CHARTER FINANCIAL CORP - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - November 8, 2013

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Exhibit 99.1

News Release

FOR IMMEDIATE RELEASE
Contact:
 
 
Robert L. Johnson, Chairman & CEO
 
At Dresner Corporate Services
Curt Kollar, CFO
 
Steve Carr
706-645-1391
 
312-780-7211
bjohnson@charterbank.net or
 
scarr@dresnerco.com
ckollar@charterbank.net
 
 

CHARTER FINANCIAL ANNOUNCES FISCAL 2013
EARNINGS OF $6.3 MILLION, AN INCREASE OF 25.7%

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

West Point, Georgia, November 8, 2013 — Charter Financial Corporation (the “Company”) (NASDAQ: CHFN) today reported net income of $6.3 million, or $0.30 per basic and diluted share for the year ended September 30, 2013, an improvement from $5.0 million, or $0.26 per basic and diluted share, for the year ended September 30, 2012. For the quarter ended September 30, 2013 net income was $0.9 million, or $0.04 per basic and diluted share, compared with $1.8 million, or $0.09 per basic and diluted share, for the quarter ended September 30, 2012.

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

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

Total deposits were $751.3 million at September 30, 2013 compared with $800.3 million at September 30, 2012. Core deposits increased to $475.4 million at September 30, 2013 from $456.3 million at September 30, 2012. Total deposits


Exhibit 99.1

were lower at September 30, 2013 due to decreases of $15.5 million in wholesale time deposits and $52.6 million in non-wholesale time deposits. Borrowings decreased to $60.0 million at September 30, 2013 from $81.0 million at September 30, 2012.

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

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

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

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

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

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

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

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

About Charter Financial Corporation

Charter Financial Corporation is a savings and loan holding company and the parent company of CharterBank, a growing full-service community bank. On April 8, 2013, Charter Financial completed its conversion and reorganization from the mutual holding company form of organization to the stock holding company form of organization. CharterBank


Exhibit 99.1

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.



Exhibit 99.1


Charter Financial Corporation
Selected Financial Data (unaudited)
in thousands except share and per share data

 
September 30,
 
September 30,
 
June 30,
2013
 
    2012 (1)
 
2013
 
 
 
 
 
 
Total Assets
$
1,089,406

 
$
1,032,220

 
$
1,125,362

Cash and Cash Equivalents
161,452

 
108,828

 
190,657

Loans Receivable, Net
579,854

 
593,904

 
564,293

Non-covered Loans Receivable, Net
470,863

 
427,676

 
443,581

Covered Loans Receivable, Net
108,991

 
166,228

 
120,712

Other Real Estate Owned
15,684

 
24,010

 
14,546

Non-covered Other Real Estate Owned
1,615

 
2,107

 
1,386

Covered Other Real Estate Owned
14,069

 
21,903

 
13,160

Securities Available for Sale
215,118

 
189,379

 
226,551

Core Deposits (2)
475,426

 
456,292

 
481,230

Retail Deposits (3)
745,900

 
779,397

 
761,602

Total Deposits
751,297

 
800,262

 
769,781

Borrowings
60,000

 
81,000

 
70,000

Total Stockholders’ Equity
273,778

 
142,521

 
279,131

 
 
 
 
 
 
 
 
 
 
 
 
Book Value per Share (4) (5)
$
12.03

 
N/A

 
$
12.27

Tangible Book Value per Share (4) (5)
$
11.81

 
N/A

 
$
12.04

 
 
 
 
 
 
 
 
 
 
 
 
Minority Shares Outstanding (4)
—

 
7,923,379

 
—

Total Shares Issued – at Period End (4)
22,752,214

 
19,974,515

 
22,752,214

Weighted Average Total Shares Outstanding – Basic (4)
20,629,531

 
19,501,312

 
20,165,850

Weighted Average Total Shares Outstanding – Fully Diluted (4)
20,792,089

 
19,537,348

 
20,296,461

__________________________________
(1)
Financial information as of September 30, 2012 has been derived from audited financial statements.
(2)
Core deposits include transaction accounts, money market accounts and savings accounts.
(3)
Retail deposits include Core Deposits and certificates of deposit excluding brokered and wholesale certificates of deposit.
(4)
Share and per share amounts have been restated to reflect the completion of the second-step conversion using a conversion ratio of 1.2471 on shares held by the public prior to April 8, 2013.
(5)
Due to the completion of the second-step conversion on April 8, 2013, September 30, 2012 per share amounts are not comparable to other periods presented and have not been included.



Exhibit 99.1

Charter Financial Corporation
Selected Operating Data (unaudited)
in thousands except share and per share data

 
Year Ended
 
Three Months Ended
 
September 30,
 
September 30,
 
June 30,
 
March 31,
 
2013
 
2012
 
2013
 
2012
 
2013
 
2013
 
 
 
 
 
 
 
 
 
 
 
 
Total Interest Income
$
42,636

 
$
48,101

 
$
9,925

 
$
11,155

 
$
10,654

 
$
11,006

Total Interest Expense
7,361

 
10,589

 
1,661

 
2,134

 
1,743

 
1,902

Net Interest Income
35,275

 
37,512

 
8,264

 
9,021

 
8,911

 
9,104

Provision for Loan Losses on Non-covered Loans
1,400

 
3,300

 
300

 
1,200

 
500

 
300

Provision (Credit) for Loan Losses on Covered Loans
89

 
1,202

 
(5
)
 
237

 
42

 
(42
)
Net Interest Income after Provision for Loan Losses
33,786

 
33,010

 
7,969

 
7,584

 
8,369

 
8,846

Noninterest Income
11,653

 
12,912

 
2,802

 
3,618

 
2,662

 
2,977

Noninterest Expense
36,314

 
40,304

 
9,469

 
8,593

 
8,763

 
9,757

Income before Income Taxes
9,125

 
5,618

 
1,302

 
2,609

 
2,268

 
2,066

Income Tax Expense
2,869

 
639

 
382

 
858

 
650

 
682

Net Income
$
6,256

 
$
4,979

 
$
920

 
$
1,751

 
$
1,618

 
$
1,384

 
 
 
 
 
 
 
 
 
 
 
 
Earnings per Share – Basic (1)
$
0.30

 
$
0.26

 
$
0.04

 
$
0.09

 
$
0.07

 
$
0.07

Earnings per Share – Fully Diluted (1)
0.30

 
0.26

 
0.04

 
0.09

 
0.07

 
0.07

Cash Dividends per Share
0.35

 
0.08

 
0.30

 
—

 
0.05

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Charge-offs – Legacy Loans
$
1,401

 
$
4,480

 
$
492

 
$
1,556

 
$
665

 
$
136

Deposit Fees
7,754

 
7,012

 
2,011

 
1,950

 
1,915

 
1,878

Gain on Sale of Loans
1,334

 
962

 
192

 
353

 
407

 
385

__________________________________
(1)
Shares held by the public prior to April 8, 2013, have been restated to reflect the completion of the second-step conversion using a conversion ratio of 1.2471.




Exhibit 99.1

Charter Financial Corporation
Financial Ratios (unaudited)

 
Year Ended
 
Three Months Ended
 
September 30,
 
September 30,
 
June 30,
 
March 31,
 
2013
 
2012
 
2013
 
2012
 
2013
 
2013
 
 
 
 
 
 
 
 
 
 
 
 
Return on Equity (annualized)
2.98
%
 
3.58
%
 
1.32
%
 
4.95
%
 
2.38
%
 
3.83
%
Return on Assets (annualized)
0.58
%
 
0.46
%
 
0.33
%
 
0.68
%
 
0.56
%
 
0.54
%
Net Interest Margin (annualized)
3.82
%
 
4.17
%
 
3.44
%
 
4.09
%
 
3.63
%
 
4.14
%
Bank Core Capital Ratio
18.56
%
 
12.16
%
 
18.56
%
 
12.16
%
 
17.94
%
 
11.33
%
Bank Total Risk Based Capital
33.83
%
 
19.22
%
 
33.83
%
 
19.22
%
 
34.62
%
 
23.01
%
Effective Tax Rate
31.44
%
 
11.38
%
 
29.37
%
 
32.88
%
 
28.64
%
 
33.02
%
 
 
 
 
 
 
 
 
 
 
 
 
Ratios of Non-covered Assets:
 
 
 
 
 
 
 
 
 
 
 
Allowance for Loan Losses as a % of Total Loans
1.70
%
 
1.87
%
 
1.70
%
 
1.87
%
 
1.85
%
 
1.98
%
Allowance for Loan Losses as a % of Nonperforming Loans
280.32
%
 
237.69
%
 
280.32
%
 
237.69
%
 
237.93
%
 
276.92
%
Nonperforming Assets as a % of Total Loans and REO
0.94
%
 
1.27
%
 
0.94
%
 
1.27
%
 
1.08
%
 
1.00
%
Nonperforming Assets as a % of Total Assets
0.49
%
 
0.69
%
 
0.49
%
 
0.69
%
 
0.52
%
 
0.46
%
Net Charge-offs as a % of Average Loans (annualized)
0.32
%
 
0.86
%
 
0.43
%
 
1.43
%
 
0.61
%
 
0.13
%



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