CF Bankshares (US:CFBK)2020-03-16 15:41Financial Performance - As of December 31, 2019, the company's total assets amounted to $880.5 million, with stockholders' equity at $80.7 million[12]. - Total loans increased to $549.9 million, up from $263.2 million, representing a growth of 108.6%[22]. - Total net loans increased by $406.2 million, or 158.0%, since January 1, 2015[113]. - Total assets grew by $565.0 million, or 179.0%, over the same period[113]. - The company reported a total of $10.0 million in cash at the Holding Company level as of December 31, 2019[119]. Loan Portfolio Composition - Gross loans receivable increased by approximately $112.7 million, or 20.2%, from $557.7 million at December 31, 2018, to $670.4 million at December 31, 2019[16]. - Commercial, commercial real estate, and multi-family mortgage loans totaled $510.0 million, representing 76.1% of the gross loan portfolio at year-end 2019, up from 69.9% in 2018[16]. - Portfolio single-family residential mortgage loans totaled $135.3 million, accounting for 20.2% of total gross loans at year-end 2019, down from 24.8% at year-end 2018[16]. - Total consumer loans were $25.1 million, or 3.7% of gross loans receivable, at year-end 2019, compared to 5.30% in 2018[19]. - Single-family mortgage loans originated for sale totaled $733.7 million, an increase of $499.8 million, or 213.8%, compared to $233.9 million in 2018[25]. Loan Growth and Origination - The loan portfolio includes a variety of commercial and residential construction projects, contributing to the overall growth in loans[16]. - Commercial real estate and multi-family residential mortgage loan balances increased by $65.7 million to $286.8 million, a rise of 29.7% from $221.1 million in 2018[27]. - Commercial loan balances increased by $43.8 million, or 34.5%, to $170.6 million at year-end 2019[27]. - Construction loans increased by $5.9 million, or 9.5%, to $67.7 million in 2019 compared to $61.8 million at year-end 2018[29]. Credit Quality and Risk Management - Delinquent loans as a percentage of total loans were 0.19% at December 31, 2019, compared to 0.20% at December 31, 2018[37]. - Total delinquent loans amounted to $2,439,000, with 12 loans being 90 days or more delinquent[34]. - The balance of classified loans included 6 loans totaling $3,416,000, with specific classifications for commercial and multi-family residential real estate[31]. - CFBank's internal credit rating system monitors credit risk for commercial, commercial real estate, and multi-family residential loans, with annual reviews conducted[30]. - Loans classified as special mention are considered criticized assets, indicating potential future repayment issues[30]. Regulatory Environment - The company is subject to regulation by the Board of Governors of the Federal Reserve System as a financial holding company[12]. - CFBank is a member of the Federal Home Loan Bank of Cincinnati, which requires maintaining an investment in its capital stock and adhering to community investment standards[90]. - The Community Reinvestment Act requires CFBank to meet the credit needs of the communities it serves, with ratings assigned by the OCC impacting its regulatory applications[91]. - CFBank's policies allow construction loans to be made up to 80% of the appraised value of the property[29]. Capital and Liquidity - CFBank's total average deposits reached $637.97 million in 2019, a significant increase from $478.28 million in 2018, representing a growth of 33.4%[66]. - The Holding Company had $10.0 million in available cash and cash equivalents as of December 31, 2019, deemed adequate for current and anticipated operating needs[63]. - CFBank had $16.5 million in FHLB advances at year-end 2019, with eligibility to borrow up to $89.0 million based on collateral pledged[69]. Operational Risks and Challenges - The company expects high risks and exposures related to cybersecurity attacks to remain due to evolving threats and increased use of technology-based services[102]. - The company faces strong competition from various financial institutions, which may hinder its ability to sustain or grow loan and deposit levels[124]. - The unexpected loss of key management personnel could adversely affect the company's operations and financial results[128]. - The company may need to raise additional capital in the future due to higher capital requirements, which may not be available on acceptable terms[128]. Compliance and Governance - CFBank has established policies to comply with the Patriot Act, which includes enhanced due diligence procedures for customer identification[95]. - The Sarbanes-Oxley Act mandates corporate governance practices that CFBank has strengthened, including the establishment of various committee charters and a Code of Business Conduct and Ethics[97]. - Management concluded that internal controls over financial reporting were effective as of December 31, 2019[157]. Market Conditions and Economic Impact - Adverse changes in economic conditions could negatively impact the company's earnings and cash flows[112]. - Changes in interest rates could materially affect net interest income, loan origination volumes, and the value of loans held for sale[121]. - The implementation of the CECL accounting standard starting January 1, 2023, may increase credit loss allowances, reducing retained earnings and regulatory capital[130].