• Total equity to assets of 25.13%
  • Noncovered loan growth of 10.10%
  • Noninterest expense 9.9% lower than prior year
  • Nonperforming noncovered assets at 0.49% of total noncovered assets
  • Basic and diluted EPS of $0.30 for the year

WEST POINT, Ga., Nov. 8, 2013 (GLOBE NEWSWIRE) -- Charter Financial Corporation (the "Company") (Nasdaq:CHFN) today reported net income of $6.3 million, or $0.30 per basic and diluted share for the year ended September 30, 2013, an improvement from $5.0 million, or $0.26 per basic and diluted share, for the year ended September 30, 2012. For the quarter ended September 30, 2013 net income was $0.9 million, or $0.04 per basic and diluted share, compared with $1.8 million, or $0.09 per basic and diluted share, for the quarter ended September 30, 2012.

The Company's total assets were $1.1 billion at September 30, 2013, an increase of $57.2 million from September 30, 2012. Total stockholders' equity grew to $273.8 million at September 30, 2013 from $142.5 million at September 30, 2012 due to the completion of the conversion to a full stock company from the mutual holding company structure. Net non-covered loans grew $43.2 million, or 10.10%, to $470.9 million at September 30, 2013 from $427.7 million at September 30, 2012. At September 30, 2013, $109.0 million of net loans receivable were covered by FDIC loss sharing, down from $166.2 million at September 30, 2012. Of the remaining $109.0 million of loans covered by loss sharing, $21.4 million are considered problem loans and are handled by the Company's special assets group with the remaining $87.6 million generally considered "pass" credits.

Chairman and CEO Robert L. Johnson said, "This was a progressive year for Charter Financial as we successfully completed the conversion to a full-stock company, enhanced financial results, and ended the year with a robust capital position. Further, we are pleased with the non-covered loan growth for the year and, particularly for the quarter ended September 30, 2013, that the legacy loan growth exceeded the covered loan run-off. We hope these trends continue, thereby allowing us to invest some of the liquidity acquired in the FDIC-assisted acquisitions. We continue to face headwinds as our purchased loan discount accretion declines. Accordingly, achieving loan growth is a key component of our strategy to replace income."

Total deposits were $751.3 million at September 30, 2013 compared with $800.3 million at September 30, 2012. Core deposits increased to $475.4 million at September 30, 2013 from $456.3 million at September 30, 2012. Total deposits were lower at September 30, 2013 due to decreases of $15.5 million in wholesale time deposits and $52.6 million in non-wholesale time deposits. Borrowings decreased to $60.0 million at September 30, 2013 from $81.0 million at September 30, 2012.

Net interest income decreased to $35.3 million for the year ended September 30, 2013, from $37.5 million for the year ended September 30, 2012. Total interest income decreased to $42.6 million for the year ended September 30, 2013, compared to $48.1 million for the year ended September 30, 2012 primarily as a result of a decrease in the average loan balances. Interest expense decreased to $7.4 million for the year ended September 30, 2013, compared to $10.6 million for the year ended September 30, 2012, primarily as a result of lower expenses on certificates of deposit and borrowings. The average balance of certificates of deposit decreased $76.1 million and the average yield decreased 0.28%.

Net interest margin decreased to 3.82% for the year ended September 30, 2013, compared with 4.17% for the year ended September 30, 2012. The net interest margin for the quarter ended September 30, 2013 was 3.44% compared to 4.09% for the same quarter of the prior year. The net interest margin without accretion for the quarter ended September 30, 2013 was 2.68%.

Noninterest income decreased to $11.7 million for the year ended September 30, 2013, compared to $12.9 million for the year ended September 30, 2012. Noninterest income was lower due to a decrease in FDIC indemnification asset income of $1.4 million for the year ended September 30, 2013, compared to the year ended September 30, 2012. The decrease in indemnification asset income was partially due to reduced accretion and the remainder was due to impairment. Fees on deposits increased to $7.8 million for the year ended September 30, 2013, compared to $7.0 million for the year ended September 30, 2012.

Noninterest expense decreased to $36.3 million for the year ended September 30, 2013, compared to $40.3 million for the year ended September 30, 2012. A decrease in net cost of REO contributed $1.1 million to the reduction. Compensation expense decreased $0.9 million and marketing expense decreased $0.6 million both due to increased 2012 costs related to acquisitions.

The Company recorded a loan loss provision of $1.4 million on non-covered loans and $89,000 on covered loans for the year ended September 30, 2013, compared to $3.3 million on non-covered loans and $1.2 million on covered loans for the year ended September 30, 2012.

"We are delighted with the continued improvement in our asset quality. Nonperforming assets not covered by FDIC loss-sharing stand at 0.49% of total assets and our loan loss reserves are 1.70% of loans not covered by loss-sharing. We continuously review our progress with the resolution of the assets covered by loss sharing and are pleased with developments. We recorded $0.6 million of indemnification asset impairment this year and have approximately the same amount to amortize over the next year."

For the year ended September 30, 2013, income tax expense was $2.9 million, or an effective tax rate of 31.44%, compared to $639,000, or an effective tax rate of 11.38% for the year ended September 30, 2012. This increase was due primarily to a lower than normal income tax expense for the year ended September 30, 2012 related to an uncertain tax position that was resolved in that year.

Mr. Johnson concluded, "We have continued challenges ahead but believe we are well positioned to continue our momentum into 2014. Given the capital management tools available to us and our new capital, we have opportunities for long-term growth."

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. On April 8, 2013, Charter Financial completed its conversion and reorganization from the mutual holding company form of organization to the stock holding company form of organization. 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, September 30, June 30,
  2013  2012 (1) 2013
       
Total Assets  $ 1,089,406  $ 1,032,220  $ 1,125,362
Cash and Cash Equivalents  161,452  108,828  190,657
Loans Receivable, Net  579,854  593,904  564,293
Non-covered Loans Receivable, Net  470,863  427,676  443,581
Covered Loans Receivable, Net  108,991  166,228  120,712
Other Real Estate Owned  15,684  24,010  14,546
Non-covered Other Real Estate Owned  1,615  2,107  1,386
Covered Other Real Estate Owned  14,069  21,903  13,160
Securities Available for Sale  215,118  189,379  226,551
Core Deposits (2)  475,426  456,292  481,230
Retail Deposits (3)  745,900  779,397  761,602
Total Deposits  751,297  800,262  769,781
Borrowings  60,000  81,000  70,000
Total Stockholders' Equity  273,778  142,521  279,131
       
       
Book Value per Share (4) (5)  $ 12.03  N/A   $ 12.27
Tangible Book Value per Share (4) (5)  $ 11.81  N/A   $ 12.04
       
       
Minority Shares Outstanding (4)  —   7,923,379  — 
Total Shares Issued – at Period End (4)  22,752,214  19,974,515  22,752,214
Weighted Average Total Shares Outstanding – Basic (4)  20,629,531  19,501,312  20,165,850
Weighted Average Total Shares Outstanding – Fully Diluted (4)  20,792,089  19,537,348  20,296,461
       
(1)  Financial information as of September 30, 2012 has been derived from audited financial statements.
(2)  Core deposits include transaction accounts, money market accounts and savings accounts.
(3)  Retail deposits include Core Deposits and certificates of deposit excluding brokered and wholesale certificates of deposit.
(4)  Share and per share amounts have been restated to reflect the completion of the second-step conversion using a conversion ratio of 1.2471 on shares held by the public prior to April 8, 2013.
(5)  Due to the completion of the second-step conversion on April 8, 2013, September 30, 2012 per share amounts are not comparable to other periods presented and have not been included.
       
Charter Financial Corporation
Selected Operating Data (unaudited)
in thousands except share and per share data
 
 
  Year Ended Three Months Ended
  September 30, September 30, June 30, March 31,
  2013 2012 2013 2012 2013 2013
             
Total Interest Income  $ 42,636  $ 48,101  $ 9,925  $ 11,155  $ 10,654  $ 11,006
Total Interest Expense  7,361  10,589  1,661  2,134  1,743  1,902
Net Interest Income  35,275  37,512  8,264  9,021  8,911  9,104
Provision for Loan Losses on Non-covered Loans  1,400  3,300  300  1,200  500  300
Provision (Credit) for Loan Losses on Covered Loans  89  1,202  (5)  237  42  (42)
Net Interest Income after Provision for Loan Losses  33,786  33,010  7,969  7,584  8,369  8,846
Noninterest Income  11,653  12,912  2,802  3,618  2,662  2,977
Noninterest Expense  36,314  40,304  9,469  8,593  8,763  9,757
Income before Income Taxes  9,125  5,618  1,302  2,609  2,268  2,066
Income Tax Expense  2,869  639  382  858  650  682
Net Income  $ 6,256  $ 4,979  $ 920  $ 1,751  $ 1,618  $ 1,384
             
Earnings per Share – Basic (1)  $ 0.30  $ 0.26  $ 0.04  $ 0.09  $ 0.07  $ 0.07
Earnings per Share – Fully Diluted (1)  0.30  0.26  0.04  0.09  0.07  0.07
Cash Dividends per Share  0.35  0.08  0.30  —   0.05  — 
             
             
Net Charge-offs – Legacy Loans  $ 1,401  $ 4,480  $ 492  $ 1,556  $ 665  $ 136
Deposit Fees  7,754  7,012  2,011  1,950  1,915  1,878
Gain on Sale of Loans  1,334  962  192  353  407  385
             
(1)  Shares held by the public prior to April 8, 2013, have been restated to reflect the completion of the second-step conversion using a conversion ratio of 1.2471.
             
Charter Financial Corporation
Financial Ratios (unaudited)
 
 
  Year Ended Three Months Ended
  September 30, September 30, June 30, March 31,
  2013 2012 2013 2012 2013 2013
             
Return on Equity (annualized) 2.98% 3.58% 1.32% 4.95% 2.38% 3.83%
Return on Assets (annualized) 0.58% 0.46% 0.33% 0.68% 0.56% 0.54%
Net Interest Margin (annualized) 3.82% 4.17% 3.44% 4.09% 3.63% 4.14%
Bank Core Capital Ratio 18.56% 12.16% 18.56% 12.16% 17.94% 11.33%
Bank Total Risk Based Capital 33.83% 19.22% 33.83% 19.22% 34.62% 23.01%
Effective Tax Rate 31.44% 11.38% 29.37% 32.88% 28.64% 33.02%
             
Ratios of Non-covered Assets:            
Allowance for Loan Losses as a % of Total Loans 1.70% 1.87% 1.70% 1.87% 1.85% 1.98%
Allowance for Loan Losses as a % of Nonperforming Loans 280.32% 237.69% 280.32% 237.69% 237.93% 276.92%
Nonperforming Assets as a % of Total Loans and REO 0.94% 1.27% 0.94% 1.27% 1.08% 1.00%
Nonperforming Assets as a % of Total Assets 0.49% 0.69% 0.49% 0.69% 0.52% 0.46%
Net Charge-offs as a % of Average Loans (annualized) 0.32% 0.86% 0.43% 1.43% 0.61% 0.13%
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.com