• Basic and diluted EPS of $0.09 for the quarter
  • Net loan growth of 14.7% over prior year quarter, which marks the sixth consecutive year-over-year quarterly increase
  • Total risk-based capital ratio for the bank of 23.4% at March 31, 2015
  • Tangible book value per share of $12.39 at March 31, 2015, up $0.65 year over year
  • Nonperforming non-covered assets at 0.48% of total non-covered assets at March 31, 2015
  • Repurchased 300,177 shares for $3.5 million during the quarter

WEST POINT, Ga., April 30, 2015 (GLOBE NEWSWIRE) -- Charter Financial Corporation (the "Company") (Nasdaq:CHFN) today reported net income of $1.4 million, or $0.09 per basic and diluted share, for the quarter ended March 31, 2015, compared with $1.5 million, or $0.07 per basic and diluted share, for the quarter ended March 31, 2014. Despite the slight decrease in net income, earnings per share for the quarter ended March 31, 2015 increased as a result of a lower weighted average number of common shares outstanding due to continued share repurchases.

Net income for the six months ended March 31, 2015, was $3.1 million, or $0.19 per basic and diluted share, respectively, compared with $3.1 million, or $0.14 per basic and diluted share, for the six months ended March 31, 2014. Increases in net interest income and deposit and bankcard fee income along with reduced loan provision expense for the six months ended March 31, 2015, were offset by a one time true-up receipt from the completion and renegotiation of a processing contract in the prior year in the amount of $1.1 million.

Quarterly Operating Results

Quarterly earnings for the second quarter of fiscal 2015 compared with the second quarter of fiscal 2014 were positively impacted by the following items:
  • Loan interest income, excluding accretion and amortization of loss share receivable, increased $473,000.
  • Net interest margin, excluding accretion and amortization of loss share receivable, was 3.31% for the quarter ended March 31, 2015 compared with 2.85% for the same quarter of fiscal 2014.
  • Noninterest income increased $234,000, or 7.3%.
  • Deposit and bankcard fee income increased by a combined $271,000.
  • Gain on sale of loans and loan servicing release fees increased by $85,000.
  • Deposit expense decreased by $146,000, or 18.1%.
  • The cost of deposits decreased to 43 basis points for the quarter ended March 31, 2015, compared to 49 basis points for the quarter ended March 31, 2014.
  • Borrowing expense decreased $48,000, or 7.7%.

The above increases to net income were more than offset by the following items:
  • Net purchase discount accretion and amortization decreased by $265,000.
  • The average yield on loans was 4.95% for the quarter ended March 31, 2015 compared to 5.41% for the quarter ended March 31, 2014 primarily due to lower purchase accretion.
  • Salaries and employee benefits expense increased by $226,000.
  • Net cost of operations of real estate owned increased by $144,000.

Chairman and CEO Robert L. Johnson said, "While earnings were stable, we continue to improve core earnings with net income of $1.4 million for the quarter. Our net interest margin excluding purchase accounting was 3.31% for the quarter ending March 31, 2015 which was significantly improved from 2.85% for the quarter ending March 31, 2014."

Financial Condition

The Company's total assets were $1.0 billion at March 31, 2015, a slight increase from September 30, 2014. Net loan growth and shares repurchased during the first half of fiscal 2015 were funded by deposit growth, including brokered CDs, and utilization of the Company's cash and cash equivalents. Net loans grew $49.8 million, or 8.2%, to $656.2 million at March 31, 2015, from $606.4 million at September 30, 2014.

Mr. Johnson continued, "Our loan portfolio increased on a year-over-year basis for the sixth straight quarter. Due to continued slow economic activity in many of our markets, we supplemented our organic growth with the purchase of $12.4 million of high quality single family mortgage loans. Continued loan portfolio growth is important to realizing increased profitability through higher operating and capital leverage."

Total deposits were $736.8 million at March 31, 2015, compared with $717.2 million at September 30, 2014 due primarily to increases of $14.6 million and $30.8 million in core deposits and broker deposits, respectively. Core deposits increased from $486.2 million at September 30, 2014, to $500.9 million at March 31, 2015, due primarily to an increase in transaction accounts.

Mr. Johnson added, "We are starting to see the positive impact of the rebranding of our checking products that we started last fall. We reduced the number of checking products from 13 to four. We continue to provide multiple ways for consumers to have free checking accounts but in methods more beneficial for the bank through increased interchange revenue, increased balances or reduced costs through the reduction of mailing paper statements."

Total stockholders' equity decreased to $211.2 million at March 31, 2015, compared to $225.0 million at September 30, 2014, due predominantly to $17.7 million of share repurchases during the first half of fiscal 2015.

Net Interest Income and Net Interest Margin

Net interest income increased to $7.8 million for the quarter ended March 31, 2015, compared with $7.5 million for the quarter ended March 31, 2014. Interest income increased by $116,000 despite a $265,000 decline in net discount accretion and amortization on acquired covered loans, while interest expense decreased by $194,000 quarter over quarter 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, improved for the sixth consecutive quarter to 3.31% for the quarter ended March 31, 2015, compared with 2.85% for the quarter ended March 31, 2014. Net interest margin, including the impact of purchase accounting, increased to 3.54% for the quarter ended March 31, 2015, compared with 3.18% for the quarter ended March 31, 2014.

Net interest income for the six months ended March 31, 2015 increased $222,000 to $15.4 million compared to the same prior year period despite a $787,000 decline in net discount accretion and amortization on acquired covered loans. Additionally, interest expense decreased by $395,000. Net interest margin, excluding the effects of purchase accounting, improved 41 basis points to 3.22% while net interest margin, including the impact of purchase accounting, improved 27 basis points to 3.50% for the six months ended March 31, 2015.

Provision for Loan Losses

The Company recorded no provision for loan losses on non-covered loans for the quarters ended March 31, 2015 and 2014, due to an overall improvement in the credit quality of the non-covered loan portfolio. A negative provision of $4,000 was recorded on covered loans for the quarter ended March 31, 2015, compared to a negative provision of $54,000 for the same quarter in 2014.

There was no net provision recorded on non-covered and covered loans during the six months ended March 31, 2015 due to our strong asset credit quality compared to net provision expense of $248,000 for the same prior year period.

Accounting for FDIC-Assisted Acquisitions

Mr. Johnson continued, "We have completed the non-single family loan loss share portion of two of our FDIC assisted acquisitions in an uneventful fashion. The last agreement has 17 months remaining in the loss share period. The FDIC indemnification asset is down to $6.7 million indicating that we are approaching the completion of the resolution of the acquired troubled assets."

Under purchase accounting rules, the Company currently expects to realize remaining discount accretion of $4.3 million and $818,000 in amortization netting to approximately $3.5 million of future pre-tax income impact.

Noninterest Income and Expense

Noninterest income for the quarter ended March 31, 2015 increased $234,000, or 7.3%, which was primarily due to the continued increases in gain on sale of loans, bankcard fee income and other deposit fee income. Noninterest expense for the quarter ended March 31, 2015 increased $483,000, or 5.6%, compared with the same period in fiscal 2014. This increase was primarily attributable to a $226,000 increase in salaries and employee benefits along with a $144,000 increase in the net cost of real estate owned due to the write down of several pieces of real estate owned covered by FDIC loss sharing contracts.

Noninterest income for the six months ended March 31, 2015 decreased $316,000, or 4.3%, due in part to the $1.1 million true-up receipt from the completion and renegotiation of a processing contract in the prior year period. Meanwhile, bankcard fee income and other deposit fee income increased $545,000 and gain on sale of loans increased $280,000 for the six months ended March 31, 2015 compared to the same prior year period. Noninterest expense remained practically unchanged at $17.8 million for the six months ended March 31, 2015 and 2014. Decreases in legal and professional fees and the net cost of real estate owned were nearly offset by an increase in salaries and employee benefits.

Asset Quality

Asset quality remained strong with nonperforming assets not covered by loss sharing agreements remaining stable at 0.48% of total non-covered assets and the allowance for loan losses at 1.37% of total non-covered loans and 248.17% of nonperforming non-covered loans at March 31, 2015. The Company had net loan charge-offs of $31,000 on non-covered loans for the quarter ended March 31, 2015, compared to net loan charge-offs of $64,000 on non-covered loans for the same period in fiscal 2014.

Capital Management

During the quarter ended March 31, 2015, the Company repurchased 300,177 shares for approximately $3.5 million, or $11.50 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 at a discount to tangible book value. Additionally, through our current repurchase program announced in September 2014 and revised in March 2015, we can repurchase up to 2.6 million shares, of which 1.6 million shares have been repurchased to date. Collectively, the 6.5 million shares repurchased, or approximately 28% of our common stock, were purchased at a combined discount to tangible book value of $9.0 million."

Mr. Johnson concluded, "We continue to utilize our excess capital in several ways including the repurchase of shares at a discount to tangible book value, dividends, loan portfolio growth and exploring the possibility of accretive acquisitions. We are also seeking to enhance stockholder value through leverage of our expense structure and improving noninterest income."

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 may contain "forward-looking statements" within the meaning of the federal securities laws. These statements may be identified by use of such words as "believe," "expect," "anticipate," "should," "planned," "estimated," "seek," and "potential." Examples of forward-looking statements include, but are not limited to, statements regarding future growth, profitability, expense reduction, improvements in income and margins, increasing stockholder value, and 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; the effect of any acquisition or other strategic initiatives that we determine to pursue; changes in legislation or regulation; other economic, competitive, governmental, regulatory, and technological factors affecting our operations, pricing, products, and services; and the effects of geopolitical instability and risks such as terrorist attacks, the effects of weather and natural disasters such as floods, droughts, wind, tornados and hurricanes, and the effect of any damage to our reputation resulting from developments relating to any of the factors listed herein. 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. Additional information concerning factors that could cause actual results to differ materially from those forward-looking statements is contained from time to time in the Company's filings with the Securities and Exchange Commission. The company refers you to the section entitled "Risk Factors" contained in the company's Annual Report on Form 10-K for the fiscal year ended September 30, 2014. Copies of each filing may be obtained from the Company or the Securities and Exchange Commission.

The risks included here are not exhaustive and undue reliance should not be placed on any forward-looking statements, which are based on current expectations. All written and oral forward-looking statements attributable to the company, its management, or persons acting on their behalf are qualified in their entirety by these cautionary statements. Further, forward-looking statements speak only as of the date they are made, and the company undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time unless otherwise required by law.  
Charter Financial Corporation
Condensed Consolidated Statements of Financial Condition (unaudited)
     
  March 31, 2015 September 30, 2014
Assets
Cash and amounts due from depository institutions $10,865,181 $10,996,959
Interest-earning deposits in other financial institutions 53,698,660 88,465,994
Cash and cash equivalents 64,563,841 99,462,953
Loans held for sale, fair value of $2,755,616 and $2,090,469 2,700,613 2,054,722
Investment securities available for sale 182,981,526 188,743,273
Federal Home Loan Bank stock 3,005,600 3,442,900
Loans receivable:    
Not covered under FDIC loss sharing agreements 617,053,035 546,570,720
Covered under FDIC loss sharing agreements 50,040,220 70,631,743
Allowance for loan losses (covered loans) (946,314) (997,524)
Unamortized loan origination fees, net (non-covered loans) (1,471,715) (1,364,853)
Allowance for loan losses (non-covered loans) (8,463,104) (8,473,373)
Loans receivable, net 656,212,122 606,366,713
Other real estate owned:    
Not covered under FDIC loss sharing agreements 1,144,112 1,757,864
Covered under FDIC loss sharing agreements 3,343,384 5,557,927
Accrued interest and dividends receivable 2,594,483 2,459,347
Premises and equipment, net 20,092,378 20,571,541
Goodwill 4,325,282 4,325,282
Other intangible assets, net of amortization 450,873 423,676
Cash surrender value of life insurance 47,781,842 47,178,128
FDIC receivable for loss sharing agreements 6,749,359 10,531,809
Deferred income taxes 7,500,153 8,231,002
Other assets 7,199,168 9,254,001
Total assets $1,010,644,736 $1,010,361,138
     
Liabilities and Stockholders' Equity
Liabilities:    
Deposits $736,802,784 $717,192,200
FHLB advances 50,000,000 55,000,000
Advance payments by borrowers for taxes and insurance 1,161,941 1,312,283
Other liabilities 11,434,325 11,901,786
Total liabilities 799,399,050 785,406,269
Stockholders' equity:    
Common stock, $0.01 par value; 16,663,748 shares issued and outstanding at March 31, 2015 and 18,261,388 shares issued and outstanding at September 30, 2014 166,637 182,614
Preferred stock, $0.01 par value; 50,000,000 shares authorized at March 31, 2015 and September 30, 2014
Additional paid-in capital 102,621,872 119,586,164
Unearned compensation – ESOP (5,551,193) (5,984,317)
Retained earnings 113,442,799 111,924,543
Accumulated other comprehensive income (loss) 565,571 (754,135)
Total stockholders' equity 211,245,686 224,954,869
     
Total liabilities and stockholders' equity $1,010,644,736 $1,010,361,138
     
(1) Financial information as of September 30, 2014 has been derived from audited financial statements.

 
Charter Financial Corporation
Condensed Consolidated Statements of Income (unaudited)
     
  Three Months Ended  March 31, Six Months Ended  March 31,
  2015 2014 2015 2014
Interest income:        
Loans receivable $8,939,425 $8,575,982 $17,844,057 $16,730,672
Mortgage-backed securities and collateralized mortgage obligations 793,093 953,406 1,623,770 1,922,119
Federal Home Loan Bank stock 36,978 37,145 73,686 67,176
Other investment securities available for sale 153,020 19,222 197,874 38,029
Interest-earning deposits in other financial institutions 18,812 84,198 59,848 169,496
Amortization of FDIC loss share receivable (901,603) (746,391) (1,790,514) (746,391)
Total interest income 9,039,725 8,923,562 18,008,721 18,181,101
Interest expense:        
Deposits 658,445 804,420 1,391,372 1,689,845
Borrowings 577,637 625,660 1,180,382 1,276,528
Total interest expense 1,236,082 1,430,080 2,571,754 2,966,373
Net interest income 7,803,643 7,493,482 15,436,967 15,214,728
Provision for loan losses, not covered under FDIC loss sharing agreements 300,000
Provision for covered loan losses (4,000) (53,693) (51,577)
Net interest income after provision for loan losses 7,807,643 7,547,175 15,436,967 14,966,305
Noninterest income:        
Service charges on deposit accounts 1,512,974 1,371,627 3,094,952 2,799,942
Bankcard fees 993,538 863,519 1,941,161 1,690,730
Loss on investment securities available for sale (27,893) (27,209)
Bank owned life insurance 279,302 339,279 603,715 646,980
Gain on sale of loans and loan servicing release fees 351,578 266,445 718,581 438,831
Brokerage commissions 202,483 183,826 356,787 328,351
FDIC receivable for loss sharing agreements accretion (impairment) 27,059 82,875 74,519 (6,867)
Other 111,651 109,114 254,152 1,435,133
Total noninterest income 3,450,692 3,216,685 7,016,658 7,333,100
Noninterest expenses:        
Salaries and employee benefits 5,077,774 4,851,837 10,092,041 9,552,789
Occupancy 1,838,048 1,873,734 3,713,711 3,766,149
Legal and professional 385,283 386,639 625,909 940,586
Marketing 367,238 336,534 632,470 636,274
Federal insurance premiums and other regulatory fees 179,856 250,911 375,446 502,261
Net cost (benefit) of operations of real estate owned 141,568 (2,110) 84,248 286,692
Furniture and equipment 223,666 158,425 374,201 324,447
Postage, office supplies and printing 224,025 180,778 464,632 406,626
Core deposit intangible amortization expense 68,088 99,742 142,396 206,060
Other 557,503 443,782 1,293,783 1,158,465
Total noninterest expenses 9,063,049 8,580,272 17,798,837 17,780,349
Income before income taxes 2,195,286 2,183,588 4,654,788 4,519,056
Income tax expense 761,055 692,778 1,547,053 1,391,178
Net income $1,434,231 $1,490,810 $3,107,735 $3,127,878
Basic net income per share $0.09 $0.07 $0.19 $0.14
Diluted net income per share $0.09 $0.07 $0.19 $0.14
Weighted average number of common shares outstanding 15,835,418 21,701,476 16,007,320 21,855,743
Weighted average number of common and potential common shares outstanding 16,375,507 22,223,877 16,547,409 22,378,144

Charter Financial Corporation
Supplemental Financial Data (unaudited)
in thousands except per share data
     
  Quarter to Date Year to Date
  3/31/2015 12/31/2014 9/30/2014 6/30/2014 3/31/2014 3/31/2015 3/31/2014
               
Consolidated balance sheet data:              
Total assets $1,010,645 $979,777 $1,010,361 $1,040,237 $1,077,870 $1,010,645 $1,077,870
Cash and cash equivalents 64,564 48,732 99,463 149,269 175,114 64,564 175,114
Loans receivable, net 656,212 627,740 606,367 582,403 572,040 656,212 572,040
Non-covered loans receivable, net 607,118 560,724 536,732 511,176 481,907 607,118 481,907
Covered loans receivable, net 49,094 67,016 69,635 71,227 90,133 49,094 90,133
Other real estate owned 4,487 5,508 7,316 9,345 10,744 4,487 10,744
Non-covered other real estate owned 1,144 954 1,758 1,331 849 1,144 849
Covered other real estate owned 3,343 4,554 5,558 8,014 9,895 3,343 9,895
Securities available for sale 182,982 191,995 188,743 185,040 201,578 182,982 201,578
Checking 328,012 310,891 314,201 312,962 314,788 328,012 314,788
Total deposits 736,803 701,475 717,192 729,609 742,064 736,803 742,064
Borrowings 50,000 55,000 55,000 55,000 55,000 50,000 55,000
Total stockholders' equity 211,246 213,186 224,955 243,414 270,265 211,246 270,265
               
Consolidated earnings summary:              
Interest income $9,040 $8,969 $8,460 $9,007 $8,923 $18,009 $18,181
Interest expense 1,236 1,336 1,378 1,386 1,430 2,572 2,966
Net interest income 7,804 7,633 7,082 7,621 7,493 15,437 15,215
Provision for loan losses on non-covered loans 300
Provision for loan losses on covered loans (4) 4 (127) (834) (54) (51)
Net interest income after provision for loan losses 7,808 7,629 7,209 8,455 7,547 15,437 14,966
Noninterest income 3,451 3,566 3,708 3,236 3,217 7,017 7,333
Noninterest expense 9,064 8,735 9,394 9,036 8,580 17,799 17,780
Income tax expense 761 786 481 870 693 1,547 1,391
Net income $1,434 $1,674 $1,042 $1,785 $1,491 $3,108 $3,128
               
Per share data:              
Earnings per share – basic $0.09 $0.10 $0.06 $0.09 $0.07 $0.19 $0.14
Earnings per share – fully diluted $0.09 $0.10 $0.06 $0.09 $0.07 $0.19 $0.14
Cash dividends per share $0.05 $0.05 $0.05 $0.05 $0.05 $0.10 $0.10
               
Weighted average basic shares 15,835 16,175 17,936 20,747 21,701 16,007 21,856
Weighted average diluted shares 16,376 16,710 18,446 21,301 22,224 16,547 22,378
Total shares outstanding 16,664 16,963 18,261 19,960 22,603 16,664 22,603
               
Book value per share $12.68 $12.57 $12.32 $12.20 $11.96 $12.68 $11.96
Tangible book value per share $12.39 $12.29 $12.06 $11.95 $11.74 $12.39 $11.74
               
(1) Financial information as of September 30, 2014 has been derived from audited financial statements.
 
Charter Financial Corporation
Supplemental Information (unaudited)
dollars in thousands
     
  Quarter to Date Year to Date
  3/31/2015 12/31/2014 9/30/2014 6/30/2014 3/31/2014 3/31/2015 3/31/2014
               
Not covered by loss share agreements              
Loans receivable: (1)              
1-4 family residential real estate $172,131 $157,340 $152,811 $139,803 $135,181 $172,131 $135,181
Commercial real estate 340,172 313,658 300,556 284,591 271,156 340,172 271,156
Commercial 29,432 27,844 24,760 21,172 21,501 29,432 21,501
Real estate construction 70,758 67,196 63,485 58,459 47,112 70,758 47,112
Consumer and other 4,560 4,625 4,959 17,010 16,531 4,560 16,531
Total non-covered loans receivable $617,053 $570,663 $546,571 $521,035 $491,481 $617,053 $491,481
               
Allowance for loan losses:              
Balance at beginning of period $8,494 $8,473 $8,606 $8,431 $8,494 $8,473 $8,189
Charge-offs (59) (88) (342) (238) (93) (147) (160)
Recoveries 28 109 209 13 30 137 102
Provision 300
Transfer (2) 400
Balance at end of period $8,463 $8,494 $8,473 $8,606 $8,431 $8,463 $8,431
               
Nonperforming assets: (3)              
Nonaccrual loans $3,410 $3,274 $3,508 $4,243 $4,743 $3,410 $4,743
Loans delinquent 90 days or greater and still accruing 64 736 238
Total nonperforming non-covered loans 3,410 3,338 4,244 4,481 4,743 3,410 4,743
Other real estate owned 1,144 954 1,758 1,331 849 1,144 849
Total nonperforming non-covered assets $4,554 $4,292 $6,002 $5,812 $5,592 $4,554 $5,592
               
Troubled debt restructuring:              
Troubled debt restructurings - accruing $6,064 $6,094 $6,154 $7,352 $7,603 $6,064 $7,603
Troubled debt restructurings - nonaccrual 1,673 1,673 1,674 2,094 2,094 1,673 2,094
Total troubled debt restructurings $7,737 $7,767 $7,828 $9,446 $9,697 $7,737 $9,697
               
Covered by loss sharing agreements              
Nonperforming assets:              
Other real estate owned $3,343 $4,554 $5,558 $8,014 $9,895 $3,343 $9,895
Covered loans 90+ days delinquent (4) 2,638 5,434 5,315 3,156 8,825 2,638 8,825
Total nonperforming covered assets $5,981 $9,988 $10,873 $11,170 $18,720 $5,981 $18,720
               
(1) Includes previously acquired loans in the amount of $20.8 million at March 31, 2015 related to the Neighborhood Community Bank and McIntosh Commercial Bank non single-family loss sharing agreements with the FDIC that expired in June 2014 and March 2015, respectively. Additionally, $8.2 million, $8.6 million and $9.1 million of previously acquired loans related to Neighborhood Community Bank are included at December 31, 2014, September 30, 2014 and June 30, 2014, respectively.
(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
  3/31/2015 12/31/2014 9/30/2014 6/30/2014 3/31/2014 3/31/2015 3/31/2014
               
Return on equity (annualized) 2.69% 3.09% 1.78% 2.71% 2.19% 2.89% 2.29%
Return on assets (annualized) 0.58% 0.68% 0.41% 0.67% 0.55% 0.63% 0.58%
Net interest margin (annualized) 3.54% 3.47% 3.14% 3.26% 3.18% 3.50% 3.23%
Net interest margin, excluding the effects of purchase accounting (1) 3.31% 3.14% 2.95% 2.90% 2.85% 3.22% 2.81%
Bank tier 1 leverage ratio (2) 16.73% 18.31% 17.67% 19.51% 19.25% 16.73% 19.25%
Bank total risk-based capital ratio 23.42% 26.46% 27.90% 32.93% 34.18% 23.42% 34.18%
Effective tax rate 34.67% 31.96% 31.58% 32.77% 31.73% 33.24% 30.78%
Yield on loans 4.95% 5.14% 5.05% 5.44% 5.41% 5.04% 5.48%
Cost of deposits 0.43% 0.48% 0.49% 0.49% 0.49% 0.45% 0.51%
               
Ratios of non-covered assets:              
Allowance for loan losses as a % of total loans 1.37% 1.49% 1.55% 1.65% 1.71% 1.37% 1.71%
Allowance for loan losses as a % of nonperforming loans 248.17% 254.47% 199.64% 192.06% 177.76% 248.17% 177.76%
Nonperforming assets as a % of total loans and REO 0.74% 0.75% 1.09% 1.11% 1.14% 0.74% 1.14%
Nonperforming assets as a % of total assets 0.48% 0.48% 0.65% 0.62% 0.59% 0.48% 0.59%
Net charge-offs as a % of average loans (annualized) 0.02% (0.01)% 0.10% 0.18% 0.05% —% 0.02%
               
(1) Net interest income excluding accretion and amortization of loss share loans receivable divided by average net interest earning assets excluding average loan accretable discounts in the amount of $5.1 million, $5.5 million, $6.1 million, $5.5 million, and $3.5 million, for the quarters ended March 31, 2015, December 31, 2014, September 30, 2014, June 30, 2014, and March 31, 2014, respectively.
(2) During the quarter ended March 31, 2015, an upstream of capital was made between the bank and the holding company in the amount of $17.5 million to be used primarily for the repurchase of the Company's outstanding shares.
 
Charter Financial Corporation
Average Balances, Interest Rates and Yields (unaudited)
dollars in thousands
   
  Quarter to Date
  3/31/2015 3/31/2014
  Average Balance Interest Average Yield/Cost (10) Average Balance Interest Average Yield/Cost (10)
Assets:            
Interest-earning assets:            
Interest-earning deposits in other financial institutions $41,534 $19 0.18% $156,199 $84 0.22%
FHLB common stock and other equity securities 3,362 37 4.40 3,861 37 3.85
Mortgage-backed securities and collateralized mortgage obligations available for sale 162,561 793 1.95 185,459 953 2.06
Other investment securities available for sale (1) 25,428 153 2.41 19,455 19 0.40
Loans receivable (1)(2)(3)(4) 649,787 7,571 4.66 578,887 7,098 4.90
Accretion and amortization of loss share loans receivable (5)   467 0.28   732 0.50
Total interest-earning assets 882,672 9,040 4.10 943,861 8,923 3.78
Total noninterest-earning assets 107,814     133,844    
Total assets $990,486     $1,077,705    
Liabilities and Equity:            
Interest-bearing liabilities:            
Interest bearing checking $166,797 $50 0.12% $178,962 $51 0.11%
Bank rewarded checking 49,153 24 0.20 47,849 28 0.24
Savings accounts 49,179 2 0.02 48,375 2 0.02
Money market deposit accounts 124,999 64 0.21 131,376 75 0.23
Certificate of deposit accounts 223,194 518 0.93 254,623 648 1.02
Total interest-bearing deposits 613,322 658 0.43 661,185 804 0.49
Borrowed funds 53,833 578 4.29 58,856 626 4.25
Total interest-bearing liabilities 667,155 1,236 0.74 720,041 1,430 0.79
Noninterest-bearing deposits 98,450     74,468    
Other noninterest-bearing liabilities 11,371     10,583    
Total noninterest-bearing liabilities 109,821     85,051    
Total liabilities 776,976     805,092    
Total stockholders' equity 213,510     272,613    
Total liabilities and stockholders' equity $990,486     $1,077,705    
Net interest income   $7,804     $7,493  
Net interest earning assets (6)   $215,517     $223,820  
Net interest rate spread (7)     3.36%     2.99%
Net interest margin (8)     3.54%     3.18%
Net interest margin, excluding the effects of purchase accounting (9)     3.31%     2.85%
Ratio of average interest-earning assets to average interest-bearing liabilities     132.30%     131.08%
             
(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 margin, excluding the effects of purchase accounting represents net interest income excluding accretion and amortization of loss share loans receivable as a percentage of average net interest earning assets excluding loan accretable discounts in the amount of $5.1 million and $3.5 million for the quarters ended March 31, 2015 and March 31, 2014, respectively.
(10) Annualized.
 
Charter Financial Corporation
Average Balances, Interest Rates and Yields (unaudited)
dollars in thousands
   
  Fiscal Year to Date
  3/31/2015 3/31/2014
  Average Balance Interest Average Yield/Cost (10) Average Balance Interest Average Yield/Cost (10)
Assets:            
Interest-earning assets:            
Interest-earning deposits in other financial institutions $52,836 $60 0.23% $144,630 $169 0.23%
FHLB common stock and other equity securities 3,412 74 4.32 3,901 67 3.44
Mortgage-backed securities and collateralized mortgage obligations available for sale 168,146 1,624 1.93 189,066 1,922 2.03
Other investment securities available for sale (1) 20,434 198 1.94 19,543 38 0.39
Loans receivable (1)(2)(3)(4) 636,793 14,914 4.68 583,547 14,061 4.82
Accretion and amortization of loss share loans receivable (5)   1,139 0.35   1,924 0.65
Total interest-earning assets 881,621 18,009 4.09 940,687 18,181 3.87
Total noninterest-earning assets 108,963     140,769    
Total assets $990,584     $1,081,456    
Liabilities and Equity:            
Interest-bearing liabilities:            
Interest bearing checking $166,457 $104 0.12% $174,245 $98 0.11%
Bank rewarded checking 48,223 52 0.22 48,298 58 0.24
Savings accounts 48,701 5 0.02 48,123 6 0.02
Money market deposit accounts 125,152 134 0.21 130,899 145 0.22
Certificate of deposit accounts 223,900 1,097 0.98 261,871 1,382 1.06
Total interest-bearing deposits 612,433 1,392 0.45 663,436 1,689 0.51
Borrowed funds 54,615 1,180 4.32 59,434 1,277 4.30
Total interest-bearing liabilities 667,048 2,572 0.77 722,870 2,966 0.82
Noninterest-bearing deposits 96,828     73,827    
Other noninterest-bearing liabilities 11,502     11,201    
Total noninterest-bearing liabilities 108,330     85,028    
Total liabilities 775,378     807,898    
Total stockholders' equity 215,206     273,558    
Total liabilities and stockholders' equity $990,584     $1,081,456    
Net interest income   $15,437     $15,215  
Net interest earning assets (6)   $214,573     $217,817  
Net interest rate spread (7)     3.32%     3.05%
Net interest margin (8)     3.50%     3.23%
Net interest margin, excluding the effects of purchase accounting (9)     3.22%     2.81%
Ratio of average interest-earning assets to average interest-bearing liabilities     132.17%     130.13%
             
(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 margin, excluding the effects of purchase accounting represents net interest income excluding accretion and amortization of loss share loans receivable as a percentage of average net interest earning assets excluding loan accretable discounts in the amount of $5.3 million and $4.0 million for the three months ended March 31, 2015 and March 31, 2014, respectively.
(10) Annualized.
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