Ccf Hldgs Co (OTC:CCFH)

Dear Shareholders; In a recent letter to depositors and friends, we mentioned there was more positive activity going on in the market. We are seeing signs that would indicate the anemic economic recovery is beginning to gain a little momentum being fueled by a more confident consumer and a slow rebound in housing values. We also mentioned the dramatic increase in demand for residential building lots in our markets and a revitalized new housing market that could really kick start the lagging unemployment challenges we have faced the last five years. It is our hope this will not be the false start to a recovery we have seen the last three springs.

CCF Holding Company and its subsidiary, Heritage Bank, have experienced some very real challenges over the past few years. Each year we look at the past twelve months and try to highlight the positive aspects of the year and at the same time provide a forecast of upcoming challenges. Those of you who have been investors for more than four years can remember the upbeat tone of our letters and the general feeling business activity was strong and diversified. Over the past few years, we have seen segments of the economy that have shown improvements but the overall sentiment was negative. This year as we look back the positives now outweigh the negatives and the Consolidated Statement of Earnings is again awash in “black ink”. To further encourage us as we look forward, sentiment has turned to positive leaning. This should not be confused with the vibrancy of the past as we still feel things are fragile but strengthening. So, our outlook now shifts from cautiously optimistic to slightly bullish.

The enclosed financial report should be read completely including the notes, but we would like to point out a few key areas. On the Consolidated Balance Sheet, the company continues to maintain a strong cash position with over $28.0 million in cash. The investment portfolio has remained stable in size, but we did make efforts in 2012 to shorten the duration of the portfolio in preparation for increasing interest rates. We were pleased to see positive loan growth as we ended the year almost $4.0 million higher than the previous year. Foreclosed assets, also known as Other Real Estate Owned, increased year over year by $2.0 million even though we sold or liquidated more than $2.8 million during 2012. Total assets were relatively flat with the prior year showing a very modest $6.0 million decline.

The really good news comes on the other side of the ledger where we saw total deposits remain very stable and strong while seeing non-interest bearing demand deposits increased by almost $10.0 million. This created more opportunities for us to expand our outreach to new customers and helped drive down our cost of funding loans. Last, but certainly not least, we saw Shareholders’ Equity grow by more than $3.0 million; the major contributor to this was positive net earnings of $1.9 million or $0.54 per share of outstanding stock.