Parent of CFBank, NA







CF BANKSHARES INC. ANNOUNCES 1st QUARTER 2021 EARNINGS MORE THAN TRIPLED YEAR-OVER-YEAR.  ALSO ANNOUNCES EXPANSION INTO INDIANAPOLIS MARKET.



Columbus, Ohio – May 4, 2021 – CF Bankshares Inc. (NASDAQ: CFBK) (the “Company”), the parent of CFBank, today announced financial results for the first quarter ended March 31, 2021.



First Quarter 2021 Highlights



Timothy T. O’Dell, President and CEO, commented, “We are pleased with our overall Q1 results, particularly given the challenging mortgage lending environment being experienced thus far in 2021. 



Our Commercial Banking pipelines are strong and at all-time high levels as we enter the second quarter, with the majority of these Earning Assets and accompanying deposit relationships expected to be closed and funded during Q2. We anticipate closing of our Pipelines, along with the investments made in building and strengthening our Regional Banking Teams including the expansion into Indianapolis as our 4th Major Market will position our Core for solid second half 2021 performance.  Based upon the current mortgage lending environment and volatility, we could expect to see substantial decreases in mortgage originations and earnings contribution versus 2020.



We chose to outsource the delivery and funding of Round 2 PPP loans, in order to concentrate our resources for closing and funding our traditional loan Pipelines.  While our traditional loans are larger and will be more impactful on earnings performance, we recognize the value and importance of the smaller PPP loans to our customers and communities.  As a result, we have provided a website link and contacts to facilitate applications and approvals.



In addition, we are excited to expand our Bank footprint and presence by establishing a presence in Indianapolis, our 4th Major Metropolitan Market joining the existing Columbus, Cleveland, and Cincinnati, Ohio markets. We enthusiastically welcome Dan Cobb to our team as Market President of our Indianapolis expansion market. Dan is a very experienced business banker, well connected in the Indianapolis region, along with being a proven performer and leader. We are confident Dan will hit the ground running, and will quickly assemble an excellent Team, including local Treasury Management and Commercial bankers.



We are also expanding our presence within existing Metro markets.  We are in the process of adding Branch capabilities at Our office location in Beachwood, Ohio (NE Ohio), which we expect will open in early Q3.  Additionally, in early Q4, we will be adding a micro branch location in Cincinnati, along with a full-service office in the Westerville area of the Columbus market. These Branches will serve to enhance our Footprint and presence, as well as expand the delivery of banking services available for our customers, and bolster our deposit gathering network.



The pending sale of our Columbiana County branches to Consumers Bank remains on track, with an expected July closing date. The resulting capital generated through the sale will be reinvested into the growth and expansion in our Metro markets, better fitting our CFBank Commercial Banking driven business model. 



Our key objectives remain focused on Core earnings as well as expanding franchise and shareholder value. Through increasing size and scale, expanding our market presence, and gaining market share, we intend to grow core earnings.



We are just Revving Up!”



Robert E. Hoeweler, Chairman of the Board, added: “Our leadership team has effectively guided the Bank through the Pandemic, perhaps the most difficult economic period for financial institutions in history. We have steadfastly stayed on course, understanding that providing great service to our customers and supporting our communities are fundamental to how we measure success. Our team has never permitted complacency to creep in, always striving for high level performance.   As a result, we have continued to thrive through this time. I offer my sincere thanks to our team, our stakeholders, and our regulators for their partnership and support during this challenging period.”



Overview of Results 

Net income for the three months ended March 31, 2021 totaled $6.4 million (or $0.96 per diluted common share) and increased $4.4 million, or 220.1%, compared to net income of $2.0 million (or $0.30 per diluted common share) for the three months ended March 31, 2020.  Pre-provision, pre-tax net revenue (“PPNR”) for the three months ended March 31, 2021 totaled $7.9 million and increased $5.4 million compared to PPNR of $2.5 million for the three months ended March 31, 2020.

Net interest income.  Net interest income totaled $9.6 million for the quarter ended March 31, 2021 and increased $3.5 million, or 57.1%, compared to net interest income of $6.1 million for the quarter ended March 31, 2020.  The increase in net interest income was primarily due to a $2.9 million, or 29.3%, increase in interest income and a $583,000, or 15.2%, decrease in interest expense.  The increase in interest income was primarily attributed to a $573.8 million, or 67.2%, increase in average interest-earning assets outstanding, resulting primarily from an increase in net loans and loans held for sale, partially offset by a 106bps decrease in average yield on interest-earning assets.  The decrease in interest expense was attributed to a 111bps decrease in the average cost of funds on interest-bearing liabilities, partially offset by a $480.4 million, or 69.3%, increase in average interest-bearing liabilities.  The net interest margin of 2.69% for the quarter ended March 31, 2021 decreased 18bps compared to the net interest margin of 2.87% for the quarter ended March 31, 2020 but increased 21bps compared to the net interest margin of 2.48% for the prior quarter ended December 31, 2020.

Provision for loan and lease losses.  There was no provision for loan and lease losses expense for the quarter ended March 31, 2021 or for the quarter ended March 31, 2020, which is due to strong credit quality.  Net recoveries for the quarter ended March 31, 2021 totaled $64,000, compared to net charge-offs of $65,000 for the quarter ended March 31, 2020.

Noninterest income.  Noninterest income for the quarter ended March 31, 2021 totaled $7.2 million and increased $3.8 million, or 109.9%, compared to $3.4 million for the quarter ended March 31, 2020.  The increase was primarily due to a $3.5 million increase in net gain on sale of loans.  The increase in net gain on sale of loans was primarily a result of increased

sales volume related to our residential mortgage lending business.  While originations where reasonably strong during the quarter ended March 31, 2021, margins have declined substantially since the fourth quarter of 2020.

The following table represents the notional amount of loans sold during the three months ended March 31, 2021 and 2020 (in thousands).







The following table represents the revenue recognized on mortgage activities for the three months ended March 31, 2021 and 2020 (in thousands).





Noninterest expense.  Noninterest expense for the quarter ended March 31, 2021 totaled $9.0 million and increased $2.0 million, or 27.3%, compared to $7.0 million for the quarter ended March 31, 2020.  The increase in noninterest expense during the three months ended March 31, 2021 was primarily due to a $1.6 million increase in salaries and employee benefits expense and a $210,000 increase in professional fees expense. The increase in salaries and employee benefits expense was primarily due to the expansion of and increased volumes in our residential mortgage lending business, coupled with an increase in personnel to support our growth, infrastructure, and risk management practices.  The increase in professional fees was related to increased activities, volumes and outsourcing in our residential mortgage business.

Income tax expense.  Income tax expense was $1.5 million for the quarter ended March 31, 2021, an increase of $940,000, compared to $517,000 for the quarter ended March 31, 2020.  The effective tax rate for the quarter ended March 31, 2021 was approximately 18.5%, as compared to approximately 20.5% for the quarter ended March 31, 2020.

Balance Sheet Activity

General.  Assets totaled $1.6 billion at March 31, 2021 and increased $128.0 million, or 8.6%, from $1.5 billion at December 31, 2020.  The increase was primarily due to a $147.3 million increase in loans held for sale and a $71.5 million increase in net loan balances, partially offset by a $95.8 million decrease in cash and cash equivalents.

Cash and cash equivalents.  Cash and cash equivalents totaled $125.8 million at March 31, 2021, and decreased $95.8 million, or 43.2%, from $221.6 million at December 31, 2020.  The decrease in cash and cash equivalents was primarily attributed to increases in loans held for sale and net loans.

Securities. Securities available for sale totaled $9.7 million at March 31, 2021, and increased $1.0 million, or 11.9%, compared to $8.7 million at December 31, 2020.  The increase was due to security purchases, partially offset by principal maturities.

Loans held for sale.  Loans held for sale totaled $430.5 million at March 31, 2021 and increased $147.3 million, or 52.0%, from $283.2 million at December 31, 2020. 

Loans and Leases.  Net loans and leases totaled $966.8 million at March 31, 2021, and increased $71.5 million, or 8.0%, from $895.3 million at December 31, 2020.  The increase was due to a $38.2 million increase in single-family residential loan balances, a $34.1 million increase in commercial real estate loan balances, a $6.1 million increase in multi-family loan balances, a $3.1 million increase in construction loans balances, and a $2.1 million increase in consumer loan balances,

partially offset by a $12.1 million decrease in commercial loan balances.  The increases in the aforementioned loan balances were related to increased sales activity and new relationships.

The following table presents the recorded investment in loans and leases for certain non-owner-occupied loan types ($ in thousands).





Allowance for loan and lease losses (ALLL).    The allowance for loan and lease losses totaled $17.1 million at March 31, 2021, and increased $64,000, or 0.4%, from $17.0 million at December 31, 2020.  The increase in the ALLL is due to net recoveries during the three months ended March 31, 2021.  The ratio of the ALLL to total loans was 1.74% at March 31, 2021, compared to 1.87% at December 31, 2020.  The ratio of the ALLL to total loans, excluding loan balances subject to SBA guarantees, was 1.95% at March 31, 2021, compared to 2.15% at December 31, 2020.

Deposits.  Deposits totaled $1.3 billion at March 31, 2021, an increase of $207.3 million, or 18.6%, from $1.1 billion at December 31, 2020.   The increase is due to a $189.1 million increase in interest-bearing deposit accounts and  an  $18.2 million increase in noninterest-bearing account balances.  Interest-bearing deposit accounts increased to $1.1 billion at March 31, 2021, from $914.4 billion at December 31, 2020.  The increase in interest-bearing accounts is primarily attributed to a $93.0 million increase in certificate of deposit account balances,  a $59.0 million increase in brokered demand deposit account balances, a $21.5 million increase in money market account balances, and a $13.5 million increase in interest-bearing checking account balances.  The increase in certificate of deposit account balances was due to increases in brokered, listing service and retail  certificates of deposits.   The increase in interest-bearing checking is primarily related to the balances in the Insured Cash Sweep (ICS) programs offered through Promontory Interfinancial Network.  The increases in money market account balances were primarily due to increases in customer relationships and balances from on-going sales and marketing activities.  

Stockholders’ equity. Stockholders’ equity totaled $116.7 million at March 31, 2021, an increase of $6.4 million, or 5.8%, from $110.2 million at December 31, 2020.  The increase in total stockholders’ equity was primarily attributed to net income.  

About CF Bankshares Inc. and CFBank

CF Bankshares Inc. is a financial holding company that owns 100% of the stock of CFBank, National Association (CFBank). CFBank is a boutique Commercial bank headquartered in Columbus, Ohio. CFBank has focused on bettering the Ohio economy and serving the financial needs of closely held businesses since 1892. Over a century has passed, and yet, our focus remains the same: guide fellow Ohioans to financial stability and success with agility, ease, and care. CFBank grew from a Federal Savings Association to a National Bank in December of 2016. As CFBank has expanded, we have maintained our penchant for individualized service and direct customer access to decision makers. CFBank now has a presence in four major metro markets - Columbus, Cleveland, and Cincinnati, Ohio and Indianapolis, Indiana, as well as branch locations in Columbiana Country (two locations).  In every location, CFBank provides commercial loans and leases, commercial and residential real estate loans and treasury management depository services, corporate treasury management, residential lending, and full-service retail banking services and products. In addition, CFBank also has a national residential lending platform.  CFBank is also glad to offer its clients the convenience of online internet banking, mobile banking, and remote deposit.

Additional information about the Company and CFBank is available at www.CFBankOnline.com

Use of Non-GAAP Financial Measures

This earnings release contains financial information and performance measures determined by methods other than in accordance with accounting principles generally accepted in the United States of America (GAAP).  Management uses these "non-GAAP" financial measures in its analysis of the Company’s performance and believes that these non-GAAP financial measures provide a greater understanding of ongoing operations and enhance comparability of results with prior periods and peers.  These disclosures should not be viewed as substitutes for financial measures determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.  Non-GAAP financial measures included in this earnings release include Pre-Provision, Pre-Tax Net Revenue (PPNR),  PPNR Return on Average Assets and PPNR Return on Average Equity.  A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures is included at the end of this earnings release under the heading "GAAP TO NON-GAAP RECONCILIATION."

FORWARD LOOKING STATEMENTS

This earnings release and other materials we have filed or may file with the Securities and Exchange Commission (“SEC”) contain or may contain forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Reform Act of 1995, which are made in good faith by us.  Forward-looking statements include, but are not limited to: (1) projections of revenues, income or loss, earnings or loss per common share, capital structure and other financial items; (2) plans and objectives of the management or Boards of Directors of CF Bankshares Inc. or CFBank; (3) statements regarding future events, actions or economic performance; and (4) statements of assumptions underlying such statements.  Words such as "estimate," "strategy," "may," "believe," "anticipate," "expect," "predict," "will," "intend," "plan," "targeted," and the negative of these terms, or similar expressions, are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements.  Various risks and uncertainties may cause actual results to differ materially from those indicated by our forward-looking statements, including, without limitation, impacts from the ongoing COVID-19 pandemic on local, national and global economic conditions in general and on our industry and business in particular, including adverse impacts on our customer’s operations, financial condition and ability to repay loans, changes in interest rates or disruptions in the mortgage market, and the effects of various governmental responses to the pandemic, including stimulus packages and programs; uncertainty regarding the impact of changes in the U.S. presidential administration and Congress on the regulatory landscape, capital markets and responses to the COVID-19 pandemic; and those additional risks detailed from time to time in our reports filed with the SEC, including those identified in “Item 1A.  Risk Factors” of Part I of our Annual Report on Form 10-K filed with SEC for the year ended December 31, 2020.

Forward-looking statements are not guarantees of performance or results.  A forward-looking statement may include a statement of the assumptions or bases underlying the forward-looking statement.  We believe that we have chosen these assumptions or bases in good faith and that they are reasonable.  We caution you, however, that assumptions or bases almost always vary from actual results, and the differences between assumptions or bases and actual results can be material.  The forward-looking statements included in this earnings release speak only as of the date hereof.  We undertake no obligation to publicly release revisions to any forward-looking statements to reflect events or circumstances after the date of such statements, except to the extent required by law. 





































(1)  Regulatory capital ratios of CFBank



GAAP TO NON-GAAP RECONCILIATION



This press release contains certain non-GAAP disclosures for: (1) PPNR,  (2) PPNR return on average assets and (3) PPNR return on average equity.  The Company uses these non-GAAP financial measures to provide meaningful supplemental information regarding the Company’s operations performance and to enhance investors’ overall understanding of such financial performance.  In particular, the use of PPNR is prevalent among banking regulators, investors, and analysts.  Accordingly, we disclose the non-GAAP measures in addition to the related GAAP measures of: (1) net earnings (2) return on average assets and (3) return on average equity.  



The table below presents the reconciliation of these GAAP financial measures to the related non-GAAP financial measures: