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

COLUMBUS, Ohio, Nov. 8, 2023 /PRNewswire/ -- CF Bankshares Inc. (NASDAQ: CFBK) (the "Company"), the parent of CFBank, National Association ("CFBank"), today announced financial results for the third quarter ended September 30, 2023.

Third Quarter and Year to Date 2023 Highlights

  • Net Income was $4.0 million ($0.62 per diluted common share) for the third quarter and $12.7 million ($1.97 per diluted common share) for the first nine months of 2023. Third quarter results included a $1.2 million provision for credit losses.

  • Pre-provision, pre-tax net revenue ("PPNR") for the third quarter of 2023 was $6.2 million, which represented an increase of $917,000 from the second quarter 2023. PPNR for the first nine months of 2023 was $17.3 million.

  • For the third quarter of 2023, Return on Average Assets (ROA) was 0.82% and PPNR ROA was 1.27%, while Return on Average Equity (ROE) was 10.75% and PPNR ROE was 16.55%.

  • Book value per share increased to $23.10 as of September 30, 2023.

  • Noninterest income for the third quarter of 2023 increased 33% when compared to the second quarter of 2023.

  • Credit quality remains strong with nonperforming loans to total loans of 0.27% and loans more than 30 days past due at 0.14% of total loans as of September 30, 2023.

Recent Developments

  • On October 3, 2023, the Company's Board of Directors declared a Cash Dividend of $0.06 per share payable on October 27, 2023 to shareholders of record as of the close of business on October 16, 2023.

CEO and Board Chair Commentary

Timothy T. O'Dell, President and CEO, commented: "Net earnings were $4.0 Million, or $0.62 per diluted common share for the third quarter, reflecting provision for credit losses of $1.2 million. PPNR was $6.2 million for the third quarter, an increase of more than $900k versus the second quarter.

Loan Pipelines and quality new Business Opportunities, including both Deposits and Loans, remain strong. We continue to capture additional quality business opportunities and new customers, with many coming from larger regional and other bank competitors.

Fee income also expanded significantly during the third quarter. While we expect reduced swap fee income in the fourth quarter (as our third quarter Loans with Swap fees were unusually strong), we expect other fee income businesses to continue to expand. These include Business Credit Cards and salable Residential mortgage loan volumes, both of which continue to increase.

Our efficiency ratio showed meaningful improvement in the third quarter, as we continue to focus on maintaining highly efficient Operations and effective management of Overhead expenses.

Low-cost Deposit initiatives are producing improved results, with noninterest bearing deposits growing during the fourth quarter to date.

During the third quarter, our provision for credit losses was $1.2 million. This was primarily driven by specific reserves being placed on two loans. The CFBank lending and credit teams achieved net zero loan losses 7 of the previous 10 years through 2022. Credit quality remains strong.

Net interest margin (NIM) is reflecting greater stability. Income opportunities exist going forward for re-pricing maturing loans as well as loans refinancing in the normal course of business. Earlier adjustments to loan pricing in response to the higher interest rate environment are positively impacting Loan yields and interest income.

Going forward into 2024, we foresee improving earnings stability. Additionally, we see growth opportunities returning. We remain disciplined as well as selective in our Lending and Credit Businesses. We are managing Risk/Reward by ensuring appropriate Loan Pricing and Deal Structuring, and accompanying Deposit relationships, are all present.

Our business priorities for the fourth quarter and into 2024 include improving our Deposit mix by adding low-cost deposits through new Cash Management relationships. We have begun to see increased low-cost deposit traction and Pipelines as earlier and ongoing deposit initiatives are producing positive results. For example, we have added nearly 200 new Ultimate Business Advantage Checking (UBAC) accounts since launching this new Product in March.

We intend to remain opportunistic, taking advantage of competitive market uncertainty to gain quality new Business relationships and increase Market Share in all of our Geographic Market Locations.

Our Best is yet Ahead!

Robert E. Hoeweler, Chairman of the Board, added: "Our seasoned CFBank Leadership has deep experience dealing with changing business and economic cycles. In every instance, our CFBank Team has successfully made prudent operating adjustments for overcoming prevailing headwinds.

A testament to our Leadership during this challenging period for the Banking industry, CFBank has continued to effectively grow both Deposits and Loans, while capturing quality new business and customers.

We believe our consistency and discipline with executing our business principles will have us well positioned for the future when the operating conditions become more favorable. In the interim, we continue to increase franchise and book values."

Overview of Results

Net income for the three months ended September 30, 2023 totaled $4.0 million (or $0.62 per diluted common share) compared to net income of $4.2 million (or $0.66 per diluted common share) for the three months ended June 30, 2023 and net income of $4.2 million (or $0.65 per diluted common share) for the three months ended September 30, 2022. Pre-provision, pre-tax net revenue ("PPNR") for the three months ended September 30, 2023 was $6.2 million compared to PPNR of $5.3 million for the three months ended June 30, 2023 and PPNR of $5.4 million for the three months ended September 30, 2022.

Net income for the nine months ended September 30, 2023 totaled $12.7 million (or $1.97 per diluted common share) compared to net income of $13.5 million (or $2.06 per diluted common share) for the nine months ended September 30, 2022.

Net Interest Income and Net Interest Margin

Net interest income totaled $11.7 million for the quarter ended September 30, 2023 and increased $181,000, or 1.6%, compared to $11.5 million in the prior quarter, and decreased $1.6 million, or 12.4%, compared to $13.3 million in the third quarter of 2022.

The increase in net interest income compared to the prior quarter was primarily due to a $1.9 million, or 7.4%, increase in interest income, partially offset by a $1.8 million, or 11.9%, increase in interest expense. The increase in interest income was primarily attributed to a 28bps increase in average yield on interest-earning assets, coupled with a $44.9 million, or 2.5%, increase in average interest-earning assets. The increase in interest expense when compared to the prior quarter was attributed to a 35bps increase in the average cost of funds on interest-bearing liabilities, coupled with a $41.3 million, or 2.7%, increase in average interest-bearing liabilities. The net interest margin of 2.50% for the quarter ended September 30, 2023 decreased 2bps compared to the net interest margin of 2.52% for the prior quarter.

The decrease in net interest income compared to the third quarter of 2022 was primarily due to an $11.8 million, or 251.8%, increase in interest expense, partially offset by a $10.2 million, or 56.4%, increase in interest income. The increase in interest expense was attributed to a 274bps increase in the average cost of funds on interest-bearing liabilities, coupled with a $307.5 million, or 24.6%, increase in average interest-bearing liabilities. The increase in interest income was primarily attributed to a 150bps increase in the average yield on interest-earning assets, coupled with a $278.0 million, or 17.6%, increase in average interest-earning assets outstanding. The net interest margin of 2.50% for the quarter ended September 30, 2023 decreased 86bps compared to the net interest margin of 3.36% for the third quarter of 2022.

Noninterest Income

Noninterest income for the quarter ended September 30, 2023 totaled $1.3 million and increased $323,000, or 33.0%, compared to $978,000 for the prior quarter. The increase was primarily due to a $302,000 increase in swap fee income and a $17,000 increase in service charges on deposit accounts.

Noninterest income for the quarter ended September 30, 2023 increased $596,000, or 84.5%, compared to $705,000 for the quarter ended September 30, 2022. The increase was primarily due to a $420,000 increase in swap fee income and a $128,000 increase in service charges on deposit accounts.

The following table represents the notional amount of loans sold during the three months ended September 30, 2023, June 30, 2023, and September 30, 2022 (in thousands).











Three Months ended


September 30, 2023


June 30, 2023


September 30, 2022

Notional amount of loans sold

$

3,646


$

3,171


$

-

Noninterest Expense

Noninterest expense for the quarter ended September 30, 2023 totaled $6.8 million and decreased $413,000, or 5.8%, compared to $7.2 million for the prior quarter. The decrease in noninterest expense was primarily due to a $358,000 decrease in salaries and employee benefits, which was primarily due to a decrease in the number of employees coupled with lower payroll taxes.

Noninterest expense for the quarter ended September 30, 2023 decreased $1.8 million, or 21.4%, compared to $8.6 million for the quarter ended September 30, 2022. The decrease in noninterest expense was primarily due to a $692,000 decrease in salaries and employee benefits, a $594,000 decrease in data processing, and a $570,000 decrease in the impairment of property and equipment. The decrease in salaries and employee benefits was primarily due to a decrease in the number of employees coupled with lower payroll taxes. The decrease in data processing 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 the impairment of property and equipment was related to the pending contract in the third quarter of 2022 for the sale of the Company's Worthington headquarters building, which was completed in May 2023.

Income Tax Expense

Income tax expense was $984,000 for the quarter ended September 30, 2023 (effective tax rate of 19.6%), compared to $1.1 million for the prior quarter (effective tax rate of 20.0%) and $1.0 million for the quarter ended September 30, 2022 (effective tax rate of 19.4%).

Loans and Loans Held For Sale

Net loans and leases totaled $1.7 billion at September 30, 2023 and increased $28.6 million, or 1.8%, from the prior quarter and increased $87.5 million, or 5.6%, from December 31, 2022. The increase in net loans and leases from June 30, 2023 was primarily due to a $23.1 million increase in construction loan balances, a $15.2 million increase in multi-family loan balances, and a $3.9 million increase in single-family residential loan balances, partially offset by an $11.9 million decrease in commercial 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 $33.2 million increase in construction loan balances, a $20.7 million increase in in multi-family loan balances, a $17.4 million increase in commercial real estate loan balances, a $12.0 million increase in single-family residential loan balances, and a $4.8 million increase in home equity lines of credit. 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).







September 30, 2023

June 30, 2023

Construction – 1-4 family*

$

15,788

$

13,968

Construction – Multi-family*


132,538


122,211

Construction – Non-residential*


60,647


55,886

Hotel/Motel


12,360


17,134

Industrial / Warehouse


27,966


26,543

Land/Land Development


21,281


21,557

Medical/Healthcare/Senior Housing


395


417

Multi-family


154,764


140,797

Office


42,432


43,152

Retail


25,049


26,900

Other


62,275


51,368






*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 $4.6 million, or 0.27%, of total loans at September 30, 2023, an increase of $3.8 million from $799,000 at June 30, 2023 and an increase of $3.8 million from $761,000 at December 31, 2022. The increase in nonaccrual loans was primarily driven by two commercial loans, totaling $3.6 million, becoming nonaccrual during the third quarter of 2023. Loans past due more than 30 days totaled $2.4 million at September 30, 2023 compared to $1.9 million at June 30, 2023 and $2.1 million at December 31, 2022.

The allowance for credit losses on loans and leases totaled $17.0 million at September 30, 2023 compared to $16.0 million at June 30, 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 1.02% at September 30, 2023 compared to 0.97% at June 30, 2023 and 1.01% at December 31, 2022. The increase in the allowance for credit losses during the quarter ended September 30, 2023 was primarily driven by reserves placed on the two individually evaluated commercial loans, which were also placed on nonaccrual status during the quarter ended September 30, 2023.

On January 1, 2023, the Company adopted the current expected credit loss (CECL) model, which resulted in an increase to the reserve for credit losses of $49,000. There was $1.2 million in provision for credit loss expense for the quarter ended September 30, 2023, a $12,000 provision for credit loss expense for the quarter ended June 30, 2023 and a $150,000 provision for credit loss expense for the quarter ended September 30, 2022. Net charge-offs for the quarter ended September 30, 2023 totaled $126,000 compared to net recoveries of $108,000 for the prior quarter and net recoveries of $5,000 for the quarter ended September 30, 2022.

Deposits

Deposits totaled $1.7 billion at September 30, 2023, an increase of $24.9 million, or 1.5%, when compared to $1.7 billion at June 30, 2023, and an increase of $157.1 million, or 10.3%, when compared to $1.5 billion at December 31 2022. The increase when compared to the prior quarter end is primarily due to a $32.6 million increase in certificate of deposit account balances and a $1.6 million increase in money market account balances, partially offset by an $8.6 million decrease in checking account balances and a $710,000 decrease in savings account balances.

The increase in deposits when compared to December 31, 2022 is primarily due to a $99.6 million increase in money market account balances and an $89.1 million increase in certificate of deposit account balances, partially offset by a $29.7 million decrease in checking account balances and a $1.9 million decrease in savings account balances.

Noninterest-bearing deposit accounts totaled $214.3 million at September 30, 2023 and decreased $2.7 million from $217.0 million at June 30, 2023 and decreased $48.9 million from $263.2 million at December 31, 2022. At September 30, 2023, approximately 28.0% of our deposit balances exceeded the FDIC insurance limit of $250,000, as compared to approximately 28.8% at June 30, 2023 and 31.6% at December 31, 2022.

Borrowings

FHLB advances and other debt totaled $110.0 million at September 30, 2023 and at June 30, 2023 and increased $526,000 when compared to $109.5 million at December 31, 2022. 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 $151.3 million at September 30, 2023, an increase of $4.0 million, or 2.7%, from $147.3 million at June 30, 2023. Stockholders' equity increased $12.1 million, or 8.6%, from $139.2 million at December 31, 2022. The increase in total stockholders' equity during the three months ended September 30, 2023 was primarily attributed to net income, partially offset by $386,000 in dividend payments. The increase in total stockholders' equity during the nine months ended September 30, 2023 was primarily attributed to net income, partially offset by $1.1 million in dividend payments and a $347,000 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 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, 2022, as supplemented by the risk factors identified in "Item 1A. Risk Factors" of Part II of our Quarterly Report 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




Nine months ended




September




September




2023


2022


%
change


2023


2022


%
change

Total interest income

$

28,166


$

18,006


56 %


$

78,567



45,863


71 %

Total interest expense


16,499



4,690


252 %



42,681



10,228


317 %

      Net interest income


11,667



13,316


-12 %



35,886



35,635


1 %

















Provision for credit losses


1,193



150


695 %



1,442



150


861 %

Net interest income after provision for credit losses


10,474



13,166


-20 %



34,444



35,485


-3 %

















Noninterest income
















   Service charges on deposit accounts


396



268


48 %



1,079



823


31 %

   Net gain on sales of residential mortgage loans


48



-


n/m



85



678


-87 %

   Net gain on sale of commercial loans


12



134


-91 %



12



277


-96 %

   Swap fee income


444



24


1750 %



616



42


1367 %

   Other


401



279


44 %



1,206



739


63 %

      Noninterest income


1,301



705


85 %



2,998



2,559


17 %

















Noninterest expense
















   Salaries and employee benefits


3,420



4,112


-17 %



11,184



11,311


-1 %

   Occupancy and equipment


427



324


32 %



1,264



955


32 %

   Data processing


532



1,126


-53 %



1,568



2,175


-28 %

   Franchise and other taxes


308



178


73 %



935



839


11 %

   Professional fees


635



896


-29 %



1,873



2,148


-13 %

   Director fees


162



171


-5 %



496



465


7 %

   Postage, printing, and supplies


31



45


-31 %



123



126


-2 %

   Advertising and marketing


53



108


-51 %



307



287


7 %

   Telephone


61



66


-8 %



197



180


9 %

   Loan expenses


151



296


-49 %



510



502


2 %

   Depreciation


145



134


8 %



426



375


14 %

   FDIC premiums


568



312


82 %



1,590



690


130 %

   Regulatory assessment


63



70


-10 %



181



201


-10 %

   Other insurance


55



45


22 %



154



135


14 %

   Impairment of property and equipment


-



570


n/m



-



570


n/m

   Other


149



146


2 %



816



389


110 %

      Noninterest expense


6,760



8,599


-21 %



21,624



21,348


1 %

















Income before income taxes


5,015



5,272


-5 %



15,818



16,696


-5 %

Income tax expense


984



1,023


-4 %



3,116



3,203


-3 %

Net Income

$

4,031


$

4,249


-5 %


$

12,702


$

13,493


-6 %

















Share Data
















...Basic earnings per common share

$

0.63


$

0.66




$

1.98


$

2.11



Diluted earnings per common share

$

0.62


$

0.65




$

1.97


$

2.06



















Average common shares outstanding - basic


6,429,198



6,393,531





6,416,883



6,408,342



Average common shares outstanding - diluted 


6,456,575



6,547,791





6,439,931



6,549,691



















n/m - not meaningful
















 

















Consolidated Statements of Financial Condition
































($ in thousands)

Sept 30,


Jun 30,


Mar 31,


Dec 31,


Sept 30,


(unaudited)

2023


2023


2023


2022


2022


Assets
















Cash and cash equivalents

$

229,763


$

231,600


$

214,248


$

151,787


$

198,066


Interest-bearing deposits in other financial institutions


100



100



100



100



100


Securities available for sale


8,480



8,966



9,661



10,442



11,436


Equity Securities


5,000



5,000



5,000



5,000



5,000


Loans held for sale


1,355



1,355



591



580



-


Loans and leases


1,676,806



1,647,103



1,631,998



1,588,317



1,489,570


  Less allowance for credit losses on loans and leases


(17,032)



(15,960)



(15,915)



(16,062)



(15,687)


     Loans and leases, net


1,659,774



1,631,143



1,616,083



1,572,255



1,473,883


FHLB and FRB stock


8,499



8,736



9,203



7,942



7,633


Premises and equipment, net


3,940



4,085



4,118



3,778



3,792


Other assets held for sale


-



-



1,930



1,930



1,930


Operating lease right of use assets


5,138



5,313



5,500



1,357



1,499


Bank owned life insurance


26,103



25,946



25,791



25,641



26,189


Accrued interest receivable and other assets


44,300



40,605



38,085



39,362



34,514


Total assets

$

1,992,452


$

1,962,849


$

1,930,310


$

1,820,174


$

1,764,042


































Liabilities and Stockholders' Equity
















Deposits
















     Noninterest bearing

$

214,334


$

216,966


$

224,096


$

263,241


$

270,945


     Interest bearing


1,470,659



1,443,117



1,379,745



1,264,681



1,219,038


          Total deposits


1,684,993



1,660,083



1,603,841



1,527,922



1,489,983


FHLB advances and other debt


109,987



109,978



136,970



109,461



102,803


Advances by borrowers for taxes and insurance


1,737



2,034



2,132



3,513



2,573


Operating lease liabilities


5,216



5,388



5,572



1,438



1,588


Accrued interest payable and other liabilities


24,298



23,084



23,530



23,670



17,311


Subordinated debentures


14,951



14,941



14,932



14,922



14,912


          Total liabilities


1,841,182



1,815,508



1,786,977



1,680,926



1,629,170


















Stockholders' equity


151,270



147,341



143,333



139,248



134,872


Total liabilities and stockholders' equity

$

1,992,452


$

1,962,849


$

1,930,310


$

1,820,174


$

1,764,042


 




























Average Balance Sheet and Yield Analysis





















































For Three Months Ended


September 30, 2023


June 30, 2023


September 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)

$

13,802


$

101



2.40 %


$

14,406


$

213



4.94 %


$

17,044


$

219



4.64 %

Loans and leases and loans held for sale (3)


1,642,029



25,121



6.12 %



1,627,516



23,684



5.82 %



1,424,326



16,876



4.74 %

Other earning assets


197,434



2,778



5.63 %



165,843



2,190



5.28 %



135,240



813



2.40 %

FHLB and FRB stock


8,568



166



7.75 %



9,133



138



6.04 %



7,192



98



5.45 %

Total interest-earning assets


1,861,833



28,166



6.04 %



1,816,898



26,225



5.76 %



1,583,802



18,006



4.54 %

Noninterest-earning assets


95,186









92,456









78,222







Total assets

$

1,957,019








$

1,909,354








$

1,662,024


































Interest-bearing liabilities:



























Deposits

$

1,430,568



15,421



4.31 %


$

1,388,672



13,660



3.93 %


$

1,154,605



3,992



1.38 %

FHLB advances and other borrowings


124,930



1,078



3.45 %



125,505



1,079



3.44 %



93,397



698



2.99 %

Total interest-bearing liabilities


1,555,498



16,499



4.24 %



1,514,177



14,739



3.89 %



1,248,002



4,690



1.50 %




























Noninterest-bearing liabilities


251,509









249,608









279,383







Total liabilities


1,807,007









1,763,785









1,527,385


































Equity


150,012









145,569









134,639







Total liabilities and equity

$

1,957,019








$

1,909,354








$

1,662,024


































Net interest-earning assets

$

306,335








$

302,721








$

335,800







Net interest income/interest rate spread




$

11,667



1.80 %





$

11,486



1.87 %





$

13,316



3.04 %

Net interest margin








2.50 %









2.52 %









3.36 %

Average interest-earning assets



























to average interest-bearing liabilities


119.69 %









119.99 %









126.91 %


































(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 nine months
ended

($ in thousands except per share data)


Sept 30,


Jun 30,


Mar 31,


Dec 31,


Sept 30,



September 30,

(unaudited)


2023


2023


2023


2022


2022



2023



2022

Earnings and Dividends






















Net interest income


$

11,667


$

11,486


$

12,733


$

13,155


$

13,316


$

35,886


$

35,635

Provision for credit losses


$

1,193


$

12


$

237


$

637


$

150


$

1,442


$

150

Noninterest income


$

1,301


$

978


$

719


$

651


$

705


$

2,998


$

2,559

Noninterest expense


$

6,760


$

7,173


$

7,691


$

7,273


$

8,599


$

21,624


$

21,348

Net Income


$

4,031


$

4,223


$

4,448


$

4,671


$

4,249


$

12,702


$

13,493

Basic earnings per common share


$

0.63


$

0.66


$

0.69


$

0.73


$

0.66


$

1.98


$

2.11

Diluted earnings per common share


$

0.62


$

0.66


$

0.68


$

0.72


$

0.65


$

1.97


$

2.06

Dividends declared per share


$

0.06


$

0.06


$

0.05


$

0.05


$

0.05


$

0.17


$

0.13























Performance Ratios (annualized)






















Return on average assets



0.82 %



0.88 %



0.98 %



1.04 %



1.02 %



0.89 %



1.14 %

Return on average equity



10.75 %



11.60 %



12.55 %



13.55 %



12.62 %



11.61 %



13.74 %

Average yield on interest-earning assets



6.04 %



5.76 %



5.56 %



5.12 %



4.54 %



5.79 %



4.08 %

Average rate paid on interest-bearing liabilities



4.24 %



3.89 %



3.24 %



2.54 %



1.50 %



3.81 %



1.17 %

Average interest rate spread



1.80 %



1.87 %



2.32 %



2.58 %



3.04 %



1.98 %



2.91 %

Net interest margin, fully taxable equivalent



2.50 %



2.52 %



2.93 %



3.08 %



3.36 %



2.65 %



3.17 %

Efficiency ratio



52.13 %



57.55 %



57.17 %



52.68 %



61.33 %



55.61 %



55.89 %

Noninterest expense to average assets



1.38 %



1.50 %



1.69 %



1.62 %



2.07 %



1.52 %



1.81 %























Capital






















Tier 1 capital leverage ratio (1)



9.83 %



9.82 %



10.02 %



9.89 %



10.00 %



9.83 %



10.00 %

Total risk-based capital ratio (1)



13.36 %



13.24 %



12.93 %



12.74 %



12.78 %



13.36 %



12.78 %

Tier 1 risk-based capital ratio (1)



12.22 %



12.15 %



11.84 %



11.65 %



11.65 %



12.22 %



11.65 %

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



12.22 %



12.15 %



11.84 %



11.65 %



11.65 %



12.22 %



11.65 %

Equity to total assets at end of period



7.59 %



7.51 %



7.43 %



7.65 %



7.65 %



7.59 %



7.65 %

Book value per common share


$

23.10


$

22.49


$

21.88


$

21.43


$

20.85


$

23.10


$

20.85

Tangible book value per
common share (2)


$

23.10


$

22.49


$

21.88


$

21.43


$

20.85


$

23.10


$

20.85

Period-end market value per common share


$

16.75


$

15.00


$

19.50


$

21.18


$

20.62


$

16.75


$

20.62

Period-end common shares outstanding



6,549,609



6,550,950



6,549,991



6,496,824



6,467,278



6,549,609



6,467,278

Average basic common shares outstanding



6,429,198



6,418,305



6,402,856



6,363,552



6,393,531



6,416,883



6,408,342

Average diluted common shares outstanding



6,456,575



6,433,623



6,542,698



6,491,820



6,547,791



6,439,931



6,549,691























Asset Quality






















Nonperforming loans


$

4,594


$

799


$

718


$

761


$

1,004


$

4,594


$

1,004

Nonperforming loans to total loans



0.27 %



0.05 %



0.04 %



0.05 %



0.07 %



0.27 %



0.07 %

Nonperforming assets to total assets



0.23 %



0.04 %



0.04 %



0.04 %



0.06 %



0.23 %



0.06 %

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



1.02 %



0.97 %



0.98 %



1.01 %



1.05 %



1.02 %



1.05 %

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



370.74 %



1997.50 %



2216.57 %



2110.64 %



1562.45 %



370.74 %



1562.45 %

Net charge-offs (recoveries)


$

126


$

(108)


$

5


$

262


$

(5)


$

23


$

(29)

Annualized net charge-offs (recoveries) to average loans



0.03 %



(0.03 %)



0.00 %



0.07 %



0.00 %



0.00 %



0.00 %























Average Balances






















Loans


$

1,657,303


$

1,642,961


$

1,603,237


$

1,537,941


$

1,439,863


$

1,634,697


$

1,346,613

Assets


$

1,957,019


$

1,909,354


$

1,824,343


$

1,795,395


$

1,662,024


$

1,897,390


$

1,573,180

Stockholders' equity


$

150,012


$

145,569


$

141,792


$

137,845


$

134,639


$

145,820


$

130,889























(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.

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


Nine months ended


September 30,


June 30,


September 30,


September 30,


2023


2023


2022


2023


2022

Net income

$

4,031


$

4,223


$

4,249


$

12,702


$

13,493

Add: Provision for credit losses


1,193



12



150



1,442



150

Add: Income tax expense


984



1,056



1,023



3,116



3,203

Pre-provision, pre-tax net revenue

$

6,208


$

5,291