Central Federal Corp, Worthington, OH (CFBK)

A Case of Book-ish and 10x

This is a fun time to be a bank stock investor! So many really nice banks are trading at compelling values that it’s hard to choose which one to feature first.

For example, I'm seeing a number of well-run banks where you can buy shares at book value, 10x earnings, or both, and reasonably anticipate doubling your money in three or four years.

CFBank is just one of these. CFBK is trading cheaply at 7.8x rapidly-growing earnings. In three years, earnings could be $2.50, book value could be $16, and CFBK could trade at $24.

It's smart to hold a few low-stress stocks like this that just compound earnings and don't require babysitting, no?

Disclosure: As of this posting, I own shares of CFBK and may subsequently either dispose of them or purchase more.

Prospective Buyers

CFBank's leading market share in four towns would be especially attractive for these acquisitive neighbors.

Farmers National Banc Corp, Canfield, OH (FMNB)
LCNB Corp, Lebanon, OH (LCNB)
Peoples Bancorp, Marietta, OH (PEBO)

Financial Snapshot
as of 06/30/2019

Total assets:
Tangible book value per share:   
NPAs to assets:
Price to book:
Market cap:
Dividend yield:
Trailing 12-month ROA:
Trailing 12-month ROE:

The Crew

Robert E. Hoeweler, Chairman
Timothy T. O'Dell, President and CEO
Edward W. Cochran, Director, largest shareholder

The Skinny

These four characteristics inform my assessment that Central Federal Corp is well run and in a good position to grow:

1. Location, location! CFBank's branches are located in Ohio's top four metropolitan areas: Akron, Cincinnati, Cleveland, and Columbus.

2. Sizable branches. Between them, CFBank's Fairlawn and Worthington branches hold over $500 million in deposits. On average, deposits in the bank's other four branches exceed $37 million. (It takes about $15 million in deposits for a bank branch to break even.)

3. Effective CEO. Before Tim O'Dell arrived on the scene, CFBank was a sh*tty little thrift. O'Dell attracted good lenders, reduced problem loans, and exponentially increased both the size and profitability of the bank.

4. Invested Board. Collectively, the Central Federal Corp board owns 19% of CFBK stock, and every director is invested (which isn't always the case).