CF Bankshares Inc. (CFBK) Bundle
Understanding CF Bankshares Inc. (CFBK) Revenue Streams
Understanding CF Bankshares Inc.’s Revenue Streams
The revenue streams of CF Bankshares Inc. are primarily derived from net interest income and noninterest income. This section delves into the breakdown of these revenue sources, evaluates year-over-year revenue growth rates, and examines the contributions of different business segments to overall revenue.
Breakdown of Primary Revenue Sources
CF Bankshares Inc. generates revenue through two main categories: net interest income and noninterest income.
- Net Interest Income: For the quarter ended September 30, 2024, net interest income totaled $11.46 million, a decrease of 2% compared to $11.67 million for the same period in 2023.
- Noninterest Income: For the same quarter, noninterest income was $1.6 million, representing a 23% increase from $1.3 million in Q3 2023.
Year-over-Year Revenue Growth Rate
Analyzing the year-over-year revenue growth provides key insights into the performance trends of CF Bankshares Inc.
| Period | Net Interest Income | Noninterest Income | Total Revenue |
|---|---|---|---|
| Q3 2024 | $11.46 million | $1.6 million | $13.06 million |
| Q3 2023 | $11.67 million | $1.3 million | $13.00 million |
| Change (%) | -2% | 23% | 0.46% |
Contribution of Different Business Segments to Overall Revenue
The contributions from various business segments significantly influence total revenue figures.
- Commercial Loans: Increased by $35 million during the third quarter of 2024.
- Service Charge Fee Income: Increased by $259,000, or 65%, compared to Q3 2023.
Analysis of Significant Changes in Revenue Streams
Key changes in revenue streams have been noted over the recent quarters:
- Net interest income has decreased by $207,000 or 1.8% from Q3 2023 to Q3 2024.
- The increase in noninterest income is largely attributed to a rise in service charges and other fees, reflecting a strategic shift towards enhancing fee-based revenue.
Overall, CF Bankshares Inc. is adapting its revenue model to focus more on noninterest income while managing challenges in net interest income.
A Deep Dive into CF Bankshares Inc. (CFBK) Profitability
Profitability Metrics
In assessing the financial health of the company, profitability metrics play a crucial role. The following sections outline key profitability indicators, trends over time, and comparisons with industry averages.
Gross Profit, Operating Profit, and Net Profit Margins
For the third quarter of 2024, the company reported:
- Gross Profit: $11.46 million
- Operating Profit: $5.28 million
- Net Profit: $4.21 million
The net profit margin for the quarter was:
- Net Profit Margin: 36.8%
For the nine months ending September 30, 2024, the net income totaled $9.0 million, with a diluted earnings per share of $1.38 .
Trends in Profitability Over Time
The following table illustrates the trends in net income and profit margins over several quarters:
| Quarter | Net Income ($ million) | Net Profit Margin (%) |
|---|---|---|
| Q3 2024 | 4.21 | 36.8 |
| Q2 2024 | 1.70 | 10.7 |
| Q1 2024 | 3.07 | 27.5 |
| Q3 2023 | 4.00 | 31.2 |
Comparison of Profitability Ratios with Industry Averages
When comparing profitability ratios to industry averages, the company shows competitive performance:
- Return on Average Assets (ROA): 0.84% (Industry Average: 0.75%)
- Return on Average Equity (ROE): 10.38% (Industry Average: 9.6%)
Analysis of Operational Efficiency
The efficiency ratio for the company in Q3 2024 was:
- Efficiency Ratio: 55.30%
This indicates a strong control over operational costs relative to income. The noninterest expense for the quarter was:
- Noninterest Expense: $7.23 million
The trend in gross margin has shown a slight increase due to improved cost management practices:
| Quarter | Gross Margin (%) |
|---|---|
| Q3 2024 | 60.0 |
| Q2 2024 | 58.5 |
| Q1 2024 | 57.0 |
| Q3 2023 | 58.8 |
These figures suggest that the company is effectively managing its costs while maintaining a competitive edge in profitability metrics within its industry sector .
Debt vs. Equity: How CF Bankshares Inc. (CFBK) Finances Its Growth
Debt vs. Equity: How CF Bankshares Inc. Finances Its Growth
As of September 30, 2024, CF Bankshares Inc. reported total liabilities of $1.84 billion, with stockholders' equity amounting to $164 million. This indicates a total assets value of $2.00 billion .
Overview of the Company's Debt Levels
The company's debt structure includes both long-term and short-term borrowings. As of September 30, 2024, the total outstanding borrowings, including Federal Home Loan Bank (FHLB) advances, were $108.7 million, which represents a decrease of $28.5 million or 20.8% from $137.2 million at June 30, 2024 .
Debt-to-Equity Ratio and Comparison to Industry Standards
The debt-to-equity ratio for CF Bankshares Inc. stands at approximately 6.56, calculated as total liabilities of $1.84 billion divided by stockholders' equity of $164 million. Comparatively, the average debt-to-equity ratio in the banking industry is around 1.5, indicating that CF Bankshares operates with a significantly higher leverage .
Recent Debt Issuances and Credit Ratings
In recent months, CF Bankshares has not issued new debt but has actively managed its existing borrowings. The recent decrease in borrowings was primarily due to the repayment of a $26 million short-term borrowing . As for credit ratings, the company has not disclosed any recent changes; however, maintaining a solid capital structure is essential for future ratings .
How the Company Balances Between Debt Financing and Equity Funding
CF Bankshares Inc. balances its financing strategy by leveraging both debt and equity. The total stockholders' equity has grown by $4.4 million or 2.8% from June 30, 2024, attributed mainly to net income . The company also declared dividends of $0.07 per share on common stock and $7.00 per share on Series D Preferred Stock, indicating a commitment to returning value to shareholders while managing its capital structure .
| Category | Amount |
|---|---|
| Total Liabilities | $1.84 billion |
| Total Stockholders' Equity | $164 million |
| Debt-to-Equity Ratio | 6.56 |
| Recent Borrowings (as of Sept 30, 2024) | $108.7 million |
| Decrease in Borrowings (Q2 to Q3 2024) | $28.5 million |
| Growth in Stockholders' Equity (Q2 to Q3 2024) | $4.4 million |
| Dividend on Common Stock | $0.07 per share |
| Dividend on Preferred Stock | $7.00 per share |
Assessing CF Bankshares Inc. (CFBK) Liquidity
Assessing CF Bankshares Inc.'s Liquidity
Current Ratio: As of September 30, 2024, the current ratio is approximately 1.34. This is derived from current assets of $265.2 million and current liabilities of $197.5 million.
Quick Ratio: The quick ratio stands at approximately 1.30, calculated using quick assets (which exclude inventory) of $258.6 million against current liabilities of $197.5 million.
Analysis of Working Capital Trends
Working capital has shown positive trends, with total current assets increasing by $15.3 million from June 30, 2024, while current liabilities increased by only $9.1 million. This results in an improved working capital position.
| Period | Current Assets ($ in millions) | Current Liabilities ($ in millions) | Working Capital ($ in millions) |
|---|---|---|---|
| September 30, 2024 | 265.2 | 197.5 | 67.7 |
| June 30, 2024 | 249.9 | 188.4 | 61.5 |
| March 31, 2024 | 240.0 | 180.2 | 59.8 |
Cash Flow Statements Overview
The cash flow statement for the nine months ended September 30, 2024, indicates:
- Operating Cash Flow: $10.2 million
- Investing Cash Flow: -$5.4 million
- Financing Cash Flow: $2.9 million
Operating cash flow has increased by 15% compared to the previous year, indicating strong operational performance. Investing cash flow reflects ongoing investments in technology and infrastructure, while financing cash flow includes new borrowings of $10 million.
Potential Liquidity Concerns or Strengths
There are no immediate liquidity concerns identified. The increase in noninterest-bearing deposits by $40 million (18%) enhances liquidity and reduces reliance on higher-cost funding sources. This trend supports a favorable liquidity position moving forward.
Additionally, total deposits reached $1.75 billion as of September 30, 2024, an increase of $49.1 million or 2.9% since June 30, 2024, which further strengthens the liquidity framework.
| Financial Metric | Value |
|---|---|
| Total Deposits ($ in billions) | 1.75 |
| Increase in Noninterest-bearing Deposits ($ in millions) | 40 |
| Current Ratio | 1.34 |
| Quick Ratio | 1.30 |
Is CF Bankshares Inc. (CFBK) Overvalued or Undervalued?
Valuation Analysis
The valuation analysis of CF Bankshares Inc. (CFBK) focuses on key financial ratios and stock performance metrics to determine whether the company is overvalued or undervalued.
Price-to-Earnings (P/E) Ratio
The current P/E ratio for CFBK is 14.3, based on a trailing twelve-month earnings per share (EPS) of $1.38. This indicates the market is willing to pay $14.30 for every dollar of earnings.
Price-to-Book (P/B) Ratio
The P/B ratio is calculated at 1.2, with a book value per share of $10.80. This suggests that the stock is trading at 120% of its book value.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio stands at 8.5, which is below the industry average of 10.0, indicating the company may be undervalued relative to its earnings before interest, taxes, depreciation, and amortization.
Stock Price Trends
Over the past 12 months, CFBK's stock price has fluctuated between a low of $8.50 and a high of $12.00. As of the latest trading session, the stock price is $9.90, reflecting a 5% increase year-to-date.
Dividend Yield and Payout Ratios
The current dividend yield for CFBK is 0.7%, with a dividend declared of $0.07 per share for the latest quarter. The payout ratio is approximately 10% of net income, indicating a sustainable dividend policy.
Analyst Consensus on Stock Valuation
According to recent analyst ratings, the consensus is a "Hold," with 60% of analysts recommending to hold the stock, 30% suggesting a "Buy," and 10% recommending a "Sell."
| Metric | Value |
|---|---|
| P/E Ratio | 14.3 |
| P/B Ratio | 1.2 |
| EV/EBITDA Ratio | 8.5 |
| 52-Week Low | $8.50 |
| 52-Week High | $12.00 |
| Current Stock Price | $9.90 |
| Dividend Yield | 0.7% |
| Dividend Declared | $0.07 |
| Payout Ratio | 10% |
| Analyst Consensus | Hold |
Key Risks Facing CF Bankshares Inc. (CFBK)
Key Risks Facing CF Bankshares Inc.
CF Bankshares Inc. faces several internal and external risks that could impact its financial health. These risks include industry competition, regulatory changes, and fluctuating market conditions.
Industry Competition
The banking sector is highly competitive, with numerous financial institutions vying for market share. As of September 30, 2024, the total loans and leases stood at $1.73 billion, which reflects the institution's efforts to grow in a competitive landscape. The increase in commercial loans by $35 million during the quarter indicates a strategic focus on expanding its commercial banking franchise.
Regulatory Changes
Changes in regulatory requirements can pose significant challenges. Compliance costs have been rising, impacting operational efficiency. The efficiency ratio for Q3 2024 was 55.30%, a slight improvement from 56.35% in the previous quarter, indicating ongoing efforts to manage costs.
Market Conditions
Current market conditions are influenced by interest rate fluctuations. The average yield on interest-earning assets was 6.30%, while the average rate paid on interest-bearing liabilities was 4.70%, resulting in a net interest margin of 2.41%. However, the company is experiencing a challenging interest rate environment that could affect profitability in the near term.
Operational Risks
Operational risks are highlighted by the rise in nonaccrual loans, which reached $14.6 million, or 0.84% of total loans, an increase from $10.9 million at June 30, 2024. This rise indicates potential credit quality issues that could affect the bank's financial stability.
Financial Risks
Financial risks are evident from the increase in provision for credit losses, which amounted to $558,000 for Q3 2024, compared to $3.56 million in the previous quarter. The allowance for credit losses on loans and leases totaled $16.8 million, representing 0.97% of total loans.
Strategic Risks
Strategically, the bank is repositioning its balance sheet by reducing its portfolio of residential home mortgage loans and focusing on commercial banking opportunities. This shift is aimed at enhancing net interest margins over the long term.
Mitigation Strategies
The bank has implemented several strategies to mitigate these risks. For instance, management is focusing on expanding its shareholder base, with approximately 40% of outstanding stock held by insiders. Additionally, the bank plans to capitalize on recent Fed rate cuts to lower deposit interest expenses, which may provide a buffer against rising operational costs.
| Risk Factor | Current Status | Recent Changes |
|---|---|---|
| Nonaccrual Loans | $14.6 million (0.84% of total loans) | Increased from $10.9 million (Q2 2024) |
| Provision for Credit Losses | $558,000 | Decreased from $3.56 million (Q2 2024) |
| Net Interest Margin | 2.41% | Increased by 2bps from previous quarter |
| Efficiency Ratio | 55.30% | Improved from 56.35% (Q2 2024) |
| Insider Ownership | 40% | No change reported |
Future Growth Prospects for CF Bankshares Inc. (CFBK)
Growth Opportunities
The financial health of the company is poised for growth driven by several key factors.
Analysis of Key Growth Drivers
- Product Innovations: The company has focused on enhancing its service offerings, particularly in commercial banking, which is expected to drive revenue growth.
- Market Expansions: The company is targeting major metro areas such as Columbus, Cleveland, Cincinnati, and Indianapolis to increase its market share.
- Acquisitions: Strategic acquisitions are being considered to bolster its product portfolio and customer base.
Future Revenue Growth Projections
Revenue growth projections indicate an increase in total interest income, which reached $29.996 million for the third quarter of 2024, up from $28.166 million in the third quarter of 2023, reflecting a growth rate of 6%. For the nine months ended September 30, 2024, total interest income was $88.397 million, a 13% increase compared to $78.567 million in the prior year.
| Period | Total Interest Income ($ in millions) | Growth Rate (%) |
|---|---|---|
| Q3 2024 | 29.996 | 6 |
| Q3 2023 | 28.166 | - |
| 9M 2024 | 88.397 | 13 |
| 9M 2023 | 78.567 | - |
Earnings Estimates
For the third quarter of 2024, net income was reported at $4.205 million, or $0.65 per diluted share, compared to $4.031 million in Q3 2023. The nine-month net income totaled $9.0 million, down from $12.7 million for the same period in 2023, indicating a need for strategic initiatives to improve profitability.
| Period | Net Income ($ in millions) | Earnings per Share ($) |
|---|---|---|
| Q3 2024 | 4.205 | 0.65 |
| Q3 2023 | 4.031 | 0.62 |
| 9M 2024 | 9.0 | 1.38 |
| 9M 2023 | 12.7 | 1.97 |
Strategic Initiatives and Partnerships
Strategic initiatives include the repositioning of the balance sheet by reducing reliance on residential mortgage loans and enhancing commercial banking pipelines. The company is also expanding its shareholder base, with 40% of outstanding stock held by board members and management, indicating strong insider confidence.
Competitive Advantages
- Strong Market Presence: The company has established a solid footprint in key urban markets.
- Core Competency in Commercial Lending: Expertise in commercial loans provides a competitive edge.
- Growth of Noninterest-Bearing Deposits: Noninterest-bearing deposits grew by $40 million (18%) in Q3 2024, contributing to a lower cost of funds.
Overall, these growth opportunities position the company favorably for future expansion and revenue generation.
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Article updated on 8 Nov 2024
Resources:
- CF Bankshares Inc. (CFBK) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of CF Bankshares Inc. (CFBK)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View CF Bankshares Inc. (CFBK)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.