8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): January 25, 2011

CHARTER FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

United States	001-34889	58-2659667
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(IRS Employer Identification No.)

1233 O. G. Skinner Drive, West Point, Georgia	31833
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (706) 645-1391

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition

On January 25, 2011, Charter Financial Corporation, a federal corporation and the holding company for CharterBank, issued a press release announcing its financial results for the first quarter ended December 31, 2010. The text of the press release is included as Exhibit 99.1 to this report. The information included in the press release text is considered to be “furnished” under the Securities Exchange Act of 1934.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits.

99.1 Press release dated January 25, 2011.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	CHARTER FINANCIAL CORPORATION
	(Registrant)
Date: January 25, 2011	By:	/s/ Robert L. Johnson
		President and Chief Executive Officer

EX-99.1

Exhibit 99.1

News Release

FOR IMMEDIATE RELEASE

Contact:	At The Investor Relations Company:
Robert L. Johnson, Chairman & CEO	Woody Wallace
Curt Kollar, CFO	312-245-2700
706-645-1391	wwallace@tirc.com
bjohnson@charterbank.net or ckollar@charterbank.net

CHARTER FINANCIAL ANNOUNCES FIRST QUARTER FISCAL 2011 RESULTS

• Net Income $276,000 for the Quarter

• Bank Core Capital Ratio Improved to 11.41%

• Reduced Wholesale Funding

• Strengthened Balance Sheet

WEST POINT, Georgia, January 25, 2011—Charter Financial Corporation (NASDAQ: CHFN) today reported first quarter fiscal 2011 net income of $276,000, or $0.02 per basic and diluted share, compared with $1.2 million, or $0.07 per basic and diluted share, for the quarter ended December 31, 2009. The lower net income was primarily attributable to operating expenses related to the FDIC–assisted acquisition of McIntosh Commercial Bank (MCB) in March of 2010.

The Company’s total assets amounted to $1.1 billion at December 31, 2010 down slightly from $1.2 billion at September 30, 2010 but up from $944.7 million at December 31, 2009. Loans outstanding were $584.0 million at December 31, 2010, of which $136.4 million, or 23.4%, were covered by FDIC loss sharing. This compared with loans outstanding of $599.4 million at September 30, 2010 and $564.1 million at December 31, 2009.

Total interest income increased to $12.4 million for the first quarter ended December 31, 2010, compared to $11.2 million for the same quarter of last year. Interest expense was lower at $4.8 million for the first quarter, compared with $5.1 million for the same quarter the year before. Net interest income increased 22.6%, to $7.6 million for the first quarter compared with $6.2 million for the same quarter the year before.

The net interest margin rose to 3.98% for the first quarter of fiscal 2011, compared with 3.05% for the same quarter the year before. Higher interest income on loans and the accretion of purchase discounts from the FDIC-assisted acquisitions of Neighborhood Community Bank in June 2009 and McIntosh Commercial Bank in March 2010 contributed to the improved net interest margin. The increase in net interest income was partially offset by increased levels of nonperforming loans (primarily loans covered by loss sharing) as well as reduced legacy loan balances. Net interest income was inhibited by conservative levels of cash accumulated late in the past year, largely from acquired assets and lack of attractive

reinvestment options including low securities yields and low demand from credit worthy loan applicants.

Robert L. Johnson, Chairman and CEO, said, “Our FDIC-assisted acquisitions continue to progress well. We have received $98.4 million in reimbursement for losses under the loss sharing agreements. We have a FDIC receivable of $71.7 million based on estimated future loss-share claims. The acquired assets will take some time to work out and safely reinvest. We remain upbeat about the results and continuing opportunities to build our retail franchise through FDIC-assisted acquisitions. We are also optimistic about future opportunities to invest the cash that results from these acquisitions.”

The Company had net charge-offs of $571,000 for the quarter ended December 31, 2010 compared with $166,000 for the same quarter the year before. The Company recorded a loan loss provision of $800,000 on non-covered loans for quarter ended December 31, 2010, the same as the $800,000 loan loss provision for the same quarter the year before. This provision increased the allowance for loan losses to 2.19% of non-covered loans at December 31, 2010 compared with 2.03% of non-covered loans at December 31, 2009. Nonperforming assets not covered by loss sharing were $22.7 million at December 31, 2010, up slightly from $21.4 million at September 30, 2010 but down from $24.2 million at June 30, 2010.

Noninterest expense increased to $9.4 million for the quarter ended December 31, 2010, compared with $6.1 million for the quarter ended December 31, 2009 and $9.1 million for the quarter ended September 30, 2010. The majority of the increase from a year ago was attributed to the Company’s FDIC-assisted acquisitions, including the costs associated with acquiring, integrating and operating the additional branches as well as resolving the acquired problem assets. The increase from the quarter ended September 30, 2010 to the quarter ended December 31, 2010 included an $810,000 prepayment penalty for the early retirement of a borrowing from the FHLB. The Company has also incurred costs adding staff and infrastructure to prepare for additional acquisitions.

Noninterest income totaled $2.9 million for the quarter ended December 31, 2010 compared with $2.4 million for the same quarter the year before. Noninterest income in the first quarter of fiscal 2011 included $171,000 in gains from the sale of securities compared to a loss of $145,000 for the same quarter the year before. Fees on deposits were $1.4 million for the December 2010 quarter compared to $1.3 million for the December 2009 quarter.

Total deposits amounted to $762.4 million at December 31, 2010 compared with $614.7 million at December 31, 2009. The McIntosh Commercial Bank acquisition and implementation of the Company’s new Rewards checking program were the primary contributors to the increased deposits. Borrowings decreased to $152.0 million at December 31, 2010 from $217.0 million at December 31, 2009, due to the Company’s continued focus on decreasing wholesale funding.

The Company had sharply higher total stockholders’ equity of $134.9 million at December 31, 2010 compared with $101.0 million at December 31, 2009. The higher equity is due to a combination of the incremental stock offering completed in September 2010 and earnings.

Mr. Johnson concluded, “CharterBank is well capitalized with core regulatory capital of 11.41% and this ratio was improved from 10.21% at September 30, 2010 through a

combination of earnings and reduction in wholesale funding. We reduced borrowings by $60.0 million and wholesale deposits by $28.2 million since September 30, 2010. The Bank continues to be profitable in difficult economic times. Our loan portfolio is sound and we are working through and reserving for troubled credits. Our network of 14 branches services an attractive geographic region. We are well positioned with capital and expect more opportunities to acquire banks from the FDIC and to expand our footprint in the future.”

About Charter Financial Corporation

Charter Financial Corporation is a savings and loan holding company and the parent company of CharterBank, a growing full-service community bank. Charter Financial Corporation and subsidiary, CharterBank, are in the mutual holding company structure. CharterBank is headquartered in West Point, Georgia, and operates branches in West Central Georgia and East Central 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.

FINANCIAL TABLES FOLLOW

Charter Financial Corporation

Selected Financial Data (unaudited)

[in thousands except share and per share data]:

	December 31, 2010		December 31, 2009		September 30, 2010***
Total Assets	$	1,059,195	$	944,703	$	1,188,534
Cash and Cash Equivalents		124,033		61,047		235,639
Loans Receivable, Net		584,021		564,136		599,370
Non-covered Loans Receivable, Net		447,621		477,882		451,231
Covered Loans Receivable, Net		136,400		86,254		148,139
Real Estate Owned		39,500		16,533		39,268
Non-covered Real Estate Owned		9,044		3,810		9,641
Covered Real Estate Owned		30,456		12,723		29,627
Mortgage Securities Available for Sale		130,634		190,980		133,080
Core Deposits*		311,456		241,485		313,170
Retail Deposits**		707,199		498,152		739,691
Total Deposits		762,412		614,735		823,134
Borrowings		152,000		217,000		212,000
Total Stockholders’ Equity		134,935		100,982		135,788
Book Value per Share	$	7.44	$	5.48	$	7.49
Tangible Book Value per Share		7.15		5.20		7.20
Minority Shares Outstanding		6,675,775		2,564,733		6,675,775
Total Shares Outstanding – at Quarter End		18,133,699		18,422,657		18,133,699
Weighted Average Total Shares Outstanding – Basic		18,133,699		18,409,106		18,422,050
Weighted Average Total Shares Outstanding – Fully Diluted		18,184,273		18,412,477		18,473,624

* Core deposits include transaction accounts, money market accounts and savings accounts.

** Retail deposits include Core Deposits and certificates of deposits excluding brokered and wholesale.

*** Financial information as of September 30, 2010 has been derived from audited financial statements.

Selected Operating Data (unaudited)

[in thousands except share and per share data]:

	Three months ended
	December 31,					September 30,
	2010			2009		2010
Total Interest Income	$	12,385		$	11,249	$	13,331
Total Interest Expense		4,818			5,071		6,186
Net Interest Income		7,567			6,178		7,145
Provision for Loan Losses		800			800		700
Provision for Loan Losses on Covered Assets		—			—		420
Net Interest Income after Provision for Loan Losses		6,767			5,378		6,025
Noninterest Income		2,910			2,409		3,371
Noninterest Expense		9,409			6,084		9,082
Income before Income Taxes		268			1,703		314
Income Tax Expense (Benefit)		(8	)		501		(532	)
Net Income	$	276		$	1,202	$	846
Earnings per Share	$	0.02		$	0.07	$	0.05
Earnings per Share – Fully Diluted		0.02			0.07		0.05
Cash Dividends per Share***		0.05			0.25		0.05
Net Charge-offs		571			166		361
Deposit Fees		1,433			1,276		1,564
Gain on Sale of Loans		262			89		171

*** First Charter, MHC has waived most of its portion of these dividends, resulting in payment primarily to the minority stockholders.

	Three months ended
	December 31,						September 30,
	2010			2009			2010
Return on Equity		.98	%		4.82	%		3.09	%
Return on Assets		0.10			0.52			0.29
Net Interest Margin		3.98			3.05			3.26
Bank Core Capital Ratio		11.41			9.38			10.21
Effective Tax Rate		(2.95	)		29.42			(169.56	)
Dividend Payout Ratio		175.85			65.24			32.95
Ratios of Assets Not Covered:
Loan Loss Reserve as a % of Total Loans		2.19			2.03			2.12
Loan Loss Reserve as a % of Nonperforming Loans		73.26			58.61			83.07
Nonperforming Assets as a % of Total Loans and REO		4.86			4.23			4.55
Net Charge offs as a % of Average Loans		0.50			0.14			0.27

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