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| 8-K - FORM 8-K - CHARTER FINANCIAL CORP | chfn-8k05082017.htm |
This presentation may contain certain forward-looking statements
regarding our prospective performance and strategies within the
meaning of Section 27A of the Securities Act of 1933, as amended and
Section 21E of the Securities Exchange Act of 1934, as amended. We
intend such forward-looking statements to be covered by the Safe
Harbor Provision for forward-looking statements contained in the
Private Securities Litigation Reform Act of 1995, and are including
this statement for purposes of said safe harbor provision. Forward-
looking statements can be identified by the use of words such as
“estimate,” “project,” “believe,” “intend,” “anticipate,” “plan,”
“seek,” “expect” and words of similar meaning. These forward-
looking statements include, but are not limited to:
• statements of our goals, intentions and expectations;
• statements regarding our business plans, prospects, growth and
operating strategies;
• statements regarding the asset quality of our loan and investment
portfolios; and
• estimates of our risks and future costs and benefits.
These forward-looking statements are based on current beliefs and
expectations of our management and are inherently subject to significant
business, economic and competitive uncertainties and contingencies, many
of which are beyond our control. In addition, these forward-looking
statements are subject to assumptions with respect to future business
strategies and decisions that are subject to change.
The following factors, among others, could cause actual results to differ
materially from the anticipated results or other expectations expressed in
the forward-looking statements:
• general economic conditions, either nationally or in our market
areas, that are worse than expected;
• competition among depository and other financial institutions
FORWARD-LOOKING STATEMENT
• changes in the interest rate environment that reduce our margins
or reduce the fair value of financial instruments;
• adverse changes in the securities markets;
• changes in laws or government regulations or policies affecting
financial institutions, including changes in regulatory fees and
capital requirements;
• our ability to enter new markets successfully and capitalize on
growth opportunities;
• our ability to successfully identify, acquire, and integrate future
acquisitions;
• our incurring higher than expected loan charge-offs with respect
to assets acquired in FDIC-assisted acquisitions;
• changes in consumer spending, borrowing and savings habits;
• changes in accounting policies and practices, as may be adopted
by the bank regulatory agencies and the Financial Accounting
Standards Board; and
• changes in our organization, compensation and benefit plans.
Because of these and other uncertainties, our actual future results may
be materially different from the results indicated by these forward-looking
statements. Readers are cautioned not to place undue reliance on the
forward-looking statements contained herein, which speak only as of
the date of this presentation. Except as required by applicable law or
regulation, we do not undertake, and specifically disclaim any obligation to
update any forward-looking statements that may be made from time to
time by or on behalf of the Company. Please see “Risk Factors” beginning
on page 19 of the Company’s Prospectus dated February 11, 2013.
2
NASDAQ: CHFN
Recent Price1 (05/02/2017): $19.21
Shares Outstanding (03/31/2017): 15.1 Million
Market Capitalization2: $289.3 Million
Price/Tangible Book Value3: 164.19%
Estimated P/E4 21.3x
Dividend Yield5: 1.35%
Total Assets (03/31/2017): $1.5 Billion
1 - Source: Bloomberg
2 - Based on May 2, 2017 closing market price and March 31, 2017 shares outstanding.
3 - Based on May 2, 2017 closing market price, March 31, 2017 shares outstanding and March 31, 2017
tangible book value.
4 - Based on May 2, 2017 closing market price, March 31, 2017 shares outstanding and LTM $0.90
earnings/share.
5 - Based on May 2, 2017 closing market price
MARKET PROFILE
3
• Founded in 1954 in West Point, Georgia
• Acquired Community Bank of the South
with four Metro Atlanta branches on
April 15, 2016
• History of organic and acquisitive growth
• Approximately 330 FTE’s servicing 58,000
checking accounts
• 20 Branches in Atlanta, Auburn/Columbus,
Combined Statistical Areas (“CSA”) and
Pensacola Metropolitan Statistical Areas
(“MSA”)
CORPORATE PROFILE
March 31, 2017
Total Assets: $1.5 Billion
Total Net Loans: $1.0 Billion
Total Deposits: $1.2 Billion
Total Capital: $208.4 Million
4
z
• Focus on strategic growth
• M&A execution experience … 6 transactions both assisted & unassisted
• Maintained conservative credit
• Built strong retail deposit franchise
• History of rewarding shareholders
OVERVIEW OF MANAGEMENT TEAM
TOP EXECUTIVES
(Banking/CharterBank)
NAME POSITION EXPERIENCE
ROBERT L. JOHNSON CHAIRMAN & CEO 35/33
LEE W. WASHAM PRESIDENT 33/17
CURTIS R. KOLLAR SENIOR VICE-PRESIDENT & CFO 30/26
5
RECENT ACCOMPLISHMENTS
• Continued North Atlanta Expansion
• Acquisition of Community Bank of the South (“CBS”) (2016)
• Buckhead Branch (2017)
• Norcross Branch/LPO (2008)
• Growing into an earnings & markets-driven stock
• Consecutive quarterly dividend increases
• Strong credit quality
• Near-complete leverage of thrift conversion capital
6
MARKET CONDITIONS
• Atlanta MSA employment growing at 3.9%
• I-85 corridor legacy markets energized with
automotive & logistics-related job growth
• Most markets have significant
manufacturing, university or military influences
• Active regional M&A market
7
DEPOSIT HIGHLIGHTS
8
• As of March 31, 2017
• 57,878 checking accounts
• 50,868 active debit cards
• 2.6%* gross fee yield on checking account balances
• Bank card revenue 42.5% of deposit fees
• 58.7% checking accounts accept electronic
statements
• 46 bps cost of deposits
* Annualized fees divided by average checking account balances
CHECKING FEES
9
* Annualized fees
Note: Unless otherwise noted, the above chart displays information based on Charter’s fiscal year end, which is September 30.
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
$0
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
$14,000,000
Accounts$
Do
lla
rs
Total Checking Fees Total # Checking Accounts
CHECKING FEES
10
• 2000 – Total checking
accounts 5,000
• 2017 – Total checking
accounts 58,000
* Annualized fees
Note: Unless otherwise noted, the above chart displays information based on Charter’s fiscal year end, which is September 30.
20%
25%
30%
35%
40%
45%
50%
55%
60%
$0
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
$14,000,000
% Bank Card Fees of Total Checking Fees Total Checking Fees
CHECKING FEES
11
($ Millions)
Note: Unless otherwise noted, the above chart displays information based on Charter’s fiscal year end, which is September 30.
$0.0
$2.0
$4.0
$6.0
$8.0
$10.0
$12.0
$14.0
FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 YTD 2017 Annualized
Total Checking Fees Bank Card Fees & Other NSF Fees
SWIPE AND DRIVE
12
Source: SNL Financial
• Growth of CHFN’s Atlanta MSA deposit base
to $583 million ranking 9th among community
banks (under $10.0 billion assets)
• Opened Buckhead branch February 2017
• CHFN’s loan portfolio and deposits in the Atlanta
Combined Statistical Area exceed 60% of bank total
13
INCREASING POSITION IN
ATLANTA METRO MARKET
CBS TRANSACTION HIGHLIGHTS
14
• Strongly accretive to forward EPS
• $300 million in deposits and loans in the desirable
north side Atlanta/Cobb County market
• High growth markets
• Proven lending team – good cultural fit
• Retail synergy
CAPITAL LEVERAGE STRATEGY
Holding Company CET1 of 16.36% at
March 31, 2017
• M&A
• Organic growth
• Adding loan producers
• Cash dividends
15
Reduced outstanding shares by approximately 35.6%
EFFECTIVE STOCK BUYBACKS
16
-
3.00
6.00
9.00
12.00
15.00
18.00
21.00
24.00
27.00
30.00
-
3
6
9
12
15
18
21
24
27
30
33
$ DollarsMi
llio
ns
Shares Outstanding Stock Price
FINANCIAL INFORMATION
17
Total Loans, Net
Net Income $8.4 million
Fully Diluted EPS1 $0.55
Total Deposits $1.2 billion
• ALL as a % of Nonperforming Loans – 652.47%
• ALL as a % of Total Loans – 1.04%
• Continued advances in core earnings
Asset Quality 0.24% NPA
16.36%
$1.0 billion
1 - Diluted net income per share for the six months ended March 31, 2017 was computed by dividing net income by weighted average
shares outstanding plus potential common shares resulting from dilutive stock options and unvested restricted shares, determined using the
treasury stock method.
• Basic EPS up 28% from March 2016
• Bank Common Equity Tier 1 of 15.57%
Basic EPS $0.59
FISCAL 2017 YTD (6 Months)
RESULTS AND DEVELOPMENTS
18
ROA 1.15%
• Total Loans, Net up 44% from March 2016
• Total Deposits up 52% from March 2016
Holding Company
Common Equity Tier 1
Note: Unless otherwise noted, the above chart displays information based on Charter’s fiscal year end, which is September 30.
1 - Core deposits consist of transaction accounts, money market accounts, and savings accounts.
BALANCE SHEET HIGHLIGHTS
19
($ Millions) 2012 2013 2014 2015 2016 Q2 2017
Total Assets $1,032,220 $1,089,406 $1,010,361 $1,027,079 $1,438,389 $1,484,796
Loans, net 593,904 579,854 606,367 714,761 994,052 1,007,552
Securities 189,379 215,118 188,743 184,404 206,336 191,483
Total Liabilities $889,699 $815,628 $785,406 $822,149 $1,235,240 $1,276,383
Retail Deposits 779,397 745,900 717,192 703,278 1,125,067 1,164,938
Core1 456,292 475,426 486,248 505,154 784,705 820,537
Time 323,105 270,475 230,944 198,124 340,362 344,401
Total Borrowings 81,000 60,000 55,000 62,000 56,588 56,656
Total Equity $142,521 $273,778 $224,955 $204,931 $203,150 $208,413
32.1%
Note: Core Deposits = Transaction, Savings & Money Market Accounts
Wholesale Funding = Wholesale Deposits, Borrowings & TRUPS
($ Millions)
DEPOSIT GROWTH
20
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
Core Deposits Retail CD's Wholesale Funding
48%
27%
25% 26%
30%
44%
30%
41%
29%
43%
13%
44%
$1,021
$825
$1,035
$881
11%
37%
52%
$811
8%
59%
33%
$687
$801
12%
25%
63%
$772
7%
30%
63%
$1,218
64%
28%
8%
8%
27%
65%
$1,258
Average cost of deposits for the three
months ended March 31, 2017:
0.46%
DEPOSIT MIX – MARCH 31, 2017
21
Time
Deposits
(Excluding
Wholesale
Deposits)
29%Savings &
Money
Market
25%
Transaction
Accounts
43%
Wholesale
Time
Deposits
3%
($ Millions)
NET LOANS OUTSTANDING
22
$656.2 $672.8
$714.8
$679.9
$701.4
$993.8 $994.1 $990.6 $1,007.6
$300.0
$400.0
$500.0
$600.0
$700.0
$800.0
$900.0
$1,000.0
$1,100.0
Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17
1-4 Family
22%
Comm RE -
Owner Occupied
17%
Comm RE - Non
Owner Occupied
Other
34%
Comm RE -
Hotels
5%
Comm RE
Multifamily
3%
Commercial
& Industrial
7%
Consumer &
Other
4%
Real Estate
Construction
8%
Note: Unless otherwise noted, the above chart displays information based on Charter’s fiscal year end, which is September 30.
[1] Due to the early termination of the FDIC loss share agreements in the fourth quarter of fiscal 2015, ratios for fiscal year ended 2016, include
all previously covered assets with the exception of FAS ASC 310-30 loans that are excluded from nonperforming loans due to the ongoing
recognition of accretion income established at the time of acquisition. Ratios for periods prior to September 30, 2015, represent non-covered data
only.
LOAN MIX - MARCH 31, 2017
23
Asset quality ratios[1]: At
2012 2013 2014 2015 2016 3/31/17
NPAs / Total Assets (%) 0.69% 0.49% 0.65% 0.73% 0.45% 0.24%
COs / Average Loans (%) 0.86 0.32 0.08 0.00 -0.13% -0.21
ALLL Loans / NPLs (x) 2.38x 2.80x 2.00x 2.30x 2.78x 6.52x
Allowance / Total Loans (%) 1.87% 1.70% 1.55% 1.30% 1.03% 1.04%
Note: Unless otherwise noted, the above chart displays information based on Charter’s fiscal year end, which is September 30.
INCOME STATEMENT HIGHLIGHTS
24
Q2 2017
($ Millions) 2012 2013 2014 2015 2016 YTD
Net Interest Income $37,512 $35,275 $29,918 $32,880 $42,154 $23,854
Provision for Loan Losses $4,503 $1,489 ($713) $0 ($250) ($900)
Non-Interest Income $12,912 $11,653 $14,277 $12,329 $20,964 $9,529
Non-Interest Expense $40,303 $36,314 $36,211 $36,832 $45,398 $21,039
Income Tax Expense $639 $2,869 $2,742 $2,805 $6,107 $4,882
Net Income $4,979 $6,256 $5,955 $5,572 $11,863 $8,362
Memo: Net Accretion Income $8,988 $8,923 $3,087 $3,558 $4,371 $1,082
Net Interest Income Less Net Accretion Income $28,524 $26,352 $26,831 $29,322 $37,783 $22,772
5.35%
4.61%
3.83%
4.23%
4.40%
4.12%
1.23%
0.95%
0.81% 0.74% 0.66% 0.63%
4.17%
3.82%
3.22%
3.67%
3.89%
3.61%
3.11%
2.82% 2.87%
3.26%
3.47% 3.44%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 Q2 2017 YTD
Yield on Interest Earning Assets
Cost of Interest Bearing Liabilities
Net Interest Margin
Net Interest Margin Excluding Purchase Accounting
*Adjusted for net purchase discount accretion and amortization
Note: Unless otherwise noted, the above chart displays information based on Charter’s fiscal year end, which is September 30.
25
NET INTEREST MARGIN TRENDS
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
4.00%
4.50%
FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 Q2 2017
YTD
*Impact of Purchase Accounting on Net Interest Margin
*Net Interest Margin Excluding the effects of Purchas Accounting
Net Interest Margin Including the effects of Purchase Accounting
($ Millions)
* Adjusted for net purchase discount accretion and amortization; loss share buyout;
recoveries on purchased loans, and acquisition deal costs
26
OPERATING LEVERAGE
$39.9
$38.0
$41.3
$44.1
$56.5
$32.1101% 96%
88% 83%
73%
66%
80% 77%
82% 81%
72%
63%
30%
40%
50%
60%
70%
80%
90%
100%
110%
120%
130%
140%
150%
160%
$0.0
$10.0
$20.0
$30.0
$40.0
$50.0
$60.0
FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 YTD 2017
Adjusted Net Operating Revenue* Adjusted Efficiency Ratio* Efficiency Ratio
$20
$25
$30
$35
$40
$45
$50
$55
$60
$65
$70
FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 YTD 2017
Annualized
Net Operating Revenue Adjusted Net Operating Revenue* G&A Expenses
Note: Unless otherwise noted, the above chart displays information based on Charter’s fiscal year end, which is September 30.
($ Millions)
27
NONINTEREST INCOME
Noninterest Income adjusted for FDIC purchase accounting accretion
*Other includes BOLI, Brokerage Commissions, Gain/Loss on Sale of Securities
$0
$5
$10
$15
$20
$25
FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 YTD 2017
Recovery on Purchase Accounting Loans
Other*
1-4 Loan Gain on Sale
Deposit Fees
$11.5
21.8%
66.7%61.2%
30.4%
64.9%
27.5%
$14.5
57.2%
15.5%$14.8
71.0%
18.1%
$21.0
$11.6 10.1%
10.9%
7.6%
11.5%
8.4%
17.2%
65.5%
13.4%
2.6%
18.5%
$9.5
Note: Unless otherwise noted, the above chart displays information based on Charter’s fiscal year end, which is September 30.
($ Millions)
28
NONINTEREST EXPENSE
FY 2016 - Noninterest Expense includes $4.2 million of deal costs.
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
$50
FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 YTD 2017
Marketing
Professional Services
Occupancy & Furn. and Equip.
Other
Salaries and Benefits
22.4%
17.9%
50.8%48.0%
21.7%
21.6%
54.6%
14.1%
22.7%
$36.2
56.5%
11.9%
23.3%
$36.8
23.2%
56.2%
13.3%
$45.4
$40.3
$36.3
58.0%
21.1%
14.0%
$21.0
Accelerating EPS growth
Capacity for additional operating and capital leverage
Focused on organic growth
Strategic M&A potential
Favorable credit quality
Track record of returns to shareholders with annualized total
return since:
2013 stock conversion approximately 20%*
29
INVESTMENT MERITS
*Source: Bloomberg with dividends reinvested
INVESTOR CONTACTS
1233 O. G. Skinner Drive
West Point, Georgia 31833
1-800-763-4444
www.charterbk.com
30
Robert L. Johnson
Chairman and Chief Executive Officer
bjohnson@charterbank.net
(706) 645-3249
Lee W. Washam
President
lwasham@charterbank.net
(706) 645-3630
Curtis R. Kollar
Senior Vice President and
Chief Financial Officer
ckollar@charterbank.net
(706) 645-3237
31
APPENDIX
INTEREST RATE RISK
BANK NET PORTFOLIO VALUE
At March 31, 2017
32
(1) Assumes an instantaneous uniform change in interest rates at all maturities.
(2) NPV is the difference between the present value of an institution's assets and liabilities.
(3) Present value of assets represents the discounted present value of incoming cash flows on interest-earning assets.
(4) NPV ratio represents NPV divided by the present value of assets.
Change in Interest
Rates (bp) (1) Estimated NPV (2)
Estimated
Increase
(Decrease)
in NPV
Percentage
Change in
NPV
NPV Ratio as a
Percent of
Present Value of
Assets (3)(4)
Increase (Decrease)
in NPV Ratio as a
Percent of Present
Value of Assets (3)(4)
(dollars in thousands)
300 $295,683 $6,580 2.3% 20.0% 0.2%
200 $294,281 $5,178 1.8% 19.9% 0.3%
100 $292,159 $3,056 1.1% 19.8% 0.2%
— $289,103 — — 19.6% —
(100) $270,127 ($18,976) (6.6%) 18.3% (1.3%)
