Charter Financial Announces Fiscal 2010 Results

- Net Income of $5,935,000 for the Fiscal Year

- Completes Incremental 2nd Step Capital Raise

- Completes Core Systems Conversion for McIntosh Commercial Bank Acquisition

- Strengthens Balance Sheet; Builds Cash

- Common Stock Listed on NASDAQ; Added to Wilshire 5000

Dec 08, 2010, 18:05 ET from Charter Financial Corporation

WEST POINT, Ga., Dec. 8, 2010 /PRNewswire-FirstCall/ -- Charter Financial Corporation (Nasdaq: CHFN) today reported net income for its fiscal year ended September 30, 2010 of $5.9 million, or $0.32 per basic and diluted share, compared with $2.3 million, or $0.13 per basic and $0.12 per diluted share, for the fiscal year ended September 30, 2009.  The higher net income was primarily attributable to a purchase gain on the assets acquired in the FDIC–assisted acquisition of McIntosh Commercial Bank (MCB) earlier this year.  Net income for the quarter ended September 30, 2010 was $846,000, up from $510,000 for the corresponding quarter in the prior year.  

For the quarter ended March 31, 2010 and the year ended September 30, 2010, the Company retrospectively lowered the gain recognized on the purchase of MCB from $15.6 million to $9.3 million.   This was required by  FASB ASC 805, "Business Combinations," when, during the quarter, the Company obtained third-party appraisals and other valuations for the majority of MCB's collateral-dependent problem loans and foreclosed real estate indicating, overall, that the appraised values were lower than the company's original estimates made as of the acquisition date.  Any losses beyond the revised estimate, should they occur, would be covered by the FDIC at the 95% reimbursement rate provided in the loss share agreement with the FDIC.

The Company's total assets rose to $1.2 billion at September 30, 2010 from $1.1 billion at June 30, 2010 and $936.9 million at September 30, 2009.  Loans outstanding were $599.4 million at September 30, 2010, of which $148.1 million, or 24.7%, were covered by FDIC loss sharing.  This compared with loans outstanding of $630.6 million at June 30, 2010 and $552.6 million at September 30, 2009.

Total interest income increased to $50.0 million for the year ended September 30, 2010, compared with $40.6 million for the prior fiscal year. Interest expense was slightly higher at $22.8 million for the year ended September 30, 2010, compared with $22.6 million for the prior fiscal year. Net interest income increased 51.4%, to $27.2 million for the year ended September 30, 2010, compared with $18.0 million for the prior fiscal year.  The net interest margin rose to 3.19% for the year ended September 30, 2010, compared with 2.35% for the prior fiscal year.  Higher interest income on loans and the 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. The Company's net interest income was inhibited by the conservative levels of cash accumulated late in the fiscal year largely from acquired assets and lack of attractive reinvestment options including low securities yields and weak loan demand.

"Integration of our FDIC-assisted acquisitions is progressing well.  The operating system conversion for McIntosh Commercial Bank was completed in August.   Claims filed under the loss sharing agreements have totaled $98.4 million since the acquisition dates.  The majority of this amount has been collected from the FDIC.    We have learned some things from both of our FDIC assisted deals that will help us in the future.  The acquired assets  will take some time to work out and safely reinvest.  Even with the adjustment of the initial McIntosh estimates we remain upbeat about the results to date and the opportunities that lie ahead," said Robert L. Johnson, Chairman and CEO.

The Company had net charge-offs of $5.3 million for the year ended September 30, 2010 compared with $3.5 million for the prior fiscal year. A loan loss provision of $5.8 million was recorded for the year ended September 30, 2010 compared to $4.6 million for the prior fiscal year for non-covered loans.  This provision increased the allowance for loan losses to 2.12% of non-covered loans at September 30, 2010 compared with 1.98% of non-covered loans at September 30, 2009.  Nonperforming assets not covered by loss sharing were $21.4 million at September 30, 2010, down from $24.0 million at June 30, 2010.

Noninterest expense increased to $30.5 million for the year ended September 30, 2010 compared with $22.6 million for the prior fiscal year.  The majority of the increase was attributed 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 totaled $17.5 million for the year ended September 30, 2010 compared with $11.8 million for the prior fiscal year.   Noninterest income in the 2010 fiscal year included $9.3 million in purchase gain on the McIntosh Commercial Bank FDIC-assisted acquisition.  The Company also realized other-than-temporary impairment losses of $3.5 million in the year ended September 30, 2010.

Total deposits amounted to $823.1 million at September 30, 2010 compared with $597.6 million at September 30, 2009.  The MCB acquisition and implementation of the Company's new Rewards checking program were the primary contributors to the increased deposits.  Borrowings decreased to $212.0 million at September 30, 2010 from $227.0 million at September 30, 2009, due to the Company's continued focus on decreasing wholesale funding.  Borrowings were reduced an additional $60.0 million subsequent to the conclusion of the 2010 fiscal year.

The Company had total shareholders' equity of $135.8 million at September 30, 2010 compared with $98.3 million at September 30, 2009.   Mr. Johnson concluded, "CharterBank is well capitalized with core regulatory capital of 10.21% and this ratio was enhanced by the  reduction in borrowings following the end of the fiscal year.  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 are well positioned with capital and expect more opportunities to acquire banks from the FDIC and to expand our footprint in the future."

On September 29, 2010, the Company announced that it had completed an incremental sale of common stock and began trading on the NASDAQ Capital Market under the symbol CHFN.  Charter Financial Corporation, the holding company for CharterBank, sold approximately $34.2 million of common stock for net proceeds of $30.1 million.  

After the market close on October 15, 2010, the Company's common stock was added to the Wilshire 5000 Total Market Index.

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  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

FINANCIAL TABLES FOLLOW

Charter Financial Corporation

Selected Financial Data (in thousands except share data):

September 30,

September 30,

June 30,

2010

2009

2010

Unaudited

Total Assets

$1,188,534

$    936,880

$1,139,955

Cash and Cash Equivalents

235,639

53,840

117,356

Loans Receivable, Net

599,370

552,550

630,571

    Non-covered Loans Receivable, Net

451,231

462,786

463,725

    Covered Loans Receivable, Net

148,139

89,764

166,846

Mortgage Securities Available for Sale

133,080

201,626

156,251

Core Deposits*

313,170

216,902

308,402

Retail Deposits**

739,691

463,587

710,620

Total Deposits

823,134

597,634

811,058

Borrowings

212,000

227,000

212,175

Total Stockholders' Equity

135,788

98,257

108,755

Book Value per Share

$        7.49

$         5.34

$        5.90

Tangible Book Value per Share

7.20

5.06

5.63

Minority Shares Outstanding

6,675,775

2,551,033

2,566,233

Total Shares Outstanding –  at Quarter End

18,133,699

18,408,957

18,424,157

Weighted Average Total Shares Outstanding – Basic

18,422,050

18,497,297

18,424,720

Weighted Average Total Shares Outstanding – Fully Diluted

18,473,624

18,558,523

18,479,581

*Core deposits include transaction accounts, money market accounts, and savings accounts.

**Retail deposits include Core Deposits, and certificates of deposits excluding brokered and wholesale.

Selected Operating Data (in thousands except share data):

Year Ended

Three months ended

September 30,

September 30,

June 30,

March 31,

2010

2009

2010

2009

2010

2010

Total Interest Income

$   49,959

$  40,559

$  13,331

$  12,189

$ 14,354

$ 11,025

Total Interest Expense

22,758

22,599

6,186

5,917

6,193

5,307

  Net Interest Income

27,201

17,960

7,145

6,272

8,161

5,718

Provision for Loan Losses

5,800

4,550

700

1,400

1,300

3,000

Provision for Loan Losses on Covered Assets

420

-

420

-

-

-

  Net Interest Income after Provision for Loan Losses

20,981

13,410

6,025

4,872

6,861

2,718

Noninterest Income

17,510

11,792

3,371

3,480

2,985

8,744

Noninterest Expense

30,469

22,581

9,082

7,805

8,038

7,265

  Income before Income Taxes

8,022

2,621

314

547

1,808

4,197

Income Tax Expense (Benefit)

2,087

306

(532)

37

608

1,510

  Net Income

$     5,935

$   2,315

$       846

$       510

$ 1,200

$  2,687

Earnings per Share

$       0.32

$     0.13

$      0.05

$     0.03

$   0.07

$   0.15

Earnings per Share – Fully Diluted

0.32

0.12

0.05

0.03

0.07

$   0.15

Cash Dividends per Share***

0.40

1.00

0.05

0.25

0.10

0.00

Net Charge-offs (Recoveries)- Legacy Charter Loans

5,335

3,462

361

408

3,239

1,569

Deposit Fees

5,789

4,664

1,564

1,284

1,553

1,396

Gain on Sale of Loans

796

682

171

135

157

380

***First Charter, MHC has waived a portion of these dividends, resulting in payment to the minority stockholders and the Holding Company.

Year Ended

Three months ended

Performance Ratios:

September 30,

September 30,

June 30,

March 31,

2010

2009

2010

2009

2010

2010

Return on Equity

5.62%

2.25%

3.09%

2.06%

4.38%

10.39%

Return on Assets

0.56

0.27

0.29

0.21

0.41

1.10

Net Interest Margin

3.19

2.35

3.26

3.00

3.55

2.80

Effective Tax Rate Expense (Benefit)

26.01

11.66

(169.56)

6.83

33.62

35.98

Dividend Payout Ratio

27.29

145.13

32.95

153.79

46.39

-

Ratios of Assets Not Covered:

Loan Loss Reserve as a % of Total Loans

2.12

1.98

2.12

1.98

2.00

2.39

Loan Loss Reserve as a % of Nonperforming Assets

45.70

51.58

45.70

51.58

39.57

55.58

Nonperforming Assets as a % of Total Loans and REO

4.55

3.79

4.55

3.79

4.93

4.24

Net Chargeoffs (Recoveries) as a % of Average Loans

0.90

0.76

0.27

0.35

2.70

1.16

SOURCE Charter Financial Corporation



RELATED LINKS

http://www.charterbank.net