Charter Financial Reports Third Quarter Fiscal 2010 Net Income of $1.1 Million

WEST POINT, Ga., July 26 /PRNewswire-FirstCall/ -- Charter Financial Corporation (OTC Bulletin Board: CHFN) today reported net income for its third quarter ended June 30, 2010 of $1.1 million, or $0.06 per basic and diluted share, compared with $376,000, or $0.02 per basic and diluted share, for the same quarter of fiscal 2009.  The higher net income was primarily attributable to earnings on the assets and liabilities acquired in the FDIC–assisted McIntosh Commercial Bank acquisition earlier this year.

The Company's total assets rose to $1.1 billion at June 30, 2010 versus $936.9 million at September 30, 2009, and $977.7 million June 30, 2009.  Loans outstanding increased to $665.4 million, with $201.7 million covered by FDIC loss sharing at June 30, 2010.  This compared with loans outstanding of $552.6 million at September 30, 2009 and $543.8 million at June 30 2009.  

Total interest income increased to $14.3 million for the third fiscal quarter compared with $9.1 million for the same quarter last year. Interest expense was higher at $6.2 million for the third fiscal quarter compared with $5.3 million for the prior year's corresponding quarter. Net interest income rose sharply to $8.2 million for the third fiscal quarter from $3.8 million for the prior year's third fiscal quarter.  The net interest margin rose to 3.42% for the quarter just ended versus 2.08% for the comparable quarter the prior year.  Interest income on loans and accretion of purchase discounts from the FDIC–assisted acquisitions of Neighborhood Community Bank in June 2009 and McIntosh Commercial Bank in March 2010 contributed to the improved net interest margin.

"Integration of our FDIC-assisted acquisitions is going well.  The operating system conversion for Neighborhood Community Bank was completed in November and the McIntosh Commercial Bank conversion is scheduled for August.  The resolution of acquired problem assets will be a long process but we are encouraged by our results to date," said Robert L. Johnson, Chairman and CEO.

"McIntosh deposit retention has met our expectations and so far is similar to our experience at Neighborhood Community Bank.  After some initial run-off at Neighborhood, deposits now exceed balances at the acquisition date," he noted.  

The Company had net charge-offs of $3.2 million for the quarter ended June 30, 2010 compared with $1.4 million in the same quarter a year ago. Of these charge-offs for the quarter, $2.2 million had been identified as specific reserves in prior quarters. A loan loss provision of $1.3 million was recorded for this fiscal year's third quarter.  This provision brings the allowance for loan losses to 2.00% of non-covered loans at June 2010 compared with 1.81% of non-covered loans at June 30, 2009 and 1.97% of non-covered loans at September 30, 2009.

Total deposits amounted to $811.1 million at June 30, 2010 compared with $597.6 million at September 30, 2009.  The McIntosh acquisition and our implementation of our new Rewards checking program were the primary contributors to the increased deposits.  The Bank's borrowings decreased to $212.2 million at the end of June 2010 from $227.0 million at September 30, 2009 due to our focus on decreasing wholesale funding.  The Company had total shareholders' equity of $112.5 million at June 30, 2010 compared with $98.3 million at September 30, 2009.  Mr. Johnson concluded, "CharterBank is well capitalized with core regulatory capital of 9.11%.    The bank continues to be profitable in difficult economic times.  Our loan portfolio is sound and we are working through and reserving for troubled credits.  Our network of 16 branches services an attractive geographic region.  We expect more opportunities to acquire banks from the FDIC and expand this footprint in the future.  To continue with this strategy, we recently announced that we intend to raise additional capital through an incremental stock offering."  

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 and subsidiary CharterBank are in the mutual holding company structure. CharterBank is headquartered in West Point, Georgia, and operates 16 branches in West Central Georgia and East Central Alabama. CharterBank's deposits are insured by the Federal Deposit Insurance Corporation.

Forward-Looking Statements

This release may contain "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. 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.

SOURCE Charter Financial Corporation