Exhibit 99.1
Atlantic Coast Federal Corporation's First Quarter Earnings Rise 42% to
$1,107,000 or $0.08 Per Diluted Share; Company Sets Sights On Two New Locations
in Metro Jacksonville
WAYCROSS, Ga.--(BUSINESS WIRE)--May 9, 2006--Atlantic Coast
Federal Corporation (NASDAQ/NM: ACFC), the holding company for
Atlantic Coast Federal, today announced higher earnings for the first
quarter ended March 31, 2006, compared with the same quarter last
year. The Company's improved earnings reflected growth in total assets
and net loans, driving higher net interest income versus the first
quarter of 2005. A substantial year-over-year decline in
non-performing loans and ongoing strong credit quality metrics,
particularly in its smaller-balance consumer loan portfolio, also
enabled the Company to reduce its provision for loan losses for the
quarter. Because of this continued momentum in its business, net
income for the first quarter of 2006 increased 42% to $1,107,000 or
$0.08 per diluted share versus $782,000 or $0.06 per diluted share in
the same period last year.
Net interest income increased 6% to $5,279,000 in the first
quarter compared with $4,965,000 in the same quarter last year due
equally to improving yields and growth in assets and net loans. The
Company's provision for loan losses declined 85% to $76,000 from
$523,000 in the year-earlier period, with the prior-year amount
reflecting primarily a $400,000 addition to specific reserves for a
single commercial real estate loan. The Company's net interest income,
after provision for loan losses, rose 17% in the first quarter to
$5,203,000 from $4,442,000 in the comparable 2005 period.
Non-interest income for the first quarter increased 27% to
$1,638,000 versus $1,286,000 in the year-earlier period primarily
because of higher deposit account service fees. Included in the
current year's non-interest income was a loss of $177,000 on
securities available for sale. For asset/liability management
purposes, the Company determined that it will sell certain
available-for-sale securities with an original cost of approximately
$16,000,000 in the second quarter of 2006. The Company considers the
difference between the market value and original cost of those
securities at March 31, 2006, an other-than-temporary loss and,
accordingly, charged this impairment of value to earnings for the
current period. Non-interest expense for the quarter rose 16% to
$5,234,000 from $4,507,000 in the same period last year. The increase
was related primarily to additional compensation costs related to the
Company's share-based compensation plans implemented in mid-2005 along
with customary annual merit pay increases, higher occupancy costs
related to the opening of the Company's Florida Regional Center in
Jacksonville during 2005, and increased data processing and
advertising expenses.
Commenting on the announcement, Robert J. Larison, Jr., President
and Chief Executive Officer, said, "Favorable business conditions
across our market region during the first quarter enabled us to build
on the success we achieved in 2005, posting gains in loans and other
assets compared with the year-earlier quarter, accompanied by an
expanding deposit base that provides significant funding for our
growth. These key balance sheet measures also carry good momentum from
the fourth quarter of 2005, with total assets, our loan portfolio and
our deposit base all showing quarter-to-quarter increases. These
trends signal a sound start to 2006, and we are encouraged by the
prospects for continued growth in the year ahead."
Improving asset quality continues to play a key role in the
Company's earnings performance. Non-performing loans to total loans
stood at 0.51% at the end of the first quarter of 2006, up slightly
from 0.45% at December 31, 2005, but down significantly from 1.11% for
the first quarter of 2005. Net charge-offs on an annualized basis
remained at a low 0.11% of average total loans in the first quarter of
2006 versus 0.17% in the fourth quarter of 2005 and 0.10% in the first
quarter last year.
Although the Company posted higher net interest income for the
first quarter of 2006, reflecting a higher level of net
interest-earning assets and an increased yield on those assets, the
Company experienced further margin compression in the first quarter.
Net interest margin declined to 3.04% from 3.21% in the first quarter
of 2005, but the rate of decline slowed to 17 basis points
year-over-year in the first quarter from a 28-basis-point decline in
the fourth quarter of 2005. The Company attributes this recent
moderation in its net interest margin to an increase in 2005 in
prime-based home equity loans, variable-rate investment securities and
other shorter-term variable interest-bearing investments, which
provide yields that keep better pace with the increasing interest
rates paid on deposits. Nevertheless, the yield curve remains
relatively flat and competition for deposits is aggressive, both of
which are expected to keep continued pressure on the Company's cost of
funds over the near term.
In March, the Company announced that its Board of Directors voted
to increase the Company's regular quarterly cash dividend rate again,
raising the rate on common stock to $0.09 per share. This new rate,
the fourth consecutive quarterly increase since Atlantic Coast Federal
Corporation commenced dividend payments in 2005, represents an
increase of $0.01 from the preceding quarter and was paid on May 1,
2006, to all stockholders of record as of April 14, 2006.
Concluding, Larison added, "While our present branch footprint
continues to produce solid growth and good success for the Company and
its stockholders, both financially and operationally, we believe
additional opportunities exist for Atlantic Coast to expand its reach
in northeast Florida. In the next year, these goals and aspirations
will take tangible form with the planned opening of two new branches
south of Jacksonville in demographically attractive and fast-growing
St. Johns County, which will increase our presence in the metropolitan
area to nine locations. Aside from this physical growth, we continue
to assess the merits of other new locations in our markets as well as
other opportunities to expand our banking system."
The Company's total assets increased 14% to $770,519,000 at March
31, 2006, from $674,240,000 in the year-earlier quarter. Net loans
receivable increased 9% to $599,295,000 at March 31, 2006, from
$547,455,000 as of March 31, 2005. Deposits rose 15% to $530,113,000
at the end of the first quarter of 2006 from $461,442,000 at March 31,
2005. Total stockholders' equity declined 6% to $94,039,000 at March
31, 2006, from $99,519,000 in the year-earlier quarter, with the
change primarily reflecting the impact of the Company's share
repurchase activities during the last half of 2005.
The Company's balance sheet also showed growth on a linked-quarter
basis. Total assets for the first quarter increased 4% from
$743,849,000 at December 31, 2005, while net loans receivable
increased 3% from a year-end total of $580,441,000. Deposits rose 3%
from $516,322,000 at December 31, 2005, and stockholders' equity
increased 1% from $92,917,000 as of December 31, 2005.
Returns on average total assets and stockholders' equity
(annualized) for the first quarter of 2006 were 0.59% and 4.78%,
respectively, versus 0.48% and 3.14%, for the comparable period last
year.
Atlantic Coast Federal Corporation is the holding company for
Atlantic Coast Federal, a federally chartered and insured stock
savings association that was organized in 1939 as a credit union to
serve the employees of the Atlantic Coast Line Railroad. In November
2000, the credit union converted its charter from a federal credit
union to a federal mutual savings association and, in January 2003,
Atlantic Coast Federal Corporation was formed as the holding company.
The Company completed its initial public stock offering in October
2004. Investors may obtain additional information about Atlantic Coast
Federal Corporation on the Internet at www.acfederal.net, under the
Investor Information section.
Atlantic Coast Federal, with approximately $771 million in assets
as of March 31, 2006, is a community-oriented financial institution.
It serves southeastern Georgia and northeastern Florida through 13
offices, including a growing presence in the Jacksonville metropolitan
area. Atlantic Coast Federal expects to open two additional branches
in St. Johns County, Florida, in the next year.
This news release contains forward-looking statements within the
meaning of the federal securities laws. Statements in this release
that are not strictly historical are forward-looking and are based
upon current expectations that may differ materially from actual
results. These forward-looking statements, identified by words such as
"will," expected, "believe," and "prospects," involve risks and
uncertainties that could cause actual results to differ materially
from those anticipated by the statements made herein. These risks and
uncertainties involve general economic trends and changes in interest
rates, increased competition, changes in consumer demand for financial
services, the possibility of unforeseen events affecting the industry
generally, the uncertainties associated with newly developed or
acquired operations, and market disruptions and other effects of
terrorist activities. The Company undertakes no obligation to release
revisions to these forward-looking statements publicly to reflect
events or circumstances after the date hereof or to reflect the
occurrence of unforeseen events, except as required to be reported
under the rules and regulations of the Securities and Exchange
Commission.
ATLANTIC COAST FEDERAL CORPORATION
Unaudited Financial Highlights
(In thousands, except per share amounts)
Three Months Ended
March 31,
---------------------
2006 2005
--------- ---------
Total interest income $ 10,515 $ 8,443
Total interest expense 5,236 3,478
--------- ---------
Net interest income 5,279 4,965
Provision for loan losses 76 523
--------- ---------
Net interest income after provision for loan
losses 5,203 4,442
Non-interest income 1,638 1,286
Non-interest expense 5,234 4,507
--------- ---------
Income before income taxes 1,607 1,221
Income tax expense 500 439
--------- ---------
Net income $ 1,107 $ 782
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Basic and diluted earnings per share $ 0.08 $ 0.06
========= =========
Weighted average shares outstanding
Basic 13,510 14,129
========= =========
Diluted 13,580 14,129
========= =========
Dividends declared per share $ 0.09 $ 0.05
========= =========
March 31, Dec. 31,
2006 2005
--------- ---------
Total assets $ 770,519 $ 743,849
Cash and cash equivalents 47,585 37,959
Securities available for sale 69,061 71,965
Loans receivable, net 599,295 580,441
Total deposits 530,113 516,322
Federal Home Loan Bank advances 129,000 129,000
Stockholders' equity 94,039 92,917
Selected Consolidated Financial Ratios and Other Data (unaudited) for
the first quarter ended March 31, 2006 and 2005, may be found at the
following link: http://www.irinfo.com/acfc/1Q06fss.pdf. Investors
should refer to the Company's Form 10-Q for the first quarter ended
March 31, 2006, for additional information and disclosures; the Form
10-Q will be available at the Investor Information section of the
Company's website immediately upon filing with the Securities and
Exchange Commission.
CONTACT: Corporate Communications, Inc.
Patrick J. Watson, 615-254-3376