<PAGE> 1
As filed with the Securities and Exchange Commission on November 8, 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):
November 8, 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
----------------------------------------------------------
(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 November 7, 1999, First Charter Corporation ("FCC") and Carolina
First Bancshares, Inc. ("Carolina First") entered into an Agreement and Plan of
Merger ("Merger Agreement"), pursuant to which Carolina First will be merged
(the "Merger") into FCC. The Board of Directors of FCC and the Board of
Directors of Carolina First approved the Merger Agreement and the transactions
related thereto at separate meetings held on November 7, 1999.
In accordance with the terms of the Merger Agreement, (i) each share of
the $2.50 par value common stock of Carolina First ("Carolina First Common
Stock") (excluding shares held by any shares held by Carolina First or
FCC or their respective companies, in each case other than in a fiduciary
capacity or as a result of debts previously contracted) will be converted into
2.267 shares (the "Exchange Ratio") of the no par value common stock of FCC
("FCC Common Stock").
At the effective time of the Merger, all rights with respect to
Carolina First Common Stock pursuant to stock option, stock appreciation rights,
stock awards or other rights, shall be converted into and shall become rights
with respect to FCC Common Stock, adjusted to reflect the Exchange Ratio.
The Merger is intended to constitute a tax-free reorganization under
the Internal Revenue Code of 1986, as amended, and to be accounted for as a
pooling of interests.
Consummation of the Merger is subject to various conditions, including:
(i) approval of the Merger Agreement and the Merger by the stockholders of each
of the parties thereto; (ii) receipt of requisite federal and state regulatory
approvals; (iii) receipt of opinions of counsel to each of FCC and Carolina
First as to the tax-free nature of certain aspects of the Merger; (iv) receipt
of letters from the independent accountants of FCC and Carolina First to the
effect that the Merger will qualify for pooling of interests accounting
treatment; and (v) satisfaction or waiver of certain other conditions.
Under the Merger Agreement, Carolina First has the right to terminate
the Merger Agreement if the Average Closing Price (as defined below) of FCC
Common Stock (i) is less than .80 times the Starting Price (as defined below)
and (ii) reflects a decline, on the Determination Date (as defined below) of
more than 15% below a weighted index of the stock prices of 11 banks or bank
holding companies designated in the Merger Agreement. In the event that Carolina
First gives notice of its intention to terminate the Merger Agreement based on
such provision, FCC has the right, within five days of FCC's receipt of such
notice, to elect to adjust the Exchange Ratio in accordance with the terms of
the Merger Agreement, and, thereby remove Carolina First's right to terminate.
For purposes of the Merger Agreement, the Average Closing Price means
the average of the daily last sales price of FCC Common Stock as reported on the
Nasdaq Stock Market (as reported in The Wall Street Journal or, if not reported
therein, in another mutually agreed upon authoritative source) for the 20
consecutive trading days on the Nasdaq Stock Market ending
<PAGE> 3
at the close of business on the Determination Date. The Determination Date
means the date on which the approval of the Federal Reserve Board required for
consummation of the Merger shall be received by FCC, without regard to any
requisite holding periods. For purposes of the Merger Agreement, the Starting
Price means the last sale price of FCC Common Stock as reported by The Nasdaq
Stock Market (as reported by The Wall Street Journal or, if not reported
therein, in another mutually agreed upon authoritative source) on November 8,
1999, the day of the announcement by press release of the Merger.
In connection with the Merger Agreement, Carolina First and FCC entered
into a stock option agreement (the "Stock Option Agreement") pursuant to which
Carolina First granted to FCC an option to purchase up to 1,040,838 shares of
Carolina First Common Stock (representing 19.9% of the shares of Carolina First
Common Stock currently outstanding less the number of share of Carolina First
Common Stock owned by FCC), at a purchase price of $36 per share, upon certain
terms and in accordance with certain conditions. Under the terms of the Stock
Option Agreement, the Total Profit and the Notional Total Profit (each as
defined in the Stock Option Agreement) that a holder may realize under the Stock
Option Agreement, as a result of exercising the option may not exceed
$10,000,000.
In the Merger Agreement, FCC has agreed to elect 6 Carolina First
designees to the FCC Board of Directors. Following the Merger, Lawrence M.
Kimbrough will continue in his role as President and Chief Executive Officer of
FCC and First Charter National Bank. James E. Burt, III will become Chairman of
the First Charter National Bank Board of Directors and an Executive Vice
President of FCC.
A copy of the joint news release (the "News Release") relating to the
Merger is being filed as Exhibit 99.1 to this report and is incorporated herein
by reference. In addition, First Charter Corporation has prepared certain
materials that have been delivered to certain analysts ("Analysts Materials"). A
copy of the Analysts Materials related to the Merger is being filed as Exhibit
99.2 to this report and is incorporated herein by reference. The News Release
and the Analysts Materials contain, among other things, forward-looking
statements, including estimates of future operating results and other
forward-looking financial information for First Charter Corporation and Carolina
First BancShares, Inc. These estimates constitute forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995. As
such, the estimates involve significant risks and uncertainties. Actual results
may differ materially due to such factors as: (1) expected cost savings from the
merger not materializing within the expected time frame; (2) revenues following
the merger not meeting expectations; (3) competitive pressures among financial
institutions increasing significantly; (4) costs or difficulties related to the
integration of the businesses of First Charter Corporation and Carolina First
BancShares, Inc. being greater than anticipated; (5) general economic conditions
being less favorable than anticipated; (6) legislation or regulatory changes
adversely affecting the business in which the combined company will be engaged;
and (7) the timing of the completion of the transactions.
ITEM 7 FINANCIAL STATEMENTS AND EXHIBITS
(c) The following exhibits are filed herewith:
Exhibit No. Description
----------- -----------
99.1 News release disseminated on November 8,
1999 by First Charter Corporation.
99.2 Information provided to Analysts on November
8, 1999 by First Charter Corporation.
<PAGE> 4
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 thereunto duly authorized.
FIRST CHARTER CORPORATION
By: /s/ Lawrence M. Kimbrough
-------------------------------------
Lawrence M. Kimbrough
President and Chief Executive Officer
Dated: November 8, 1999
<PAGE> 5
EXHIBIT INDEX
Exhibit No. Description Sequential Page
- ----------- ----------- No.
---------------
99.1 News Release disseminated on
November 8, 1999 by First Charter
Corporation.
99.2 Information provided to Analysts on
November 8, 1999 by First Charter
Corporation.
<PAGE> 1
Exhibit 99.1
For Additional Information,
Contact Robert O. Bratton,
Chief Financial Officer
First Charter Corporation
(704) 721-4473
or
Jan H. Hollar,
Chief Financial Officer
Carolina First BancShares, Inc.
(704) 732-6208
For Immediate Release
November 8, 1999
FIRST CHARTER CORPORATION AND
CAROLINA FIRST BANCSHARES, INC. AGREE TO MERGE
Concord, North Carolina - First Charter Corporation (Nasdaq: FCTR) and Carolina
First BancShares, Inc. (Nasdaq: CFBI) jointly announced today that they have
entered into a definitive merger agreement for First Charter to acquire Carolina
First. Under the terms of the agreement, Carolina First BancShares, Inc. will be
merged into First Charter Corporation and each Carolina First shareholder will
receive 2.267 shares of First Charter common stock for each share of Carolina
First common stock. Based on First Charter's closing price on November 5, 1999,
the transaction is valued at approximately $260 million or $42.50 per share.
"The combination of First Charter and Carolina First is a key move in our
company's strategic plan in that it will strengthen our presence in several
attractive, high growth markets in the Charlotte Metropolitan area," said
Lawrence M. Kimbrough, Chief Executive Officer of First Charter Corporation.
"Merging with Carolina First will enable us to deliver our products and services
to an expanded customer base, continue strong earnings growth and create greater
value for our customers and shareholders."
When the merger is completed, First Charter will have $2.6 billion in assets,
$1.8 billion in deposits and 64 financial centers in North Carolina. The new
company will have the eighth largest deposit market share in North Carolina and
the fifth largest in Charlotte, which was recently recognized as the second
fastest growing city in the U.S. The pro-forma market capitalization will be
$583 million or 91st among all banks in the country.
<PAGE> 2
Carolina First Chief Executive Officer James E. Burt, III stated, "The merger
with First Charter will give our customers a variety of benefits, including a
more extensive network of branches and ATMs, full service telephone banking, and
a broader array of financial services to meet their needs. We are excited about
the opportunities that will result from the merger of our two companies and
confident that our employees and shareholders will recognize the advantages
brought by First Charter's depth of management, commitment to exceptional
service quality and marketplace momentum."
Following the merger, Lawrence M. Kimbrough will continue in his role as
President and Chief Executive Officer of First Charter. James E. Burt, III will
become Chairman of the First Charter National Bank Board of Directors and a
member of the executive leadership team. Other members of the Carolina First
management team are expected to serve in key customer contact positions in
strategic markets.
Subject to certain conditions, including the approval of both companies'
shareholders and applicable regulatory authorities, the merger is expected to
close no later than the second quarter of 2000. The transaction is intended to
be tax-free to the shareholders of Carolina First and will be accounted for as a
pooling of interests.
First Charter Corporation is a regional bank holding company headquartered in
Concord, North Carolina, with $1.8 billion in assets. Through its banking
subsidiary, First Charter operates 33 financial centers, a full service
telephone banking center, and a network of 71 automated teller machines in North
Carolina. First Charter provides businesses and individuals with a broad range
of financial services, including banking, financial planning, funds management,
investments, insurance, mortgages and a full array of employee benefit programs.
Carolina First BancShares, Inc. is a bank holding company headquartered in
Lincolnton, North Carolina, with $774 million in assets. Through its three bank
subsidiaries, Lincoln Bank of North Carolina, Cabarrus Bank of North Carolina,
and Community Bank and Trust Company, it operates 31 full service offices in 12
counties. Carolina First maintains a number one deposit share in the South
Iredell and Lincoln County areas.
This news release contains forward-looking statements, including estimates of
future operating results and other forward-looking financial information for
First Charter Corporation and Carolina First BancShares, Inc. These estimates
constitute forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. As such, the estimates involve
significant risks and uncertainties. Actual results may differ materially due to
such factors as: (1) expected cost savings from the merger not materializing
within the expected time frame; (2) revenues following the merger not meeting
expectations; (3) competitive pressures among financial institutions increasing
significantly; (4) costs or difficulties related to the integration of the
businesses of First Charter Corporation and Carolina First BancShares, Inc.
being greater than anticipated; (5) general economic conditions being less
favorable than anticipated; (6) legislation or regulatory changes adversely
affecting the business in which the combined company will be engaged; and (7)
the timing of the completion of the transactions.
<PAGE> 1
Exhibit 99.2
First Charter Corporation - Carolina First BancShares, Inc.
Merger Supplementary Materials
November 8, 1999
<PAGE> 2
[FIRST CHARTER LOGO]
[CAROLINA FIRST BANCSHARES, INC. LOGO]
Growing the Franchise in High Growth Markets
Investor Presentation
November 8, 1999
<PAGE> 3
Forward-Looking Disclaimer
This news release contains forward-looking statements, including estimates of
future operating results and other forward-looking financial information for
First Charter Corporation and Carolina First BancShares, Inc. These estimates
constitute forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. As such, the estimates involve
significant risks and uncertainties. Actual results may differ materially due to
such factors as: (1) expected cost savings from the merger not materializing
within the expected time frame; (2) revenues following the merger not meeting
expectations; (3) competitive pressures among financial institutions increasing
significantly; (4) costs of difficulties related to the integration of the
businesses of First Charter and Carolina First being greater than anticipated;
(5) general economic conditions being less favorable than anticipated; and (6)
legislation or regulatory changes adversely affecting the business in which the
combined company will be engaged.
First Charter believes these forward looking statements are reasonable; however,
undue reliance should not be placed on such forward looking statements, which
are based on current expectations. Such statements are not guarantees of
performance. They involve risks, uncertainties and assumptions. The future
results and shareholder values of First Charter following completion of the
merger may differ materially from those expressed in these forward-looking
statements. Many of the factors that will determine these results and values are
beyond management's ability to control or predict.
<PAGE> 4
Overview
- Transaction Summary
- Company Profiles
- Financial Summary
- Strategic Rationale
<PAGE> 5
Transaction Summary
Terms
- Fixed exchange ratio of 2.267
- Transaction value of $260 million*
- $42.50 per Carolina First share
- 24.7x LTM earnings or 387.1% price to book
- Lock-up option granted to First Charter of 19.9%
- Indexed walk-away option
Structure
- Pooling-of-interests / Tax-free exchange
- Definitive agreement signed
Timing
- Subject to regulatory and shareholder approvals
- Expected to close in the second quarter 2000
(*) Pricing data based upon FCTR November 5th close of $18.75.
<PAGE> 6
Transaction Summary
Ownership
- First Charter Corporation 57%
- Carolina First BancShares, Inc. 43%
Board of Directors
- First Charter Corporation 10 seats
- Carolina First BancShares, Inc. 6 seats
Management of First Charter
- J. Roy Davis, Jr.
Chairman of First Charter Corporation
- Lawrence M. Kimbrough
Chief Executive Officer of First Charter Corporation
- James E. Burt, III
Chairman of First Charter National Bank
<PAGE> 7
First Charter Corporation
[Map of several counties of Central-Western North Carolina showing locations of
First Charter Corporation financial centers.]
- - In the Charlotte SMSA - 33 Financial Centers
- - $1.8 Billion in Assets - 71 ATMs
- 550 Employees
<PAGE> 8
Carolina First BancShares, Inc.
[Map of several counties of Central-Western North Carolina showing locations of
Carolina First BancShares, Inc. financial centers.]
- - Overlapping Markets - 31 Branch Offices
- - $774 Million in Assets - 30 ATMs
- 375 Employees
<PAGE> 9
Financial Summary
For the Six Months Ended: 6/30/99 6/30/99
FCTR(1) CFBI(1)
------- -------
Return on Average Assets 1.39% 1.27%
Return on Average Equity 10.64 14.80
Cost of Funds 4.63 3.90
Net Interest Margin (FTE) 4.25 5.22
Efficiency ratio 53.09 62.31
Reserve/NPLs 265.92 358.93
NPAs/Assets .48 .30
(1) Excludes non-recurring items.
<PAGE> 10
Carolina First BancShares, Inc.
- - Loan Growth
[Graph showing percentage growth
for years 1995 - 1999.]
% Growth
--------
1995 22.2
1996 20.9
1997 11.6
1998 17.8
1999 16.4
Carolina First
--------------
- - Deposit Growth Average Branch Deposit Growth 96-99 36.31%
84% of Carolina First's branches have grown in excess of 20%
from 1996 - 1998
Source: SNL Securities and company filings
Loan data are year end, except 1999 which is latest twelve
months as of 9/30/99.
Deposit data exclude zero deposit branches.
<PAGE> 11
Strategic Rationale
- - Enhances position in high growth market
- - 33% franchise overlap
- - Provides access to lower cost of funds market
- - Creates larger cross selling platform
- - Reduces thrift component of balance sheet
- - Opportunity to leverage investment in people and technology
<PAGE> 12
Charlotte Metro Market Characteristics
- - 25th largest city in the US
- The 2nd fastest growing city in the country
- - Strong, diversified economy
- - Over 1.6 million potential retail customers
- 53% of households have a income greater than $35,000
- - Over 15,000 middle-market businesses
<PAGE> 13
Growth Markets
Projected Total Population Projected Household Income
Growth 1998-2003 (%) Growth 1998-2003 (%)
[GRAPH] [GRAPH]
% Growth % Growth
-------- --------
FCTR/CFBI 8.51 FCTR/CFBI 23.73
CCB 6.87 CCB 22.81
CBC 7.11 CBC 22.22
BBT 5.74 BBT 21.70
NC 7.17 NC 23.78
USA 4.26 USA 20.31
Population growth and income data are weighted averages based on deposits as of
6/30/98.
Source: SNL Securities & Claritas.
<PAGE> 14
Pro-Forma Financial Data
- Assets: $2,596 Million
[Map showing location of - Loans: 1,899
financial institutions of
First Charter and - Deposits: 1,798
Carolina First BancShares.]
- Equity: 290
- Market Cap: 583
- Rank: 91st in US
Balance sheet data as of 9/30/99 press releases.
<PAGE> 15
Market Share
Deposit Market Share Ranking
[N.C. LOGO] [CHARLOTTE CITY LOGO]
Rank: 8th in N.C. Rank: 5th
COMBINED
[LAKE NORMAN LOGO] ZIP CODES
Rank: 1st Rank: 1st
Source: SNL Securities; deposit data as of 6/30/98.
Zip codes comprising Lake Norman are 28166, 28115, 28036, 28037 and 28078.
<PAGE> 16
Pro Forma Performance
Return on Average Assets (%) Return on Average Equity (%)
[GRAPH] [GRAPH]
Pre-Home Federal, Pre-Home, FCTR YTD,
FCTR YTD, FCTR/CFBI FCTR/CFBI Pro Forma
Pro Forma
ROA ROE
--- ---
Pre-Home Federal 1.62% 15.20%
FCTR YTD 6/30/99 1.39 10.64
FCTR/CFBI Pro Forma 1.63 15.23
Pre-Home Federal data as of 3/31/98.
<PAGE> 17
Estimated Synergies (Fully Phased In)
Total
Expense Savings
($ in millions)
---------------
Non-Interest Expense $2.2
Branch Consolidation 5.0
Back Office/Salaries 2.2
----
Total $9.4 34.8% of non-interest
expense
Other
Non-Interest Income $1.4
Deposit Repricing 1.6
-----
Total $3.0 1.1% of gross
----- revenues
Total $12.4
<PAGE> 18
Merger Related Charges
Total
($ in thousands)
----------------
Conversion costs $700
Employee related 4,000
Lease buyouts/equipment writedowns 2,000
Professional services 3,600
Other 1,000
-------
Total pre-tax merger charges $11,300
Total after-tax merger charges $9,000
<PAGE> 19
EPS Accretion
2nd Half
($ Thousands except per share) 2000 2001
------------------------------ -------- -------
First Charter EPS $0.77 $1.66
First Charter Net Income $13,551 $29,205
Carolina First Net Income 6,206 14,020
------- -------
Combined Net Income $19,758 $43,225
Cost Savings (after-tax) 3,894 9,191
Pro Forma Earnings $23,652 $52,416
======= =======
Pro Forma Earnings Per Share $0.76 $1.69
======= =======
Earnings Per Share Accretion (%) (1.31) 1.49
<PAGE> 20
Successful Integration History
<TABLE>
<CAPTION>
Deal Acquired Acquired Expense
Announcement Value Assets Assets as Market Savings
Acquisition Date ($MM) ($MM) % of FCTR Overlap Achieved
- ----------- ------------ ----- -------- --------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Bank of Union 9/13/95 $35.4 $ 134.0 39.7% No Yes
Carolina State Bank 6/30/97 38.7 141.5 26.4 No Yes
HFNC Financial 5/18/98 241.0 1,007.9 53.3 Yes Yes
</TABLE>
<PAGE> 21
Summary
- - Two companies with successful merger history
- Carolina First represents First Charter's 4th acquisition in
an overlapping, high growth market
- - 33% overlap, 35% expense savings
- - Opportunity for revenue growth and lower costs of funds
- - Strong management team
- Demonstrated acquisition experience and earnings performance
- - Dedicated to delivering exceptional customer service
- - The transaction is expected to be accretive to earnings per share
Expect More From Us.
<PAGE> 22
Comparable Acquisitions
<TABLE>
<CAPTION>
Seller's Deal Deal Deal
Ann. Assets Value Premium Price/ Price/
Buyer ST Seller ST Date ($000s) ($M) to Market Book LTM EPS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Wachovia Corp. NC B.C. Bankshares Inc. GA 10/7/99 $382 $133.9 NM% 358.5% 20.9x
Old National Bancorp IN ANB Corporation IN 7/30/99 784 212.4 33.0 285.5 23.9
Fifth Third Bancorp OH Peoples Bank Corp IN 7/12/99 650 229.9 52.1 417.8 26.5
Sky Financial Group Inc. OH Mahoning National Bancorp OH 6/7/99 809 306.5 54.5 315.7 21.4
Synovus Financial Corporation GA Merit Holding Corp. GA 3/19/99 306 115.2 25.9 308.7 23.2
BB&T Corporation NC Matewan Bancshares Inc. WV 2/25/99 684 157.9 24.4 245.9 27.3
Union Planters Corp. TN Republic Banking FL 2/22/99 1,575 412.0 12.8 239.1 25.7
Summit Bancorp NJ Prime Bancorp PA 2/18/99 1,039 292.0 47.7 324.9 24.6
Independence Community Bank Corp. NY Broad National Bancorp. NJ 2/1/99 685 138.8 18.1 295.6 18.1
BB&T Corp. NC Mason-Dixon Bancshares Inc. MD 1/28/99 1,102 259.4 74.2 298.4 24.2
Valley National Bancorp NJ Ramapo Financial Corp. NJ 12/17/98 328 107.3 51.7 298.6 30.1
First Financial Bancorp OH Sand Ridge Financial Corp. IN 12/17/98 520 140.7 NM 318.2 27.5
Sky Financial Group Inc. OH First Western Bancorp Inc. PA 12/14/98 2,203 424.3 23.1 280.0 22.0
M&T Bank Corporation NY FNB Rochester Corporation NY 12/9/98 568 128.8 50.4 316.5 25.2
- ------------------------------------------------------------------------------------------------------------------------------------
Average: 39.0% 307.4% 24.3x
Minimum: 12.8 239.1 18.1
Maximum: 74.2 417.8 30.1
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
First Charter Carolina First 11/8/99 63.5% 387.1% 24.7x
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Sources: SNL Securities, press releases and company SEC filings.
All bank/bank deals between $100 - $600 million in AL, AR, DC, DE, FL, GA, IN,
KY, MD, MS, NJ, NY, NC, OH, PA, SC, TN, VA and WV announced since 10/01/98.
Most recent available financial data prior to announcement used for comparable
companies.
<PAGE> 23
Pro Forma Performance
First Charter
First Charter Pro Forma
------------- -------------
1-4 Mortgage Loans / Loans 46.77 % 42.21 %
CD's / Total Deposits 50.43 49.67
Loans / Deposits 121.81 105.61
Tier 1 Leverage Ratio 12.38 10.29
Net Interest Margin 3.89 4.23
Non-Interest Income / Average Assets 0.85 0.98
Return on Average Assets 1.33 1.63
Return on Average Equity 11.25 15.23
Source: Company releases and FDIC
Balance sheet data as of 9/30/99.
Income statement items reflect fully phased in synergies assumptions for 2000.
Performance data exclude First Charters's securities gains. Margin is reported,
not FTE.
