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Charter Financial Announces Third Quarter Fiscal 2015 Earnings of $1.9 Million

  • Basic and diluted EPS of $0.12 for the quarter
  • Net loan growth of 15.5% over prior year quarter, which marks the seventh consecutive year-over-year quarterly increase
  • Flat noninterest expense
  • Tangible book value per share of $12.44 at June 30, 2015, up $0.49 year over year
  • Nonperforming non-covered assets at 0.55% of total non-covered assets at June 30, 2015
  • Repurchased 259,836 shares for an average of $12.13 per share during the quarter

WEST POINT, Ga., July 23, 2015 (GLOBE NEWSWIRE) -- Charter Financial Corporation (the "Company") (NASDAQ:CHFN) today reported net income of $1.9 million, or $0.12 per basic and diluted share, for the quarter ended June 30, 2015, compared with $1.8 million, or $0.09 per basic and diluted share, for the quarter ended June 30, 2014. Net income for the quarter increased primarily due to increases in noninterest income and net interest income, partially offset by a large negative provision for covered loans, which benefited last year's results.

Net income for the nine months ended June 30, 2015, was $5.0 million, or $0.32 and $0.30 per basic and diluted share, respectively, up from $4.9 million, or $0.23 and $0.22 per basic and diluted share, respectively, for the nine months ended June 30, 2014.

Quarterly Operating Results

Quarterly earnings for the third quarter of fiscal 2015 compared with the third quarter of fiscal 2014 were positively impacted by the following items:

  • Loan interest income, excluding accretion and amortization of loss share receivable, increased $319,000.
  • Net interest margin, excluding accretion and amortization of loss share receivable, was 3.21% for the quarter ended June 30, 2015 compared with 2.90% for the same quarter of fiscal 2014.
  • The cost of deposits decreased to 43 basis points for the quarter ended June 30, 2015, compared to 49 basis points for the quarter ended June 30, 2014.
  • Deposit and bankcard fee income increased by a combined $309,000.
  • Gain on sale of loans and loan servicing release fees increased by $137,000.
  • Net cost of operations of real estate owned decreased by $118,000.

The above increases to net income were partially offset by the following items:

  • Net purchase discount accretion and amortization decreased by $90,000.
  • The average yield on loans was 5.02% for the quarter ended June 30, 2015 compared to 5.44% for the quarter ended June 30, 2014.
  • The Company recorded a negative provision of $834,000 for the quarter ended June 30, 2014 compared to no provision in the current year quarter.

Chairman and CEO Robert L. Johnson said, "Our net income and earnings per share for the quarter increased by 7% and 33%, respectively, compared to the prior year quarter. We are pleased with this growth and with the continued improvements in our core earnings. Our net interest margin, excluding purchase accounting, was 3.21% for the quarter ending June 30, 2015, which was significantly improved from 2.90% for the quarter ending June 30, 2014."

Financial Condition

The Company's total assets remained relatively unchanged at $1.0 billion at June 30, 2015. Net loan growth and shares repurchased during the first three quarters of fiscal 2015 were funded by deposit growth, including brokered CDs, and utilization of the Company's cash and cash equivalents. Net loans grew $66.5 million, or 11.0%, to $672.8 million at June 30, 2015, from $606.4 million at September 30, 2014.

Mr. Johnson continued, "Our loan portfolio increased on a year-over-year basis for the seventh consecutive quarter. Continued loan portfolio growth is important to realizing increased profitability through higher operating and capital leverage."

Total deposits were $734.2 million at June 30, 2015, compared with $717.2 million at September 30, 2014, due primarily to increases of $19.5 million and $30.8 million in core deposits and brokered deposits, respectively. Core deposits increased from $486.2 million at September 30, 2014, to $505.7 million at June 30, 2015, due primarily to an increase in transaction accounts.

Mr. Johnson added, "The rebranding of our checking products that we started last fall is having a positive impact. We reduced the number of checking products from 13 to four, enabling consumers to have free checking accounts in methods more beneficial for the bank. This is accomplished through increased interchange revenue, increased balances or reduced costs through the reduction of mailing paper statements."

Total stockholders' equity decreased to $208.9 million at June 30, 2015, compared to $225.0 million at September 30, 2014, due predominantly to $20.8 million of share repurchases during the first three quarters of fiscal 2015.

Net Interest Income and Net Interest Margin

Net interest income increased to $8.1 million for the quarter ended June 30, 2015, compared with $7.6 million for the quarter ended June 30, 2014. Interest income increased by $358,000 due to a slight increase in loan receivable income and a $253,000 decrease in amortization of FDIC loss share receivable, aided by a $168,000, or 12.1%, decrease in total interest expense quarter over quarter. The Company's net interest margin, excluding the effects of purchase accounting, was 3.21% for the quarter ended June 30, 2015, compared with 2.90% for the quarter ended June 30, 2014. Net interest margin, including the impact of purchase accounting, increased to 3.62% for the quarter ended June 30, 2015, compared with 3.26% for the quarter ended June 30, 2014.

Net interest income for the nine months ended June 30, 2015, increased $748,000 to $23.6 million compared to the same prior year period despite a $695,000 decline in net discount accretion and amortization on acquired covered loans. Additionally, interest expense decreased by $563,000. Net interest margin, excluding the effects of purchase accounting, improved 38 basis points to 3.22%, while net interest margin, including the impact of purchase accounting, improved 30 basis points to 3.54% for the nine months ended June 30, 2015.

Provision for Loan Losses

The Company recorded no provision for loan losses on non-covered loans for the quarters ended June 30, 2015 and 2014, due to an overall improvement in the credit quality of the non-covered loan portfolio. No provision was recorded on covered loans for the quarter ended June 30, 2015, compared to a negative provision of $834,000 for the same quarter in 2014.

There was no net provision recorded on non-covered and covered loans during the nine months ended June 30, 2015 due to our continued strong asset credit quality compared to a $300,000 provision on non-covered loans and an $886,000 negative provision on covered loans for the same prior year period.

Accounting for FDIC-Assisted Acquisitions

Mr. Johnson continued, "Earlier this year, we completed the non-single family portion of two of our FDIC assisted acquisitions. The last agreement has 14 months remaining in the loss share period. The FDIC indemnification asset is down to $4.5 million, indicating that we are approaching the completion of the resolution of the acquired troubled assets."

Under purchase accounting rules, the Company currently expects to realize remaining discount accretion of $4.0 million and $1.7 million in amortization, netting to approximately $2.3 million of future pre-tax income impact.

Noninterest Income and Expense

Noninterest income for the quarter ended June 30, 2015 increased $581,000, or 17.9%, which was primarily due to the continued increases in gain on sale of loans, bankcard fee income and other deposit fee income. Noninterest expense for the quarter ended June 30, 2015 of $9.1 million increased slightly compared with the same period in fiscal 2014. This increase was primarily attributable to increases in salaries and employee benefits, occupancy and losses on debit card fraud, and partially offset by a $118,000 decrease in net cost of real estate owned.

Noninterest income for the nine months ended June 30, 2015 increased$264,000, or 2.5%, despite a $1.1 million true-up receipt from the completion and renegotiation of a processing contract in the prior year period. Bankcard fee income and other deposit fee income increased $855,000 and gain on sale of loans increased $416,000 for the nine months ended June 30, 2015 compared to the same prior year period. Noninterest expense remained practically unchanged at $26.8 million for the nine months ended June 30, 2015 and 2014. Decreases in legal and professional fees and the net cost of real estate owned were offset by increases in salaries and employee benefits and other noninterest expense.

Asset Quality

Asset quality remained strong with nonperforming assets not covered by loss sharing agreements at 0.55% of total non-covered assets and the allowance for loan losses at 1.33% of total non-covered loans and 196.86% of nonperforming non-covered loans at June 30, 2015. The Company had net loan recoveries of $12,000 on non-covered loans for the nine months ended June 30, 2014, compared to net loan charge-offs of $283,000 on non-covered loans for the same period in fiscal 2014.

Capital Management

During the quarter ended June 30, 2015, the Company repurchased 259,836 shares for approximately $3.2 million, or $12.13 per share.

Mr. Johnson said, "Since December 2013, we have completed three stock buyback programs, whereby the Company repurchased a combined 4.9 million shares at a discount to tangible book value. Additionally, through our current repurchase program announced in September 2014 and revised in March 2015, we can repurchase up to 2.6 million shares, of which 1.9 million shares have been repurchased to date. Collectively, the 6.7 million shares repurchased, or approximately 29% of our common stock, were purchased at a combined discount to tangible book value of $9.4 million."

Mr. Johnson concluded, "Over the past two years, we have utilized our excess capital in several ways, including the repurchase of shares at a discount to tangible book value, dividends, and growing our loan portfolio. Meanwhile, we continue to explore the possibility of additional acquisitions and opportunities that would be accretive to our earnings. We are also seeking to enhance stockholder value through leverage of our expense structure and improving noninterest income."

About Charter Financial Corporation

Charter Financial Corporation is a savings and loan holding company and the parent company of CharterBank, a full-service community bank and a federal savings institution. CharterBank is headquartered in West Point, Georgia, and operates branches in west-central Georgia, east-central Alabama, and the Florida Gulf Coast. CharterBank's deposits are insured by the Federal Deposit Insurance Corporation. Investors may obtain additional information about Charter Financial Corporation and CharterBank on the internet at www.charterbk.com under About Us.

Forward-Looking Statements

This release may contain "forward-looking statements" within the meaning of the federal securities laws. These statements may be identified by use of such words as "believe," "expect," "anticipate," "should," "planned," "estimated," "seek," and "potential." Examples of forward-looking statements include, but are not limited to, statements regarding future growth, profitability, expense reduction, improvements in income and margins, increasing stockholder value, and estimates with respect to our financial condition and results of operation and business that are subject to various factors that could cause actual results to differ materially from these estimates. These factors include but are not limited to general and local economic conditions; changes in interest rates, deposit flows, demand for mortgages and other loans, real estate values, and competition; changes in accounting principles, policies, or guidelines; the changing exposure to credit risk; the effect of any acquisition or other strategic initiatives that we determine to pursue; changes in legislation or regulation; other economic, competitive, governmental, regulatory, and technological factors affecting our operations, pricing, products, and services; the effect of cyberterrorism and system failures; and the effects of geopolitical instability and risks such as terrorist attacks, the effects of weather and natural disasters such as floods, droughts, wind, tornadoes and hurricanes, and the effect of any damage to our reputation resulting from developments relating to any of the factors listed herein. Any or all forward-looking statements in this release and in any other public statements we make may turn out to be wrong. They can be affected by inaccurate assumptions we might make or known or unknown risks and uncertainties. Consequently, no forward-looking statements can be guaranteed. Except as required by law, the Company disclaims any obligation to subsequently revise or update any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. Additional information concerning factors that could cause actual results to differ materially from those forward-looking statements is contained from time to time in the Company's filings with the Securities and Exchange Commission. The company refers you to the section entitled "Risk Factors" contained in the company's Annual Report on Form 10-K for the fiscal year ended September 30, 2014. Copies of each filing may be obtained from the Company or the Securities and Exchange Commission.

The risks included here are not exhaustive and undue reliance should not be placed on any forward-looking statements, which are based on current expectations. All written and oral forward-looking statements attributable to the company, its management, or persons acting on their behalf are qualified in their entirety by these cautionary statements. Further, forward-looking statements speak only as of the date they are made, and the company undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time unless otherwise required by law.

Charter Financial Corporation
Condensed Consolidated Statements of Financial Condition (unaudited)
June 30,
2015
September 30, 2014
Assets
Cash and amounts due from depository institutions $11,386,552 $10,996,959
Interest-earning deposits in other financial institutions 28,564,277 88,465,994
Cash and cash equivalents 39,950,829 99,462,953
Loans held for sale, fair value of $2,136,035 and $2,090,469 2,092,222 2,054,722
Investment securities available for sale 189,790,982 188,743,273
Federal Home Loan Bank stock 3,005,600 3,442,900
Loans receivable:
Not covered under FDIC loss sharing agreements 636,894,866 546,570,720
Covered under FDIC loss sharing agreements 46,772,694 70,631,743
Allowance for loan losses (covered loans) (948,200) (997,524)
Unamortized loan origination fees, net (non-covered loans) (1,404,319) (1,364,853)
Allowance for loan losses (non-covered loans) (8,484,986) (8,473,373)
Loans receivable, net 672,830,055 606,366,713
Other real estate owned:
Not covered under FDIC loss sharing agreements 938,705 1,757,864
Covered under FDIC loss sharing agreements 2,350,797 5,557,927
Accrued interest and dividends receivable 2,579,929 2,459,347
Premises and equipment, net 19,905,672 20,571,541
Goodwill 4,325,282 4,325,282
Other intangible assets, net of amortization 492,751 423,676
Cash surrender value of life insurance 48,102,945 47,178,128
FDIC receivable for loss sharing agreements 4,473,374 10,531,809
Deferred income taxes 7,753,812 8,231,002
Other assets 6,343,250 9,254,001
Total assets $1,004,936,205 $1,010,361,138
Liabilities and Stockholders' Equity
Liabilities:
Deposits $734,237,570 $717,192,200
FHLB advances 50,000,000 55,000,000
Advance payments by borrowers for taxes and insurance 1,503,405 1,312,283
Other liabilities 10,275,898 11,901,786
Total liabilities 796,016,873 785,406,269
Stockholders' equity:
Common stock, $0.01 par value; 16,403,912 shares issued and outstanding at June 30, 2015 and 18,261,388 shares issued and outstanding at September 30, 2014 164,039 182,614
Preferred stock, $0.01 par value; 50,000,000 shares authorized at June 30, 2015 and September 30, 2014
Additional paid-in capital 99,755,617 119,586,164
Unearned compensation – ESOP (5,551,193) (5,984,317)
Retained earnings 114,576,694 111,924,543
Accumulated other comprehensive loss (25,825) (754,135)
Total stockholders' equity 208,919,332 224,954,869
Total liabilities and stockholders' equity $1,004,936,205 $1,010,361,138
(1) Financial information as of September 30, 2014 has been derived from audited financial statements.
Charter Financial Corporation
Condensed Consolidated Statements of Income (unaudited)
Three Months Ended
June 30,
Nine Months Ended
June 30,
2015 2014 2015 2014
Interest income:
Loans receivable $8,988,725 $8,833,596 $26,832,782 $25,564,268
Mortgage-backed securities and collateralized mortgage obligations 735,230 871,899 2,359,001 2,794,019
Federal Home Loan Bank stock 35,316 35,601 109,001 102,778
Other investment securities available for sale 176,342 18,286 374,216 56,314
Interest-earning deposits in other financial institutions 25,611 97,321 85,459 266,816
Amortization of FDIC loss share receivable (596,691) (849,919) (2,387,205) (1,596,310)
Total interest income 9,364,533 9,006,784 27,373,254 27,187,885
Interest expense:
Deposits 672,525 790,011 2,063,898 2,479,856
Borrowings 545,368 595,829 1,725,750 1,872,357
Total interest expense 1,217,893 1,385,840 3,789,648 4,352,213
Net interest income 8,146,640 7,620,944 23,583,606 22,835,672
Provision for loan losses, not covered under FDIC loss sharing agreements 300,000
Provision for covered loan losses (834,086) (885,664)
Net interest income after provision for loan losses 8,146,640 8,455,030 23,583,606 23,421,336
Noninterest income:
Service charges on deposit accounts 1,663,324 1,463,698 4,758,276 4,263,639
Bankcard fees 1,015,719 906,013 2,956,880 2,596,743
Gain (loss) on investment securities available for sale 200,704 (27,209) 200,704
Bank owned life insurance 321,102 278,487 924,817 925,467
Gain on sale of loans and loan servicing release fees 435,055 298,405 1,153,636 737,236
Brokerage commissions 210,563 124,128 567,349 452,479
FDIC receivable for loss sharing agreements accretion 19,711 68,400 94,230 61,533
Other 150,933 (104,205) 405,086 1,330,929
Total noninterest income 3,816,407 3,235,630 10,833,065 10,568,730
Noninterest expenses:
Salaries and employee benefits 5,034,540 4,969,325 15,126,581 14,522,114
Occupancy 1,926,645 1,863,131 5,640,356 5,629,280
Legal and professional 352,116 369,360 978,025 1,309,946
Marketing 305,991 339,774 938,461 976,048
Federal insurance premiums and other regulatory fees 189,089 199,167 564,535 701,428
Net (benefit) cost of operations of real estate owned (29,675) 87,846 54,573 374,538
Furniture and equipment 229,105 225,753 603,306 550,200
Postage, office supplies and printing 222,151 239,874 686,783 646,500
Core deposit intangible amortization expense 64,009 94,454 206,405 300,514
Other 756,546 646,682 2,050,328 1,805,148
Total noninterest expenses 9,050,517 9,035,366 26,849,353 26,815,716
Income before income taxes 2,912,530 2,655,294 7,567,318 7,174,350
Income tax expense 1,000,796 870,116 2,547,849 2,261,294
Net income $1,911,734 $1,785,178 $5,019,469 $4,913,056
Basic net income per share $0.12 $0.09 $0.32 $0.23
Diluted net income per share $0.12 $0.09 $0.30 $0.22
Weighted average number of common shares outstanding 15,559,917 20,746,759 15,858,186 21,486,082
Weighted average number of common and potential common shares outstanding 16,210,424 21,300,951 16,508,693 22,040,274
Charter Financial Corporation
Supplemental Financial Data (unaudited)
in thousands except per share data
Quarter to Date Year to Date
6/30/2015 3/31/2015 12/31/2014 9/30/2014 6/30/2014 6/30/2015 6/30/2014
Consolidated balance sheet data:
Total assets $1,004,936 $1,010,645 $979,777 $1,010,361 $1,040,237 $1,004,936 $1,040,237
Cash and cash equivalents 39,951 64,564 48,732 99,463 149,269 39,951 149,269
Loans receivable, net 672,830 656,212 627,740 606,367 582,403 672,830 582,403
Non-covered loans receivable, net 627,006 607,118 560,724 536,732 511,176 627,006 511,176
Covered loans receivable, net 45,824 49,094 67,016 69,635 71,227 45,824 71,227
Other real estate owned 3,290 4,487 5,508 7,316 9,345 3,290 9,345
Non-covered other real estate owned 939 1,144 954 1,758 1,331 939 1,331
Covered other real estate owned 2,351 3,343 4,554 5,558 8,014 2,351 8,014
Securities available for sale 189,791 182,982 191,995 188,743 185,040 189,791 185,040
Transaction accounts 328,961 328,012 310,891 314,201 312,962 328,961 312,962
Total deposits 734,238 736,803 701,475 717,192 729,609 734,238 729,609
Borrowings 50,000 50,000 55,000 55,000 55,000 50,000 55,000
Total stockholders' equity 208,919 211,246 213,186 224,955 243,414 208,919 243,414
Consolidated earnings summary:
Interest income $9,365 $9,040 $8,969 $8,460 $9,007 $27,373 $27,188
Interest expense 1,218 1,236 1,336 1,378 1,386 3,789 4,352
Net interest income 8,147 7,804 7,633 7,082 7,621 23,584 22,836
Provision for loan losses on non-covered loans 300
Provision for loan losses on covered loans (4) 4 (127) (834) (885)
Net interest income after provision for loan losses 8,147 7,808 7,629 7,209 8,455 23,584 23,421
Noninterest income 3,816 3,451 3,566 3,708 3,236 10,833 10,569
Noninterest expense 9,050 9,064 8,735 9,394 9,036 26,850 26,816
Income tax expense 1,001 761 786 481 870 2,548 2,261
Net income $1,912 $1,434 $1,674 $1,042 $1,785 $5,019 $4,913
Per share data:
Earnings per share – basic $0.12 $0.09 $0.10 $0.06 $0.09 $0.32 $0.23
Earnings per share – fully diluted $0.12 $0.09 $0.10 $0.06 $0.09 $0.30 $0.22
Cash dividends per share $0.05 $0.05 $0.05 $0.05 $0.05 $0.15 $0.15
Weighted average basic shares 15,560 15,835 16,175 17,936 20,747 15,858 21,486
Weighted average diluted shares 16,210 16,376 16,710 18,446 21,301 16,509 22,040
Total shares outstanding 16,404 16,664 16,963 18,261 19,960 16,404 19,960
Book value per share $12.74 $12.68 $12.57 $12.32 $12.20 $12.74 $12.20
Tangible book value per share $12.44 $12.39 $12.29 $12.06 $11.95 $12.44 $11.95
(1) Financial information as of September 30, 2014 has been derived from audited financial statements.
Charter Financial Corporation
Supplemental Information (unaudited)
dollars in thousands
Quarter to Date Year to Date
6/30/2015 3/31/2015 12/31/2014 9/30/2014 6/30/2014 6/30/2015 6/30/2014
Not covered by loss share agreements
Loans receivable: (1)
1-4 family residential real estate $174,824 $172,131 $157,340 $152,811 $139,803 $174,824 $139,803
Commercial real estate 356,950 340,172 313,658 300,556 284,591 356,950 284,591
Commercial 30,078 29,432 27,844 24,760 21,172 30,078 21,172
Real estate construction 70,189 70,758 67,196 63,485 58,459 70,189 58,459
Consumer and other 4,854 4,560 4,625 4,959 17,010 4,854 17,010
Total non-covered loans receivable $636,895 $617,053 $570,663 $546,571 $521,035 $636,895 $521,035
Allowance for loan losses:
Balance at beginning of period $8,463 $8,494 $8,473 $8,606 $8,431 $8,473 $8,189
Charge-offs (54) (59) (88) (342) (238) (202) (399)
Recoveries 76 28 109 209 13 214 116
Provision 300
Transfer (2) 400 400
Balance at end of period $8,485 $8,463 $8,494 $8,473 $8,606 $8,485 $8,606
Nonperforming assets: (3)
Nonaccrual loans $4,310 $3,410 $3,274 $3,508 $4,243 $4,310 $4,243
Loans delinquent 90 days or greater and still accruing 64 736 238 238
Total nonperforming non-covered loans 4,310 3,410 3,338 4,244 4,481 4,310 4,481
Other real estate owned 939 1,144 954 1,758 1,331 939 1,331
Total nonperforming non-covered assets $5,249 $4,554 $4,292 $6,002 $5,812 $5,249 $5,812
Troubled debt restructuring:
Troubled debt restructurings - accruing $6,105 $6,064 $6,094 $6,154 $7,352 $6,105 $7,352
Troubled debt restructurings - nonaccrual 1,790 1,673 1,673 1,674 2,094 1,790 2,094
Total troubled debt restructurings $7,895 $7,737 $7,767 $7,828 $9,446 $7,895 $9,446
Covered by loss sharing agreements
Nonperforming assets:
Other real estate owned $2,351 $3,343 $4,554 $5,558 $8,014 $2,351 $8,014
Covered loans 90+ days delinquent (4) 1,248 2,638 5,434 5,315 3,156 1,248 3,156
Total nonperforming covered assets $3,599 $5,981 $9,988 $10,873 $11,170 $3,599 $11,170
(1) Includes previously acquired loans in the amount of $20.2 million and $20.8 million at June 30, 2015 and March 31, 2015, respectively, related to the Neighborhood Community Bank and McIntosh Commercial Bank non single-family loss sharing agreements with the FDIC that expired in June 2014 and March 2015, respectively. Additionally, $8.2 million, $8.6 million and $9.1 million of previously acquired loans related to Neighborhood Community Bank are included at December 31, 2014, September 30, 2014 and June 30, 2014, respectively.
(2) Transfer of allowance related to acquired Neighborhood Community Bank non-single family loans upon expiration of the non-single family loss sharing agreement with the FDIC in June 2014.
(3) Previously acquired loans that are no longer covered under the commercial loss sharing agreement with the FDIC are excluded from this table. Due to the recognition of accretion income established at the time of acquisition, acquired loans that are greater than 90 days delinquent or designated nonaccrual status are regarded as accruing loans for reporting purposes.
(4) Covered loans contractually past due greater than ninety days are reported as accruing loans because of accretable discounts established at the time of acquisition.

Charter Financial Corporation
Supplemental Information (unaudited)
Quarter to Date Year to Date
6/30/2015 3/31/2015 12/31/2014 9/30/2014 6/30/2014 6/30/2015 6/30/2014
Return on equity (annualized) 3.62% 2.69% 3.09% 1.78% 2.71% 3.13% 2.42%
Return on assets (annualized) 0.76% 0.58% 0.68% 0.41% 0.67% 0.67% 0.61%
Net interest margin (annualized) 3.62% 3.54% 3.47% 3.14% 3.26% 3.54% 3.24%
Net interest margin, excluding the effects of purchase accounting (1) 3.21% 3.31% 3.14% 2.95% 2.90% 3.22% 2.84%
Bank tier 1 leverage ratio (2) 16.70% 16.73% 18.31% 17.67% 19.51% 16.70% 19.51%
Bank total risk-based capital ratio 22.88% 23.42% 26.46% 27.90% 32.93% 22.88% 32.93%
Effective tax rate 34.36% 34.67% 31.96% 31.58% 32.77% 33.67% 31.52%
Yield on loans 5.02% 4.95% 5.14% 5.05% 5.44% 5.04% 5.47%
Cost of deposits 0.43% 0.43% 0.48% 0.49% 0.49% 0.45% 0.50%
Ratios of non-covered assets:
Allowance for loan losses as a % of total loans 1.33% 1.37% 1.49% 1.55% 1.65% 1.33% 1.65%
Allowance for loan losses as a % of nonperforming loans 196.86% 248.17% 254.47% 199.64% 192.06% 196.86% 192.06%
Nonperforming assets as a % of total loans and REO 0.82% 0.74% 0.75% 1.09% 1.11% 0.82% 1.11%
Nonperforming assets as a % of total assets 0.55% 0.48% 0.48% 0.65% 0.62% 0.55% 0.62%
Net charge-offs as a % of average loans (annualized) (0.01)% 0.02% (0.01)% 0.10% 0.18% —% 0.08%
(1) Net interest income excluding accretion and amortization of loss share loans receivable divided by average net interest earning assets excluding average loan accretable discounts in the amount of $3.9 million, $5.1 million, $5.5 million, $6.1 million, and $5.5 million, for the quarters ended June 30, 2015, March 31, 2015, December 31, 2014, September 30, 2014, and June 30, 2014, respectively.
(2) During the quarter ended March 31, 2015, an upstream of capital was made between the bank and the holding company in the amount of $17.5 million to be used primarily for the repurchase of the Company's outstanding shares.
Charter Financial Corporation
Average Balances, Interest Rates and Yields (unaudited)
dollars in thousands
Quarter to Date
6/30/2015 6/30/2014
Average
Balance

Interest
Average
Yield/Cost
(10)
Average
Balance

Interest
Average
Yield/Cost
(10)
Assets:
Interest-earning assets:
Interest-earning deposits in other financial institutions $44,748 $26 0.23% $151,348 $97 0.26%
FHLB common stock and other equity securities 3,006 35 4.70 3,443 36 4.14
Mortgage-backed securities and collateralized mortgage obligations available for sale 155,280 735 1.89 176,194 872 1.98
Other investment securities available for sale (1) 28,218 176 2.50 18,290 18 0.40
Loans receivable (1)(2)(3)(4) 668,329 7,508 4.49 586,797 7,189 4.90
Accretion and amortization of loss share loans receivable (5) 885 0.53 795 0.54
Total interest-earning assets 899,581 9,365 4.16 936,072 9,007 3.85
Total noninterest-earning assets 103,728 123,453
Total assets $1,003,309 $1,059,525
Liabilities and Equity:
Interest-bearing liabilities:
Interest bearing checking $175,641 $53 0.12% $178,771 $51 0.11%
Bank rewarded checking 49,743 25 0.20 48,429 29 0.24
Savings accounts 50,409 2 0.02 48,482 2 0.02
Money market deposit accounts 123,392 62 0.20 120,903 65 0.21
Certificate of deposit accounts 231,077 531 0.92 247,197 643 1.04
Total interest-bearing deposits 630,262 673 0.43 643,782 790 0.49
Borrowed funds 50,000 545 4.36 55,000 596 4.33
Total interest-bearing liabilities 680,262 1,218 0.72 698,782 1,386 0.79
Noninterest-bearing deposits 99,138 85,061
Other noninterest-bearing liabilities 12,417 11,979
Total noninterest-bearing liabilities 111,555 97,040
Total liabilities 791,817 795,822
Total stockholders' equity 211,492 263,703
Total liabilities and stockholders' equity $1,003,309 $1,059,525
Net interest income $8,147 $7,621
Net interest earning assets (6) $219,319 $237,290
Net interest rate spread (7) 3.44% 3.06%
Net interest margin (8) 3.62% 3.26%
Net interest margin, excluding the effects of purchase accounting (9) 3.21% 2.90%
Ratio of average interest-earning assets to average interest-bearing liabilities 132.24% 133.96%
(1) Tax exempt or tax-advantaged securities and loans are shown at their contractual yields and are not shown at a tax equivalent yield.
(2) Includes net loan fees deferred and accreted pursuant to applicable accounting requirements.
(3) Interest income on loans is interest income as recorded in the income statement and, therefore, does not include interest income on nonaccrual loans.
(4) Interest income on loans excludes discount accretion and amortization of the indemnification asset.
(5) Accretion of accretable purchase discount on loans acquired in FDIC-assisted acquisitions and amortization of the overstatement of FDIC indemnification asset.
(6) Net interest-earning assets represent total average interest-earning assets less total average interest-bearing liabilities.
(7) Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.
(8) Net interest margin represents net interest income as a percentage of average interest-earning assets.
(9) Net interest margin, excluding the effects of purchase accounting represents net interest income excluding accretion and amortization of loss share loans receivable as a percentage of average net interest earning assets excluding loan accretable discounts in the amount of $3.9 million and $5.5 million for the quarters ended June 30, 2015 and June 30, 2014, respectively.
(10) Annualized.
Charter Financial Corporation
Average Balances, Interest Rates and Yields (unaudited)
dollars in thousands
Fiscal Year to Date
6/30/2015 6/30/2014
Average
Balance

Interest
Average
Yield/Cost
(10)
Average
Balance

Interest
Average
Yield/Cost
(10)
Assets:
Interest-earning assets:
Interest-earning deposits in other financial institutions $50,140 $85 0.23% $146,869 $267 0.24%
FHLB common stock and other equity securities 3,276 109 4.44 3,748 103 3.66
Mortgage-backed securities and collateralized mortgage obligations available for sale 163,857 2,359 1.92 184,775 2,794 2.02
Other investment securities available for sale (1) 23,029 374 2.17 19,126 56 0.39
Loans receivable (1)(2)(3)(4) 647,306 22,422 4.62 584,630 21,249 4.85
Accretion and amortization of loss share loans receivable (5) 2,024 0.41 2,719 0.62
Total interest-earning assets 887,608 27,373 4.11 939,148 27,188 3.86
Total noninterest-earning assets 107,218 134,998
Total assets $994,826 $1,074,146
Liabilities and Equity:
Interest-bearing liabilities:
Interest bearing checking $169,518 $157 0.12% $175,754 $149 0.11%
Bank rewarded checking 48,730 77 0.21 48,342 87 0.24
Savings accounts 49,270 7 0.02 48,243 8 0.02
Money market deposit accounts 124,565 196 0.21 127,567 211 0.22
Certificate of deposit accounts 226,293 1,627 0.96 256,980 2,025 1.05
Total interest-bearing deposits 618,376 2,064 0.45 656,886 2,480 0.50
Borrowed funds 53,077 1,725 4.33 57,956 1,872 4.31
Total interest-bearing liabilities 671,453 3,789 0.75 714,842 4,352 0.81
Noninterest-bearing deposits 97,598 77,572
Other noninterest-bearing liabilities 11,807 11,459
Total noninterest-bearing liabilities 109,405 89,031
Total liabilities 780,858 803,873
Total stockholders' equity 213,968 270,273
Total liabilities and stockholders' equity $994,826 $1,074,146
Net interest income $23,584 $22,836
Net interest earning assets (6) $216,155 $224,306
Net interest rate spread (7) 3.36% 3.05%
Net interest margin (8) 3.54% 3.24%
Net interest margin, excluding the effects of purchase accounting (9) 3.22% 2.84%
Ratio of average interest-earning assets to average interest-bearing liabilities 132.19% 131.38%
(1) Tax exempt or tax-advantaged securities and loans are shown at their contractual yields and are not shown at a tax equivalent yield.
(2) Includes net loan fees deferred and accreted pursuant to applicable accounting requirements.
(3) Interest income on loans is interest income as recorded in the income statement and, therefore, does not include interest income on nonaccrual loans.
(4) Interest income on loans excludes discount accretion and amortization of the indemnification asset.
(5) Accretion of accretable purchase discount on loans acquired in FDIC-assisted acquisitions and amortization of the overstatement of FDIC indemnification asset.
(6) Net interest-earning assets represent total average interest-earning assets less total average interest-bearing liabilities.
(7) Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.
(8) Net interest margin represents net interest income as a percentage of average interest-earning assets.
(9) Net interest margin, excluding the effects of purchase accounting represents net interest income excluding accretion and amortization of loss share loans receivable as a percentage of average net interest earning assets excluding loan accretable discounts in the amount of $4.8 million and $4.5 million for the three months ended June 30, 2015 and June 30, 2014, respectively.
(10) Annualized.

CONTACT: Robert L. Johnson, Chairman & CEO Curt Kollar, CFO 706-645-1391 bjohnson@charterbank.net or ckollar@charterbank.net At Dresner Corporate Services Steve Carr 312-780-7211 scarr@dresnerco.comSource:Charter Financial Corporation