CF Bankshares (CFBK) - 2019 Q2 - Quarterly Report

Financial Performance - Net income for the three months ended June 30, 2019, totaled $2.3 million, an increase of $1.2 million, or 101.8%, compared to $1.1 million for the same period in 2018[245]. - Net income for the six months ended June 30, 2019 was $4.0 million, an increase of $2.1 million, or 106.1%, compared to $1.9 million for the same period in 2018[260]. - Noninterest income for the six months ended June 30, 2019 totaled $4.3 million, an increase of $3.1 million, or 251.1%, compared to $1.2 million for the same period in 2018[268]. Asset and Loan Growth - Total assets increased by $56.0 million, or 8.4%, to $721.0 million as of June 30, 2019, from $665.0 million at December 31, 2018[210]. - Net loans and leases rose by $48.0 million, or 8.7%, totaling $598.7 million at June 30, 2019, compared to $550.7 million at December 31, 2018[213]. - Deposits totaled $628.6 million at June 30, 2019, an increase of $48.8 million, or 8.4%, from $579.8 million at December 31, 2018[237]. Interest Income and Expense - Interest income increased by $2.6 million, or 45.0%, totaling $8.5 million for the quarter ended June 30, 2019, compared to $5.9 million for the same period in 2018[249]. - Interest expense increased by $1.8 million, or 115.5%, totaling $3.3 million for the quarter ended June 30, 2019, compared to $1.5 million for the same period in 2018[250]. - Net interest income totaled $5.2 million for the quarter ended June 30, 2019, an increase of $882,000, or 20.3%, compared to $4.3 million for the same period in 2018[248]. Loan Quality and Allowance - The allowance for loan and lease losses (ALLL) was $7.0 million at June 30, 2019, reflecting a slight increase of $17,000, or 0.2%, from the same period in 2018[215]. - Nonperforming loans increased to $2.4 million at June 30, 2019, up from $377,000 at December 31, 2018, resulting in a ratio of 0.40% of total loans[221]. - Total criticized and classified loans increased by $3.9 million, or 37.6%, during the six months ended June 30, 2019, primarily due to loan downgrades[228]. Equity and Capital Management - Stockholders' equity totaled $50.9 million at June 30, 2019, an increase of $5.3 million, or 11.8%, from $45.6 million at December 31, 2018[241]. - CFBank had an accumulated deficit of approximately $2.5 million as of June 30, 2019, reflecting a reduction of $4.7 million since December 31, 2018, due to the retention of earnings[304]. - The annual debt service on the Company's $10 million of fixed-to-floating rate subordinated notes is $700,000, with a fixed rate of 7.00% until December 2023[300]. Liquidity and Borrowing Capacity - CFBank's additional borrowing capacity with the FHLB increased by $20.1 million, or 36.7%, to $74.9 million at June 30, 2019, compared to $54.8 million at December 31, 2018[293]. - CFBank's additional borrowing capacity at the FRB increased by $3.1 million, or 5.2%, to $61.6 million at June 30, 2019, from $58.5 million at December 31, 2018[293]. - CFBank's liquidity management involves adjusting investments in liquid assets based on expected loan demand and deposit flows[289]. Operational Efficiency - The effective tax rate for the six months ended June 30, 2019 was approximately 20.2%, compared to approximately 19.5% for the same period in 2018[271]. - Noninterest expense for the six months ended June 30, 2019 totaled $9.6 million, an increase of $2.5 million, or 35.9%, compared to $7.1 million for the same period in 2018[269]. - The increase in salaries and employee benefits expense was primarily due to the expansion of the residential mortgage lending business, resulting in a $1.2 million increase for the six months ended June 30, 2019[269]. Risk Management and Compliance - The company has not engaged in subprime lending or used option ARM products, indicating a conservative lending strategy[231]. - As of June 30, 2019, there has been no material change in the Company's market risk compared to the previous year[309]. - The Company maintains effective disclosure controls and procedures as of the quarter ended June 30, 2019[311].