EX-99 2 l27104aexv99.htm EX-99 EX-99
 

Exhibit 99
PRESS RELEASE
     
FOR IMMEDIATE RELEASE:
  July 20, 2007
For Further Information:
  Mark S. Allio, Chairman, President and CEO
Phone: 330.576.1334
Fax: 330.666.7959
CENTRAL FEDERAL CORPORATION ANNOUNCES 32% ORGANIC ASSET GROWTH AND
CONTINUED PROFITABLE GROWTH FROM OPERATIONS FOR
2nd QUARTER 2007
Highlights
  •   Total assets increased 32% on an annualized basis, or $19.2 million during the 2nd quarter of 2007 to $259.9 million at June 30, 2007, and increased 20% on an annualized basis or $23.9 million during the first six months of 2007.
 
  •   Total assets increased $40.9 million, or 19% during the twelve months ended June 30, 2007.
 
  •   CFBank’s commercial, commercial real estate and multi-family loans increased 55% on an annualized basis, or $18.1 million during the second quarter of 2007 to $150.7 million at June 30, 2007, and increased 38% on an annualized basis or $24.3 million during the first six months of 2007.
 
  •   Commercial, commercial real estate and multi-family loans increased $43.2 million, or 40% during the twelve months ended June 30, 2007.
 
  •   Net income for the 2nd quarter of 2007 totaled $84,000 or $.02 per diluted share, up $78,000 from $6,000 or $.00 per diluted share in the prior year quarter.
 
  •   Net income for the six months ended June 30, 2007 totaled $169,000 or $.04 per diluted share, an improvement of $387,000 compared to a net loss of ($218,000) or ($.05) per diluted share for the prior year period.
 
  •   Net interest income increased 7% during the 2nd quarter of 2007 compared to the prior year quarter and 12% for the 6 months ended June 30, 2007 compared to the 6 months ended June 30, 2006.
Fairlawn, Ohio — July 20, 2007 — Central Federal Corporation (Nasdaq: CFBK) announced the fifth consecutive quarter of profitable operations during the 2nd quarter of 2007 and a $78,000 improvement in net income compared to the 2nd quarter of 2006. Net income for the 2nd quarter of 2007 totaled $84,000 or $.02 per diluted share compared to net income of $6,000, or $.00 per diluted share in the prior year quarter.
Net income for the six months ended June 30, 2007 totaled $169,000, or $.04 per diluted share and improved $386,000 compared to a net loss of ($218,000), or ($.05) per diluted share for the prior year period.

1

 

Total assets increased $23.9 million or 20.2% on an annualized basis during the 1st half of 2007 and included $24.3 million, or 38.4% annualized growth in commercial, commercial real estate and multi-family loans. During the twelve months ended June 30, 2007, total assets increased $40.9 million or 18.7% and included $43.2 million or 40.1% increase in commercial, commercial real estate and multi-family loans. Commercial, commercial real estate and multi-family loans are the focus of our growth plan.
The flat/inverted yield curve continued to negatively affect funding costs and challenge the net interest margin growth. Although loan growth positively affected gross interest income, which increased 25.9% in the 2nd quarter of 2007 compared to the prior year quarter, interest expense increased 45.3% during the same time frame resulting in a 7.5% increase in net interest income for the 2nd quarter of 2007 compared to the prior year quarter. On a year-to-date basis, gross interest income increased 33.6% during the six months ended June 30, 2007 compared to the prior year period and interest expense increased 57.6% in the same time frame, resulting in a 12.4% increase in net interest income for the six months ended June 30, 2007 compared to the prior year period.
Net interest income
The level of short-term market interest rates, a flat to inverted yield curve and increased local competition for both loans and deposits continued to impact yields on assets and the cost of funding. As a result, net interest margin declined from 3.50% the 2nd quarter of 2006 to 3.12% in the 2nd quarter of 2007. On a year-to-date basis, net interest margin declined from 3.53% for the six months ended June 30, 2006 to 3.18% for the current year period. Management of the net interest margin in the current interest rate and competitive environment will continue to be a challenge and continued downward pressure on margins is expected. CFBank continues to manage the net interest margin through matching its asset and liability pricing closely to its business model.
Provision for loan losses
CFBank continued to provide appropriate reserves for loan losses in response to growth in commercial, commercial real estate and multi-family loans, the performance of the loan portfolio giving consideration to economic conditions, changes in interest rates and the effect of such changes on real estate values, and changes in the composition of the loan portfolio. The provision totaled $107,000 and $142,000 in the three and six months ended June 30, 2007 compared to $292,000 and $582,000 in the prior year periods.
The current year period provisions were lower than the prior year periods due to a smaller percentage increase in commercial, commercial real estate and multi-family loan balances in the 2007 periods, a decline in nonperforming loans and a decline in historical write-offs on single-family mortgage and consumer loans. Commercial, commercial real estate and multi-family loans increased 19.4% in the 2nd quarter of 2006 compared to 13.7% in the 2nd quarter of 2007. For the six months ended June 30, 2006, these loan types increased 48.6% compared to 19.2% during the current year period. CFBank continued to experience low levels of nonperforming loans and net loan charge-offs. Nonperforming loans totaled $168,000 or 0.08% of total loans at June 30, 2007 compared to $297,000 or 0.16% of total loans at year-end 2006. More than 97% of the nonperforming balances were single-family mortgage loans at both June 30, 2007 and December 31, 2006. Net (recoveries) totaled ($21,000) or (.03%) to average loans during the six months ended June 30, 2007 and net charge-offs totaled $89,000 or 0.12% to average loans during the prior year period. The ratio of the allowance for loan losses to total loans was 1.08% at June 30, 2007 and 1.13% at December 31, 2006.

2

 

As we continue to execute our plan for growth and improved profitability, we will continue to prudently monitor credit quality in both the existing portfolio and potential loan opportunities. We believe the allowance for loan losses is adequate to absorb probable incurred credit losses in the loan portfolio at June 30, 2007; however, future additions to the allowance may be necessary based on changes in economic conditions and other factors.
Noninterest expense
Noninterest expense totaled $1.8 million in the 2nd quarter of 2007 and increased $211,000, or 13.0% compared to $1.6 million in the prior year quarter. Noninterest expense totaled $3.7 million for the six months ended June 30, 2007 and increased $294,000, or 8.7% from the prior year period. The increase in noninterest expense in the current year periods was due to costs associated with additional operational resources necessary to further our strategic growth plan. Specifically, during the quarter ended June 30, 2007 additional expense were incurred for the opening of CFBank’s office in Worthington, Ohio replacing the office in Easton, Ohio. Non-interest expenses in the current year period also were incurred for marketing, advertising and the hiring of necessary human resources to support of growth.
Management leveraged growth during calendar year 2006 and was able to grow assets by 36.4% or $63.0 million with no increase in noninterest expense during that year. Noninterest expense to average assets improved to 2.89% in the quarter ended June 30, 2007 from 3.03% in the prior year quarter and to 3.00% for the six months ended June 30, 2007 from 3.38% in the prior year period.
Balance sheet activity
Assets totaled $259.9 million at June 30, 2007 and increased $23.9 million or 10.1% from $236.0 million at December 31, 2006 due to growth in the loan portfolio, which was funded with deposits and Federal Home Loan Bank (FHLB) advances.
Net loans totaled $208.8 million at June 30, 2007 and increased $24.1 million from $184.7 million at December 31, 2006. Commercial, commercial real estate and multi-family loans totaled $150.7 million at June 30, 2007 and increased $24.3 million from $126.4 million at December 31, 2006. Mortgage loans totaled $29.6 million at June 30, 2007 and decreased $564,000 from $30.1 million at December 31, 2006 as most of our mortgage loan production was originated for sale. Consumer loans increased $575,000 and totaled $30.8 million at June 30, 2007 compared to $30.3 million at December 31, 2006.
Deposits totaled $177.1 million at June 30, 2007 and increased $9.5 million, or 5.7% from $167.6 million at December 31, 2006. The increase in deposits was due to an increase of $8.9 million in certificate of deposit accounts, $1.5 million in interest bearing checking accounts and $391,000 in noninterest bearing deposits offset by a decline of $440,000 in money market accounts and $860,000 in traditional savings account balances. The increase in certificate of deposit accounts included $5.7 million in brokered deposits.
FHLB advances totaled $48.0 million at June 30, 2007 and increased $15.5 million or 47.7% compared to $32.5 million at December 31, 2006. A $2.2 million economic development advance from the FHLB was drawn during the March 2007 quarter to fund construction of CFBank’s new Columbus regional office in Worthington, which opened in June 2007. The remaining increase in FHLB advances was used to fund loan growth.
Shareholders’ equity totaled $27.5 million at June 30, 2007 and decreased $1.6 million or 5.5% compared to $29.1 million at December 31, 2006 as a result of an $830,000 treasury stock repurchase and $809,000 in dividends to shareholders offset by net income in the 1st half of 2007.

3

 

About Central Federal Corporation and CFBank
Central Federal Corporation is the holding company for CFBank, a federally chartered savings association formed in Ohio in 1892. CFBank has four full-service banking offices in Fairlawn, Calcutta, Columbus and Wellsville, Ohio. Additional information about mortgage loans, home equity loans, commercial loans and other services is available at www.CFBankOnline.com.
Statements contained in this release that are not historical fact may be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Company cautions that such statements necessarily are based on certain assumptions which are subject to risks and uncertainties, including, but not limited to, changes in general economic and market conditions. Further information on these risk factors is included in the Company’s filings with the Securities and Exchange Commission.

4

 

                                                 
Consolidated Statements of Operations   Three months ended             Six months ended        
($ in thousands, except share data)   June 30,             June 30,        
(unaudited)   2007     2006     % change     2007     2006     % change  
 
                                                
Total interest income
   $ 4,210     $ 3,345       26 %   $ 8,168     $ 6,114       34 %
 
                                                
Total interest expense
     2,365       1,628       45 %     4,521       2,868       58 %
 
                                        
 
                                                
Net interest income
     1,845       1,717       7 %     3,647       3,246       12 %
 
                                                
Provision for loan losses
     107       292       -63 %     142       582       -76 %
 
                                        
 
                                                
Net interest income after provision for loan losses
     1,738       1,425       22 %     3,505       2,664       32 %
 
                                                
Noninterest income
                                                
 
                                                
Service charges on deposit accounts
     68       54       26 %     125       105       19 %
 
                                                
Net gain on sales of loans
     97       95       2 %     172       127       35 %
 
                                                
Net loss on sale of securities
     —       (5 )     n/m       —       (5 )     n/m  
 
                                                
Other
     45       73       -38 %     113       170       -34 %
 
                                        
 
                                                
Noninterest income
     210       217       -3 %     410       397       3 %
 
                                                
Noninterest expense
                                                
 
                                                
Salaries and employee benefits
     951       906       5 %     2,014       1,835       10 %
 
                                                
Occupancy and equipment
     123       115       7 %     242       229       6 %
 
                                                
Data processing
     149       116       28 %     283       234       21 %
 
                                                
Franchise taxes
     69       45       53 %     138       92       50 %
 
                                                
Professional fees
     105       75       40 %     193       241       -20 %
 
                                                
Director fees
     38       39       -3 %     75       81       -7 %
 
                                                
Postage, printing and supplies
     42       45       -7 %     93       95       -2 %
 
                                                
Advertising and promotion
     72       29       148 %     96       49       96 %
 
                                                
Telephone
     24       27       -11 %     53       53       0 %
 
                                                
Loan expenses
     2       16       -88 %     7       61       -89 %
 
                                                
Foreclosed assets, net
     4       (7 )     n/m       10       3       n/m  
 
                                                
Depreciation
     154       119       29 %     297       224       33 %
 
                                                
Other
     98       95       3 %     182       192       -5 %
 
                                        
 
                                                
Noninterest expense
     1,831       1,620       13 %     3,683       3,389       9 %
 
                                                
Income (loss) before income taxes
     117       22       n/m       232       (328 )     n/m  
 
                                                
Income tax expense (benefit)
     33       16       n/m       63       (110 )     n/m  
 
                                        
 
                                                
Net income (loss)
   $ 84     $ 6       n/m     $ 169     $ (218 )     n/m  
 
                                        
 
                                                
 
                                                
Share Data
                                                
 
                                                
Basic earnings (loss) per share
   $ 0.02     $ 0.00             $ 0.04     $ (0.05 )        
 
                                                
Diluted earnings (loss) per share
   $ 0.02     $ 0.00             $ 0.04     $ (0.05 )        
 
                                                
Cash dividends per share
   $ 0.09     $ 0.09             $ 0.18     $ 0.18          
 
                                                
Average shares outstanding — basic
     4,501,889       4,524,051               4,517,158       4,374,493          
 
                                                
Average shares outstanding — diluted
     4,501,889       4,524,051               4,517,179       4,374,493          
n/m — not meaningful

5

 

                                         
Consolidated Statements of Financial Condition   June 30,     March 31,     December 31,     September 30,     June 30,  
($ in thousands)   2007     2007     2006     2006     2006  
(unaudited)                                        
 
                                        
Assets
                                        
 
                                        
Cash and cash equivalents
   $ 3,370     $ 4,278     $ 5,403     $ 8,775     $ 4,734  
 
                                        
Securities available for sale
     30,770       30,519       29,326       29,626       30,102  
 
                                        
Loans held for sale
     795       1,029       2,000       2,560       2,150  
 
                                        
Loans
                                        
 
                                        
Mortgages
     29,569       29,508       30,133       26,826       26,661  
 
                                        
Commercial, commercial real estate and multi-family
     150,709       132,606       126,418       113,654       107,556  
 
                                        
Consumer
     30,828       30,491       30,253       31,405       35,811  
 
                              
 
                                        
Total loans
     211,106       192,605       186,804       171,885       170,028  
 
                                        
Less allowance for loan losses
     (2,272 )     (2,150 )     (2,109 )     (2,032 )     (1,988 )
 
                              
 
                                        
Loans, net
     208,834       190,455       184,695       169,853       168,040  
 
                                        
Federal Home Loan Bank stock
     1,963       1,963       2,813       2,772       2,732  
 
                                        
Loan servicing rights
     183       197       201       211       238  
 
                                        
Foreclosed assets, net
     262       —       —       75       75  
 
                                        
Premises and equipment, net
     5,835       4,535       4,105       3,806       2,875  
 
                                        
Bank owned life insurance
     3,710       3,678       3,646       3,626       3,594  
 
                                        
Deferred tax asset
     2,036       1,958       2,044       2,069       2,232  
 
                                        
Accrued interest receivable and other assets
     2,162       2,120       1,795       1,740       2,248  
 
                              
 
                                        
 
   $ 259,920     $ 240,732     $ 236,028     $ 225,113     $ 219,020  
 
                              
 
                                        
 
                                        
Liabilities and Shareholders’ Equity
                                        
 
                                        
Deposits
                                        
 
                                        
Noninterest bearing
   $ 11,505     $ 9,872     $ 11,114     $ 10,842     $ 10,245  
 
                                        
Interest bearing
     165,612       155,647       156,477       151,713       136,423  
 
                              
 
                                        
Total deposits
     177,117       165,519       167,591       162,555       146,668  
 
                                        
Federal Home Loan Bank advances
     48,045       38,170       32,520       26,270       36,449  
 
                                        
Advances by borrowers for taxes and insurance
     100       79       137       94       112  
 
                                        
Accrued interest payable and other liabilities
     2,007       2,946       1,540       1,717       1,280  
 
                                        
Subordinated debentures
     5,155       5,155       5,155       5,155       5,155  
 
                              
 
                                        
Total liabilities
     232,424       211,869       206,943       195,791       189,664  
 
                                        
Shareholders’ equity
     27,496       28,863       29,085       29,322       29,356  
 
                                  
 
                                        
 
   $ 259,920     $ 240,732     $ 236,028     $ 225,113     $ 219,020  
 
                              

6

 

                                                         
Consolidated Financial Highlights   At or for the three months ended     At or for the six months ended  
($ in thousands except per share data)   June 30,     March 31,     December 31,     September 30,     June 30,     June 30,  
(unaudited)   2007     2007     2006     2006     2006     2007     2006  
 
                                                        
Earnings
                                                        
 
                                                        
Net interest income
   $ 1,845     $ 1,802     $ 1,760     $ 1,759     $ 1,717     $ 3,647     $ 3,246  
 
                                                        
Provision for loan losses
   $ 107     $ 35     $ 118     $ 120     $ 292     $ 142     $ 582  
 
                                                        
Noninterest income
   $ 210     $ 200     $ 212     $ 214     $ 217     $ 410     $ 397  
 
                                                        
Noninterest expense
   $ 1,831     $ 1,852     $ 1,735     $ 1,725     $ 1,620     $ 3,683     $ 3,389  
 
                                                        
Net income (loss)
   $ 84     $ 85     $ 87     $ 94     $ 6     $ 169     $ (218 )
 
                                                        
Basic earnings (loss) per share
   $ 0.02     $ 0.02     $ 0.02     $ 0.02     $ 0.00     $ 0.04     $ (0.05 )
 
                                                        
Diluted earnings (loss) per share
   $ 0.02     $ 0.02     $ 0.02     $ 0.02     $ 0.00     $ 0.04     $ (0.05 )
 
                                                        
Performance Ratios (annualized)
                                                        
 
                                                        
Return on average assets
     0.13 %     0.14 %     0.15 %     0.17 %     0.01 %     0.14 %     (0.22 %)
 
                                                        
Return on average equity
     1.18 %     1.17 %     1.19 %     1.28 %     0.08 %     1.18 %     (1.45 %)
 
                                                        
Average yield on interest-earning assets
     7.11 %     7.13 %     7.07 %     7.18 %     6.82 %     7.12 %     6.64 %
 
                                                        
Average rate paid on interest-bearing liabilities
     4.48 %     4.37 %     4.44 %     4.22 %     3.78 %     4.43 %     3.61 %
 
                                                        
Average interest rate spread
     2.64 %     2.75 %     2.63 %     2.96 %     3.04 %     2.69 %     3.03 %
 
                                                        
Net interest margin, fully taxable equivalent
     3.12 %     3.24 %     3.20 %     3.45 %     3.50 %     3.18 %     3.53 %
 
                                                        
Efficiency ratio
     89.10 %     92.51 %     87.98 %     87.43 %     83.55 %     90.78 %     92.90 %
 
                                                        
Noninterest expense to average assets
     2.89 %     3.11 %     2.99 %     3.11 %     3.03 %     3.00 %     3.38 %
                                                         
Consolidated Financial Highlights (continued)   At or for the three months ended     At or for the six months ended  
($ in thousands except per share data)   June 30,     March 31,     December 31,     September 30,     June 30,     June 30,  
(unaudited)   2007     2007     2006     2006     2006     2007     2006  
 
                                                        
Capital
                                                        
 
                                                        
Equity to total assets at end of period
     10.58 %     11.99 %     12.32 %     13.03 %     13.40 %     10.58 %     13.40 %
 
                                                        
Tangible equity to tangible assets
     10.58 %     11.99 %     12.32 %     13.03 %     13.40 %     10.58 %     13.40 %
 
                                                        
Book value per share
   $ 6.20     $ 6.33     $ 6.40     $ 6.45     $ 6.46     $ 6.20     $ 6.46  
 
                                                        
Tangible book value per share
   $ 6.20     $ 6.33     $ 6.40     $ 6.45     $ 6.46     $ 6.20     $ 6.46  
 
                                                        
Period-end market value per share
   $ 7.00     $ 6.90     $ 7.36     $ 8.09     $ 8.05     $ 7.00     $ 8.05  
 
                                                        
Dividends declared per common share
   $ 0.09     $ 0.09     $ 0.09     $ 0.09     $ 0.09     $ 0.18     $ 0.18  
 
                                                        
Period-end common shares outstanding
     4,434,787       4,559,787       4,543,662       4,543,662       4,543,662       4,434,787       4,543,662  
 
                                                        
Average basic shares outstanding
     4,501,889       4,532,596       4,529,766       4,527,194       4,524,051       4,517,158       4,374,493  
 
                                                        
Average diluted shares outstanding
     4,501,889       4,532,636       4,529,766       4,527,194       4,524,051       4,517,179       4,374,493  
 
                                                        
Asset Quality
                                                        
 
                                                        
Nonperforming loans
   $ 168     $ 296     $ 297     $ 332     $ 335     $ 168     $ 335  
 
                                                        
Nonperforming loans to total loans
     0.08 %     0.15 %     0.16 %     0.19 %     0.20 %     0.08 %     0.20 %
 
                                                        
Nonperforming assets to total assets
     0.17 %     0.12 %     0.13 %     0.18 %     0.19 %     0.17 %     0.19 %
 
                                                        
Allowance for loan losses to total loans
     1.08 %     1.12 %     1.13 %     1.18 %     1.17 %     1.08 %     1.17 %
 
                                                        
Allowance for loan losses to nonperforming loans
     1352.38 %     726.35 %     710.10 %     612.05 %     593.43 %     1352.38 %     593.43 %
 
                                                        
Net charge-offs (recoveries)
   $ (16 )   $ (5 )   $ 41     $ 76     $ 34     $ (21 )   $ 89  
 
                                                        
Annualized net charge-offs (recoveries) to
                                                        
 
                                                        
average loans
     -0.03 %     -0.01 %     0.09 %     0.18 %     0.08 %     -0.02 %     0.12 %
 
                                                        
Average Balances
                                                        
 
                                                        
Loans
   $ 201,737     $ 187,684     $ 180,417     $ 169,752     $ 160,840     $ 194,710     $ 147,826  
 
                                                        
Assets
   $ 253,579     $ 237,906     $ 232,097     $ 221,946     $ 214,021     $ 245,742     $ 200,502  
 
                                                        
Shareholders’ equity
   $ 28,378     $ 29,013     $ 29,275     $ 29,456     $ 29,637     $ 28,695     $ 30,039  

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