- Net income of $1.7 million WEST POINT, Ga., July 18
/PRNewswire-FirstCall/ -- Charter Financial Corporation (OTC:CHFN)
(BULLETIN BOARD: CHFN) today reported third quarter fiscal 2008 net
income of $1.7 million, or $0.09 per share, compared with $2.1
million, or $0.11 per share, for same quarter of the prior year.
Net income for the nine months ended June 30, 2008 was $7.6 million
or $0.40 per share compared with $49.9 million or $2.61 per share
for the comparable period in the prior year. The lower net income
for the third quarter includes a $1.2 million decrease in net
interest income, a significant portion of which was due to the
reduction in Freddie Mac's cash dividends on common stock from
$0.50 per share to $0.25 per share, and a $600,000 addition to the
loan loss provision. These decreases were partially offset by a
$1.3 million increase in noninterest income. CharterBank's
regulatory core capital, while impacted by the lower price of
Freddie Mac common stock, remains strong at 9.79%, which is almost
twice the well capitalized requirement of 5%. Addressing the
speculation about the future capital structure of Freddie Mac,
CharterBank's core capital excluding the value of Freddie Mac
common stock would be 9.64%. The Company has additional capital at
the holding company level that is not included in the bank capital
ratio. The Company, including holding company and bank capital, has
15.5% equity to total assets as of June 30, 2008. "Because of our
very strong capital position, our practice has been to pay out most
of our net earnings, excluding gains on the sale of Freddie Mac
stock but including its cash dividend payments to us, as cash
dividends to our shareholders," said Robert L. Johnson, president
and CEO. "We plan to continue this practice although the
uncertainty of Freddie Mac's cash dividend together with our owning
less Freddie Mac stock requires that we closely monitor
developments and reassess the level of our future cash dividends."
In response to continuing market uncertainties subsequent to June
30, 2008, CharterBank sold one million shares of Freddie Mac common
stock. Pre-tax gain of $6.5 million from that sale will be included
in the company's fourth quarter income. The Company noted that the
higher net income for the nine months ended June 30, 2007 was due
to the sale of one million shares of Freddie Mac stock during the
first quarter of that year, which resulted in a pre-tax gain of
$69.5 million ($42.6 million after tax). There was a pre-tax gain
of $3.7 million on the sale of Freddie Mac stock in the first three
quarters of the current year. For the third fiscal quarter 2008,
the pretax gain on Freddie Mac common stock sales was $1.0 million
compared with $1.3 million in fiscal second quarter 2008 and no
gain in fiscal third quarter 2007. "We continue to closely monitor
our asset quality and believe that our loan loss reserves are
adequate," said Johnson. "We had net loan chargeoffs of $114,000
and added $600,000 to our reserve for loan losses for the quarter
ended June 30, 2008 which brought the provision for loan losses for
the nine months to $750,000." Net charge-offs (annualized) for the
quarter were eleven basis points of loan balances as of June 30,
2008. Additional information will be available at
http://www.charterbank.net/. 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 located between West Point
and LaGrange, Georgia, despite the present state of the U. S. auto
market. This assembly plant is scheduled to open in the fall of
2009." "We continue to make progress in building our retail
franchise. Net loans receivable climbed to a record $433.7 million,
up $19.5 million from March 31, 2008 and up $31.8 million from June
30, 2007. This performance is a real tribute to our executives and
staff under current economic conditions. It tells us we are meeting
our customers' needs," concluded Johnson. Additional 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
2.3 million shares of Freddie Mac common stock with a market value
of $16.2 million as of July 14, 2008. 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): June 30, March 31,
September 30, June 30, 2008 2008 2007 2007 Unaudited Total Assets
$877,871 $905,426 $1,021,856 $1,028,646 Loans Receivable, Net
433,700 414,076 405,553 401,910 Mortgage Securities Available for
Sale 250,881 270,952 263,351 268,073 Freddie Mac Common Stock
53,710 83,999 200,782 206,532 Other Investment Securities 30,327
36,548 31,792 31,994 Core Deposits* 184,528 188,397 203,348 206,001
Retail Deposits** 382,315 390,284 378,498 372,662 Total Deposits
460,048 453,102 430,683 401,060 Deferred Income Taxes 14,868 29,009
72,504 74,213 Borrowings 257,000 257,000 272,058 303,759 Realized
Stockholders' Equity*** 111,270 110,474 108,186 114,700 Accumulated
Other Comprehensive Income**** 24,815 47,413 116,886 118,939 Total
Stockholders' Equity 136,085 157,887 225,072 233,639 Book Value per
Share $7.08 $8.21 $11.73 $12.19 Tangible Book Value per Share 6.80
7.93 11.44 11.90 Minority Shares Outstanding 3,550,017 3,564,622
3,136,085 3,116,197 Total Shares Outstanding 19,225,402 19,225,402
18,994,009 19,170,765 Weighted Average Total Shares Outstanding -
Basic 19,029,060 19,018,570 19,097,807 18,972,247 Weighted Average
Total Shares Outstanding - Diluted 19,022,054 19,064,622 19,210,548
19,158,884 * 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 Nine months ended June 30,
March 31, June 30, 2008 2007 2008 2008 2007 Unaudited Total
Interest Income $11,373 $13,664 $11,942 $36,005 $41,231 Total
Interest Expense 6,442 7,576 6,812 20,552 22,414 Net Interest
Income 4,931 6,088 5,130 15,453 18,817 Provision for Loan Losses
600 - 150 750 - Net Interest Income after Provision for Loan Losses
4,331 6,088 4,980 14,703 18,817 Noninterest Income 3,168 1,897
5,173 11,105 74,937 Noninterest Expense 5,049 5,025 4,828 15,245
15,049 Income before Income Taxes 2,450 2,960 5,325 10,563 78,705
Income Tax Expense 751 846 1,451 2,970 28,821 Net Income $1,699
$2,114 $3,874 $7,593 $49,884 Earnings per Share - Basic $0.09 $0.11
$0.20 $0.40 $2.61 Earnings per Share - Diluted 0.09 0.11 0.20 0.40
2.58 Cash Dividends per Share 0.50 0.50 0.50 1.50 1.45 Net
Charge-offs (Recoveries) 114 (12) 285 917 45 Deposit Fees 1,207
1,192 1,248 3,766 3,297 Gain on Sale of Loans 179 372 170 609 855
Gain on Sale of Freddie Mac Common Stock 1,022 - 1,302 3,671 69,453
Gain on Covered Calls Related to Freddie Mac Common Stock 241 -
1,993 1,719 300 Three months ended Nine months ended June 30, March
31, June 30, 2008 2007 2008 2008 2007 Unaudited Return on Equity
4.32% 3.48% 9.24% 5.49% 25.92% Return on Assets 0.75 0.81 1.70 1.08
6.18 Net Interest Margin 2.35 2.45 2.40 2.36 2.45 Loan Loss Reserve
as a % of Total Loans 1.33 1.48 1.28 1.33 1.48 Loan Loss Reserve as
a % of Nonperforming Assets 53.69 106.57 58.04 53.69 106.57
Nonperforming Assets as a % of Total Loans and REO 2.46 1.38 2.19
2.46 1.38 Net Charge-offs (annualized) as a % of Average Loans 0.11
0.04 0.27 0.29 0.02 Nonperforming Assets to Total Assets 1.24 0.55
1.02 1.24 0.55 Bank Core Capital Ratio 9.79 9.38 9.67 9.79 9.38
Dividend Payout Ratio 93.72 73.70 41.11 82.49 9.50 Effective Tax
Rate 30.65 28.57 27.25 28.12 36.62 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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