CF Bankshares Inc. operates one of the smallest publicly traded Ohio community banks, and the second-quarter print reads as a deposit-franchise cleanup rather than a growth sprint. Net interest margin for the second quarter expanded ten basis points, reaching 2.93 percent on a fully taxable equivalent basis. The expansion was on a forty-six basis point decline in the average rate paid on interest-bearing deposits while the loan book was held largely flat. The expansion reflects a forty-six basis point decline in the average rate paid on interest-bearing deposits while the loan book was held largely flat. Net income of $5.9 million grew seventeen percent year-over-year, and the provision expense fell to $0.9 million.
The principal structural mechanism is repricing of the deposit book ahead of the loan book. Interest-bearing balances grew $59.9 million while noninterest-bearing balances fell $11.9 million, driven by customer migration between account types. The brokered deposit stack contracted by $66.5 million, which lowered the marginal cost of funds. Capital remains the cleanest feature of the franchise, and the CET1 ratio is 13.55 percent. The leverage ratio is 11.64 percent, with both sitting well above the well-capitalized thresholds under the Basel III framework that governs the bank's primary federal regulator, the Office of the Comptroller of the Currency.
The offsetting data signal is a single $5.0 million syndicated commercial-and-industrial loan that migrated to nonaccrual during the quarter. That single loan lifted nonperforming assets to 1.15 percent of loans from 0.87 percent at year-end, accounting for nearly all of the sequential increase in nonaccrual balances. Diluted earnings per share of $0.90 ran ahead of $0.77 in the year-ago quarter. Net recoveries of $106,000 replaced the $51,000 of net charge-offs a year earlier. The open question for the next two quarters is whether the nonaccrual migration is a one-off syndicated exposure or the leading edge of broader credit drift in the commercial book, and whether loan growth re-accelerates from the year-to-date pace without forcing a return of higher-cost deposits.