Charter Financial Announces Third Quarter Fiscal 2014 Earnings of $1.8 Million

        Print
| Source: Charter Financial Corporation
  • Total year to date average equity to average assets of 25.2%
  • Nonperforming non-covered assets at 0.62% of total non-covered assets as of June 30, 2014
  • Net non-covered organic loan growth of 13.3% over prior year quarter
  • Basic and diluted EPS of $0.09 for quarter, up $0.02, respectively, on a year-over-year basis
  • Tangible book value per share of $11.95 at June 30, 2014

WEST POINT, Ga., July 28, 2014 (GLOBE NEWSWIRE) -- Charter Financial Corporation (the "Company") (Nasdaq:CHFN) today reported net income of $1.8 million, or $0.09 per basic and diluted share, for the quarter ended June 30, 2014, compared with $1.6 million, or $0.07 per basic and diluted share, for the quarter ended June 30, 2013. The increase in net income was primarily attributable to an $834,000 negative loan loss provision on covered loans related to improved credit quality and workout experience, along with the absence of a non-covered loan loss provision in the 2014 third quarter versus $500,000 in the prior year quarter and a $573,000 increase in noninterest income. The increase was partially offset by a decline in net interest income of $1.3 million for the quarter ended June 30, 2014. Net income for the nine months ended June 30, 2014, was $4.9 million, or $0.23 and $0.22 per basic and diluted share, respectively, compared with $5.3 million, or $0.26 per basic and diluted share, for the nine months ended June 30, 2013. The decrease in net income and earnings per share for the nine months ended June 30, 2014, was primarily the result of lower net purchase discount accretion, partially offset by reduced provision for loan losses due to improved credit quality and higher noninterest income.

Quarterly Operating Results

The improvement in reported quarterly earnings for the third quarter of fiscal 2014 compared with the third quarter of fiscal 2013 resulted primarily from the following items:

  • Recorded an $834,000 negative loan loss provision on covered loans.
  • Borrowing expense decreased $146,000, or 19.7%.
  • Deposit expense decreased by $211,000, or 21.1%.
  • The cost of deposits remained stable at 49 basis points for the quarter ended June 30, 2014 compared to 57 basis points for the quarter ended June 30, 2013.
  • Net interest margin excluding accretion and amortization of loss share receivable was 2.90% for the quarter ended June 30, 2014 compared with 2.75% the same quarter of 2013.
  • Noninterest income increased by $573,000, or 21.5%.
  • Deposit and bankcard fee income increased by a combined $455,000.
  • Recognized a net gain of $201,000 on the sale of securities available for sale.

The improvement was partially mitigated by the following items:

  • Loan interest income decreased $809,000 primarily due to a decrease in net accretion income.
  • The average yield on loans was 5.44% for the quarter ended June 30, 2014 compared to 6.83% for the quarter ended June 30, 2013.
  • Salaries and employee benefits increased by $509,000, primarily related to stock awards made during the 2014 fiscal year.
  • Noninterest expense and income tax expense increased by a combined $493,000.
  • Recorded a $248,000 loss on the write down of fixed assets associated with a branch to be closed in the fourth quarter of fiscal 2014.
  • The net cost of operations of real estate owned increased $110,000.

Chairman and CEO Robert L. Johnson said, "While economic activity remains slow in our markets we achieved modest loan growth. We increased net organic loans not covered by loss sharing by $31.7 million since September 30, 2013, and by $58.9 million from June 30, 2013. With the purchase discount accretion reductions in our covered loan portfolio and limited opportunity for loan growth, we will continue to face significant near-term earnings challenges. However, longer term, we remain optimistic in our ability to improve earnings."

Financial Condition

The Company's total assets were $1.0 billion at June 30, 2014, a decrease of $49.2 million from September 30, 2013. Net non-covered loans grew $40.3 million, or 8.6%, to $511.2 million at June 30, 2014, from $470.9 million at September 30, 2013. Of the $40.3 million in net non-covered loan growth, $8.6 million was 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. At June 30, 2014, $71.2 million of net loans receivable were covered by FDIC loss sharing, down from $109.0 million at September 30, 2013.

Total deposits were $729.6 million at June 30, 2014, compared with $751.3 million at September 30, 2013. Core deposits increased from $475.4 million at September 30, 2013, to $486.4 million at June 30, 2014, due primarily to an increase in transaction accounts.

Total stockholders' equity decreased to $243.4 million at June 30, 2014, compared to $273.8 million at September 30, 2013, due predominantly to the repurchase of shares during the two previous quarters.

Net Interest Income and Net Interest Margin

Net interest income decreased to $7.6 million for the quarter ended June 30, 2014, from $8.9 million for the quarter ended June 30, 2013. Total interest income decreased to $9.0 million for the quarter ended June 30, 2014, compared to $10.7 million for the same quarter last year primarily as a result of a $1.3 million decrease in net accretion income. Interest expense was lower at $1.4 million for the quarter ended June 30, 2014, compared with $1.7 million for the same quarter of 2013, primarily as a result of lower expenses on certificates of deposit and borrowings.

The Company's net interest margin, excluding accretion and amortization of loss share receivable, was 2.90% for the quarter ended June 30, 2014, compared with 2.75% for the quarter ended June 30, 2013. Net interest margin, including the impact of loss share accounting, decreased to 3.26% for the quarter ended June 30, 2014, compared with 3.63% for the same quarter of 2013. The Company has excess cash that is invested in Fed Funds and thus provides an opportunity for earnings improvement as these funds can be deployed into loans and the repurchase of shares.

Provision for Loan Losses

The Company recorded no provision for loan losses on non-covered loans and a negative provision of $834,000 on covered loans for the quarter ended June 30, 2014, compared to a provision of $500,000 on non-covered loans and provision of $42,000 on covered loans for the same quarter in 2013. In the quarter ended June 30, 2014, the last quarter of the non-single family loss sharing agreement related to the Company's first FDIC-assisted acquisition, the Company successfully resolved several loss share assets resulting in the negative provision on covered loans.

Accounting for FDIC-Assisted Acquisitions

The Company reevaluates estimated losses quarterly on covered loans and foreclosed properties and the related FDIC indemnification asset. The Company has three and nine quarters, respectively, of loss sharing remaining on its second and third non-single family loss share agreements resulting from its FDIC-assisted acquisitions. At June 30, 2014, the Company had $71.2 million of total loans, net and $8.0 million of other real estate owned covered by loss share agreements, and is aggressively working to complete the resolution of the problem assets during the remaining loss share periods. The discount accretion included in interest income, net of amortization of FDIC indemnification asset overstatement relating to these assets acquired in the FDIC acquisitions, was $795,000 for the current quarter and $2.1 million in the same quarter last year. There is $6.0 million of discount remaining to accrete into interest income over the remaining life of all acquired loans with the accretion heavily weighted towards the early quarters. Additionally, there is an estimated $2.5 million overstatement of FDIC indemnification asset that will be amortized over the remaining life of the acquired loan pools or the agreement with the FDIC, whichever is shorter.

During the Company's quarterly reevaluation of cash flows on acquired loans, the Company improved its estimate of cash flows related to covered loans resulting in a transfer of $1.8 million from nonaccretable discount to accretable yield related to the McIntosh Commercial Bank and First National Bank of Florida agreements. In accordance with accounting guidance, the transferred amount will be accreted into income prospectively over the estimated remaining life of the loan pools. There was also a transfer of $1.2 million from Neighborhood Community Bank's allowance discount with $400,000 being transferred into the non-covered allowance and approximately $834,000 posted as a negative provision. Concurrently, an estimate of approximately $2.5 million which previously represented cash flows receivable from the FDIC and included in the FDIC receivable for loss sharing agreements on the balance sheet, will be amortized into interest income over the remaining life of the loan pools or the agreement with the FDIC, whichever is shorter.

Noninterest Income and Expense

Noninterest income increased $573,000 to $3.2 million for the quarter ended June 30, 2014, compared with $2.7 million for the same quarter in 2013, due primarily to an increase in bankcard and deposit fees as well as gains recognized on securities available for sale. The increase in noninterest income was partially offset by the write down of assets related to the planned closure of an underperforming bank branch in the fourth quarter of fiscal 2014 which will provide anticipated cost savings in future periods.

Noninterest expense increased to $9.0 million for the quarter ended June 30, 2014, compared to $8.8 million for the same quarter of 2013. The increase was primarily attributable to an increase in stock benefits due to stock awards made in fiscal 2014.

Asset Quality

Asset quality remained strong with nonperforming assets not covered by loss sharing agreements at 0.62% of total non-covered assets and the allowance for loan losses at 1.65% of total non-covered loans and 192.06% of nonperforming non-covered loans at June 30, 2014. The Company's first commercial loss share agreement expired and resulted in a transfer to the non-covered allowance for loan losses of $400,000 and a negative provision of approximately $800,000 during the third quarter of fiscal 2014 due to improved workout experience and credit quality. The Company had net loan charge-offs of $225,000 on non-covered loans for the three months ended June 30, 2014, compared to net loan charge-offs of $665,000 on non-covered loans for the same period in 2013.

Capital Management

During the quarter ended June 30, 2014, the Company repurchased 2.6 million shares for approximately $29.0 million, or $10.96 per share.

Mr. Johnson said, "Since December 2013, we have completed two stock buyback programs, whereby the company repurchased a combined 2.8 million shares, or approximately 12% of our common stock, at a discount to tangible book value. Meanwhile, in June we announced the approval of a new stock buyback program for up to 2,030,000 shares, or approximately 10% of our outstanding shares, which allows us to continue our share repurchase. 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. We will also continue to consider acquisitions where the additional franchise value and earnings more than offset the book value dilution."

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) (audited)
  June 30, September 30,
  2014 2013
     
Assets    
Cash and amounts due from depository institutions  $ 6,961,232  $ 10,069,875
Interest-earning deposits in other financial institutions 142,307,370 151,382,606
Cash and cash equivalents 149,268,602 161,452,481
Loans held for sale, fair value of $2,380,651 and $1,883,244 2,332,156 1,857,393
Securities available for sale 185,040,274 215,118,407
Federal Home Loan Bank stock 3,442,900 3,940,300
Loans receivable:    
Not covered under FDIC loss sharing agreements 521,035,113 480,152,265
Covered under FDIC loss sharing agreements 71,883,355 112,915,868
Allowance for loan losses (covered loans) (657,133) (3,924,278)
Unamortized loan origination fees, net (non-covered loans) (1,252,972) (1,100,666)
Allowance for loan losses (non-covered loans) (8,605,698) (8,188,896)
Loans receivable, net 582,402,665 579,854,293
Other real estate owned:    
Not covered under FDIC loss sharing agreements 1,331,356 1,615,036
Covered under FDIC loss sharing agreements 8,014,010 14,068,846
Accrued interest and dividends receivable 2,424,460 2,728,902
Premises and equipment, net 20,739,910 21,750,756
Goodwill 4,325,282 4,325,282
Other intangible assets, net of amortization 503,372 803,886
Cash surrender value of life insurance 46,851,349 39,825,881
FDIC receivable for loss sharing agreements 14,921,803 29,941,862
Deferred income taxes 10,750,880 11,350,745
Other assets 7,888,340 771,779
Total assets  $ 1,040,237,359  $ 1,089,405,849
     
Liabilities and Stockholders' Equity    
Liabilities:    
Deposits  $ 729,608,889  $ 751,296,668
FHLB advances 55,000,000 60,000,000
Advance payments by borrowers for taxes and insurance 931,770 1,054,251
Other liabilities 11,282,376 3,277,094
Total liabilities 796,823,035 815,628,013
Stockholders' equity:    
Common stock, $0.01 par value; 19,959,971 shares issued and outstanding at June 30, 2014 and 22,752,214 shares issued and outstanding at September 30, 2013 199,600 227,522
Preferred stock, $0.01 par value; 50,000,000 shares authorized at June 30, 2014 and September 30, 2013
Additional paid-in capital 138,090,060 171,729,570
Unearned compensation – ESOP (5,984,317) (6,480,949)
Retained earnings 111,784,129 110,141,286
Accumulated other comprehensive loss (675,148) (1,839,593)
Total stockholders' equity 243,414,324 273,777,836
     
Total liabilities and stockholders' equity  $ 1,040,237,359  $ 1,089,405,849
 
Charter Financial Corporation
Condensed Consolidated Statements of Income (unaudited)
         
         
  Three Months Ended June 30, Nine Months Ended June 30,
  2014 2013 2014 2013
Interest income:        
Loans receivable  $ 8,833,596  $ 9,642,115  $ 25,564,268  $ 29,969,312
Mortgage-backed securities and collateralized mortgage obligations 871,899 816,602 2,794,019 2,285,175
Federal Home Loan Bank stock 35,601 29,307 102,778 95,097
Other investment securities available for sale 18,286 41,817 56,314 136,289
Interest-earning deposits in other financial institutions 97,321 123,869 266,816 225,263
Amortization of FDIC loss share receivable (849,919) (1,596,310)
Total interest income 9,006,784 10,653,710 27,187,885 32,711,136
Interest expense:        
Deposits 790,011 1,001,276 2,479,856 3,307,644
Borrowings 595,829 741,881 1,872,357 2,391,919
Total interest expense 1,385,840 1,743,157 4,352,213 5,699,563
Net interest income 7,620,944 8,910,553 22,835,672 27,011,573
Provision for loan losses, not covered under FDIC loss sharing agreements 500,000 300,000 1,100,000
Provision for covered loan losses (834,086) 41,838 (885,664) 94,321
Net interest income after provision for loan losses 8,455,030 8,368,715 23,421,336 25,817,252
Noninterest income:        
Service charges on deposit accounts 1,463,698 1,277,072 4,263,639 3,952,695
Bankcard fees 906,013 637,943 2,596,743 1,790,922
Gain on securities available for sale 200,704 200,704 219,913
Bank owned life insurance 278,487 211,491 925,467 694,431
Gain on sale of loans and loan servicing release fees 298,405 407,176 737,236 1,142,387
Brokerage commissions 124,128 153,205 452,479 468,543
FDIC receivable for loss sharing agreements accretion (impairment) 68,400 (114,993) 61,533 218,918
Other (104,205) 90,602 1,330,929 362,959
Total noninterest income 3,235,630 2,662,496 10,568,730 8,850,768
Noninterest expenses:        
Salaries and employee benefits 4,969,325 4,460,128 14,522,114 13,502,879
Occupancy 1,863,131 1,845,412 5,629,280 5,324,176
Legal and professional 369,360 458,735 1,309,946 1,275,322
Marketing 339,774 335,708 976,048 927,110
Federal insurance premiums and other regulatory fees 199,167 254,002 701,428 356,718
Net cost (benefit) of operations of real estate owned 87,846 (22,205) 374,538 977,302
Furniture and equipment 225,753 203,276 550,200 615,235
Postage, office supplies and printing 239,874 282,903 646,500 807,034
Core deposit intangible amortization expense 94,454 116,317 300,514 364,716
Other 646,682 829,473 1,805,148 2,694,791
Total noninterest expenses 9,035,366 8,763,749 26,815,716 26,845,283
Income before income taxes 2,655,294 2,267,462 7,174,350 7,822,737
Income tax expense 870,116 649,513 2,261,294 2,486,092
Net income  $ 1,785,178  $ 1,617,949  $ 4,913,056  $ 5,336,645
Basic net income per share  $ 0.09  $ 0.07  $ 0.23  $ 0.26
Diluted net income per share  $ 0.09  $ 0.07  $ 0.22  $ 0.26
Weighted average number of common shares outstanding 20,746,759 21,747,891 21,486,082 20,165,850
Weighted average number of common and potential common shares outstanding 21,300,951 21,878,502 22,040,274 20,296,461
 
Charter Financial Corporation
Supplemental Financial Data (unaudited)
in thousands except per share data
               
               
  Quarter to Date Year to Date
  6/30/2014 3/31/2014 12/31/2013 9/30/2013 6/30/2013 6/30/2014 6/30/2013
               
Consolidated balance sheet data:              
Total assets  $ 1,040,237  $ 1,077,870  $ 1,079,911  $ 1,089,406  $ 1,125,362  $ 1,040,237  $ 1,125,362
Cash and cash equivalents 149,269 175,114 157,268 161,452 190,657 149,269 190,657
Loans receivable, net 582,403 572,040 576,567 579,854 564,293 582,403 564,293
Non-covered loans receivable, net 511,176 481,907 476,467 470,863 443,581 511,176 443,581
Covered loans receivable, net 71,227 90,133 100,100 108,991 120,712 71,227 120,712
Other real estate owned 9,345 10,744 11,996 15,684 14,546 9,345 14,546
Non-covered other real estate owned 1,331 849 1,054 1,615 1,386 1,331 1,386
Covered other real estate owned 8,014 9,895 10,942 14,069 13,160 8,014 13,160
Securities available for sale 185,040 201,578 208,064 215,118 226,551 185,040 226,551
Core deposits (2) 486,392 491,585 474,389 475,426 481,230 486,392 481,230
Total deposits 729,609 742,064 737,654 751,297 769,781 729,609 769,781
Borrowings 55,000 55,000 60,000 60,000 70,000 55,000 70,000
Total stockholders' equity 243,414 270,265 273,164 273,778 279,131 243,414 279,131
               
Consolidated earnings summary:              
Interest income  $ 9,007  $ 8,923  $ 9,257  $ 9,925  $ 10,654  $ 27,188  $ 32,711
Interest expense 1,386 1,430 1,536 1,661 1,743 4,352 5,700
Net interest income 7,621 7,493 7,721 8,264 8,911 22,836 27,011
Provision for loan losses on non-covered loans 300 300 500 300 1,100
Provision for loan losses on covered loans (834) (54) 2 (5) 42 (885) 94
Net interest income after provision for loan losses 8,455 7,547 7,419 7,969 8,369 23,421 25,817
Noninterest income 3,236 3,217 4,116 2,802 2,662 10,569 8,852
Noninterest expense 9,036 8,580 9,200 9,469 8,763 26,816 26,846
Income tax expense 870 693 698 382 650 2,261 2,486
Net income  $ 1,785  $ 1,491  $ 1,637  $ 920  $ 1,618  $ 4,913  $ 5,337
               
Per share data:              
Earnings per share – basic  $ 0.09  $ 0.07  $ 0.07  $ 0.04  $ 0.07  $ 0.23  $ 0.26
Earnings per share – fully diluted  $ 0.09  $ 0.07  $ 0.07  $ 0.04  $ 0.07  $ 0.22  $ 0.26
Cash dividends per share  $ 0.05  $ 0.05  $ 0.05  $ 0.30  $ 0.05  $ 0.15  $ 0.05
               
Weighted average basic shares 20,747 21,701 22,007 22,005 21,748 21,486 20,166
Weighted average diluted shares 21,301 22,224 22,528 22,167 21,879 22,040 20,296
Total shares outstanding 19,960 22,603 22,998 22,752 22,752 19,960 22,752
               
Book value per share  $ 12.20  $ 11.96  $ 11.88  $ 12.03  $ 12.27  $ 12.20  $ 12.27
Tangible book value per share  $ 11.95  $ 11.74  $ 11.66  $ 11.81  $ 12.04  $ 11.95  $ 12.04
__________________________________            
(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
  6/30/2014 3/31/2014 12/31/2013 9/30/2013 6/30/2013 6/30/2014 6/30/2013
               
Not covered by loss share agreements              
Loans receivable: (1)              
1-4 family residential real estate  $ 139,803  $ 135,181  $ 133,331  $ 124,571  $ 113,255  $ 139,803  $ 113,255
Commercial real estate 284,591 271,156 267,818 269,609 254,743 284,591 254,743
Commercial 21,172 21,501 22,793 23,774 19,215 21,172 19,215
Real estate construction 58,459 47,112 45,200 44,653 47,904 58,459 47,904
Consumer and other 17,010 16,531 16,908 17,545 17,876 17,010 17,876
Total non-covered loans receivable  $ 521,035  $ 491,481  $ 486,050  $ 480,152  $ 452,993  $ 521,035  $ 452,993
               
Allowance for loan losses:              
Balance at beginning of period  $ 8,431  $ 8,494  $ 8,189  $ 8,380  $ 8,546  $ 8,189  $ 8,190
Charge-offs (238) (93) (68) (501) (705) (399) (1,100)
Recoveries 13 30 73 10 39 116 190
Provision 300 300 500 300 1,100
Transfer (2) 400 400
Balance at end of period  $ 8,606  $ 8,431  $ 8,494  $ 8,189  $ 8,380  $ 8,606  $ 8,380
               
Nonperforming assets: (3)              
Nonaccrual loans  $ 4,243  $ 4,743  $ 4,975  $ 2,874  $ 3,480  $ 4,243  $ 3,480
Loans delinquent 90 days or greater and still accruing 238 47 42 238 42
Total nonperforming non-covered loans 4,481 4,743 4,975 2,921 3,522 4,481 3,522
Other real estate owned 1,331 849 1,053 1,615 1,386 1,331 1,386
Total nonperforming non-covered assets  $ 5,812  $ 5,592  $ 6,028  $ 4,536  $ 4,908  $ 5,812  $ 4,908
               
Trouble debt restructuring:              
Trouble debt restructurings - accruing  $ 7,352  $ 7,603  $ 8,589  $ 12,302  $ 12,129  $ 7,352  $ 12,129
Trouble debt restructurings - nonaccrual 2,094 2,094 2,261 439 500 2,094 500
Total trouble debt restructurings  $ 9,446  $ 9,697  $ 10,850  $ 12,741  $ 12,629  $ 9,446  $ 12,629
               
Covered by loss sharing agreements              
Nonperforming assets:              
Other real estate owned  $ 8,014  $ 9,895  $ 10,942  $ 14,069  $ 13,160  $ 8,014  $ 13,160
Covered loans 90+ days delinquent (4) 3,156 8,825 8,661 8,574 13,223 3,156 13,223
Total nonperforming covered assets  $ 11,170  $ 18,720  $ 19,603  $ 22,643  $ 26,383  $ 11,170  $ 26,383
__________________________________            
(1)  Includes previously acquired loans in the amount of $9.1 million 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 are regarded as accruing loans.
(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
  6/30/2014 3/31/2014 12/31/2013 9/30/2013 6/30/2013 6/30/2014 6/30/2013
               
Return on equity (annualized) 2.71% 2.19% 2.39% 1.32% 2.38% 2.42% 3.81%
Return on assets (annualized) 0.67% 0.55% 0.60% 0.33% 0.56% 0.61% 0.67%
Net interest margin (annualized) 3.26% 3.18% 3.29% 3.44% 3.63% 3.24% 3.95%
Bank core capital ratio 19.51% 19.25% 19.05% 18.56% 17.94% 19.51% 17.94%
Bank total risk based capital 32.69% 34.18% 33.83% 33.83% 34.62% 32.69% 34.62%
Effective tax rate 32.77% 31.73% 29.90% 29.37% 28.64% 31.52% 31.78%
Yield on loans 5.44% 5.41% 5.55% 6.14% 6.83% 5.47% 6.92%
Cost of deposits 0.49% 0.49% 0.53% 0.55% 0.57% 0.50% 0.62%
               
Ratios of non-covered assets:              
Allowance for loan losses as a % of total loans 1.65% 1.71% 1.74% 1.70% 1.85% 1.65% 1.85%
Allowance for loan losses as a % of nonperforming loans 192.06% 177.76% 170.74% 280.32% 237.93% 192.06% 237.93%
Nonperforming assets as a % of total loans and REO 1.11% 1.14% 1.24% 0.94% 1.08% 1.11% 1.08%
Nonperforming assets as a % of total assets 0.62% 0.59% 0.64% 0.49% 0.52% 0.62% 0.52%
Net charge-offs as a % of average loans (annualized) 0.18% 0.05% —% 0.43% 0.61% 0.08% 0.28%
 
Charter Financial Corporation
Average Balances, Interest Rates and Yields (unaudited)
dollars in thousands
             
             
  Quarter to Date
  6/30/2014 6/30/2013
      Average     Average
  Average   Yield/ Average   Yield/
  Balance Interest Cost (3) Balance Interest Cost (3)
Assets:            
Interest-earning assets:            
Interest-earning deposits in other financial institutions  $ 151,348  $ 97 0.26%  $ 203,091  $ 124 0.24%
FHLB common stock and other equity securities 3,443 36 4.14 4,407 29 2.66
Mortgage-backed securities and collateralized mortgage obligations available for sale 176,194 872 1.98 184,833 817 1.77
Other investment securities available for sale 18,290 18 0.40 25,986 42 0.64
Loans receivable 586,797 7,189 4.90 564,863 7,543 5.34
Accretion and amortization of loss share loans receivable (1) 795 0.54 2,099 1.49
Total interest-earning assets 936,072 9,007 3.85 983,180 10,654 4.33
Total noninterest-earning assets 123,453     170,008    
Total assets  $ 1,059,525      $ 1,153,188    
Liabilities and Equity:            
Interest-bearing liabilities:            
NOW accounts  $ 178,771  $ 51 0.11%  $ 162,665  $ 54 0.13%
Reward accounts 48,429 29 0.24 51,863 44 0.34
Savings accounts 48,482 2 0.02 49,702 6 0.05
Money market deposit accounts 120,903 65 0.21 141,723 68 0.19
Certificate of deposit accounts 247,197 643 1.04 296,014 829 1.12
Total interest-bearing deposits 643,782 790 0.49 701,967 1,001 0.57
Borrowed funds 55,000 596 4.33 69,978 742 4.24
Total interest-bearing liabilities 698,782 1,386 0.79 771,945 1,743 0.90
Noninterest-bearing deposits 85,061     101,677    
Other noninterest-bearing liabilities 11,979     7,498    
Total noninterest-bearing liabilities 97,040     109,175    
Total liabilities 795,822     881,120    
Total stockholders' equity 263,703     272,068    
Total liabilities and stockholders' equity  $ 1,059,525      $ 1,153,188    
Net interest income    $ 7,621      $ 8,911  
             
Net interest-earning assets    $ 237,290      $ 211,235  
Net interest rate spread     3.06%     3.43%
Net interest margin     3.26%     3.63%
Net interest margin, excluding the effects of purchase accounting (2)     2.90%     2.75%
Ratio of average interest-earning assets to average interest-bearing liabilities     133.96%     127.36%
__________________________________          
(1)  Accretion of accretable purchase discount on loans acquired in FDIC-assisted acquisitions and amortization of impairment of FDIC indemnification asset.
(2)  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 $5.5 million and $7.9 million for the quarter ended June 30, 2014 and June 30, 2013, respectively.
(3)  Annualized.
 
Charter Financial Corporation
Average Balances, Interest Rates and Yields (unaudited)
dollars in thousands
             
             
  Year to Date
  6/30/2014 6/30/2013  
      Average     Average
  Average   Yield/ Average   Yield/
  Balance Interest Cost (3) Balance Interest Cost (3)
Assets:            
Interest-earning assets:            
Interest-earning deposits in other financial institutions  $ 146,869  $ 267 0.24%  $ 134,628  $ 225 0.22%
FHLB common stock and other equity securities 3,748 103 3.66 4,965 95 2.55
Mortgage-backed securities and collateralized mortgage obligations available for sale 184,775 2,794 2.02 169,320 2,285 1.80
Other investment securities available for sale 19,126 56 0.39 25,141 137 0.73
Loans receivable 584,630 21,249 4.85 577,277 22,840 5.28
Accretion and amortization of loss share loans receivable (1)   2,719 0.62   7,129 1.64
Total interest-earning assets 939,148 27,188 3.86 911,331 32,711 4.79
Total noninterest-earning assets 134,998     153,793    
Total assets  $ 1,074,146      $ 1,065,124    
Liabilities and Equity:            
Interest-bearing liabilities:            
NOW accounts  $ 175,754  $ 149 0.11%  $ 154,547  $ 155 0.13%
Rewards checking 48,342 87 0.24 52,035 146 0.37
Savings accounts 48,243 8 0.02 49,596 18 0.05
Money market deposit accounts 127,567 211 0.22 133,077 245 0.25
Certificate of deposit accounts 256,980 2,025 1.05 317,961 2,743 1.15
Total interest-bearing deposits 656,886 2,480 0.50 707,216 3,307 0.62
Borrowed funds 57,956 1,872 4.31 76,418 2,392 4.17
Total interest-bearing liabilities 714,842 4,352 0.81 783,634 5,699 0.97
Noninterest-bearing deposits 77,572     88,018    
Other noninterest-bearing liabilities 11,459     6,781    
Total noninterest-bearing liabilities 89,031     94,799    
Total liabilities 803,873     878,433    
Total stockholders' equity 270,273     186,691    
Total liabilities and stockholders' equity  $ 1,074,146      $ 1,065,124    
Net interest income    $ 22,836      $ 27,012  
             
Net interest earning assets    $ 224,306      $ 127,697  
Net interest rate spread     3.05%     3.82%
Net interest margin     3.24%     3.95%
Net interest margin, excluding the effects of purchase accounting (2)     2.84%     2.88%
Ratio of average interest-earning assets to average interest-bearing liabilities     131.38%     116.3%
__________________________________          
(1)  Accretion of accretable purchase discount on loans acquired in FDIC-assisted acquisitions and amortization of impairment of FDIC indemnification asset.
(2)  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 $4.5 million and $10.3 million for the nine months ended June 30, 2014 and 2013, respectively.
(3)  Annualized.
Robert L. Johnson, Chairman & CEO
Curt Kollar, CFO
706-645-1391
 or


At Dresner Corporate Services
Steve Carr
312-780-7211