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FFW Corporation Announces Earnings for the Three and Six Months Ended December 31, 2013

WABASH, IN -- (Marketwired) -- 01/24/14 -- FFW Corporation (the "Corporation") (OTCBB: FFWC) (01/23/14 Close: $18.00), parent corporation of Crossroads Bank, announced earnings for the three and six months ended December 31, 2013.

For the three months ended December 31, 2013, the Corporation reported net income of $770,000 or $0.58 per common share compared to $858,000 or $0.66 per common share for the three months ended December 31, 2012. The net interest margin for the three months ended December 31, 2013 was $2,584,000 compared to $2,321,000 for the three months ended December 31, 2012. The provision for loan losses decreased from $210,000 for the period ended December 31, 2012 to $180,000 for the period ended December 31, 2013. Total noninterest income was $817,000 for the three months ended December 31, 2013 compared to $1,035,000 for the three months ended December 31, 2012. Noninterest expense was $2,217,000 for the three months ended December 31, 2013 and $2,145,000 for the three months ended December 31, 2012.

For the six months ended December 31, 2013, the Corporation reported net income of $1,408,000 or $1.04 per common share compared to $1,388,000 or $1.03 per common share for the six months ended December 31, 2012. The net interest margin for the six months ended December 31, 2013 was $5,144,000 compared to $4,687,000 for the six months ended December 31, 2012. The provision for loan losses decreased from $420,000 for the period ended December 31, 2012 to $360,000 for the period ended December 31, 2013. Total noninterest income was $1,423,000 for the six months ended December 31, 2013 compared to $1,683,000 for the six months ended December 31, 2012. Noninterest expense was $4,414,000 for the six months ended December 31, 2013 and $4,267,000 for the six months ended December 31, 2012.

The three and six months ended December 31, 2013 represented a return on average common equity of 10.73% and 9.74%, respectively, compared to 11.95% and 9.43% for the three and six month periods ended December 31, 2012. The three and six months ended December 31, 2013 represented a return on average assets of 0.85% and 0.80%, respectively, compared to 1.01% and 0.83%, for the three and six month periods ended December 31, 2012.

The allowance for loan losses as a percentage of gross loans receivable was 1.52% at December 31, 2013 compared to 1.43% at June 30, 2013. Nonperforming assets were $8,832,000 at December 31, 2013 compared to $9,794,000 at June 30, 2013.

As of December 31, 2013, FFWC's equity-to-assets ratio was 9.98% compared to 9.27% at June 30, 2013. Total assets at December 31, 2013 were $347,834,000 compared to $337,818,000 at June 30, 2013. Shareholders' equity was $34,715,000 at December 31, 2013 compared to $31,322,000 at June 30, 2013. Crossroads Bank exceeds all applicable regulatory requirements to be considered "well capitalized."

The Corporation announced December 31, 2013 that it has closed the sale of 3,250 shares of a new series of Fixed Rate Cumulative Perpetual Preferred Stock, Series C ("Series C Preferred Stock"), for an aggregate subscription price of $3,250,000. The shares were offered to a select group of investors in a private placement exempt from registration under Section 4(2) and Rule 506 of the Securities Act of 1933 (the "Act"). The Corporation intends to use the net proceeds of the offering along with a dividend of approximately $1,500,000 paid by the Bank to FFW to redeem 4,750 of the Corporation's shares of Fixed Rate Cumulative Preferred Stock, Series A ("Series A Preferred Stock"), for $4,750,000, plus accrued dividends, as soon as it receives regulatory non-objection to that redemption. The Series A stock was paying dividends at 5% per year, and those dividends are scheduled to increase to 9% on February 15, 2014. Following the redemption, FFW will continue to have outstanding 364 shares of its Fixed Rate Cumulative Preferred Stock, Series B, which pays dividends at 9% per year, and 2,539 shares of its Series A Preferred Stock. The Series A and B Preferred Stock had been issued under the Treasury Department's TARP Capital Purchase Program.

The Series C Preferred Stock is perpetual and non-voting, has a liquidation preference of $1,000, and pays annual dividends of 5% for the first three years, subject to possible increases to a maximum of 7% thereafter depending on changes in the prime rate of interest, payable quarterly. It is redeemable immediately for 100% of its liquidation preference plus declared and unpaid dividends.

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

                                                 December 31      June 30
                                                ------------   ------------
                                                    2013           2013
                                                ------------   ------------
                                                  Unaudited
Assets
Cash and due from financial institutions           7,171,693      4,353,619
Interest-earning deposits in other financial
 institutions                                     15,366,494     11,647,346
                                                ------------   ------------
  Cash and cash equivalents                       22,538,187     16,000,965
                                                ------------   ------------

Securities available for sale                     82,605,897     85,122,447
Loans receivable, net of allowance for loan
 losses of $3,424,000 at December 31, 2013 and
 $3,132,000 at June 30, 2013                     221,149,576    215,347,079
Loans held for sale                                  453,600        113,600
Federal Home Loan Bank stock, at cost              2,717,300      2,717,300
Accrued interest receivable                        1,737,436      1,719,787
Premises and equipment, net                        3,257,160      3,348,926
Mortgage servicing rights                            661,780        629,050
Cash surrender value of life insurance             7,340,810      7,206,897
Goodwill                                           1,213,898      1,213,898
Deferred tax asset                                 2,588,763      2,392,638
Other assets                                       1,570,037      2,005,096
                                                ------------   ------------
  Total assets                                   347,834,444    337,817,683
                                                ------------   ------------

Liabilities and shareholders' equity
Deposits
  Noninterest-bearing deposits                    28,173,951     27,397,357
  Interest-bearing deposits                      279,882,876    272,581,131
                                                ------------   ------------
    Total deposits                               308,056,827    299,978,488
                                                ------------   ------------

Borrowings                                         3,258,400      4,758,400
Accrued expenses and other liabilities             1,804,086      1,758,769
                                                ------------   ------------
    Total liabilities                            313,119,313    306,495,657
                                                ------------   ------------

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
   December 31, 2013, $7,335,000 liquidation
   preference                                      7,289,000      7,248,308
  Series B, 9% Fixed Rate Cumulative Perpetual
   Preferred Stock - 364 shares outstanding
   December 31, 2013, $368,000 liquidation
   preference                                        364,000        368,292
  Series C, 5% Fixed Rate Cumulative Perpetual
   Preferred Stock - 3,250 shares outstanding
   December 31, 2013, $3,250,000 liquidation
   preference
Common stock, $.01 par; 2,000,000 shares
 authorized;                                       3,250,000              -
  issued shares: 1,836,328
  outstanding shares: 1,132,084 at December
   31, 2013 and 1,122,084 at June 30, 2013            18,363         18,363
Additional paid-in capital                         9,414,302      9,531,646
Retained earnings                                 26,661,325     25,737,557
Accumulated other comprehensive income            (1,471,735)      (618,516)
Treasury stock, at cost: 704,244 shares at
 December 31, 2013 and 714,244 at June 30,
 2013                                            (10,810,124)   (10,963,624)
                                                ------------   ------------
  Total shareholders' equity                      34,715,131     31,322,026
                                                ------------   ------------

                                                ------------   ------------
  Total liabilities and shareholders' equity     347,834,444    337,817,683
                                                ------------   ------------



Consolidated Statement of Income

                              Three Months Ended        Six Months Ended
                                 December 31              December 31
                           -----------------------  -----------------------
                               2013        2012         2013        2012
                           ----------- -----------  ----------- -----------
                            Unaudited   Unaudited    Unaudited   Unaudited
Interest and dividend
 income:
  Loans, including fees    $ 2,598,970 $ 2,673,449  $ 5,254,840 $ 5,385,865
  Taxable securities            49,161     341,728    1,294,349     900,158
  Tax exempt securities        599,398     312,418            -     444,745
  Other                         17,978       4,541       27,044       8,668
                           ----------- -----------  ----------- -----------
    Total interest and
     dividend income         3,265,507   3,332,136    6,576,233   6,739,436
                           ----------- -----------  ----------- -----------

Interest expense:
  Deposits                     648,337     903,745    1,353,450   1,818,524
  Borrowings                    33,122     107,222       78,430     234,255
                           ----------- -----------  ----------- -----------
    Total interest expense     681,459   1,010,967    1,431,880   2,052,779
                           ----------- -----------  ----------- -----------

Net interest income          2,584,048   2,321,169    5,144,353   4,686,657

Provision for loan losses      180,000     210,000      360,000     420,000

Net interest income after
 provision for loan losses   2,404,048   2,111,169    4,784,353   4,266,657
Noninterest income:
  Net gains on sales of
   securities                   52,679     186,767       52,679     179,490
  Net gains on sales of
   loans                       104,923     331,233      148,556     508,235
  Other than temporary
   impairment on
   securities                        -     (79,983)           -     (80,641)
  Commission income            227,034     196,788      438,492     394,463
  Service charges and fees     261,014     334,506      524,907     524,170
  Earnings on life
   insurance                    66,692      67,696      133,913     134,059
  Other                         98,480      (2,172)     117,817      23,433
                           ----------- -----------  ----------- -----------
    Total noninterest
     income                    817,303   1,034,835    1,422,845   1,683,209
                           ----------- -----------  ----------- -----------

Noninterest expense:
  Salaries and benefits      1,124,954   1,070,252    2,223,756   2,138,455
  Occupancy and equipment      242,680     243,604      491,153     499,905
  Professional                 161,204     136,276      328,865     222,610
  Marketing                     43,855      58,815       85,729      90,817
  Deposit insurance
   premium                      77,868     112,375      157,076     228,180
  Regulatory assessment         22,530      37,955       51,415      74,441
  Correspondent bank
   charges                      20,303      23,680       41,857      47,809
  Data processing              147,366     136,851      317,053     274,947
  Printing, postage and
   supplies                     60,500      66,437      115,865     125,079
  Expense on life
   insurance                    18,818      17,418       37,635      34,837
  Contribution expense           6,957      10,681       19,778      23,698
  Other                        289,549     230,340      543,706     506,132
                           ----------- -----------  ----------- -----------
    Total noninterest
     expense                 2,216,584   2,144,684    4,413,888   4,266,910
                           ----------- -----------  ----------- -----------

Income before income taxes   1,004,767   1,001,320    1,793,310   1,682,956

Income tax expense             234,809     143,742      385,479     295,342

                           ----------- -----------  ----------- -----------
Net income                 $   769,958 $   857,578  $ 1,407,831 $ 1,387,614
                           ----------- -----------  ----------- -----------
Preferred stock dividends
 and discount accretion,
 net                           117,504     117,504      235,008     235,008
                           ----------- -----------  ----------- -----------
Net income attributable to
 common shareholders       $   652,454 $   740,074  $ 1,172,823 $ 1,152,606
                           ----------- -----------  ----------- -----------



Key Balances and Ratios

                            Three Months Ended         Six Months Ended
                                December 31               December 31
                         ------------------------  ------------------------
                             2013         2012         2013         2012
                         -----------  -----------  -----------  -----------
                          Unaudited    Unaudited    Unaudited    Unaudited
Per common share data:
Earnings                 $      0.58  $      0.66  $      1.04  $      1.03
Diluted earnings         $      0.58  $      0.66  $      1.04  $      1.03
Dividends paid           $      0.11  $      0.11  $      0.22  $      0.11
Average shares issued
 and outstanding           1,132,084    1,122,084    1,132,084    1,122,084
Shares outstanding end
 of period                 1,132,084    1,122,084    1,132,084    1,122,084

Supplemental data:
Net interest margin **          3.01%        2.92%        3.09%        2.98%
Return on average assets
 ***                            0.85%        1.01%        0.80%        0.83%
Return on average common
 equity ***                    10.73%       11.95%        9.74%        9.43%

                         December 31    June 30
                         -----------  -----------
                             2013         2013
                         -----------  -----------
Nonperforming assets *   $ 8,831,678  $ 9,794,035
Repossessed assets       $   408,245  $   813,386

*   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

FOR MORE INFORMATION CONTACT:
Emily Boardman
Treasurer
260-563-3185

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