657,303


$

1,642,961


$

1,707,088


$

1,623,207

Assets


$

1,997,376


$

2,004,194


$

2,023,471


$

1,957,019


$

1,909,354


$

2,000,785


$

1,867,082

Stockholders' equity


$

160,205


$

157,359


$

153,724


$

150,012


$

145,569


$

158,782


$

143,689



(1)

Regulatory capital ratios of CFBank

(2)

There are no differences between book value per common share and tangible book value per common share since the Company does not have any intangible assets.

(3)

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

NON-GAAP FINANCIAL MEASURES

The following non-GAAP financial measures used by the Company provide information useful to investors in understanding the Company's operating performance and trends and facilitate comparisons with the performance of peers. The following tables summarize the non-GAAP financial measures derived from amounts reported in the Company's consolidated financial statements:
















Pre-provision, pre-tax net revenue ("PPNR"),












PPNR Return on Average Assets and PPNR Return on Average Equity























Three Months Ended


Six months ended


June 30,


March 31,


June 30,


June 30,


2024


2024


2023


2024


2023

Net income

$

1,695


$

3,070


$

4,223


$

4,765


$

8,671

Add: Provision for credit losses


3,561



1,237



12



4,798



249

Add: Income tax expense


237



695



1,056



932



2,132

Pre-provision, pre-tax net revenue

$

5,493


$

5,002


$

5,291


$

10,495


$

11,052
















Average Assets

$

1,997,376


$

2,004,194


$

1,909,354


$

2,000,785


$

1,867,082

Average Stockholders' Equity

$

160,205


$

157,359


$

145,569


$

158,782


$

143,689
















Return on average assets (GAAP) (1)


0.34 %



0.61 %



0.88 %



0.48 %



0.93 %

PPNR return on average assets (Non-GAAP) (2)


1.10 %



1.00 %



1.11 %



1.05 %



1.18 %
















Return on average equity (GAAP) (3)


4.23 %



7.80 %



11.60 %



6.00 %



12.07 %

PPNR return on average equity (Non-GAAP)(4)


13.71 %



12.71 %



14.54 %



13.22 %



15.38 %
















(1) Annualized net income divided by average assets









(2) Annualized PPNR divided by average assets









(3) Annualized net income divided by average stockholders' equity









(4) Annualized PPNR divided by average stockholders' equity









Net Income Adjusted for Impact of Additional Specific Reserves on Noncore Assets ("Adjusted Core Net Income"),

Adjusted Return on Average Assets, Adjusted Return on Average Equity and Adjusted Diluted Earnings Per Share



Three Months Ended


June 30, 2024

Net income

$

1,695

Add: Additional specific reserves on noncore assets


3,133

Less: Income tax effect of additional specific reserves on noncore assets


(658)

Adjusted Core Net Income

$

4,170




Average Assets

$

1,997,376

Less: Average noncore assets (a)


(127,119)

Adjusted Average Assets

$

1,870,257




Average Stockholders' Equity

$

160,205

Add: Impact of additional specific reserves on noncore assets


2,475

Adjusted Average Stockholders' Equity

$

162,680




Diluted earnings per common share (EPS) (GAAP)

$

0.26

After tax impact of additional specific reserves on noncore assets


0.39

Adjusted Diluted EPS

$

0.65




Return on average assets (GAAP) (b)


0.34 %

Adjusted return on average assets (Non-GAAP) (c)


0.89 %




Return on average equity (GAAP) (d)


4.23 %

Adjusted return on average equity (Non-GAAP)(e)


10.25 %




(a) Noncore assets consist of loans for which the Company doesn't have an underlying customer relationship or an expectation or intent to build a relationship.

(b) Annualized net income divided by average assets

(c) Annualized Adjusted Core net income divided by Adjusted average assets

(d) Annualized net income divided by average stockholders' equity

(e) Annualized Adjusted Core net income divided by Adjusted average stockholders' equity




Credit Quality Metrics on Core Loan Portfolio


At


June 30, 2024

Gross loans (GAAP)

$

1,706,980

Less: Noncore loans (a)


(127,119)

Gross core loans (Non-GAAP)

$

1,579,861




Loans 30 or more days past due (GAAP)

$

7,620

Less: Noncore loans 30 or more days past due


(4,000)

Core loans more than 30 days past due (Non-GAAP)

$

3,620




Loans 30 or more days past due as a percent of gross loans (GAAP)


0.45 %

Core loans 30 or more days past due as a percent of gross core portfolio loans (Non-GAAP)


0.23 %




Total assets (GAAP)

$

2,040,634

Less: Noncore assets (a)


(127,119)

Total Core Assets (Non-GAAP)

$

1,913,515




Assets designated as substandard, doubtful or loss ("Classified Assets") (GAAP)

$

9,808

Less: Classified noncore assets (b)


(7,335)

Classified Core Assets (Non-GAAP)

$

2,473




Classified assets as a percent of total assets (GAAP)


0.48 %

Classified core assets as a percent of total core assets (Non-GAAP)


0.13 %




(a) Noncore assets consist of loans for which the Company doesn't have an underlying customer relationship or an expectation or intent to build a relationship.

(b) Classified noncore assets consist of noncore assets with a risk rating of substandard, doubtful or loss

Cision View original content:https://www.prnewswire.com/news-releases/cf-bankshares-inc-parent-of-cfbank-na-reports-results-for-the-2nd-quarter-2024-302215639.html

SOURCE CF Bankshares Inc.



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