<PAGE> 1
As filed with the Securities and Exchange Commission on October 13, 1999
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 8 - K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
October 12, 1999
----------------
FIRST CHARTER CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
North Carolina 0-15829 56-1355866
- --------------- ------------ -------------------
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
22 Union Street, North, Concord, North Carolina 28026-0228
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(Addresses, including zip codes, of principal executive offices)
(704) 786-3300
----------------------------------------------------
(Registrant's telephone number, including area code)
<PAGE> 2
ITEM 5 OTHER EVENTS.
On October 12, 1999, First Charter Corporation (the "Registrant")
announced financial results for the three month and nine month periods ended
September 30, 1999. A copy of the press release is included as Exhibit 99.1 to
this Current Report on Form 8-K.
ITEM 7 FINANCIAL STATEMENTS AND EXHIBITS
(c) The following exhibits are filed herewith:
Exhibit No. Description
- ----------- -----------
99.1 News release disseminated on October 12, 1999 by First Charter
Corporation.
<PAGE> 3
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.
FIRST CHARTER CORPORATION
By: /s/Lawrence M. Kimbrough
-----------------------------------
Lawrence M. Kimbrough
President and Chief Executive Officer
Dated: October 13, 1999
<PAGE> 4
EXHIBIT INDEX
Exhibit No. Description Sequential Page No.
- ----------- ----------- -------------------
99.1 News Release disseminated on October 12,
1999 by First Charter Corporation.
<PAGE> 1
For Additional Information,
Contact Robert O. Bratton,
Chief Financial Officer
(704) 721-4473
or
David E. Keul, Controller
(704) 721-4482
FOR IMMEDIATE RELEASE
October 12, 1999
FIRST CHARTER ANNOUNCES INCREASES IN
THIRD QUARTER AND YEAR TO DATE EARNINGS
Concord, North Carolina -- First Charter Corporation (NASDAQ: FCTR) reported
today net income for the third quarter of 1999 of $7.1 million, or $0.40 per
diluted share, compared to a net loss of $9.4 million, or $0.51 per diluted
share, in the third quarter of 1998. Lawrence M. Kimbrough, President and Chief
Executive Officer commented that "We have now completed the successful
integration of HFNC Financial Corp. into First Charter. We feel that the
integration process has gone very well and that we have already begun to realize
many of the anticipated benefits of this merger." For comparative purposes, the
1999 third quarter results include pretax total gains of $1.8 million from the
sale of property ($0.06 per diluted share, after tax), while the 1998 third
quarter results included pretax merger expenses of $18.2 million ($0.77 per
diluted share, after tax), primarily associated with First Charter's merger with
HFNC Financial Corp. Recurring net income for the third quarter of 1999 amounted
to $6.0 million, or $0.34 per diluted share, compared to recurring net income of
$4.9 million, or $0.26 per diluted share for the third quarter of 1998.
Net income for the nine month period ended September 30, 1999 amounted to $19.8
million, or $1.09 per diluted share, compared to $3.4 million, or $0.18 per
diluted share, during the same nine month period in 1998. For comparative
purposes, the 1999 results include pretax total gains of $3.5 million ($0.13 per
diluted share, after tax) on sales of property and mortgage loans. The 1998
results included a pretax net expense of $15.8 million ($0.68 per diluted share,
after tax). This net expense in 1998 included pretax gains totaling $2.4 million
from the nonrecurring sales of securities and First Charter's merchant card
program, which was offset by the $18.2 million of pretax merger expenses.
Recurring net income for the nine month period ended September 30, 1999 amounted
to $17.5
<PAGE> 2
million, or $0.96 per diluted share, compared to recurring net income of $16.1
million, or $0.86 per diluted share for the same period in 1998.
"Our growth is fueled not only by the economic vitality of the Charlotte
metropolitan market, but also by our continuing emphasis on understanding and
meeting the needs of our customers," noted Kimbrough. "Our focus on customer
service is paramount. Although First Charter is known for giving exceptional
customer service already, our goal is to create EXTRAORDINARY customer
experiences each and every day. Our customers can truly Expect More From Us."
Net interest income for the third quarter of 1999 increased to $17.2 million, up
4.3% compared to the same quarter of 1998. Net interest income for the nine
months ended September 30, 1999 increased 4.6% to $51.6 million, compared to
$49.3 million in the comparable period in 1998. These increases were driven
primarily by decreases in the cost of funding.
Noninterest Income and Expense
Noninterest income for the third quarter of 1999 totaled $5.4 million compared
to $2.7 million for the same period in 1998. For comparative purposes, the 1999
third quarter results include total gains of $1.8 million from the sale of
property. Excluding this item, noninterest income increased 34.2% in the third
quarter 1999 compared to the same period in 1998. This increase was primarily
the result of revenue growth from First Charter Insurance Services, which has
acquired four insurance agencies in the last twelve months using the purchase
accounting method.
Noninterest income for the nine months ended September 30, 1999 totaled $14.5
million compared to $10.5 million for the same period in 1998. For comparative
purposes, the 1999 results include total gains of $3.5 million from the sales of
property and mortgage loans, while the 1998 results included total gains of $2.3
million from the sale of securities and the sale of First Charter's merchant
card program. Excluding these items, noninterest income increased 35.4% for the
nine month period ended September 30, 1999 compared to the same period in 1998.
Noninterest expense for the third quarter of 1999 totaled $11.6 million compared
to $29.3 million for the same period in 1998. For comparative purposes, the 1998
third quarter results included the 1998 merger expenses of $18.2 million.
Excluding the merger expenses, noninterest expense for the third quarter
increased 4.9% compared to the same period in 1998.
Noninterest expense for the nine months ended September 30, 1999 totaled $34.2
million compared to $49.0 million for the same period in 1998. For comparative
purposes, the nine months ended September 30, 1998 results included the 1998
merger costs of $18.2 million. Excluding the merger costs, noninterest expense
for the nine months ended September 30, 1999 increased 11.2% compared to the
same period in 1998. This increase was the result of strategic investments in
technology and a major brand advertising campaign designed to increase First
Charter's name recognition throughout the greater Charlotte metropolitan region.
Balance Sheet
Net loans at September 30, 1999 amounted to $1.37 billion, compared to $1.39
billion and $1.41 billion at September 30, 1998 and December 31, 1998,
respectively. This reduction from prior periods is due to the sale of $147.6
million of 30 year fixed rate mortgage loans in April 1999. Strong commercial
loan portfolio growth during 1999 has largely offset the amount of mortgage
<PAGE> 3
loans sold. The provision for loan losses for the nine months ended September
30, 1999 amounted to $2.6 million compared to $1.9 million for the same period
in 1998. As a result of year to date increased commercial loan volume, mostly
occurring during the first six months of 1999, the year to date provision for
loan losses has increased from prior year levels. The provision for loan losses
during the third quarter of 1999 amounted to $375,000, compared to $655,000
during the same period in 1998. This reduction from the prior period is a result
of decreased net charge-offs for the third quarter of 1999 compared to the prior
year period and a 14.6% decline in nonperforming assets to $8.6 million,
representing 0.47% of total assets at September 30, 1999, compared to 0.55% at
September 30, 1998 and 0.53% at December 31, 1998.
Total deposits at September 30, 1999 amounted to $1.14 billion, compared to
$1.09 billion and $1.12 billion at September 30, 1998 and December 31, 1998,
respectively. Shareholders' equity at September 30, 1999 was $228.5 million,
which represents a book value per share of $13.01 and an equity-to-assets
percentage of 12.55%. Based on the $17.50 closing price of First Charter
Corporation common stock at September 30, 1999, the Corporation had a market
capitalization of $307.4 million.
Share Repurchase Program
On April 27, 1999, First Charter Corporation announced its intent to repurchase
up to 1 million shares of its common stock. As of September 30, 1999, the
Corporation has repurchased and retired 994,148 shares.
CORPORATE PROFILE
First Charter Corporation is the holding company for First Charter National
Bank. A regional financial services company with assets of $1.8 billion, First
Charter operates 33 financial centers and 71 ATMs located in six counties
throughout the greater Charlotte metropolitan area. First Charter provides
businesses and individuals with a broad range of financial services, including
banking, comprehensive financial planning, funds management, investments,
insurance, mortgages and a full array of employee benefit programs. Common stock
for First Charter Corporation is traded under the symbol "FCTR" on the NASDAQ
National Market.
This news release contains forward-looking statements. Such statements are
subject to certain factors which may cause the company's results to vary from
those expected, including the risks set forth from time to time in the company's
filings with the Securities and Exchange Commission. Readers are cautioned not
to place undue reliance on these forward-looking statements, which reflect
management's judgment only as of the date hereof. The company undertakes no
obligation to publicly revise these forward-looking statements to reflect events
and circumstances that arise after the date hereof.
(SELECTED FINANCIAL INFORMATION IS ATTACHED)
<PAGE> 4
First Charter Corporation and Subsidiaries
(Unaudited, except for December 1998 amounts)
Consolidated Balance Sheets
(Dollars in thousands)
<TABLE>
<CAPTION>
September 30, September 30, December 31,
1999 1998 Change 1998 Change
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<S> <C> <C> <C> <C> <C>
ASSETS:
Cash and due from banks.......................... $ 36,867 $ 35,944 2.6 % $ 41,884 (12.0)%
Federal funds sold............................... - 26,305 (100.0) 6,402 (100.0)
Interest earning bank deposits................... 4,978 5,522 (9.9) 11,713 (57.5)
Securities available for sale.................... 342,037 310,963 10.0 331,799 3.1
Loans, net....................................... 1,367,648 1,391,432 (1.7) 1,406,967 (2.8)
Other assets..................................... 68,349 62,139 10.0 65,592 4.2
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Total assets................................ $ 1,819,879 $ 1,832,305 (0.7) $ 1,864,357 (2.4)
=====================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY:
Total deposits................................... $ 1,136,606 $ 1,092,996 4.0 % $ 1,123,035 1.2 %
Other borrowings................................. 426,704 464,753 (8.2) 469,944 (9.2)
Other liabilities................................ 28,119 31,296 (10.2) 25,406 10.7
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Total liabilities........................... 1,591,429 1,589,045 0.2 1,618,385 (1.7)
Total shareholders' equity.................. 228,450 243,260 (6.1) 245,972 (7.1)
---------------------------------------------------------------------
Total liabilities and shareholders' equity.. $ 1,819,879 $ 1,832,305 (0.7) $ 1,864,357 (2.4)
=====================================================================
</TABLE>
Consolidated Statements of Income
(Dollars in thousands)
<TABLE>
<CAPTION>
Three Months Ended September 30, Nine Months Ended September 30,
--------------------------------------------------------------------------------
1999 1998 Change 1999 1998 Change
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Interest and fees on loans...................... $ 28,594 $ 29,548 (3.2)% $ 86,907 $ 86,736 0.2 %
Interest on securities.......................... 4,913 4,713 4.2 14,289 14,199 0.6
Other interest income........................... 44 367 (88.0) 354 968 (63.4)
--------------------------------------------------------------------------------
Total interest income........................ 33,551 34,628 (3.1) 101,550 101,903 (0.3)
--------------------------------------------------------------------------------
Interest on deposits............................ 10,897 11,715 (7.0) 33,140 34,541 (4.1)
Other interest expense.......................... 5,451 6,424 (15.1) 16,855 18,069 (6.7)
--------------------------------------------------------------------------------
Total interest expense....................... 16,348 18,139 (9.9) 49,995 52,610 (5.0)
--------------------------------------------------------------------------------
Net interest income........................ 17,203 16,489 4.3 51,555 49,293 4.6
Provision for loan losses....................... 375 655 (42.7) 2,600 1,917 35.6
--------------------------------------------------------------------------------
Net interest income after provision........ 16,828 15,834 6.3 48,955 47,376 3.3
--------------------------------------------------------------------------------
Trust income.................................... 583 492 18.5 1,683 1,439 17.0
Service charges on deposit accounts 1,159 1,078 7.5 3,331 3,186 4.6
Gain on sale of securities...................... 225 5 4,400.0 843 1,962 (57.0)
Gain on sale of loans........................... - - - 1,757 - -
Gain on sale of property........................ 1,752 - - 1,752 - -
Insurance and other fee income.................. 1,176 627 87.6 3,813 2,023 88.5
Other noninterest income........................ 478 497 (3.8) 1,335 1,867 (28.5)
--------------------------------------------------------------------------------
Total noninterest income..................... 5,373 2,699 99.1 14,514 10,477 38.5
--------------------------------------------------------------------------------
Salaries and employee benefits.................. 6,374 5,988 6.4 17,980 17,624 2.0
Occupancy and equipment......................... 1,883 1,522 23.7 5,463 4,332 26.1
Merger expense.................................. - 18,192 (100.0) - 18,192 (100.0)
Other noninterest expense....................... 3,392 3,597 (5.7) 10,801 8,844 22.1
--------------------------------------------------------------------------------
Total noninterest expense.................... 11,649 29,299 (60.2) 34,244 48,992 (30.1)
--------------------------------------------------------------------------------
Income (loss) before income taxes.......... 10,552 (10,766) 198.0 29,225 8,861 229.8
Income taxes................................. 3,434 (1,318) 360.5 9,413 5,505 71.0
--------------------------------------------------------------------------------
Net income (loss)............................... $ 7,118 $ (9,448) 175.3 $ 19,812 $ 3,356 490.3
================================================================================
Net interest income, taxable equivalent...... $ 17,897 $ 17,156 4.3 % $ 53,784 $ 51,240 5.0 %
================================================================================
</TABLE>
Share Information
<TABLE>
<CAPTION>
Three Months Ended September 30, Nine Months Ended September 30,
--------------------------------------------------------------------------------
1999 1998 Change 1999 1998 Change
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Basic income per share:
Net income (loss)........................... $ 0.40 $ (0.52) 176.9 % $ 1.09 $ 0.18 505.6 %
Average common equivalent shares............ 17,670,835 18,304,490 3.5 18,125,195 18,311,489 (1.0)
Diluted income per share:
Net income (loss)........................... $ 0.40 $ (0.51) 178.4 $ 1.09 $ 0.18 505.6
Average common equivalent shares............ 17,763,070 18,657,474 (4.8) 18,204,647 18,693,390 (2.6)
Shares outstanding at period end................. 17,565,195 18,466,982 (4.9) 17,565,195 18,466,982 (4.9)
Cash dividends declared.......................... $ 0.17 $ 0.15 13.3 $ 0.51 $ 0.44 15.9
Book value....................................... $ 13.01 $ 13.17 (1.2) $ 13.01 $ 13.17 (1.2)
</TABLE>
<PAGE> 5
First Charter Corporation and Subsidiaries
(Unaudited, except for December 1998 amounts)
<TABLE>
<CAPTION>
Loan Portfolio September 30, September 30, December 31,
(Dollars in thousands) 1999 1998 Change 1998 Change
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Commercial................................ $ 614,360 $ 443,036 38.7 % $ 469,524 30.8 %
Real estate............................... 647,656 833,546 (22.3) 824,385 (21.4)
Home equity............................... 79,602 73,870 7.8 75,098 6.0
Installment............................... 43,096 56,530 (23.8) 53,669 (19.7)
----------------------------------------------------------------------
Total.................................. $ 1,384,714 $ 1,406,982 (1.6) $ 1,422,676 (2.7)
======================================================================
</TABLE>
<TABLE>
<CAPTION>
Nonperforming Assets September 30, September 30, December 31,
(Dollars in thousands) 1999 1998 Change 1998 Change
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Nonaccrual loans.......................... $ 6,375 $ 6,093 4.6 % $ 5,758 10.7 %
Restructured loans........................ 389 577 (32.6) 577 (32.6)
Other real estate......................... 1,857 3,420 (45.7) 3,537 (47.5)
----------------------------------------------------------------------
Total non-performing assets............ $ 8,621 $ 10,090 (14.6) $ 9,872 (12.7)
======================================================================
</TABLE>
<TABLE>
<CAPTION>
Allowance for Loan Losses Nine Months Ended September 30,
(Dollars in thousands) --------------------------------------- December 31, Change
1999 1998 Change 1998 (Annualized)
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Beginning balance (January 1)............. $ 15,554 $ 15,263 1.9 % $ 15,263 1.9 %
Provision charged to operations........... 2,600 1,917 35.6 2,376 46.3
Allowance related to loans sold........... (369) - - - -
Charge-offs............................... (1,485) (2,258) (34.2) (2,737) (27.5)
Recoveries................................ 537 453 18.5 652 10.1
----------------------------------------------------------------------
Net loan charge-offs................... (948) (1,805) (47.5) (2,085) (39.2)
----------------------------------------------------------------------
Ending balance...................... $ 16,837 $ 15,375 9.5 $ 15,554 8.2
======================================================================
</TABLE>
<TABLE>
<CAPTION>
Selected Average Balances Three Months Ended September 30, Nine Months Ended September 30,
(Dollars in thousands) -------------------------------------------------------------------------------------
1999 1998 Change 1999 1998 Change
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Loans..................................... $ 1,371,260 $ 1,383,416 (0.9)% $ 1,391,258 $ 1,342,949 3.6 %
Securities................................ 332,383 315,323 5.4 325,895 307,447 6.0
Total interest earning assets............. 1,706,467 1,722,886 (1.0) 1,724,853 1,658,773 4.0
Assets.................................... 1,787,678 1,817,781 (1.7) 1,819,337 1,759,755 3.4
Deposits.................................. 1,139,144 1,120,262 1.7 1,123,232 1,050,622 6.9
Total interest bearing liabilities........ 1,415,489 1,436,232 (1.4) 1,433,495 1,383,569 3.6
Shareholders' equity...................... 219,868 255,430 (13.9) 233,614 252,158 (7.4)
</TABLE>
<TABLE>
<CAPTION>
Selected Yield/Cost Rates (annualized) Three Months Ended September 30, Nine Months Ended September 30,
-------------------------------------------------------------------------------------
1999 1998 Change 1999 1998 Change
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Yield on loans (FTE)...................... 8.31 % 8.51 % (20) BP 8.39 % 8.66 % (27)BP
Yield on securities (FTE)................. 6.56 6.67 (11) 6.61 6.17 44
Yield on interest earning assets (FTE).... 7.96 8.14 (18) 8.04 8.17 (13)
Cost of deposits.......................... 3.80 4.15 (35) 3.94 4.40 (46)
Cost of interest bearing liabilities...... 4.58 5.01 (43) 4.66 5.08 (42)
Interest rate spread...................... 3.38 3.13 25 3.38 3.09 29
Net interest margin*...................... 4.16 3.96 20 4.17 3.93 24
</TABLE>
<TABLE>
<CAPTION>
Significant Financial/Operating Ratios Nine Months Ended September 30,
1999 1998 Change
----------------------------------------
<S> <C> <C> <C>
Return on average assets (annualized)..... 1.46 % 0.25 % 121 BP
Return on average equity (annualized)..... 11.34 1.78 956
Efficiency ratio**........................ 54.26 51.54 272
Allowance for loan losses to gross loans.. 1.22 1.09 13
Nonperforming assets to assets............ 0.47 0.55 (8)
Reserves to nonperforming loans........... 248.92 230.51 1,841
Interest bearing liabilities to earning
assets.................................. 90.27 89.03 124
Equity to assets.......................... 12.55 13.28 (73)
Gross loans to deposits................... 121.83 128.73 (690)
Earning assets to total assets............ 95.16 95.50 (34)
==================================================================================================================================
</TABLE>
BP Change is measured in basis points
FTE Fully taxable equivalent
* Net interest income, on a fully-taxable equivalent basis, as a percentage
of average earning assets.
** Noninterest expense less foreclosed property expense divided by the sum
of taxable equivalent net interest income plus noninterest income
adjusted for non-recurring income.
