Exhibit 99.1
Atlantic Coast Federal Corporation Reports Third Quarter Results
WAYCROSS, Ga.--(BUSINESS WIRE)--Oct. 31, 2006--Atlantic Coast
Federal Corporation (NASDAQ:ACFC), the holding company for Atlantic
Coast Bank, today announced financial results for the third quarter
and nine months ended September 30, 2006. The Company's interim
results reflected continued growth in its loan portfolio, up 12% since
September 30, 2005, along with an improving interest margin compared
with the third quarter of 2005. Continued solid credit quality trends
and good collection activity also characterized the Company's third
quarter results, leading to a credit to the provision for loan losses
this quarter. Finally, Atlantic Coast Federal Corporation reported an
ongoing improvement in its efficiency ratio on growing net interest
income against the year-earlier quarter.
Net income for the third quarter, however, was lower than the
amount reported in the year-earlier period because, as announced last
year, the Company recognized an income tax benefit in the third
quarter of 2005. Income before income taxes for the third quarter,
which was unaffected by the tax benefit and more reflective of the
Company's business fundamentals, increased 57% for the third quarter
versus the third quarter of 2005.
Commenting on the announcement, Robert J. Larison, Jr., President
and Chief Executive Officer, said, "We are gratified to report another
quarter of solid execution by our team, even as the overall industry
environment remained highly competitive. These efforts, reflected in
ongoing loan growth across our markets, coupled with strong and
improving credit quality, translated into a 16% increase in net
interest income for the quarter - the fastest rate of growth we have
experienced this year. We are very pleased to see the momentum we have
witnessed in our operations continue through the third quarter and are
excited by the prospects to build on this, especially considering the
attractive economic and demographic characteristics of our
Jacksonville market and with the recent opening of our Julington Creek
branch there."
For the third quarter of 2006, net income declined 15% to
$1,637,000 or $0.12 per share from $1,915,000 or $0.14 per share,
inclusive of the tax benefit, in the third quarter of 2005. However,
income before income taxes, which excludes the prior-year income tax
benefit, increased 57% to $2,396,000 from $1,527,000 in the third
quarter of 2005.
Net interest income increased 16% to $5,607,000 from $4,824,000 in
the third quarter of 2005 as the Company's net interest margin
improved 23 basis points to 3.09% versus the same quarter last year.
On a linked-quarter basis, net interest margin was unchanged in the
third quarter. The Company recorded a credit to the provision for loan
losses in the third quarter of $98,000 compared with a provision for
loan losses of $442,000 in the third quarter of 2005. The current-year
credit reflected the collection of a large commercial loan previously
classified as impaired and the reversal of the associated specific
reserve, along with the positive impact of credit improvements on
several other loans. Net interest income, after provision for loan
losses, increased 30% to $5,705,000 in the third quarter of 2006 from
$4,382,000 in the same 2005 period.
For the nine months ended September 30, 2006, net interest income
increased 10% to $16,363,000 from $14,886,000 in the same period last
year as net interest margin rose two basis points to 3.07% versus the
first nine months of 2005. The provision for loan losses for the first
nine months of 2006 was 88% lower at $183,000 compared with $1,542,000
in the year-earlier period, again reflecting favorable credit quality
trends. Net interest income, after provision for loan losses, rose 21%
to $16,180,000 in the first nine months of 2006 from $13,344,000 in
the comparable 2005 period.
As reflected by the lower provision for loan losses this year, the
Company's asset quality metrics have remained strong. Net charge offs
declined 94% to $24,000 in the third quarter of 2006 and 78% to
$272,000 for the first nine months of the year, compared with
year-earlier amounts. Relative to average total loans, annualized net
charge-offs fell to 0.02% versus 0.06% in the second quarter of 2006
and 0.28% in the third quarter of 2005. Although the total amount of
non-performing loans rose 10% in the third quarter year over year,
non-performing loans relative to total loans remained at a relatively
low 0.47% at September 30, 2006. This compares with 0.62% in the
second quarter of 2006 and 0.48% at September 30, 2005.
Non-interest income for the third quarter declined 7% to
$2,094,000 versus $2,258,000 in the year-earlier period, primarily
because of lower overdraft fees on business accounts. Non-interest
income for the first nine months of 2006 increased 11% to $5,921,000
from $5,340,000 as higher fees for check card overdrafts, increased
income on Bank-Owned Life Insurance (BOLI) and a second quarter 2006
gain on the early termination of an interest rate swap agreement more
than offset a year-over-year decline in overdraft fees on business
accounts and the loss recorded in the first quarter of 2006 on the
disposition of available for sale securities.
Non-interest expense for the third quarter rose 6% to $5,403,000
from $5,113,000 in the same period last year. Non-interest expense for
the first nine months of 2006 increased 9% to $15,892,000 from
$14,597,000 in the year-earlier period. The increases in the quarter
and year-to-date period reflected primarily employee and share-based
compensation costs, together with higher occupancy costs, which were
partially offset by lower data processing costs and outside
professional services. The Company's efficiency ratio improved to
70.16% in the third quarter from 72.20% in the third quarter last
year, but was up from 68.55% in the second quarter of 2006.
The Company's total assets increased 7% to $793,131,000 at
September 30, 2006, from $743,849,000 at December 31, 2005, and were
8% higher versus $733,171,000 at September 30, 2005. Loans receivable,
net totaled $623,628,000 at September 30, 2006, up 7% from
$580,441,000 at December 31, 2005, and 12% from $557,165,000 at
September 30, 2005. Deposits rose 6% to $546,050,000 at the end of the
third quarter of 2006 from $516,322,000 at December 31, 2005, and
increased 9% from deposits of $502,147,000 at September 30, 2005.
Total stockholders' equity declined 2% to $91,002,000 at
September 30, 2006, from $92,917,000 at December 31, 2005, and
declined 7% from $97,492,000 at September 30, 2005, with the decline
reflecting the impact of the Company's share repurchases since
mid-2005.
Return on average stockholders' equity for the third quarter and
nine months ended September 30, 2006, was 6.95% and 6.00%,
respectively, versus 7.65% and 4.78%, respectively, for the comparable
periods last year. Return on average total assets for the third
quarter and nine months ended September 30, 2006, was 0.84% and 0.74%,
respectively, compared with 1.06% and 0.69%, respectively, for the
same periods in 2005.
In September 2006, Atlantic Coast Federal Corporation's Board of
Directors voted to increase the Company's regular quarterly cash
dividend rate on common stock to $0.11 per share. The new rate, paid
on October 30, 2006, to stockholders of record as of October 13, 2006,
represented a $0.01 increase over the previous dividend rate and
marked the sixth 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 $793 million in assets as
of September 30, 2006, is a community-oriented financial institution.
It serves southeastern Georgia and northeastern Florida through 14
offices, including a growing presence in the Jacksonville metropolitan
area. Atlantic Coast Bank expects to open an additional branch in St.
Johns County, Florida, in the coming 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 Nine Months Ended
September 30, September 30,
------------------ -------------------
2006 2005 2006 2005
------- ------- -------- --------
Total interest income $12,006 $ 9,407 $ 33,677 $ 27,069
Total interest expense 6,399 4,583 17,314 12,183
------- ------- -------- --------
Net interest income 5,607 4,824 16,363 14,886
Provision for (recovery of)
loan losses (98) 442 183 1,542
------- ------- -------- --------
Net interest income after
provision for (recovery of)
loan losses 5,705 4,382 16,180 13,344
Non-interest income 2,094 2,258 5,921 5,340
Non-interest expense 5,403 5,113 15,892 14,597
------- ------- -------- --------
Income before income taxes 2,396 1,527 6,209 4,087
Income tax expense (benefit) 759 (388) 1,973 487
------- ------- -------- --------
Net income $ 1,637 $ 1,915 $ 4,236 $ 3,600
======= ======= ======== ========
Basic and diluted earnings per
share $ 0.12 $ 0.14 $ 0.31 $ 0.25
======= ======= ======== ========
Weighted average shares
outstanding:
Basic 13,471 14,055 13,497 14,104
======= ======= ======== ========
Diluted 13,555 14,093 13,579 14,116
======= ======= ======== ========
Sept. 30, Dec. 31,
2006 2005
--------- ---------
Total assets $793,131 $743,849
Cash and cash equivalents 29,839 37,959
Securities available for sale 77,901 71,965
Loans receivable, net 623,628 580,441
Total deposits 546,050 516,322
Federal Home Loan Bank advances 139,000 129,000
Stockholders' equity 91,002 92,917
Selected Consolidated Financial Ratios and Other Data (unaudited) for the third
quarter and nine months ended September 30, 2006 and 2005, may be found at the
following link: http://www.irinfo.com/acfc/3Q06fsw.pdf.
Investors should refer to the Company's Form 10-Q for the quarter ended
September 30, 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