Exhibit 99.1
Atlantic Coast Federal Corporation's Second Quarter Earnings Increase
83% to $0.11 Per Diluted Share
WAYCROSS, Ga.--(BUSINESS WIRE)--Aug. 1, 2006--Atlantic Coast
Federal Corporation (NASDAQ: ACFC), the holding company for Atlantic
Coast Bank, today announced financial results for the second quarter
and six months ended June 30, 2006. The Company's improved earnings
for the second quarter reflected a continued increase in its loan
portfolio compared with year-earlier levels, coupled with a relatively
stable net interest margin, which together produced higher net
interest income for the quarter versus the second quarter last year.
Other highlights of the second quarter included a continuation of
solid credit quality metrics, again allowing the Company to reduce its
provision for loan losses versus the comparable 2005 period, and an
improvement in the Company's efficiency ratio. Because of the
continued strength of its business, net income for the second quarter
of 2006 increased 66% to $1,493,000 from $902,000 in the same period
last year. On a diluted per share basis, net income increased 83% to
$0.11 versus $0.06 in the second quarter of 2005.
Commenting on the announcement, Robert J. Larison, Jr., President
and Chief Executive Officer, said, "We are pleased to witness
continued momentum in our business, signaled by solid year-over-year
balance sheet growth and the strong earnings we have reported today.
These trends are especially gratifying considering the fact that we
still confront a relatively flat yield curve and heightened
competition for loans and deposits, both of which continue to exert
some pressure on our net interest margin and recently have restrained
our growth somewhat as we avoid unfavorable pricing situations.
Nevertheless, our markets remain economically and demographically
attractive, our product innovations, such as business checking
accounts and business lines of credit, continue to place increasing
focus on commercial lending and small business customers, and credit
quality in our loan portfolio remains stable. These factors give us
momentum as we move into the second half of 2006 and, along with our
plans to open two new branches during the coming year, position us for
continued growth over the long term."
For the second quarter of 2006, net interest income increased 7%
to $5,477,000 from $5,097,000 in the second quarter of 2005 as the
Company's net interest margin improved five basis points to 3.09%
versus the first quarter of 2006, but declined two basis points from
the second quarter last year. The provision for loan losses in the
second quarter declined 65% to $204,000 from $577,000 in the second
quarter of 2005. The Company's net interest income, after provision
for loan losses, rose 17% to $5,273,000 in the first quarter from
$4,520,000 in the same 2005 period.
For the six months ended June 30, 2006, net interest income
increased 7% to $10,756,000 from $10,062,000 in the same period last
year as net interest margin declined 10 basis points to 3.07% versus
the first half of 2005. The provision for loan losses for the first
six months of 2006 was 75% lower at $280,000 compared with $1,100,000
in the year-earlier period. Net interest income, after provision for
loan losses, rose 17% to $10,476,000 in the first half of 2006 from
$8,962,000 in the comparable 2005 period.
During the second quarter, the Company continued to benefit from
strong asset quality, as reflected by lower provisions for loan losses
in the second quarter of 2006 and year-to-date period compared with
the same periods last year. Non-performing loans relative to total
loans remained at a relatively low 0.62% at June 30, 2006, up from
0.51% in the first quarter of 2006 and 0.40% at June 30, 2005,
indicating, in management's view, continued low exposure to potential
losses in the Company's loan portfolio. The increase in non-performing
loans to total loans reflected primarily the recent classification of
certain commercial real estate loans as non-accrual; however, the
Company is adequately collateralized on these loans and does not
expect significant losses beyond the reserves already provided. Net
charge-offs on an annualized basis fell to 0.06% of average total
loans from 0.11% in the first quarter of 2006 and 0.54% in the second
quarter of 2005.
Non-interest income for the second quarter increased 22% to
$2,188,000 versus $1,795,000 in the year-earlier period, primarily
because of higher deposit account service fees. Non-interest income
for the first six months of 2006 increased 24% to $3,826,000 from
$3,082,000 in the same period last year as increased service fees and
higher Bank-Owned Life Insurance (BOLI) income helped offset the
impact of a first quarter loss on securities available for sale.
Non-interest expense for the second quarter rose 6% to $5,254,000
from $4,977,000 in the same period last year. Non-interest expense for
the first half of 2006 increased 11% to $10,489,000 from $9,484,000 in
the year-earlier period. The increases in the quarter and year-to-date
period reflected additional compensation costs related to the
Company's share-based compensation plans implemented in mid-2005 and
higher information technology expense; however, the decline in the
rate of growth of non-interest expense in the second quarter was due
primarily to lower accounting and legal fees. The Company's efficiency
ratio improved to 68.55% for the second quarter from 75.67% in the
first quarter of 2006 and 72.21% in the second quarter last year.
Concluding, Larison added, "Recently, we announced the roll-out of
a new identity for our banking operations, changing our name from
Atlantic Coast Federal to Atlantic Coast Bank. While this change in no
way affects the operations of the bank or the high level of service we
strive to provide for our customers, the new name better signifies our
expanded breadth of products and our increasing emphasis on business
development. As we work to strengthen our brand of banking across this
vibrant coastal region under the Atlantic Coast Bank name, we believe
these efforts will pay off with greater visibility and appeal among
new and existing customers seeking the capabilities and responsiveness
of a community-focused, full-service bank."
The Company's total assets increased 1% to $778,868,000 at June
30, 2006, from $770,519,000 at March 31, 2006, and were 10% higher
versus $709,299,000 at June 30, 2005. Loans receivable, net totaled
$613,838,000 at June 30, 2006, up 2% from $599,295,000 at March 31,
2006, and were 11% higher versus loans receivable, net of $550,551,000
as of June 30, 2005. Deposits rose 3% to $548,044,000 at the end of
the second quarter of 2006 from $530,113,000 at March 31, 2006, and
increased 13% from deposits of $485,567,000 at June 30, 2005. Total
stockholders' equity increased 1% to $95,090,000 at June 30, 2006,
from $94,039,000 at March 31, 2006, but was 4% lower than
stockholders' equity of $99,538,000 at June 30, 2005, with the decline
reflecting the impact of the Company's share repurchases since
mid-2005.
Return on average stockholders' equity for the second quarter and
six months ended June 30, 2006, was 6.37% and 5.58%, respectively,
versus 3.58% and 3.36%, respectively, for the comparable periods last
year. Return on average total assets for the second quarter and six
months ended June 30, 2006, was 0.78% and 0.69%, respectively,
compared with 0.52% and 0.50%, respectively, for the same periods in
2005.
In June 2006, Atlantic Coast Federal Corporation's Board of
Directors voted to increase the Company's regular quarterly cash
dividend rate on common stock to $0.10 per share. The new rate, paid
on July 31, 2006, to stockholders of record as of July 14, 2006,
represented a $0.01 increase over the previous dividend rate and
marked the fifth consecutive quarterly increase in the rate since
dividend declarations commenced in the first quarter of 2005.
Atlantic Coast Federal Corporation is the holding company for
Atlantic Coast Bank, 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.AtlanticCoastBank.net,
under the Investor Information section.
Atlantic Coast Bank, with approximately $779 million in assets as
of June 30, 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 Bank 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 Six Months Ended
June 30, June 30,
------------------- -------------------
2006 2005 2006 2005
-------- -------- -------- --------
Total interest income $ 11,156 $ 9,219 $ 21,671 $ 17,662
Total interest expense 5,679 4,122 10,915 7,600
-------- -------- -------- --------
Net interest income 5,477 5,097 10,756 10,062
Provision for loan losses 204 577 280 1,100
-------- -------- -------- --------
Net interest income after
provision for loan losses 5,273 4,520 10,476 8,962
Non-interest income 2,188 1,795 3,826 3,082
Non-interest expense 5,254 4,977 10,489 9,484
-------- -------- -------- --------
Income before income taxes 2,207 1,338 3,813 2,560
Income tax expense 714 436 1,213 875
-------- -------- -------- --------
Net income $ 1,493 $ 902 $ 2,600 $ 1,685
======== ======== ======== ========
Basic and diluted
earnings per share $ 0.11 $ 0.06 $ 0.19 $ 0.12
======== ======== ======== ========
Weighted average shares
outstanding:
Basic 13,510 14,129 13,510 14,129
======== ======== ======== ========
Diluted 13,602 14,129 13,591 14,129
======== ======== ======== ========
June 30, Dec. 31,
2006 2005
-------- --------
Total assets $778,868 $743,849
Cash and cash equivalents 40,470 37,959
Securities available for sale 69,143 71,965
Loans receivable, net 613,838 580,441
Total deposits 548,044 516,322
Federal Home Loan Bank advances 119,000 129,000
Stockholders' equity 95,090 92,917
Selected Consolidated Financial Ratios and Other Data (unaudited) for
the second quarter and six months ended June 30, 2006 and 2005, may be
found at the following link: http://www.irinfo.com/acfc/2Q06fsq.pdf.
Investors should refer to the Company's Form 10-Q for the quarter
ended June 30, 2006, for additional information and disclosures; the
Form 10-Q will be available at the Investor Information section of the
Company's Web site immediately upon filing with the Securities and
Exchange Commission.
CONTACT: For Atlantic Coast Federal Corporation:
Corporate Communications, Inc.
Patrick J. Watson, 615-254-3376