Exhibit 99

 

 

 

 

 

 

 

CENTRAL FEDERAL CORPORATION ANNOUNCES 1^st QUARTER 2013 RESULTS

 

Highlights

 

 

 

 

 

Fairlawn, Ohio – May 15, 2013 –  Central Federal Corporation (Nasdaq: CFBK) (“The Company”)

announced a net loss attributable to common shareholders of $0.8 million, or $(0.05) per diluted common share, for the quarter ended March 31, 2013, compared to a net loss attributable to common shareholders of $0.8 million, or $(1.03) per diluted common share for the quarter ended March 31, 2012.   For the three months ended March 31, 2013 compared to March 31, 2012, the net loss remained relatively consistent as the $0.1 million increase in provision expense and $0.1 million decrease in net interest income for the quarter ended March 31, 2013, was offset by a $0.2 decrease in noninterest expense.

 

Timothy T. O’Dell, CEO, commented, “We are pleased to see that our workout efforts have resulted in a 12.4% decrease in nonperforming loans since December 31, 2012, while our sales and relationship building efforts have resulted in $10.8 million in new commercial loans.  In addition, we are starting to get traction in driving our net interest income, which is up 15.7% over the prior quarter.  We like that trajectory and the momentum it provides.”

 

Overview of Results

 

Net interest income.  Net interest income totaled $1.2 million for the quarter ended March 31, 2013 and decreased $81,000, or 6.4%, compared to $1.3 million for the quarter ended March 31, 2012. The decrease in net interest income was due primarily to rates repricing on the asset side, as there was a larger decrease in the yield on interest-earning assets than in the cost of interest-bearing liabilities. The average yield on interest-earning assets decreased 25 bps and the average cost of interest-bearing liabilities decreased 19 bps during the quarter ended March 31, 2013, compared to the quarter ended March 31, 2012.  The average yield on interest-earning assets decreased primarily in the loan portfolio as maturities and paydowns of higher priced loans were replaced with new loans at today’s lower market prices.  The mix of earning assets has improved, however, as lower yielding liquid assets are replaced

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with higher yielding loans. The average cost of interest-bearing liabilities decreased primarily due to reduced deposit pricing in the current year quarter, as well as the favorable re-pricing that occurred in the CD portfolio as CD’s re-priced at today’s lower rates.

 

Compared to the three months ended December 31, 2012, net interest income increased $161,000, or 15.7%, as a result of increased loan activity, and a reduction in our overall cost of funds.

 

Interest income totaled $1.7 million and decreased $305,000, or 15.1%, for the quarter ended March 31, 2013, compared to $2.0 million for the quarter ended March 31, 2012. The decrease in interest income was primarily due to a decrease of 109 basis points in loan yields, as loans continue to re-price at today’s lower interest rates, partially offset by a favorable volume variance due to the increase in average loan balances from $144.9 million at March 31, 2012, to $154.7 million at March 31, 2013.

 

Interest expense decreased $0.2 million, or 29.9%, to $0.5 million for the first quarter of 2013, compared to $0.7 in the first quarter of 2012.    The decrease in interest expense resulted from lower deposit costs due to a 19 basis points decrease in average deposit rates, as a result of deposit pricing and CD’s re-pricing in today’s lower rate environment, coupled with a decrease in the deposit base, primarily broker CD’s.

 

Robert E. Hoeweler, Chairman of the Board, added  “We believe that we have been able to effectively leverage our capital, in a relatively short period of time, to support our initiatives in terms of growing the balance sheet with quality earning assets and driving improved earnings though net interest income.   We are concentrating on improving our efficiency ratio as we review all aspects of the Bank’s operations, and continue to seek additional revenue streams within the financial services market place.”

 

Provision for loan losses.  The provision for loan losses totaled $326,000 for the quarter ended March 31, 2013 and increased $126,000, or 63.0%, compared to $200,000 for the quarter ended March 31, 2012.  The increase in the provision for loan losses for the quarter ended March 31, 2013 was primarily due to growth in the loan portfolio and one commercial loan relationship where the risk rating was downgraded. 

 

Net charge-offs decreased $788,000 due to recoveries of $119,000, or (-.30)% of average loans on an annualized basis for the quarter ended March 31, 2013, compared to net charge-offs totaling $669,000, or 1.79% of average loans on an annualized basis for the quarter ended March 31, 2012. The decrease in net charge-offs during the three months ended March 31, 2013 was primarily related to multi-family residential and commercial real estate loans, resulting largely from ongoing loan workout efforts.

 

 

Noninterest income.  Noninterest income for the quarter ended March 31, 2013 totaled $133,000 and decreased $25,000, or 15.8%, compared to $158,000 for the quarter ended March 31, 2012. The decrease was primarily due to net gains on sales of loans during the quarter ended March 31, 2013, which was partially offset by an increase in service charges on deposits.  There were no sales of securities in the current year quarter.

 

 

Noninterest expense. Noninterest expense decreased $161,000 or 8.2%, and totaled $1.8 million for the first quarter of 2013, compared to $2.0 million for the first quarter of 2012. The decrease in noninterest expense during the three months ended March 31, 2013 was primarily due to a decrease in salaries and employee benefits, FDIC premiums and director fees.

 

Salaries and employee benefits expense decreased $99,000 or 10.0%, and totaled $892,000 for the three months ended March 31, 2013, compared to $991,000 for the three months ended March 31, 2012. The decrease was primarily a result of a restructuring that occurred after the August 2012 capital raise.

 

Director fees decreased $40,000, or 88.9%, and totaled $5,000 for the three months ended March 31, 2013, compared to $45,000 for the three months ended March 31, 2012.  The decrease was due to a

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decrease in fees paid to the former Chairman of the Board upon completion of the stock offering and a suspension of director fees beginning in September 2012 in consideration of the financial performance of the Company.  Director fees are expected to resume after the Company achieves profitability.

 

FDIC premiums decreased $45,000, or 28.8%, and totaled $111,000 for the three months ended March 31, 2013, compared to $156,000 for the three months ended March 31, 2012.  The decrease was primarily due to a lower assessment base and an improvement in the rate in the current year quarter.

 

Thad Perry, President, commented, “We believe the leadership team has done an effective job in “right sizing” the organization and instilling an expense conscious culture to ensure that we are making prudent investments that will continue to help improve profitability and enable the revenue generating capabilities of the organization”. 

 

 

 

Balance Sheet Activity

 

General. Assets totaled $216.4 million at March 31, 2013 and increased $1.4 million, or 0.7%, from $215.0 million at December 31, 2012.  The increase was primarily due to a $13.8 million increase in net loan balances, partially offset by a $10.7 million decrease in cash and cash equivalents used to fund higher earning asset growth.

 

Cash and cash equivalents.  Cash and cash equivalents totaled $14.4 million at March 31, 2013 and decreased $10.7 million, or 42.7%, from $25.1 million at December 31, 2012. The decrease in cash and cash equivalents was primarily due to the funding of higher yielding loans.  Management anticipated that the level of on-balance-sheet liquidity would decrease as new loan originations are made pursuant to the business plan implemented since completion of the stock offering in August 2012.

 

Loans.  Net loans totaled $166.8 million at March 31, 2013 and increased 13.8 million, or 9.0%, from $153.0 million at December 31, 2012. The increase was primarily due to higher commercial, multi-family residential, commercial real estate and single-family residential loan balances. A renewed lending focus after the successful capital raise was a key driver in growing earning assets.

 

Allowance for loan losses (ALLL). The ALLL totaled $5.7 million at March 31, 2013 and increased $445,000 million, or 8.5%, from $5.2 million at December 31, 2012.  The increase in the ALLL was due to a 9.0% increase in overall loan balances, partially offset by a 12.4% decrease in nonperforming assets, a 29.5% decrease in past due loans, and a 2.97% decrease in criticized and classified loans during the three months ended March, 31, 2013. The ratio of the ALLL to total loans was 3.29% at March 31, 2013, compared to 3.31% at December 31, 2012.

 

Individually impaired loans totaled $9.0 million at March 31, 2013 and decreased $883,000, or 9.0%, from $9.9 million at December 31, 2012.  The decrease was due to $883,000 in principal payoffs of two impaired loans during the three months ended March 31, 2013. The amount of the ALLL specifically allocated to individually impaired loans totaled $842,000 at March 31, 2013 and $830,000 at December 31, 2012. 

 

Nonperforming loans, which are nonaccrual loans and loans at least 90 days past due but still accruing interest, decreased $791,000, or 12.4%, and totaled $5.6 million at March 31, 2013, compared to $6.4 million at December 31, 2012.  The decrease in nonperforming loans was due to loan payments and proceeds from the sale of underlying collateral of various loans.  The $707,000 decrease in nonperforming commercial real estate loans was primarily due to payoff of three commercial real estate loans. The ratio of nonperforming loans to total loans decreased to 3.2% at March 31, 2013, compared to 4.0% at December 31, 2012, primarily due to an increase in overall loan portfolio balances.  

 

The level of CFBank’s criticized and classified loans continues to be negatively impacted by the duration and lingering nature of the current recessionary economic environment and its continued detrimental

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effects on some of our borrowers, including deterioration in client business performance, declines in borrowers’ cash flows and lower collateral values. The levels of criticized and classified loans decreased during the three months ended March 31, 2013.  Loans designated as special mention decreased $948,000 million, or 7.3%, and totaled $12.1 million at March 31, 2013, compared to $13.1 million at December 31, 2012.  Loans classified as substandard increased $96,000, or .61%, and totaled $15.8 million at March 31, 2013, compared to $15.7 million at December 31, 2012.  No loans were classified as doubtful at March 31, 2013 or December 31, 2012. The decrease in criticized and classified loans was due to principal repayments and payoffs. 

 

Total past due loans decreased $938,000, or 29.5%, and totaled $2.2 million at March 31, 2013, compared to $3.2 million at December 31, 2012.  Past due loans totaled 1.3% of the loan portfolio at March 31, 2013, compared to 2.0% at December 31, 2012.  The decrease in the balance of past due loans was primarily due to lower delinquencies in the commercial real estate and residential and single-family loan segments,  partially offset by an increase in delinquencies in the consumer loan segment.  The decrease in the delinquency rate is primarily related to lower delinquencies offset by an increase in overall loan balances

 

Deposits. Deposits totaled $168.7 million at March 31, 2013 and decreased $4.8 million, or 2.8%, from $173.5 million at December 31, 2012.  The decrease was primarily due to decreases in certificate of deposit and checking accounts of $5.8 million and $1.7 million, respectively, offset by increases in money market and savings accounts totaling $2.7 million. The decrease in CD’s was due primarily to a decrease in brokered deposits.

 

FHLB advances. Long-term FHLB advances totaled $10.0 million at March 31, 2013, and December 31, 2012. Short-term FHLB advances totaled $5,955 and $0 at March 31, 2013 and December 31, 2012, respectively.  The short-term advance at March 31, 2013, was paid back on April 4, 2013

 

 

Stockholders’ equity.    Stockholders’ equity totaled $22.9 million at March 31, 2013 and decreased $0.8 million, or 3.3%, from $23.7 million at December 31, 2012.  The decrease was due to a net loss of $0.8 million during the quarter ended March 31, 2013.

 

 

 

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, Wellsville and Worthington, Ohio.  Additional information about CFBank’s banking services and the Company is available at www.CFBankOnline.com.

Forward-Looking Information

 

Statements in this earnings release and in other communications by the Company that are not statements of historical fact are forward-looking statements 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 the Holding Company 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.  The following factors could cause such differences:

 

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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 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 report speak only as of the date of the report.  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. 

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