November 15, 2006
Dear Shareholder:
I am pleased to present our comparative third quarter Statement of Condition and results of operations for 2006 and 2005. Our financial performance continues at a record-breaking pace particularly for net income of $2,002,000 in 2006 for the first nine months, compared to $1,446,000 for 2005. This earnings level for the first nine months of 2006 represents $1.41 diluted earnings per share compared to $1.02 diluted earnings per share for the same period in 2005, which is an increase of 38.2%. Charter Bank achieved record quarterly earnings of $850,000, or 43.1% over third quarter 2005.
A number of significant financial trends have contributed to this performance including strong loan growth of $29.0 million and an increase in our net interest margin from 4.27% in 2005 to 4.67% in September 2006. Charter Bank assets, net loans, and deposits have grown at annually compounded rates of 16.0%, 17.5%, and 13.7%, respectively, from 2001 through September 30, 2006. Charter’s quarterly return on average equity was 18.1% for the third quarter 2006, compared to 15.2% for the third quarter 2005.
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We continue to field more inquiries from interested buyers than sellers of common stock in Charter Financial Corporation. The most recent trade in our stock was at a sale price of $27 per share.
I am pleased to announce the promotion of Mike Anderson to Senior Vice President and Team Leader of our Kent office. Mike will succeed Bret Gagliardi who will continue as a Senior Vice President and Relationship Manager on a part-time basis. Bret wishes to spend more time with his family and other community activities.
We always appreciate your comments, questions and, of course, your referrals. A copy of our current rate sheet is enclosed. For more information about our rates, please visit www.charterbankwa.com/rates
As you can see from the enclosed financial information, we are a high performing community bank in one of the strongest economic environments in the country. Thank you for your loyal support over the years. Please call me directly at (425) 586-5015 if I can be of service to you.
Sincerely,
Keith B. Jackson
Chairman and Chief Executive Officer
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