Key Highlights

  • Net income was USD 6.0 million, or USD 0.91 per diluted share, against USD 2.3 million a year earlier.
  • Net interest margin rose to 2.96%, up 3 basis points from the second quarter and 20 from last year.
  • Commercial loan fundings reached USD 79 million in the quarter, producing net commercial loan growth of USD 42 million.
  • Book value per share rose 10.5% year over year to USD 29.83, and CFBank's Tier 1 leverage ratio was 11.99%.

Profit Recovers on Margin and Commercial Growth

CF Bankshares (NASDAQ:CFBK), the parent of CFBank, National Association in Columbus, Ohio, reported third-quarter results on Tuesday. Net income was USD 6.0 million, or USD 0.91 per diluted share, after USD 551,000 of provision expense. That compares with USD 5.9 million and USD 0.90 in the second quarter and USD 2.3 million and USD 0.36 a year earlier. Pre-provision, pre-tax net revenue was USD 7.9 million against USD 8.2 million in the prior quarter and USD 7.8 million a year earlier.

Return on average equity was 12.22% and return on average assets 1.14%. Nine-month net income was USD 17.0 million, or USD 2.59 per diluted share, against USD 11.8 million and USD 1.81.

Net interest income was USD 14.9 million, up 0.7% from the second quarter and 8.4% from a year earlier. A 40 basis point decline in the average rate on interest-bearing liabilities drove the annual gain, while the average yield on earning assets fell 11 basis points.

Commercial Banking Build-Out

Commercial loan fundings were USD 79 million in the quarter and USD 357 million year to date, with net commercial loan growth of USD 42 million and USD 129 million, respectively. Gross loans and leases were USD 1.9 billion, up USD 39.3 million, or 2.2%, from the second quarter, led by a USD 31.9 million rise in commercial real estate and an USD 11.4 million rise in construction balances.

Customer fees, including treasury management, rose USD 71,000, or 8%, from the second quarter and 32% year to date. Noninterest income was USD 1.8 million. Noninterest expense was USD 8.8 million, up 5.1% from the prior quarter on a USD 264,000 increase in recruiting costs tied to commercial team expansion, including USD 111,000 of signing bonuses and USD 198,000 of recruiting fees.

President and Chief Executive Timothy O'Dell described strong commercial loan and deposit pipelines entering the fourth quarter and continued investment in private banking and mortgage origination teams. The board declared a dividend of USD 0.09 per share, paid on Oct. 20 to holders of record on Oct. 12.

Credit and Capital

Nonaccrual loans were USD 20.4 million, or 1.10% of total loans, down USD 478,000 from June. Of that total, USD 4.8 million was guaranteed by the Small Business Administration. Loans 30 days or more past due rose to USD 30.8 million from USD 20.4 million, mainly a USD 6.7 million commercial and industrial loan and a USD 5.9 million commercial real estate loan from one relationship. Both were brought current after quarter end.

The allowance for credit losses on loans was USD 19.0 million, or 1.03% of loans, against 1.07% in June. The effective tax rate was 18.4%. CFBank reported a Tier 1 leverage ratio of 11.99% and a total capital ratio of 14.69%.

Bank Markers to Follow

Tracking points include net interest margin against 2.96%, commercial loan fundings relative to USD 79 million, and noninterest expense after the recruiting-related increase.

Further items are loans 30 days or more past due against USD 30.8 million, nonaccrual loans relative to 1.10% of loans, and the allowance ratio against 1.03%.