CF BANKSHARES INC., PARENT OF CFBANK NA, REPORTS RESULTS FOR THE 2ND QUARTER 2023.

COLUMBUS, Ohio, Aug. 3, 2023 /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, 2023.

Second Quarter and First Half 2023 Highlights

• Net Income was $4.2 million ($0.66 per diluted common share) for the second quarter and $8.7 million YTD ($1.35 per diluted common share).  Pre-provision, pre-tax net revenue ("PPNR") for Q2 2023 was $5.3 million and $11.1 million YTD.
• Return on Average Assets (ROA) was 0.88% and PPNR ROA was 1.11% for the second quarter, while Return on Average Equity (ROE) was 11.60% and PPNR ROE was 14.54%.
• Book value per share increased to $22.49 at June 30, 2023.
• Noninterest income for Q2 2023 was up 36% when compared to Q1 2023.
• Deposit balances increased $56 million, or 4% during the quarter.
• Credit quality remains strong with nonperforming loans to total loans of 0.05% and loans more than 30 days past due at 0.11% of total loans. 
• At June 30, 2023, CFBank's primary and secondary liquidity (cash plus available borrowing capacity) totaled $638 million.  The estimated amount of CFBank's uninsured customer deposit accounts was $480 million, or approximately 28.9% of total deposit balances, as of June 30, 2023.

Recent Developments

• On July 10, 2023, the Company's Board of Directors declared a Cash Dividend of $0.06 per share payable on August 1, 2023 to shareholders of record as of the close of business on July 21, 2023. 

CEO and Board Chair Commentary

Timothy T. O'Dell, President and CEO, commented: "Our CFBK Earnings were $4.2 Million, or $0.66 cents per share, for Q2. Our Book Value at June 30, 2023 was $22.49 per share.

Our CF Team has been proactive in responding early on to Margin pressures boosting loan pricing and deposit requirements beginning early this year.

Loan growth has been modest during the first half of the year. Presently, we are pleased to report that both our Loan and Deposit Pipelines are increasing. Our objective and expectation for the second half of 2023 is to outrun elevated loan payoffs experienced during the second quarter and anticipated during the third quarter of this year. These payoffs are mostly Commercial Real Estate loans moving to permanent financing sources. Our business objectives include taking advantage of continuing quality new business relationship opportunities throughout all of our markets during the second half of this year.

In addition to significant commercial loan payoffs during the second quarter, our Residential Mortgage Lending Business also experienced roughly $10 Million of low-rate loans being paid off. We successfully replaced this low-rate runoff at higher interest rates, while absorbing the remaining unrecognized loan origination expenses during Q2. We expect this to provide a future lift to our Margin and Earnings.

We continue to opportunistically make investments in our CF Banking Team, focused on adding proven revenue generators for growing our Deposit and Fee Income businesses.

The current operating environment, with high interest rates coupled with an inverted yield curve, remains highly challenging.  However, we believe that we are adjusting successfully and, as a general statement, seeing signs of improving stabilization along with positive impacts from our ongoing loan pricing initiatives. Our total assets continue to increase, to $1.96 Billion at June 30, 2023, and we anticipate surpassing $2 Billion in total assets during 2023.

"We remain very encouraged going forward by our continued access to quality new full relationship Loan and Deposit business. Additionally, we are gaining traction in growing our Fee Income businesses including good acceptance of our recently launched Business Credit Card product offering.

Steady as we go!"

Robert E. Hoeweler, Chairman of the Board, added: "Our over-achieving Business principle is to serve well the needs of our customers and our communities. Our concentration on the basics, the blocking and tackling of banking if you will, has us well positioned. Our seasoned CFBank Leadership Team has once again successfully reacted to the current economic situation quickly and decisively as reflected in our Q2 results."

Overview of Results 

Net income for the three months ended June 30, 2023 totaled $4.2 million (or $0.66 per diluted common share) compared to net income of $4.4 million (or $0.68 per diluted common share) for the three months ended March 31, 2023 and net income of $4.7 million (or $0.72 per diluted common share) for the three months ended June 30, 2022.  Pre-provision, pre-tax net revenue ("PPNR") for the three months ended June 30, 2023 was $5.3 million compared to PPNR of $5.8 million for the three months ended March 31, 2023 and $5.9 million for the three months ended June 30, 2022.

Net income for the six months ended June 30, 2023 totaled $8.7 million (or $1.35 per diluted common share) compared to net income of $9.2 million (or $1.41 per diluted common share) for the six months ended June 30, 2022.

Net Interest Income and Net Interest Margin

Net interest income totaled $11.5 million for the quarter ended June 30, 2023 and decreased $1.2 million, or 9.8%, compared to $12.7 million in the prior quarter, and decreased $59,000, or 0.5%, compared to $11.5 million in the second quarter of 2022. 

The decrease in net interest income compared to the prior quarter was primarily due to a $3.2 million, or 28.8%, increase in interest expense, partially offset by a $2.0 million, or 8.5%, increase in interest income. The increase in interest expense when compared to the prior quarter was attributed to a 65bps increase in the average cost of funds on interest-bearing liabilities, coupled with a $101.4 million, or 7.2%, increase in average interest-bearing liabilities.  The increase in interest income was primarily attributed to an $80.3 million, or 4.6%, increase in average interest-earning assets, coupled with 20bps increase in average yield on interest-earning assets.  The net interest margin of 2.52% for the quarter ended June 30, 2023 decreased 41bps compared to the net interest margin of 2.93% for the prior quarter.

The decrease in net interest income compared to the second quarter of 2022 was primarily due to a $11.6 million, or 366.4%, increase in interest expense, partially offset by a $11.5 million, or 78.3%, increase in interest income.  The increase in interest expense was attributed to a 284bps increase in the average cost of funds on interest-bearing liabilities, coupled with a $313.5 million, or 26.1%, increase in average interest-bearing liabilities. The increase in interest income was primarily attributed to a 188bps increase in the average yield on interest-earning assets, coupled with a $301.3 million, or 19.9%, increase in average interest-earning assets outstanding.  The net interest margin of 2.52% for the quarter ended June 30, 2023 decreased 52bps compared to the net interest margin of 3.04% for the second quarter of 2022.

Noninterest Income

Noninterest income for the quarter ended June 30, 2023 totaled $978,000 and increased $259,000, or 36.0%, compared to $719,000 for the prior quarter.  The increase was primarily due to a $112,000 increase in swap fee income and a $75,000 increase in service charges on deposit accounts. 

Noninterest income for the quarter ended June 30, 2023 increased $170,000, or 21.0%, compared to $808,000 for the quarter ended June 30, 2022.  The increase was primarily due to a $167,000 increase in other noninterest income related to commercial loan servicing fees, a $137,000 increase in swap fee income, partially offset by a $143,000 decrease in net gain on sale of commercial loans.

During the second quarter 2022, we exited the DTC mortgage loan business in favor of traditional Retail mortgage lending to customers in our Regional markets. The following table represents the notional amount of loans sold during the three months ended June 30, 2023, March 31, 2023, and June 30, 2022 (in thousands).

	Three Months ended
	June 30, 2023			March 31, 2023			June 30, 2022
Notional amount of loans sold	$	3,171		$	1,991		$	9,368

The following table represents the revenue recognized on mortgage activities for the three months ended June 30, 2023, March 31, 2023, and June 30, 2022 (in thousands).

	Three Months ended
	June 30, 2023			March 31, 2023			June 30, 2022
Gain (loss) on loans sold	$	40		$	(3)		$	(103)
Gain (loss) from change in fair value of loans held-for-sale		-			-			92
Gain (loss) from change in fair value of derivatives		-			-			132
	$	40		$	(3)		$	121

Noninterest Expense

Noninterest expense for the quarter ended June 30, 2023 totaled $7.2 million and decreased $518,000, or 6.7%, compared to $7.7 million for the prior quarter.  The decrease in noninterest expense was primarily due to a $303,000 decrease in other noninterest expense and a $208,000 decrease in salaries and employee benefits.  The decrease in other noninterest expense was primarily due to fraud losses on customer accounts that occurred in the first quarter of 2023.  The decrease in salaries and employee benefits was primarily due to a decrease in the number of employees coupled with lower payroll taxes.

Noninterest expense for the quarter ended June 30, 2023 increased $701,000, or 10.8%, compared to $6.5 million for the quarter ended June 30, 2022.  The increase in noninterest expense was primarily due to a $292,000 increase in FDIC premiums and a $200,000 increase in salaries and employee benefits.  The increase in FDIC expense was related to increased assets and deposit levels and assessment rates.  The increase in salaries and employee benefits was primarily due to a decline in deferred salary costs related to lower origination volumes.

Income Tax Expense

Income tax expense was $1.1 million for the quarter ended June 30, 2023 (effective tax rate of 20.0%), compared to $1.1 million for the prior quarter (effective tax rate of 19.5%) and $1.2 million for the quarter ended June 30, 2022 (effective tax rate of 19.6%).

Loans and Loans Held For Sale

Net loans and leases totaled $1.6 billion at June 30, 2023 and increased $15.1 million, or 0.9%, from the prior quarter and increased $58.9 million, or 3.7%, from December 31, 2022. The increase in net loans during the quarter was primarily due to a $9.6 million increase in commercial loan balances, a $5.9 million increase in construction loan balances, and a $1.2 million increase in commercial real estate loan balances, partially offset by a $1.0 million decrease in single-family residential loan balances.  The increases in the aforementioned loan balances were related to increased sales activity and new relationships.

The increase in net loans and leases from December 31, 2022 was primarily due to a $17.8 million increase in commercial real estate loan balances, a $12.4 million increase in commercial loan balances, a $10.1 million increase in construction loan balances, an $8.0 million increase in single-family residential loan balances, a $5.8 million increase in home equity lines of credit, and a $5.4 million increase in multi-family loan balances.  The increases in the aforementioned loan balances were related to increased sales activity and new relationships.

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

	June 30, 2023		March 31, 2023
Construction - 1-4 family*	$	13,968	$	22,099
Construction - Multi-family*		122,211		107,841
Construction - Non-residential*		55,886		54,790
Hotel/Motel		17,134		17,211
Industrial / Warehouse		26,543		24,511
Land/Land Development		21,557		30,848
Medical/Healthcare/Senior Housing		417		443
Multi-family		140,797		131,178
Office		43,152		42,949
Retail		26,900		27,085
Other		51,368		50,549

*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 $799,000, or 0.05%, of total loans at June 30, 2023, an increase of $81,000 from nonaccrual loans at March 31, 2023 and an increase of $38,000 from nonaccrual loans at December 31, 2022. Loans past due more than 30 days totaled $1.9 million at June 30, 2023 compared to $1.0 million at March 31, 2023 and $2.1 million at December 31, 2022.

The allowance for credit losses on loans and leases totaled $16.0 million at June 30, 2023 compared to $15.9 million at March 31, 2023 and $16.1 million at December 31, 2022.  The ratio of the allowance for credit losses on loans and leases to total loans and leases was 0.97% at June 30, 2023 compared to 0.98% at March 31, 2023 and 1.01% at December 31, 2022.

On January 1, 2023, the Company adopted CECL, which resulted in an increase to the reserve for credit losses of $49,000.  There was $12,000 in provision for credit loss expense for the quarter ended June 30, 2023, a $237,000 provision for credit loss expense for the quarter ended March 31, 2023 and no provision for credit loss expense for the quarter ended June 30, 2022.  Net recoveries for the quarter ended June 30, 2023 totaled $108,000 compared to net charge-offs of $5,000 for the prior quarter and net recoveries of $12,000 for the quarter ended June 30, 2022.

Subsequent to June 30, 2023, CFBank was notified of a potential credit issue with the borrower on a participation loan of which we are not the lead bank.  The balance of CFBank's participation was $2.9 million as of June 30, 2023.  The lead bank is currently gathering additional information to determine the impact.

Deposits

Deposits totaled $1.7 billion at June 30, 2023, an increase of $56.2 million, or 3.5%, when compared to $1.6 billion at March 31, 2023, and an increase of $132.2 million, or 8.6%, when compared to $1.5 billion at December 31 2022.  The increase when compared to the prior quarter end is primarily due to a $35.2 million increase in certificate of deposit account balances and a $28.6 million increase in money market account balances, partially offset by a $6.5 million decrease in checking account balances and a $1.1 million decrease in savings account balances. 

The increase in deposits when compared to December 31, 2022 is primarily due to a $98.0 million increase in money market account balances and a $56.5 million increase in certificate of deposit account balances, partially offset by a $21.1 million decrease in checking account balances and a $1.2 million decrease in savings account balances.

Noninterest-bearing deposit accounts totaled $217.0 million at June 30, 2023 and decreased $7.1 million from $224.1 million at March 31, 2023 and decreased $46.2 million from $263.2 million at December 31, 2022.  At June 30, 2023, approximately 28.8% of our deposit balances exceeded the FDIC insurance limit of $250,000, as compared to approximately 30.5% at March 31, 2023 and 31.6% at December 31, 2022.

Borrowings

FHLB advances and other debt totaled $110.0 million at June 30, 2023, a decrease of $27.0 million, or 19.7%, when compared to $137.0 million at March 31, 2023 and an increase of $517,000 when compared to $109.5 million at December 31, 2022.  The decrease when compared to the prior quarter was due to the repayment of an FHLB short-term advance.  The increase when compared to December 31, 2022 was due to a $4.0 million increase on the Company's line of credit with a third party financial institution, partially offset by a $3.5 million decrease in FHLB advances. 

Capital

Stockholders' equity totaled $147.3 million at June 30, 2023, an increase of $4.0 million, or 2.8%, from $143.3 million at March 31, 2023.  Stockholders' equity increased $8.1 million, or 5.8%, from $139.2  million at December 31, 2022.  The increase in total stockholders' equity during the three months ended June 30, 2023 was primarily attributed to net income, partially offset by a $148,000 increase in other comprehensive loss.  The increase in total stockholders' equity during the six months ended June 30, 2023 was primarily attributed to net income, partially offset by a $364,000 increase in other comprehensive loss.  The other comprehensive loss was the result of the mark-to-market adjustment of our investment portfolio.

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).  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.  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.  Non-GAAP financial measures included in this earnings release include Tangible book value per common share, Pre-Provision, Pre-Tax Net Revenue (PPNR), PPNR Return on Average Assets (PPNR ROA) and PPNR Return on Average Equity (PPNR ROE).  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 "GAAP TO NON-GAAP RECONCILIATION."

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 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 recognized in CB Resource Inc.'s Durable Performance Index which highlighted banks who have maintained above average performance based on 11 key performance indicators over the three-year period ended September 30, 2022.  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, 2022, as supplemented by the risk factors identified in "Item 1A. Risk Factors" of Part II of our Quarterly Reports on Form 10-Q filed with the SEC for the quarter ended March 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,
	2023			2022			% change		2023			2022			% change
Total interest income	$	26,225		$	14,705		78 %		$	50,401			27,857		81 %
Total interest expense		14,739			3,160		366 %			26,182			5,538		373 %
Net interest income		11,486			11,545		-1 %			24,219			22,319		9 %
Provision for credit losses		12			-		n/m			249			-		n/m
Net interest income after provision for credit losses		11,474			11,545		-1 %			23,970			22,319		7 %
Noninterest income
Service charges on deposit accounts		379			289		31 %			683			555		23 %
Net gain on sales of residential mortgage loans		40			121		-67 %			37			678		-95 %
Net gain on sale of commercial loans		-			143		-100 %			-			143		-100 %
Swap fee income		142			5		2740 %			172			18		856 %
Other		417			250		67 %			805			460		75 %
Noninterest income		978			808		21 %			1,697			1,854		-8 %
Noninterest expense
Salaries and employee benefits		3,778			3,578		6 %			7,764			7,199		8 %
Occupancy and equipment		456			312		46 %			837			631		33 %
Data processing		487			529		-8 %			1,036			1,049		-1 %
Franchise and other taxes		328			338		-3 %			627			661		-5 %
Professional fees		632			645		-2 %			1,238			1,252		-1 %
Director fees		164			153		7 %			334			294		14 %
Postage, printing, and supplies		37			38		-3 %			92			81		14 %
Advertising and marketing		71			134		-47 %			254			179		42 %
Telephone		72			61		18 %			136			114		19 %
Loan expenses		187			106		76 %			359			206		74 %
Depreciation		148			126		17 %			281			241		17 %
FDIC premiums		519			227		129 %			1,022			378		170 %
Regulatory assessment		60			65		-8 %			118			131		-10 %
Other insurance		52			46		13 %			99			90		10 %
Other		182			114		60 %			667			243		174 %
Noninterest expense		7,173			6,472		11 %			14,864			12,749		17 %
Income before income taxes		5,279			5,881		-10 %			10,803			11,424		-5 %
Income tax expense		1,056			1,155		-9 %			2,132			2,180		-2 %
Net Income	$	4,223		$	4,726		-11 %		$	8,671		$	9,244		-6 %
Share Data
Basic earnings per common share	$	0.66		$	0.74				$	1.35		$	1.44
Diluted earnings per common share	$	0.66		$	0.72				$	1.35		$	1.41
Average common shares outstanding - basic		6,418,305			6,413,884					6,410,624			6,415,871
Average common shares outstanding - diluted		6,433,623			6,552,763					6,431,508			6,550,620
n/m - not meaningful

 

Consolidated Statements of Financial Condition
($ in thousands)	Jun 30,			Mar 31,			Dec 31,			Sept 30,			Jun 30,
(unaudited)	2023			2023			2022			2022			2022
Assets
Cash and cash equivalents	$	231,600		$	214,248		$	151,787		$	198,066		$	154,850
Interest-bearing deposits in other financial institutions		100			100			100			100			100
Securities available for sale		8,966			9,661			10,442			11,436			12,220
Equity Securities		5,000			5,000			5,000			5,000			5,000
Loans held for sale		1,355			591			580			-			-
Loans and leases		1,647,103			1,631,998			1,588,317			1,489,570			1,393,759
Less allowance for credit losses on loans and leases		(15,960)			(15,915)			(16,062)			(15,687)			(15,532)
Loans and leases, net		1,631,143			1,616,083			1,572,255			1,473,883			1,378,227
FHLB and FRB stock		8,736			9,203			7,942			7,633			7,332
Premises and equipment, net		4,085			4,118			3,778			3,792			6,110
Other assets held for sale		-			1,930			1,930			1,930			-
Operating lease right of use assets		5,313			5,500			1,357			1,499			1,638
Bank owned life insurance		25,946			25,791			25,641			26,189			26,038
Accrued interest receivable and other assets		40,605			38,085			39,362			34,514			27,962
Total assets	$	1,962,849		$	1,930,310		$	1,820,174		$	1,764,042		$	1,619,477
Liabilities and Stockholders' Equity
Deposits
Noninterest bearing	$	216,966		$	224,096		$	263,241		$	270,945		$	244,484
Interest bearing		1,443,117			1,379,745			1,264,681			1,219,038			1,133,005
Total deposits		1,660,083			1,603,841			1,527,922			1,489,983			1,377,489
FHLB advances and other debt		109,978			136,970			109,461			102,803			75,594
Advances by borrowers for taxes and insurance		2,034			2,132			3,513			2,573			1,879
Operating lease liabilities		5,388			5,572			1,438			1,588			1,736
Accrued interest payable and other liabilities		23,084			23,530			23,670			17,311			15,185
Subordinated debentures		14,941			14,932			14,922			14,912			14,903
Total liabilities		1,815,508			1,786,977			1,680,926			1,629,170			1,486,786
Stockholders' equity		147,341			143,333			139,248			134,872			132,691
Total liabilities and stockholders' equity	$	1,962,849		$	1,930,310		$	1,820,174		$	1,764,042		$	1,619,477

 

Average Balance Sheet and Yield Analysis
	For Three Months Ended
	June 30, 2023									March 31, 2023									June 30, 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-earning assets:
Securities (1) (2)	$	14,406		$	213			4.94 %		$	15,197		$	215			4.84 %		$	17,744		$	221			4.58 %
Loans and leases and loans held for sale (3)		1,627,516			23,684			5.82 %			1,587,536			22,338			5.63 %			1,327,636			14,042			4.23 %
Other earning assets		165,843			2,190			5.28 %			125,780			1,502			4.78 %			162,912			364			0.89 %
FHLB and FRB stock		9,133			138			6.04 %			8,064			121			6.00 %			7,329			78			4.26 %
Total interest-earning assets		1,816,898			26,225			5.76 %			1,736,577			24,176			5.56 %			1,515,621			14,705			3.88 %
Noninterest-earning assets		92,456									87,766									81,305
Total assets	$	1,909,354								$	1,824,343								$	1,596,926
Interest-bearing liabilities:
Deposits	$	1,388,672			13,660			3.93 %		$	1,288,161			10,419			3.24 %		$	1,108,079			2,501			0.90 %
FHLB advances and other borrowings		125,505			1,079			3.44 %			124,610			1,024			3.29 %			92,612			659			2.85 %
Total interest-bearing liabilities		1,514,177			14,739			3.89 %			1,412,771			11,443			3.24 %			1,200,691			3,160			1.05 %
Noninterest-bearing liabilities		249,608									269,780									266,812
Total liabilities		1,763,785									1,682,551									1,467,503
Equity		145,569									141,792									129,423
Total liabilities and equity	$	1,909,354								$	1,824,343								$	1,596,926
Net interest-earning assets	$	302,721								$	323,806								$	314,930
Net interest income/interest rate spread				$	11,486			1.87 %					$	12,733			2.32 %					$	11,545			2.83 %
Net interest margin								2.52 %									2.93 %									3.04 %
Average interest-earning assets
to average interest-bearing liabilities		119.99 %									122.92 %									126.23 %

(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)		2023			2023			2022			2022			2022				2023			2022
Earnings and Dividends
Net interest income		$	11,486		$	12,733		$	13,155		$	13,316		$	11,545		$	24,219		$	22,319
Provision for credit losses		$	12		$	237		$	637		$	150		$	-		$	249		$	-
Noninterest income		$	978		$	719		$	651		$	705		$	808		$	1,697		$	1,854
Noninterest expense		$	7,173		$	7,691		$	7,273		$	8,599		$	6,472		$	14,864		$	12,749
Net Income		$	4,223		$	4,448		$	4,671		$	4,249		$	4,726		$	8,671		$	9,244
Basic earnings per common share		$	0.66		$	0.69		$	0.73		$	0.66		$	0.74		$	1.35		$	1.44
Diluted earnings per common share		$	0.66		$	0.68		$	0.72		$	0.65		$	0.72		$	1.35		$	1.41
Dividends declared per share		$	0.06		$	0.05		$	0.05		$	0.05		$	0.04		$	0.11		$	0.08
Performance Ratios (annualized)
Return on average assets			0.88 %			0.98 %			1.04 %			1.02 %			1.18 %			0.93 %			1.21 %
Return on average equity			11.60 %			12.55 %			13.55 %			12.62 %			14.61 %			12.07 %			14.47 %
Average yield on interest-earning assets			5.76 %			5.56 %			5.12 %			4.54 %			3.88 %			5.66 %			3.85 %
Average rate paid on interest-bearing liabilities			3.89 %			3.24 %			2.54 %			1.50 %			1.05 %			3.58 %			0.98 %
Average interest rate spread			1.87 %			2.32 %			2.58 %			3.04 %			2.83 %			2.08 %			2.87 %
Net interest margin, fully taxable equivalent			2.52 %			2.93 %			3.08 %			3.36 %			3.04 %			2.72 %			3.08 %
Efficiency ratio			57.55 %			57.17 %			52.68 %			61.33 %			52.39 %			57.35 %			52.74 %
Noninterest expense to average assets			1.50 %			1.69 %			1.62 %			2.07 %			1.62 %			1.59 %			1.67 %
Capital
Tier 1 capital leverage ratio (1)			9.82 %			10.02 %			9.89 %			10.00 %			10.09 %			9.82 %			10.09 %
Total risk-based capital ratio (1)			13.24 %			12.93 %			12.74 %			12.78 %			13.33 %			13.24 %			13.33 %
Tier 1 risk-based capital ratio (1)			12.15 %			11.84 %			11.65 %			11.65 %			12.13 %			12.15 %			12.13 %
Common equity tier 1 capital to risk weighted assets (1)			12.15 %			11.84 %			11.65 %			11.65 %			12.13 %			12.15 %			12.13 %
Equity to total assets at end of period			7.51 %			7.43 %			7.65 %			7.65 %			8.19 %			7.51 %			8.19 %
Book value per common share		$	22.49		$	21.88		$	21.43		$	20.85		$	20.25		$	22.49		$	20.25
Tangible book value per common share		$	22.49		$	21.88		$	21.43		$	20.85		$	20.25		$	22.49		$	20.25
Period-end market value per common share		$	15.00		$	19.50		$	21.18		$	20.62		$	21.00		$	15.00		$	21.00
Period-end common shares outstanding			6,550,950			6,549,991			6,496,824			6,467,278			6,552,020			6,550,950			6,552,020
Average basic common shares outstanding			6,418,305			6,402,856			6,363,552			6,393,531			6,413,884			6,410,624			6,415,871
Average diluted common shares outstanding			6,433,623			6,542,698			6,491,820			6,547,791			6,552,763			6,431,508			6,550,620
Asset Quality
Nonperforming loans		$	799		$	718		$	761		$	1,004		$	921		$	799		$	921
Nonperforming loans to total loans			0.05 %			0.04 %			0.05 %			0.07 %			0.07 %			0.05 %			0.07 %
Nonperforming assets to total assets			0.04 %			0.04 %			0.04 %			0.06 %			0.06 %			0.04 %			0.06 %
Allowance for credit losses on loans and leases to total loans and leases			0.97 %			0.98 %			1.01 %			1.05 %			1.11 %			0.97 %			1.11 %
Allowance for credit losses on loans and leases to nonperforming loans and leases			1997.50 %			2216.57 %			2110.64 %			1562.45 %			1686.43 %			1997.50 %			1686.43 %
Net charge-offs (recoveries)		$	(108)		$	5		$	262		$	(5)		$	(12)		$	(103)		$	(24)
Annualized net charge-offs (recoveries) to average loans			(0.03 %)			0.00 %			0.07 %			0.00 %			0.00 %			(0.01 %)			0.00 %
Average Balances
Loans		$	1,642,961		$	1,603,237		$	1,537,941		$	1,439,863		$	1,340,330		$	1,623,207		$	1,297,484
Assets		$	1,909,354		$	1,824,343		$	1,795,395		$	1,662,024		$	1,596,926		$	1,867,082		$	1,526,465
Stockholders' equity		$	145,569		$	141,792		$	137,845		$	134,639		$	129,423		$	143,689		$	127,811

(1)  Regulatory capital ratios of CFBank

GAAP TO NON-GAAP RECONCILIATION

This press release contains certain non-GAAP disclosures for: (1) Tangible book value per common share (2) PPNR, (3) PPNR return on average assets and (4) PPNR return on average equity.  The Company uses these non-GAAP financial measures to provide meaningful supplemental information regarding the Company's operations performance and to enhance investors' overall understanding of such financial performance.  In particular, the use of PPNR is prevalent among banking regulators, investors, and analysts.  Accordingly, we disclose the non-GAAP measures in addition to the related GAAP measures of: (1) book value per common share (2) net earnings (3) return on average assets and (4) return on average equity.

The table below presents the reconciliation of these GAAP financial measures to the related non-GAAP financial measures:

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,
	2023			2023			2022			2023			2022
Net income	$	4,223		$	4,448		$	4,726		$	8,671		$	9,244
Add: Provision for credit losses		12			237			-			249			-
Add: Income tax expense		1,056			1,076			1,155			2,132			2,180
Pre-provision, pre-tax net revenue	$	5,291		$	5,761		$	5,881		$	11,052		$	11,424
Average Assets	$	1,909,354		$	1,824,343		$	1,596,926		$	1,867,082		$	1,526,465
Average Stockholders' Equity	$	145,569		$	141,792		$	129,423		$	143,689		$	127,811
Return on average assets (1)		0.88 %			0.98 %			1.18 %			0.93 %			1.21 %
PPNR return on average assets (2)		1.11 %			1.26 %			1.47 %			1.18 %			1.50 %
Return on average equity (3)		11.60 %			12.55 %			14.61 %			12.07 %			14.47 %
PPNR return on average equity (4)		14.54 %			16.25 %			18.18 %			15.38 %			17.88 %
(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

 

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SOURCE CF BANKSHARES INC.