Exhibit 99.1
Atlantic Coast Federal Corporation
Reports Second Quarter Results
WAYCROSS, Ga.--(BUSINESS WIRE)--July 24, 2007--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, 2007, highlighted by ongoing growth in
the Company's loan portfolio. Largely as a result of higher
non-interest expenses related to the Company's recent organizational
changes, including additions to its executive management, branch and
service personnel to position the Company for future growth, and
higher outside professional services, as well as higher provision for
loan losses, the Company reported lower earnings for the second
quarter of 2007 versus the year-earlier period.
Net income for the second quarter of 2007 totaled $635,000 or
$0.05 per diluted share compared with $1,410,000 or $0.10 per diluted
share in the same period last year. For the first six months of 2007,
net income declined to $1,420,000 or $0.11 per diluted share from
$2,701,000 or $0.20 per diluted share in the first six months of 2006.
References in this release to prior-year or first quarter 2007 results
have been restated in accordance with the Company's earlier
announcement concerning the correction of accounting for two interest
rate swap agreements. The effect of this restatement was a non-cash
cumulative increase in net income over the past three years of
approximately $422,000, net of taxes, and did not change reported
stockholders' equity as of March 31, 2007. Restated net income for the
second quarter of 2006 was $83,000 or $0.01 per diluted share lower
than originally reported, while restated net income for the first half
of 2006 was $101,000 or $0.01 per diluted share higher than originally
reported amounts.
Commenting on the Company's report, Robert J. Larison, Jr.,
President and Chief Executive Officer, said, "We are pleased to report
continued solid growth in our banking operations during the second
quarter, reflecting an expanded footprint in Jacksonville and
increasing success in our lending activities, particularly within our
Florida market. However, overall competitive conditions remain
intense, increasing our funding costs as we remain aggressive on
deposit rates to support balance sheet growth and placing near-term
pressure on margins. Also during the second quarter, the Company and
Atlantic Coast Federal, MHC made the decision to proceed with a
second-step conversion, through which the Company's shares will become
100% publicly held. We believe these efforts to expand our business,
increase our market penetration, and transform the Company's
organization, while weighing on our current earnings, will enhance our
growth opportunities and competitive position in the long term."
For the second quarter of 2007, net interest income increased 2%
to $5,538,000 from $5,422,000 in the second quarter of 2006. This
reflected primarily an increase in average interest-earning balances
and higher rates, offset by a continued rise in funding costs that
reflected highly competitive market conditions, especially in the
Florida market where the majority of the Company's growth is
occurring. With these pressures and the impact of a flat yield curve,
the Company's net interest margin for the second quarter was unchanged
at 2.68% versus the first quarter of 2007, but was 38 basis points
lower than in the second quarter last year. Management believes the
yield curve will continue to put pressure on net interest margins for
the remainder of 2007. For the six months ended June 30, 2007, net
interest income increased 2% to $10,891,000 from $10,658,000 in the
same period last year as net interest margin declined 36 basis points
to 2.68% versus the first half of 2006.
The Company's provision for loan losses in the second quarter
totaled $509,000, up from $204,000 in the second quarter of 2006,
primarily reflecting growth in the loan portfolio. Given the
geographic concentration of the Company's residential single-family
mortgage loan portfolio in the northeast Florida and southeast Georgia
market, overall credit quality continues to be strong relative to the
southeast region and national markets in general. The stability of the
residential real estate market is considered in management's estimate
of loan losses, as are the types of loan products within its
portfolio. Moreover, the Company does not originate or purchase
sub-prime loans for its portfolio. As a result, the Company's loss
reserve projections, as a relative percentage of the outstanding loan
portfolio, remain unchanged from period to period.
Non-performing loans relative to total loans declined to 0.47% at
June 30, 2007, compared with 0.52% in the first quarter of 2007 and
0.62% at June 30, 2006. Net charge-offs on an annualized basis,
however, did rise somewhat to 0.18% of average total loans compared
with 0.09% in the first quarter of 2007 and 0.06% in the second
quarter of 2006. The provision for loan losses for the first six
months of 2007 increased to $805,000 from $280,000 in the year-earlier
period, with almost one-half of the year-over-year difference
reflecting an unusually low provision in the first quarter of 2006 due
to the collection in that period of a large commercial loan previously
classified as impaired and the reversal of the associated reserve. The
remainder of the increase in the provision for loan losses was related
to growth in the loan portfolio.
Net interest income, after provision for loan losses, declined 4%
to $5,029,000 in the second quarter from $5,218,000 in the same 2006
period. Net interest income, after provision for loan losses, declined
3% to $10,086,000 in the first half of 2007 from $10,378,000 in the
comparable 2006 period.
Non-interest income for the second quarter declined 3% to
$2,059,000 from $2,118,000 in the year-earlier period, primarily
because of moderating service charges and fees, which offset an
increase in income from interest rate swaps. Non-interest income for
the first six months of 2007 declined 5% to $3,888,000 from $4,077,000
in the same period last year, reflecting moderating service charges
and fees and a decline in swap income, both partially offset by
reduced losses on securities available for sale.
Non-interest expense for the second quarter rose 18% to $6,184,000
from $5,254,000 in the same period last year. This increase reflected
higher salaries for regular annual salary increases, new executive
additions, personnel costs associated with a new branch opened in
Jacksonville in the fall of 2006, and the expansion of the Company's
private banking activities. It also reflected higher legal and
accounting fees related to the recent restatement of financial results
and filings of amended reports with the Securities and Exchange
Commission on Form 10-K/A for 2006 and Form 10-Q/A for the first
quarter of 2007 to correct the accounting treatment for two interest
rate swap agreements, as well as increased legal fees for newly
required executive compensation disclosures that were implemented in
the Company's most recent proxy statement. Occupancy costs also rose
due to the opening of the new branch, as did Federal Deposit Insurance
Corporation premiums due to an increase in the assessment rate and a
change in the timing of assessments. These higher costs were offset to
some extent by lower data processing costs and advertising expenses.
Non-interest expense for the first half of 2007 increased 14% to
$11,919,000 from $10,488,000 in the year-earlier period, reflecting
largely the same cost pressures. The Company's efficiency ratio was
81.40% for the second quarter of 2007 compared with 80.03% in the
first quarter of 2007 and 69.68% in the second quarter last year.
The Company's total assets increased 7% to $898,415,000 at June
30, 2007, from $843,079,000 at December 31, 2006, and were 15% higher
versus $779,193,000 at June 30, 2006. Loans receivable, net totaled
$668,837,000 at June 30, 2007, up 5% from $639,517,000 at December 31,
2006, and were 9% higher than loans receivable, net of $613,838,000 at
June 30, 2006. Deposits rose 4% to $598,091,000 at the end of the
second quarter of 2007 from $573,052,000 at December 31, 2006, and
increased 9% from deposits of $548,044,000 at June 30, 2006. Total
stockholders' equity declined 2% to $89,097,000 at June 30, 2007, from
$91,087,000 at December 31, 2006, and was down 6% from stockholders'
equity of $95,097,000 at June 30, 2006, with the declines from earlier
levels reflecting the Company's share repurchase activities over the
past year.
Return on average stockholders' equity for the second quarter and
six months ended June 30, 2007, was 2.78% and 3.11%, respectively,
versus 6.02% and 5.80%, respectively, for the comparable periods last
year. Return on average total assets for the second quarter and six
months ended June 30, 2007, was 0.29% and 0.32%, respectively,
compared with 0.74% and 0.71%, respectively, for the same periods in
2006.
In June 2007, Atlantic Coast Federal Corporation's Board of
Directors voted to increase the Company's regular quarterly cash
dividend rate on common stock to $0.14 per share. The new rate,
payable on July 30, 2007, to stockholders of record as of July 13,
2007, represented a $0.01 increase over the previous dividend rate and
marked the ninth 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.
On May 7, 2007, the Company announced its intention to convert from
the mutual holding company form of ownership to the full stock form of
ownership. 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 $898.4 million in assets
as of June 30, 2007, is a community-oriented financial institution. It
serves southeastern Georgia and northeastern Florida through 14
offices, including a focus on the Jacksonville metropolitan area.
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,
---------------------------------------
2007 2006 2007 2006
---------------------------------------
(Restated) (Restated)
Total interest income $13,766 $ 11,156 $ 27,022 $ 21,670
Total interest expense 8,228 5,734 16,131 11,012
------ ------- ------- -------
Net interest income 5,538 5,422 10,891 10,658
Provision for loan losses 509 204 805 280
------ ------- ------- -------
Net interest income after
provision for loan losses 5,029 5,218 10,086 10,378
Non-interest income 2,059 2,118 3,888 4,077
Non-interest expense 6,184 5,254 11,919 10,488
------ ------- ------- -------
Income before income taxes 904 2,082 2,055 3,967
Income tax expense 269 672 635 1,266
------ ------- ------- -------
Net income $ 635 $ 1,410 $ 1,420 $ 2,701
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Basic and diluted earnings per
share $ 0.05 $ 0.10 $ 0.11 $ 0.20
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Weighted average shares
outstanding:
Basic 13,122 13,510 13,162 13,510
====== ======= ======= =======
Diluted 13,322 13,602 13,284 13,591
====== ======= ======= =======
June 30, Dec. 31, June 30,
2007 2006 2006
-------------------------------
(Restated)(Restated)
Total assets $898,415 $843,079 $779,193
Cash and cash equivalents 40,036 41,057 40,470
Securities available for sale 126,857 99,231 69,143
Loans receivable, net 668,837 639,517 613,838
Total deposits 598,091 573,052 548,044
Federal Home Loan Bank advances 142,000 144,000 119,000
Stockholders' equity 89,097 91,087 95,097
Selected Consolidated Financial Ratios and Other Data (unaudited) for
the second quarter and six months ended June 30, 2007 and 2006, may
be found at the following link:
http://www.irinfo.com/acfc/ACFC2Q07mtw.pdf. Investors should refer to
the Company's Form 10-Q for the quarter ended June 30, 2007, 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: For Atlantic Coast Federal Corporation:
Corporate Communications, Inc.
Patrick J. Watson, 615-254-3376