CF Bankshares (US:CFBK)2024-08-14 17:16Financial Performance - Net income for Q2 2024 was $1.7 million, or $0.26 per diluted share, down from $4.2 million, or $0.66 per diluted share in Q2 2023, primarily due to increased provision for credit losses and decreased net interest income[171]. - Net interest income for Q2 2024 totaled $11.4 million, a decrease of $119,000, or 1.0%, compared to $11.5 million in Q2 2023, driven by a $3.2 million, or 21.8%, increase in interest expense[172]. - Interest income increased to $29.3 million in Q2 2024, up $3.1 million, or 11.8%, from $26.2 million in Q2 2023, attributed to a 42bps increase in average yield on loans and leases[173]. - Noninterest income for Q2 2024 was $1.2 million, an increase of $240,000, or 24.5%, compared to $978,000 in Q2 2023, mainly due to higher service charges on deposit accounts[177]. - Noninterest expense decreased by $81,000, or 1.1%, to $7.1 million in Q2 2024, primarily due to a reduction in salaries and employee benefits[178]. - Net interest income for the six months ended June 30, 2024, totaled $22.7 million, a decrease of $1.5 million, or 6.5%, compared to $24.2 million for the same period in 2023[181]. - Noninterest income for the six months ended June 30, 2024, totaled $2.1 million, an increase of $426,000, or 25.1%, compared to $1.7 million in 2023, mainly from increased service charges on deposit accounts[185]. - Noninterest expense decreased to $14.3 million for the six months ended June 30, 2024, down $585,000, or 3.9%, from $14.9 million in 2023, primarily due to a reduction in salaries and employee benefits[185]. - Income tax expense was $932,000 for the six months ended June 30, 2024, a decrease of $1.2 million compared to $2.1 million in 2023, with an effective tax rate of approximately 16.4%[186]. Asset and Liability Management - Total assets decreased by $18.0 million, or 0.9%, to $2.0 billion as of June 30, 2024, from $2.1 billion at December 31, 2023[150]. - Cash and cash equivalents decreased by $19.8 million, or 7.6%, totaling $241.8 million at June 30, 2024[150]. - Total deposits decreased by $47.6 million, or 2.7%, to $1.7 billion at June 30, 2024, mainly due to declines in both interest-bearing and noninterest-bearing account balances[164]. - FHLB advances and other debt rose to $137.2 million at June 30, 2024, an increase of $27.2 million, or 24.7%, compared to $110.0 million at December 31, 2023[165]. - Total interest-bearing liabilities increased to $1,574,950 thousand as of June 30, 2024, from $1,463,754 thousand at the end of 2023, marking an increase of 7.6%[191]. - Total assets as of June 30, 2024, were $1.997 billion, an increase from $1.909 billion in 2023[189]. - Total assets increased to $2,000,785 thousand as of June 30, 2024, compared to $1,867,082 thousand at the end of 2023, reflecting a growth of 7.1%[191]. - Cash, unpledged securities, and deposits in other financial institutions decreased by $19.3 million, or 7.4%, to $242.7 million at June 30, 2024, compared to $262.0 million at December 31, 2023[201]. Credit Quality - The allowance for credit losses on loans increased by $2.4 million, or 14.3%, totaling $19.3 million at June 30, 2024[152]. - Nonperforming loans increased by $5.2 million, totaling $10.9 million at June 30, 2024, with a ratio of 0.64% of total loans[157]. - Total criticized and classified loans increased by $4.9 million, or 37.3%, during the six months ended June 30, 2024[159]. - Total past due loans increased by $5.6 million, totaling $7.6 million at June 30, 2024, representing 0.4% of the loan portfolio[160]. - Individually evaluated loans increased by $5.7 million, or 163.9%, totaling $9.2 million at June 30, 2024[155]. - The ratio of the allowance for credit losses to total loans was 1.13% at June 30, 2024, compared to 0.99% at December 31, 2023[152]. - Provision for credit losses for Q2 2024 was $3.6 million, a significant increase from $12,000 in Q2 2023, primarily due to reserves on two commercial loan participations totaling $3.1 million[174]. - Provision for credit losses was $4.8 million for the six months ended June 30, 2024, reflecting an increase of $4.5 million compared to $249,000 in 2023, primarily due to reserves on individually evaluated commercial loans[184]. Interest Rate and Yield - Interest expense rose to $35.7 million for the six months ended June 30, 2024, an increase of $9.5 million, or 36.5%, compared to $26.2 million in 2023, driven by a 102bps increase in the average rate of interest-bearing deposits[183]. - Average yield on loans and leases increased to 6.19% for the six months ended June 30, 2024, compared to 5.73% for the same period in 2023[191]. - The net interest margin decreased to 2.37% for the six months ended June 30, 2024, down 35bps from 2.72% in 2023[182]. - Average interest-earning assets increased to $1.9 billion for the three months ended June 30, 2024, with a yield of 6.16% compared to 5.76% in 2023[189]. Liquidity and Capital - Stockholders' equity increased by $4.2 million, or 2.7%, to $159.6 million at June 30, 2024, primarily due to net income, partially offset by dividend payments[169]. - The Holding Company had adequate funds and sources of liquidity as of June 30, 2024, to meet current and anticipated operating needs[204]. - The ability to pay dividends on common stock is dependent on cash and liquidity available at the Holding Company level, as well as dividends received from CFBank[208]. - Banking regulations limit the amount of dividends that can be paid to the Holding Company by CFBank without prior regulatory approval[209]. - Annual debt service on subordinated debentures is approximately $435,000, with an interest rate of 8.41% as of June 30, 2024[206]. - The Company has $10 million of fixed-to-floating rate subordinated notes with an annual debt service of $970,000, and an interest rate of 9.73% as of June 30, 2024[206]. - The Holding Company has a $35.0 million credit facility with an outstanding balance of $34.7 million, bearing interest at a fixed rate of 3.85% until May 21, 2026[207]. Regulatory and Compliance - Federal income tax laws provided deductions totaling $2.3 million for thrift bad debt reserves established before 1988[210]. - There has been no material change in the Company's market risk as of June 30, 2024, compared to the previous year[212]. - The Company maintains effective disclosure controls and procedures as of June 30, 2024[214]. - The Holding Company and CFBank may be involved in various legal proceedings, but none are expected to have a material adverse effect on financial condition or results of operations[216].