CF Bankshares Net Interest Margin Widens 24 Basis Points
Net interest income rose 11.4% to $14.8 million as average loan yield climbed 25 bps and commercial fundings of $135 million lifted net commercial loan growth to $52 million.
CF Bankshares Inc. (CFBK), parent of CFBank, National Association, reported net interest income of $14.8 million for the second quarter ended June 30, 2026, up $1.5 million, or 11.4%, from $13.3 million in the first quarter.
The sequential lift reversed the first quarter’s lower interest income, which President and CEO Timothy T. O’Dell had attributed to late-quarter commercial fundings and elevated payoffs. Interest income rose $1.9 million, or 6.7%, while interest expense increased $368,000, or 2.5%.
Net interest margin expanded 24 bps to 2.93% from 2.69%, after a 5 bps sequential expansion in the first quarter. Average yield on loans and leases including loans held for sale rose 25 bps to 6.24%. An early payoff of a commercial loan produced $370,000 of prepayment penalty fee income that the company said added 7 bps to the margin. Average interest-earning assets increased $44.9 million, or 2.3%, to $2.03 billion.
Average interest-bearing deposit cost rose 15 bps to 3.71%. Average interest-bearing liabilities fell $26.6 million, or 1.6%, to $1.60 billion.
Commercial loan fundings of $135 million produced $52 million of net commercial loan growth, after $45 million of net core commercial growth in the first quarter that was net of $100 million of payoffs and amortization. Gross loans and leases increased $38.1 million, or 2.1%, to $1.82 billion at June 30, driven by a $52.9 million rise in commercial real estate and a $1.6 million rise in commercial and industrial loans, offset by a $10.9 million decline in single-family residential, a $3.1 million decline in home equity lines, and a $2.1 million decline in construction.
Total deposits increased $19.2 million, or 1.1%, to $1.83 billion. Noninterest-bearing balances rose $33.0 million, or 14%, to $273.6 million, while interest-bearing deposits declined $13.8 million. Core deposits excluding brokered deposits increased $91 million, or 6%.
Noninterest income rose $214,000, or 14.4%, to $1.7 million, led by a $184,000 increase in swap fee income and a $78,000 increase in customer fees including treasury management. Noninterest expense was essentially unchanged at $8.3 million, up only $27,000, or 0.3%. The efficiency ratio improved to 50.4% from 56.1%.
Net income was $5.9 million, or $0.90 a share, up 18% from $5.0 million, or $0.77 a share, in the first quarter. Pre-provision, pre-tax net revenue was $8.2 million, up 26% from $6.5 million. Return on average equity was 12.31% and return on average assets 1.11%.
Provision for credit losses was $944,000, up from $604,000 in the first quarter. Nonaccrual loans rose $522,000 to $20.8 million, or 1.15% of loans. Loans 30 days or more past due increased to $20.4 million from $17.5 million, including a $2.7 million C&I loan. The bank recorded net recoveries of $105,000 versus net charge-offs of $16,000 in the prior quarter. The allowance for credit losses rose to $19.4 million, or 1.07% of loans, from $18.6 million, or 1.05%.
Tier 1 leverage was 11.64% and the total capital ratio 14.76% at June 30, down from 11.76% and 15.15% at March 31. Book value per share rose to $29.04 from $28.20. Stockholders’ equity increased $5.4 million, or 2.9%, to $194.3 million, including $586,000 of dividend payments. The board declared a $0.09 a share common dividend on July 1, matching the April 1 declaration.
O’Dell said the company expects increasing size and scale supported by commercial loan pipelines to be further accretive to core earnings in the second half of 2026. He said NIM is expected to remain a challenge and that the treasury management group is concentrating on sourcing low-cost deposits from businesses that manage large deposits.
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