<PAGE> 1
As filed with the Securities and Exchange Commission on January 18, 2000
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):
January 18, 2000
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 January 18, 2000, First Charter Corporation (the "Registrant")
announced financial results for the three month period and year ended December
31, 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 January 18, 2000
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 thereunto duly authorized.
FIRST CHARTER CORPORATION
By: /s/ Lawrence M. Kimbrough
-------------------------------------
Lawrence M. Kimbrough
President and Chief Executive Officer
Dated: January 18, 2000
<PAGE> 4
EXHIBIT INDEX
Exhibit No. Description Sequential Page No.
- ----------- ----------- -------------------
99.1 News Release disseminated on January 18,
2000 by First Charter Corporation.
<PAGE> 1
Exhibit 99.1
NEWS RELEASE DATED 1-18-2000
For Additional Information,
Contact Robert O. Bratton,
Chief Financial Officer
(704) 721-4473
or
David E. Keul, Controller
(704) 721-4482
FOR IMMEDIATE RELEASE
January 18, 2000
FIRST CHARTER ANNOUNCES INCREASES IN
FOURTH QUARTER AND YEAR END EARNINGS
Concord, North Carolina -- First Charter Corporation (NASDAQ: FCTR) reported
today a 12.5% increase in diluted earnings per share for the fourth quarter of
1999 of $0.36, compared to $0.32 in the fourth quarter of 1998. Net income
increased 6.8% for the fourth quarter of 1999 to $6.3 million, compared to $5.9
million in the fourth quarter of 1998.
Net income for the year ended December 31, 1999 amounted to $26.1 million, or
$1.45 per diluted share, compared to $9.2 million, or $0.50 per diluted share,
during the same period in 1998. For comparative purposes, the 1999 results
include pretax total gains of $3.5 million ($0.13 per diluted share, after tax)
on the sales of property and mortgage loans. The 1998 results included a pretax
net expense of $15.8 million ($0.69 per diluted share, after tax), which was
comprised of pretax merger expenses of $18.2 million that were offset by pretax
gains totaling $2.4 million from the nonrecurring sales of securities and First
Charter's merchant card program. Recurring net income for the year ended
December 31, 1999 amounted to $23.8 million, or $1.32 per diluted share,
compared to recurring net income of $22.0 million, or $1.19 per diluted share
for the same period in 1998.
Lawrence M. Kimbrough, President and Chief Executive Officer commented that
"First Charter is focused on both core earnings and market growth. Our recurring
diluted earnings per share in 1999 was approximately 11% higher than the
previous year, driven primarily by improved sales, and strategic investments in
technology and personnel. At the same time, we are moving forward with the
announced merger with Carolina First BancShares, Inc., which will strengthen our
presence in the Charlotte metropolitan market."
<PAGE> 2
NET INTEREST INCOME
Net interest income for the fourth quarter of 1999 increased to $17.9 million,
up 7.8% compared to the same quarter of 1998. Net interest income for the year
ended December 31, 1999 increased 5.4% to $69.4 million, compared to $65.9
million in the comparable period in 1998. These increases were driven primarily
by decreases in the cost of funding.
NONINTEREST INCOME AND EXPENSE
Noninterest income for the fourth quarter of 1999 totaled $3.7 million compared
to $3.2 million for the same period in 1998. This increase was primarily the
result of revenue growth from First Charter Insurance Services, which has
acquired four insurance agencies using the purchase accounting method.
Noninterest income for the year ended December 31, 1999 totaled $18.2 million
compared to $13.7 million for the same period in 1998, an increase of 33.4%. For
comparative purposes, the 1999 results include total gains of $3.5 million from
the sales of property and mortgage loans, while the 1998 results included total
gains of $2.4 million from the sale of securities and the sale of First
Charter's merchant card program. Excluding these items, noninterest income
increased 30.1% for the year ended December 31, 1999 compared to the same period
in 1998.
Noninterest expense for the fourth quarter of 1999 totaled $11.6 million
compared to $10.2 million for the same period in 1998. Noninterest expense for
the year ended December 31, 1999 totaled $45.9 million compared to $59.2 million
for the same period in 1998. For comparative purposes, the 1998 results included
merger costs associated with the merger with HFNC Financial Corp. totaling $18.2
million. Excluding the merger costs, noninterest expense for the year ended
December 31, 1999 increased 11.9% compared to the same period in 1998. This
increase was the result of strategic investments in technology, personnel and a
major brand advertising campaign designed to increase First Charter's name
recognition throughout the greater Charlotte metropolitan region.
BALANCE SHEET
Net loans at December 31, 1999 and December 31, 1998 amounted to $1.4 billion.
This amount is unchanged from prior periods due to the sale of $147.6 million of
30 year fixed rate mortgage loans in April 1999. Strong commercial loan
portfolio growth during 1999 offset the amount of mortgage loans sold. The
provision for loan losses for the year ended December 31, 1999 amounted to $3.4
million compared to $2.4 million for the same period in 1998. The provision for
loan losses during the fourth quarter of 1999 amounted to $750,000, compared to
$459,000 during the same period in 1998. As a result of year to date increased
commercial loan volume, the year to date and quarter to date provisions for loan
losses have increased from prior year levels. At December 31, 1999 nonperforming
assets were $9.8 million, compared to $9.9 million at December 31, 1998.
Nonperforming assets represent 0.52% of total assets at December 31, 1999 and
0.53% of total assets at December 31, 1998.
Total deposits at December 31, 1999 and 1998 amounted to $1.1 billion.
Shareholders' equity at December 31, 1999 was $227.7 million, which represents a
book value per share of $12.96 and a period end equity-to-assets percentage of
12.02%. Based on the $14.875 closing price of First Charter Corporation common
stock at December 31, 1999, the Corporation had a market capitalization of
$261.4 million.
<PAGE> 3
CORPORATE PROFILE
First Charter Corporation is the holding company for First Charter National
Bank. A regional financial services company with assets of $1.9 billion, First
Charter operates 33 financial centers and 71 ATMs located in six counties
throughout the greater Charlotte metropolitan area. First Charter provides
businesses and individuals with a broad range of financial services, including
banking, comprehensive financial planning, funds management, investments,
insurance, mortgages and a full array of employee benefit programs. Common stock
for First Charter Corporation is traded under the symbol "FCTR" on the NASDAQ
National Market.
On November 8, 1999, First Charter Corporation and Carolina First BancShares,
Inc. (Nasdaq: CFBI) jointly announced 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.
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.
This news release contains forward-looking statements. Such statements are
subject to certain factors which may cause the company's results to vary from
those expected, including the risks set forth from time to time in the company's
filings with the Securities and Exchange Commission. Readers are cautioned not
to place undue reliance on these forward-looking statements, which reflect
management's judgment only as of the date hereof. The company undertakes no
obligation to publicly revise these forward-looking statements to reflect events
and circumstances that arise after the date hereof.
(SELECTED FINANCIAL INFORMATION IS ATTACHED)
<PAGE> 4
FIRST CHARTER CORPORATION AND SUBSIDIARIES
(Unaudited, except for December 1998 amounts)
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands) DECEMBER 31, DECEMBER 31,
ASSETS: 1999 1998 CHANGE
-------------------------------------
<S> <C> <C> <C>
Cash and due from banks ............................... $ 59,967 $ 41,884 43.2%
Federal funds sold .................................... 665 6,402 (89.6)
Interest earning bank deposits......................... 1,995 11,713 (83.0)
Securities available for sale.......................... 342,136 331,799 3.1
Loans, net ............................................ 1,408,953 1,406,967 0.1
Other assets .......................................... 80,601 65,592 22.9
---------- ---------- ----
Total Assets ................................... $1,894,317 $1,864,357 1.6
========== ========== ====
LIABILITIES AND SHAREHOLDERS' EQUITY:
Total deposits......................................... $1,149,512 $1,123,035 2.4%
Other borrowings ...................................... 491,976 469,944 4.7
Other liabilities ..................................... 25,117 25,406 (1.1)
---------- ---------- ----
Total liabilities .............................. 1,666,605 1,618,385 3.0
Total shareholders' equity ..................... 227,712 245,972 (7.4)
---------- ---------- ----
Total liabilities and shareholders' equity...... $1,894,317 $1,864,357 1.6
========== ========== ====
</TABLE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF INCOME THREE MONTHS ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------
(Dollars in thousands) 1999 1998 CHANGE 1999 1998 CHANGE
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Interest and fees on loans ............................. $29,927 $29,640 1.0% $116,834 $116,376 0.4%
Interest on securities ................................. 5,191 4,707 10.3 19,480 18,906 3.0
Other interest income .................................. 49 259 (81.1) 403 1,227 (67.2)
------- ------- ----- -------- -------- -----
Total interest income ............................... 35,167 34,606 1.6 136,717 136,509 0.2
------- ------- ----- -------- -------- -----
Interest on deposits ................................... 11,231 11,600 (3.2) 44,371 46,141 (3.8)
Other interest expense ................................. 6,043 6,413 (5.8) 22,898 24,482 (6.5)
------- ------- ----- -------- -------- -----
Total interest expense .............................. 17,274 18,013 (4.1) 67,269 70,623 (4.7)
------- ------- ----- -------- -------- -----
Net interest income ............................. 17,893 16,593 7.8 69,448 65,886 5.4
Provision for loan losses .............................. 750 459 63.4 3,350 2,376 41.0
------- ------- ----- -------- -------- -----
Net interest income after provision ............. 17,143 16,134 6.3 66,098 63,510 4.1
------- ------- ----- -------- -------- -----
Trust income ........................................... 620 567 9.3 2,303 2,006 14.8
Service charges on deposit accounts .................... 1,598 1,134 40.9 4,929 4,320 14.1
Gain on sale of securities ............................. 315 260 21.2 1,158 2,222 (47.9)
Gain on sale of loans .................................. -- -- -- 1,757 -- --
Gain on sale of property ............................... -- -- -- 1,752 -- --
Insurance and other fee income ......................... 1,058 104 917.3 4,871 2,127 129.0
Other noninterest income ............................... 108 1,108 (90.3) 1,443 2,975 (51.5)
------- ------- ----- -------- -------- -----
Total noninterest income ............................ 3,699 3,173 16.6 18,213 13,650 33.4
------- ------- ----- -------- -------- -----
Salaries and employee benefits ......................... 6,077 5,280 15.1 24,057 22,904 5.0
Occupancy and equipment ................................ 2,107 1,873 12.5 7,570 6,205 22.0
Merger expense ......................................... -- -- -- -- 18,192 (100.0)
Other noninterest expense .............................. 3,441 3,021 13.9 14,242 11,865 20.0
------- ------- ----- -------- -------- -----
Total noninterest expense ........................... 11,625 10,174 14.3 45,869 59,166 (22.5)
------- ------- ----- -------- -------- -----
Income before income taxes ...................... 9,217 9,133 0.9 38,442 17,994 113.6
Income taxes ........................................ 2,937 3,253 (9.7) 12,350 8,758 41.0
------- ------- ----- -------- -------- -----
Net income ............................................. $ 6,280 $ 5,880 6.8 $ 26,092 $ 9,236 182.5
======= ======= === ======== ======== =====
Net interest income, taxable equivalent.............. $18,706 $17,333 7.9% $ 72,489 $ 68,573 5.7%
======= ======= === ======== ======== =====
</TABLE>
<TABLE>
<CAPTION>
SHARE INFORMATION THREE MONTHS ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------
1999 1998 CHANGE 1999 1998 CHANGE
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Basic income per share:
Net income ...................................... $ 0.36 $ 0.32 12.5% $ 1.45 $ 0.51 184.3%
Average common equivalent shares ................ 17,572,796 18,433,665 (4.7) 17,985,960 18,273,281 (1.6)
Diluted income per share:
Net income ...................................... $ 0.36 $ 0.32 12.5 $ 1.45 $ 0.50 190.0
Average common equivalent shares ................ 17,603,259 18,484,993 (4.8) 18,053,064 18,571,805 (2.8)
Shares outstanding at period end ....................... 17,571,729 18,442,202 (4.7) 17,571,729 18,442,202 (4.7)
Cash dividends declared ................................ $ 0.17 $ 0.17 -- $ 0.68 $ 0.61 11.5
Book value ............................................. $ 12.96 $ 13.34 (2.8) $ 12.96 $ 13.34 (2.8)
</TABLE>
<PAGE> 5
FIRST CHARTER CORPORATION AND SUBSIDIARIES
(Unaudited, except for December 1998 amounts)
<TABLE>
<CAPTION>
LOAN PORTFOLIO DECEMBER 31, DECEMBER 31,
(Dollars in thousands) 1999 1998 Change
------------ ------------ ------
<S> <C> <C> <C>
Commercial ....................... $ 651,808 469,524 38.8 %
Real estate ...................... 640,062 824,385 (22.4)
Home equity ...................... 90,458 75,098 20.5
Installment ...................... 44,167 53,669 (17.7)
---------- ---------- ----
Total ......................... $1,426,495 $1,422,676 0.3
========== ========== ====
</TABLE>
<TABLE>
<CAPTION>
NONPERFORMING ASSETS DECEMBER 31, DECEMBER 31,
(Dollars in thousands) 1999 1998 Change
------------ ------------ ------
<S> <C> <C> <C>
Nonaccrual loans ................. $ 7,738 $ 5,758 34.4 %
Restructured loans ............... 37 577 (93.6)
Other real estate ................ 2,041 3,537 (42.3)
---------- ---------- ----
Total non-performing assets ... $ 9,816 $ 9,872 (0.6)
========== ========== ====
</TABLE>
<TABLE>
<CAPTION>
ALLOWANCE FOR LOAN LOSSES YEAR ENDED DECEMBER 31,
--------------------------------------
(Dollars in thousands) 1999 1998 Change
-------- -------- ------
<S> <C> <C> <C>
Beginning balance (January 1) .... $ 15,554 $ 15,263 1.9 %
Provision charged to operations ... 3,350 2,376 41.0
Allowance related to loans sold ... (369) -- --
Charge-offs ....................... (1,915) (2,737) (30.0)
Recoveries ........................ 719 652 10.3
-------- -------- ----
Net loan charge-offs ........... (1,196) (2,085) (42.6)
-------- -------- ----
Ending balance .............. $ 17,339 $ 15,554 11.5
======== ======== ====
</TABLE>
<TABLE>
<CAPTION>
SELECTED AVERAGE BALANCES THREE MONTHS ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
------------------------------------------ --------------------------------------
(Dollars in thousands) 1999 1998 Change 1999 1998 Change
---------- ---------- ------ ---------- ---------- ------
<S> <C> <C> <C> <C> <C> <C>
Loans ................................ $1,405,800 $1,406,426 (0.0)% $1,398,285 $1,358,949 2.9 %
Securities ........................... 347,673 303,822 14.4 331,379 306,533 8.1
Total interest earning assets ........ 1,756,984 1,731,943 1.4 1,736,381 1,687,835 2.9
Assets ............................... 1,846,232 1,873,173 (1.4) 1,826,421 1,813,012 0.7
Deposits ............................. 1,152,184 1,140,333 1.0 1,130,032 1,096,460 3.1
Total interest bearing liabilities ... 1,458,469 1,467,327 (0.6) 1,440,121 1,404,681 2.5
Shareholders' equity ................. 220,986 247,147 (10.6) 230,149 251,289 (8.4)
</TABLE>
<TABLE>
<CAPTION>
Selected Yield/Cost Rates Three Months Ended December 31, Year Ended December 31,
---------------------------------- -------------------------------
1999 1998 Change 1999 1998 CHANGE
---- ---- ------ ---- ---- ------
<S> <C> <C> <C> <C> <C> <C>
Yield on loans (FTE) ..................... 8.49 % 8.40 % 9 BP 8.40 % 8.59 % (19)BP
Yield on securities (FTE) ................ 6.66 6.91 (25) 6.62 6.93 (31)
Yield on interest earning assets (FTE) ... 8.12 8.10 2 8.05 8.25 (20)
Cost of deposits ......................... 3.87 4.04 (17) 3.93 4.21 (28)
Cost of interest bearing liabilities ..... 4.70 4.87 (17) 4.67 5.03 (36)
Interest rate spread ..................... 3.42 3.23 19 3.38 3.22 16
Net interest margin* ..................... 4.22 3.97 25 4.17 4.07 10
</TABLE>
<TABLE>
<CAPTION>
Significant Financial/Operating Ratios Year Ended December 31,
----------------------------------
1999 1998 Change
------ ------ ------
<S> <C> <C> <C>
Return on average assets ......................... 1.43 % 0.51 % 92 BP
Return on average equity ......................... 11.34 3.68 766
Efficiency ratio** ............................... 53.89 51.22 267
Allowance for loan losses to gross loans ......... 1.22 1.09 13
Nonperforming assets to assets ................... 0.52 0.53 (1)
Reserves to nonperforming loans .................. 223.01 245.52 (2,251)
Interest bearing liabilities to earning assets ... 92.67 89.87 280
Equity to assets ................................. 12.02 13.19 (117)
Gross loans to deposits .......................... 124.10 126.68 (258)
Earning assets to total assets ................... 93.51 95.08 (157)
</TABLE>
BP Change is measured in basis points
FTE Fully taxable equivalent
* Net interest income, on a fully-taxable equivalent basis, as a percentage
of average earning assets.
** Recurring noninterest expense less foreclosed property expense divided by
the sum of taxable equivalent net interest income plus recurring
noninterest income.
