• Total fiscal 2014 average equity to average assets of 24.62%
  • Net non-covered organic loan growth of 12.2% over prior year
  • Tangible book value per share of $12.06 at September 30, 2014, up $0.25 year over year
  • Basic and diluted EPS of $0.29 and $0.28, respectively, for the year
  • Nonperforming non-covered assets at 0.65% of total non-covered assets at September 30, 2014
  • Repurchased 4.9 million shares for $53.2 million during fiscal 2014

WEST POINT, Ga., Nov. 5, 2014 (GLOBE NEWSWIRE) -- Charter Financial Corporation (the "Company") (Nasdaq:CHFN) today reported net income of $6.0 million, or $0.29 and $0.28 per basic and diluted share, respectively, for the year ended September 30, 2014, compared with $6.3 million, or $0.30 per basic and diluted share, for the year ended September 30, 2013. The decrease in net income was primarily attributable to a $5.8 million decrease in discount accretion and amortization of the FDIC loss share receivable, partially offset by an increase to noninterest income and decreases to both interest expense and provision for loan losses.

Net income for the quarter ended September 30, 2014, was $1.0 million, or $0.06 per basic and diluted share, compared with $920,000, or $0.04 per basic and diluted share, for the quarter ended September 30, 2013. The slight increase in net income and earnings per share for the quarter ended September 30, 2014, was primarily the result of reduced provision for loan losses due to improved credit quality and higher noninterest income, partially offset by lower discount accretion and amortization. Earnings per share for the quarter ended September 30, 2014 also benefited from a lower weighted average number of common shares outstanding as a result of the share repurchases made during fiscal 2014.

Quarterly Operating Results

The improvement in reported quarterly earnings for the fourth quarter of fiscal 2014 compared with the fourth quarter of fiscal 2013 resulted primarily from the following items:
  • Borrowing expense decreased $124,000, or 17.1%.
  • Deposit expense decreased by $160,000, or 17.1%.
  • The cost of deposits decreased to 49 basis points for the quarter ended September 30, 2014, compared to 55 basis points for the quarter ended September 30, 2013.
  • Net interest margin excluding accretion and amortization of loss share receivable was 2.95% for the quarter ended September 30, 2014 compared with 2.68% the same quarter of 2013.
  • Provision for covered loan losses decreased by $122,000.
  • No provision required for non-covered loans compared to $300,000 the same quarter of 2013.
  • Noninterest income increased by $906,000, or 32.3%.
  • Deposit and bankcard fee income increased by a combined $501,000.
  • Gain on sale of loans and loan servicing release fees increased by $174,000.

The improvement was partially mitigated by the following items:
  • Net decrease to total interest income of $1.4 million due to impact of accretion income and FDIC loss share receivable amortization.
  • The average yield on loans was 5.05% for the quarter ended September 30, 2014 compared to 6.14% for the quarter ended September 30, 2013.
  • Salaries and employee benefits expense increased by $285,000, primarily related to stock awards made during the 2014 fiscal year.

Chairman and CEO Robert L. Johnson said, "We are pleased with our progress in improving our core earnings with $6.0 million in net income for the year in spite of having $5.8 million less in net discount accretion and amortization than we had in the prior year. We look forward to additional improvements in core earnings by building our non-covered loan portfolio while also improving noninterest income."

Financial Condition

The Company's total assets were $1.0 billion at September 30, 2014, a decrease of $79.0 million from September 30, 2013, due predominantly to the reduction of cash and cash equivalents as a result of the Company's share repurchase programs. Net non-covered loans grew $65.9 million, or 14.0%, to $536.7 million at September 30, 2014, from $470.9 million at September 30, 2013. Of the $65.9 million in net non-covered loan growth, $8.3 million was due to a transfer of non-single family loans that are no longer covered by the FDIC due to the expiration of a non-single family loss sharing agreement during 2014. At September 30, 2014, $69.6 million of net loans receivable were covered by FDIC loss sharing, down from $109.0 million at September 30, 2013, due to the continued progress through the resolution process on loss share assets as well as due to the expired agreement mentioned previously.

Mr. Johnson continued, "In spite of the persisting slow-growth economic activity in our markets, we increased our net organic loan portfolio by $25.9 million during the quarter ended September 30, 2014 and $57.6 million during the year ended September 30, 2014, an increase of 12.2%, and hope to see this trend continue in the coming year."

Total deposits were $717.2 million at September 30, 2014, compared with $751.3 million at September 30, 2013 due primarily to a $44.9 million decrease in time deposits. Core deposits increased from $475.4 million at September 30, 2013, to $486.2 million at September 30, 2014, due primarily to an increase in transaction accounts.

Total stockholders' equity decreased to $225.0 million at September 30, 2014, compared to $273.8 million at September 30, 2013, due predominantly to $53.2 million of share repurchases during fiscal 2014.

Net Interest Income and Net Interest Margin

Net interest income decreased to $7.1 million for the quarter ended September 30, 2014, compared with $8.3 million for the quarter ended September 30, 2013. Interest income decreased by $1.5 million while interest expense decreased by $284,000 quarter over quarter. The Company's net interest margin, excluding the effects of purchase accounting, increased to 2.95% for the quarter ended September 30, 2014, compared with 2.68% for the quarter ended September 30, 2013. Net interest margin, including the impact of loss share accounting, was 3.14% for the quarter ended September 30, 2014, and 3.44% for the quarter ended September 30, 2013.

Net interest income decreased to $29.9 million for the year ended September 30, 2014, from $35.3 million for the year ended September 30, 2013. Total interest income decreased to $35.6 million for the year ended September 30, 2014, compared to $42.6 million for the year ended September 30, 2013, due to lower average yields on loans and a decline in accretion income on acquired covered loans. Interest expense decreased to $5.7 million for the year ended September 30, 2014, compared with $7.4 million for the year ended September 30, 2013, primarily as a result of lower interest expense on certificates of deposit and borrowings. The Company's net interest margin, excluding the effects of purchase accounting, for the years ended September 30, 2014 and 2013 was 2.87% and 2.82%, respectively, while net interest margin, including the effects of purchase accounting, for the same periods was 3.22% and 3.82%, respectively.

Provision for Loan Losses

The Company recorded no provision for loan losses on non-covered loans and a negative provision of $127,000 on covered loans for the quarter ended September 30, 2014, compared to a provision of $300,000 on non-covered loans and a negative provision of $5,000 on covered loans for the same quarter in 2013.

For the year ended September 30, 2014, provision for loan losses on non-covered loans was $300,000 compared to a provision of $1.4 million for the year ended September 30, 2013. This decrease was due to an overall improvement in the non-covered loan portfolio. A negative provision for loan losses on covered loans of $1.0 million was recorded for the year ended September 30, 2014 due to improved credit quality and workout experience compared with an $89,000 provision for the year ended September 30, 2013.

Accounting for FDIC-Assisted Acquisitions

Mr. Johnson said, "We are pleased we have reduced the FDIC indemnification asset to $10.5 million. This is evidence we are in the homestretch in resolving the acquired problem assets. We continue evaluating the cash flows of the purchased loans and adjusting the indemnification asset, discount accretion and amortization of the indemnification asset based on revised cash flow estimates. We currently project remaining discount accretion of $6.0 million and $2.9 million in amortization resulting in a net future pre-tax income impact of $3.1 million from this purchase accounting."

Noninterest Income and Expense

Noninterest income for the quarter ended September 30, 2014 was up $906,000 compared with the same period in fiscal 2013, due primarily to an increase in bankcard and deposit fees. Noninterest income increased $2.6 million to $14.3 million for the year ended September 30, 2014, compared with $11.7 million for fiscal 2013, due primarily to an increase in bankcard and deposit fees as well as a true-up receipt from the completion and renegotiation of a processing contract. As the use of bankcards increase due to the continued transition from paper to electronic transactions, the Company has experienced significant growth in third-party processing fees associated with this increased usage.

Noninterest expense for the quarter ended September 30, 2014 decreased slightly to $9.4 million compared with $9.5 million for the same quarter in fiscal 2013. Similarly, for the year ended September 30, 2014 noninterest expense remained relatively unchanged at $36.2 million compared with $36.3 million for fiscal 2013.

Asset Quality

Asset quality remained strong with nonperforming assets not covered by loss sharing agreements at 0.65% of total non-covered assets and the allowance for loan losses at 1.55% of total non-covered loans and 199.64% of nonperforming non-covered loans at September 30, 2014. The Company had net loan charge-offs of $132,000 on non-covered loans for the three months ended September 30, 2014, compared to net loan charge-offs of $492,000 on non-covered loans for the same period in fiscal 2013. For the year ended September 30, 2014, net charge-offs as a percent of average non-covered loans was 0.08% compared to 0.32% for fiscal 2013.

Capital Management

During the quarter ended September 30, 2014, the Company repurchased 1.7 million shares for approximately $18.8 million, or $11.06 per share.

Mr. Johnson said, "Since December 2013, we have completed three stock buyback programs, whereby the Company repurchased a combined 4.9 million shares, or approximately 21% of our common stock, at a discount to tangible book value. Meanwhile, in September we announced the approval of a new stock buyback program for up to 1.8 million shares, or approximately 10% of our outstanding shares, of which 1.2 million have been repurchased subsequent to fiscal year end for an average price of $10.92 per share. The 6.1 million of total shares repurchased were purchased at a combined discount to tangible book value of $6.6 million."

Mr. Johnson concluded, "The Company's solid financial position affords us the ability to repurchase these shares which currently trade at a discount to tangible book value per share. We believe that this use of capital, along with our quarterly cash dividend, provides excellent stockholder value. In the coming fiscal year, we will continue to explore the opportunity for accretive acquisitions, organically grow our loan portfolio and improve profitability through the reduction of expenses and increased margins."

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. 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
Condensed Consolidated Statements of Financial Condition (unaudited)
     
     
  September 30, 2014 September 30, 2013
Assets
Cash and amounts due from depository institutions  $ 10,996,959  $ 10,069,875
Interest-earning deposits in other financial institutions 88,465,994 151,382,606
Cash and cash equivalents 99,462,953 161,452,481
Loans held for sale, fair value of $2,090,469 and $1,883,244 2,054,722 1,857,393
Securities available for sale 188,743,273 215,118,407
Federal Home Loan Bank stock 3,442,900 3,940,300
Loans receivable:    
Not covered under FDIC loss sharing agreements 546,570,720 480,152,265
Covered under FDIC loss sharing agreements 70,631,743 112,915,868
Allowance for loan losses (covered loans) (997,524) (3,924,278)
Unamortized loan origination fees, net (non-covered loans) (1,364,853) (1,100,666)
Allowance for loan losses (non-covered loans) (8,473,373) (8,188,896)
Loans receivable, net 606,366,713 579,854,293
Other real estate owned:    
Not covered under FDIC loss sharing agreements 1,757,864 1,615,036
Covered under FDIC loss sharing agreements 5,557,927 14,068,846
Accrued interest and dividends receivable 2,459,347 2,728,902
Premises and equipment, net 20,571,541 21,750,756
Goodwill 4,325,282 4,325,282
Other intangible assets, net of amortization 423,676 803,886
Cash surrender value of life insurance 47,178,128 39,825,881
FDIC receivable for loss sharing agreements 10,531,809 29,941,862
Deferred income taxes 10,791,570 11,350,745
Other assets 6,693,433 771,779
Total assets  $ 1,010,361,138  $ 1,089,405,849
     
Liabilities and Stockholders' Equity
Liabilities:    
Deposits  $ 717,192,200  $ 751,296,668
FHLB advances 55,000,000 60,000,000
Advance payments by borrowers for taxes and insurance 1,312,283 1,054,251
Other liabilities 11,901,786 3,277,094
Total liabilities 785,406,269 815,628,013
Stockholders' equity:    
Common stock, $0.01 par value; 18,261,388 shares issued and outstanding at September 30, 2014 and 22,752,214 shares issued and outstanding at September 30, 2013 182,614 227,522
Preferred stock, $0.01 par value; 50,000,000 shares authorized at September 30, 2014 and September 30, 2013
Additional paid-in capital 119,586,164 171,729,570
Unearned compensation – ESOP (5,984,317) (6,480,949)
Retained earnings 111,924,543 110,141,286
Accumulated other comprehensive loss (754,135) (1,839,593)
Total stockholders' equity 224,954,869 273,777,836
     
Total liabilities and stockholders' equity  $ 1,010,361,138  $ 1,089,405,849
     
(1)  Financial information as of and for the twelve months ended September 30, 2013 has been derived from audited financial statements.
 
 
Charter Financial Corporation
Condensed Consolidated Statements of Income (unaudited)
         
  Quarter Ended Year Ended
  September 30, September 30,
  2014 2013 2014 2013
Interest income:        
Loans receivable  $ 9,439,668  $ 8,846,371  $ 35,003,936  $ 38,815,683
Mortgage-backed securities and collateralized mortgage obligations 818,617 909,558 3,612,636 3,194,733
Federal Home Loan Bank stock 32,017 27,795 134,795 122,893
Other investment securities available for sale 16,022 38,862 72,336 175,150
Interest-earning deposits in other financial institutions 64,229 102,747 331,045 328,010
Amortization of FDIC loss share receivable (1,910,707) (3,507,017)
Total interest income 8,459,846 9,925,333 35,647,731 42,636,469
Interest expense:        
Deposits 775,176 935,204 3,255,032 4,242,848
Borrowings 602,376 726,352 2,474,733 3,118,271
Total interest expense 1,377,552 1,661,556 5,729,765 7,361,119
Net interest income 7,082,294 8,263,777 29,917,966 35,275,350
Provision for loan losses, not covered under FDIC loss sharing agreements  -- 300,000 300,000 1,400,000
Provision for covered loan losses (126,896) (4,877) (1,012,560) 89,444
Net interest income after provision for loan losses 7,209,190 7,968,654 30,630,526 33,785,906
Noninterest income:        
Service charges on deposit accounts 1,551,840 1,363,754 5,815,479 5,316,448
Bankcard fees 960,011 647,045 3,556,754 2,437,968
Gain on securities available for sale 29,604 200,704 249,517
Bank owned life insurance 326,779 299,530 1,252,246 993,961
Gain on sale of loans and loan servicing release fees 366,350 191,943 1,103,586 1,334,330
Brokerage commissions 137,776 119,950 590,255 588,493
FDIC receivable for loss sharing agreements (impairment) accretion (235,824) (185,683) (174,291) 33,235
Other 601,348 335,963 1,932,277 698,922
Total noninterest income 3,708,280 2,802,106 14,277,010 11,652,874
Noninterest expenses:        
Salaries and employee benefits 5,241,096 4,955,786 19,763,210 18,458,664
Occupancy 1,847,491 1,978,768 7,476,771 7,302,944
Legal and professional 371,722 647,495 1,681,667 1,922,817
Marketing 469,915 367,141 1,445,963 1,294,251
Federal insurance premiums and other regulatory fees 190,187 233,281 891,615 589,999
Net cost of operations of real estate owned 59,896 39,658 434,433 1,016,960
Furniture and equipment 177,427 213,417 727,627 828,652
Postage, office supplies and printing 219,353 275,197 865,853 1,082,231
Core deposit intangible amortization expense 79,696 111,706 380,210 476,423
Other 737,691 646,131 2,542,841 3,340,922
Total noninterest expenses 9,394,474 9,468,580 36,210,190 36,313,863
Income before income taxes 1,522,996 1,302,180 8,697,346 9,124,917
Income tax expense 480,919 382,408 2,742,213 2,868,500
Net income  $ 1,042,077  $ 919,772  $ 5,955,133  $ 6,256,417
Basic net income per share  $ 0.06  $ 0.04  $ 0.29  $ 0.30
Diluted net income per share  $ 0.06  $ 0.04  $ 0.28  $ 0.30
Weighted average number of common shares outstanding 17,936,142 22,004,910 20,591,302 20,629,531
Weighted average number of common and potential common shares outstanding 18,446,228 22,167,468 21,101,388 20,792,089
         
(1) Financial information as of and for the twelve months ended September 30, 2013 has been derived from audited financial statements.
 
 
Charter Financial Corporation
Supplemental Financial Data (unaudited)
in thousands except per share data
               
  Quarter to Date Year to Date
  9/30/2014 6/30/2014 3/31/2014 12/31/2013 9/30/2013 9/30/2014 9/30/2013
Consolidated balance sheet data:              
Total assets  $ 1,010,361  $ 1,040,237  $ 1,077,870  $ 1,079,911  $ 1,089,406  $ 1,010,361  $ 1,089,406
Cash and cash equivalents 99,463 149,269 175,114 157,268 161,452 99,463 161,452
Loans receivable, net 606,367 582,403 572,040 576,567 579,854 606,367 579,854
Non-covered loans receivable, net 536,732 511,176 481,907 476,467 470,863 536,732 470,863
Covered loans receivable, net 69,635 71,227 90,133 100,100 108,991 69,635 108,991
Other real estate owned 7,316 9,345 10,744 11,996 15,684 7,316 15,684
Non-covered other real estate owned 1,758 1,331 849 1,054 1,615 1,758 1,615
Covered other real estate owned 5,558 8,014 9,895 10,942 14,069 5,558 14,069
Securities available for sale 188,743 185,040 201,578 208,064 215,118 188,743 215,118
Core deposits (2) 486,248 486,392 491,585 474,389 475,426 486,248 475,426
Total deposits 717,192 729,609 742,064 737,654 751,297 717,192 751,297
Borrowings 55,000 55,000 55,000 60,000 60,000 55,000 60,000
Total stockholders' equity 224,955 243,414 270,265 273,164 273,778 224,955 273,778
               
Consolidated earnings summary:              
Interest income  $ 8,460  $ 9,007  $ 8,923  $ 9,257  $ 9,925  $ 35,648  $ 42,636
Interest expense 1,378 1,386 1,430 1,536 1,661 5,730 7,361
Net interest income 7,082 7,621 7,493 7,721 8,264 29,918 35,275
Provision for loan losses on non-covered loans 300 300 300 1,400
Provision for loan losses on covered loans (127) (834) (54) 2 (5) (1,013) 89
Net interest income after provision for loan losses 7,209 8,455 7,547 7,419 7,969 30,631 33,786
Noninterest income 3,708 3,236 3,217 4,116 2,802 14,277 11,653
Noninterest expense 9,394 9,036 8,580 9,200 9,469 36,211 36,314
Income tax expense 481 870 693 698 382 2,742 2,869
Net income  $ 1,042  $ 1,785  $ 1,491  $ 1,637  $ 920  $ 5,955  $ 6,256
               
Per share data:              
Earnings per share – basic  $ 0.06  $ 0.09  $ 0.07  $ 0.07  $ 0.04  $ 0.29  $ 0.30
Earnings per share – fully diluted  $ 0.06  $ 0.09  $ 0.07  $ 0.07  $ 0.04  $ 0.28  $ 0.30
Cash dividends per share  $ 0.05  $ 0.05  $ 0.05  $ 0.05  $ 0.30  $ 0.20  $ 0.35
               
Weighted average basic shares 17,936 20,747 21,701 22,007 22,005 20,591 20,630
Weighted average diluted shares 18,446 21,301 22,224 22,528 22,167 21,101 20,792
Total shares outstanding 18,261 19,960 22,603 22,998 22,752 18,261 22,752
               
Book value per share  $ 12.32  $ 12.20  $ 11.96  $ 11.88  $ 12.03  $ 12.32  $ 12.03
Tangible book value per share  $ 12.06  $ 11.95  $ 11.74  $ 11.66  $ 11.81  $ 12.06  $ 11.81
               
(1)  Financial information as of September 30, 2013 has been derived from audited financial statements.
(2) Core deposits include transaction accounts, money market accounts and savings accounts.
 
 
Charter Financial Corporation
Supplemental Information (unaudited)
dollars in thousands
               
  Quarter to Date Year to Date
  9/30/2014 6/30/2014 3/31/2014 12/31/2013 9/30/2013 9/30/2014 9/30/2013
Not covered by loss share agreements              
Loans receivable: (1)              
1-4 family residential real estate  $ 152,811  $ 139,803  $ 135,181  $ 133,331  $ 124,571  $ 152,811  $ 124,571
Commercial real estate 300,556 284,591 271,156 267,818 269,609 300,556 269,609
Commercial 24,760 21,172 21,501 22,793 23,774 24,760 23,774
Real estate construction 63,485 58,459 47,112 45,200 44,653 63,485 44,653
Consumer and other 4,959 17,010 16,531 16,908 17,545 4,959 17,545
Total non-covered loans receivable  $ 546,571  $ 521,035  $ 491,481  $ 486,050  $ 480,152  $ 546,571  $ 480,152
               
Allowance for loan losses:              
Balance at beginning of period  $ 8,606  $ 8,431  $ 8,494  $ 8,189  $ 8,380  $ 8,189  $ 8,190
Charge-offs (342) (238) (93) (68) (501) (741) (1,601)
Recoveries 209 13 30 73 10 325 200
Provision 300 300 300 1,400
Transfer (2) 400 400
Balance at end of period  $ 8,473  $ 8,606  $ 8,431  $ 8,494  $ 8,189  $ 8,473  $ 8,189
               
Nonperforming assets: (3)              
Nonaccrual loans  $ 3,508  $ 4,243  $ 4,743  $ 4,975  $ 2,874  $ 3,508  $ 2,874
Loans delinquent 90 days or greater and still accruing 736 238 47 736 47
Total nonperforming non-covered loans 4,244 4,481 4,743 4,975 2,921 4,244 2,921
Other real estate owned 1,758 1,331 849 1,053 1,615 1,758 1,615
Total nonperforming non-covered assets  $ 6,002  $ 5,812  $ 5,592  $ 6,028  $ 4,536  $ 6,002  $ 4,536
               
Troubled debt restructuring:              
Troubled debt restructurings - accruing  $ 6,154  $ 7,352  $ 7,603  $ 8,589  $ 12,302  $ 6,154  $ 12,302
Troubled debt restructurings - nonaccrual 1,674 2,094 2,094 2,261 439 1,674 439
Total troubled debt restructurings  $ 7,828  $ 9,446  $ 9,697  $ 10,850  $ 12,741  $ 7,828  $ 12,741
               
Covered by loss sharing agreements              
Nonperforming assets:              
Other real estate owned  $ 5,558  $ 8,014  $ 9,895  $ 10,942  $ 14,069  $ 5,558  $ 14,069
Covered loans 90+ days delinquent (4) 5,315 3,156 8,825 8,661 8,574 5,315 8,574
Total nonperforming covered assets  $ 10,873  $ 11,170  $ 18,720  $ 19,603  $ 22,643  $ 10,873  $ 22,643
 
(1)  Includes previously acquired loans in the amount of $8.6 million and $9.1 million at September 30, 2014 and June 30, 2014, respectively, related to the Neighborhood Community Bank non single-family loss sharing agreement with the FDIC that expired in June 2014.
(2)  Transfer of allowance related to acquired Neighborhood Community Bank non-single family loans upon expiration of the non-single family loss sharing agreement with the FDIC in June 2014.
(3)  Previously acquired loans that are no longer covered under the commercial loss sharing agreement with the FDIC are excluded from this table. Due to the recognition of accretion income established at the time of acquisition, acquired loans that are greater than 90 days delinquent or designated nonaccrual status are regarded as accruing loans for reporting purposes.
(4) Covered loans contractually past due greater than ninety days are reported as accruing loans because of accretable discounts established at the time of acquisition.
 
 
Charter Financial Corporation
Supplemental Information (unaudited)
               
  Quarter to Date Year to Date
  9/30/2014 6/30/2014 3/31/2014 12/31/2013 9/30/2013 9/30/2014 9/30/2013
               
Return on equity (annualized) 1.78% 2.71% 2.19% 2.39% 1.32% 2.28% 2.98%
Return on assets (annualized) 0.41% 0.67% 0.55% 0.60% 0.33% 0.56% 0.58%
Net interest margin (annualized) 3.14% 3.26% 3.18% 3.29% 3.44% 3.22% 3.82%
Net interest margin, excluding the effects of purchase accounting (1) 2.95% 2.90% 2.85% 2.77% 2.68% 2.87% 2.82%
Bank tier 1 leverage ratio 17.67% 19.51% 19.25% 19.05% 18.56% 17.67% 18.56%
Bank total risk-based capital ratio 27.90% 32.93% 34.18% 33.83% 33.83% 27.90% 33.83%
Effective tax rate 31.58% 32.77% 31.73% 29.90% 29.37% 31.53% 31.44%
Yield on loans 5.05% 5.44% 5.41% 5.55% 6.14% 5.36% 6.73%
Cost of deposits 0.49% 0.49% 0.49% 0.53% 0.55% 0.50% 0.61%
               
Ratios of non-covered assets:              
Allowance for loan losses as a % of total loans 1.55% 1.65% 1.71% 1.74% 1.70% 1.55% 1.70%
Allowance for loan losses as a % of nonperforming loans 199.64% 192.06% 177.76% 170.74% 280.32% 199.64% 280.32%
Nonperforming assets as a % of total loans and REO 1.09% 1.11% 1.14% 1.24% 0.94% 1.09% 0.94%
Nonperforming assets as a % of total assets 0.65% 0.62% 0.59% 0.64% 0.49% 0.65% 0.49%
Net charge-offs as a % of average loans (annualized) 0.10% 0.18% 0.05% —% 0.43% 0.08% 0.32%
 
(1) Net interest income excluding accretion and amortization of loss share loans receivable divided by net interest earning assets excluding loan accretable discounts in the amount of $6.1 million, $5.5 million, $3.5 million, $4.4 million, and $5.9 million, for the quarters ended September 30, 2014, June 30, 2014, March 31, 2014, December 31, 2013 and September 30, 2013, respectively, and $4.9 million and $9.2 million for the years ended September 30, 2014 and September 30, 2013, respectively.
 
 
Charter Financial Corporation
Average Balances, Interest Rates and Yields (unaudited)
dollars in thousands
             
  Quarter to Date
  9/30/2014 9/30/2013
      Average     Average
  Average    Yield/ Average    Yield/
   Balance  Interest  Cost (10)  Balance  Interest  Cost (10)
Assets:            
Interest-earning assets:            
Interest-earning deposits in other financial institutions  $ 115,090  $ 64 0.22%  $ 155,631  $ 103 0.26%
FHLB common stock and other equity securities 3,443 32 3.72 4,317 28 2.58
Mortgage-backed securities and collateralized mortgage obligations available for sale 173,113 819 1.89 199,000 909 1.83
Other investment securities available for sale (1) 15,744 16 0.41 25,666 39 0.61
Loans receivable (1)(2)(3)(4) 595,959 7,161 4.81 576,486 7,053 4.89
Accretion and amortization of loss share loans receivable (5)   368 0.24   1,793 1.23
Total interest-earning assets 903,349 8,460 3.75 961,100 9,925 4.13
Total noninterest-earning assets 118,774     142,279    
Total assets  $ 1,022,123      $ 1,103,379    
Liabilities and Equity:            
Interest-bearing liabilities:            
NOW accounts  $ 173,813  $ 42 0.10%  $ 166,575  $ 48 0.12%
Rewards checking 45,798 27 0.23 49,731 32 0.26
Savings accounts 48,734 2 0.02 48,986 5 0.04
Money market deposit accounts 123,641 70 0.23 128,365 68 0.21
Certificate of deposit accounts 238,705 635 1.06 280,887 782 1.11
Total interest-bearing deposits 630,691 776 0.49 674,544 935 0.55
Borrowed funds 55,000 602 4.38 67,663 726 4.29
Total interest-bearing liabilities 685,691 1,378 0.80 742,207 1,661 0.90
Noninterest-bearing deposits 87,829     75,806    
Other noninterest-bearing liabilities 14,024     7,575    
Total noninterest-bearing liabilities 101,853     83,381    
Total liabilities 787,544     825,588    
Total stockholders' equity 234,579     277,791    
Total liabilities and stockholders' equity  $ 1,022,123      $ 1,103,379    
Net interest income    $ 7,082      $ 8,264  
Net interest earning assets (6)    $ 217,658      $ 218,893  
Net interest rate spread (7)     2.95%     3.23%
Net interest margin (8)     3.14%     3.44%
Net interest margin, excluding the effects of purchase accounting (9)     2.95%     2.68%
Ratio of average interest-earning assets to average interest-bearing liabilities     131.74%     129.49%
             
(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 in FDIC-assisted acquisitions 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 income excluding accretion and amortization of loss share loans receivable divided by net interest earning assets excluding loan accretable discounts in the amount of $6.1 million and $5.9 million for the quarters ended September 30, 2014 and September 30, 2013, respectively.
(10)  Annualized.
 
 
Charter Financial Corporation
Average Balances, Interest Rates and Yields (unaudited)
dollars in thousands
             
  Year Ended
  9/30/2014 9/30/2013
      Average     Average
  Average   Yield/ Average   Yield/
  Balance Interest Cost Balance Interest Cost
Assets:            
Interest-earning assets:            
Interest-earning deposits in other financial institutions  $ 138,859  $ 331 0.24%  $ 139,922  $ 328 0.23%
FHLB common stock and other equity securities 3,671 135 3.67 4,802 123 2.56
Mortgage-backed securities and collateralized mortgage obligations available for sale 181,836 3,613 1.99 176,801 3,195 1.81
Other investment securities available for sale (1) 18,273 72 0.40 25,274 175 0.69
Loans receivable (1)(2)(3)(4) 587,486 28,410 4.84 577,077 29,892 5.18
Accretion and amortization of loss share loans receivable (5)   3,087 0.52   8,923 1.52
Total interest-earning assets 930,125 35,648 3.83 923,876 42,636 4.61
Total noninterest-earning assets 130,908     150,891    
Total assets  $ 1,061,033      $ 1,074,767    
Liabilities and Equity:            
Interest-bearing liabilities:            
NOW accounts  $ 175,265  $ 190 0.11%  $ 157,579  $ 203 0.13%
Rewards checking 47,701 114 0.24 51,454 178 0.35
Savings accounts 48,367 10 0.02 49,443 23 0.05
Money market deposit accounts 126,578 281 0.22 131,890 313 0.24
Certificate of deposit accounts 252,374 2,660 1.05 308,616 3,526 1.14
Total interest-bearing deposits 650,285 3,255 0.50 698,982 4,243 0.61
Borrowed funds 57,211 2,475 4.33 74,211 3,118 4.20
Total interest-bearing liabilities 707,496 5,730 0.81 773,193 7,361 0.95
Noninterest-bearing deposits 80,157     84,939    
Other noninterest-bearing liabilities 12,104     6,982    
Total noninterest-bearing liabilities 92,261     91,921    
Total liabilities 799,757     865,114    
Total stockholders' equity 261,276     209,653    
Total liabilities and stockholders' equity  $ 1,061,033      $ 1,074,767    
Net interest income    $ 29,918      $ 35,275  
Net interest earning assets (6)    $ 222,629      $ 150,683  
Net interest rate spread (7)     3.02%     3.66%
Net interest margin (8)     3.22%     3.82%
Net interest margin, excluding the effects of purchase accounting (9)     2.87%     2.82%
Ratio of average interest-earning assets to average interest-bearing liabilities     131.47%     119.49%
             
(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 in FDIC-assisted acquisitions 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 income excluding accretion and amortization of loss share loans receivable divided by net interest earning assets excluding loan accretable discounts in the amount of $4.9 million and $9.2 million for the years ended September 30, 2014 and September 30, 2013, respectively.
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