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Form 8-K CHARTER FINANCIAL CORP For: Jul 26

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July 29, 2016 11:38 AM EDT



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________________

FORM 8-K
_____________________________________

CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 26, 2016

_____________________________________

CHARTER FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)

_____________________________________

 
Maryland
001-35870
90-0947148
 
 
(State or other jurisdiction of
(Commission
(IRS Employer
 
 
incorporation or organization)
File Number)
Identification No.)
 


1233 O.G. Skinner Drive, West Point, Georgia 31833
(Address of principal executive offices) (Zip code)

(706) 645-1391
(Registrant's telephone number, including area code)

N/A
(Former name or former address, if changed since last report)

_____________________________________


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))





Item 2.02.    Results of Operations and Financial Condition

On July 29, 2016, Charter Financial Corporation issued an earnings release announcing its financial results for the third quarter ended June 30, 2016. The text of the press release is included as Exhibit 99.1 to this report. The information included in the press release text is considered to be “furnished” under the Securities Exchange Act of 1934.

Item 8.01.     Other Events

On July 26, 2016, the Board of Directors of Charter Financial Corporation declared a regular quarterly cash dividend of $0.05 per share. The dividend is payable on August 25, 2016, to stockholders of record as of August 11, 2016. A press release announcing the details of the declaration is filed herewith as Exhibit 99.2.

Item 9.01.     Financial Statements and Exhibits
(d)
Exhibits.
 
 
 
 
 
Exhibit No.
Description
 
 
 
 
99.1
Earnings press release dated July 29, 2016.
 
99.2
Dividend press release dated July 26, 2016.










SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
 
 
CHARTER FINANCIAL CORPORATION
 
 
 
(Registrant)
 
 
 
 
 
Date:
July 29, 2016
 
By:
/s/ Curtis R. Kollar
 
 
 
 
Curtis R. Kollar
 
 
 
 
Senior Vice President and Chief Financial Officer








Exhibit 99.1

 
 
NEWS RELEASE
Contact:
 
 
Robert L. Johnson, Chairman & CEO
 
Dresner Corporate Services
Curt Kollar, CFO
 
Steve Carr
706-645-1391
 
312-780-7211
 
 
 

CHARTER FINANCIAL ANNOUNCES THIRD QUARTER
FISCAL 2016 EARNINGS OF $1.3 MILLION

•
Completed acquisition of CBS Financial Corporation
•
Acquisition core system conversion completed July 15, 2016
•
Year over year quarterly increase of $3.9 million in net interest income
•
Basic and diluted EPS of $0.09 for the quarter
•
Bankcard and deposit fee quarterly income grew year over year by $431,000, or 16.1%
•
Nonperforming assets at 0.46% of total assets at June 30, 2016

West Point, Georgia, July 29, 2016 — Charter Financial Corporation (the “Company”) (NASDAQ: CHFN) today reported net income of $1.3 million for the quarter ended June 30, 2016, or $0.09 per basic and diluted share, respectively, compared with net income of $1.9 million, or $0.12 per basic and diluted share, for the quarter ended June 30, 2015. Net income for the current year quarter decreased 32.2% over the prior year quarter due in part to $3.5 million of costs incurred related to the acquisition of CBS Financial Corporation ("CBS"), which was completed on April 15, 2016, as well as write-downs of $325,000 on assets available for sale, partially offset by a $3.9 million increase in net interest income. Additional merger-related costs are expected to be incurred as full conversion and integration of Community Bank of the South into CharterBank has been completed as of July 2016.
Net income for the nine months ended June 30, 2016, was $8.1 million, or $0.56 and $0.53 per basic and diluted share, respectively, compared with net income of $5.0 million, or $0.32 and $0.30 per basic and diluted share, respectively, for the nine months ended June 30, 2015. The year over year increase was partially attributable to $3.6 million of nonrecurring recoveries on loans that were previously covered by loss share agreements with the FDIC.
Quarterly Operating Results
Quarterly earnings for the third quarter of fiscal 2016 compared with the third quarter of fiscal 2015 were positively impacted by the following items:
•
Loan interest income increased $3.6 million, or 39.8%, while loan interest income excluding accretion and amortization of loss share receivable increased $3.8 million, or 50.3%.
•
Net interest margin was 3.97% for the quarter ended June 30, 2016, compared with 3.62% for the same quarter of fiscal 2015, while net interest margin excluding accretion and amortization of loss share receivable was 3.53% for the quarter ended June 30, 2016, compared with 3.21% for the same quarter of fiscal 2015.
•
Deposit and bankcard fee income increased by a combined $431,000, or 16.1%.

1
Exhibit 99.1

•
Interest expense on FHLB borrowings decreased $75,000, or 13.8%, due to a maturing advance being extended at a substantially lower rate.
•
Nonrecurring income of $259,000 on bank owned life insurance.
The above increases to net income were more than offset by the following items:
•
Approximately $3.5 million of costs related to the CBS merger, consisting primarily of severance payments, occupancy expense, and legal and professional fees.
•
Write-downs of $325,000 on assets available for sale.
Chairman and CEO Robert L. Johnson said, “We are pleased with the results of our third fiscal quarter, our first following the acquisition of CBS. We continued to deliver strong earnings in spite of substantial one-time expenses related to the acquisition. With the systems conversion of CBS completed in July and our new Buckhead branch set to open in early Fall, we believe we will begin to capitalize on our market extension into the attractive North Atlanta market.”
Financial Condition
The Company's total assets increased $400.8 million to $1.4 billion at June 30, 2016, from $1.0 billion at September 30, 2015. Net loans increased $279.0 million, or 39.0%, to $993.8 million at June 30, 2016, from $714.8 million at September 30, 2015. These increases were largely attributable to the completion of the acquisition of CBS, which brought in $376.5 million of total assets and $300.9 million of loans, respectively.
Mr. Johnson continued, “The addition of the approximately $300 million in loans and deposits acquired in the CBS acquisition provides additional leverage to our capital and brings us closer to our earning targets.”
Total deposits were $1.2 billion at June 30, 2016, compared with $738.9 million at September 30, 2015. The increase was due in part to the acquisition of CBS, which added $334.0 million of deposits to the Company's portfolio, as well as a continued increase in the Company's legacy deposits, which grew $73.6 million during the nine months ended June 30, 2016. Overall, transaction and money market accounts increased $144.8 million and $120.0 million, respectively, at June 30, 2016.
Total stockholders' equity decreased to $199.8 million at June 30, 2016, compared to $204.9 million at September 30, 2015, due primarily to $13.2 million of share repurchases during fiscal 2016, offset by $8.1 million of net income during the same period. Book value per share increased to $13.29 at June 30, 2016, from $12.79 per share at September 30, 2015, due to the effects of the company's stock repurchases. Tangible book value per share decreased to $11.11 at June 30, 2016, compared to $12.48 at September 30, 2015, due to $25.7 million of goodwill generated by the purchase of CBS, partially offset by stock repurchases during fiscal 2016 and the associated reduced share count at June 30, 2016.
Net Interest Income and Net Interest Margin
Net interest income increased to $12.1 million for the quarter ended June 30, 2016, compared with $8.1 million for the quarter ended June 30, 2015. Interest income increased $4.3 million due to a $3.8 million increase in loan interest income, excluding accretion and amortization of loss share receivable, combined with a $393,000 increase in net purchase discount accretion and amortization of loss share receivable. Quarter over quarter, total interest expense increased $334,000 to $1.6 million for the quarter ended June 30, 2016, largely due to increased balances of higher-costing deposits from CBS. Net interest margin was 3.97% for the three months ended June 30, 2016, compared to 3.62% for the same period in 2015. The Company's net interest margin, excluding the effects of purchase accounting, increased to 3.53% for the quarter ended June 30, 2016, compared with 3.21% for the quarter ended June 30, 2015.
Net interest income for the nine months ended June 30, 2016, increased $6.4 million, or 27.0%, to $30.0 million, compared to $23.6 million for the prior year period. Interest income increased $6.6 million primarily due to an increase of $4.0 million, or 15.0%, in loan interest income to $30.9 million. Loan interest income, excluding accretion and amortization of loss share receivable, increased $5.2 million, while net purchase discount accretion and amortization of loss share receivable increased $1.3 million during the nine months ended June 30, 2016.
Under purchase accounting rules, the Company currently expects to realize remaining loan discount accretion of $853,000 over the next five quarters related to its acquisitions of McIntosh Community Bank and the First National Bank of Florida, pursuant to its previous entry into loss share agreements with the FDIC, and $3.4 million on the CBS acquisition over the life of the loans acquired.
Provision for Loan Losses
The Company recorded a $100,000 negative provision for loan losses in the three and nine months ended June 30, 2016, due to the continued positive credit quality trends of the loan portfolio, as well as a continued build-up of reserves due to net recoveries

2
Exhibit 99.1

of previously charged-off loans. No provision was recorded in the three and nine months ended June 30, 2015.
Noninterest Income and Expense
Noninterest income for the quarter ended June 30, 2016, increased $887,000 to $4.7 million, compared with $3.8 million for the prior year period. The increase was due to a $431,000 increase in bankcard fee and other deposit fee income along with a $167,000 increase in gain on sale of loans and servicing released loan fees, as well as nonrecurring income of $259,000 in bank owned life insurance in other noninterest income.
Noninterest expense for the quarter ended June 30, 2016, increased $6.0 million to $15.1 million, compared with the same period in fiscal 2015, primarily due to $3.5 million in merger expenses related to the CBS acquisition, as well as write-downs of $325,000 on assets available for sale and a $73,000 lease-cancellation charge.
Noninterest income for the nine months ended June 30, 2016, increased $5.2 million to $16.0 million, compared with $10.8 million for the prior year period. The improvement was due to a $1.1 million increase in bankcard fee and other deposit fee income along with $3.6 million in nonrecurring recoveries on loans that were previously covered by loss share agreements with the FDIC.
Noninterest expense for the nine months ended June 30, 2016, increased $7.2 million to $34.0 million, compared with the same period in fiscal 2015, attributable to $4.0 million of merger-related costs in the current year period, along with unrelated increases in salaries and employee benefits and legal and professional fees.
Asset Quality
Asset quality remained strong with nonperforming assets at 0.46% of total assets and the allowance for loan losses at 1.00% of total loans and 300.10% of nonperforming loans at June 30, 2016. Not included in the allowance is $3.4 million in yield and credit discounts on the CBS acquired loans. The allowance for loan losses was 1.37% of legacy loans. The Company recorded net loan recoveries of $367,000 and $729,000 in its allowance for loan losses for the three and nine months ended June 30, 2016, respectively, compared with net loan recoveries of $24,000 and charge-offs of $38,000 for the same periods in fiscal 2015.
Capital Management
During the quarter ended June 30, 2016, the Company repurchased 9,639 shares of its common stock for approximately $121,000, or $12.53 per share. Beginning with the first quarter of fiscal 2014 through the third quarter of fiscal 2016, the Company repurchased a combined 8.1 million shares, or 35.6%, of the Company's common stock at an amount of $91.9 million, which approximates tangible book value.
The Company completed the acquisition of CBS for a total purchase price of $55.9 million during the quarter.
Mr. Johnson concluded, “Our strategy of increasing capital and operating leverage has improved shareholder value, and our stock repurchases over the last 11 quarters have returned capital to our shareholders. With our stock now trading above book value, we will focus our efforts on leveraging our expense structure through organic growth and possible acquisitive growth, improving our noninterest income and realizing the anticipated growth in earnings as a result of our Atlanta expansion.”
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 and a federal savings institution. CharterBank is headquartered in West Point, Georgia, and operates branches in Metro Atlanta, the I-85 corridor south to Auburn, Alabama, and the Florida Gulf Coast. CharterBank's deposits are insured by the Federal Deposit Insurance Corporation. Investors may obtain additional information about Charter Financial Corporation and CharterBank on the internet at www.charterbk.com under About Us.
Forward-Looking Statements
This release may contain “forward-looking statements” within the meaning of the federal securities laws. These statements may be identified by use of such words as “believe,” “expect,” “anticipate,” “should,” “planned,” “intend,” “focused on,” “estimated,” “working on,” “continue to,” “seek,” and “potential.” Examples of forward-looking statements include, but are not limited to, statements regarding future growth, profitability, expense reduction, improvements in income and margins, increasing stockholder value, and 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 the Company's inability to implement its business strategy; general and local economic conditions; changes in interest rates, deposit flows, demand for mortgages and other loans, real estate values, and competition; changes in loan defaults and charge-off rates; changes in the value of securities and other assets, adequacy of loan loss reserves, or deposit levels necessitating an

3
Exhibit 99.1

increase in borrowing to fund loans and investments; the changing exposure to credit risk; the inability to identify suitable future acquisition targets; the potential inability to promptly and effectively integrate the businesses of CharterBank and Community Bank of the South and effectively manage the new businesses and lending teams; the inability to properly leverage the expansion into the North Atlanta market; changes in legislation or regulation; other economic, competitive, governmental, regulatory, and technological factors affecting our operations, pricing, products, and services; the effect of cyberterrorism and system failures; and the effects of geopolitical instability and risks such as terrorist attacks, the effects of weather and natural disasters such as floods, droughts, wind, tornadoes and hurricanes, and the effect of any damage to our reputation resulting from developments relating to any of the factors listed herein. 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. Additional information concerning factors that could cause actual results to differ materially from those forward-looking statements is contained from time to time in the Company's filings with the Securities and Exchange Commission. The company refers you to the section entitled “Risk Factors” contained in the company's Annual Report on Form 10-K for the fiscal year ended September 30, 2015. Copies of each filing may be obtained from the Company or the Securities and Exchange Commission.
The risks included here are not exhaustive and undue reliance should not be placed on any forward-looking statements, which are based on current expectations. All written and oral forward-looking statements attributable to the company, its management, or persons acting on their behalf are qualified in their entirety by these cautionary statements. Further, forward-looking statements speak only as of the date they are made, and the company undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time unless otherwise required by law.


4
Exhibit 99.1


Charter Financial Corporation
Condensed Consolidated Statements of Financial Condition (unaudited)

 
June 30, 2016
 
September 30, 2015 (1)
Assets
Cash and amounts due from depository institutions
$
27,254,886

 
$
9,921,822

Interest-earning deposits in other financial institutions
78,852,621

 
20,421,403

Cash and cash equivalents
106,107,507

 
30,343,225

Loans held for sale, fair value of $3,863,387 and $1,444,042
3,770,556

 
1,406,902

Certificates of deposit held at other financial institutions
19,969,470

 
—

Investment securities available for sale
169,736,987

 
184,404,089

Federal Home Loan Bank stock
3,361,800

 
3,515,600

Restricted securities, at cost
279,000

 
—

Loans receivable
1,005,154,835

 
725,673,178

Unamortized loan origination fees, net
(1,251,261
)
 
(1,423,456
)
Allowance for loan losses
(10,117,763
)
 
(9,488,512
)
Loans receivable, net
993,785,811

 
714,761,210

Other real estate owned
3,180,502

 
3,410,538

Accrued interest and dividends receivable
3,410,176

 
2,668,406

Premises and equipment, net
28,282,764

 
19,660,012

Goodwill
29,989,946

 
4,325,282

Other intangible assets, net of amortization
2,797,381

 
157,226

Cash surrender value of life insurance
48,936,378

 
48,423,510

Deferred income taxes
5,399,464

 
5,674,095

Other assets
8,843,203

 
8,329,239

Total assets
$
1,427,850,945

 
$
1,027,079,334

Liabilities and Stockholders’ Equity
Liabilities:
 

 
 

Deposits
$
1,155,245,321

 
$
738,855,076

Federal Home Loan Bank advances
50,000,000

 
62,000,000

Floating rate junior subordinated debt
6,553,274

 
—

Advance payments by borrowers for taxes and insurance
1,925,582

 
1,745,753

Other liabilities
14,326,890

 
19,547,895

Total liabilities
1,228,051,067

 
822,148,724

Stockholders’ equity:
 

 
 

Common stock, $0.01 par value; 15,031,076 shares issued and outstanding at June 30, 2016 and 16,027,654 shares issued and outstanding at September 30, 2015
150,311

 
160,277

Preferred stock, $0.01 par value; 50,000,000 shares authorized at June 30, 2016 and September 30, 2015
—

 
—

Additional paid-in capital
83,370,080

 
95,355,054

Unearned compensation – ESOP
(5,106,169
)
 
(5,551,193
)
Retained earnings
120,248,463

 
114,362,386

Accumulated other comprehensive income
1,137,193

 
604,086

Total stockholders’ equity
199,799,878

 
204,930,610

Total liabilities and stockholders’ equity
$
1,427,850,945

 
$
1,027,079,334

__________________________________
(1)
Financial information at September 30, 2015 has been derived from audited financial statements.




5
Exhibit 99.1

Charter Financial Corporation
Condensed Consolidated Statements of Income (unaudited)

 
Three Months Ended 
 June 30,
 
Nine Months Ended 
 June 30,
 
2016
 
2015
 
2016
 
2015
Interest income:
 
 
 
 
 
 
 
Loans receivable
$
12,563,466

 
$
8,988,725

 
$
30,868,429

 
$
26,832,782

Taxable investment securities
922,435

 
911,572

 
2,803,482

 
2,720,800

Nontaxable investment securities
6,702

 
—

 
6,702

 
12,417

Federal Home Loan Bank stock
38,416

 
35,316

 
113,493

 
109,001

Interest-earning deposits in other financial institutions
46,374

 
25,611

 
112,812

 
85,459

Certificates of deposit held at other financial institutions
54,452

 
—

 
54,452

 
—

Restricted securities
2,503

 
—

 
2,503

 
—

Amortization of FDIC loss share receivable
—

 
(596,691
)
 
—

 
(2,387,205
)
Total interest income
13,634,348

 
9,364,533

 
33,961,873

 
27,373,254

Interest expense:
 

 
 

 
 

 
 

Deposits
977,520

 
672,525

 
2,335,171

 
2,063,898

Borrowings
470,219

 
545,368

 
1,568,470

 
1,725,750

Floating rate junior subordinated debt
103,771

 
—

 
103,771

 
—

Total interest expense
1,551,510

 
1,217,893

 
4,007,412

 
3,789,648

Net interest income
12,082,838

 
8,146,640

 
29,954,461

 
23,583,606

Provision for loan losses
(100,000
)
 
—

 
(100,000
)
 
—

Net interest income after provision for loan losses
12,182,838

 
8,146,640

 
30,054,461

 
23,583,606

Noninterest income:
 

 
 

 
 

 
 

Service charges on deposit accounts
1,810,166

 
1,663,324

 
5,182,869

 
4,758,276

Bankcard fees
1,299,988

 
1,015,719

 
3,634,995

 
2,956,880

Gain (loss) on investment securities available for sale
12,920

 
—

 
48,885

 
(27,209
)
Bank owned life insurance
327,304

 
321,102

 
892,828

 
924,817

Gain on sale of loans and loan servicing release fees
602,178

 
435,055

 
1,309,784

 
1,153,636

Brokerage commissions
163,912

 
210,563

 
452,057

 
567,349

Recoveries on acquired loans previously covered under FDIC loss share agreements
—

 
—

 
3,625,000

 
—

FDIC receivable for loss sharing agreements accretion
—

 
19,711

 
—

 
94,230

Other
486,462

 
150,933

 
899,955

 
405,086

Total noninterest income
4,702,930

 
3,816,407

 
16,046,373

 
10,833,065

Noninterest expenses:
 

 
 

 
 

 
 

Salaries and employee benefits
8,470,498

 
5,034,540

 
19,020,827

 
15,126,581

Occupancy
3,220,260

 
1,926,645

 
7,353,044

 
5,640,356

Legal and professional
793,489

 
352,116

 
1,851,892

 
978,025

Marketing
468,354

 
305,991

 
1,081,515

 
938,461

Federal insurance premiums and other regulatory fees
185,333

 
189,089

 
619,213

 
564,535

Net (benefit) cost of operations of real estate owned
(75,897
)
 
(29,675
)
 
(25,732
)
 
54,573

Furniture and equipment
301,137

 
229,105

 
630,859

 
603,306

Postage, office supplies and printing
236,704

 
222,151

 
592,086

 
686,783

Core deposit intangible amortization expense
172,706

 
64,009

 
257,845

 
206,405

Other
1,291,259

 
756,546

 
2,663,095

 
2,050,328

Total noninterest expenses
15,063,843

 
9,050,517

 
34,044,644

 
26,849,353

Income before income taxes
1,821,925

 
2,912,530

 
12,056,190

 
7,567,318

Income tax expense
526,690

 
1,000,796

 
4,003,588

 
2,547,849

Net income
$
1,295,235

 
$
1,911,734

 
$
8,052,602

 
$
5,019,469

Basic net income per share
$
0.09

 
$
0.12

 
$
0.56

 
$
0.32

Diluted net income per share
$
0.09

 
$
0.12

 
$
0.53

 
$
0.30

Weighted average number of common shares outstanding
14,184,675

 
15,559,917

 
14,433,345

 
15,858,186

Weighted average number of common and potential common shares outstanding
14,841,814

 
16,210,424

 
15,090,484

 
16,508,693



6
Exhibit 99.1

Charter Financial Corporation
Supplemental Financial Data (unaudited)
in thousands except per share data
 
Quarter to Date
 
 
Year to Date
 
6/30/2016
 
3/31/2016
 
12/31/2015
 
9/30/2015 (1)
 
6/30/2015
 
 
6/30/2016
 
6/30/2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated balance sheet data:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total assets
$
1,427,851

 
$
1,051,281

 
$
1,004,880

 
$
1,027,079

 
$
1,004,936

 
 
$
1,427,851

 
$
1,004,936

Cash and cash equivalents
106,108

 
79,331

 
51,881

 
30,343

 
39,951

 
 
106,108

 
39,951

Loans receivable, net
993,786

 
701,399

 
679,870

 
714,761

 
672,830

 
 
993,786

 
672,830

Other real estate owned
3,181

 
2,711

 
3,165

 
3,411

 
3,290

 
 
3,181

 
3,290

Securities available for sale
169,737

 
172,197

 
175,988

 
184,404

 
189,791

 
 
169,737

 
189,791

Transaction accounts
472,123

 
353,834

 
331,570

 
327,373

 
328,961

 
 
472,123

 
328,961

Total deposits
1,155,245

 
791,692

 
744,234

 
738,855

 
734,238

 
 
1,155,245

 
734,238

Borrowings
56,553

 
50,000

 
50,000

 
62,000

 
50,000

 
 
56,553

 
50,000

Total stockholders’ equity
199,800

 
198,031

 
198,368

 
204,931

 
208,919

 
 
199,800

 
208,919

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated earnings summary:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest income
$
13,635

 
$
9,888

 
$
10,439

 
$
10,519

 
$
9,365

 
 
$
33,962

 
$
27,373

Interest expense
1,552

 
1,237

 
1,218

 
1,223

 
1,218

 
 
4,008

 
3,789

Net interest income
12,083

 
8,651

 
9,221

 
9,296

 
8,147

 
 
29,954

 
23,584

Provision for loan losses
(100
)
 
—

 
—

 
—

 
—

 
 
(100
)
 
—

Net interest income after provision for loan losses
12,183

 
8,651

 
9,221

 
9,296

 
8,147

 
 
30,054

 
23,584

Noninterest income
4,703

 
4,513

 
6,831

 
1,496

 
3,816

 
 
16,046

 
10,833

Noninterest expense
15,064

 
9,903

 
9,079

 
9,982

 
9,050

 
 
34,043

 
26,850

Income tax expense
527

 
1,118

 
2,359

 
257

 
1,001

 
 
4,004

 
2,548

Net income
$
1,295

 
$
2,143

 
$
4,614

 
$
553

 
$
1,912

 
 
$
8,053

 
$
5,019

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Per share data:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings per share – basic
$
0.09

 
$
0.15

 
$
0.31

 
$
0.04

 
$
0.12

 
 
$
0.56

 
$
0.32

Earnings per share – fully diluted
$
0.09

 
$
0.14

 
$
0.30

 
$
0.04

 
$
0.12

 
 
$
0.53

 
$
0.30

Cash dividends per share
$
0.05

 
$
0.05

 
$
0.05

 
$
0.05

 
$
0.05

 
 
$
0.15

 
$
0.15

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average basic shares
14,185

 
14,225

 
14,886

 
15,300

 
15,560

 
 
14,433

 
15,858

Weighted average diluted shares
14,842

 
14,910

 
15,545

 
15,982

 
16,210

 
 
15,090

 
16,509

Total shares outstanding
15,031

 
15,026

 
15,229

 
16,028

 
16,404

 
 
15,031

 
16,404

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Book value per share
$
13.29

 
$
13.18

 
$
13.03

 
$
12.79

 
$
12.74

 
 
$
13.29

 
$
12.74

Tangible book value per share
$
11.11

 
$
12.89

 
$
12.73

 
$
12.48

 
$
12.44

 
 
$
11.11

 
$
12.44

__________________________________
(1)
Financial information at and for the year ended September 30, 2015 has been derived from audited financial statements.




7
Exhibit 99.1

Charter Financial Corporation
Supplemental Information (unaudited)
dollars in thousands
 
Quarter to Date
 
 
Year to Date
 
6/30/2016
 
3/31/2016
 
12/31/2015
 
9/30/2015
 
6/30/2015
 
 
6/30/2016
 
6/30/2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans receivable:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1-4 family residential real estate
$
234,346

 
$
190,180

 
$
182,297

 
$
188,044

 
$
182,290

 
 
$
234,346

 
$
182,290

Commercial real estate
586,082

 
392,946

 
396,023

 
416,576

 
394,417

 
 
586,082

 
394,417

Commercial
64,700

 
43,741

 
39,836

 
37,444

 
31,847

 
 
64,700

 
31,847

Real estate construction
104,389

 
72,323

 
61,816

 
77,217

 
70,189

 
 
104,389

 
70,189

Consumer and other
15,638

 
13,205

 
10,715

 
6,392

 
4,924

 
 
15,638

 
4,924

Total loans receivable (1)
$
1,005,155

 
$
712,395

 
$
690,687

 
$
725,673

 
$
683,667

 
 
$
1,005,155

 
$
683,667

 
 
 
 
 
 
 
 
 


 
 
 
 
 
Allowance for loan losses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at beginning of period
$
9,850

 
$
9,695

 
$
9,489

 
$
9,433

 
$
9,409

 
 
$
9,489

 
$
9,471

Charge-offs
(7
)
 
(205
)
 
(15
)
 
(263
)
 
(54
)
 
 
(227
)
 
(266
)
Recoveries
375

 
360

 
221

 
319

 
78

 
 
956

 
228

Provision
(100
)
 
—

 
—

 
—

 
—

 
 
(100
)
 
—

Balance at end of period
$
10,118

 
$
9,850

 
$
9,695

 
$
9,489

 
$
9,433

 
 
$
10,118

 
$
9,433

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nonperforming assets: (2)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nonaccrual loans
$
3,371

 
$
2,098

 
$
2,463

 
$
4,114

 
$
4,310

 
 
$
3,371

 
$
4,310

Loans delinquent 90 days or greater and still accruing
—

 
52

 
14

 
14

 
—

 
 
—

 
—

Total nonperforming loans
3,371

 
2,150

 
2,477

 
4,128

 
4,310

 
 
3,371

 
4,310

Other real estate owned (3)
3,181

 
2,711

 
3,165

 
3,411

 
3,290

 
 
3,181

 
3,290

Total nonperforming assets
$
6,552

 
$
4,861

 
$
5,642

 
$
7,539

 
$
7,600

 
 
$
6,552

 
$
7,600

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Troubled debt restructuring:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Troubled debt restructurings - accruing
$
4,999

 
$
7,267

 
$
7,265

 
$
6,046

 
$
6,105

 
 
$
4,999

 
$
6,105

Troubled debt restructurings - nonaccrual
1,716

 
332

 
317

 
1,607

 
1,790

 
 
1,716

 
1,790

Total troubled debt restructurings
$
6,715

 
$
7,599

 
$
7,582

 
$
7,653

 
$
7,895

 
 
$
6,715

 
$
7,895

__________________________________
(1)
Included in the loan balances are loans that were previously covered under loss share agreements with the FDIC in the amount of $46.8 million and $50.0 million at September 30, 2015, and June 30, 2015, respectively.
(2)
Loans being accounted for under purchase accounting rules which have associated accretion income established at the time of acquisition remaining to recognize, that were greater than 90 days delinquent or otherwise considered nonperforming loans are excluded from this table.
(3)
Included in the balances is OREO that was previously covered under loss share agreements with the FDIC in the amount of $2.4 million and $3.3 million at September 30, 2015 and June 30, 2015, respectively.




8
Exhibit 99.1

Charter Financial Corporation
Supplemental Information (unaudited)

 
Quarter to Date
 
 
Year to Date
 
6/30/2016
 
3/31/2016
 
12/31/2015
 
9/30/2015
 
6/30/2015
 
 
6/30/2016
 
6/30/2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Return on equity (annualized)
2.61
 %
 
4.32
 %
 
8.97
 %
 
1.06
 %
 
3.62
 %
 
 
5.34
 %
 
3.13
%
Return on assets (annualized)
0.38
 %
 
0.83
 %
 
1.83
 %
 
0.22
 %
 
0.76
 %
 
 
0.95
 %
 
0.67
%
Net interest margin (annualized)
3.97
 %
 
3.72
 %
 
4.03
 %
 
4.05
 %
 
3.62
 %
 
 
3.91
 %
 
3.54
%
Net interest margin, excluding the effects of purchase accounting (1)
3.53
 %
 
3.36
 %
 
3.51
 %
 
3.37
 %
 
3.21
 %
 
 
3.47
 %
 
3.22
%
Bank tier 1 leverage ratio (2)
11.32
 %
 
17.13
 %
 
17.19
 %
 
16.04
 %
 
16.70
 %
 
 
11.32
 %
 
16.70
%
Bank total risk-based capital ratio
14.99
 %
 
22.98
 %
 
23.23
 %
 
21.71
 %
 
22.88
 %
 
 
14.99
 %
 
22.88
%
Effective tax rate
28.91
 %
 
34.28
 %
 
33.83
 %
 
31.78
 %
 
34.36
 %
 
 
33.21
 %
 
33.67
%
Yield on loans
5.20
 %
 
5.03
 %
 
5.33
 %
 
5.40
 %
 
5.02
 %
 
 
5.19
 %
 
5.04
%
Cost of deposits
0.43
 %
 
0.42
 %
 
0.42
 %
 
0.42
 %
 
0.43
 %
 
 
0.42
 %
 
0.45
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Asset quality ratios: (3)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Allowance for loan losses as a % of total loans (4)
1.00
 %
 
1.38
 %
 
1.40
 %
 
1.30
 %
 
1.33
 %
 
 
1.00
 %
 
1.33
%
Allowance for loan losses as a % of nonperforming loans
300.10
 %
 
458.13
 %
 
391.42
 %
 
229.85
 %
 
196.86
 %
 
 
300.10
 %
 
196.86
%
Nonperforming assets as a % of total loans and OREO
0.65
 %
 
0.68
 %
 
0.81
 %
 
1.04
 %
 
0.82
 %
 
 
0.65
 %
 
0.82
%
Nonperforming assets as a % of total assets
0.46
 %
 
0.46
 %
 
0.56
 %
 
0.73
 %
 
0.55
 %
 
 
0.46
 %
 
0.55
%
Net charge-offs (recoveries) as a % of average loans (annualized)
(0.15
)%
 
(0.09
)%
 
(0.12
)%
 
(0.15
)%
 
(0.01
)%
 
 
(0.12
)%
 
—
%
__________________________________
(1)
Net interest income excluding accretion and amortization of acquired loans divided by average net interest earning assets excluding average loan accretable discounts in the amount of $4.7 million, $2.0 million, $3.1 million, $3.8 million, and $3.9 million for the quarters ended June 30, 2016, March 31, 2016, December 31, 2015, September 30, 2015, and June 30, 2015, respectively.
(2)
During the quarter ended June 30, 2016, a downstream of capital was made between the holding company and the bank in the amount of $6.1 million as part of the Company's acquisition of CBS.
(3)
Due to the early termination of the FDIC loss share agreements in the fourth quarter of fiscal 2015, ratios for the three and nine months ended June 30, 2016 and the three months ended March 31, 2016, December 31, 2015 and September 30, 2015 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.
(4)
Accounting requirements for the third quarter 2016 acquisition of CBS have affected the comparability of the allowance for loan losses as a percentage of loans. Excluding former CBS loans totaling $264.7 million at June 30, 2016, which were recorded at acquisition date fair value, the allowance approximated 1.37% of all other loans at June 30, 2016.




9
Exhibit 99.1

Charter Financial Corporation
Average Balances, Interest Rates and Yields (unaudited)
dollars in thousands
 
Quarter to Date
 
6/30/2016
 
6/30/2015
 
Average Balance
 
Interest
 
Average Yield/Cost (10)
 
Average Balance
 
Interest
 
Average Yield/Cost (10)
Assets:
 
 
 
 
 
 
 
 
 
 
 
Interest-earning assets:
 
 
 
 
 
 
 
 
 
 
 
Interest-earning deposits in other financial institutions
$
54,423

 
$
47

 
0.35
%
 
$
44,748

 
$
26

 
0.23
%
Certificates of deposit held at other financial institutions
19,404

 
54

 
1.12

 
—

 
—

 
—

FHLB common stock and other equity securities
3,442

 
38

 
4.46

 
3,006

 
35

 
4.70

Taxable investment securities
172,065

 
922

 
2.14

 
183,498

 
911

 
1.99

Nontaxable investment securities (1)
2,409

 
7

 
1.11

 
—

 
—

 
—

Restricted securities
236

 
3

 
4.24

 
—

 
—

 
—

Loans receivable (1)(2)(3)(4)
966,375

 
11,285

 
4.67

 
668,329

 
7,508

 
4.49

Accretion and amortization of acquired loan discounts (5)
 
 
1,278

 
0.53

 
 
 
885

 
0.53

Total interest-earning assets
1,218,354

 
13,634

 
4.48

 
899,581

 
9,365

 
4.16

Total noninterest-earning assets
145,454

 
 
 
 

 
103,728

 
 
 
 

Total assets
$
1,363,808

 
 
 
 

 
$
1,003,309

 
 
 
 

Liabilities and Equity:
 

 
 

 
 

 
 

 
 

 
 

Interest-bearing liabilities:
 

 
 

 
 

 
 

 
 

 
 

Interest bearing checking
$
229,650

 
$
72

 
0.12
%
 
$
175,641

 
$
53

 
0.12
%
Bank rewarded checking
50,188

 
25

 
0.20

 
49,743

 
25

 
0.20

Savings accounts
61,364

 
9

 
0.06

 
50,409

 
2

 
0.02

Money market deposit accounts
228,316

 
178

 
0.31

 
123,392

 
62

 
0.20

Certificate of deposit accounts
349,773

 
694

 
0.79

 
231,077

 
531

 
0.92

Total interest-bearing deposits
919,291

 
978

 
0.43

 
630,262

 
673

 
0.43

Borrowed funds
53,101

 
470

 
3.54

 
50,000

 
545

 
4.36

Floating rate junior subordinated debt
5,516

 
104

 
7.53

 
—

 
—

 
—

Total interest-bearing liabilities
977,908

 
1,552

 
0.63

 
680,262

 
1,218

 
0.72

Noninterest-bearing deposits
171,913

 
 
 
 

 
99,138

 
 
 
 

Other noninterest-bearing liabilities
15,390

 
 
 
 

 
12,417

 
 
 
 

Total noninterest-bearing liabilities
187,303

 
 
 
 

 
111,555

 
 
 
 

Total liabilities
1,165,211

 
 
 
 

 
791,817

 
 
 
 

Total stockholders' equity
198,597

 
 
 
 

 
211,492

 
 
 
 

Total liabilities and stockholders' equity
$
1,363,808

 
 
 
 

 
$
1,003,309

 
 
 
 

Net interest income
 

 
$
12,082

 
 

 
 

 
$
8,147

 
 

Net interest earning assets (6)
 

 
$
240,446

 
 

 
 

 
$
219,319

 
 

Net interest rate spread (7)
 

 
 

 
3.85
%
 
 

 
 

 
3.44
%
Net interest margin (8)
 

 
 

 
3.97
%
 
 

 
 

 
3.62
%
Net interest margin, excluding the effects of purchase accounting (9)
 
 
 
 
3.53
%
 
 
 
 
 
3.21
%
Ratio of average interest-earning assets to average interest-bearing liabilities
 
 
 
 
124.59
%
 
 
 
 
 
132.24
%
__________________________________
(1)
Tax exempt or tax-advantaged securities and loans are shown at their contractual yields and are not shown at a tax equivalent yield.
(2)
Includes net loan fees deferred and accreted pursuant to applicable accounting requirements.
(3)
Interest income on loans is interest income as recorded in the income statement and does not include interest income on nonaccrual loans.
(4)
Interest income on loans excludes discount accretion and amortization of the indemnification asset.
(5)
Accretion of accretable purchase discount on loans acquired and amortization of the overstatement of FDIC indemnification asset.
(6)
Net interest-earning assets represent total average interest-earning assets less total average interest-bearing liabilities.
(7)
Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.
(8)
Net interest margin represents net interest income as a percentage of average interest-earning assets.
(9)
Net interest margin, excluding the effects of purchase accounting represents net interest income excluding accretion and amortization of acquired loans receivable as a percentage of average net interest earning assets excluding loan accretable discounts in the amount of $4.7 million and $3.9 million for the quarters ended June 30, 2016 and June 30, 2015, respectively.
(10)
Annualized.

10
Exhibit 99.1

Charter Financial Corporation
Average Balances, Interest Rates and Yields (unaudited)
dollars in thousands
 
Fiscal Year to Date
 
6/30/2016
 
6/30/2015
 
Average Balance
 
Interest
 
Average Yield/Cost (10)
 
Average Balance
 
Interest
 
Average Yield/Cost (10)
Assets:
 
 
 
 
 
 
 
 
 
 
 
Interest-earning assets:
 

 
 

 
 

 
 

 
 

 
 

Interest-earning deposits in other financial institutions
$
41,580

 
$
113

 
0.36
%
 
$
50,140

 
$
85

 
0.23
%
Certificates of deposit held at other financial institutions
6,444

 
54

 
1.13

 
—

 
—

 
—

FHLB common stock and other equity securities
3,175

 
113

 
4.77

 
3,276

 
109

 
4.44

Taxable investment securities
175,776

 
2,803

 
2.13

 
182,891

 
2,721

 
1.98

Nontaxable investment securities (1)
800

 
7

 
1.12

 
3,995

 
12

 
0.41

Restricted securities
78

 
3

 
4.28

 
—

 
—

 
—

Loans receivable (1)(2)(3)(4)
792,607

 
27,588

 
4.64

 
647,306

 
22,422

 
4.62

Accretion and amortization of acquired loan discounts (5)
 
 
3,280

 
0.55

 
 
 
2,024

 
0.41

Total interest-earning assets
1,020,460

 
33,961

 
4.44

 
887,608

 
27,373

 
4.11

Total noninterest-earning assets
112,802

 
 
 
 

 
107,218

 
 
 
 

Total assets
$
1,133,262

 
 
 
 

 
$
994,826

 
 
 
 

Liabilities and Equity:
 

 
 

 
 

 
 

 
 

 
 

Interest-bearing liabilities:
 

 
 

 
 

 
 

 
 

 
 

Interest bearing checking
$
196,187

 
$
182

 
0.12
%
 
$
169,518

 
$
157

 
0.12
%
Bank rewarded checking
48,577

 
73

 
0.20

 
48,730

 
77

 
0.21

Savings accounts
54,871

 
16

 
0.04

 
49,270

 
7

 
0.02

Money market deposit accounts
167,194

 
342

 
0.27

 
124,565

 
196

 
0.21

Certificate of deposit accounts
271,776

 
1,722

 
0.84

 
226,293

 
1,627

 
0.96

Total interest-bearing deposits
738,605

 
2,335

 
0.42

 
618,376

 
2,064

 
0.45

Borrowed funds
51,577

 
1,568

 
4.05

 
53,077

 
1,725

 
4.33

Floating rate junior subordinated debt
1,833

 
104

 
7.55

 
—

 
—

 
—

Total interest-bearing liabilities
792,015

 
4,007

 
0.67

 
671,453

 
3,789

 
0.75

Noninterest-bearing deposits
127,130

 
 
 
 
 
97,598

 
 
 
 
Other noninterest-bearing liabilities
13,172

 
 
 
 
 
11,807

 
 
 
 
Total noninterest-bearing liabilities
140,302

 
 
 
 
 
109,405

 
 
 
 
Total liabilities
932,317

 
 
 
 
 
780,858

 
 
 
 
Total stockholders' equity
200,945

 
 
 
 
 
213,968

 
 
 
 
Total liabilities and stockholders' equity
$
1,133,262

 
 
 
 
 
$
994,826

 
 
 
 
Net interest income
 

 
$
29,954

 
 

 
 

 
$
23,584

 
 

Net interest earning assets (6)
 

 
$
228,445

 
 

 
 

 
$
216,155

 
 

Net interest rate spread (7)
 

 
 

 
3.77
%
 
 

 
 

 
3.36
%
Net interest margin (8)
 

 
 

 
3.91
%
 
 

 
 

 
3.54
%
Net interest margin, excluding the effects of purchase accounting (9)
 
 
 
 
3.47
%
 
 
 
 
 
3.22
%
Ratio of average interest-earning assets to average interest-bearing liabilities
 

 
 

 
128.84
%
 
 

 
 

 
132.19
%
__________________________________
(1)
Tax exempt or tax-advantaged securities and loans are shown at their contractual yields and are not shown at a tax equivalent yield.
(2)
Includes net loan fees deferred and accreted pursuant to applicable accounting requirements.
(3)
Interest income on loans is interest income as recorded in the income statement and does not include interest income on nonaccrual loans.
(4)
Interest income on loans excludes discount accretion and amortization of the indemnification asset.
(5)
Accretion of accretable purchase discount on loans acquired and amortization of the overstatement of FDIC indemnification asset.
(6)
Net interest-earning assets represent total average interest-earning assets less total average interest-bearing liabilities.
(7)
Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.
(8)
Net interest margin represents net interest income as a percentage of average interest-earning assets.
(9)
Net interest margin, excluding the effects of purchase accounting represents net interest income excluding accretion and amortization of acquired loans receivable as a percentage of average net interest earning assets excluding loan accretable discounts in the amount of $3.2 million and $4.8 million for the nine months ended June 30, 2016 and June 30, 2015, respectively.
(10)
Annualized.

11
Exhibit 99.2


 
 
NEWS RELEASE
Contact:
 
 
Robert L. Johnson, Chairman & CEO
 
Dresner Corporate Services
Curt Kollar, CFO
 
Steve Carr
706-645-1391
 
312-780-7211
 
 
 

CHARTER FINANCIAL DECLARES REGULAR
QUARTERLY CASH DIVIDEND

West Point, Georgia, July 26, 2016 – Charter Financial Corporation (NASDAQ: CHFN) today announced that its board of directors has declared a regular quarterly cash dividend of $0.05 per share. The dividend is payable on August 25, 2016, to stockholders of record as of August 11, 2016.
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. CharterBank is headquartered in West Point, Georgia, and operates branches in Metro Atlanta, the I-85 corridor south to Auburn, Alabama, and the Florida Gulf Coast. CharterBank's deposits are insured by the Federal Deposit Insurance Corporation. Investors may obtain additional information about Charter Financial Corporation and CharterBank on the internet at www.charterbk.com under About Us.





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