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Central Federal Corp. Reports Operating Results (10-Q)

May 14, 2010 | About:

Central Federal Corp. (NASDAQ:CFBK) filed Quarterly Report for the period ended 2010-03-31.

Central Federal Corp. has a market cap of $6.6 million; its shares were traded at around $1.6 with and P/S ratio of 0.4.

Highlight of Business Operations:

Cash available from liquid assets and borrowing capacity increased to $78.9 million at March 31, 2010 from $32.9 million at December 31, 2009. Cash and unpledged securities increased $20.9 million in the first quarter of 2010 due to managements strategy to use brokered deposits to increase on-balance-sheet liquidity and lock the cost of longer-term liabilities at low current market interest rates available. CFBanks additional borrowing capacity with the FHLB decreased to $5.8 million at March 31, 2010 from $7.7 million at December 31, 2009 primarily due to tightening in overall credit policies by the FHLB during the first quarter of 2010. CFBanks additional borrowing capacity at the FRB increased to $39.2 million at March 31, 2010 from $12.1 million at December 31, 2008 due to additional commercial real estate loans pledged as collateral with the FRB during the first quarter of 2010. Further tightening in credit policies by the FHLB or FRB, deterioration in the credit performance of CFBanks loan portfolio, or a decline in the balances of pledged collateral, may reduce CFBanks borrowing capacity.

CFBank could raise additional deposits by offering above-market interest rates. Current regulatory restrictions limit an institutions ability to pay above-market interest rates in situations where capital levels fall below well-capitalized levels. CFBank relies on competitive interest rates, customer service, and relationships with customers to retain deposits. To promote and stabilize liquidity in the banking and financial services sector, the FDIC temporarily increased deposit insurance coverage from $100,000 to $250,000 per depositor through December 31, 2013. CFBank is a participant in the FDICs Temporary Liquidity Guarantee Program that provides unlimited deposit insurance coverage, through June 30, 2010, for noninterest-bearing transaction accounts. Based on our historical experience with deposit retention, current retention strategies and participation in programs offering additional FDIC insurance protection, we believe that, although it is not possible to predict future terms and conditions upon renewal, a significant portion of existing deposits will remain with CFBank.

At March 31, 2010, the Holding Company and its subsidiaries, other than CFBank, had cash of $1.6 million available to meet cash needs. Annual debt service on the subordinated debentures is currently approximately $160,000. The subordinated debentures have a variable rate of interest, reset quarterly, equal to the three-month London Interbank Offered Rate (LIBOR) plus 2.85%. The total rate in effect was 3.10% at March 31, 2010. An increase in the three-month LIBOR would increase the debt service requirement of the subordinated debentures. Annual dividends on the preferred stock are approximately $361,000 at the current 5% level, which is scheduled to increase to 9% after February 14, 2013. Annual operating expenses are approximately $425,000. The Holding Companys available cash at March 31, 2010 is sufficient to cover cash needs, at their current level, for approximately 1.7 years.

At March 31, 2010, CFBank exceeded all of its regulatory capital requirements to be considered well-capitalized with a Tier 1 capital level of $24.1 million, or 8.4% of adjusted total assets, which exceeds the required level of $14.3 million, or 5.0%; Tier 1 risk-based capital level of $24.1 million, or 11.0% of risk-weighted assets, which exceeds the required level of $13.2 million, or 6.0%; and total risk-based capital of $26.9 million, or 12.2% of risk-weighted assets, which exceeds the required level of $22.0 million, or 10.0%.

Read the The complete Report

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