Exhibit 99.1
Atlantic Coast Federal Corporation
Reports Third Quarter Results
WAYCROSS, Ga.--(BUSINESS WIRE)--Oct. 31, 2007--Atlantic Coast
Federal Corporation (NASDAQ:ACFC), the holding company for Atlantic
Coast Bank, today announced results for the third quarter and nine
months ended September 30, 2007. These interim results reflected
continued growth in the Company's loan portfolio, which helped offset
a year-over-year decline in net interest margin. However, current-year
non-interest income declined from the prior-year periods, while
non-interest expense increased, resulting in lower comparable earnings
for the 2007 periods.
For the third quarter of 2007, net income declined 48% to $789,000
or $0.06 per share from $1,518,000 or $0.11 per share in the third
quarter of 2006. For the first nine months of 2007, net income
declined 48% to $2,209,000 or $0.17 per share from $4,218,000 or $0.31
per share in the prior-year period.
Commenting on the Company's results, Robert J. Larison, Jr.,
President and Chief Executive Officer, said, "We are pleased to report
continued growth in our traditional banking operations during a period
of market instability caused by industry-wide credit quality concerns.
It is gratifying that our progress comes at a time during which we
also have concentrated an unprecedented focus on positioning our
organization for long-term growth and market penetration.
Fundamentally, our business remains solid, and we are enthusiastic
about the outlook for growth as we gain increasing traction from key
strategic initiatives, including recent organizational changes and the
expected completion of our second-step offering in the fourth quarter
of 2007. At the same time, we recognize that we are operating in a
challenging real-estate lending environment, which may affect our
growth, margins and credit quality, and we face the near-term impact
of costs associated with some of our strategic initiatives. However,
over the longer term, we expect these steps to result in improved
performance for the Company through development of strong
relationships within our community, which we believe, in turn, will
provide greater value for our stockholders."
The Company's total assets increased 9% to $915,748,000 at
September 30, 2007, from $843,079,000 at December 31, 2006. Loans
receivable, net totaled $669,225,000 at September 30, 2007, up 5% from
$639,517,000 at December 31, 2006. Deposits rose 4% to $598,013,000 at
the end of the third quarter of 2007 from $573,052,000 at December 31,
2006. Total stockholders' equity of $90,793,000 at September 30, 2007,
was virtually unchanged from stockholders' equity of $91,087,000 at
December 31, 2006.
For the third quarter of 2007, net interest income increased 3% to
$5,730,000 from $5,558,000 in the third quarter last year. This
reflected primarily an increase in the balance of average
interest-earning assets and higher rates, offset by a continued rise
in funding costs due to highly competitive market conditions,
especially in the northeast 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 third
quarter improved two basis points to 2.70% compared with the second
quarter of 2007, but was 34 basis points lower than the same quarter
last year. Management believes the yield curve will continue to
pressure net interest margins for the remainder of 2007. For the nine
months ended September 30, 2007, net interest income increased 2% to
$16,621,000 from $16,217,000 in the same period last year as net
interest margin declined 36 basis points to 2.67% versus 3.03% in the
first nine months of 2006.
In evaluating the level of the allowance for loan losses,
management considers historical loss experience, the types and amount
of loans in the loan portfolio, the source of origination of those
loans, adverse situations that may affect the borrowers' ability to
repay, estimated value of any underlying collateral, the stability of
the residential real estate markets in which the Company originates
and purchases loans, and prevailing national and local economic
conditions. Given the geographic concentration of the Company's loan
portfolio in the northeast Florida market, coupled with continued
industry-wide credit quality concerns, management increased its
allowance for loan losses to 0.86% of total loans as of September 30,
2007, versus 0.75% at June 30, 2007, and 0.72% at September 30, 2006.
The Company does not originate or purchase sub-prime loans for its
portfolio.
Non-performing loans relative to total loans increased to 1.05% at
September 30, 2007, reflecting the recent addition of two northeast
Florida commercial loans. One loan is a well-collateralized credit for
which the Company believes no specific reserve is necessary. The
second loan is secured by property that has encountered delays in
completion and also has declined in value based on a recent appraisal;
therefore, the Company established a specific reserve on this loan.
This compared with 0.47% in both the second quarter of 2007 and the
prior-year quarter. Net charge-offs on an annualized basis, however,
continued to demonstrate a positive trend, reflecting a net recovery
of 0.17% in the third quarter of 2007, due primarily to a $793,000
recovery on a commercial loan charged off in 2003, versus net
charge-offs of 0.18% in the second quarter of 2007 and 0.02% in the
third quarter of 2006.
Net interest income, after provision for loan losses, decreased 6%
to $5,292,000 in the third quarter of 2007 from $5,656,000 in the same
period last year. Net interest income, after provision for loan
losses, declined 4% to $15,378,000 in the first nine months of 2007
from $16,034,000 in the comparable 2006 period.
Non-interest income for the third quarter declined 23% to
$1,514,000 versus $1,963,000 in the prior-year period, primarily due
to a decline in the fair value of interest rate swaps in the quarter
and lower service charges and fees. Non-interest income for the first
nine months of 2007 declined 11% to $5,402,000 from $6,040,000 for the
prior-year period, reflecting a reduction in the fair value of
interest rate swaps and lower service charges and fees, which was
partially offset by reduced losses on securities available for sale.
Non-interest expense for the third quarter rose 5% to $5,670,000
from $5,403,000 in the same period last year, primarily due to higher
salaries related to organization changes and executive additions
during 2007. Non-interest expense for the first nine months of 2007
increased 11% to $17,589,000 from $15,891,000 in the prior-year
period, reflecting the same expense pressures seen in the third
quarter as well as higher legal and accounting fees, and increased
Federal Deposit Insurance Corporation premiums due to an increase in
the assessment rate and a change in the timing of assessments. The
Company's efficiency ratio was 78.27% in the third quarter compared
with 81.40% in the second quarter of 2007 and 71.84% in the third
quarter last year.
Annualized return on average stockholders' equity for the third
quarter and nine months ended September 30, 2007, was 3.47% and 3.23%,
respectively, versus 6.44% and 5.98%, respectively, for the comparable
periods last year. Annualized return on average total assets for the
third quarter and nine months ended September 30, 2007, was 0.35% and
0.33%, respectively, compared with 0.78% and 0.73%, respectively, for
the same periods in 2006.
In September 2007, Atlantic Coast Federal Corporation's Board of
Directors voted to increase the Company's regular quarterly cash
dividend rate on common stock to $0.15 per share. The new rate, paid
on October 29, 2007, to stockholders of record as of October 12, 2007,
represented a $0.01 increase over the previous dividend rate and
marked the tenth 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. Today, Atlantic Coast
Bank is a community-oriented financial institution serving
southeastern Georgia and northeastern Florida through 14 offices,
including a focus on the Jacksonville metropolitan area.
Atlantic Coast Federal Corporation 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.
In May 2007, Atlantic Coast Federal Corporation and Atlantic Coast
Federal, MHC adopted a plan to convert the Mutual Holding Company from
the mutual-to-stock form of organization. In connection with this
second-step offering, Atlantic Coast Bank formed Atlantic Coast
Financial Corporation, a Maryland holding company, to become the new
holding company of Atlantic Coast Bank. On October 12, 2007, a
registration statement relating to these securities was declared
effective. This press release shall not constitute an offer to sell or
the solicitation of an offer to buy shares of common stock nor shall
there be any sale of these securities in any state in which such
offer, solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such state. The
securities are not savings accounts or savings deposits, may lose
value and are not insured by the Federal Deposit Insurance Corporation
or any government agency.
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,
------------------- -------------------
2007 2006 2007 2006
--------- --------- --------- ---------
Total interest income $ 14,263 $ 12,006 $ 41,285 $ 33,677
Total interest expense 8,533 6,448 24,664 17,460
--------- --------- --------- ---------
Net interest income 5,730 5,558 16,621 16,217
Provision for (recovery of)
loan losses 438 (98) 1,243 183
--------- --------- --------- ---------
Net interest income after
provision for (recovery of)
loan losses 5,292 5,656 15,378 16,034
Non-interest income 1,514 1,963 5,402 6,040
Non-interest expense 5,670 5,403 17,589 15,891
--------- --------- --------- ---------
Income before income taxes 1,136 2,216 3,191 6,183
Income tax expense 347 698 982 1,965
--------- --------- --------- ---------
Net income $ 789 $ 1,518 $ 2,209 $ 4,218
========= ========= ========= =========
Basic and diluted earnings
per share $ 0.06 $ 0.11 $ 0.17 $ 0.31
========= ========= ========= =========
Weighted average shares
outstanding:
Basic 13,168 13,471 13,164 13,497
========= ========= ========= =========
Diluted 13,255 13,555 13,286 13,579
========= ========= ========= =========
Sept. 30, Dec. 31,
2007 2006
--------- ---------
Total assets $ 915,748 $ 843,079
Cash and cash equivalents 49,903 41,057
Securities available for sale 133,681 99,231
Loans receivable, net 669,225 639,517
Total deposits 598,013 573,052
Federal Home Loan Bank advances 156,000 144,000
Securities sold under agreements to purchase 63,500 29,000
Stockholders' equity 90,793 91,087
Selected Consolidated Financial Ratios and Other Data (unaudited)
for the third quarter and nine months ended September 30, 2007 and
2006, may be found at the following link:
http://www.irinfo.com/acfc/ACFC3Q07xzy.pdf. Investors should refer to
the Company's Form 10-Q for the quarter ended September 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