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Charter Financial Announces Second Quarter Fiscal 2016 Earnings of $2.1 Million

  • Tangible book value per share of $12.89 at March 31, 2016, up $0.50 year over year
  • Basic and diluted EPS of $0.15 and $0.14, respectively, for the quarter
  • Bankcard and deposit fee quarterly income grew year over year by $303,000, or 12.1%
  • Nonperforming assets at 0.46% of total assets at March 31, 2016
  • Recognized $750,000 of recoveries in the quarter on previously charged-off loss share loans
  • Incurred $568,000 of merger-related costs during the quarter
  • Subsequent event: completed acquisition of CBS Financial Corporation on April 15, 2016

WEST POINT, Ga., April 28, 2016 (GLOBE NEWSWIRE) -- Charter Financial Corporation (the “Company”) (NASDAQ:CHFN) today reported net income of $2.1 million for the quarter ended March 31, 2016, or $0.15 and $0.14 per basic and diluted share, respectively, compared with net income $1.4 million, or $0.09 per basic and diluted share for the quarter ended March 31, 2015. Net income for the current year quarter increased 49.4% over the prior year quarter due in part to an $847,000 increase in net interest income and $750,000 of recoveries on previously charged-off loss share loans recognized in the current year quarter, partially offset by approximately $568,000 of costs incurred related to the merger with CBS Financial Corporation (“CBS”) that was completed on April 15, 2016. Additional merger-related costs are expected to be incurred as full conversion and integration of Community Bank of the South into CharterBank is not expected to be completed until July 2016.

Net income for the six months ended March 31, 2016, was $6.8 million, or $0.46 and $0.44 per basic and diluted share, respectively, compared with net income of $3.1 million, or $0.19 per basic and diluted share, for the six months ended March 31, 2015. The year over year increase was partially attributable to $3.6 million of nonrecurring recoveries on loans that were previously covered by loss share agreements with the FDIC.

Quarterly Operating Results

Quarterly earnings for the second quarter of fiscal 2016 compared with the second quarter of fiscal 2015 were positively impacted by the following items:

  • Loan interest income, excluding accretion and amortization of loss share receivable, increased $460,000, or 6.1%.
  • Net interest margin, excluding accretion and amortization of loss share receivable, was 3.36% for the quarter ended March 31, 2016, compared with 3.31% for the same quarter of fiscal 2015.
  • The cost of deposits decreased slightly to 42 basis points for the quarter ended March 31, 2016, compared to 43 basis points for the quarter ended March 31, 2015.
  • Deposit and bankcard fee income increased by a combined $303,000, or 12.1%.
  • $750,000 of recoveries on previously charged-off loss share loans recognized in noninterest income.

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

  • Approximately $568,000 of costs related to the CBS merger, consisting primarily of occupancy expense and legal and professional fees.
  • Income tax expense increased $357,000.

Chairman and CEO Robert L. Johnson said, “With the recent closing of the deal with CBS, we are focused on executing a smooth and methodical conversion and providing our customers in this market an entirely new banking experience. We are also excited about the banking location set to open in the Buckhead area of Atlanta later this summer. Ultimately, we are pleased with our financial results through the first half of fiscal 2016 and anticipate beginning to realize some of the benefits from our growth in Atlanta by the end of the year.”

Financial Condition

The Company's total assets increased $24.2 million to $1.1 billion at March 31, 2016, compared with September 30, 2015. Net loans decreased $13.4 million, or 1.9%, to $701.4 million at March 31, 2016, from $714.8 million at September 30, 2015.

Mr. Johnson continued, “Despite the slight decrease in net loans since September 30, 2015, we have experienced a $45.2 million, or 6.9%, increase in net loans since March 31, 2015. The current fiscal year decrease was primarily due to prepayments on a small number of large loans in the first quarter. In the second half of year, we anticipate growing the portfolio through the recently completed acquisition, organic growth and possible future acquisitions.”

Total deposits were $791.7 million at March 31, 2016, compared with $738.9 million at September 30, 2015. The increase was due in part to increases of $26.5 million and $18.9 million in transaction and money market accounts, respectively, during the six months ended March 31, 2016.

Total stockholders' equity decreased to $198.0 million at March 31, 2016, compared to $204.9 million at September 30, 2015, due primarily to $13.1 million of share repurchases during fiscal 2016, offset by $6.8 million of net income during the same period. Despite the decrease in stockholders’ equity, tangible book value per share grew to $12.89 at March 31, 2016, an increase of $0.41, compared to $12.48 at September 30, 2015, due to stock repurchases during fiscal 2016 and the associated reduced share count at March 31, 2016.

Net Interest Income and Net Interest Margin

Net interest income increased to $8.7 million for the quarter ended March 31, 2016, compared with $7.8 million for the quarter ended March 31, 2015. Interest income increased $848,000 due to a $460,000 increase in loan interest income, excluding accretion and amortization of loss share receivable, combined with a $366,000 increase in net purchase discount accretion and amortization of loss share receivable. Year over year total interest expense remained relatively unchanged at $1.2 million for the quarter ended March 31, 2016. The Company's net interest margin, excluding the effects of purchase accounting, increased slightly to 3.36% for the quarter ended March 31, 2016, compared with 3.31% for the quarter ended March 31, 2015.

Net interest income for the six months ended March 31, 2016, increased $2.4 million, or 15.8%, to $17.9 million, compared to $15.4 million for the prior year period. Interest income increased $2.3 million primarily due to increases of $1.4 million and $863,000 in loan interest income, excluding accretion and amortization of loss share receivable, and net purchase discount accretion and amortization of loss share receivable, respectively. Additionally, total interest expense decreased $116,000, or 4.5%, for the current year period compared to the prior year period.

Under purchase accounting rules, the Company currently expects to realize remaining loan discount accretion of $1.5 million over the next six quarters.

Provision for Loan Losses

The Company recorded no provision for loan losses in the three and six months ended March 31, 2016, due to the continued credit quality trends of the loan portfolio. No net provision was recorded in the six months ended March 31, 2015.

Noninterest Income and Expense

Noninterest income for the quarter ended March 31, 2016 increased $1.0 million to $4.5 million, compared with $3.5 million for the prior year period. The increase was due to a $303,000 increase in bankcard fee and other deposit fee income along with $750,000 in nonrecurring recoveries on loans that were previously covered by loss share agreements with the FDIC. Noninterest expense for the quarter ended March 31, 2016, increased $840,000 to $9.9 million, compared with the same period in fiscal 2015, primarily due to costs incurred related to the merger with CBS.

Noninterest income for the six months ended March 31, 2016 increased $4.3 million to $11.3 million, compared with $7.0 million for the prior year period. The improvement was due to a $672,000 increase in bankcard fee and other deposit fee income along with $3.6 million in nonrecurring recoveries on loans that were previously covered by loss share agreements with the FDIC. Noninterest expense for the six months ended March 31, 2016 increased $1.2 million to $19.0 million, compared with the same period in fiscal 2015, attributable to $568,000 of merger-related costs in the current year period, along with unrelated increases in salaries and employee benefits and legal and professional fees.

Asset Quality

Asset quality remained strong with nonperforming assets at 0.46% of total assets and the allowance for loan losses at 1.38% of total loans and 458.13% of nonperforming loans at March 31, 2016. The Company had net loan recoveries of $155,000 and $362,000 in its allowance for loan losses for the three and six months ended March 31, 2016, respectively, compared with net loan charge-offs of $18,000 and $62,000 for the same periods in fiscal 2015.

Capital Management

During the quarter ended March 31, 2016, the Company repurchased 208,195 shares for approximately $2.7 million, or $13.17 per share. Beginning with the first quarter of fiscal 2014 through the second quarter of fiscal 2016, the Company repurchased a combined 8.1 million shares, or 35.6%, of the Company's common stock at a discount to tangible book value of $12.5 million.

Mr. Johnson concluded, “We are pleased with the results of our stock repurchases over the past ten quarters, but with our stock consistently trading above book value, we intend to focus our efforts on enhancing shareholder value through leveraging our expense structure, improving our noninterest income and realizing the anticipated growth in earnings as a result of our recent and pending Atlanta expansion.”

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,” “intend,” “focused on,” “estimated,” “working on,” “continue to,” “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 the Company's inability to implement its business strategy; general and local economic conditions; changes in interest rates, deposit flows, demand for mortgages and other loans, real estate values, and competition; changes in loan defaults and charge-off rates; changes in the value of securities and other assets, adequacy of loan loss reserves, or deposit levels necessitating an increase in borrowing to fund loans and investments; the changing exposure to credit risk; the potential inability to promptly and effectively integrate the businesses of CharterBank and Community Bank of the South and effectively manage the new businesses and lending teams; 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, 2015. 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)
March 31,
2016
September 30,
2015
(1)
Assets
Cash and amounts due from depository institutions$10,730,776 $9,921,822
Interest-earning deposits in other financial institutions68,599,736 20,421,403
Cash and cash equivalents79,330,512 30,343,225
Loans held for sale, fair value of $1,253,584 and $1,444,0421,222,577 1,406,902
Investment securities available for sale172,197,338 184,404,089
Federal Home Loan Bank stock3,029,000 3,515,600
Loans receivable712,395,319 725,673,178
Unamortized loan origination fees, net(1,145,461) (1,423,456)
Allowance for loan losses(9,850,499) (9,488,512)
Loans receivable, net701,399,359 714,761,210
Other real estate owned2,711,249 3,410,538
Accrued interest and dividends receivable2,611,221 2,668,406
Premises and equipment, net20,446,166 19,660,012
Goodwill4,325,282 4,325,282
Other intangible assets, net of amortization72,087 157,226
Cash surrender value of life insurance48,989,033 48,423,510
Deferred income taxes5,861,733 5,674,095
Other assets9,085,841 8,329,239
Total assets$1,051,281,398 $1,027,079,334
Liabilities and Stockholders’ Equity
Liabilities:
Deposits$791,692,453 $738,855,076
Federal Home Loan Bank advances50,000,000 62,000,000
Advance payments by borrowers for taxes and insurance1,270,039 1,745,753
Other liabilities10,288,197 19,547,895
Total liabilities853,250,689 822,148,724
Stockholders’ equity:
Common stock, $0.01 par value; 15,026,378 shares issued and outstanding at March 31, 2016 and 16,027,654 shares issued and outstanding at September 30, 2015150,264 160,277
Preferred stock, $0.01 par value; 50,000,000 shares authorized at March 31, 2016 and September 30, 2015
Additional paid-in capital83,084,397 95,355,054
Unearned compensation – ESOP(5,106,169) (5,551,193)
Retained earnings119,662,368 114,362,386
Accumulated other comprehensive income239,849 604,086
Total stockholders’ equity198,030,709 204,930,610
Total liabilities and stockholders’ equity$1,051,281,398 $1,027,079,334

__________________________________

(1) Financial information at September 30, 2015 has been derived from audited financial statements.

Charter Financial Corporation
Condensed Consolidated Statements of Income (unaudited)
Three Months Ended
March 31,
Six Months Ended
March 31,
2016 2015 2016 2015
Interest income:
Loans receivable$8,863,437 $8,939,425 $18,304,962 $17,844,057
Mortgage-backed securities and collateralized mortgage obligations664,082 793,093 1,346,539 1,623,770
Federal Home Loan Bank stock36,149 36,978 75,077 73,686
Other investment securities available for sale270,454 153,020 534,508 197,874
Interest-earning deposits in other financial institutions54,047 18,812 66,438 59,848
Amortization of FDIC loss share receivable (901,603) (1,790,514)
Total interest income9,888,169 9,039,725 20,327,524 18,008,721
Interest expense:
Deposits692,218 658,445 1,357,652 1,391,372
Borrowings545,368 577,637 1,098,250 1,180,382
Total interest expense1,237,586 1,236,082 2,455,902 2,571,754
Net interest income8,650,583 7,803,643 17,871,622 15,436,967
Provision for loan losses (4,000)
Net interest income after provision for loan losses8,650,583 7,807,643 17,871,622 15,436,967
Noninterest income:
Service charges on deposit accounts1,620,144 1,512,974 3,372,702 3,094,952
Bankcard fees1,189,181 993,538 2,335,007 1,941,161
(Loss) gain on investment securities available for sale (27,893) 35,965 (27,209)
Bank owned life insurance244,860 279,302 565,523 603,715
Gain on sale of loans and loan servicing release fees359,750 351,578 707,606 718,581
Brokerage commissions146,430 202,483 288,145 356,787
Recoveries on acquired loans previously covered under FDIC loss share agreements750,000 3,625,000
FDIC receivable for loss sharing agreements accretion 27,059 74,519
Other202,538 111,651 413,495 254,152
Total noninterest income4,512,903 3,450,692 11,343,443 7,016,658
Noninterest expenses:
Salaries and employee benefits5,287,339 5,077,774 10,550,328 10,092,041
Occupancy2,222,332 1,838,048 4,132,784 3,713,711
Legal and professional678,565 385,283 1,058,403 625,909
Marketing352,247 367,238 613,161 632,470
Federal insurance premiums and other regulatory fees210,038 179,856 433,881 375,446
Net cost of operations of real estate owned71,408 141,568 50,164 84,248
Furniture and equipment161,308 223,666 329,722 374,201
Postage, office supplies and printing170,670 224,025 355,382 464,632
Core deposit intangible amortization expense36,154 68,088 85,138 142,396
Other712,710 557,503 1,371,838 1,293,783
Total noninterest expenses9,902,771 9,063,049 18,980,801 17,798,837
Income before income taxes3,260,715 2,195,286 10,234,264 4,654,788
Income tax expense1,117,627 761,055 3,476,898 1,547,053
Net income$2,143,088 $1,434,231 $6,757,366 $3,107,735
Basic net income per share$0.15 $0.09 $0.46 $0.19
Diluted net income per share$0.14 $0.09 $0.44 $0.19
Weighted average number of common shares outstanding14,224,862 15,835,418 14,557,000 16,007,320
Weighted average number of common and potential common shares outstanding14,909,947 16,375,507 15,242,085 16,547,409


Charter Financial Corporation
Supplemental Financial Data (unaudited)
in thousands except per share data
Quarter to Date Year to Date
3/31/2016 12/31/2015 9/30/2015 (1) 6/30/2015 3/31/2015 3/31/2016 3/31/2015
Consolidated balance sheet data:
Total assets$1,051,281 $1,004,880 $1,027,079 $1,004,936 $1,010,645 $1,051,281 $1,010,645
Cash and cash equivalents79,331 51,881 30,343 39,951 64,564 79,331 64,564
Loans receivable, net701,399 679,870 714,761 672,830 656,212 701,399 656,212
Other real estate owned2,711 3,165 3,411 3,290 4,487 2,711 4,487
Securities available for sale172,197 175,988 184,404 189,791 182,982 172,197 182,982
Transaction accounts353,834 331,570 327,373 328,961 328,012 353,834 328,012
Total deposits791,692 744,234 738,855 734,238 736,803 791,692 736,803
Borrowings50,000 50,000 62,000 50,000 50,000 50,000 50,000
Total stockholders’ equity198,031 198,368 204,931 208,919 211,246 198,031 211,246
Consolidated earnings summary:
Interest income$9,888 $10,439 $10,519 $9,365 $9,040 $20,328 $18,009
Interest expense1,237 1,218 1,223 1,218 1,236 2,456 2,572
Net interest income8,651 9,221 9,296 8,147 7,804 17,872 15,437
Provision for loan losses (4)
Net interest income after provision for loan losses8,651 9,221 9,296 8,147 7,808 17,872 15,437
Noninterest income4,513 6,831 1,496 3,816 3,451 11,343 7,017
Noninterest expense9,903 9,079 9,982 9,050 9,064 18,981 17,799
Income tax expense1,118 2,359 257 1,001 761 3,477 1,547
Net income$2,143 $4,614 $553 $1,912 $1,434 $6,757 $3,108
Per share data:
Earnings per share – basic$0.15 $0.31 $0.04 $0.12 $0.09 $0.46 $0.19
Earnings per share – fully diluted$0.14 $0.30 $0.04 $0.12 $0.09 $0.44 $0.19
Cash dividends per share$0.05 $0.05 $0.05 $0.05 $0.05 $0.10 $0.10
Weighted average basic shares14,225 14,886 15,300 15,560 15,835 14,557 16,007
Weighted average diluted shares14,910 15,545 15,982 16,210 16,376 15,242 16,547
Total shares outstanding15,026 15,229 16,028 16,404 16,664 15,026 16,664
Book value per share$13.18 $13.03 $12.79 $12.74 $12.68 $13.18 $12.68
Tangible book value per share$12.89 $12.73 $12.48 $12.44 $12.39 $12.89 $12.39

__________________________________

(1) Financial information at and for the year ended September 30, 2015 has been derived from audited financial statements.

Charter Financial Corporation
Supplemental Information (unaudited)
dollars in thousands
Quarter to Date Year to Date
3/31/2016 12/31/2015 9/30/2015 6/30/2015 3/31/2015 3/31/2016 3/31/2015
Loans receivable:
1-4 family residential real estate$190,180 $182,297 $188,044 $182,290 $179,748 $190,180 $179,748
Commercial real estate392,946 396,023 416,576 394,417 380,691 392,946 380,691
Commercial43,741 39,836 37,444 31,847 31,271 43,741 31,271
Real estate construction72,323 61,816 77,217 70,189 70,758 72,323 70,758
Consumer and other13,205 10,715 6,392 4,924 4,632 13,205 4,632
Total loans receivable (1)$712,395 $690,687 $725,673 $683,667 $667,100 $712,395 $667,100
Allowance for loan losses:
Balance at beginning of period$9,695 $9,489 $9,433 $9,409 $9,507 $9,489 $9,471
Charge-offs(205) (15) (263) (54) (59) (220) (212)
Recoveries360 221 319 78 41 581 150
Provision (2) (80)
Balance at end of period$9,850 $9,695 $9,489 $9,433 $9,409 $9,850 $9,409
Nonperforming assets: (3)
Nonaccrual loans$2,098 $2,463 $4,114 $4,310 $3,410 $2,098 $3,410
Loans delinquent 90 days or greater and still accruing52 14 14 52
Total nonperforming loans2,150 2,477 4,128 4,310 3,410 2,150 3,410
Other real estate owned (4)2,711 3,165 3,411 3,290 4,487 2,711 4,487
Total nonperforming assets$4,861 $5,642 $7,539 $7,600 $7,898 $4,861 $7,898
Troubled debt restructuring:
Troubled debt restructurings - accruing$7,267 $7,265 $6,046 $6,105 $6,064 $7,267 $6,064
Troubled debt restructurings - nonaccrual332 317 1,607 1,790 1,673 332 1,673
Total troubled debt restructurings$7,599 $7,582 $7,653 $7,895 $7,737 $7,599 $7,737

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(1) Included in the loan balances are loans that were previously covered under loss share agreements with the FDIC in the amount of $46.8 million and $50.0 million at June 30, 2015, and March 31, 2015, respectively.

(2) Prior to the termination of the FDIC loss share agreements in the fourth quarter of fiscal 2015, only the Company’s loss share percentage of the provision for covered loan losses was recognized in the Statement of Income as a provision expense (benefit). The remainder was recorded as an increase (decrease) to the FDIC receivable for loss sharing agreements in the Statement of Financial Condition.

(3) Loans that were previously covered under loss share agreements with the FDIC, and have associated accretion income established at the time of acquisition remaining to recognize, that were greater than 90 days delinquent or otherwise considered nonperforming loans are excluded from this table.

(4) Included in the balances is OREO that was previously covered under loss share agreements with the FDIC in the amount of $2.4 million and $3.3 million at June 30, 2015 and March 31, 2015, respectively.

Charter Financial Corporation
Supplemental Information (unaudited)
Quarter to Date Year to Date
3/31/2016 12/31/2015 9/30/2015 6/30/2015 3/31/2015 3/31/2016 3/31/2015
Return on equity (annualized)4.32% 8.97% 1.06% 3.62% 2.69% 6.69% 2.89%
Return on assets (annualized)0.83% 1.83% 0.22% 0.76% 0.58% 1.33% 0.63%
Net interest margin (annualized)3.72% 4.03% 4.05% 3.62% 3.54% 3.88% 3.50%
Net interest margin, excluding the effects of purchase accounting (1)3.36% 3.51% 3.37% 3.21% 3.31% 3.43% 3.22%
Bank tier 1 leverage ratio (2)17.13% 17.19% 16.04% 16.70% 16.73% 17.13% 16.73%
Bank total risk-based capital ratio22.98% 23.23% 21.71% 22.88% 23.42% 22.98% 23.42%
Effective tax rate34.28% 33.83% 31.78% 34.36% 34.67% 33.97% 33.24%
Yield on loans5.03% 5.33% 5.40% 5.02% 4.95% 5.18% 5.04%
Cost of deposits0.42% 0.42% 0.42% 0.43% 0.43% 0.42% 0.45%
Asset quality ratios: (3)
Allowance for loan losses as a % of total loans1.38% 1.40% 1.30% 1.33% 1.37% 1.38% 1.37%
Allowance for loan losses as a % of nonperforming loans458.13% 391.42% 229.85% 196.86% 248.17% 458.13% 248.17%
Nonperforming assets as a % of total loans and OREO0.68% 0.81% 1.04% 0.82% 0.74% 0.68% 0.74%
Nonperforming assets as a % of total assets0.46% 0.56% 0.73% 0.55% 0.48% 0.46% 0.48%
Net charge-offs (recoveries) as a % of average loans (annualized)(0.09)% (0.12)% (0.15)% (0.01)% 0.02% (0.21)% %

__________________________________

(1) Net interest income excluding accretion and amortization of acquired loans divided by average net interest earning assets excluding average loan accretable discounts in the amount of $2.0 million, $3.1 million, $3.8 million, $3.9 million, and $5.1 million for the quarters ended March 31, 2016, December 31, 2015, September 30, 2015, June 30, 2015, and March 31, 2015, 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.

(3) Due to the early termination of the FDIC loss share agreements in the fourth quarter of fiscal 2015, ratios for the three and six months ended March 31, 2016 and the three months ended December 31, 2015 and September 30, 2015 include all previously covered assets with the exception of FAS ASC 310-30 loans that are excluded from nonperforming loans due to the ongoing recognition of accretion income established at the time of acquisition. Ratios for periods prior to September 30, 2015, represent non-covered data only.

Charter Financial Corporation
Average Balances, Interest Rates and Yields (unaudited)
dollars in thousands
Quarter to Date
3/31/2016 3/31/2015
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$47,144 $54 0.46% $41,534 $19 0.18%
FHLB common stock and other equity securities3,007 36 4.81 3,362 37 4.40
Mortgage-backed securities and collateralized mortgage obligations available for sale135,510 664 1.96 162,561 793 1.95
Other investment securities available for sale (1)39,127 270 2.76 25,428 153 2.41
Loans receivable (1)(2)(3)(4)704,452 8,031 4.56 649,787 7,571 4.66
Accretion and amortization of acquired loan discounts (5) 833 0.47 467 0.28
Total interest-earning assets929,240 9,888 4.26 882,672 9,040 4.10
Total noninterest-earning assets98,710 107,814
Total assets$1,027,950 $990,486
Liabilities and Equity:
Interest-bearing liabilities:
Interest bearing checking$181,581 $55 0.12% $166,797 $50 0.12%
Bank rewarded checking48,859 25 0.20 49,153 24 0.20
Savings accounts52,907 4 0.03 49,179 2 0.02
Money market deposit accounts142,777 89 0.25 124,999 64 0.21
Certificate of deposit accounts233,980 519 0.89 223,194 518 0.93
Total interest-bearing deposits660,104 692 0.42 613,322 658 0.43
Borrowed funds50,000 545 4.36 53,833 578 4.29
Total interest-bearing liabilities710,104 1,237 0.70 667,155 1,236 0.74
Noninterest-bearing deposits106,304 98,450
Other noninterest-bearing liabilities13,235 11,371
Total noninterest-bearing liabilities119,539 109,821
Total liabilities829,643 776,976
Total stockholders' equity198,307 213,510
Total liabilities and stockholders' equity$1,027,950 $990,486
Net interest income $8,651 $7,804
Net interest earning assets (6) $219,136 $215,517
Net interest rate spread (7) 3.56% 3.36%
Net interest margin (8) 3.72% 3.54%
Net interest margin, excluding the effects of purchase accounting (9) 3.36% 3.31%
Ratio of average interest-earning assets to average interest-bearing liabilities 130.86% 132.30%

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(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 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 acquired loans receivable as a percentage of average net interest earning assets excluding loan accretable discounts in the amount of $2.0 million and $5.1 million for the quarters ended March 31, 2016 and March 31, 2015, respectively.

(10) Annualized.

Charter Financial Corporation
Average Balances, Interest Rates and Yields (unaudited)
dollars in thousands
Fiscal Year to Date
3/31/2016 3/31/2015
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$35,192 $66 0.38% $52,836 $60 0.23%
FHLB common stock and other equity securities3,043 75 4.93 3,412 74 4.32
Mortgage-backed securities and collateralized mortgage obligations available for sale138,314 1,347 1.95 168,146 1,624 1.93
Other investment securities available for sale (1)39,307 535 2.72 20,434 198 1.94
Loans receivable (1)(2)(3)(4)706,199 16,303 4.62 636,793 14,914 4.68
Accretion and amortization of acquired loan discounts (5) 2,002 0.57 1,139 0.35
Total interest-earning assets922,055 20,328 4.41 881,621 18,009 4.09
Total noninterest-earning assets96,564 108,963
Total assets$1,018,619 $990,584
Liabilities and Equity:
Interest-bearing liabilities:
Interest bearing checking$179,548 $110 0.12% $166,457 $104 0.12%
Bank rewarded checking47,776 48 0.20 48,223 52 0.22
Savings accounts51,642 8 0.03 48,701 5 0.02
Money market deposit accounts136,800 165 0.24 125,152 134 0.21
Certificate of deposit accounts232,990 1,027 0.88 223,900 1,097 0.98
Total interest-bearing deposits648,756 1,358 0.42 612,433 1,392 0.45
Borrowed funds50,820 1,098 4.32 54,615 1,180 4.32
Total interest-bearing liabilities699,576 2,456 0.70 667,048 2,572 0.77
Noninterest-bearing deposits104,861 96,828
Other noninterest-bearing liabilities12,069 11,502
Total noninterest-bearing liabilities116,930 108,330
Total liabilities816,506 775,378
Total stockholders' equity202,113 215,206
Total liabilities and stockholders' equity$1,018,619 $990,584
Net interest income $17,872 $15,437
Net interest earning assets (6) $222,479 $214,573
Net interest rate spread (7) 3.71% 3.32%
Net interest margin (8) 3.88% 3.50%
Net interest margin, excluding the effects of purchase accounting (9) 3.43% 3.22%
Ratio of average interest-earning assets to average interest-bearing liabilities 131.80% 132.17%

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(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 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 acquired loans receivable as a percentage of average net interest earning assets excluding loan accretable discounts in the amount of $2.5 million and $5.3 million for the six months ended March 31, 2016 and March 31, 2015, respectively.

(10) Annualized.

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

Source:Charter Financial Corporation