Exhibit 99
PRESS RELEASE
FOR IMMEDIATE RELEASE
DATE: February 11, 2005
COMPANY: Central Federal Corporation
2923 Smith Road
Fairlawn, Ohio 44333
CONTACT: Mark S. Allio
Vice Chairman, President and CEO
PHONE: 330.666.7979 FAX: 330.666.7959
CENTRAL FEDERAL CORPORATION ANNOUNCES 2004 PERFORMANCE AND UPDATE ON REVERSE
STOCK SPLIT RATIO
Fairlawn, Ohio - February 11, 2005 - Central Federal Corporation (Nasdaq: GCFC)
announced a net loss for the fourth quarter of 2004 of ($445,000), or ($.21) per
diluted share and a net loss for the year ended December 31, 2004 of ($1.7
million), or ($.82) per diluted share. These amounts represented a 65%
improvement from a net loss of ($1.3 million), or ($.64) per diluted share for
the fourth quarter of 2003 and a 30% improvement from a net loss of ($2.4
million), or ($1.31) per diluted share for the year ended December 31, 2003. The
loss for the quarter ended December 31, 2004 included $106,500 in non-deductible
professional fees related to the proposed reverse stock split. The loss for the
year ended December 31, 2004 was due to increased noninterest expenses
associated with staffing, improved technology and expansion to new locations in
Fairlawn and Columbus, and a higher provision for loan losses related to the
Company's significant commercial loan growth during the year as it continued to
successfully implement its plan to expand into business financial services and
position itself for growth in the Fairlawn and Columbus, Ohio markets.
Total assets increased $64.0 million, or 60% during 2004 and totaled $171.0
million at December 31, 2004 compared to $107.0 million at December 31, 2003
primarily due to growth in the commercial loan portfolio and short term cash
balances.
Loans increased $50.1 million, or 86% during 2004 and totaled $108.1 million at
December 31, 2004 compared to $58.0 million at December 31, 2003. Commercial
loan balances increased $42.3 million and totaled $51.5 million at December 31,
2004 compared to $9.2 million at December 31, 2003 as the Company continued to
focus on commercial lending. Mortgage loan balances increased $7.1 million
during the year and totaled $43.8 million at December 31, 2004 compared to $36.7
million at December 31, 2003.
Deposits increased $28.3 million, or 39% during 2004 and totaled $101.6 million
at December 31, 2004 compared to $73.4 million at December 31, 2003. The
increase was due to growth of $14.6 million in money market accounts, $9.6
million in certificate of deposit accounts, including $6.1 million in brokered
deposits, and $4.4 million in checking accounts, primarily commercial checking
accounts offset by a $383,000 decline in savings accounts. The growth in
deposits is primarily the result of the Company's focus on commercial customer
relationships.
Federal Home Loan Bank advances increased $33.7 million during 2004 and totaled
$41.2 million at December 31, 2004 compared to $7.5 million at December 31, 2003
as advances were used to fund commercial loan growth and overnight cash
investments. Fixed rate advances for terms of 1 through 4.5 years totaling $12.3
million were drawn primarily during the first six months of 2004 to fund
commercial loans at low borrowing interest rates and protect the Company's
interest rate risk position as market interest rates have increased.
Total shareholders' equity declined 2% during 2004 and totaled $19.5 million at
December 31, 2004 compared to $19.9 million at December 31, 2003 primarily due
to the net loss and dividends during the year offset by the issuance of
additional capital in the acquisition of Reserve Mortgage Services, Inc., a
wholly owned subsidiary of CFBank, in October 2004. Capital levels remained
strong as the Company continued to leverage its capital through growth. The
Company's capital ratio totaled 11.4% at December 31, 2004 compared to 18.6% at
December 31, 2003.
Net interest income totaled $1.1 million and $4.0 million for the quarter and
year ended December 31, 2004, compared to ($625,000) and $1.9 million for the
respective prior year periods. The prior year periods included a $1.3 million
pre-tax prepayment penalty incurred in the repayment of long-term, fixed-rate
Federal Home Loan Bank advances which eliminated an inappropriate and costly
source of funding arranged in 1998 and 1999 to finance mortgage loans which had
prepaid during the high refinancing activity in 2002 and 2003. Not including
this prior year charge, net interest income increased 77% in the fourth quarter
of 2004 and 25% for the year ended December 31, 2004 compared to the prior year
periods. The improvement in net interest income was due to the growth in assets,
primarily commercial loans in accordance with the company's growth strategy and
a reduction in the cost of borrowings from the prior year period.
The provision for loan losses totaled $280,000 and $646,000 for the quarter and
year ended December 31, 2004, respectively compared to $19,000 and $102,000 in
the prior year periods. The increase in the provision and resultant allowance
for loan losses reflects the $42.3 million growth in the commercial loan
portfolio during 2004. The ratio of the allowance for loan losses to total loans
was .90% at December 31, 2004 compared to .71% at December 31, 2003.
Noninterest income totaled $255,000 and $537,000 for the quarter and year ended
December 31, 2004, respectively compared to $140,000 and $756,000 in the prior
year periods. The decline during the current year was primarily due to lower
mortgage originations and sales as consumer refinancing activity slowed with the
moderate rise in interest rates, resulting in lower gains. Gains on loan sales
in the fourth quarter of 2004 improved as a result of loan production from
Reserve Mortgage Services, Inc. Losses on security sales in the current year,
primarily the sale of fixed rate debt securities, contributed to the decline in
noninterest income for the year.
Noninterest expense totaled $1.7 million and $6.4 million for the quarter and
year ended December 31, 2004, respectively compared to $1.4 million and $5.9
million in the prior year periods. Expense increased for the year ended December
31, 2004 and included operating costs related to staffing, improved technology
and expansion to new locations in Fairlawn and Columbus including data
processing, occupancy, depreciation and other expenses. Noninterest expense in
the fourth quarter of 2004 included $106,500 in legal and professional fees
related to the proposed reverse stock split. Noninterest expense during the year
ended December 31, 2004 also included $412,000 in expenses related to employee
severance, post-retirement life insurance benefits associated with bank owned
life insurance, one time charges recognized in connection with the servicing of
loans and one time internal operating account write-offs. Expense for the year
ended December 31, 2003 included $1.4 million in salaries and benefits expense
related to restructuring of employee benefit plans and payments on agreements
with former executives.
The Company announced in October 2004 that it would ask stockholders to approve
a reverse stock split in an effort to ease the economic and management burden of
complying with the Sarbanes-Oxley Act of 2002 and federal securities laws. The
Board of Directors subsequently established a reverse stock split ratio of
1-to-500 shares and set $14.50 per share as a fair price to compensate
stockholders who hold fewer than 500 shares on the effective date and who would
no longer remain stockholders of the Company after the effective date. As
discussed in the Company's February 2, 2005 press release, significant numbers
of individuals have purchased share lots in quantities of 499 or fewer shares
during the past few months. The dramatic increase in shares held by stockholders
who own fewer than 500 shares has increased substantially the cost of the
Company's effecting its going private transaction in the event the transaction
is approved by stockholders at the special meeting to be held on March 14, 2005.
Accordingly, in order to reduce the aggregate cost of repurchasing shares, the
Board of Directors has revised the ratio of the reverse stock split to 1-to-325.
Moreover, the Board also has reserved the right to abandon the transaction
following shareholder approval in the interest of the Company and its
shareholders, and it is not likely the Board will authorize the Company to move
forward with the
proposed reverse stock split, if the cost of the transaction is expected to
exceed $2 million.
ABOUT CENTRAL FEDERAL CORPORATION AND CFBANK
Central Federal Corporation (Nasdaq: GCFC), the holding company for CFBank, was
organized as a Delaware corporation in September 1998 in connection with the
bank's conversion from a mutual to stock organization, which was completed on
December 30, 1998. CFBank is a community-oriented financial services company
founded in 1892. Its home office is in Fairlawn, Ohio. It operates two
additional offices in Columbiana County, Ohio, and one in Columbus, Ohio.
Reserve Mortgage Services, Inc., an Ohio corporation, became a wholly owned
subsidiary of CFBank in October 2004.
This release contains certain forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended. We intend these
forward-looking statements to be subject to the safe harbor created by that
provision. These forward-looking statements involve risks and uncertainties and
include, but are not limited to, statements regarding future events and our
plans, goals and objectives. Our actual results may differ materially from these
statements. Although we believe the assumptions underlying the forward-looking
statements are reasonable, any of the assumptions could prove to be inaccurate.
Therefore, we can give no assurances that the results contemplated in these
forward-looking statements will be realized. The inclusion of this
forward-looking information should not be regarded as a representation by our
Company or by any person that the future events, plans or expectations
contemplated by our Company will be achieved. Furthermore, past performance in
operations and share price is not necessarily predictive of future performance.
Selected Financial Condition Data At December 31,
($ in thousands) 2004 2003 % change
-------------- -------------- ----------
Total assets $ 171,005 $ 107,011 60%
Cash and cash equivalents 32,675 8,936 266%
Securities available for sale 13,508 27,126 -50%
Loans, net 108,149 58,024 86%
Allowance for loan losses 978 415 135%
Nonperforming loans 286 741 -61%
Foreclosed assets, net 132 193 -32%
Goodwill 1,749 - n/m
Other intangible assets 299 - n/m
Deposits 101,624 73,358 39%
Federal Home Loan Bank advances 41,170 7,500 449%
Subordinated debentures 5,155 5,155 0%
Total shareholders' equity 19,507 19,856 -2%
Summary of Earnings Three months ended Year ended
($ in thousands, except per share data) December 31, December 31,
------------------------- --------------------------
2004 2003 % change 2004 2003 % change
---------- ----------- -------- ----------- ----------- --------
Total interest income $ 1,884 $ 1,167 61% $ 6,144 $ 5,435 13%
Total interest expense 744 1,792 -58% 2,149 3,521 -39%
---------- ----------- ----------- -----------
Net interest income 282% 109%
1,140 (625) 3,995 1,914
Provision for loan losses 280 19 n/m 646 102 n/m
---------- ----------- ----------- -----------
Net interest income after provision for
loan losses 860 (644) 234% 3,349 1,812 85%
Noninterest income
Net gain (loss) on sales of securities - 41 n/m (55) 42 n/m
Net gains on sales of loans 159 75 112% 222 429 -48%
Other 96 24 300% 370 285 30%
---------- ----------- ----------- -----------
Noninterest income 255 140 82% 537 756 -29%
Noninterest expense 1,749 1,356 29% 6,420 5,930 8%
---------- ----------- ----------- -----------
Loss before income taxes -66% -25%
(634) (1,860) (2,534) (3,362)
Income tax benefit (189) (591) -68% (872) (988) -12%
---------- ----------- ----------- -----------
Net loss $ (445) $ (1,269) -65% $ (1,662) $ (2,374) -30%
========== =========== =========== ===========
Basic loss per share $ (0.21) $ (0.64) -67% ($0.82) $ (1.31) -37%
Diluted loss per share $ (0.21) $ (0.64) -67% ($0.82) $ (1.31) -37%
Selected Financial Ratios and Other Data At or for the three months ended At or for the year ended
December 31, December 31,
------------------------------ ------------------------------
2004 2003 2004 2003
------------- ------------- ------------- -------------
Performance Ratios:
Return on average assets (1.07%) (4.77%) (1.23%) (2.19%)
Return on average equity (8.94%) (25.05%) (8.60%) (12.34%)
Average yield on interest-earnings assets 4.71% 4.76% 5.03% 5.62%
Average rate paid on interest-bearing
liabilities 2.12% 2.49% 1.93% 2.63%
Average interest rate spread 2.59% 2.27% 3.10% 2.99%
Net interest margin, fully taxable equivalent 3.02% 2.63% 3.27% 3.28%
Interest-earning assets to interest-bearing
liabilities 107.52% 117.86% 109.82% 113.38%
Efficiency ratio 125.38% (257.79%) 139.96% 225.65%
Non-interest expense to average assets 4.19% 5.10% 4.74% 5.47%
Dividend payout ratio n/m n/m n/m n/m
Capital Ratios:
Equity to total assets at end of period 11.41% 18.56% 11.41% 18.56%
Average equity to average assets 11.92% 19.05% 14.26% 17.76%
Asset Quality Ratios:
Nonperforming loans to total loans 0.26% 1.28% 0.26% 1.28%
Nonperforming assets to total assets 0.24% 0.87% 0.24% 0.87%
Allowance for loan losses to total loans 0.90% 0.71% 0.90% 0.71%
Allowance for loan losses to nonperforming
loans 341.62% 56.01% 341.62% 56.01%
Net charge-offs to average loans 0.18% 0.19% 0.10% 0.08%
Per Share Data:
Dividends declared $ 0.09 $ 0.09 $ 0.36 $ 0.36
Tangible book value per share at end of period 7.99 9.81 7.99 9.81
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n/m - not meaningful