<PAGE> 1
As filed with the Securities and Exchange Commission on July 9, 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):
July 8, 1999
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FIRST CHARTER CORPORATION
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(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
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(Registrant's telephone number, including area code)
<PAGE> 2
Item 5 Other Events.
On July 8, 1999, First Charter Corporation (the "Registrant") announced
financial results for the three month and six month periods ended June 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 July 8, 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: July 9, 1999
<PAGE> 4
EXHIBIT INDEX
Exhibit No. Description Sequential Page
- ----------- ----------- No.
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99.1 News Release disseminated on July 8,
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
July 8, 1999
FIRST CHARTER CORPORATION ANNOUNCES
SECOND QUARTER EARNINGS
Concord, North Carolina -- First Charter Corporation (NASDAQ: FCTR) reported
today that net income for the second quarter of 1999 totaled $6.5 million, or
$0.36 per diluted share. This compares to earnings of $6.2 million, or $0.33 per
diluted share, in the first quarter of 1999 and $6.6 million, or $0.35 per
diluted share, in the second quarter of 1998. Net income for the six month
period ended June 30, 1999 amounted to $12.7 million, or $0.69 per diluted
share, compared to $12.8 million, or $0.68 per diluted share, during the first
six months of 1998.
Net interest income for the second quarter of 1999 increased to $17.1 million,
up 3.9% compared to the same quarter of 1998. Net interest income for the six
months ended June 30, 1999 increased 4.7% to $34.4 million, compared to $32.8
million in the prior year period. These increases were driven primarily by
successfully moderating the cost of funding and by higher average loan balances.
"Growth in net interest income during the first half of 1999 reflects our
success in building a stronger commercial presence in Mecklenburg County," noted
Lawrence M. Kimbrough, President and Chief Executive Officer. "We fully expect
our commercial business to expand throughout the second half of 1999, fueled by
our relationship-oriented commercial officers, top-of-the-line service quality
and ongoing investments in technology and brand advertising."
Noninterest Income and Expense
Noninterest income increased 30.4% to $5.4 million in the second quarter of 1999
compared to the same period in 1998, due in part to gains from loan and security
sales and to the revenue growth from First Charter Insurance Services, which has
acquired four insurance agencies during the last three quarters. For comparative
purposes, the 1999 second quarter results include total gains of $2.0 million
from sales of mortgage loans and securities ($0.07 per diluted share after tax),
while the 1998 second quarter results included gains totaling $1.4 million
($0.05 per diluted share after tax) from the sale of securities and the sale of
First Charter's merchant card program. Noninterest expense for the quarter
totaled $11.7 million, an increase of 19.1% over second quarter of 1998. The
increase was a 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.
<PAGE> 2
Balance Sheet
Net loans at June 30, 1999 amounted to $1.36 billion, compared to $1.37 billion
and $1.41 billion at June 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 loans in April 1999. Strong loan portfolio growth during the last
twelve months has largely offset the amount of loans sold. The majority of this
growth has been commercial in nature, with loans in the commercial market
amounting to $655.5 million of the loan portfolio at June 30, 1999, compared to
$427.0 million at June 30, 1998. As a result of this increased commercial loan
volume, the provision for loan losses has increased from prior year levels.
Commercial loans are reserved at a higher level than home mortgage loans. Since
June 1998, nonperforming assets have declined 5.8% to $8.5 million, representing
0.48% of total assets at June 30, 1999, compared to 0.50% at June 30, 1998 and
0.53% at December 31, 1998.
Total deposits at June 30, 1999 were $1.13 billion, up from $1.08 billion one
year ago. Shareholders' equity was $231.6 million, which represents a book value
per share of $13.00 and an equity-to-assets ratio of 12.93%. Based on the $24.75
closing price of First Charter Corporation common stock at June 30, 1999, the
Corporation had a market capitalization of $441.0 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 June 30, 1999, the Corporation
has repurchased and retired 739,617 shares to date at a weighted average price
of $23.90 per share. The Corporation intends to continue its repurchase program
at its discretion based on market conditions.
Corporate Profile
First Charter Corporation is the holding company for First Charter National
Bank. A regional bank with assets of $1.8 billion, First Charter operates 33
branch offices and 65 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. First Charter is building a new
customer support and technology center in the University Research Park
(Charlotte), with occupancy expected in the summer of 2000.
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> 3
First Charter Corporation and Subsidiaries
(Unaudited, except for December 1998 amounts)
Consolidated Balance Sheets
(Dollars in thousands)
<TABLE>
<CAPTION>
June 30, June 30, December 31,
ASSETS: 1999 1998 Change 1998 Change
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<S> <C> <C> <C> <C> <C>
Cash and due from banks ....................... $ 40,957 $ 45,521 (10.0)% $ 41,884 (2.2)%
Federal funds sold ............................ -- 19,119 (100.0) 6,402 (100.0)
Interest earning bank deposits ................ 4,002 2,525 58.5 11,713 (65.8)
Securities available for sale ................. 324,931 313,805 3.5 331,799 (2.1)
Loans, net .................................... 1,357,335 1,367,868 (0.8) 1,406,967 (3.5)
Other assets .................................. 64,825 51,491 25.9 65,592 (1.2)
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Total assets ............................. $1,792,050 $1,800,329 (0.5) $1,864,357 (3.9)
======================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY:
Total deposits ................................ $1,129,451 $1,080,714 4.5 % $1,123,035 0.6 %
Other borrowings .............................. 400,196 447,383 (10.5) 469,944 (14.8)
Other liabilities ............................. 30,763 17,687 73.9 25,406 21.1
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Total liabilities ........................ 1,560,410 1,545,784 0.9 1,618,385 (3.6)
Total shareholders' equity ............... 231,640 254,545 (9.0) 245,972 (5.8)
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Total liabilities and shareholders' equity $1,792,050 $1,800,329 (0.5) $1,864,357 (3.9)
======================================================================
</TABLE>
Consolidated Statements of Income
(Dollars in thousands)
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
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1999 1998 Change 1999 1998 Change
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<S> <C> <C> <C> <C> <C> <C>
Interest and fees on loans ............... $28,518 $29,023 (1.7)% $58,313 $57,187 2.0 %
Interest on securities ................... 4,643 4,785 (3.0) 9,376 9,472 (1.0)
Other interest income .................... 71 369 (80.8) 310 616 (49.7)
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Total interest income ................. 33,232 34,177 (2.8) 67,999 67,275 1.1
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Interest on deposits ..................... 10,954 11,413 (4.0) 22,243 22,824 (2.5)
Other interest expense ................... 5,156 6,278 (17.9) 11,404 11,647 (2.1)
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Total interest expense ................ 16,110 17,691 (8.9) 33,647 34,471 (2.4)
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Net interest income ................. 17,122 16,486 3.9 34,352 32,804 4.7
Provision for loan losses ................ 1,250 600 108.3 2,225 1,262 76.3
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Net interest income after provision . 15,872 15,886 (0.1) 32,127 31,542 1.9
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Trust income ............................. 565 477 18.4 1,100 947 16.2
Service charges on deposit accounts ...... 1,134 1,049 8.1 2,172 2,108 3.0
Gain on sale of securities ............... 274 970 (71.8) 618 1,957 (68.4)
Gain on sale of loans .................... 1,757 -- -- 1,757 -- --
Insurance and other fee income ........... 912 673 35.5 2,637 1,396 88.9
Other noninterest income ................. 718 943 (23.9) 857 1,370 (37.4)
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Total noninterest income .............. 5,360 4,112 30.4 9,141 7,778 17.5
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Salaries and employee benefits ........... 5,886 6,044 (2.6) 11,606 11,750 (3.7)
Occupancy and equipment .................. 1,851 1,448 27.8 3,580 2,794 28.1
Other noninterest expense ................ 3,958 2,325 70.2 7,409 5,150 52.7
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Total noninterest expense ............. 11,695 9,817 19.1 22,595 19,694 14.7
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Income before income taxes .......... 9,537 10,181 (6.3) 18,673 19,626 (4.9)
Income taxes .......................... 3,016 3,547 (15.0) 5,979 6,822 (12.4)
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Net income ............................... $ 6,521 $ 6,634 (1.7) $12,694 $12,804 (0.9)
===================================================================
Net interest income, taxable equivalent $17,884 $17,138 4.4 % $35,887 $34,084 5.3 %
===================================================================
</TABLE>
Share Information
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
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1999 1998 Change 1999 1998 Change
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<S> <C> <C> <C> <C> <C> <C>
Basic income per share:
Net Income ..................... $ 0.36 $ 0.36 -- % $ 0.69 $ 0.70 (1.4)%
Average common equivalent shares 18,224,986 18,360,121 (0.7) 18,356,140 18,315,048 0.2
Diluted income per share:
Net Income ..................... $ 0.36 $ 0.35 2.9 $ 0.69 $ 0.68 1.5
Average common equivalent shares 18,326,670 18,745,541 (2.2) 18,429,095 18,712,537 (1.5)
Shares outstanding at period end .... 17,817,786 19,161,044 (7.0) 17,817,786 19,161,044 (7.0)
Cash dividends declared ............. $ 0.17 $ 0.15 13.3 $ 0.34 $ 0.29 17.2
Book value .......................... $ 13.00 $ 13.28 (2.1) $ 13.00 $ 13.28 (2.1)
</TABLE>
<PAGE> 4
First Charter Corporation and Subsidiaries
(Unaudited, except for December 1998 amounts)
Allowance for Loan Losses
<TABLE>
<CAPTION>
Six Months Ended
-------------------------------------- December 31, Change
(Dollars in thousands) 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 2,225 1,262 76.3 2,376 88.8
Allowance related to loans sold (369) -- -- -- --
Charge-offs ................... (1,107) (1,588) (30.3) (2,737) (18.5)
Recoveries .................... 346 312 10.9 652 7.1
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Net loan charge-offs ....... (761) (1,276) (40.4) (2,085) (26.4)
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Ending balance .......... $ 16,649 $ 15,249 9.2 $ 15,554 7.0
====================================================================
</TABLE>
Nonperforming Assets
<TABLE>
<CAPTION>
June 30, June 30, December 31,
(Dollars in thousands) 1999 1998 Change 1998 Change
-------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Nonaccrual loans ............. $5,873 $4,609 27.4 % $5,758 2.0 %
Renegotiated loans ........... 388 582 (33.3) 577 (32.8)
Other real estate ............ 2,276 3,871 (41.2) 3,537 (35.7)
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Total non-performing assets $8,537 $9,062 (5.8) $9,872 (13.5)
=======================================================
</TABLE>
Selected Average Balances
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
---------------------------------------------------------------------------------------
(Dollars in thousands) 1999 1998 Change 1999 1998 Change
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<S> <C> <C> <C> <C> <C> <C>
Loans ............................ $1,363,528 $1,340,067 1.8% $1,401,423 $1,318,496 6.3%
Securities ....................... 319,612 329,408 (3.0) 322,597 314,273 2.6
Total interest earning assets .... 1,688,398 1,672,348 1.0 1,734,199 1,641,924 5.6
Assets ........................... 1,783,643 1,763,765 1.1 1,835,428 1,730,817 6.0
Deposits ......................... 1,120,571 956,517 17.2 1,115,144 961,382 16.0
Total interest bearing liabilities 1,393,618 1,393,510 0.0 1,441,915 1,370,389 5.2
Shareholders' equity ............. 238,571 253,169 (5.8) 240,600 249,535 (3.6)
</TABLE>
Selected Yield/Cost Rates (annualized)
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
-----------------------------------------------------------
1999 1998 Change 1999 1998 Change
-----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Yield on loans (FTE) ................. 8.42% 8.71% (29)BP 8.43% 8.76% (33)BP
Yield on securities (FTE) ............ 6.67 6.53 14 6.64 6.82 (18)
Yield on interest earning assets (FTE) 8.08 8.35 (27) 8.09 8.42 (33)
Cost of deposits ..................... 3.92 4.79 (87) 4.02 4.79 (77)
Cost of interest bearing liabilities . 4.64 5.09 (45) 4.71 5.07 (36)
Interest rate spread ................. 3.44 3.26 18 3.38 3.35 3
Net interest margin* ................. 4.25 4.11 14 4.17 4.19 (2)
</TABLE>
Significant Financial/Operating Ratios
<TABLE>
<CAPTION>
Six Months Ended June 30,
-----------------------------------
1999 1998 Change
-----------------------------------
<S> <C> <C> <C>
Return on average assets (annualized) ....... 1.39% 1.49% (10)BP
Return on average equity (annualized) ....... 10.64 10.35 29
Efficiency ratio** ........................... 53.09 50.57 252
Allowance for loan losses to gross loans ..... 1.21 1.10 11
Nonperforming assets to assets ............... 0.48 0.50 (2)
Reserves to nonperforming loans .............. 265.92 293.76 (2,784)
Interest bearing liabilities to earning assets 89.81 88.91 90
Equity to assets ............................. 12.93 14.14 (121)
Gross loans to deposits ...................... 121.67 128.00 (633)
Earning assets to total assets ............... 95.04 95.47 (43)
</TABLE>
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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.
