- Net income increased to $3.9 Million WEST POINT, Ga., April 24 /PRNewswire-FirstCall/ -- Charter Financial Corporation (OTC:CHFN) (BULLETIN BOARD: CHFN) today reported second quarter fiscal 2008 net income of $3.9 million, or $0.20 per share, compared with $2.0 million, or $0.10 per share, for same quarter of the prior year. Net income for the six months ended March 31, 2008 was $5.9 million or $0.31 per share compared with $47.8 million or $2.49 per share for the comparable period in the prior year. The rise in net income for the second quarter was attributed to a pretax $3.4 million increase in noninterest income due to larger gains on the sale of Freddie Mac stock and on covered calls related to Freddie Mac stock. The increase in net income for the second quarter also reflects a $256,000 decrease in noninterest expense that was partially offset by a $1.2 million decline in net interest income, a $150,000 loan loss provision, and a $399,000 increase in tax expense. The company noted that the higher net income for the six months ended March 31, 2007 was due to the sale of one million shares of Freddie Mac stock during the first quarter of fiscal 2007, which resulted in a pre-tax gain of $69.5 million ($42.6 million after tax), compared with a pre-tax gain of $2.6 million in the first two quarters of the current year. For the second fiscal quarter 2008, the pretax gain on sale of Freddie Mac stock was $1.3 million compared with $1.3 million in fiscal first quarter 2008 and no gain in fiscal second quarter 2007. Income from covered calls for the quarter ended March 31, 2008 was $2.0 million compared with a $515,000 loss for the December 2007 quarter. Of the $2.0 million covered call income for the quarter, $1.1 million was realized and the remaining $930,000 was from mark to market. Contributing to the increase in noninterest income was $100,000 in earnings from an additional investment of $15 million in bank-owned life insurance. "We continue to monitor our asset quality closely and believe that our loan loss reserves are adequate," said Robert L. Johnson, President and CEO. "Less than ten percent of our assets are acquisition, development or construction loans. More than two thirds of our nonaccrual loans are less than thirty days delinquent. Capital is strong, standing at 17.4% of total assets. CharterBank's regulatory core capital is 9.67%, which is almost twice the well capitalized requirement of 5%." Net interest income was $5.1 million for the quarter ended March 31, 2008, which was $1.2 million lower than the prior year quarter, with the largest contributor to the decline being the reduced dividend on Freddie Mac stock. Discussing the company's outlook, Johnson said: "We continue to anticipate a significant boost to the economy in our market area over the next several years from the new KIA Motors Corporation assembly plant to be located between West Point and LaGrange. "The plant is tentatively scheduled to begin operations in 2009. KIA and its suppliers have announced intentions to employ approximately 4,300 in West Point, Georgia and several thousand more in surrounding communities. As a leading community bank in the area, we expect to see accelerated growth in our retail banking business. "We continue to make progress in building our retail franchise. Net loans receivable climbed to a record $414.1 million, which is up $5.9 million from December 31, 2007 and up $14.1 million from March 31, 2007. We grew retail deposits $5.0 million for the quarter to $390.3 million compared with $385.3 million at December 31, 2007," concluded Johnson. Additional financial information is available at http://www.charterbank.net/. Charter Financial Corporation is a savings and loan holding company and the parent company of CharterBank, a full-service community bank and a federal savings institution. Charter Financial Corporation and CharterBank are in a mutual holding company structure. Charter Financial owns 3.4 million shares of Freddie Mac common stock with a market value of $84.0 million. CharterBank is headquartered in West Point, Georgia, and operates ten branches on the I-85 corridor from LaGrange, Georgia to Auburn, Alabama. CharterBank's deposits are insured by the Federal Deposit Insurance Corporation. Forward-Looking Statements This release may contain "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. 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. FINANCIAL TABLES FOLLOW Charter Financial Corporation Selected Financial Data (in thousands except share and per share data): March 31, December 31, September 30, March 31, 2008 2007 2007 2007 Unaudited Total Assets $905,426 $912,263 $1,021,856 $1,064,835 Loans Receivable, Net 414,076 408,124 405,553 399,969 Mortgage Securities Available for Sale 270,952 257,221 263,351 285,083 Freddie Mac Common Stock 83,999 114,475 200,782 202,415 Other Investment Securities 36,548 30,654 31,792 32,249 Core Deposits* 188,397 199,986 203,348 202,715 Retail Deposits** 390,284 385,295 378,498 362,909 Total Deposits 453,102 438,708 430,683 413,682 Deferred Income Taxes 29,009 40,355 72,504 74,174 Borrowings 257,000 246,797 272,058 329,731 Realized Stockholders' Equity*** 110,474 108,197 108,186 114,088 Accumulated Other Comprehensive Income**** 47,413 65,637 116,886 118,799 Total Stockholders' Equity 157,887 173,734 225,072 232,887 Book Value per Share $8.21 $9.05 $11.73 $12.15 Tangible Book Value per Share 7.93 8.77 11.44 11.86 Minority Shares Outstanding 3,564,622 3,533,648 3,136,085 3,112,697 Total Shares Outstanding 19,225,402 18,997,284 18,994,009 19,167,765 Weighted Average Total Shares Outstanding-Basic 19,018,570 18,997,097 19,097,807 18,967,899 Weighted Average Total Shares Outstanding - Diluted 19,064,622 19,111,743 19,210,548 19,144,179 * Core Deposits includes transaction accounts, money market accounts, and savings accounts. ** Retail Deposits includes Core Deposits, and certificates of deposits excluding brokered and wholesale. *** Includes Total Stockholders' Equity less Accumulated Other Comprehensive Income. **** Includes unrealized gains and losses on Freddie Mac common stock and other investment securities adjusted for income taxes at a tax rate of 38.6%. Charter Financial Corporation Selected Operating Data (in thousands except share and per share data): Three months ended Six months ended March 31, December 31, March 31, 2008 2007 2007 2008 2007 Unaudited Total Interest Income $11,942 $13,722 $12,689 $24,631 $27,567 Total Interest Expense 6,812 7,366 7,297 14,109 14,838 Net Interest Income 5,130 6,356 5,392 10,522 12,729 Provision for Loan Losses 150 - - 150 - Net Interest Income after Provision for Loan Losses 4,980 6,356 5,392 10,372 12,729 Noninterest Income 5,173 1,752 2,764 7,938 73,040 Noninterest Expense 4,828 5,084 5,367 10,197 10,024 Income before Income Taxes 5,325 3,024 2,789 8,113 75,745 Income Tax Expense 1,451 1,052 769 2,219 27,975 Net Income $3,874 $1,972 $2,020 $5,894 $47,770 Earnings per Share - Basic $0.20 $0.10 $0.11 $0.31 $2.49 Earnings per Share - Diluted 0.20 0.10 0.11 0.31 2.46 Cash Dividends per Share 0.50 0.50 0.50 1.00 0.95 Net Charge-offs (Recoveries) 285 10 518 803 57 Deposit Fees 1,248 1,064 1,311 2,559 2,106 Gain on Sale of Loans 170 260 260 430 483 Gain on Sale of Freddie Mac Common Stock 1,302 - 1,348 2,649 69,453 Gain on Covered Calls Related to Freddie Mac Common Stock 1,993 112 (515) 1,478 300 Three months ended Six months ended March 31, December 31, March 31, 2008 2007 2007 2008 2007 Unaudited Return on Equity 9.24% 3.22% 3.92% 6.30% 36.26% Return on Assets 1.70 0.74 0.83 1.25 8.76 Net Interest Margin 2.40 2.50 2.34 2.37 2.44 Loan Loss Reserve as a % of Total Loans 1.28 1.48 1.33 1.28 1.48 Loan Loss Reserve as a % of Nonperforming Assets 58.04 99.49 70.45 58.04 99.49 Nonperforming Assets as a % of Total Loans and REO 2.19 1.49 1.87 2.19 1.49 Net Chargeoffs as a % of Average Loans 0.27 0.01 0.51 0.39 0.03 Nonperforming Assets to Total Assets 1.02 0.57 0.86 1.02 0.57 Bank Core Capital Ratio 9.67 8.76 9.94 9.67 8.76 Dividend Payout Ratio 41.11 78.92 151.98 79.10 6.66 Effective Tax Rate 27.25 34.78 27.57 27.36 36.93 DATASOURCE: Charter Financial Corporation CONTACT: Robert L. Johnson, President & CEO, , or Curt Kollar, CFO, , both of Charter Financial Corporation, +1-706-645-1391; or Woody Wallace of The Investor Relations Company, +1-312-245-2700, , for Charter Financial Corporation Web site: http://www.charterbank.net/

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