Exhibit 99
PRESS RELEASE
FOR IMMEDIATE RELEASE
DATE: July 22, 2005
COMPANY: Central Federal Corporation
2923 Smith Road
Fairlawn, Ohio 44333
CONTACT: Mark S. Allio
Vice Chairman, President and CEO
PHONE: 330.576.1334 FAX: 330.666.7959
CENTRAL FEDERAL CORPORATION ANNOUNCES 2ND QUARTER PERFORMANCE
Fairlawn, Ohio - July 22, 2005 - Central Federal Corporation (Nasdaq: GCFC)
announced a net loss for the second quarter of 2005 of ($270,000) or ($.12) per
diluted share, compared to a net loss for the second quarter of 2004 of
($284,000) or ($.14) per diluted share. The net loss for the six month period
ended June 30, 2005 totaled ($559,000) or ($.25) per diluted share compared to a
net loss of ($552,000) or ($.28) per diluted share for the prior year period
ended June 30, 2004.
The company continued to execute its growth strategy. Commercial, commercial
real estate and multi-family loans increased $17.3 million or 32.8% and totaled
$70.0 million at June 30, 2005. Home equity lines of credit increased $5.5
million, or 93.2% and totaled $11.4 million at June 30, 2005. Deposits increased
$16.8 million or 16.5% during the first six months of 2005 and totaled $118.4
million at June 30, 2005.
This growth positively impacted the company's net interest income which
increased 33.4% and 33.8% and totaled $1.2 million and $2.4 million for the
three and six months ended June 30, 2005 compared to $931,000 and $1.8 million
for the prior year periods.
During the quarter ended June 30, 2005, the company securitized single-family
residential mortgage loans with an outstanding principal balance of $18.6
million, formerly held in its portfolio, with Freddie Mac. The company continues
to hold the securities and service the loans. The securitization increased
liquidity as the securities retained are readily marketable, eliminated credit
risk on the loans and reduced the bank's risk-based capital requirement. As a
result of the securitization, net single-family residential mortgage loan
balances declined $18.5 million, the loan servicing asset increased $120,000 and
securities available for sale increased $18.9 million. The unrealized gain on
the securities at June 30, 2005 was $530,000 which increased the company's
capital by $350,000.
Total assets at December 31, 2004 included $30.0 million in overnight
investments at a positive spread to the Federal Home Loan Bank advances used to
fund the investment. As short term interest rates increased and the spread
between the investment and borrowing declined, the cash was withdrawn to repay
the advances during the first quarter of 2005. The $5.9 million decline in total
assets to $165.1 million at June 30, 2005 from $171.0 million at December 31,
2004 was the result of the $30.0 million reduction in cash and borrowings
associated with the arbitrage transaction offset by $17.3 million growth in
commercial loans and $5.5 million growth in home equity lines of credit. Loan
growth was funded by deposits, which increased $16.8 million, and FHLB advances,
which increased $9.9 million after the repayment associated with the arbitrage
transaction.
Loans totaled $108.6 million at June 30, 2005 compared to $108.1 million at
December 31, 2004. Mortgage loan balances declined $19.6 million and totaled
$21.9 million at June 30, 2005 due to the securitization discussed above. Not
considering the securitization transaction, overall loan balances increased
17.5%. Commercial loan balances increased $17.3 million and totaled $70.0
million at June 30, 2005 compared to $52.7 million at December 31, 2004 as the
company continued to focus on commercial lending. Total consumer loan balances
increased $4.2 million due to the growth in home equity lines of credit
mentioned above.
Deposits increased $16.8 million or 16.5% during the first six months of 2005
and totaled $118.4 million at June 30, 2005 compared to $101.6 million at
December 31, 2004. The increase was due to growth of $13.9 million in
certificate of deposit accounts and $4.3 million in demand deposit accounts,
largely commercial checking accounts. Traditional savings account balances
declined $1.4 million.
The company's capital position totaled 11.8% at June 30, 2005.
The loss for the quarter and year-to-date periods ended June 30, 2005 was due to
provisions for loan losses, expenses associated with management, technology and
physical resources necessary to support our strategic growth plan and $127,000
and $177,000 pretax operating losses of Reserve Mortgage Services (Reserve), the
company's mortgage services division for the three and six months ended June 30,
2005.
The provision for loan losses increased $100,000 and $282,000 and totaled
$134,000 and $352,000 for the three and six months ended June 30, 2005 compared
to $34,000 and $70,000 for the prior year periods. The provision reflected
growth in commercial, commercial real estate and multi-family loans, increased
nonperforming mortgage loans and the need to maintain adequate reserves for
losses as the portfolio grows. There were no nonperforming commercial loans at
June 30, 2005. The ratio of the allowance for loan losses to total loans
increased to 1.13% at June 30, 2005 compared to .90% at December 31, 2004 and
..59% at June 30, 2004.
Noninterest income increased $103,000 and $310,000 and totaled $237,000 and
$536,000 for the three and six months ended June 30, 2005 compared to $134,000
and $226,000 for the prior year periods. Mortgage loan originations and sales
increased and gains on sales totaled $96,000 and $307,000 during the current
year periods compared to $27,000 and $44,000 during the prior year periods due
to loan production by Reserve.
Noninterest expense increased $255,000 and $602,000 and totaled $1.7 million and
$3.4 million for the three and six months ended June 30, 2005 compared to $1.5
million and $2.8 million for the prior year periods. Operating costs related to
Reserve, which was acquired in October 2004, totaled $239,000 and $497,000,
including $31,000 and $62,000 amortization of intangible assets during the
current year periods. The current year six month period also included $37,500
costs related to the reverse stock split transaction which was abandoned by the
Board in March 2005. The company moved to its new headquarters and CFBank
location in Fairlawn in April 2004, and occupancy expenses related to the
facility increased approximately $56,000 during the six months ended June 30,
2005 compared to the prior year period.
ABOUT CENTRAL FEDERAL CORPORATION AND CFBANK
Central Federal Corporation (Nasdaq: GCFC), the holding company for CFBank, was
organized as a Delaware corporation in September 1998 in connection with the
bank's conversion from a mutual to stock organization, which was completed on
December 30, 1998. CFBank is a
community-oriented financial services company founded in 1892. Its home
office is in Fairlawn, Ohio. It operates two additional offices in Columbiana
County, Ohio, and one in Columbus, Ohio. Reserve Mortgage Services was acquired
in October 2004 and is the mortgage services division of CFBank.
This release contains certain forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended. We intend these
forward-looking statements to be subject to the safe harbor created by that
provision. These forward-looking statements involve risks and uncertainties and
include, but are not limited to, statements regarding future events and our
plans, goals and objectives. Our actual results may differ materially from these
statements. Although we believe the assumptions underlying the forward-looking
statements are reasonable, any of the assumptions could prove to be inaccurate.
Therefore, we can give no assurances that the results contemplated in these
forward-looking statements will be realized. The inclusion of this
forward-looking information should not be regarded as a representation by our
company or by any person that the future events, plans or expectations
contemplated by our company will be achieved. Furthermore, past performance in
operations and share price is not necessarily predictive of future performance.
Selected Financial Condition Data June 30, December 31,
($ in thousands) 2005 2004 % change
----------- ------------ --------
(unaudited)
Total assets $165,092 $171,005 -3%
Cash and cash equivalents 1,429 32,675 -96%
Securities available for sale* 35,271 13,508 161%
Loans, net* 108,600 108,149 0%
Allowance for loan losses 1,242 978 27%
Nonperforming loans 603 286 111%
Foreclosed assets, net 112 132 -15%
Goodwill 1,749 1,749 0%
Other intangible assets 238 299 -20%
Deposits 118,373 101,624 16%
Federal Home Loan Bank advances 21,045 41,170 -49%
Subordinated debentures 5,155 5,155 0%
Total shareholders' equity 19,428 19,507 0%
* note: single-family residential mortgage loans with an outstanding
principal balance of $18.6 million were securitized with Freddie Mac in
June 2005 and transferred from loans to securities available for sale.
Summary of Operations Three months ended Six months ended
($ in thousands, except per share data) June 30, June 30,
---------------------------------- ------------------------------------
(unaudited) 2005 2004 % change 2005 2004 % change
------- ------- -------- ------- ------- ---------
Total interest income $ 2,098 $ 1,372 53% $ 4,036 $ 2,643 53%
Total interest expense 856 441 94% 1,625 841 93%
------- ------- ------- -------
Net interest income 1,242 931 33% 2,411 1,802 34%
Provision for loan losses 134 34 294% 352 70 403%
------- ------- ------- -------
Net interest income after provision
for loan losses 1,108 897 24% 2,059 1,732 19%
Noninterest income
Net gains on sales of loans 96 27 256% 307 44 598%
Other 117 107 9% 205 182 13%
------- ------- ------- -------
Noninterest income 213 134 59% 512 226 127%
Noninterest expense 1,738 1,483 17% 3,440 2,838 21%
------- ------- ------- -------
Loss before income taxes (417) (452) -8% (869) (880) -1%
Income tax benefit (147) (168) -13% (310) (328) -5%
------- ------- ------- -------
Net loss $ (270) $ (284) -5% $ (559) $ (552) 1%
======= ======= ======= =======
Basic loss per share $ (0.12) $ (0.14) -12% $ (0.25) $ (0.28) -8%
Diluted loss per share (0.12) (0.14) -12% (0.25) (0.28) -8%
Selected Financial Ratios and Other Data At or for the three At or for the six
(unaudited) months ended months ended
June 30, June 30,
----------------------- -----------------------
2005 2004 2005 2004
-------- -------- ------- -------- --------
Performance Ratios:
Return on average assets (0.67%) (0.91%) (0.69%) (0.94%)
Return on average equity (5.57%) (6.00%) (5.72%) (5.70%)
Average yield on interest-earnings assets 5.82% 4.90% 5.60% 5.05%
Average rate paid on interest-bearing liabilities 2.57% 1.74% 2.45% 1.79%
Average interest rate spread 3.25% 3.16% 3.15% 3.26%
Net interest margin, fully taxable equivalent 3.44% 3.33% 3.35% 3.45%
Interest-earning assets to interest-bearing liabilities 108.38% 110.58% 108.69% 111.94%
Efficiency ratio 119.45% 136.81% 117.69% 138.64%
Non-interest expense to average assets 4.33% 4.76% 4.27% 4.85%
Dividend payout ratio n/m n/m n/m n/m
Capital Ratios:
Equity to total assets at end of period 11.77% 14.47% 11.77% 14.47%
Average equity to average assets 12.08% 15.20% 12.14% 16.54%
Asset Quality Ratios:
Nonperforming loans to total loans 0.55% 0.17% 0.55% 0.17%
Nonperforming assets to total assets 0.43% 0.58% 0.43% 0.58%
Allowance for loan losses to total loans 1.13% 0.59% 1.13% 0.59%
Allowance for loan losses to nonperforming loans 206.04% 344.28% 206.04% 344.28%
Net charge-offs to average loans 0.00% 0.05% 0.15% 0.06%
Per Share Data:
Dividends declared $ 0.09 $ 0.09 $ 0.18 $ 0.18
Tangible book value per share at end of period 7.77 9.15 7.77 9.15
- -------------------------
n/m - not meaningful