CF Bankshares (US:CFBK)2020-08-12 14:32Financial Performance - Net income for the three months ended June 30, 2020 totaled $10.1 million, an increase of $7.8 million, or 341.6%, compared to $2.3 million for the same period in 2019[265]. - Net interest income for the quarter ended June 30, 2020 totaled $6.3 million, an increase of $1.1 million, or 20.2%, compared to $5.2 million for the same quarter in 2019[268]. - Interest income for the quarter ended June 30, 2020 was $9.9 million, up $1.4 million, or 16.0%, from $8.5 million in the same quarter of 2019[269]. - Noninterest income for the quarter ended June 30, 2020 totaled $19.9 million, an increase of $17.3 million, or 674.1%, compared to $2.6 million for the same quarter in 2019[273]. - Provision for loan and lease losses for the quarter ended June 30, 2020 was $3.1 million, compared to no provision for the same period in 2019, reflecting increased economic stress due to COVID-19[271]. - Net charge-offs for the quarter ended June 30, 2020 totaled $91,000, compared to net recoveries of $5,000 for the same quarter in 2019[271]. - Noninterest expense for the quarter ended June 30, 2020 totaled $10.3 million, an increase of $5.4 million, or 109.1%, compared to $4.9 million for the same quarter in 2019[274]. - Income tax expense for the quarter ended June 30, 2020 was $2.6 million, an increase of $2.0 million compared to $583,000 for the same quarter in 2019[276]. Asset and Loan Growth - Total assets increased by $265.5 million, or 30.2%, to $1.1 billion as of June 30, 2020, compared to $880.5 million at December 31, 2019[224]. - Net loans and leases rose by $183.2 million, or 27.6%, totaling $846.5 million at June 30, 2020, driven by a $156.9 million increase in commercial loan balances[229]. - Loans held for sale increased by $30.2 million, or 22.2%, totaling $165.9 million at June 30, 2020[227]. - Securities available for sale rose by $2.6 million, or 32.2%, totaling $10.8 million at June 30, 2020[226]. - Cash and cash equivalents increased by $31.5 million, or 68.7%, reaching $77.4 million at June 30, 2020, primarily due to increases in FHLB advances and other borrowings[225]. Loan Quality and Allowance for Losses - The allowance for loan and lease losses (ALLL) grew by $3.0 million, or 41.6%, totaling $10.1 million at June 30, 2020, with a ratio of ALLL to total loans at 1.18%[231]. - Individually evaluated impaired loans decreased by $1.7 million, or 36.8%, to $2.9 million at June 30, 2020, from $4.6 million at December 31, 2019[234]. - Nonperforming loans decreased by $1.9 million to $581,000 at June 30, 2020, resulting in a nonperforming loans to total loans ratio of 0.07%, down from 0.36% at December 31, 2019[238]. - Total past due loans decreased by $3.8 million to $1.4 million at June 30, 2020, representing 0.2% of the loan portfolio compared to 0.8% at December 31, 2019[248]. - The amount of the ALLL specifically allocated to individually impaired loans decreased to $22,000 at June 30, 2020, from $35,000 at December 31, 2019[235]. Deposits and Funding - Deposits increased by $102.7 million, or 13.8%, to $849.0 million at June 30, 2020, driven by increases in both interest-bearing and noninterest-bearing accounts[253]. - FHLB advances and other debt increased by $136.8 million, or 471.4%, to $165.8 million at June 30, 2020, compared to $29.0 million at December 31, 2019[255]. - The principal balance of PPPLF advances outstanding was $125.1 million at June 30, 2020, providing liquidity through term financing backed by PPP loans[260]. - Interest-bearing deposit accounts increased to $700.8 million at June 30, 2020, from $630.8 million at December 31, 2019[253]. Economic and Operational Context - CFBank's financial condition is significantly influenced by economic conditions in Ohio, where it has concentrated its business activities[213]. - The Company transitioned a majority of on-site staff to remote work arrangements to mitigate COVID-19 risks[219]. - Payment modifications were made on loans totaling approximately $100 million, representing about 12% of outstanding loan balances since the pandemic began[218]. - The level of total criticized and classified loans increased by $3.8 million, or 34.5%, during the six months ended June 30, 2020[244]. Equity and Capital Management - Stockholders' equity increased to $92.6 million at June 30, 2020, up $11.9 million, or 14.8%, from $80.7 million at December 31, 2019[262]. - The Holding Company's ability to pay dividends is contingent upon the payment of quarterly interest on subordinated debentures and compliance with fixed-to-floating rate subordinated debt terms[322]. - Federal income tax laws provided deductions totaling $2.3 million for thrift bad debt reserves established before 1988, which could create a tax liability if CFBank were liquidated or if tax laws changed[323]. Internal Controls and Compliance - The principal executive officer and principal financial officer concluded that the disclosure controls and procedures were effective for the quarter ended June 30, 2020[327]. - No changes were made in internal controls over financial reporting in the second quarter of 2020 that materially affected the internal control over financial reporting[328]. - The Holding Company and CFBank may be involved in various legal proceedings in the normal course of business, but management believes there are no pending legal proceedings that would materially affect financial condition or results of operations[330][331].