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| 8-K - FORM 8-K - CHARTER FINANCIAL CORP | chfn02222017-8k.htm |
This presentation may contain certain forward-looking statements
regarding our prospective performance and strategies within the
meaning of Section 27A of the Securities Act of 1933, as amended and
Section 21E of the Securities Exchange Act of 1934, as amended. We
intend such forward-looking statements to be covered by the Safe
Harbor Provision for forward-looking statements contained in the
Private Securities Litigation Reform Act of 1995, and are including
this statement for purposes of said safe harbor provision. Forward-
looking statements can be identified by the use of words such as
“estimate,” “project,” “believe,” “intend,” “anticipate,” “plan,”
“seek,” “expect” and words of similar meaning. These forward-
looking statements include, but are not limited to:
• statements of our goals, intentions and expectations;
• statements regarding our business plans, prospects, growth and
operating strategies;
• statements regarding the asset quality of our loan and investment
portfolios; and
• estimates of our risks and future costs and benefits.
These forward-looking statements are based on current beliefs and
expectations of our management and are inherently subject to significant
business, economic and competitive uncertainties and contingencies, many
of which are beyond our control. In addition, these forward-looking
statements are subject to assumptions with respect to future business
strategies and decisions that are subject to change.
The following factors, among others, could cause actual results to differ
materially from the anticipated results or other expectations expressed in
the forward-looking statements:
• general economic conditions, either nationally or in our market
areas, that are worse than expected;
• competition among depository and other financial institutions
FORWARD-LOOKING STATEMENT
• changes in the interest rate environment that reduce our margins
or reduce the fair value of financial instruments;
• adverse changes in the securities markets;
• changes in laws or government regulations or policies affecting
financial institutions, including changes in regulatory fees and
capital requirements;
• our ability to enter new markets successfully and capitalize on
growth opportunities;
• our ability to successfully identify, acquire, and integrate future
acquisitions;
• our incurring higher than expected loan charge-offs with respect
to assets acquired in FDIC-assisted acquisitions;
• changes in consumer spending, borrowing and savings habits;
• changes in accounting policies and practices, as may be adopted
by the bank regulatory agencies and the Financial Accounting
Standards Board; and
• changes in our organization, compensation and benefit plans.
Because of these and other uncertainties, our actual future results may
be materially different from the results indicated by these forward-looking
statements. Readers are cautioned not to place undue reliance on the
forward-looking statements contained herein, which speak only as of
the date of this presentation. Except as required by applicable law or
regulation, we do not undertake, and specifically disclaim any obligation to
update any forward-looking statements that may be made from time to
time by or on behalf of the Company. Please see “Risk Factors” beginning
on page 19 of the Company’s Prospectus dated February 11, 2013.
2
NASDAQ: CHFN
Recent Price1 (02/15/2017): $18.06
Shares Outstanding (12/31/2016): 15.0 Million
Market Capitalization2: $271.5 Million
Price/Tangible Book Value3: 156.77%
Estimated P/E4 22.00x
Dividend Yield5: 1.33%
Total Assets (12/31/2016): $1.5 Billion
1 - Source: Bloomberg
2 - Based on February 15, 2017 closing market price and December 31, 2016 shares outstanding.
3 - Based on February 15, 2017 closing market price, December 31, 2016 shares outstanding and December 31, 2016
tangible book value.
4 - Based on February 15, 2017 closing market price, December 31, 2016 shares outstanding and LTM $0.82
earnings/share.
5 - Based on February 15, 2017 closing market price
MARKET PROFILE
3
• Founded in 1954 in West Point, Georgia
• Acquired Community Bank of the South
with four Metro Atlanta branches on
April 15, 2016
• History of organic and acquisitive growth
• Approximately 323 FTE’s servicing over
56,000 checking accounts
• 20 Branches in Atlanta, Auburn/Columbus,
Combined Statistical Areas (“CSA”) and
Pensacola Metropolitan Statistical Areas
(“MSA”)
CORPORATE PROFILE
September 30, 2016
Total Assets: $1.4 Billion
Total Net Loans: $994.1 Million
Total Deposits: $1.2 Billion
Total Capital: $203.1 Million
4
z
• Focused on growing Atlanta presence
• Conservative credit
• M&A experience … 6 transactions both assisted & unassisted
• Transformed from traditional thrift to bank-like balance sheet
• History of rewarding shareholders
OVERVIEW OF MANAGEMENT TEAM
TOP EXECUTIVES
(Banking/CharterBank)
NAME POSITION EXPERIENCE
ROBERT L. JOHNSON CHAIRMAN, PRESIDENT & CEO 35/33
LEE W. WASHAM PRESIDENT, CHARTERBANK 33/17
CURTIS R. KOLLAR SENIOR VICE-PRESIDENT & CFO 30/26
5
MARKET CONDITIONS
• Recent acquisition expands growth and lending
proficiencies on north side of Atlanta
• I-85 corridor legacy markets energized with
automotive & logistics-related job growth
• Most markets have significant
manufacturing, university or military influences
• Active regional M&A market
6
RECENT ACCOMPLISHMENTS
• Continued North Atlanta Expansion
• Acquisition of Community Bank of the South (“CBS”)
• Norcross
• Opened Buckhead Branch
• Growing into an earnings & markets-driven stock
• Consecutive quarterly dividend raises
• Strong credit quality
• Accretive share repurchases
7
Source: SNL Financial
• Growth of CHFN’s Atlanta MSA deposit base
to $583 million ranking 9th among community
banks (under $10.0 billion assets)
• 9th Atlanta MSA branch opened in Buckhead
February 2017
• CHFN’s loan portfolio and deposits in the Atlanta
Combined Statistical Area exceed 60% of bank total
8
INCREASE POSITIONING IN
ATLANTA METRO MARKET
CBS TRANSACTION HIGHLIGHTS
9
• Strongly accretive to forward EPS
• $300 million in deposits and loans in the desirable
north side Atlanta/Cobb County market
• High growth markets
• Proven lending team – good cultural fit
• Retail synergy
CAPITAL LEVERAGE FOCUS
Bank Tier 1 Common Equity of 14.34% at
September 30, 2016
• Whole bank and branch acquisitions
• Organic growth
• Adding loan producers in Atlanta
• Cash dividends
10
Reduced outstanding shares by approximately 35.6%
EFFECTIVE STOCK BUYBACKS
11
10.00
11.00
12.00
13.00
14.00
15.00
16.00
17.00
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15
16
17
18
19
20
21
22
23
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$ D
ollars
M
i
l
l
i
o
n
s
Shares Outstanding Stock Price
FINANCIAL INFORMATION
12
Total Loans, Net
Net Income $11.9 million
Fully Diluted EPS1 $0.79
Total Deposits $1.2 billion
• ALL as a % of Nonperforming Loans – 277.66%
• ALL as a % of Total Loans – 1.03%
• Continued advances in core earnings
Asset Quality 0.45% NPA
11.87%
$994.1 million
1 - Diluted net income per share for the year ended September 30, 2016 was computed by dividing net income by weighted average
shares outstanding plus potential common shares resulting from dilutive stock options and unvested restricted shares, determined using the
treasury stock method.
• Basic EPS up 137% from prior fiscal year
• Repurchased 1,016,424 shares FY2016
• Bank Tier 1 Common Equity of 14.34%
Basic EPS $0.83
FISCAL YEAR ENDED SEPTEMBER 30, 2016
RESULTS AND DEVELOPMENTS
13
ROA 0.98%
• Total Loans, Net up 39% from prior fiscal year
• Total Deposits up 57% from prior fiscal year
Tangible Common
Equity/Total Assets
Note: Unless otherwise noted, the above chart displays information based on Charter’s fiscal year end, which is September 30.
1 - Core deposits consist of transaction accounts, money market accounts, and savings accounts.
BALANCE SHEET HIGHLIGHTS
14
($ Millions) 2013 2014 2015 2016
Total Assets $1,089,406 $1,010,361 $1,027,079 $1,438,389
Loans, net 579,854 606,367 714,761 994,052
Securities 215,118 188,743 184,404 206,336
Total Liabilities $815,628 $785,406 $822,149 $1,235,240
Retail Deposits 745,900 717,192 703,278 1,125,067
Core1 475,426 486,248 505,154 784,705
Time 270,475 230,944 198,124 340,362
Total Borrowings 60,000 55,000 62,000 56,588
Total Equity $273,778 $224,955 $204,931 $203,150
32.1%
Note: Core Deposits = Transaction, Savings & Money Market Accounts
Wholesale Funding = Wholesale Deposits, Borrowings & TRUPS
($ Millions)
DEPOSIT GROWTH
15
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
Core Deposits Retail CD's Wholesale Funding (Includes TRUPS)
48%
27%
25% 26%
30%
44%
30%
41%
29%
43%
13%
44%
$1,021
$825
$1,035
$881
11%
37%
52%
$811
8%
59%
33%
$687
$801
12%
25%
63%
$772
7%
30%
63%
$1,218
64%
28%
8%
Average cost of deposits for the three
months ended September 30, 2016:
0.46%
DEPOSIT MIX - SEPTEMBER 30, 2016
16
Time
Deposits
(Excluding
Wholesale
Deposits)
29%Savings &
Money
Market
27%
Transaction
Accounts
41%
Wholesale
Time
Deposits
3%
1-4 Family
24%
Comm RE -
Owner Occupied
17%
Comm RE - Non
Owner Occupied
Other
34%
Comm RE -
Hotels
5%
Comm RE
Multifamily
3%
Commercial
& Industrial
7%
Consumer &
Other
2%
Real Estate
Construction
8%
Note: Unless otherwise noted, the above chart displays information based on Charter’s fiscal year end, which is September 30.
[1] Due to the early termination of the FDIC loss share agreements in the fourth quarter of fiscal 2015, ratios for fiscal year ended 2016, include
all previously covered assets with the exception of FAS ASC 310-30 loans that are excluded from nonperforming loans due to the ongoing
recognition of accretion income established at the time of acquisition. Ratios for periods prior to September 30, 2015, represent non-covered data
only.
LOAN MIX - SEPTEMBER 30, 2016
17
Asset quality ratios[1]:
2012 2013 2014 2015 2016
NPAs / Total Assets (%) 0.69% 0.49% 0.65% 0.73% 0.45%
NCOs / Average Loans (%) 0.86% 0.32% 0.08% 0.00% -0.13%
ALLL Loans / NPLs (x) 2.38x 2.80x 2.00x 2.30x 2.78x
Allowance / Total Loans (%) 1.87% 1.70% 1.55% 1.30% 1.03%
($ Millions)
NET LOANS OUTSTANDING
18
$606.4 $627.7
$656.2 $672.8
$714.8
$679.9 $701.4
$993.8 $994.1
$300.0
$400.0
$500.0
$600.0
$700.0
$800.0
$900.0
$1,000.0
$1,100.0
Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16
Note: Unless otherwise noted, the above chart displays information based on Charter’s fiscal year end, which is September 30.
INCOME STATEMENT HIGHLIGHTS
19
($ Millions) 2012 2013 2014 2015 2016
Net Interest Income $37,512 $35,275 $29,918 $32,880 $42,154
Provision for Loan Losses $4,503 $1,489 ($713) $0 ($250)
Non-Interest Income $12,912 $11,653 $14,277 $12,329 $20,964
Non-Interest Expense $40,303 $36,314 $36,211 $36,832 $45,398
Income Tax Expense $639 $2,869 $2,742 $2,805 $6,107
Net Income $4,979 $6,256 $5,955 $5,572 $11,863
5.35%
4.61%
3.83%
4.23%
4.40%
1.23%
0.95%
0.81% 0.74%
0.66%
4.17%
3.82%
3.22%
3.67%
3.89%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
FY 2012 FY 2013 FY 2014 FY 2015 FY 2016
Yield on Interest Earning Assets Cost of Interest Bearing Liabilities Net Interest Margin
Note: Unless otherwise noted, the above chart displays information based on Charter’s fiscal year end, which is September 30.
20
NET INTEREST MARGIN TRENDS
2.68%
2.95%
3.37%
3.47%
2.00%
2.20%
2.40%
2.60%
2.80%
3.00%
3.20%
3.40%
3.60%
3.80%
Net Interest Margin Excluding the effects of Purchase Accounting
($ Millions)
*Adjusted for FDIC purchase accounting accretion and amortization; loss share buyout;
recoveries on purchased loans, and acquisition deal costs
21
OPERATING LEVERAGE
$39.9 $38.0 $41.3
$44.1
$56.5
101%
96%
88% 83%
73%
80% 77%
82% 81%
72%
30%
40%
50%
60%
70%
80%
90%
100%
110%
120%
130%
140%
150%
160%
$0.0
$10.0
$20.0
$30.0
$40.0
$50.0
$60.0
FY 2012 FY 2013 FY 2014 FY 2015 FY 2016
Adjusted Net Operating Revenue* Adjusted Efficiency Ratio* Efficiency Ratio
$20
$25
$30
$35
$40
$45
$50
$55
$60
$65
$70
FY 2012 FY 2013 FY 2014 FY 2015 FY 2016
Net Operating Revenue Adjusted Net Operating Revenue* G&A Expenses
Note: Unless otherwise noted, the above chart displays information based on Charter’s fiscal year end, which is September 30.
($ Millions)
22
NONINTEREST INCOME
*Adjusted for FDIC purchase accounting accretion
$0
$5
$10
$15
$20
$25
FY 2012 FY 2013 FY 2014 FY 2015 FY 2016
Brokerage Commission
Bank Owned Life Insurance
Other*
1-4 Loan Sales
Recovery on Purchase Accounting Loans
Bankcard Fees
Service Charges on Deposit Accounts
$11.5
11.5%
45.8%50.7%
8.4%
40.2%
7.6%
$14.5
33.6%
17.2%
$14.8
43.7%
10.9%
$21.0
$11.6
23.6%
27.3%
24.6%
21.0%17.0%
10.1%
Note: Unless otherwise noted, the above chart displays information based on Charter’s fiscal year end, which is September 30.
($ Millions)
23
NONINTEREST EXPENSE
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
$50
FY 2012 FY 2013 FY 2014 FY 2015 FY 2016
Marketing
Professional Services
Occupancy & Furn. and Equip.
Other
Salaries and Benefits
22.4%
17.9%
50.8%48.0%
21.7%
21.6%
54.6%
14.1%
22.7%
$36.2
56.5%
11.9%
23.3%
$36.8
23.2%
56.2%
13.3%
$45.4
$40.3
$36.3
FY 2016 - Noninterest Expense includes $4.2 million of deal costs.
CBS acquisition accelerates EPS growth and transition to trading
on P/E multiple
Growth in the Atlanta market
Favorable credit quality and robust capital
Capital and infrastructure to support balance sheet expansion
Track record of returns to shareholders with annualized total
return since:
2013 stock conversion of 18%*
2010 stock offering of 19%*
24
INVESTMENT MERITS
*Source: Bloomberg with dividends reinvested
INVESTOR CONTACTS
1233 O. G. Skinner Drive
West Point, Georgia 31833
1-800-763-4444
www.charterbk.com
25
Robert L. Johnson
Chairman and Chief Executive Officer
bjohnson@charterbank.net
(706) 645-3249
Lee W. Washam
President
lwasham@charterbank.net
(706) 645-3630
Curtis R. Kollar
Senior Vice President and
Chief Financial Officer
ckollar@charterbank.net
(706) 645-3237
26
APPENDIX
BOARD AND EXECUTIVE TEAM
27
Name
Position(s) Held With
Charter Financial Corporation Age (1)
Director
Since (2)
Current
Term
Expires
Directors Continuing in Office
Robert L. Johnson Chief Executive Officer, President and Director 63 1986 2017
David Z. Cauble, III Director 64 1996 2017
David L. Strobel Director 65 2003 2017
Jane W. Darden Director 66 1988 2018
Curti M. Johnson General Counsel and Senior Vice President, Director 57 2007 2019
Thomas M. Lane Director 62 1996 2018
Edward D. Smith Director 42 2011 2019
Executive Officers Who Are Not Directors
Curtis R. Kollar Senior Vice President and Chief Financial Officer 64
Lee Washam President of CharterBank 55
(1) As of December 31, 2016.
(2) Includes service as a director of CharterBank prior to its mutual-to-stock conversion.
NET PORTFOLIO VALUE
At September 30, 2016
28
(1) Assumes an instantaneous uniform change in interest rates at all maturities.
(2) NPV is the difference between the present value of an institution's assets and liabilities.
(3) Present value of assets represents the discounted present value of incoming cash flows on interest-earning assets.
(4) NPV ratio represents NPV divided by the present value of assets.
Change in Interest
Rates (bp) (1) Estimated NPV (2)
Estimated
Increase
(Decrease)
in NPV
Percentage
Change in
NPV
NPV Ratio as a
Percent of
Present Value of
Assets (3)(4)
Increase (Decrease)
in NPV Ratio as a
Percent of Present
Value of Assets
(3)(4)
(dollars in thousands)
300 $242,141 ($543) (0.2%) 16.8% —
200 $243,079 $394 0.2% 16.9% 0.1%
100 $243,432 $747 0.3% 16.9% 0.1%
— $242,685 — — 16.8% —
(100) $226,298 ($16,386) (6.8%) 15.7% (1.1%)
