CF Bankshares (US:CFBK)2024-11-13 19:06Financial Performance - Net income for Q3 2024 was $4.2 million, or $0.65 per diluted share, compared to $4.0 million, or $0.62 per diluted share in Q3 2023, reflecting a positive trend[205]. - Noninterest income for Q3 2024 totaled $1.6 million, an increase of $305,000, or 23.4%, compared to $1.3 million in Q3 2023[211]. - Noninterest expense increased by $466,000, or 6.9%, to $7.2 million in Q3 2024, driven by higher salaries and employee benefits[211]. - Net interest income decreased by $207,000, or 1.8%, to $11.5 million in Q3 2024, primarily due to a $2.0 million increase in interest expense[206]. - Provision for credit losses decreased to $558,000 in Q3 2024 from $1.2 million in Q3 2023, while net charge-offs increased to $3.3 million from $126,000[208]. - Noninterest income totaled $3.7 million for the nine months ended September 30, 2024, an increase of $731,000, or 24.4%, compared to $3.0 million in 2023, mainly from service charges on deposit accounts[219]. - Noninterest expense decreased to $21.5 million for the nine months ended September 30, 2024, down $119,000, or 0.6%, from $21.6 million in 2023, primarily due to a decrease in salaries and employee benefits[219]. - Income tax expense was $2.0 million for the nine months ended September 30, 2024, a decrease of $1.1 million compared to $3.1 million in 2023, with an effective tax rate of approximately 18.3%[221]. Asset and Loan Management - Total assets increased by $7.9 million, or 0.4%, to $2.07 billion as of September 30, 2024, compared to $2.06 billion at December 31, 2023[180]. - Net loans and leases rose by $22.9 million, or 1.4%, totaling $1.72 billion as of September 30, 2024, driven by increases in multi-family loans and commercial real estate loans[182]. - Loans held for sale surged by $3.4 million, or 183.4%, reaching $5.2 million as of September 30, 2024, due to higher volumes of loans to be sold[182]. - Total past due loans increased by $5.7 million, totaling $7.7 million at September 30, 2024, representing 0.4% of the loan portfolio[191]. - Nonperforming loans increased by $8.9 million to $14.6 million as of September 30, 2024, resulting in a ratio of 0.84% to total loans, up from 0.33% at December 31, 2023[188]. - Total criticized and classified loans rose by $6.2 million, or 46.9%, during the nine months ended September 30, 2024[190]. - The allowance for credit losses on loans decreased by $85,000, or 0.5%, totaling $16.8 million as of September 30, 2024, with a ratio of 0.97% to total loans[183]. Deposits and Funding - Total deposits reached $1.75 billion at September 30, 2024, a slight increase of $1.5 million, or 0.1%, from $1.74 billion at December 31, 2023[196]. - Approximately 30.2% of deposit balances exceeded the FDIC insurance limit of $250,000 as of September 30, 2024, up from 29.2% at December 31, 2023[197]. - Brokered deposits decreased by $14.7 million, or 3.3%, to $425.7 million at September 30, 2024, while customer balances in CDARS and ICS programs increased by $16.6 million, or 7.0%[198]. - Cash, unpledged securities, and deposits in other financial institutions decreased by $26.1 million, or 10.0%, to $235.9 million at September 30, 2024, compared to $262.0 million at December 31, 2023[237]. - CFBank maintains $65.0 million in unused lines of credit with two commercial banks as of September 30, 2024[240]. Interest Income and Expense - Interest income increased by $1.8 million, or 6.5%, to $30.0 million in Q3 2024, attributed to a 27bps increase in average yield on loans and leases[207]. - Net interest income for the nine months ended September 30, 2024, totaled $34.1 million, a decrease of $1.8 million, or 4.9%, compared to $35.9 million for the same period in 2023[215]. - Interest income increased to $88.4 million for the nine months ended September 30, 2024, up $9.8 million, or 12.5%, from $78.6 million in 2023, primarily due to a 40bps increase in average yield on loans and leases[217]. - Interest expense rose to $54.3 million for the nine months ended September 30, 2024, an increase of $11.6 million, or 27.2%, compared to $42.7 million in 2023, driven by an 82bps increase in the average rate of interest-bearing deposits[218]. - The net interest margin for the nine months ended September 30, 2024, was 2.38%, a decrease of 27bps from 2.65% in 2023[215]. Regulatory and Compliance - CFBank's primary federal regulator, the OCC, rated its Community Reinvestment Act performance as "Needs to Improve" due to legacy issues from its residential mortgage business[176]. - The company strategically scaled down its residential mortgage business starting in 2021, focusing on lending in regional markets[176]. - CFBank has not engaged in subprime lending or used option adjustable-rate mortgage products, mitigating certain risks associated with lending[192]. - 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[247]. - Banking regulations limit the amount of dividends that can be paid to the Holding Company by CFBank without prior regulatory approval[248]. Legal and Risk Management - The Holding Company and CFBank may be involved in various legal proceedings in the normal course of business, but no pending legal proceedings are believed to have a material adverse effect on financial condition[255]. - Management believes there has been no material change in the Company's market risk as of September 30, 2024[251]. - Disclosure controls and procedures were effective as of the quarter ended September 30, 2024[253].