<PAGE> 1
PROSPECTUS SUPPLEMENT Filed Pursuant to Rule 424(b)(3)
(TO PROSPECTUS DATED FEBRUARY 17, 1999) Registration No. 333-71495
FIRST CHARTER CORPORATION
COMMON STOCK
429,708 SHARES
The Home Federal Savings and Loan Employee Stock Ownership Plan is
offering 429,708 shares of First Charter's common stock pursuant to this
prospectus supplement and the attached prospectus. The Home Federal Plan
acquired shares of our common stock when we merged with HFNC Financial Corp. and
is required to sell these shares by the terms of the Home Federal Plan in order
to satisfy the outstanding balance of the loan to the Home Federal Plan. We will
not receive any of the proceeds from the sale of these shares. Please see "USE
OF PROCEEDS" in the accompanying prospectus.
The Robinson-Humphrey Company, LLC, as the Underwriter, will offer to
sell shares of our common stock under the terms of this prospectus supplement
and the accompanying prospectus. Please see "PLAN OF DISTRIBUTION."
Our common stock is traded on the Nasdaq National Market System under
the symbol "FCTR" and, on March 22, 1999, the last bid price of our common stock
was $17.50.
---------------
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT HOME FEDERAL PLAN
--------------------- --------------------- ---------------------
<S> <C> <C> <C>
Per Share........... $17.50 $0.825 $16.675
Total............... $7,519,890 $354,509 $7,165,381
</TABLE>
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE UNDERWRITER EXPECTS TO DELIVER THE SHARES TO PURCHASERS ON MARCH 26,
1999.
---------------
THE ROBINSON-HUMPHREY COMPANY, LLC
MARCH 23, 1999
<PAGE> 2
SELECTED FINANCIAL DATA
The following tables present for First Charter, selected consolidated
financial data for the five-year period ended December 31, 1998. The information
presented has been derived from the audited consolidated financial statements of
First Charter. See "HOW TO OBTAIN ADDITIONAL INFORMATION" in the accompanying
prospectus.
FIRST CHARTER CORPORATION AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
Years Ended December 31,
-------------------------------------------------------------------------------
1994 1995 1996 1997 1998
------------ --------------- ------------- ------------- ------------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Interest income............................... $82,174 $98,209 $116,371 $123,130 $136,509
Interest expense.............................. 37,516 47,844 57,416 62,827 70,623
------------ --------------- ------------- ------------- ------------
Net interest income........................ 44,658 50,365 58,955 60,303 65,886
Provision for loan losses..................... 1,591 2,328 1,481 2,684 2,376
------------ --------------- ------------- ------------- ------------
Net interest income after provision for
loan losses............................ 43,067 48,037 57,474 57,619 63,510
Noninterest income............................ 6,428 7,125 8,156 15,082 13,650
Noninterest expense........................... 29,757 31,817 39,169 42,765 59,166
------------ --------------- ------------- ------------- ------------
Income before income taxes.................... 19,738 23,345 26,461 29,936 17,994
Income taxes.................................. 6,510 7,467 9,028 10,765 8,758
------------ --------------- ------------- ------------- ------------
Net income................................. $13,228 $15,878 $17,433 $19,171 $9,236
============ =============== ============= ============= ============
PER SHARE DATA:(1)
Basic net income per share.................... $ 0.81 $ 0.95 $ 0.95 $ 1.06 $ 0.51
Diluted net income per share.................. 0.80 0.94 0.94 1.03 0.50
Cash dividends declared (2)................... 0.34 0.43 0.50 0.53 0.61
Period-end book value......................... 6.18 7.08 12.25 12.79 13.34
BALANCE SHEET DATA (AT PERIOD END):
Securities available for sale............... $ 55,452 $ 399,694 $ 325,825 $ 315,565 $331,799
Investment securities held to maturity........ 202,504 8,959 13,940 -- --
Loans, net.................................... 782,420 913,892 1,108,311 1,246,228 1,406,967
Allowance for loan losses..................... 13,144 13,552 14,140 15,263 15,554
Total assets.................................. 1,125,894 1,415,368 1,573,177 1,672,641 1,864,357
Deposits...................................... 941,552 964,005 1,013,696 1,059,262 1,123,035
Borrowed funds................................ 35,374 124,714 309,895 350,079 469,944
Total Liabilities............................. 989,990 1,104,460 1,340,396 1,428,732 1,618,385
Total shareholders' equity.................... 135,904 311,075 232,781 243,909 245,972
RATIOS:
Net income to average shareholders'
equity..................................... 10.14% 7.44% 6.20% 7.47% 3.68%
Net income to average total assets............ 1.22 1.34 1.16 1.21 0.52
Net interest income to average earning
assets (tax equivalent)................... 5.04 4.34 4.23 4.12 4.07
Average loans to average deposits............. 88.41 86.33 104.68 111.96 139.05
Net loans charged off during period to
average loans.............................. 0.13 0.23 0.09 0.16 0.15
</TABLE>
- -----------------
(1) Per share data presented for the years ended December 31, 1995 and 1994
are First Charter historical amounts excluding Home Federal Savings and
Loan figures because Home Federal Savings and Loan converted from a
mutual to stock form in fiscal year 1996.
(2) First Charter Corporation historical cash dividends declared.
<PAGE> 3
SELLING SHAREHOLDER
ALL OF THE FIRST CHARTER COMMON STOCK SOLD WILL BE SOLD FOR THE ACCOUNT
OF THE HOME FEDERAL PLAN.
No proceeds from the sale of the shares of First Charter common stock by
the Home Federal Plan will be received by First Charter. The sale of the shares
of First Charter common stock by the Home Federal Plan is taking place in
accordance with the terms of such plan and as a result of the merger of HFNC
Financial Corp. with First Charter, which was completed on September 30, 1998.
Under the terms of the Home Federal Plan, the Home Federal Plan is required to
sell a sufficient number of shares of First Charter common stock in order to pay
down the remaining balance of the ESOP loan to the Home Federal Plan that was
incurred in connection with the establishment of the Home Federal Plan. Any
shares of First Charter common stock held by the Home Federal Plan that remain
after the satisfaction of the ESOP loan to the Home Federal Plan will be
distributed to the participants in the Home Federal Plan in accordance with its
terms. The table below sets forth the following:
- the name of the selling shareholder;
- the number of shares of First Charter common stock owned by the
Home Federal Plan as of September 30, 1998;
- the number of shares offered hereby for the Home Federal Plan;
and
- the amount and percentage of First Charter common stock to be
owned by the Home Federal Plan, assuming that all of the shares
of First Charter common stock offered for sale by such selling
shareholder are sold.
<TABLE>
<CAPTION>
Number of Number of Amount and
Shares of Shares of First Percentage of First
First Charter Charter Common Charter's Common
Common Stock Stock Offered Stock to be Owned
Selling Shareholder Currently Owned Hereby After the Offering
------------------------------- --------------- --------------- ------------------
<S> <C> <C> <C>
Home Federal Savings and Loan
Employee Stock Ownership Plan 654,578(1) 429,708(2) 224,870(3)
1.2%
</TABLE>
- -----------------------------
(1) These shares were acquired pursuant to the merger of HFNC with and into
First Charter which was consummated September 30, 1998.
(2) The number of shares to be sold by the selling shareholder has declined
from 501,360 shares indicated in the accompanying prospectus due in part
to normal allocation of shares under the Home Federal Plan to
participants in the plan.
(3) The selling shareholder intends to sell the shares of First Charter
common stock registered hereunder to pay down its ESOP loan and then to
distribute the remainder of the shares of First Charter common stock
then held by the Home Federal Plan to participants in the Home Federal
Plan.
S-3
<PAGE> 4
UNDERWRITING
The Robinson-Humphrey Company, LLC, as the Underwriter has agreed to
purchase from the Home Federal Plan, and the Home Federal Plan has agreed to
sell to the Underwriter the shares of First Charter common stock under the terms
and conditions of the Underwriting Agreement among First Charter, the Home
Federal Plan and the Underwriter dated as of March 23, 1999.
The Underwriting Agreement provides that the obligations of the
Underwriter is subject to approval of certain legal matters by counsel and to
various other conditions. The Underwriter is committed to purchase all shares of
First Charter's common stock offered by this prospectus supplement and the
accompanying prospectus if it purchases any.
The Underwriter proposes to offer the shares of First Charter's common
stock directly to the public at the public offering price set forth on the cover
page of this prospectus supplement and to certain dealers at such price less a
concession not in excess of $0.50 per share. The Underwriter may allow, and such
dealers may reallow, a concession not in excess of $0.10 per share in sales to
certain other dealers. After this offering, the public offering price and other
selling terms may be changed.
First Charter, its executive officers and directors have agreed that
they will not offer, sell or otherwise dispose of any shares of common stock
(other than shares offered by the Home Federal Plan in this offering), subject
to certain exceptions, for a period of 90 days from the date of this prospectus
supplement without the prior written consent of the Underwriter.
Pursuant to the Underwriting Agreement, First Charter has agreed to
indemnify the Underwriter against certain liabilities, including liabilities
under the Securities Act of 1933, as amended.
The Underwriter does not intend to confirm sales to any accounts over
which it exercises discretionary authority.
In connection with this offering, the Underwriter and selling group
members (if any) or their respective affiliates who are qualified registered
market makers on the Nasdaq National Market may engage in passive market-making
transactions with respect to shares of First Charter common stock in accordance
with Rule 103 of Regulation M, during the one business day prior to the pricing
of this offering before the commencement of offers or sales of the First Charter
common stock. The passive market-making transactions must comply with the
applicable volume and price limitations and be identified as such. In general, a
passive market maker must display its bid at a price not in excess of the
highest independent bid for the security; however, if all independent bids are
lowered below the passive market maker's bid, such bid must then be lowered when
certain purchase limits are exceeded.
S-4
<PAGE> 5
Until the distribution of the First Charter common stock is completed,
rules of the SEC may limit the ability of the Underwriter to bid for and
purchase shares of the First Charter common stock. As an exception to these
rules, the Underwriter is permitted to engage in certain transactions that
stabilize the price of the First Charter common stock. Such transactions may
consist of bids or purchases for the purpose of pegging, fixing or maintaining
the price of First Charter's common stock. If the Underwriter creates a short
position in First Charter's common stock in connection with this offering (i.e.
it sells more shares than are set forth on the cover page of this prospectus),
the Underwriter may reduce the short position by purchasing shares of First
Charter commons stock in the open market.
Neither First Charter nor the Underwriter makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of First Charter's common stock. In
addition, neither First Charter nor the Underwriter makes any representation
that the Underwriter will engage in such transactions or that such transactions,
once commenced, will not be discontinued without notice.
LEGAL MATTERS
Certain legal matters with respect to the validity of the shares of
First Charter's common stock offered hereby will be passed upon for First
Charter and the Home Federal Plan by Alston & Bird LLP. Certain legal matters
relating to this offering will be passed upon by the Underwriter by Smith,
Gambrell & Russell, LLP.
S-5
<PAGE> 6
PROSPECTUS
FIRST CHARTER CORPORATION
COMMON STOCK
501,360 SHARES
The Home Federal Savings and Loan Employee Stock Ownership Plan is
offering 501,360 shares of First Charter's common stock pursuant to this
prospectus. The Home Federal Plan acquired shares of our common stock when we
merged with HFNC Financial Corp. and is required to sell these shares by the
terms of the Home Federal Plan in order to satisfy the outstanding balance of
the loan to the Plan that was incurred as part of the Home Federal Plan.
The Home Federal Plan will offer to sell shares of our common stock
periodically under the terms of this prospectus. Currently there are no plans
for an underwritten offering. The Home Federal Plan may sell its shares in
transactions through the Nasdaq National market System or in negotiated
transactions. If the Home Federal Plan elects to engage in an Underwritten sale,
we will file a prospectus supplement disclosing the terms of the underwriting
arrangements. See "PLAN OF DISTRIBUTION." We will not receive any of the
proceeds from the sale of these shares. Please see "USE OF PROCEEDS."
Our common stock is traded on the Nasdaq National Market System under
the symbol "FCTR" and, on January 25, 1999, the last sale price of our common
stock was $18.00.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus is February 17, 1999
<PAGE> 7
THE COMPANY
GENERAL
First Charter, a North Carolina corporation, is a registered bank
holding company. As of September 30, 1998, we had total consolidated assets of
approximately $1.8 billion, total consolidated loans of approximately $1.4
billion, total consolidated deposits of approximately $1.0 billion, and total
consolidated shareholders' equity of approximately $243 million.
We conduct our business activities through two banking subsidiaries,
First Charter National Bank, a national banking association, and Home Federal
Savings and Loan, a federal stock savings and loan association. Through our
subsidiaries we provide a wide variety of retail and commercial banking services
through 31 branch offices, 2 limited service facilities, and 66 ATMs located in
Cabarrus, Mecklenburg, Rowan, Cleveland, Rutherford, and Union Counties, North
Carolina.
We consummated the merger of Home Federal Savings and Loan's parent
company, HFNC Financial Corp., on September 30, 1998 which has significantly
increased our consolidated assets and the number of branch offices through which
we offer our services. Certain of the financial data in this document and
incorporated into it reflects this merger.
Our principal executive offices are located at 22 Union Street North,
Concord, North Carolina 28025, and our telephone number at such address is (704)
786-3300. Additional information with respect to First Charter and our
subsidiaries is included in documents incorporated by reference in this
prospectus. See "HOW TO OBTAIN ADDITIONAL INFORMATION."
1998 EARNINGS
On January 13, 1999, we reported that 1998 earnings totaled $9.2
million, or $0.50 per diluted share, down 51.8% from 1997 earnings of $19.1
million, or $1.03 per diluted share. These results cover the combined operations
of First Charter and HFNC Financial Corp., which merged into First Charter
effective September 30. The acquisition was accounted for as a pooling of
interests; accordingly, all prior periods' financial data have been restated to
combine the operations of HFNC Financial Corp. with those of First Charter.
Total assets at December 31, 1998 amounted to $1.9 billion, up 11.5%
from $1.7 billion at December 31, 1997. Net loans increased 12.9% during the
year to $1.4 billion, while total deposits increased 6.0% to $1.1 billion from
December 31, 1997. First Charter's 1998 results produced a return on average
assets of 0.52% and a return on average equity of 3.68%, compared to prior year
ratios of 1.21% and 7.47%, respectively.
During the fourth quarter of 1998, First Charter earned $5.9 million,
compared to recurring earnings of $4.7 million in 1997, an increase of 24.4%.
Income per diluted share during the period was $0.32, compared to $0.25 in 1997.
The results for the fourth quarter of 1997 exclude net nonrecurring charges of
$1.7 million, or $0.09 per diluted share, primarily related to the Carolina
State Bank merger. There were no nonrecurring gains or charges in the
<PAGE> 8
fourth quarter of 1998. Total shareholders' equity was $246.0 million at
December 31, 1998, which represents a book value per share of $13.34 and an
equity-to-assets ratio of 13.2%.
- 2 -
<PAGE> 9
SELECTED FINANCIAL DATA
The following tables present for First Charter, selected consolidated
financial data for the five-year period ended December 31, 1997, and for the
nine-month periods ended September 30, 1998 and September 30, 1997. The
information presented representing the five-year periods has been derived from
the audited consolidated financial statements of First Charter, and the
information presented representing the nine-month periods is derived from the
unaudited consolidated financial statements of First Charter. See "HOW TO OBTAIN
ADDITIONAL INFORMATION."
FIRST CHARTER CORPORATION AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
Years Ended December 31,
--------------------------------------------------------------------------------------------
(Dollars in thousands, except per share data)
1993 1994 1995 1996 1997
---------------- ----------------- ----------------- ------------------ ----------------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Interest income................... $78,263 $82,174 $98,209 $116,371 $123,130
Interest expense.................. 31,755 37,516 47,844 57,416 62,827
---------------- ----------------- ----------------- ------------------ ----------------
Net interest income............ 46,508 44,658 50,365 58,955 60,303
Provision for loan losses......... 2,486 1,591 2,328 1,481 2,684
---------------- ----------------- ----------------- ------------------ ----------------
Net interest income after
provision for loan losses.... 44,022 43,067 48,037 57,474 57,619
Noninterest income................ 7,206 6,428 7,125 8,156 15,082
Noninterest expense............... 27,519 29,757 31,817 39,169 42,765
---------------- ----------------- ----------------- ------------------ ----------------
Income before income taxes..... 23,709 19,738 23,345 26,461 29,936
Income taxes...................... 8,207 6,510 7,467 9,028 10,765
---------------- ----------------- ----------------- ------------------ ----------------
Net income before
cumulative effect of change
in accounting principle...... 15,502 13,228 15,878 17,433 19,171
Cumulative effect of change in
accounting principle........... 2,353 -- -- -- --
---------------- ----------------- ----------------- ------------------ ----------------
Net income..................... $17,855 $13,228 $15,878 $17,433 $19,171
================ ================= ================= ================== ================
PER SHARE DATA:(1) /
Basic net income before
cumulative effect of
accounting change............... $0.61 $0.81 $0.95 $ 0.95 $ 1.06
Basic net income per share........ 0.65 0.81 0.95 0.95 1.06
Diluted net income before
cumulative effect of
accounting change............... 0.61 0.80 0.94 0.94 1.03
Diluted net income per share...... 0.64 0.80 0.94 0.94 1.03
Cash dividends declared........... 0.26 0.34 0.43 0.50 0.57
Period-end book value............. 5.79 6.18 7.08 12.25 12.79
BALANCE SHEET DATA (AT PERIOD END):
Securities available for sale.... $ 39,675 $ 55,452 $ 399,694 $ 325,825 $ 315,565
Investment securities held to
maturity.......................... 180,222 202,504 8,959 13,940 --
Loans, net........................ 726,129 782,420 913,892 1,108,311 1,246,228
Allowance for loan losses......... 12,433 13,144 13,552 14,140 15,263
Total assets...................... 1,029,145 1,125,894 1,415,368 1,573,177 1,672,641
Deposits.......................... 838,894 941,552 964,005 1,013,696 1,059,262
Borrowed funds.................... 58,100 35,374 124,714 309,895 350,079
Total Liabilities................. 906,934 989,990 1,104,460 1,340,396 1,428,732
Total shareholders' equity........ 122,219 135,904 311,075 232,781 243,909
RATIOS:
Net income to average
shareholders' equity........... 15.25% 10.14% 7.44% 6.20% 7.47%
Net income to average total
assets......................... 1.78 1.22 1.34 1.16 1.21
Net interest income to average
earning assets (tax
equivalent).................... 5.61 5.04 4.34 4.23 4.12
Average loans to average
deposits....................... 89.40 88.41 86.33 104.68 111.96
Net loans charged off during
period to average loans........ 0.22 0.13 0.23 0.09 0.16
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
-------------------------------------
1997 1998
------------------ -----------------
<S> <C> <C>
INCOME STATEMENT DATA:
Interest income................... $91,337 $101,903
Interest expense.................. 46,579 52,610
------------------ -----------------
Net interest income............ 44,758 49,293
Provision for loan losses......... 1,729 1,917
------------------ -----------------
Net interest income after
provision for loan losses.... 43,029 47,376
Noninterest income................ 10,548 10,477
Noninterest expense............... 28,920 48,992
------------------ -----------------
Income before income taxes..... 24,657 8,861
Income taxes...................... 8,562 5,505
------------------ -----------------
Net income before
cumulative effect of change
in accounting principle...... 16,095 3,356
Cumulative effect of change in
accounting principle........... -- --
------------------ -----------------
Net income..................... $16,095 $3,356
================== =================
PER SHARE DATA:(1)
Basic net income before
cumulative effect of
accounting change............... $ 0.88 $ 0.18
Basic net income per share........ 0.88 0.18
Diluted net income before
cumulative effect of
accounting change............... 0.87 0.18
Diluted net income per share...... 0.87 0.18
Cash dividends declared........... 0.38 0.45
Period-end book value............. 12.67 13.17
BALANCE SHEET DATA (AT PERIOD END):
Securities available for sale.... $ 315,565 $ 310,963
Investment securities held to
maturity.......................... -- --
Loans, net........................ 1,181,935 1,391,432
Allowance for loan losses......... 14,877 15,375
Total assets...................... 1,595,779 1,832,305
Deposits.......................... 1,051,789 1,092,996
Borrowed funds.................... 350,079 464,753
Total Liabilities................. 1,428,732 1,589,045
Total shareholders' equity........ 241,360 243,260
RATIOS:
Net income to average
shareholders' equity........... 6.23% 1.33%
Net income to average total
assets......................... 1.02 0.19
Net interest income to average
earning assets (tax
equivalent).................... 4.01 3.98
Average loans to average
deposits....................... 111.59 132.37
Net loans charged off during
period to average loans........ 0.11 0.13
</TABLE>
(1) Per share data presented for the years ended December 31, 1995, 1994 and
1993 are First Charter historical amounts excluding Home Federal figures because
Home Federal converted from a mutual to stock form in fiscal year 1996.
- 3 -
<PAGE> 10
CERTAIN REGULATORY CONSIDERATIONS
The following discussion sets forth certain of the material elements of
the regulatory framework applicable to banks and bank holding companies. It also
provides certain specific information related to us.
GENERAL
First Charter is a bank holding company registered with the Board of
Governors of the Federal Reserve System (the "Federal Reserve") under the Bank
Holding Company Act of 1956, as amended, (the "BHC Act"). As such, First Charter
and its non-bank subsidiaries are subject to the supervision, examination, and
reporting requirements of the BHC Act and the regulations of the Federal
Reserve.
The BHC Act requires every bank holding company to obtain the prior
approval of the Federal Reserve before it may:
- acquire direct or indirect ownership or control of any voting
shares of any bank if, after such acquisition, the bank
holding company will directly or indirectly own or control
more than 5% of the voting shares of the bank;
- acquire all or substantially all of the assets of any bank; or
- merge or consolidate with any other bank holding company.
The BHC Act further provides that the Federal Reserve may not approve
any transaction that would result in a monopoly or would be in furtherance of
any combination or conspiracy to monopolize or attempt to monopolize the
business of banking in any section of the United States. The Federal Reserve is
also precluded from approving any transaction which could substantially lessen
competition or tend to create a monopoly in any section of the country, or that
would be in restraint of trade. However, the Federal Reserve can approve any
such transaction if it decides that the anti-competitive effects of the proposed
transaction are clearly outweighed by the public interest in meeting the
convenience and needs of the community to be served. The Federal Reserve is also
required to consider the financial and managerial resources and future prospects
of the bank holding companies and banks concerned and the convenience and needs
of the community to be served. Consideration of financial resources generally
focuses on capital adequacy which is discussed below, and consideration of
convenience and needs issues includes the parties' performance under the
Community Reinvestment Act of 1977.
Another factor that is gaining increasing scrutiny in the application
process is the "Year 2000" readiness of the parties involved in acquisition
transactions. Banking organizations whose Year 2000 readiness is in less than
satisfactory condition are undergoing special scrutiny in connection with
acquisition transactions requiring regulatory approval. Such banking
organizations may not be eligible to use expedited application procedures for
acquisition transactions.
- 4 -
<PAGE> 11
The BHC Act, as amended by the interstate banking provisions of the
Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 ("Interstate
Banking Act"), which became effective in September 1995, repealed the prior
statutory restrictions on interstate acquisitions of banks by bank holding
companies, such that First Charter and any other bank holding company located in
North Carolina may now acquire a bank located in any other state, and any bank
holding company located outside North Carolina may lawfully acquire any North
Carolina-based bank, regardless of state law to the contrary, in either case
subject to certain deposit-percentage limitations, aging requirements, and other
restrictions. The Interstate Banking Act also generally provides that, after
June 1, 1997, national and state-chartered banks may branch interstate through
acquisitions of banks in other states.
The BHC Act generally prohibits First Charter from:
- engaging in activities other than banking or managing or
controlling banks or other permissible subsidiaries; and
- acquiring or retaining direct or indirect control of any
company engaged in any activities except for those activities
the Federal Reserve determines to be so closely related to
banking or managing or controlling banks as to be a proper
incident thereto.
In determining whether a particular activity is permissible, the
Federal Reserve must consider whether the performance of such an activity
reasonably can be expected to produce benefits to the public, such as greater
convenience, increased competition, or gains in efficiency, that outweigh
possible adverse effects, such as undue concentration of resources, decreased or
unfair competition, conflicts of interest, or unsound banking practices. The
Federal Reserve has determined the following to be permissible activities of
bank holding companies:
- factoring accounts receivable;
- acquiring or servicing loans;
- leasing personal property;
- conducting discount securities brokerage activities;
- performing certain data processing services;
- acting as agent or broker in selling credit life insurance and
certain other types of insurance in connection with credit
transactions; and
- performing certain insurance underwriting activities.
- 5 -
<PAGE> 12
The BHC Act further provides that the Federal Reserve may not approve
any transaction that:
- would result in a monopoly;
- would further any combination or conspiracy to monopolize or
attempt to monopolize banking in any section of the United
States;
- could substantially lessen competition;
- could create a monopoly in any section of the country; or
- would be in restraint of trade.
The Federal Reserve can approve such a transaction if it decides that
the public interest in meeting the convenience and needs of the community to be
served clearly outweighs the anti-competitive effects of the proposed
transaction. The Federal Reserve is also required to consider the financial and
managerial resources and future prospects of the bank holding companies and
banks concerned and the convenience and needs of the community to be served.
Consideration of financial resources generally focuses on capital adequacy,
which is discussed below. And consideration of convenience and needs issues
includes the parties' performance under the Community Reinvestment Act of 1977.
The BHC Act does not place territorial limitations on permissible
nonbanking activities of bank holding companies. Despite prior approval, the
Federal Reserve has the power to order a holding company or its subsidiaries to
terminate any activity or to terminate its ownership or control of any
subsidiary when it has reasonable cause to believe that continuation of such
activity or such ownership or control constitutes a serious risk to the
financial safety, soundness, or stability of any bank subsidiary of that bank
holding company.
Each First Charter banking subsidiary is a member of the "FDIC." As
such, its deposits are insured by the FDIC to the extent provided by law. Each
such subsidiary is also subject to numerous state and federal statutes and
regulations that affect is business, activities, and operations, and each is
supervised and examined by one or more state or federal bank regulatory
agencies.
Various regulatory agencies have supervisory jurisdiction over First
Charter's subsidiary institutions. The FDIC and the applicable state authority
have jurisdiction over state-chartered non-member banks. The OTS has
jurisdiction over federally chartered thrift institutions, such as Home Federal.
The OCC has jurisdiction over national banks, such as First Charter National
Bank. The regulatory agencies regularly examine each of such institution's
operations and have authority to approve or disapprove mergers, consolidations,
the establishment of branches, and similar corporate actions. The federal state
banking regulators also have the power to prevent the continuance or development
of unsafe or unsound banking practices or other violations of law.
- 6 -
<PAGE> 13
PAYMENT OF DIVIDENDS
First Charter is a legal entity separate and distinct from its banking
and other subsidiaries. The principal sources of cash flow of First Charter,
including cash flow to pay dividends to its shareholders, are dividends from its
subsidiary depository institutions. There are statutory and regulatory
limitations on the payment of dividends by these subsidiary depository
institutions to First Charter, as well as by First Charter to its shareholders.
As to the payment of dividends, First Charter National Bank is subject
to the regulations of the OCC, and Home Federal is subject to the laws and
regulations of the OTS.
If, in the opinion of the federal banking regulator, a depository
institution under its jurisdiction is engaged in or is about to engage in an
unsafe or unsound practice (which, depending on the financial condition of the
depository institution, could include the payment of dividends), such agency may
require, after notice and hearing, that such institution cease and desist from
such practice. The federal banking agencies have indicated that paying dividends
that deplete a depository institution's capital base to an inadequate level
would be an unsafe and unsound banking practice. Under the Federal Deposit
Insurance Corporation Improvement Act of 1991 ("FDICIA"), a depository
institution may not pay any dividend if payment would cause it to become
undercapitalized or if it already is undercapitalized. See "- Prompt Corrective
Action." Moreover, the federal agencies have issued policy statements that
provide that bank holding companies and insured banks should generally only pay
dividends out of current operating earnings.
At September 30, 1998, under dividend restrictions imposed under
federal and state laws, the First Charter banking subsidiaries, without
obtaining governmental approvals, could not declare or pay any dividends to
First Charter.
The payment of dividends by First Charter and the First Charter banking
subsidiaries may also be affected or limited by other factors, such as the
requirement to maintain adequate capital above regulatory guidelines.
CAPITAL ADEQUACY
First Charter and the First Charter banking subsidiaries must comply
with the capital adequacy standards established by the Federal Reserve in the
case of First Charter, and the appropriate federal banking regulator in the case
of each of the First Charter banking subsidiaries. There are two basic measures
of capital adequacy for bank holding companies and their subsidiary depository
institutions that have been promulgated by the Federal Reserve and each of the
federal bank regulatory agencies: a risk-based measure and a leverage measure. A
bank holding company must satisfy all applicable capital standards to be
considered in compliance.
The risk-based capital standards are designed to:
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<PAGE> 14
- make regulatory capital requirements more sensitive to
differences in risk profile among depository institutions and
bank holding companies;
- to account for off-balance-sheet exposure; and
- to minimize disincentives for holding liquid assets; assets
and off-balance-sheet items are assigned to broad risk
categories, each with appropriate weights.
The resulting capital ratios represent capital as a percentage of total
risk-weighted assets and off-balance-sheet items.
The minimum guideline for the ratio ("Total Capital Ratio") of total
capital ("Total Capital") to risk-weighted assets (including certain
off-balance-sheet items, such as standby letters of credit) is 8.0%. At least
half of Total Capital must be composed of common equity, undivided profits,
minority interests in the equity accounts of consolidated subsidiaries,
noncumulative perpetual preferred stock, and a limited amount of cumulative
perpetual preferred stock, less goodwill and certain other intangible assets
("Tier 1 Capital"). The remainder may consist of subordinated debt, other
preferred stock, and a limited amount of loan loss reserves ("Tier 2 Capital").
At September 30, 1998, First Charter's consolidated Total Capital Ratio was
20.81% and its Tier 1 Capital Ratio (i.e., the ratio of Tier 1 Capital to
risk-weighted assets) was 19.56%.
In addition, the Federal Reserve has established minimum leverage ratio
guidelines for bank holding companies. These guidelines provide for a minimum
ratio (the "Leverage Ratio") of Tier 1 Capital to average assets, less goodwill
and certain other intangible assets, of 3.0% for bank holding companies that
meet certain specified criteria, including having the highest regulatory rating.
All other bank holding companies generally are required to maintain a Leverage
Ratio of at least 3.0%, plus an additional cushion of 100 to 200 basis points.
First Charter's Leverage Ratio at September 30, 1998, was 13.48 %. The
guidelines also provide that bank holding companies experiencing internal growth
or making acquisitions will be expected to maintain strong capital positions
substantially above the minimum supervisory levels without significant reliance
on intangible assets. Furthermore, the Federal Reserve has indicated that it
will consider a "tangible Tier 1 Capital Leverage Ratio" (deducting all
intangibles) and other indicia of capital strength in evaluating proposals for
expansion or new activities.
Each of the First Charter banking subsidiaries is subject to risk-based
and leverage capital requirements adopted by its federal banking regulator.
These requirements are substantially similar to those adopted by the Federal
Reserve for bank holding companies. Each First Charter banking subsidiary was in
compliance with applicable minimum capital requirements as of September 30,
1998. Neither First Charter nor any of its banking subsidiaries has been advised
by any federal banking agency of any specific minimum capital ratio requirement
applicable to it.
Failure to meet capital guidelines could subject a bank or thrift to a
variety of enforcement remedies, including issuance of a capital directive, the
termination of deposit insurance by the FDIC, a prohibition on the taking of
brokered deposits, and certain other restrictions on its business. As described
below, substantial additional restrictions can be imposed upon
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<PAGE> 15
FDIC-insured depository institutions that fail to meet applicable capital
requirements, see "- Prompt Corrective Action."
The federal bank regulators continue to indicate their desire to raise
capital requirements applicable to banking organizations beyond their current
levels. In this regard, the Federal Reserve, the FDIC, and the OCC have,
pursuant to FDICIA, proposed an amendment to the risk-based capital standards
that would calculate the change in an institution's net economic value
attributable to increases and decreases in market interest rates and would
require banks with excessive interest rate risk exposure to hold additional
amounts of capital against such exposures. The OTS has already included an
interest-rate risk component in its risk-based capital guidelines for savings
associations that it regulates.
SUPPORT OF SUBSIDIARY INSTITUTIONS
Under Federal Reserve policy, First Charter is expected to act as a
source of financial strength for, and to commit resources to support, each of
the First Charter banking subsidiaries, This support may be required at times
when, absent such Federal Reserve policy, First Charter may not be inclined to
provide it. In addition, any capital loans by a bank holding company to any of
its banking subsidiaries are subordinate in right of payment to deposits and to
certain other indebtedness of such banks. In the event of a bank holding
company's bankruptcy, any commitment by the bank holding company to a federal
bank regulatory agency to maintain the capital of a banking subsidiary will be
assumed by the bankruptcy trustee and will be entitled to a priority of payment.
Under the Federal Deposit Insurance Act (the "FDIA"), a depository
institution that the FDIC insures can be held liable for any loss incurred by,
or reasonably expected to be incurred by, the FDIC after August 9, 1989, in
connection with (i) the default of a commonly controlled FDIC-insured depository
institution or (ii) any assistance provided by the FDIC to any commonly
controlled FDIC-insured depository institution "in danger of default." "Default"
is defined generally as the appointment of a conservator or receiver, and "in
danger of default" is defined generally as the existence of certain conditions
indicating that a default is likely to occur in the absence of regulatory
assistance. The FDIC's claim for damages is superior to claims of shareholders
of the insured depository institution or its holding company, but is subordinate
to claims of depositors, secured creditors, and holders of subordinated debt
(other than affiliates) of the commonly controlled insured depository
institution. The First Charter banking subsidiaries are subject to these
cross-guarantee provisions. As a result, any loss suffered by the FDIC in
respect of any of these subsidiaries would likely result in assertion of the
cross-guarantee provisions, the assessment of such estimated losses against the
depository institution's banking or thrift affiliates, and a potential loss of
First Charter's respective investments in such other subsidiary depository
institutions.
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<PAGE> 16
PROMPT CORRECTIVE ACTION
FDICIA establishes a system of prompt corrective action to resolve the
problems of undercapitalized institutions. Under this system, which became
effective in December 1992, the federal banking regulators are required to
establish five capital categories (well capitalized, adequately capitalized,
undercapitalized, significantly undercapitalized, and critically
undercapitalized). With respect to institutions in the three undercapitalized
categories, the regulators must take certain mandatory supervisory actions, and
they are authorized to take other discretionary actions. The severity of these
actions will depend upon the capital category in which the institution is
placed. Generally, subject to narrow exceptions, FDICIA requires the banking
regulator to appoint a receiver or conservator for an institution that is
critically undercapitalized. The federal banking agencies have specified by
regulation the relevant capital level for each category.
Under the final agency rules implementing the prompt corrective action
provisions, an institution is deemed to be well capitalized if it
- has a Total Capital Ratio of 10% or greater;
- has a Leverage Ratio of 5.0% or greater and is not subject to
any written agreement, order, capital directive, or prompt
corrective action directive issued by the appropriate federal
banking agency.
An institution is considered to be adequately capitalized if it
- has a Total Capital Ratio of 8.0% or greater;
- has a Tier 1 Capital Ratio of 4.0% or greater; and
- has a Leverage Ratio of 4.0% or greater.
A depository institution is considered to be undercapitalized if it
- has a Total Capital Ratio of less than 8.0%;
- has a Tier 1 Capital Ratio of less than 4.0%; or
- has a Leveraged Ratio of less than 4.0%.
A depository institution is considered to be significantly
undercapitalized if it
- has a Tier 1 Capital Ratio of 6.0%;
- has a Total Capital Ratio of 3.0%; or
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<PAGE> 17
- has a Leverage Ratio of less than 3.0%.
An institution that has a tangible equity capital to assets ratio equal
to or less than 2.0% is deemed to be critically undercapitalized. "Tangible
Equity" includes core capital elements counted as Tier 1 Capital for purposes of
the risk-based capital standards, plus the amount of outstanding cumulative
perpetual preferred stock (including related surplus), minus all intangible
assets with certain exceptions. A depository institution may be deemed to be in
a capitalization category that is lower than is indicated by its actual capital
position if it receives an unsatisfactory examination rating.
An institution that is categorized as undercapitalized, significantly
undercapitalized, or critically undercapitalized is required to submit an
acceptable capital restoration plan to its appropriate federal banking agency.
Under FDICIA, a bank holding company must guarantee that a subsidiary depository
institution meet its capital restoration plan, subject to certain limitations.
The obligation of a controlling bank holding company under FDICIA to fund a
capital restoration plan is limited to the lesser of 5.0% of an undercapitalized
subsidiary's assets or the amount required to meet regulatory capital
requirements. An undercapitalized institution is also generally prohibited from
increasing its average total assets, making acquisitions, establishing any
branches, or engaging in any new line of business, except in accordance with an
accepted capital restoration plan or with the approval of the FDIC. In addition,
the appropriate federal banking agency is given authority with respect to any
undercapitalized depository institution to take any of the actions it is
required to or may take with respect to a significantly undercapitalized
institution as described below if it determines "that those actions are
necessary to carry out the purpose" of FDICIA.
For those institutions that are significantly undercapitalized or
undercapitalized and either fail to submit an acceptable capital restoration
plan or fail to implement an approved capital restoration plan, the appropriate
federal banking agency must require the institution to take one or more of the
following actions:
(1) sell enough shares, including voting shares, to become
adequately capitalized;
(2) merge with (or be sold to) another institution (or holding
company), but only if grounds exist for appointing a
conservator or receiver;
(3) restrict certain transactions with banking affiliates;
(4) otherwise restrict transactions with bank or non-bank
affiliates;
(5) restrict interest rates that the institution pays on deposits
to "prevailing rates" in the institution's "region";
(6) restrict asset growth or reduce total assets;
(7) alter, reduce, or terminate activities;
- 11 -
<PAGE> 18
(8) hold a new election of directors;
(9) dismiss any director or senior executive officer who held
office for more than 180 days immediately before the
institution became undercapitalized, provided that in
requiring dismissal of a director or senior officer, the
agency must comply with certain procedural requirements,
including the opportunity for an appeal in which the director
or officer will have the burden of proving his or her value to
the institution;
(10) employ "qualified" senior executive officers;
(11) cease accepting deposits from correspondent depository
institutions;
(12) divest certain nondepository affiliates which pose a danger to
the institution; or
(13) be divested by a parent holding company. In addition, without
the prior approval of the appropriate federal banking agency,
a significantly undercapitalized institution may not pay any
bonus to any senior executive officer or increase the rate of
compensation for such an officer.
At September 30, 1998, all of the First Charter banking subsidiaries
had the requisite capital levels to qualify as well capitalized. An
institution's capital category is determined solely for the purposes of applying
the prompt corrective action law and it may not constitute an accurate
representation of an institution's overall financial condition or prospects.
DESCRIPTION OF FIRST CHARTER COMMON STOCK
The First Charter articles of incorporation currently authorize the
issuance of 50,000,000 shares of First Charter common stock. As of September 30,
1998, 18,466,982 shares of First Charter common stock were outstanding. THE
CAPITAL STOCK OF FIRST CHARTER DOES NOT REPRESENT OR CONSTITUTE A DEPOSIT
ACCOUNT AND IS NOT INSURED BY THE FDIC, THE BANK INSURANCE FUND, THE SAVINGS
ASSOCIATION INSURANCE FUND, OR ANY GOVERNMENTAL AGENCY.
Shares of First Charter common stock may be issued at such time or
times and for such consideration as the First Charter board of directors may
deem advisable, subject to such limitations as may be set forth in the laws of
the State of North Carolina, the First Charter articles of incorporation, the
First Charter bylaws, or the rules of the Nasdaq National Market System.
DIVIDEND RIGHTS
The holders of First Charter common stock are entitled to receive such
dividends or distributions as the board of directors of First Charter may
declare out of funds legally available for such payments. Payments of
distributions by First Charter are subject to the restrictions of North Carolina
law applicable to the declaration of distributions by a business corporation. A
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<PAGE> 19
corporation generally may not authorize and make distributions if, after giving
effect thereto, it would be unable to meet its debts as they become due in the
usual course of business, or if the corporation's total assets would be less
than the sum of its total liabilities plus the amount that would be needed, if
it were to be dissolved at the time of distribution to satisfy claims of
shareholders who have preferential rights superior to the rights of the holders
receiving the distribution. Share dividends, if any are declared, may be paid
from First Charter's authorized but unissued shares.
The payment of distributions to holders of First Charter common stock
is subject to the provisions of the North Carolina Business Corporation Act and
the ability of the First Charter banking subsidiaries and any other subsidiary
of First Charter to pay dividends to First Charter, as restricted by various
bank regulatory agencies. See "CERTAIN REGULATORY CONSIDERATIONS." There are no
limitations on dividends in any agreement to which First Charter is a party.
VOTING RIGHTS
Holders of First Charter common stock are entitled to one vote for each
share on matters on which shareholders are entitled to vote.
In the event of the voluntary or involuntary liquidation, dissolution,
distribution of assets, or winding-up of First Charter, the holders of First
Charter common stock will be entitled to receive all of the remaining assets of
First Charter, of whatever kind, available for distribution to shareholders
ratably in proportion to the number of shares of First Charter common stock
held. The First Charter board of directors may distribute in kind to the holders
of First Charter common stock such remaining assets of First Charter or may
sell, transfer, or otherwise dispose of all or any part of such remaining assets
to any other person or entity and receive payment therefor in cash, stock, or
obligations of such other person or entity, and may sell all or any part of the
consideration so received and distribute any balance thereof in kind to holders
of First Charter common stock. Neither the merger or consolidation of First
Charter into or with any other corporation, nor the merger of any other
corporation into First Charter, nor any purchase or redemption of shares of
stock of First Charter of any class, shall be deemed to be a dissolution,
liquidation, or winding-up of First Charter for purposes of this paragraph.
Because First Charter is a holding company, its right and the rights of
its creditors and shareholders, including the holders of First Charter common
stock, to participate in the distribution of assets of a subsidiary on its
liquidation or recapitalization may be subject to prior claims of such
subsidiary's creditors except to the extent that First Charter itself may be a
creditor having recognized claims against such subsidiary.
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<PAGE> 20
SELLING SHAREHOLDER
ALL OF THE FIRST CHARTER COMMON STOCK SOLD UNDER THIS PROSPECTUS WILL
BE SOLD FOR THE ACCOUNT OF THE HOME FEDERAL PLAN.
No proceeds from the sale of the shares of First Charter common stock
by the Home Federal Plan will be received by First Charter. The sale of the
shares of First Charter common stock by the Home Federal Plan is taking place in
accordance with the terms of such plan and as a result of the merger of HFNC
Financial Corp. with First Charter, which was completed on September 30, 1998.
Under the terms of the Home Federal Plan, the Home Federal Plan is required to
sell a sufficient number of shares of First Charter common stock in order to pay
down the remaining balance of the ESOP loan to the Home Federal Plan that was
incurred in connection with the establishment of the Home Federal Plan. Any
shares of First Charter common stock held by the Home Federal Plan that remain
after the satisfaction of the ESOP loan to the Home Federal Plan will be
distributed to the participants in the Home Federal Plan in accordance with its
terms. The table below sets forth the following:
- the name of the selling shareholder;
- the number of shares of First Charter common stock owned by
the Home Federal Plan as of September 30, 1998;
- the number of shares offered hereby for the Home Federal Plan;
and
- the amount and percentage of First Charter common stock to be
owned by the Home Federal Plan, assuming that all of the
shares of First Charter common stock offered for sale by such
selling shareholder are sold.
<TABLE>
<CAPTION>
Amount and Percentage of
Number of Shares of First Number of Shares of First First Charter's Common
Charter Common Stock Charter Common Stock Stock to be Owned
Selling Shareholder Currently Owned Offered Hereby After the Offering
------------------------------- --------------------------- ------------------------- ---------------------------
<S> <C> <C> <C>
Home Federal Savings and Loan
Employee Stock Ownership Plan 654,578(1) 501,360 153,218(2)
</TABLE>
- --------------------
(1) These shares were acquired pursuant to the merger of the selling shareholder
with and into First Charter which was consummated September 30, 1998.
(2) The selling shareholder intends to sell the shares of First Charter common
stock registered hereunder to pay down its ESOP Loan and then to distribute
the remainder of the shares of First Charter common stock then held by the
Home Federal Plan to participants in the Home Federal Plan.
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<PAGE> 21
PLAN OF DISTRIBUTION
Any or all of the shares of First Charter common stock offered hereby
may be sold from time to time by the Home Federal Plan, or by pledgees, donees,
transferees or other successors in interest. The Home Federal Plan may sell its
shares in transactions through the Nasdaq National Market System, in negotiated
transactions, or by a combination of such methods of sale. The shares of First
Charter common stock offered hereby may be offered at fixed prices that may be
changed, at market prices prevailing at the time of sale, at prices related to
such prevailing market prices, or at negotiated prices. Such prices will be
determined by the Home Federal Plan or by agreement between the Home Federal
Plan and its underwriter, broker-dealer, or agent. The Home Federal Plan may
sell its shares directly to purchasers or through underwriters, agents or
broker-dealers by one or more of the following: (a) ordinary brokerage
transactions and transactions in which the broker solicits purchasers; (b)
purchases by a broker or dealer as principal and resale by such broker or dealer
for its account pursuant to this prospectus; (c) a block trade in which the
broker or dealer so engaged will attempt to sell the shares as agent but may
position and resell a portion of the block as principal to facilitate the
transaction; (d) an exchange distribution in accordance with the rules of the
exchange or automated interdealer quotation system on which the shares are then
listed; and (e) through the writing of options on the shares. Any such
underwriters, agents or broker-dealers may receive compensation in the form of
discounts, concessions or commissions from the Home Federal Plan and or the
purchasers of the shares for which such underwriters, agents or broker-dealers
may act as agents or to whom they sell as principals, or both (which
compensation as to an underwriter, agent or particular broker-dealer will be
negotiated prior to the sale and may be in excess of customary compensation). If
required by applicable law at the time a particular offer of the shares is made,
the terms and conditions of such transaction will be set forth in a supplement
to this prospectus. In addition, any shares covered by this prospectus which
qualify for sale pursuant to Rule 144 under the Securities Act of 1933, as
amended, may be sold under Rule 144 rather than pursuant to this prospectus.
In connection with the distribution of the shares being sold pursuant
to this prospectus, the Home Federal Plan may enter into hedging transactions
with broker-dealers. In connection with such transactions, broker-dealers may
engage in short sales of the shares in the course of hedging the positions they
assume with the Home Federal Plan. The Home Federal Plan may also sell the
shares short and redeliver the shares to close out the short positions. The Home
Federal Plan may also enter into option or other transactions with
broker-dealers which require the delivery to the broker-dealer of the shares.
The Home Federal Plan may also loan or pledge the shares to a broker-dealer, and
the broker-dealer may sell the shares so loaned, or upon a default the
broker-dealer may effect sales of the pledged shares. In addition to the
foregoing, the Home Federal Plan may from time to time enter into other types of
hedging transactions.
. In addition, the Home Federal Plan and any underwriter,
broker-dealer, or agent that participates in the distribution of the shares of
First Charter common stock may be deemed to be an underwriter under the
Securities Act of 1933, as amended, (although neither First Charter nor the Home
Federal Plan so concedes), and any profit on the sale of shares of First Charter
common stock and any discount, concession, or commission received by any of such
underwriter,
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<PAGE> 22
broker-dealer, or agent, may be deemed to be underwriting discounts
and commissions under the Securities Act of 1933, as amended.
USE OF PROCEEDS
The shares of First Charter common stock offered hereby are for the
account of the Home Federal Plan. The Home Federal Plan will use the proceeds
from the sale of the shares registered for sale hereunder to retire its
indebtedness, and will distribute any remaining proceeds to its participants in
accordance with the terms and conditions of the Home Federal Plan. Accordingly,
First Charter will not receive any of the proceeds from any sales of the shares
of First Charter common stock by the Home Federal Plan.
EXPERTS
The consolidated balance sheets of First Charter Corporation and
subsidiaries as of December 31, 1997 and 1996, and the related consolidated
statements of income, shareholders' equity and cash flows for each of the years
in the three-year period ended December 31, 1997, included in First Charter's
1997 Annual Report, which is incorporated by reference in First Charter's 1997
Annual Report on Form 10-K and incorporated by reference herein, have been
incorporated by reference herein in reliance upon the report of KPMG LLP,
independent certified public accountants, incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing.
The supplemental consolidated balance sheets of First Charter
Corporation and subsidiaries as of December 31, 1997 and 1996, and the related
supplemental consolidated statements of income, shareholders' equity and cash
flows for each of the years in the three-year period ended December 31, 1997,
included in First Charter's Current Report on Form 8-K filed January 11, 1999,
which is incorporated by reference herein, have been incorporated by reference
herein in reliance upon the report of KPMG LLP, independent certified public
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing.
OPINION
Alston & Bird LLP will pass upon the legality of the shares of First
Charter common stock offered hereby.
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<PAGE> 23
HOW TO OBTAIN ADDITIONAL INFORMATION
We file annual, quarterly, and special reports, proxy statements, and
other information with the Securities and Exchange Commission (the "SEC"). You
may read and copy any document that we file with the SEC at the SEC's public
reference rooms at the following locations: 450 Fifth Street, N.W., Judiciary
Plaza, Washington, D.C. 20549; 7 World Trade Center, 13th Floor, New York, New
York 10048; and Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. The SEC also maintains a site on the World Wide Web at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the SEC.
Our common stock is listed and traded on the Nasdaq National Market
System under the symbol "FCTR." Reports, proxy and information statements, and
other information concerning First Charter also may be inspected at the offices
of the National Association of Securities Dealers; Inc. located at 1735 K
Street, N.W., Washington, D.C. 20006.
This prospectus constitutes part of the Registration Statement on Form
S-3 of First Charter (including any exhibits and amendments thereto, the
"Registration Statement") filed with the SEC under the Securities Act of 1933,
as amended, relating to the shares of our common stock offered hereby. This
prospectus does not include all of the information in the Registration
Statement. For further information about our business and our common stock,
please refer to the Registration Statement. The Registration Statement may be
inspected and copied, at prescribed rates, at the SEC's public reference
facilities at the addresses set forth above.
The SEC allows us to "incorporate by reference" certain information we
file with the SEC. This means we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and later information that we file
with the SEC will automatically update this information. We incorporate by
reference the documents listed below, and any future filings made with the SEC
under Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of
1934, as amended, until the Home Federal Plan sells all the shares of our common
stock registered hereby.
The following documents which we have previously filed with the SEC are
hereby incorporated by reference herein:
(a) Our Annual Report on Form 10-K for the year ended December 31,
1997 (provided that any information included or incorporated
by reference in response to Items 402(a)(8), (i), (k), or (1)
of Regulation S-K of the SEC shall not be deemed to be
incorporated herein and is not part of the Registration
Statement);
(b) Our Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1998, June 30, 1998 and September 30, 1998;
(c) Our Current Reports on Form 8-K dated January 15, 1999,
January 11, 1999 (which includes supplemental consolidated
financial statements and accompanying
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<PAGE> 24
management discussion and analysis restated to reflect the
merger of First Charter and HFNC Financial Corp. consummated
as of September 30, 1998), April 15, 1998, May 28, 1998, July
10, 1998, July 17, 1998, August 4, 1998, September 10, 1998,
October 1, 1998, October 23, 1998, and December 2, 1998;
(d) The description of the current management and Board of
Directors contained in the prospectus pursuant to Section
14(a) of the Exchange Act of 1934, as amended, for our Annual
Meeting of Shareholders held on April 28, 1998;
(e) The description of our common stock contained in our
Registration Statement under Section 12(b) of the Exchange Act
and any amendment or report filed for the purpose of updating
such description.
We will provide without charge, upon the written or oral request of any
person, including any beneficial owner, to whom this prospectus is delivered, a
copy of any and all information (excluding certain exhibits) relating to our
business or our common stock that has been incorporated by reference in the
Registration Statement. Such requests should be directed to:
Lawrence M. Kimbrough
President and Chief Executive Officer
First Charter Corporation
22 Union Street, North
Concord, North Carolina 28025
(telephone: (704) 786-3300)
PLEASE NOTE
We have not authorized anyone to provide you with any information other
than the information included in this document and the documents we refer you
to. If someone provides you with other information, please do not rely on it as
being authorized by us.
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<PAGE> 25
No dealer, salesperson or other individual has been authorized to give
any information or to make any representations other than those contained or
incorporated by reference in this prospectus supplement or the prospectus in
connection with the offer made by this prospectus supplement and the prospectus,
and, if given or made, such information or representations must not be relied
upon as having been authorized by First Charter or any agent or underwriter.
Neither the delivery of this prospectus supplement or the prospectus nor any
sale made hereunder shall under any circumstance create an implication that
there has been no change in the affairs of First Charter since the date hereof.
This prospectus supplement and the prospectus does not constitute an offer or
solicitation by anyone in any state in which such offer or solicitation is not
authorized or in which the person making such offer or solicitation is not
qualified to do so or to anyone to whom it is unlawful to make such offer or
solicitation.
---------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
PROSPECTUS SUPPLEMENT
<S> <C>
Selected Financial Data.............S-2
Selling Shareholder.................S-3
Underwriting........................S-4
Legal Matters.......................S-5
PROSPECTUS
The Company...........................1
Selected Financial Data...............3
Certain Regulatory Considerations.....4
Description of First Charter
Common Stock.........................12
Selling Shareholder..................14
Plan of Distribution.................15
Use of Proceeds......................16
Experts..............................16
Opinion..............................16
How to Obtain Additional Information.17
</TABLE>
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FIRST CHARTER
CORPORATION
COMMON STOCK
---------------------------------
PROSPECTUS
SUPPLEMENT
---------------------------------
MARCH 23, 1999
THE ROBINSON-HUMPHREY COMPANY, LLC
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