Parent of CFBank,  NA







CENTRAL FEDERAL CORPORATION, PARENT OF CFBANK, ANNOUNCES RECORD PRE-TAX NET INCOME FOR THE QUARTER AND YEAR.  NET INCOME MORE THAN DOUBLED COMPARED TO PRIOR YEAR  



Columbus,  Ohio – February 4, 2020 – Central Federal Corporation (NASDAQ: CFBK) (the “Company”) the parent of CFBank, today announced financial results for the fourth quarter and year ended December 31, 2019.



Fourth Quarter and Full Year 2019 Highlights



Timothy T. O’Dell, President and CEO, commented, “During 2019, our CF Team continued to elevate significantly our results and performance, including doubling both Net Income (up 125%) and EPS (up 103%) along with increasing Book Value by 18%, while achieving an overall ROA for the year of 1.30%.  We are pleased with 2019’s results and our earnings trajectory, which we believe should compare very favorably in many areas to our top performing peers.   As we enter 2020, we are highly encouraged by our strong market pipelines and considerable business opportunities, which we believe will enable us to build upon our 2019 Earnings performance and business successes.

“CFBank’s combination of strong credit discipline coupled with our high performing sales culture, has consistently produced quality loan and business growth.  For 2020, we are focused on balancing our Commercial Banking business among our three major market regions of Columbus, Cleveland and Cincinnati, as well as continuing to diversify through SBA Lending, Owner Occupied Commercial Real Estate, and Equipment Financing. 

“Our 2020 business objectives include proactively and prudently positioning our Bank for the business cycle.  We have begun a number of initiatives aimed at enhancing risk/reward, which include adjusting our loan mix and concentrations to emphasize an increase in lower risk earning assets and loan types.  We believe this can be accomplished without sacrificing growth.  In addition, on the liability side of our balance sheet, we are investing in expanding our cash management business. Our Residential Mortgage Lending volumes were up strongly during 2019.  Also, we have made great strides during this past year with streamlining and improving operating efficiencies and enhancing mortgage loan processes and flow.

“We enter 2020 feeling bullish and with solid momentum and pipelines in essentially all of our lines of business. Additionally, we have increased our depth of talented and proven high performers. We are just getting Revved up!”

Robert E. Hoeweler, Chairman of the Board, added “Our profit performance for both the fourth quarter and full year reflect our dedication to setting a high performance bar for our Bank, and we have a team built to meet and exceed our goals and our action phrase for the coming year, as coined by our CEO Tim O’Dell, “We are just getting revved up”.  The hard work put in by our CF Team is reflected in our results for 2019.  In addition, the capital infused in the fourth quarter of 2019 will open many options for growth, both through continued organic growth and possibly through select acquisitions.  We are closing in on our goal of reaching $1 billion of assets.”



Overview of Results 

Net income for the three months ended December 31, 2019 totaled $3.0 million and increased $1.7 million, or 133.3%, compared to net income of $1.3 million for the three months ended December 31, 2018.  Net income attributable to common stockholders for the three months ended December 31, 2019, totaled $3.0 million (or $0.51 per diluted common share) and increased $1.6 million compared to net income attributable to common stockholders of $1.4 million (or $0.33 per diluted common share) for the three months ended December 31, 2018. 

Net income for the year ended December 31, 2019 totaled $9.6 million and increased $5.3 million, or 124.7%, compared to net income of $4.3 million for the year ended December 31, 2018.  Net income attributable to common stockholders for the year ended December 31, 2019, totaled $9.8 million (or $2.03 per diluted common share) and increased $5.5 million compared to net income attributable to common stockholders of $4.3 million (or $1.00 per diluted common share) for the year ended December 31, 2018.

Net interest income.  Net interest income totaled $6.0 million for the quarter ended December 31, 2019 and increased $1.1 million, or 22.1%, compared to net interest income of  $4.9 million for the quarter ended December 31, 2018.  The increase in net interest income was primarily due to a $2.5 million, or 34.5%, increase in interest income, partially offset by a $1.4 million, or 60.8%, increase in interest expense.  The increase in interest income was primarily attributed to a $209.2 million, or 35.8%, increase in average interest-earning assets outstanding, resulting primarily from an increase in net loans and loans held for sale, partially offset by a 5bps decrease in average yield on interest-earning assets.  The increase in interest expense was attributed to a $175.4 million, or 37.8%, increase in average interest-bearing liabilities and a 34bps increase in the average cost of funds on interest-bearing liabilities.    The net interest margin of 3.04% for the quarter ended December 31, 2019 decreased 34bps compared to the net interest margin of 3.38% for the quarter ended December 31, 2018.

Net interest income totaled $21.7 million for the year ended December 31, 2019 and increased $3.8 million, or 21.3%, compared to net interest income of $17.9 million for the year ended December 31, 2018.  The increase in net interest income was primarily due to a $10.2 million, or 41.1%, increase in interest income, partially offset by a $6.4 million, or 91.6%, increase in interest expense.  The increase in interest income was primarily attributed to a $180.0 million, or 34.3%, increase in average interest-earning assets outstanding, resulting primarily from an increase in net loans and loans held for sale, and a 23bps increase in average yield on interest-earning assets.  The increase in interest expense was attributed to a $154.4 million, or 37.7%, increase in average interest-bearing liabilities and a  67bps increase in the average cost of funds on interest-bearing liabilities.    The net interest margin of 3.08% for the year ended December 31, 2019 decreased 33bps compared to the net interest margin of 3.41% for the year ended December 31, 2018.

Provision for loan and lease losses.  There was no provision for loan and lease losses for the quarter ended December 31, 2019 or the quarter ended December 31, 2018, which is due to strong credit quality and net recoveries.  Net recoveries for the quarter ended December 31, 2019 totaled $81,000, compared to net recoveries of $7,000 for the quarter ended December 31, 2018.

There was no provision for loan and lease losses for the year ended December 31, 2019 or the year ended December 31, 2018, which is due to strong credit quality and net recoveries.  Net recoveries for the year ended December 31, 2019 totaled $126,000, compared to net recoveries of $42,000 for the year ended December 31, 2018.

Noninterest income.  Noninterest income for the quarter ended December 31, 2019 totaled $4.2 million and increased $3.3 million, or 385.3%, compared to $860,000 for the quarter ended December 31, 2018.  The increase was primarily due to a $3.2 million increase in net gain on sale of loans.  The increase in net gain on sale of loans was primarily a result of increased sales volume related to our residential mortgage lending business. 

Noninterest income for the year ended December 31, 2019 totaled $11.7 million and increased $9.0 million, or 331.5%, compared to $2.7 million for the year ended December 31, 2018.  The increase was primarily due to a $8.8 million increase in net gain on sale of loans.  The increase in net gain on sale of loans was primarily a result of increased sales volume related to our residential mortgage lending business. 

Noninterest expense.  Noninterest expense for the quarter ended December 31, 2019 totaled $6.4 million and increased $2.2 million, or 54.5%, compared to $4.2 million for the quarter ended December 31, 2018.  The increase in noninterest expense during the three months ended December 31, 2019 was primarily due to a $988,000 increase in salaries and employee benefits expense,  a  $551,000 increase in advertising and marketing expense and a $350,000 increase in professional fee expense. The increase in salaries and employee benefits expense was primarily due to the expansion of our residential mortgage lending business, consistent with our focus on driving noninterest income, coupled with an increase in personnel to support our growth, infrastructure and risk management practices.  The increase in advertising and marketing expense was primarily due to increased expenditures related to leads-based marketing to drive revenue growth in our residential mortgage lending business.  The increase in professional fees was related to increased activities and volumes in our residential mortgage business.

Noninterest expense for the year ended December 31, 2019 totaled $21.4 million and increased $6.1 million, or 40.0%, compared to $15.3 million for the year ended December 31, 2018.  The increase in noninterest expense during the year ended December 31, 2019 was primarily due to a $3.0 million increase in salaries and employee benefits expense,  a $1.4 million increase in advertising and marketing expense and a $580,000 increase in professional fee expense. The increase in salaries and employee benefits expense was primarily due to the expansion of our residential mortgage lending business, consistent with our focus on driving noninterest income, coupled with increases in personnel due to our geographic expansion and to support our growth, infrastructure and risk management practices.  The increase in advertising and marketing expense was primarily due to increased expenditures related to leads-based marketing to drive revenue growth in our residential mortgage lending business.  The increase in professional fees was related to increased activities and volumes in our residential mortgage business.

Income tax expense.  Income tax expense was $765,000 for the quarter ended December 31, 2019,  an increase of $412,000, compared to $353,000 for the quarter ended December 31, 2018.  The effective tax rate for the quarter ended December 31, 2019 was approximately 20.2%, as compared to approximately 21.4% for the quarter ended December 31, 2018.  

Income tax expense was $2.4 million for the year ended December 31, 2019, an increase of $1.3 million, compared to $1.1 million for the year ended December 31, 2018.  The effective tax rate for the year ended December 31, 2019 was approximately 20.3%, as compared to approximately 19.8% for the year ended December 31, 2018.

Balance Sheet Activity

General.  Assets totaled $880.5 million at December 31, 2019 and increased $215.5 million, or 32.4%, from $665.0 million at December 31, 2018.  The increase was primarily due to a $118.3 million increase in loans held for sale, and a $112.6 million increase in net loan balances, partially offset by a $21.4 million decrease in cash and cash equivalents.

Cash and cash equivalents.  Cash and cash equivalents totaled $45.9 million at December 31, 2019, and decreased  $21.4 million, or 31.8%, from $67.3 million at December 31, 2018.  The decrease in cash and cash equivalents was primarily attributed to an increase in loans and loans held for sale, partially offset by an increase in deposit balances. 

Securities.  Securities available for sale totaled $8.2 million at December 31, 2019, and decreased  $1.9 million, or 19.2%, compared to $10.1 million at December 31, 2018.  The decrease was primarily due to principal maturities. 

Loans held for sale.  Loans held for sale totaled $135.7 million at December 31, 2019 and increased $118.3 million, or 680.6%, from $17.4 million at December 31, 2018.  The increase was due to increased mortgage volume activity.

Loans and Leases.    Net loans and leases totaled $663.3 million at December 31, 2019, and increased $112.6 million, or 20.5%, from $550.7 million at December 31, 2018.  The increase was primarily due to  a  $74.1 million increase in commercial real estate loan balances and a $43.8 million increase in commercial loan balances,  partially offset by an  $8.4

million decrease in multi-family loan balances.  The increases in the aforementioned loan balances were primarily due to increased sales activity and new relationships. 

Allowance for loan and lease losses (ALLL).    The allowance for loan and lease losses totaled $7.1 million at December 31, 2019, and increased $126,000, or 1.8%, from  $7.0 million at December 31, 2018.  The increase in the ALLL is due to net recoveries during the year ended December 31, 2019.  The ratio of the ALLL to total loans was 1.06% at December 31, 2019, compared to 1.26% at December 31, 2018. 

Deposits.  Deposits totaled $746.3 million at December 31, 2019, an increase of $166.5 million, or 28.7%, from $579.8 million at December 31, 2018.  Interest-bearing deposit accounts increased to $630.8 million at December 31, 2019, from $468.3 million at December 31, 2018.  The increase in interest-bearing accounts is primarily attributed to a  $93.1 million increase in money market account balances, a $90.5 million increase in certificate of deposit account balances, and a $2.3 million increase in saving account balances, partially offset by a $23.4 million decrease in interest-bearing checking account balances.  The increase in certificate of deposit account balances was due to a combination of increases in retail, brokered and listing service certificates of deposit.  The increases in money market, certificate of deposit and savings account balances were primarily due to increases in customer relationships and balances from on-going sales and marketing activities. The decrease in interest-bearing checking account balances was due to the timing of certain large customer transactions. The increase in noninterest-bearing checking accounts was due to increases in customer relationships and balances. 

Stockholders’ equity. Stockholders’ equity totaled $80.7 million at December 31, 2019, an increase of $35.1 million, or 77.1%, from $45.6 million at December 31, 2018.  The increase in total stockholders’ equity was primarily attributed to the private placement of approximately $23.6 million of equity (net of offering costs) in October 2019, net income, as well as the exercise of outstanding warrants to purchase common stock of the Company.

About Central Federal Corporation and CFBank

Central Federal Corporation is a financial holding company that owns 100% of the stock of CFBank, National Association (CFBank), which was formed in Ohio in 1892 and converted from a federal savings association to a national bank on December 1, 2016. CFBank has a presence in four major metro Ohio markets – Columbus, Cleveland, Cincinnati and Akron-  as well as its two branch locations in Columbiana County, Ohio.  Also,  in  March 2019, CFBank opened a branch location in Blue Ash, Ohio, which is its second location in the Cincinnati market.    CFBank provides personalized Business Banking products and services including commercial loans and leases, commercial and residential real estate loans and treasury management depository services.  As a full service commercial bank, our business, along with our products and services, is focused on serving the banking and financial needs of closely held businesses.  Our business model emphasizes personalized service, customer access to decision makers, quick execution, and the convenience of online internet banking, mobile banking, remote deposit and corporate treasury management.  In addition, CFBank provides residential lending and full service retail banking services and products.  

Additional information about the Company and CFBank is available at www.CFBankOnline.com

FORWARD LOOKING STATEMENTS

This earnings release and other materials we have filed or may file with the Securities and Exchange Commission (“SEC”) contain or may contain forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Reform Act of 1995, 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 Central Federal Corporation 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, including, without limitation, those detailed from time to time in our reports filed with the SEC, including those identified in “Item 1A.  Risk Factors” of Part I of our Form 10-K filed with SEC for the year ended December 31, 2018.

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 that 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 earnings release speak only as of the date hereof.  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. 





























(1)  Regulatory capital ratios of CFBank