FFW Corporation Announces Earnings for the Year Ended June 30, 2012

August 17, 2012

WABASH, IN--(Marketwire -08/17/12)- FFW Corporation (the "Corporation") (FFWC) (8/16/2012 Close: $13.75), parent corporation of Crossroads Bank, announced earnings for the quarter and year ended June 30, 2012.

For the year ended June 30, 2012, the Corporation reported net income of $593,000 or $0.11 per common share compared to $2,674,000 or $1.96 per common share for the year ended June 30, 2011. The net interest margin for the year ended June 30, 2012 was $9,365,000 compared to $9,868,000 for the year ended June 30, 2011. The provision for loan losses increased from $1,445,000 for the year ended June 30, 2011 to $4,800,000 for the year ended June 30, 2012. The additional provision recorded in fiscal year 2012 is primarily due to a loss on a commercial credit in which Crossroads Bank (the "Bank"), the wholly owned subsidiary of FFW Corporation, was a participating lender and not the lead loan servicer. The loan was secured by a life insurance policy, whose value was dissipated through fraudulent actions of the borrower. The reasons for the loss are still being investigated, but the Bank is vigorously pursuing actions necessary to seek recovery of the loss. Total noninterest income was $3,339,000 for the year ended June 30, 2012 and $3,201,000 for the year ended June 30, 2011. Noninterest expense was $8,252,000 for the year ended June 30, 2012 and $7,990,000 for the year ended June 30, 2011.

Due to the aforementioned loan loss, the quarter ended June 30, 2012 resulted in a net loss of $1,536,000 or negative $1.47 per common share. As a result of the loss, the Corporation will not declare and pay a common shareholder dividend for the quarter ended September 30, 2012. The Corporation expects to resume the common dividend when the Corporation returns to profitable status in succeeding quarters.

Roger K. Cromer, President and Chief Executive Officer, stated, "The loan loss we experienced in the current quarter was both unexpected and disappointing. The Bank has made significant efforts in reduction of nonperforming assets and capital strengthening. Without the impact of the loss, the Bank would have reported net income of approximately $2.8 million for the fiscal year ended June 30, 2012. While the final earnings were not what we had anticipated, the additional provision recorded in the current year and the efforts to otherwise reduce nonperforming assets have improved the overall balance sheet condition of the Bank in that the nonperforming ratios are the lowest in 8 quarters and the strength of the loan loss allowance as a percentage of loans is the highest it has ever been. We continue to remain positive in these difficult economic times and are committed to working through the issues we have faced. We are taking all possible steps to seek a recovery of the significant loan loss we experienced this year."

The twelve months ended June 30, 2012 represented a return on average common equity of 0.51% compared to 10.03% for the twelve months ended June 30, 2011. The twelve months ended June 30, 2012 represented a return on average assets of 0.18% compared to 0.80% for the twelve months ended June 30, 2011.

The allowance for loan losses as a percentage of gross loans receivable was 1.68% at June 30, 2012 and 1.39% at June 30, 2011. Nonperforming assets were $10,234,000 at June 30, 2012 and $13,141,000 at June 30, 2011.

As of June 30, 2012, FFWC's equity-to-assets ratio was 9.34% compared to 9.23% at June 30, 2011. Total assets at June 30, 2012 were $329,042,000 compared to $323,018,000 at June 30, 2011. Shareholders' equity was $30,746,000 at June 30, 2012 compared to $29,830,000 at June 30, 2011. Crossroads Bank exceeds all applicable regulatory requirements to be considered "well capitalized."

Crossroads Bank is a wholly owned subsidiary of FFW Corporation providing an extensive array of banking services and a wide range of investments and securities products through its main office in Wabash and four Indiana banking centers located in Columbia City, North Manchester, South Whitley, and Syracuse. The Bank provides leasing services at its banking centers and its Carmel, IN leasing and commercial loan office. Insurance products are offered through an affiliated company, Insurance 1 Services, Inc. The corporation's stock is traded on the OTC Markets under the symbol "FFWC." Our website address is www.crossroadsbanking.com.

  FFW Corporation Selected Financial Information Consolidated Balance Sheet June 30 June 30 ------------ ------------ 2012 2011 ------------ ------------ Unaudited Assets Cash and due from financial institutions $ 3,478,709 $ 3,711,671 Interest-earning deposits in other financial institutions 13,360,765 2,840,994 ------------ ------------ Cash and cash equivalents 16,839,474 6,552,665 ------------ ------------ Securities available for sale 83,665,458 71,219,096 Loans receivable, net of allowance for loan losses of $3,520,110 at June 30, 2012 and $3,147,896 at June 30, 2011 205,934,060 222,348,968 Loans held for sale 337,000 241,400 Federal Home Loan Bank stock, at cost 2,717,300 2,717,300 Accrued interest receivable 1,647,845 1,635,370 Premises and equipment, net 3,550,515 3,695,172 Mortgage servicing rights 486,617 444,950 Cash surrender value of life insurance 6,938,977 6,655,864 Goodwill 1,213,898 1,213,898 Deferred tax asset 2,558,162 1,653,133 Other assets 3,152,807 4,640,682 ------------ ------------ Total assets $329,042,113 $323,018,498 ============ ============ Liabilities and shareholders' equity Deposits Noninterest-bearing deposits $ 20,029,966 $ 17,954,304 Interest-bearing deposits 262,519,228 257,585,276 ------------ ------------ Total deposits 282,549,194 275,539,580 ------------ ------------ Borrowings 14,258,400 15,986,695 Accrued expenses and other liabilities 1,488,058 1,662,503 ------------ ------------ Total liabilities 298,295,652 293,188,778 ------------ ------------ Shareholders' equity Preferred stock, $.01 par; $1,000 liquidation value per share; 500,000 shares authorized; Series A, 5% Fixed Rate Cumulative Perpetual Preferred Stock - 7,289 shares outstanding June 30, 2012, $7,336,000 liquidation preference 7,166,924 7,085,539 Series B, 9% Fixed Rate Cumulative Perpetual Preferred Stock - 364 shares outstanding June 30, 2012, $368,000 liquidation preference 376,876 385,461 Common stock, $.01 par; 2,000,000 shares authorized; issued shares: 1,836,328 outstanding shares: 1,122,084 and 1,121,884, respectively 18,363 18,363 Additional paid-in capital 9,495,807 9,435,162 Retained earnings 23,848,467 24,095,722 Accumulated other comprehensive income 803,648 (223,833) Treasury stock, at cost: 714,244 shares and 714,444 shares, respectively (10,963,624) (10,966,694) ------------ ------------ Total shareholders' equity 30,746,461 29,829,720 ------------ ------------ ------------ ------------ Total liabilities and shareholders' equity $329,042,113 $323,018,498 ============ ============ FFW Corporation Selected Financial Information Consolidated Statement of Income Three Months Ended Twelve Months Ended June 30 June 30 ------------------------ ------------------------ 2012 2011 2012 2011 ----------- ----------- ----------- ----------- Unaudited Unaudited Unaudited Interest and dividend income: Loans, including fees $ 2,567,679 $ 3,056,603 $11,191,505 $12,217,074 Taxable securities 513,721 610,803 2,067,341 2,459,676 Tax exempt securities 159,656 143,485 555,348 601,087 Other 13,556 3,685 32,786 30,688 ----------- ----------- ----------- ----------- Total interest and dividend income 3,254,612 3,814,576 13,846,980 15,308,525 ----------- ----------- ----------- ----------- Interest expense: Deposits 946,701 1,088,143 3,951,857 4,657,152 Borrowings 130,421 134,197 529,894 783,724 ----------- ----------- ----------- ----------- Total interest expense 1,077,122 1,222,340 4,481,751 5,440,876 ----------- ----------- ----------- ----------- Net interest income 2,177,490 2,592,236 9,365,229 9,867,649 Provision for loan losses 3,900,000 300,000 4,800,000 1,445,000 Net interest income after provision for loan losses (1,722,510) 2,292,236 4,565,229 8,422,649 Noninterest income: Net gains on sales of securities 155,078 142,850 463,225 400,589 Net gains on sales of loans 159,576 26,464 736,506 480,642 Net gains (losses) on fixed assets - - - 5,001 Other than temporary impairment on securities (3,253) - (93,826) - Commission income 199,141 155,821 743,116 637,247 Service charges and fees 237,798 276,003 1,042,903 1,318,363 Earnings on life insurance 70,416 70,243 283,113 280,870 Other 18,785 21,326 164,041 78,761 ----------- ----------- ----------- ----------- Total noninterest income 837,541 692,707 3,339,078 3,201,473 ----------- ----------- ----------- ----------- Noninterest expense: Salaries and benefits 993,848 980,910 4,162,397 3,961,729 Occupancy and equipment 322,254 238,359 1,068,252 981,005 Professional 91,930 106,696 364,840 398,358 Marketing 45,790 35,511 183,767 151,468 Deposit insurance premium 112,446 134,201 429,268 513,024 Regulatory assessment 35,752 25,899 138,989 102,680 Correspondent bank charges 25,318 26,136 80,555 86,942 Data processing 131,706 102,368 502,993 426,295 Printing, postage and supplies 43,890 63,032 218,684 231,767 Expense on life insurance 16,108 14,902 64,433 41,018 Contribution expense 14,879 17,546 65,173 72,563 Other 214,212 246,869 972,780 1,023,592 ----------- ----------- ----------- ----------- Total noninterest expense 2,048,133 1,992,429 8,252,131 7,990,441 ----------- ----------- ----------- ----------- Income before income taxes (2,933,102) 992,514 (347,824) 3,633,681 Income tax expense (1,397,499) 255,730 (940,823) 959,845 ----------- ----------- ----------- ----------- Net income $(1,535,603) $ 736,784 $ 592,999 $ 2,673,836 =========== =========== =========== =========== Preferred stock dividends and discount accretion, net 117,504 117,504 470,016 470,016 ----------- ----------- ----------- ----------- Net income attributable to common shareholders $(1,653,107) $ 619,280 $ 122,983 $ 2,203,820 =========== =========== =========== =========== FFW Corporation Selected Financial Information Key Balances and Ratios Three Months Ended Twelve Months Ended June 30 June 30 ------------------------ ------------------------ 2012 2011 2012 2011 ----------- ----------- ----------- ----------- Unaudited Unaudited Unaudited Per common share data: Earnings $ (1.47) $ 0.55 $ 0.11 $ 1.96 Diluted earnings $ (1.47) $ 0.55 $ 0.11 $ 1.96 Dividends paid $ 0.11 $ 0.22 $ 0.33 $ 0.88 Average shares issued and outstanding 1,122,084 1,121,884 1,121,945 1,122,694 Shares outstanding end of period 1,122,084 1,121,884 1,122,084 1,121,884 Supplemental data: Net interest margin ** 2.92% 3.22% 3.01% 3.15% Return on average assets *** -1.82% 0.90% 0.18% 0.80% Return on average common equity *** -26.25% 11.22% 0.51% 10.03% June 30 June 30 ----------- ----------- 2012 2011 ----------- ----------- Nonperforming assets * $10,233,539 $13,140,830 Repossessed assets $ 1,402,764 $ 2,502,944 * Includes non-accruing loans, accruing loans delinquent more than 90 days and repossessed assets ** Yields reflected have not been computed on a tax equivalent basis *** Annualized