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Additionally, we are attracting top banking talent and quality business from Regional banks and other competitors as we continue building and strengthening our business presence & teams in the four Major Metro Markets we serve (Columbus, Cleveland, Cincinnati and Indianapolis).

As we move into 2024, we expect Net Interest Margin (NIM) to remain challenging, however, we are seeing signs of improving stability. Remaining nimble and maintaining efficient operations, positions us to effectively manage through changes in interest rates moving forward, while taking advantage of profitable market growth opportunities.

We are gaining business momentum and raising the bar through consistently executing well the fundamentals of our business and growth plan.

We believe "Our bests are yet Ahead!"

Robert E. Hoeweler, Chairman of the Board, added: "Through January 2024, when measured over a 1-year, 5-year and 10-year period, the performance of our stock has significantly outperformed both the KBW Regional Banking ETF and the S&P Regional Banking ETF.  Also, since our recap in late 2012, the CFBK stock price has appreciated 164%.  Our insider ownership above 40% truly aligns our interests with Shareholders."

Overview of Results

Net income for the three months ended December 31, 2023 totaled $4.2 million (or $0.65 per diluted common share) compared to net income of $4.0 million (or $0.62 per diluted common share) for the three months ended September 30, 2023 and net income of $4.7 million (or $0.72 per diluted common share) for the three months ended December 31, 2022.  Pre-provision, pre-tax net revenue ("PPNR") for the three months ended December 31, 2023 was $6.0 million compared to PPNR of $6.2 million for the three months ended September 30, 2023 and PPNR of $6.5 million for the three months ended December 31, 2022.

Net income for the year ended December 31, 2023 totaled $16.9 million (or $2.63 per diluted common share) compared to net income of $18.2 million (or $2.78 per diluted common share) for the year ended December 31, 2022.  PPNR was $23.3 million for the year ended December 31, 2023 compared to $23.4 million for the year ended December 31, 2022.

Net Interest Income and Net Interest Margin

Net interest income totaled $11.8 million for the quarter ended December 31, 2023 and increased $87,000, or 0.7%, compared to $11.7 million in the prior quarter, and decreased $1.4 million, or 10.6%, compared to $13.2 million in the fourth quarter of 2022.

The increase in net interest income compared to the prior quarter was primarily due to a $1.5 million, or 5.5%, increase in interest income, partially offset by a $1.4 million, or 8.8%, increase in interest expense.  The increase in interest income was primarily attributed to a $65.3 million, or 3.5%, increase in average interest-earning assets, coupled with a 12bps increase in the average yield on interest-earning assets.  The increase in interest expense when compared to the prior quarter was attributed to a 25bps increase in the average cost of funds on interest-bearing liabilities, coupled with a $44.8 million, or 2.9%, increase in average interest-bearing liabilities. The net interest margin of 2.44% for the quarter ended December 31, 2023 decreased 6bps compared to the net interest margin of 2.50% for the prior quarter.

The decrease in net interest income compared to the fourth quarter of 2022 was primarily due to a $9.2 million, or 105.3%, increase in interest expense, partially offset by a $7.8 million, or 35.7%, increase in interest income.  The increase in interest expense was attributed to a 195bps increase in the average cost of funds on interest-bearing liabilities, coupled with a $222.0 million, or 16.1%, increase in average interest-bearing liabilities. The increase in interest income was primarily attributed to a 104bps increase in the average yield on interest-earning assets, coupled with a $218.7 million, or 12.8%, increase in average interest-earning assets outstanding. The net interest margin of 2.44% for the quarter ended December 31 2023 decreased 64bps compared to the net interest margin of 3.08% for the fourth quarter of 2022.

Noninterest Income

Noninterest income for the quarter ended December 31, 2023 totaled $1.0 million and decreased $268,000, or 20.6%, compared to $1.3 million for the prior quarter.  The decrease was primarily due to a $345,000 decrease in swap fee income, partially offset by a $91,000 increase in service charges on deposit accounts.

Noninterest income for the quarter ended December 31, 2023 increased $382,000, or 58.7%, compared to $651,000 for the quarter ended December 31, 2022.  The increase was primarily due to a $175,000 increase in service charges on deposit accounts, a $56,000 increase in the net gain on sales of residential loans and a $173,000 decrease in the loss on the redemption of life insurance.

The following table represents the notional amount of loans sold during the three months ended December 31, 2023, September 30, 2023, and December 31, 2022 (in thousands).

Noninterest Expense

Noninterest expense for the quarter ended December 31, 2023 totaled $6.7 million and decreased $15,000, or 0.2%, compared to $6.8 million for the prior quarter.  The decrease in noninterest expense was primarily due to a $91,000 decrease in salaries and employee benefits, partially offset by a $72,000 increase in data processing expense.  The decrease in salaries and benefits was primarily due to a decrease in incentive compensation expense.  The increase in data processing expense was primarily due to one-time implementation expenses for certain product enhancements.

Noninterest expense for the quarter ended December 31, 2023 decreased $528,000, or 7.3%, compared to $7.3 million for the quarter ended December 31, 2022.  The decrease in noninterest expense was primarily due to a $485,000 decrease in salaries and employee benefits and a $115,000 decrease in advertising and marketing expense, partially offset by a $185,000 increase in FDIC premiums.  The decrease in salaries and employee benefits was primarily due to a decrease in the number of employees coupled with lower payroll taxes.  The decrease in advertising and marketing expense was due to a reduction in advertising campaigns.  The increase in FDIC premiums was related to increased assets and deposit levels and assessment rates.

Income Tax Expense

Income tax expense was $932,000 for the quarter ended December 31, 2023 (effective tax rate of 18.0%), compared to $984,000 for the prior quarter (effective tax rate of 19.6%) and $1.2 million for the quarter ended December 31, 2022 (effective tax rate of 20.8%).

Loans and Loans Held For Sale

Net loans and leases totaled $1.7 billion at December 31, 2023 and increased $34.4 million, or 2.1%, from the prior quarter and increased $121.9 million, or 7.8%, from December 31, 2022. The increase in net loans and leases from September 30, 2023 was primarily due to a $40.5 million increase in commercial real estate loan balances, an $11.9 million increase in commercial loan balances, and a $6.0 million increase in multi-family loan balances, partially offset by a $26.6 million decrease in construction loan balances.  The increases in the aforementioned loan balances were primarily related to increased sales activity and new relationships.  The decrease in construction loan balances was primarily related to $35.7 million of loans that paid off and $18.9 million of loans that converted to permanent loans upon the completion of construction, partially offset by $28.0 million of new construction loan advances.

The increase in net loans and leases from December 31, 2022 was primarily due to a $57.9 million increase in commercial real estate loan balances, a $26.6 million increase in multi-family loan balances, a $13.2 million increase in single-family residential loan balances, a $12.5 million increase in commercial loan balances, a $6.6 million increase in construction loan balances, and a $5.2 million increase in home equity lines of credit.  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).

Asset Quality

Nonaccrual loans were $5.7 million, or 0.33%, of total loans at December 31, 2023, an increase of $1.1 million from $4.6 million at September 30, 2023 and an increase of $5.0 million from $761,000 at December 31, 2022.  The increase in nonaccrual loans when compared to the prior quarter end was primarily due to three commercial loans, totaling $1.7 million, becoming nonaccrual during the fourth quarter 2023.  Of the $1.7 million that became nonaccrual during the quarter, $1.0 million is covered by an SBA guarantee.

The increase in nonaccrual loans when compared to December 31, 2022 was primarily driven by five commercial loans, totaling $4.9 million, becoming nonaccrual during the year ended December 31, 2023.  Loans past due more than 30 days totaled $2.0 million at December 31, 2023 compared to $2.4 million at September 30, 2023 and $2.1 million at December 31, 2022.

The allowance for credit losses on loans and leases totaled $16.9 million at December 31, 2023 compared to $17.0 million at September 30, 2023 and $16.1 million at December 31, 2022.  The ratio of the allowance for credit losses on loans and leases to total loans and leases was 0.99% at December 31, 2023 compared to 1.02% at September 30, 2023 and 1.01% at December 31, 2022.  The decrease in the allowance for credit losses during the quarter ended December 31, 2023 was primarily driven by a decrease in reserves placed on individually-evaluated commercial loans.  This was the result of two individually-evaluated loans being charged down to the fair market value of their collateral.

On January 1, 2023, the Company adopted the current expected credit loss (CECL) model, which resulted in an increase to the reserve for credit losses of $49,000.  There was $875,000 in provision for credit loss expense for the quarter ended December 31, 2023, a $1.2 million provision for credit loss expense for the quarter ended September 30, 2023 and a $637,000 provision for credit loss expense for the quarter ended December 31, 2022.  Net charge-offs for the quarter ended December 31, 2023 totaled $623,000 compared to net charge-offs of $126,000 for the prior quarter and net charge offs of $262,000 for the quarter ended December 31, 2022.

Deposits

Deposits totaled $1.7 billion at December 31, 2023, an increase of $59.1 million, or 3.5%, when compared to $1.7 billion at September 30, 2023, and an increase of $216.1 million, or 14.1%, when compared to $1.5 billion at December 31 2022.  The increase when compared to the prior quarter end is primarily due to a $41.2 million increase in checking account balances, a $16.2 million increase in certificate of deposit account balances, and a $2.9 million increase in money market account balances, partially offset by a $1.2 million decrease in savings account balances.

The increase in deposits when compared to December 31, 2022 is primarily due to a $105.3 million increase in certificate of deposit account balances, a $102.5 million increase in money market account balances, and an $11.4 million increase in checking account balances, partially offset by a $3.1 million decrease in savings account balances.

Noninterest-bearing deposit accounts totaled $235.9 million at December 31, 2023 and increased $21.6 million from $214.3 million at September 30, 2023 and decreased $27.3 million from $263.2 million at December 31, 2022.  At December 31, 2023, approximately 29.2% of our deposit balances exceeded the FDIC insurance limit of $250,000, as compared to approximately 28.0% at September 30, 2023 and 31.6% at December 31, 2022.

Borrowings

FHLB advances and other debt totaled $110.0 million at December 31, 2023 and at September 30, 2023 and increased $534,000 when compared to $109.5 million at December 31, 2022. The increase when compared to December 31, 2022 was due to a $4.0 million increase on the Company's line of credit with a third party financial institution, partially offset by a $3.5 million decrease in FHLB advances.

Capital

Stockholders' equity totaled $155.4 million at December 31, 2023, an increase of $4.1 million, or 2.7%, from $151.3 million at September 30, 2023.  Stockholders' equity increased $16.1 million, or 11.6%, from $139.2 million at December 31, 2022.  The increase in total stockholders' equity during the three months ended December 31, 2023 was primarily attributed to net income, partially offset by $386,000 in dividend payments.  The increase in total stockholders' equity during the year ended December 31, 2023 was primarily attributed to net income, partially offset by $1.5 million in dividend payments and a $253,000 increase in other comprehensive loss.  The other comprehensive loss was the result of the mark-to-market adjustment of our investment portfolio.

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").  Non-GAAP financial measures included in this earnings release include Tangible book value per common share, Pre-Provision, Pre-Tax Net Revenue (PPNR), PPNR Return on Average Assets (PPNR ROA) and PPNR Return on Average Equity (PPNR ROE).  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.  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."

About CF Bankshares Inc. and CFBank

CF Bankshares Inc. (the "Company") is a holding company that owns 100% of the stock of CFBank, National Association ("CFBank"). CFBank is a nationally chartered boutique Commercial bank operating primarily in Four (4) Major Metro Markets: Columbus, Cleveland, and Cincinnati, Ohio, and Indianapolis, Indiana. The current Leadership Team and Board recapitalized the Company and CFBank in 2012 during the financial crisis, repositioning CFBank as a full-service Commercial Bank model. Since the 2012 recapitalization, CFBank has achieved a CAGR in excess of 20%.

CFBank focuses on serving the financial needs of closely held businesses and entrepreneurs, by providing a comprehensive Commercial, Retail, and Mortgage Lending services presence. In all regional markets, CFBank provides commercial loans and equipment leases, commercial and residential real estate loans and treasury management depository services, residential mortgage lending, and full-service commercial and retail banking services and products.  CFBank is differentiated by our penchant for individualized service coupled with direct customer access to decision-makers, and ease of doing business. CFBank matches the sophistication of much larger banks, without the bureaucracy.

CFBank was named one of Piper Sandler's "Bank & Thrift Sm-All Stars" for 2023.  This recognition places us among the top 10% of small-cap banks and thrifts in the United States.  In addition, CFBank ranked #7 on American Banker's listing of Top 200 Publicly Traded Community Banks based on 3-year average return on equity as of December 31, 2022.

Additional information about the Company and CFBank is available at www.CF.Bank

FORWARD LOOKING STATEMENTS

This press 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 those risks detailed from time to time in our reports filed with the SEC, including those risk factors 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, 2022, as supplemented by the risk factors identified in "Item 1A. Risk Factors" of Part II of our Quarterly Report on Form 10-Q filed with the SEC for the quarter ended March 31, 2023.

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 press 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.