Exhibit 99.2
CHARTER FINANCIAL REPORTS THIRD QUARTER EARNINGS
-- Two Branches Opened in Auburn-Opelika Area
-- Retail Deposit Balances Grow $42.2 Million to $322.1 Million
-- Net Interest Income Squeezed by Rising Interest Rates
WEST POINT, Ga., July 25 /PRNewswire-FirstCall/ -- Charter Financial Corporation
(Nasdaq: CHFN) today reported third quarter fiscal 2006 net income of $2.6
million, or $0.13 per share, compared with net income of $3.2 million, or $0.16
per share, in same quarter of the prior year. The June 2005 quarter included
$1.9 million in gain on sale of Freddie Mac stock while there were no gains in
the June 2006 quarter. Net income for the nine months ending June 30, 2006 was
$10.4 million or $0.54 per share compared with $8.6 million or $0.44 per share
for the comparable period in the prior year.
Net income for the third quarter was approximately the same as the second
quarter of 2006. Lower net interest income and higher operating expenses were
offset by higher deposit fees and lower income taxes. Net interest income was
affected as short-term interest rates, which are the basis for what the Company
pays on deposits, rose significantly. Rates on deposits have, until recently,
lagged behind overall market rates. As a result of increased rates, the cost of
deposits was higher and net interest income declined from the prior quarter.
"We continue to progress in building our retail franchise with the opening of
two branches in the Auburn-Opelika, Alabama market," said Robert L. Johnson,
president and chief executive officer. "We replaced our downtown Opelika branch
with a larger, more efficient facility that offers customers an improved banking
experience. We also opened a new facility on College Street in Auburn. Together,
these upgraded facilities significantly improve our ability to serve this
market."
"We increased our retail deposits by $43.2 million during the quarter. Deposit
fees also increased by approximately 11 percent to $981,000 for the quarter from
$883,000 for the prior quarter and $679,000 in the comparable quarter a year
ago, reflecting the continued success of our program to market our suite of
checking products," Johnson added.
Noninterest expense rose to $5.3 million in the third quarter from $4.9 million
in the prior quarter and $4.5 million in the comparable quarter a year ago. The
increase was due to a number of factors, including increased staffing and the
cost of additional employees in the newly opened, larger branch offices. Also,
the Company made changes to its incentive compensation plan that resulted in
faster accrual of the costs associated with that plan. The Company's continuing
strong performance also required that accruals for employee bonuses at a faster
rate based on the possibility that the Company may achieve better results in
fiscal 2006 than previously assumed.
During the nine months ended June 30, 2006, the Company recognized $4.8 million
in income from sales of Freddie Mac common stock compared with $4.5 million in
the prior year period. The sales resulted from exercises of covered calls
written by the Company. These sales allow the Company to realize the value of
this asset at a measured pace. However, further sales this year are less likely
with the decline in the price of Freddie Mac stock.
Income tax expense was $395,000 for the quarter compared with $936,000 for the
prior quarter and $1.2 million in the comparable quarter a year ago. This
resulted in an effective tax rate of 13.41% for the quarter ended June 30, 2006
versus 26.84% for the prior quarter. The lower taxes are the result of revised
projections, which indicate our overall effective rate for the fiscal year will
be lower than previously projected.
Charter Financial Corporation is a savings and loan holding Company and the
parent Company of CharterBank, a full-service community bank and a federal
savings institution. Charter Financial Corporation and its subsidiary,
CharterBank, are in a mutual holding Company structure. Charter Financial owns
4.4 million shares of Freddie Mac common stock with a market value of $253.0
million. CharterBank is headquartered in West Point, Georgia, and operates nine
full-service branches on the I-85 corridor from LaGrange, Georgia to Auburn,
Alabama. CharterBank's deposits are insured by the Federal Deposit Insurance
Corporation.
Forward-Looking Statements
This release may contain "forward-looking statements" that may be identified by
use of such words as "believe," "expect," "anticipate," "should," "planned,"
"estimated," and "potential." Examples of forward-looking statements include,
but are not limited to, estimates with respect to our financial condition and
results of operation and business that are subject to various factors that could
cause actual results to differ materially from these estimates. These factors
include but are not limited to general and local economic conditions; changes in
interest rates, deposit flows, demand for mortgages and other loans, real estate
values, and competition; changes in accounting principles, policies, or
guidelines; changes in legislation or regulation; and other economic,
competitive, governmental, regulatory, and technological factors affecting our
operations, pricing, products, and services. Any or all forward-looking
statements in this release and in any other public statements we make may turn
out to be wrong. They can be affected by inaccurate assumptions we might make or
known or unknown risks and uncertainties. Consequently, no forward-looking
statements can be guaranteed. The Company disclaims any obligation to
subsequently revise or update any forward-looking statements to reflect events
or circumstances after the date of such statements or to reflect the occurrence
of anticipated or unanticipated events.
Selected Financial Data (in thousands except share and per share data):
June 30, March 31, September 30, June 30,
2006 2006 2005 2005
------------- ------------- ------------- -------------
Unaudited
Total Assets $ 1,105,187 $ 1,100,952 $ 1,050,570 $ 1,081,518
Loans Receivable,
Net 384,974 383,480 356,808 338,201
Mortgage Securities
Available for Sale 320,102 331,094 358,461 379,886
Freddie Mac Common
Stock 252,982 270,688 254,776 295,981
Other Investment
Securities 37,710 37,589 17,712 9,951
Retail Deposits 322,093 278,862 250,391 237,799
Core Deposits 175,643 143,386 131,361 126,647
Total Deposits 396,406 365,501 320,129 291,773
Deferred Income Taxes 90,026 98,553 93,271 109,641
Borrowings 361,660 366,935 382,336 395,817
Realized Stockholders'
Equity* 99,411 97,781 93,825 91,530
Accumulated Other
Comprehensive
Income** 144,244 157,807 149,405 177,238
Total Equity 243,655 255,588 243,230 268,768
Book Value per Share $ 12.41 $ 13.02 $ 12.31 $ 13.71
Tangible Book Value
per Share 12.12 12.73 12.02 13.41
Minority Shares
Outstanding 3,562,254 3,560,654 3,542,754 3,517,056
Total Shares
Outstanding - at
Quarter End 19,632,372 19,630,772 19,629,372 19,603,674
Weighted Average
Total Shares
Outstanding -
Basic 19,418,930 19,401,055 19,523,748 19,374,980
Weighted Average
Total Shares
Outstanding -
Fully Diluted 19,552,867 19,526,064 19,569,097 19,550,470
* Includes Total Stockholders' Equity less Accumulated Other Comprehensive
Income.
** Includes unrealized gains and losses on Freddie Mac common stock and other
investment securities adjusted for income taxes at a tax rate of 38.6%
Selected Operating Data (in thousands except share and per share data):
Three months ended Nine months ended
--------------------------------- ---------------------
June 30, March 31, June 30,
--------------------- --------- ---------------------
2006 2005 2006 2006 2005
--------- --------- --------- --------- ---------
Unaudited
Total Interest Income $ 13,739 $ 11,422 $ 13,273 $ 39,799 $ 33,159
Total Interest
Expense 7,282 5,610 6,606 20,196 15,950
Net Interest Income 6,457 5,812 6,667 19,603 17,209
Provision for
Loan Losses - - - - -
Net Interest
Income after
Provision for
Loan Losses 6,457 5,812 6,667 19,603 17,209
Noninterest
Income 1,788 3,108 1,694 9,443 8,095
Noninterest
Expense 5,300 4,535 4,873 15,212 13,666
Income before
Income Taxes 2,945 4,385 3,488 13,834 11,638
Income Tax
Expense 395 1,176 936 3,398 3,042
Net Income $ 2,550 $ 3,209 $ 2,552 $ 10,436 $ 8,596
Earnings per Share $ 0.13 $ 0.16 $ 0.13 $ 0.54 $ 0.44
Earnings per
Share - Fully
Diluted 0.13 0.16 0.13 0.54 0.44
Cash Dividends
per Share*** 0.45 0.35 0.45 1.60 2.85
Net (Recoveries)
Charge-offs 67 28 (2) 84 269
Deposit Fees 981 679 883 2,698 1,981
Gain on Sale of Loans 193 196 153 509 630
Gain on Sale of
Freddie Mac
Common Stock - 1,906 - 4,769 4,483
Gain on Covered
Calls Related to
Freddie Mac
Common Stock 215 141 310 538 449
*** First Charter, MHC has waived its portion of these dividends, resulting in
payment only to the minority stockholders.
Three months ended Nine months ended
----------------------------------- ----------------------
June 30, March 31, June 30,
---------------------- --------- ----------------------
2006 2005 2006 2006 2005
--------- --------- --------- --------- ---------
Unaudited
Return on Equity 4.00% 4.89% 3.74% 5.35% 4.21%
Return on Assets 0.93 1.19 0.92 1.27 1.06
Net Interest
Margin 2.46 2.22 2.49 2.48 2.17
Loan Loss
Reserve as a %
of Total Loans 1.55 1.84 1.57 1.55 1.84
Loan Loss
Reserve as a % of
Nonperforming
Assets 151.14 104.50 139.27 151.14 104.50
Nonperforming
Assets as a %
of Total Loans
and REO 1.02 1.75 1.13 1.02 1.75
Net Chargeoffs
as a % of
Average Loans 0.02 0.01 - 0.02 0.08
Nonperforming
Assets to
Total Assets 0.36 0.56 0.40 0.36 0.56
Bank Core
Capital Ratio 8.77 9.86 8.79 8.77 9.86
Dividend Payout
Ratio 62.85 38.36 62.77 54.47 116.54
Effective Tax
Rate Expense 13.41 26.81 26.84 24.56 26.14
SOURCE Charter Financial Corporation
-0- 07/25/2006
/CONTACT: Robert L. Johnson, President & CEO of Charter Financial
Corporation, +1-706-645-1391, bjohnson@charterbank.net , or Mike Arneth,
marneth@tirc.com , or Woody Wallace, wwallace@tirc.com , both of The Investor
Relations Company, +1-312-245-2700/
CO: Charter Financial Corporation