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Charter Financial Announces Fiscal 2012 Earnings of $5.0 Million

  • Net Income of $5.0 million—an increase of $2.7 million over fiscal 2011
  • Credit metrics improved quarter over quarter
  • Nonperforming assets declined to 0.69% of total assets
  • Allowance for loan losses at 238% of nonperforming loans
  • Regulatory core capital of 12.16%

WEST POINT, Ga., Nov. 13, 2012 (GLOBE NEWSWIRE) -- Charter Financial Corporation (Nasdaq:CHFN) today reported net income of $5.0 million, or $0.28 per basic and diluted share for the year ended September 30, 2012, an improvement from $2.3 million, or $0.13 per basic and diluted share, for the year ended September 30, 2011. For the quarter ended September 30, 2012 net income was $1.8 million, or $0.10 per basic and diluted share compared with $229,000, or $0.01 per basic and diluted share for the quarter ended September 30, 2011.

The Company's total assets were $1.03 billion at September 30, 2012, down from $1.17 billion at September 30, 2011. Total loans outstanding were $593.9 million at September 30, 2012, of which $166.2 million, or 28.0%, were covered by FDIC loss sharing agreements. Total loans outstanding at September 30, 2011, were $655.0 million. Loans not covered by loss sharing agreements were $427.7 million at September 30, 2012, which is up nominally from the September 30, 2011 balance of $420.0 million.

Chairman and CEO Robert Johnson stated, "It was a good year in which we improved earnings and realized continued improvement in credit quality. We more than doubled net income and cut nonperforming loans in half compared to our fiscal 2011 results."

Total deposits were $800.3 million at September 30, 2012 compared to $911.1 million at September 30, 2011. Over half of the Company's retail deposits are now core (non-time) deposits. Borrowings decreased to $81.0 million at September 30, 2012 from $110.0 million at September 30, 2011, due to pay downs of wholesale funding.

Mr. Johnson continued, "Our credit quality metrics continue to improve, not only with the legacy bank, but with the acquired loans covered by FDIC loss sharing agreements as well. We are very pleased nonperforming assets not covered by loss sharing declined to $5.6 million. Also, we reduced our foreclosed real estate through an auction in late September that disposed of approximately seventy properties, primarily covered by loss sharing. These properties were largely vacant land or lots that had proven to be difficult to sell."

Nonperforming assets not covered by loss sharing agreements declined to $5.6 million at September 30, 2012, from $15.8 million at September 30, 2011, and from $9.4 million at June 30, 2012. As of September 30, 2012 the allowance for loan losses increased to 237.69% of non-covered nonperforming loans from 80.13% at September 30, 2011, and 143.14% at June 30, 2012. The Company had net charge-offs on loans not covered by loss sharing of $4.5 million for the year ended September 30, 2012, compared to $2.1 million for the year ended September 30, 2011.

Net interest income increased $6.9 million to $37.5 million for the year ended September 30, 2012, compared to $30.6 million for fiscal 2011. The increase was due to a decrease in interest expense of $4.6 million to $10.6 million for the year ended September 30, 2012, compared to $15.2 million for fiscal 2011. Interest income increased $2.3 million to $48.1 million for the year ended September 30, 2012, compared to $45.8 million for fiscal 2011. The primary reason for the increase in interest income was the higher average balance of loans due to the First National Bank of Florida acquisition in September 2011.

Net interest margin increased to 4.17% for the year ended September 30, 2012, compared with 3.59% at September 30, 2011. The lower average cost of deposits and pay down of high cost term borrowings contributed to the improved net interest margin.

Noninterest expense increased to $40.5 million for the year ended September 30, 2012, compared to $34.3 million at September 30, 2011. Most of the increase relates to the Company's FDIC-assisted acquisitions, including the costs associated with acquiring, integrating and operating the additional branches, as well as resolving the acquired problem assets.

Noninterest income increased to $13.1 million for the year ended September 30, 2012, compared to $9.6 million at September 30, 2011. Noninterest income for the year was higher due to a decrease in other than temporary impairment to $273,000 for the year ended September 30, 2012, compared to $2.3 million at September 30, 2011. Fees on deposits increased to $7.0 million for the year ended September 30, 2012, compared to $5.8 million for the year ended September 30, 2011.

The Company recorded a loan loss provision of $3.3 million on non-covered loans and $1.2 million on covered loans for the year ended September 30, 2012, compared to $1.7 million on non-covered loans and $1.2 million provision on covered loans for the year ended September 30, 2011.

For the year ended September 30, 2012, income taxes were $639,000 or an effective tax rate of 11.38%. This lower than normal rate is a result of an uncertain tax position that was resolved for the year ended September 30, 2012.

Mr. Johnson continued, "We are pleased with the improvement in earnings, the rising quality of our legacy loan portfolio and the growth of our core deposit base. Organic loan growth has been slow to materialize due to ongoing consumer and business concerns with the economy. However, as we move in to fiscal 2013, we continue to explore opportunities to safely grow our earnings. Our strong regulatory leverage capital of 12.16% allows us to further seek opportunities to expand our franchise."

Mr. Johnson concluded, "Our branch network serves an attractive geographic region in West Central Georgia, East Central Alabama, and the North Florida Gulf Coast. Our solid capital standing and our acquisition experience position CharterBank to be a successful consolidator among southeastern banks and to build an enviable community bank footprint with strong shareholder returns."

About Charter Financial Corporation

Charter Financial Corporation is a savings and loan holding company and the parent company of CharterBank, a growing full-service community bank. Charter Financial Corporation is in the mutual holding company structure. 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.

Forward-Looking Statements

This release contains "forward-looking statements" that may be identified by use of such words as "believe," "expect," "anticipate," "should," "planned," "estimated," and "potential." Examples of forward-looking statements include, but are not limited to, 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; changes in legislation or regulation; and other economic, competitive, governmental, regulatory, and technological factors affecting our operations, pricing, products, and services. 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.

Charter Financial Corporation
Selected Financial Data (unaudited)
In thousands except share and per share data:
September 30,
2012
September 30,
2011***
June 30,
2012
Total Assets $ 1,032,220 $ 1,171,710 $ 1,049,436
Cash and Cash Equivalents 108,828 149,762 76,488
Loans Receivable, Net 593,904 655,028 616,837
Non-covered Loans Receivable, Net 427,676 419,979 430,292
Covered Loans Receivable, Net 166,228 235,049 186,545
Real Estate Owned 24,010 28,765 24,365
Non-covered Real Estate Owned 2,107 4,093 3,437
Covered Real Estate Owned 21,903 24,672 20,928
Securities Available for Sale 189,379 158,737 199,140
Core Deposits* 456,292 447,176 467,868
Retail Deposits** 779,397 883,389 800,575
Total Deposits 800,262 911,094 821,532
Borrowings 81,000 110,000 80,000
Total Stockholders' Equity 142,521 139,416 139,568
Book Value per Share $ 8.00 $ 7.68 $ 7.82
Tangible Book Value per Share 7.69 7.34 7.50
Minority Shares Outstanding 6,353,443 6,706,423 6,397,851
Total Shares Outstanding – at Period End 17,811,367 18,164,347 17,855,775
Weighted Average Total Shares Outstanding – Basic 17,907,597 18,146,627 17,932,227
Weighted Average Total Shares Outstanding – Fully Diluted 17,936,493 18,183,938 17,966,416
*Core deposits include transaction accounts, money market accounts and savings accounts.
**Retail deposits include Core Deposits and certificates of deposits excluding brokered and wholesale certificates of deposits.
***Financial information as of September 30, 2011 has been derived from audited financial statements.
Selected Operating Data (in thousands except share and per share data):
Twelve Months Ended Three Months Ended
September 30, September 30, June 30, March 31,
2012 2011 2012 2011 2012 2012
Total Interest Income $ 48,101 $ 45,786 $ 11,154 $ 10,692 $ 11,805 $ 12,642
Total Interest Expense 10,589 15,228 2,134 3,155 2,271 2,851
Net Interest Income 37,512 30,558 9,020 7,537 9,534 9,791
Provision for Loan Losses on non-covered loans 3,300 1,700 1,200 300 300 300
Provision for Loan Losses on covered loans 1,202 1,200 236 800 75 290
Net Interest Income after Provision for Loan Losses 33,010 27,658 7,584 6,437 9,159 9,201
Noninterest Income 13,062 9,633 3,684 2,059 2,929 2,632
Noninterest Expense 40,454 34,292 8,659 8,288 11,506 10,024
Income before Income Taxes 5,618 2,999 2,609 208 582 1,809
. .
Income Tax Expense (Benefit) 639 694 858 (21) (897) 548
Net Income $ 4,979 $ 2,305 $ 1,751 $ 229 $ 1,479 $ 1,261
Earnings per Share – Basic $ 0.28 $ 0.13 $ 0.10 $ 0.01 $ 0.08 $ 0.07
Earnings per Share – Fully Diluted 0.28 0.13 0.10 0.01 0.08 0.07
Cash Dividends per Share** 0.10 0.20 -- 0.05 0.05 --
Net Charge-offs – Legacy Loans 4,480 2,127 1,556 290 280 595
Deposit Fees 7,002 5,843 1,947 1,601 1,713 1,618
Gain on Sale of Loans 962 656 353 150 261 161
Bargain Purchase Gains -- 1,095 -- 1,095 -- --
**First Charter, MHC has waived most of its portion of these dividends, resulting in payment primarily to the minority stockholders.
Twelve Months Ended Three Months Ended
September 30, September 30, June 30, March 31,
2012 2011 2012 2011 2012 2012
Unaudited
Return on Equity 3.58% 1.67% 4.95% 0.65% 4.27% 3.68%
Return on Assets 0.46% 0.22% 0.68% 0.09% 0.57% 0.46%
Net Interest Margin 4.17% 3.59% 4.09% 3.56% 4.33% 4.35%
Bank Core Capital Ratio 12.16% 10.68% 12.16% 10.68% 12.33% 11.93%
Bank Total Risk Based Capital 19.22% 24.36% 19.22% 24.36% 20.86% 21.62%
Effective Tax Rate 11.38% 23.15% 32.88% (9.97%) (154.17%) 30.29%
Ratios of Non-covered Assets:
Allowance for loan losses as a % of Total Loans 1.87% 2.19% 1.87% 2.19% 1.94% 1.92%
Allowance for loan losses as a % of Nonperforming Loans 237.69% 80.13% 237.69% 80.13% 143.14% 124.34%
Nonperforming Assets as a % of Total Loans and REO 1.27% 3.64% 1.27% 3.64% 2.13% 2.33%
Nonperforming Assets as a % of Total Assets 0.69% 1.99% 0.69% 1.99% 1.19% 1.35%
Net Charge-offs as a % of Average Loans 0.86% 0.48% 1.43% 0.27% 0.25% 0.40%
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