<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
------------------- -----------------------
Commission file number 0-15829
-------------
FIRST CHARTER CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
North Carolina 56-1355866
------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
22 Union Street North, Concord, North Carolina 28025
---------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(704) 786-3300
----------------------------------------------------
(Registrant's telephone number, including area code)
N/A
----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes [ ] No[ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
31,181,643 shares of Common Stock, no par value, outstanding as of
August 11, 2000.
<PAGE> 2
PART 1. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
FIRST CHARTER CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, December 31,
2000 1999
---------------------------------------------------------------------------------------------------------------------
(Dollars in thousands, except share data) (UNAUDITED)
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS:
Cash and due from banks........................................................ $ 71,355 $ 94,065
Federal funds sold............................................................. 1,658 665
Interest bearing bank deposits................................................. 8,196 1,995
--------------------------------
Cash and cash equivalents................................................. 81,209 96,725
Securities held to maturity (market value of $ -- at June 30, 2000 and
$34,686 at December 31, 1999)............................................. -- 36,082
Securities available for sale (cost of $515,230 at June 30, 2000 and
$500,452 at December 31, 1999)............................................ 500,310 487,435
Loans.......................................................................... 2,089,526 1,968,077
Less: Unearned income................................................... (152) (204)
Allowance for loan losses......................................... (26,700) (25,002)
--------------------------------
Loans, net................................................................ 2,062,674 1,942,871
--------------------------------
Premises and equipment, net.................................................... 61,878 56,265
Other assets................................................................... 80,053 58,070
--------------------------------
Total assets.......................................................... $ 2,786,124 $ 2,677,448
================================
LIABILITIES AND SHAREHOLDERS' EQUITY:
Deposits, domestic:
Noninterest bearing demand............................................ $ 252,595 $ 228,030
Interest bearing...................................................... 1,618,363 1,588,461
--------------------------------
Total deposits............................................... 1,870,958 1,816,491
Other borrowings............................................................... 584,144 542,021
Other liabilities.............................................................. 42,221 28,694
--------------------------------
Total liabilities..................................................... 2,497,323 2,387,206
--------------------------------
Shareholders' equity:
Common stock - no par value; authorized 100,000,000 shares at 6/30/00 and
50,000,000 shares at 12/31/99, issued and outstanding 31,126,570
shares at 6/30/00 and 30,817,611 shares at 12/31/99..................... 149,174 146,438
Retained earnings.............................................................. 148,386 151,189
Accumulated other comprehensive income (loss):
Unrealized loss on securities available for sale, net..................... (8,759) (7,385)
--------------------------------
Total shareholders' equity............................................ 288,801 290,242
--------------------------------
Total liabilities and shareholders' equity............................ $ 2,786,124 $ 2,677,448
================================
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE> 3
FIRST CHARTER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE SIX MONTHS
ENDED JUNE 30 ENDED JUNE 30
------------------------- ------------------------
(Dollars in thousands, except share and per share data) 2000 1999 2000 1999
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest income:
Loans.................................................... $ 45,167 $ 39,643 $ 88,570 $ 80,200
Federal funds sold....................................... 135 60 218 395
Interest bearing bank deposits........................... 32 79 76 225
Securities .............................................. 8,009 7,590 16,117 14,976
------------------------- --------------------------
Total interest income............................ 53,343 47,372 104,981 95,796
------------------------- --------------------------
Interest expense:
Deposits................................................. 17,413 16,475 34,265 33,332
Federal funds purchased and securities
sold under agreements to repurchase.................. 1,813 992 3,362 2,357
Federal Home Loan Bank and other borrowings.............. 6,973 4,353 13,171 9,384
------------------------- --------------------------
Total interest expense........................... 26,199 21,820 50,798 45,073
------------------------- --------------------------
Net interest income.................. 27,144 25,552 54,183 50,723
Provision for loan losses......................................... 1,370 1,597 3,340 2,955
------------------------- --------------------------
Net interest income after provision for loan losses...... 25,774 23,955 50,843 47,768
Noninterest income:
Trust income............................................. 698 627 1,378 1,221
Service charges on deposit accounts...................... 3,091 2,142 5,642 4,131
Gain on sale of securities............................... 260 274 412 658
Gain (loss) on sale of loans............................. (99) 1,757 (99) 1,757
Insurance and other fee income........................... 1,619 1,558 3,490 3,232
Other.................................................... 1,615 1,040 2,947 2,135
------------------------- --------------------------
Total noninterest income......................... 7,184 7,398 13,770 13,134
------------------------- --------------------------
Noninterest expense:
Salaries and employee benefits........................... 10,053 8,922 20,235 17,869
Occupancy and equipment.................................. 3,133 2,984 6,146 5,605
Restructuring and merger related......................... 15,675 -- 15,675 --
Other.................................................... 5,754 6,516 11,802 12,269
------------------------- --------------------------
Total noninterest expense........................ 34,615 18,422 53,858 35,743
------------------------- --------------------------
Income (loss) before income taxes.... (1,657) 12,931 10,755 25,159
Income taxes...................................................... 681 4,019 4,625 7,975
------------------------- --------------------------
Net income (loss)................................................. $ (2,338) $ 8,912 $ 6,130 $ 17,184
========================= ==========================
Net income (loss) per share:
Basic............................................ $ (0.08) $ 0.28 $ 0.20 $ 0.54
Diluted.......................................... $ (0.08) $ 0.28 $ 0.20 $ 0.54
Weighted average shares:
Basic............................................ 31,119,789 31,437,082 31,041,095 31,615,245
Diluted.......................................... 31,301,829 31,726,228 31,209,513 31,888,421
</TABLE>
See accompanying notes to consolidated financial statements.
-3-
<PAGE> 4
FIRST CHARTER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
Accumulated
Common Stock Other
-------------------------- Retained Comprehensive
(Dollars in thousands) Shares Amount Earnings Income (Loss) Total
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1998..................... 31,545,196 $ 155,290 $ 143,110 $ 7,174 $ 305,574
Comprehensive income:
Net income through June 30, 1999........... -- -- 17,184 -- 17,184
Unrealized loss on securities available
for sale, net............................ -- -- -- (7,472) (7,472)
---------
Total comprehensive income..... 9,712
Cash dividends................................. -- -- (7,234) -- (7,234)
Stock options exercised and Dividend
Reinvestment Plan stock issued............... 159,635 746 -- -- 746
Shares issued in connection with
business acquisition......................... 68,551 1,273 -- -- 1,273
Purchase and retirement of common stock........ (749,140) (17,785) -- -- (17,785)
-----------------------------------------------------------------------------
Balance, June 30, 1999......................... 31,024,242 $ 139,524 $ 153,060 $ (298) $ 292,286
=============================================================================
Balance, December 31, 1999..................... 30,817,611 $ 146,438 $ 151,189 $ (7,385) $ 290,242
Comprehensive income:
Net income through June 30, 2000........... -- -- 6,130 -- 6,130
Unrealized loss on securities
available for sale, net.................. -- -- -- (1,374) (1,374)
---------
Total comprehensive income..... 4,756
Cash dividends................................. -- -- (8,933) -- (8,933)
Stock options exercised and Dividend
Reinvestment Plan stock issued............... 189,426 737 -- -- 737
Shares issued in connection with
business acquisition......................... 122,263 2,025 -- -- 2,025
Purchase and retirement of common stock........ (2,730) (26) -- -- (26)
-----------------------------------------------------------------------------
Balance, June 30, 2000......................... 31,126,570 $ 149,174 $ 148,386 $ (8,759) $ 288,801
=============================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE> 5
FIRST CHARTER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30,
--------------------------------------------------------------------------------------------------------------
(Dollars in thousands) 2000 1999
--------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................................................... $ 6,130 $17,184
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for loan losses.............................................. 3,340 2,955
Depreciation........................................................... 3,094 3,231
Premium amortization and discount accretion, net....................... 37 (619)
Net gain on securities available for sale transactions................. (412) (658)
Net gain on sale of other real estate.................................. (57) (75)
Net loss (gain) on sale of mortgage loans.............................. 99 (1,757)
Net loss on sale of premises and equipment............................. 4 28
Origination of mortgage loans held for sale............................ (27,311) (28,340)
Proceeds from sale of mortgage loans held for sale..................... 71,521 178,830
(Increase) decrease in other assets.................................... (17,204) 7,199
Increase in other liabilities.......................................... 13,527 1,722
-----------------------------
Net cash provided by operating activities...................... 52,769 179,700
-----------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of securities available for sale................... 32,276 20,101
Proceeds from maturities of securities available for sale.............. 26,630 91,488
Purchase of securities available for sale.............................. (37,987) (133,195)
Proceeds from calls and maturities of securities held to maturity ..... 758 6,700
Purchase of securities held to maturity ............................... -- (13,986)
Net increase in loans.................................................. (170,074) (125,935)
Proceeds from sales of other real estate............................... 1,533 2,609
Net purchases of premises and equipment................................ (9,790) (3,678)
-----------------------------
Net cash used by investing activities.......................... (156,653) (155,896)
-----------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (decrease) increase in demand, money market and savings accounts... (29,903) 43,021
Net increase (decrease) in certificates of deposit..................... 84,370 (22,293)
Net increase (decrease) in securities sold under repurchase
agreements and other borrowings.................................. 42,123 (50,800)
Purchase and retirement of common stock................................ (26) (17,785)
Proceeds from issuance of common stock................................. 737 746
Dividends paid......................................................... (8,933) (7,234)
-----------------------------
Net cash provided by (used in) financing activities............ 88,368 (54,345)
-----------------------------
Net decrease in cash and cash equivalents...................... (15,516) (30,541)
Cash and cash equivalents at beginning of period............... 96,725 102,608
-----------------------------
Cash and cash equivalents at end of period..................... $ 81,209 $ 72,067
=============================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period
for:
Interest............................................................. $ 50,011 $ 46,829
=============================
Income taxes......................................................... $ 860 $ 7,489
=============================
SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS:
Transfer of loans and premises and equipment
to other real estate owned........................................... $ (2,796) $ 1,162
=============================
Unrealized loss on securities available for sale (net of tax effect
of $(529) and $(2,914) for June 30, 2000 and
June 30, 1999, respectively)......................................... $ (1,374) $ (7,472)
=============================
Issuance of common stock for business acquisition............................ $ 2,025 $ 1,273
=============================
Transfer of loans in portfolio to held for sale.............................. $ 45,252 $ 147,555
=============================
Transfer of securities held to maturity to available for sale................ $ 35,324 $ --
=============================
</TABLE>
See accompanying notes to consolidated financial statements.
-5-
<PAGE> 6
FIRST CHARTER CORPORATION AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2000 and 1999 (UNAUDITED)
1. BUSINESS / CONSOLIDATION
The accompanying consolidated financial statements present the
consolidated financial condition and results of operations of First
Charter Corporation (the "Corporation") and its wholly owned
subsidiary, First Charter National Bank (the "Bank"), a commercial bank
operating in Avery, Buncombe, Cabarrus, Catawba, Cleveland, Iredell,
Jackson, Lincoln, McDowell, Mecklenburg, Rowan, Rutherford,
Transylvania and Union counties of North Carolina. In addition, through
its subsidiary First Charter Brokerage Services, the Bank offers
discount brokerage services, insurance and annuity sales and financial
planning services pursuant to a third party arrangement with UVEST
Investment Services. The Bank also operates three other subsidiaries:
First Charter Insurance Services, Inc., First Charter Realty
Investment, Inc., and FCNB Real Estate, Inc. First Charter Insurance
Services, Inc. is a North Carolina corporation formed to meet the
insurance needs of businesses and individuals throughout the Charlotte
metropolitan area. First Charter Realty Investment, Inc. is a Delaware
corporation organized as a holding company for FCNB Real Estate, Inc. a
real estate investment trust organized in North Carolina. In
consolidation, all significant intercompany accounts and transactions
have been eliminated. Certain amounts reported in the prior period have
been reclassified to conform with the current period presentation. Such
reclassifications have no effect on net income or shareholders' equity
as previously reported.
2. FINANCIAL STATEMENT PRESENTATION
The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements, as well as the amounts of income and expenses
during the reporting period. Actual results could differ from those
estimates.
The information furnished in this report reflects all adjustments which
are, in the opinion of management, necessary to present a fair
statement of the financial condition and the results of operations for
interim periods. All such adjustments were of a normal recurring
nature.
3. NET INCOME (LOSS) PER SHARE
Basic net income (loss) per share is computed by dividing net income
(loss) by the weighted average number of shares of common stock
outstanding for the year. Diluted net income (loss) per share reflects
the potential dilution that could occur if all of the currently
outstanding stock options on the Corporation's common stock are fully
exercised. The numerators of the basic net income (loss) per share
computations are the same as the numerators of the diluted net income
(loss) per share computations for all periods presented. Due to the net
loss position for the three months ended June 30, 2000, in accordance
with Statements of Financial Accounting Standards No. 128, "Earnings
Per Share", diluted net loss per share is calculated using the basic
weighted average shares to avoid anti-dilution. A reconciliation of the
denominator of the basic net income (loss) per share computations to
the denominator of the diluted net income (loss) per share computations
is as follows:
-6-
<PAGE> 7
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------------------------------------------
June 30, June 30, June 30, June 30,
2000 1999 2000 1999
------------------------------------------------------
<C> <C> <C> <C>
Basic net income (loss) per share denominator:
Weighted average number of
common shares outstanding................ 31,119,789 31,437,082 31,041,095 31,615,245
Dilutive effect arising from
assumed exercise of stock options....... 182,040 289,146 168,418 273,176
------------------------------------------------------
Diluted net income (loss)
per share denominator.......................... 31,301,829 31,726,228 31,209,513 31,888,421
======================================================
</TABLE>
The Corporation paid cash dividends of $0.17 per share during the
quarters ended June 30, 2000 and 1999.
4. MERGER-RELATED ACTIVITY
On April 4, 2000, the Corporation and Carolina First BancShares, Inc.
("Carolina First") announced the consummation of their merger (the
"Merger") in which Carolina First was merged into the Corporation. The
shareholders of each company approved the Merger at separate meetings
held on March 21, 2000. In accordance with the terms of the Merger
Agreement, (i) each share of the $2.50 par value common stock of
Carolina First (excluding shares held by Carolina First or the
Corporation or their respective companies, in each case other than in a
fiduciary capacity or as a result of debts previously contracted) was
converted into 2.267 shares of the no par value common stock of the
Corporation on April 4, 2000. The Merger was accounted for as a
pooling-of-interests and accordingly, all financial results for prior
periods have been restated.
Separate results of operations of the combined entities for the three
months ended March 31, 2000 and 1999 were as follows (dollars in
thousands, except per share data):
<TABLE>
<CAPTION>
Three Months Ended March 31,
------------------------------------------------------------------------
2000 1999
--------------------------------- ----------------------------------
Previously Reported Previously Reported
--------------------- ---------------------
First Carolina First Carolina
Charter First Restated Charter First Restated
--------------------------------- ----------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net interest income........ $16,618 $ 8,451 $25,069 $16,255 $ 7,559 $23,814
Net income................. 6,292 2,174 8,466 6,173 2,100 8,273
Basic income per share..... 0.36 0.36 0.27 0.33 0.35 0.26
Diluted income per share... 0.36 0.36 0.27 0.33 0.35 0.26
</TABLE>
In connection with the merger and related restructuring, the
Corporation recorded pre-tax restructuring and merger-related expenses
of approximately $15.7 million ($11.9 million after-tax). The following
table indicates the primary components of these charges, including the
amounts incurred through June 30, 2000, and the amounts remaining as
accrued expenses in other liabilities at June 30, 2000:
<TABLE>
<CAPTION>
Total
Merger and Incurred Remaining
Restructuring through accrual at
(Dollars in thousands) Charges June 30, 2000 June 30, 2000
-------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Professional costs.................. $ 3,907 $ 3,327 $ 580
Employee-related costs.............. 4,761 622 4,139
Equipment writedowns................ 4,125 4,125 --
Lease buyouts....................... 909 5 904
Conversion costs.................... 739 724 15
Other............................... 1,234 1,094 140
------- ------- -------
Total......................... $15,675 $ 9,897 $ 5,778
======= ======= =======
</TABLE>
The employee-related costs include accruals for payments to be made in
connection with the involuntary termination of approximately 132
employees who had been notified that their positions were redundant
within the combined organizations and therefore no longer needed. These
personnel were terminated from various areas of the combined
Corporation. Management expects most of these payments will be made
during the third quarter or fourth quarter of 2000. Other restructuring
activities included closing and consolidating 14 branch facilities that
were redundant, consolidating back-office functions and converting all
of Carolina First's systems to First Charter systems. The Corporation
does not currently anticipate any material restructuring and
merger-related expenses, including any material changes to the
restructuring accrual, in the third or fourth quarter of 2000 related
to the Merger.
-7-
<PAGE> 8
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The consolidated balance sheets of the Corporation represent account
balances for the Corporation and the Bank, its wholly owned banking subsidiary.
The following discussion and analysis should be read in conjunction with the
consolidated financial statements of the Corporation and the notes thereto
included in this report. In addition, the following discussion contains certain
forward-looking statements. See "Factors that May Affect Future Results".
LIQUIDITY
The Bank derives the major source of its liquidity from its core
deposit base. Liquidity is further provided by loan repayments, brokered
deposits, maturities in the investment portfolio, the ability to secure public
deposits, the availability of federal fund lines and repurchase agreements at
correspondent banks and the ability to borrow from the Federal Reserve Bank
("FRB") discount window. In addition to these sources, the Bank is a member of
the Federal Home Loan Bank ("FHLB") System, which provides access to FHLB
lending sources. At June 30, 2000, the Bank had a line of credit with the FHLB
of $526.1 million, with $67.8 million available. Another source of liquidity is
the securities in the available for sale portfolio, which may be sold in
response to liquidity needs. The Bank's loan-to-deposit ratio at June 30, 2000
was 1.12% compared to 1.08% at December 31, 1999. Management believes the Bank's
sources of liquidity are adequate to meet operating needs and deposit withdrawal
requirements.
Due to increases in certain interest rates during the second quarter of
2000, and the resulting impact on the Corporation's interest rate risk, the
Corporation classified $45.3 million in lower-yielding mortgage loans as held
for sale during the second quarter of 2000. The Bank entered into agreements for
the sale of these loans, with the sales closing in May of 2000. The loans were
sold with servicing rights retained. The Corporation recognized a loss of
approximately $99,000 on the sales transaction during the second quarter of
2000.
CAPITAL RESOURCES
At June 30, 2000, total shareholders' equity was $288.8 million,
representing a book value of $9.28 per share, compared to $290.2 million, or a
book value of $9.42 per share at December 31, 1999; see further discussion at
"RESULTS OF OPERATIONS AND FINANCIAL CONDITION -- FINANCIAL CONDITION".
At June 30, 2000, the Corporation and the Bank were in compliance with
all existing capital requirements and the most recent notifications from the
Corporation's and the Bank's various regulators categorized the Corporation and
the Bank as well capitalized under the regulatory framework for prompt
corrective action. There are no events or conditions since those notifications
that management believes have changed either of the entities' categories. The
Corporation's capital requirements are summarized in the table below:
<TABLE>
<CAPTION>
Risk-Based Capital
-----------------------------------------------
Leverage Capital Tier 1 Capital Total Capital
--------------------------------------------------------------------------------------------------
(Dollars in thousands) Amount Percentage (1) Amount Percentage (2) Amount Percentage (2)
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Actual................ $286,822 10.38% $286,822 13.82% $312,768 15.07%
Required.............. 110,486 4.00 82,997 4.00 165,995 8.00
Excess................ 176,335 6.38 203,824 9.82 146,773 7.07
</TABLE>
-8-
<PAGE> 9
(1) Percentage of total adjusted average assets. The FRB minimum leverage
ratio requirement is 3% to 5%, depending on the institution's composite
rating as determined by its regulators. The FRB has not advised the
Corporation of any specific requirements applicable to it.
(2) Percentage of risk-weighted assets.
REGULATORY RECOMMENDATIONS
Management is not presently aware of any current recommendations to the
Corporation or to the Bank by regulatory authorities which, if they were to be
implemented, would have a material adverse effect on the Corporation's or the
Bank's liquidity, capital resources, or operations.
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
FINANCIAL CONDITION
Total assets at June 30, 2000 amounted to $2.79 billion, compared to
$2.68 billion at December 31, 1999. Gross loans at June 30, 2000 amounted to
$2.09 billion, up from $1.97 billion at December 31, 1999, with most of the
increase representing continued strong commercial loan growth during the first
six months of 2000.
Securities available for sale totaled $500.3 million at June 30, 2000,
representing an increase of $12.9 million, or 2.6%, from December 31, 1999. The
carrying value of securities available for sale was approximately $14.9 million
below their amortized cost at June 30, 2000, which represents gross unrealized
gains of $1.0 million and gross unrealized losses of $15.9 million. In
conjunction with the Merger, the Corporation transferred $35.3 million of
Carolina First's securities classified as held to maturity to available for
sale due to the significance of the impact on the Corporation's interest rate
forecast as compared to Corporate policy.
Total deposits increased slightly to $1.87 billion at June 30, 2000,
compared to $1.82 billion at December 31, 1999. Other borrowings increased $42.1
million, or 7.8%, to $584.1 million at June 30, 2000 from $542.0 million at
December 31, 1999. Shareholders' equity decreased to $288.8 million from $290.2
million at December 31, 1999. The securities available for sale portfolio's
unrealized loss has increased from an unrealized net loss of $7.4 million at
December 31, 1999 (net of tax) to an unrealized net loss at June 30, 2000 of
$8.8 million (net of tax).
RESULTS OF OPERATIONS
Summary
Recurring net income for the second quarter of 2000 was $9.6 million,
or $0.31 diluted income per share, excluding $12.0 million in after-tax
nonrecurring charges primarily associated with the Merger. This is compared to
recurring net income of $7.8 million, or $0.24 diluted income per share for the
comparable period in 1999, excluding a $1.1 million after-tax nonrecurring gain
associated with the sale of mortgage loans. Components of the change in
recurring net income between the two quarterly periods included a $1.6 million
increase in net interest income, a $1.6 million increase in noninterest income
and a $0.2 million decrease in the provision for loan losses, offset by an
increase in noninterest expense of $0.5 million and an increase of $1.1 million
in income tax expense. Including the nonrecurring items noted above, the net
loss for the second quarter of 2000 totaled $2.3 million or $0.08 diluted net
loss per share, compared to net income of $8.9 million or $0.28 diluted net
income per share for the second quarter of 1999.
Recurring net income for the six month period ended June 30, 2000
amounted to $18.1 million, or $0.58 diluted net income per share, excluding
$12.0 million in after-tax nonrecurring charges primarily associated with the
Merger. This represents a 12.9% increase over the $16.0 million or $0.50 diluted
recurring net income per share during the first six months of 1999, excluding a
$1.1 million after-tax nonrecurring gain associated
-9-
<PAGE> 10
with the sale of mortgage loans. Components of the change in recurring net
income between the two six month periods included a $3.5 million increase in net
interest income and a $2.5 million increase in noninterest income, offset by a
$0.4 million increase in the provision for loan losses, an increase in
noninterest expense of $2.4 million and a $1.1 million increase in income tax
expense. Including the nonrecurring items noted above, net income for the six
month period ended June 30, 2000 totaled $6.1 million or $0.20 diluted net
income per share, compared to net income of $17.2 million or $0.54 diluted net
income per share for the prior year period. On an annualized basis, year to date
results, excluding non-recurring items, represent a return on average assets of
1.33% and 1.26% for the six month periods ended June 30, 2000 and 1999,
respectively, and a return on average equity of 12.03% and 10.76%, for the six
month periods ended June 30, 2000 and 1999, respectively.
Net Interest Income
For the three month period ended June 30, 2000, net interest income
increased $1.6 million over the comparable period in 1999, due to an increase in
interest income on loans of $5.5 million and an increase in interest income on
securities of $0.4 million, offset by an increase in total interest expense of
$4.4 million. The increase in total interest expense was driven by increased
levels of borrowings. Average loan balances during the 2000 quarter increased to
$2.07 billion from $1.86 billion in the prior year quarter. Average loan yields
during the quarter also increased to 8.80% during the 2000 quarter from 8.54% in
the prior year quarter. Average deposits increased 17.3% over the 1999 quarter,
to $1.85 billion for the quarter ended June 30, 2000. The average cost of
deposits increased to 4.36% from 4.18% in the prior year quarter.
Net interest income for the six month period ended June 30, 2000
increased $3.5 million, or 6.8%, over the comparable prior year period, due to
an increase in interest income on loans of $8.4 million and an increase in
interest income on securities of $1.1 million, offset by an increase in total
interest expense of $5.7 million. The increase in total interest expense was
driven by increased levels of borrowings. Average loan balances during the six
months ended June 30, 2000 increased to $2.03 billion from $1.89 billion in the
comparable 1999 period. Average loan yields during the six months ended June 30,
2000 also increased to 8.78% from 8.58% during the same year ago period. Average
deposits increased to $1.80 billion for the six months ended June 30, 2000 an
increase of 14.7% over the comparable 1999 period. The average cost of deposits
for the six month period ended June 30, 2000 increased to 4.34% from 4.28%
during the same year ago period.
Management assesses interest rate risk based on an earnings simulation
model. The Corporation's balance sheet is liability sensitive, meaning that in a
given period there will be more liabilities than assets subject to immediate
repricing as market rates change. Assuming a 300 basis point pro-rata change in
interest rates over a twelve-month period, the Corporation's sensitivity to
interest rate risk was approximately 6.20% of net interest income at June 30,
2000. Because immediately rate sensitive interest bearing liabilities exceed
immediately rate sensitive assets, the earnings position could improve in a
declining rate environment and could deteriorate in a rising rate environment,
depending on the correlation of rate changes in these two categories. In the
future, the Corporation is considering the limited use of interest rate swaps,
caps, or floors to assist in interest rate risk management.
Provision for Loan Losses / Asset Quality
The provision for loan losses for the quarter ended June 30, 2000 was
$1.4 million, compared to $1.6 million for the quarter ended June 30, 1999. The
decrease in the provision for loan losses for the three months ended June 30,
2000 was due to higher loan growth during the second quarter of 1999 over the
comparable 2000 period. The provision for loan losses for the six months ended
June 30, 2000 was $3.3 million, compared to $3.0 million for the six months
ended June 30, 1999. The increase in the provision for the six months ended June
30, 2000 was due to the continued loan growth primarily in the commercial loan
portfolio and an increase in net charge offs, during the first six months of
2000. Total nonperforming assets at June 30, 2000 have
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<PAGE> 11
increased $4.4 million from the December 31, 1999 level primarily due to our
continued pro-active approach to nonaccrual classifications as well as one
significant credit in the commercial loan portfolio totaling $2.7 million that
was classified as nonaccrual during the quarter.
Annualized net loan charge-offs as a percentage of gross loans
increased to 0.15% for the six months ended June 30, 2000 as compared to
annualized net loan charge offs as a percentage of gross loans of 0.10% for the
year ended December 31, 1999. The increase in annualized net loan charge-offs
was primarily due to one significant credit in the second quarter of 2000. At
June 30, 2000 and December 31, 1999, the allowance for loan losses as a
percentage of gross loans was 1.28% and 1.27%, respectively.
As part of the continual grading process used to monitor the credit
quality of the loan portfolio, an analysis is performed monthly that is
independent from any analysis performed in conjunction with the origination of
loans. Based on this review, management believes the allowance to be adequate;
however, future adjustments may be necessary if economic and other conditions
differ substantially from management's assumptions.
In addition, various regulatory agencies, as an integral part of their
examination process, periodically review the Bank's allowance for loan losses.
Such agencies may require the Bank to recognize additions to the allowance based
on their judgments about information available to them at the time of their
examination.
The following table presents changes in the allowance for loan losses
for the six months ended June 30, 2000 and 1999, respectively.
June 30, June 30,
(Dollars in thousands) 2000 1999
-------------------------------------------------------------------------------
Beginning balance............................ $ 25,002 $ 22,278
Provision charged to operations.............. 3,340 2,955
Allowance related to loans sold.............. (113) (369)
Loan charge-offs............................. (1,980) (1,555)
Less loan recoveries......................... 451 436
-------- --------
Net loan charge-offs................. (1,529) (1,119)
-------- --------
Ending balance............................... $ 26,700 $ 23,745
======== ========
Total problem assets at June 30, 2000 were $19.7 million or 0.94% of
total loans and other real estate, compared to $16.3 million or 0.83% of total
loans and other real estate at December 31, 1999. Total problem assets have
increased during the period, due to an increase in other real estate of $1.2
million and an increase in nonaccrual loans of $3.2 million. The increase in
nonaccrual loans is mainly due to our continued pro-active approach to
nonaccrual classifications and one significant credit in the commercial loan
portfolio totaling $2.7 million that was classified as nonaccrual during the
quarter. The components of nonperforming and problem assets are presented in the
table below:
June 30, December 31,
(Dollars in thousands) 2000 1999
-------------------------------------------------------------------------------
Nonaccrual loans............................. $ 13,538 $ 10,353
Restructured loans........................... -- 37
Other real estate ........................... 3,493 2,262
-------- --------
Total non-performing assets.............. 17,031 12,652
Loans 90 days or more
past due and still accruing................ 2,645 3,638
-------- --------
Total problem assets......................... $ 19,676 $ 16,290
======== ========
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<PAGE> 12
Noninterest Income
Recurring noninterest income increased 29.1% and 21.9% to $7.3 million
and $13.9 million for the three months and six months ended June 30, 2000,
respectively. This is compared to recurring noninterest income of $5.6 million
and $11.4 million for the three months and six months ended June 30, 1999,
respectively, excluding a $1.8 million nonrecurring gain associated with the
sale of mortgage loans. These increases are primarily due to increased deposit
account service charges of $0.9 million and $1.5 million for the three months
and six months of 2000, respectively, over the comparable 1999 periods due to
changes implemented in deposit account service charges during 1999. In addition,
other noninterest income increased $0.6 million and $0.8 million for the three
months and six months ended June 30, 2000, respectively, over the comparable
1999 periods, primarily due to income from equity investments. Including the
nonrecurring items noted above, noninterest income decreased $0.2 million and
increased $0.6 million for the three months and six months ended June 30, 2000,
respectively, over the comparable 1999 period.
Noninterest Expense
Recurring noninterest expense increased 2.8% and 6.8% to $18.9 million
and $38.1 million for the three months and six months ended June 30, 2000,
respectively, excluding nonrecurring restructuring and merger-related expenses
of $15.7 million. This is compared to noninterest income of $18.4 million and
$35.7 million for the three months and six months ended June 30, 1999,
respectively. These increases are primarily due to a 12.7% and 13.2% increase in
salaries and fringe benefits for the three months and six months ended June 30,
2000, respectively, over the comparable 1999 periods, resulting from strategic
investments in personnel. In addition, occupancy expense increased 5.0% and 9.7%
for the three months and six months ended June 30, 2000, respectively, over the
comparable 1999 periods, as a result of the leasing of additional office space
to accommodate growth. Including the nonrecurring items noted above, noninterest
expense increased $16.2 million and $18.1 million for the three months and six
months ended June 30, 2000, respectively, over the comparable 1999 periods.
Income Tax Expense
Total income tax expense amounted to $0.7 million for the three months
ended June 30, 2000 and $4.0 million for the same comparable 1999 period. The
decrease in the income tax expense for the three months ended June 30, 2000 is
due to a net loss for the quarter resulting from restructuring and
merger-related expenses. Income tax expense for the six months ended June 30,
2000 was $4.6 million compared to $8.0 million for the same comparable 1999
period. The decrease in the income tax expense for the six months ended June 30,
2000 is due to restructuring and merger-related expenses incurred during the
second quarter of 2000. The effective tax rates for the six months ended June
30, 2000 was 43.0% compared to 31.6% for the same comparable 1999 period. The
increase in the effective tax rates was due to certain nondeductible
restructuring and merger-related expenses.
ACCOUNTING AND REGULATORY MATTERS
Statement of Financial Accounting Standards No. 133 (SFAS No. 133),
"Accounting for Derivative Instruments and Hedging Activities," establishes
accounting and reporting standards for derivatives and hedging activities. It
requires that all derivatives be included as assets or liabilities in the
balance sheet and that such instruments be carried at fair market value through
adjustments to either other comprehensive income or current earnings or both, as
appropriate. The Standard was originally effective for financial statements
issued for all fiscal quarters of fiscal years beginning after June 15, 1999.
The implementation date of SFAS No. 133 was delayed by Statement of Financial
Accounting Standards No. 137 "Accounting for Derivative Instruments and Hedging
Activities--Deferral of the Effective Date of FASB Statement No. 133" to the
first fiscal quarters of fiscal years beginning after June 15, 2000.
Accordingly, the Corporation will adopt SFAS No. 133 on January 1, 2001. The
Corporation is in the process of assessing the impact of this standard.
From time to time, the FASB issues exposure drafts for proposed
statements of financial accounting standards. Such exposure drafts are subject
to comment from the public, to revisions by the FASB and to final
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<PAGE> 13
issuance by the FASB as statements of financial accounting standards. Management
considers the effect of the proposed statements on the consolidated financial
statements of the Corporation and monitors the status of changes to and proposed
effective dates of exposure drafts.
In 1999, the President of the United States signed into law the
Gramm-Leach-Bliley Financial Modernization Act of 1999 ("Modernization Act").
The Modernization Act allows bank holding companies meeting management, capital
and Community Reinvestment Act standards to engage in substantially broader
range of traditionally non-banking activities than was permissible before
enactment, including insurance underwriting and making merchant banking
investments in commercial and financial companies. It also allows insurers and
other financial services companies to acquire banks; removes various
restrictions that currently apply to bank holding company ownership of
securities firms and mutual fund advisory companies; and establishes the overall
regulatory structure applicable to bank holding companies that also engage in
insurance and securities operations. The Modernization Act becomes effective in
various stages and this part of the Act became effective during March 2000.
In addition, the Modernization Act also modifies current law related to
financial privacy and community reinvestment. The new privacy provisions
generally will prohibit financial institutions from disclosing nonpublic
personal financial information to nonaffiliated third parties unless the
customer has the opportunity to decline disclosure.
FACTORS THAT MAY AFFECT FUTURE RESULTS
The foregoing discussion contains certain forward-looking statements
about the Corporation's financial condition and results of operations, which are
subject to certain risks and uncertainties that could cause actual results to
differ materially from those reflected in the forward-looking statements.
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
Corporation undertakes no obligation to publicly revise these forward-looking
statements to reflect events and circumstances that arise after the date hereof.
Factors that may cause actual results to differ materially from these
forward-looking statements include, but are not limited to, the passage of
unforeseen state or federal legislation or regulation applicable to the
Corporation's operations, the Corporation's ability to accurately predict the
adequacy of the loan loss allowance needs using its present risk grading system,
the ability to generate liquidity if necessary to meet loan demand, and the
ability to manage unforeseen domestic and global rapid changes in interest
rates.
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<PAGE> 14
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The following table presents the scheduled maturity of market risk
sensitive instruments at June 30, 2000:
<TABLE>
<CAPTION>
(Dollars in thousands)
There
Maturing in: 1 Year 2 Years 3 Years 4 Years 5 Years -after Total
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Debt securities..... $ 45,442 $ 52,866 $ 68,145 $ 77,927 $ 75,008 $ 143,836 $ 463,224
Loans............... 853,516 82,985 100,264 136,607 174,657 714,645 2,062,674
-----------------------------------------------------------------------------------
Total............ $ 898,958 $ 135,851 $ 168,409 $ 214,534 $ 249,665 $ 858,481 $2,525,898
===================================================================================
LIABILITIES
Savings, NOW, Demand
and IMMA's....... $ 868,956 $ 5,019 $ 3,591 $ 118 $ 652 $ -- $ 878,336
CD's................ 819,322 84,644 66,012 17,374 2,768 2,502 992,622
Short-term
borrowings....... 457,611 -- -- -- -- -- 457,611
Long-term
borrowings....... -- 126,183 40 40 40 230 126,533
-----------------------------------------------------------------------------------
Total.......... $2,145,889 $ 215,846 $ 69,643 $ 17,532 $ 3,460 $ 2,732 $2,455,102
===================================================================================
</TABLE>
The following table presents the average interest rate and estimated
fair value of market risk sensitive instruments at June 30, 2000:
Carrying Average Estimated
(Dollars in thousands) Value Interest Rate Fair Value
-------------------------------------------------------------------------------
ASSETS
Debt Securities.......... $ 463,224 6.15% $ 463,224
Loans.................... 2,062,674 8.83 2,020,070
---------- ----------
Total .............. $2,525,898 8.34 $2,483,294
========== ==========
LIABILITIES
Savings, NOW, Demand
and IMMA's............. $ 878,336 2.36 $ 878,374
CD's..................... 992,622 5.78 988,484
Short-term
borrowings............. 457,611 6.05 455,328
Long-term
borrowings............. 126,533 5.53 125,902
---------- ----------
Total............... $2,455,102 4.59 $2,448,088
========== ==========
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<PAGE> 15
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
In December 1996, Home Federal (a former subsidiary of the Corporation
that was merged into the Bank in March 1999) filed a suit against a borrower
and his company and against the borrower's wife, daughters, and a company owned
by his wife and daughter, alleging transfers of assets to the wife, daughter,
and their company in fraud of creditors, and asking that the fraudulent
transfers be set aside. The objective of the lawsuit is to recover assets which
may be used to satisfy a portion of the judgments obtained in favor of Home
Federal in prior litigation. In April 1997, the borrower's wife filed a
counterclaim against Home Federal alleging that she borrowed $750,000 from
another financial institution, secured by a deed of trust on her principal
residence, the proceeds of which were paid to Home Federal for application on a
debt owed by one of her husband's corporations, claiming that officers of Home
Federal promised to resume making loans to her husband's corporation after the
payment. Home Federal and its officers vigorously denied all of her allegations.
Home Federal filed a motion for summary judgment and dismissal of the
counterclaim. The motion for summary judgment was heard in the Superior Court
division of the Mecklenburg County General Court of Justice in April 1998. In
June 1998, Home Federal removed this case to the United States Bankruptcy Court
for the Western District of North Carolina, Charlotte Division, due to the fact
that the defendant was the debtor in a pending bankruptcy case. In April 1999,
the Corporation moved for summary judgement to dismiss the counterclaims. At a
hearing in May 1999, the Bankruptcy Judge granted part and denied part of the
Corporation's Motion for Summary Judgement. The Judge dismissed the wife's
counterclaim for breach of fiduciary duty, but allowed her claim for fraud to
continue. A trial date has been set for August 21, 2000. The Corporation
believes it has strong defenses to the defendant's counterclaim.
In February 1997, two companies affiliated with the borrower above
filed an additional action against two executive officers of Home Federal and
against an officer of another financial institution. The action was removed from
the state court to the United States Bankruptcy Court for the Western District
of North Carolina. At the same time, the borrower, who is affiliated with all of
these companies, also filed an action in the Superior Court of Mecklenburg
County, North Carolina against the two executive officers of Home Federal and
against an officer of another financial institution. The Complaints in both
actions assert virtually identical claims. The plaintiffs in both lawsuits
allege that the officers of both financial institutions engaged in a conspiracy
to wrongfully declare loans to be in default so as to eliminate those companies
as borrowers of Home Federal. Plaintiffs claim actual damages, treble damages,
and punitive damages together with interest, attorneys' fees, and other costs.
Plaintiffs allege misrepresentation, breach of fiduciary duty, constructive
fraud, interference with business expectancy, wrongful bank account set-off, and
unfair and deceptive acts and practices. The action pending in the bankruptcy
court has been stayed. All defendants filed motions for summary judgment in the
state court action which were granted, and that lawsuit was dismissed in January
1998 by the Superior Court of Mecklenburg County. The plaintiff appealed the
order granting summary judgment to the North Carolina Court of Appeals. In July
1998, the defendants removed the state court case to the United States
Bankruptcy Court for the Western District of North Carolina, Charlotte Division,
due to the fact that the plaintiff was a debtor in a pending bankruptcy case. As
a result of the removal, the North Carolina Court of Appeals entered an order
staying further proceedings in the North Carolina Court of Appeals in August
1998. In early June 1999, the United States Bankruptcy court entered its
Memorandum Decision and Order adopting the State Court dismissal of the lawsuit.
In late June 1999, the plaintiff gave notice of appeal to the United States
District Court. On June 27, 2000 the plaintiff's appeal was denied by the United
States District Court and the time to appeal to the United States Court of
Appeals has expired. A motion has been filed with the North Carolina Court of
Appeals to dismiss the appeal pending in that Court based upon the case being
concluded in the United States District Court. It is anticipated that the motion
will be granted. The Corporation is bound by Home Federal's agreement to
indemnify both of its officers with respect to costs, expense, and liability
which might arise in connection with both of these cases.
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<PAGE> 16
Management continues to deny any liability in the above-described cases
and continues to vigorously defend against the claims. However, there can be no
assurance of the ultimate outcome of the litigation, or the range of potential
loss, if any.
The Corporation and the Bank are defendants in certain other claims and
legal actions arising in the ordinary course of business. In the opinion of
management, after consultation with legal counsel, the ultimate disposition of
these other matters is not expected to have a material adverse effect on the
consolidated operations, liquidity or financial position of the Corporation or
the Bank.
Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Not Applicable.
Item 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable.
-16-
<PAGE> 17
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) First Charter Corporation's Annual Meeting of Shareholders was
held on June 6, 2000.
(b) The following were voting results of each of the matters
(exclusive of procedural matters) which were submitted to the
shareholders:
For Withheld
------------------------
1. To elect 6 directors for three-year
terms expiring in 2003:
Michael R. Coltrane 21,893,391 1,161,413
J. Roy Davis, Jr. 22,373,557 681,247
Charles F. Harry III 22,410,290 644,514
Charles A. James 22,348,206 706,598
Walter H. Jones, Jr. 22,357,998 696,806
Hugh H. Morrison 22,419,880 634,924
To elect 3 directors for two-year
terms expiring in 2002:
James E. Burt, III 22,297,879 756,925
L. D. Warlick, Jr. 22,274,405 780,399
William W. Waters 22,348,137 706,667
To elect 2 directors for one-year
terms expiring in 2001:
Harold D. Alexander 22,175,116 879,688
Samuel C. King, Jr. 22,297,679 757,125
The following directors' terms of office
continued after the Annual Meeting:
William R. Black
John J. Godbold, Jr.
Frank H. Hawfield, Jr.
Lawrence M. Kimbrough
Dr. Jerry E. McGee
Thomas R. Revels
2. To adopt the First Charter Corporation 2000
Omnibus Stock Option and Award Plan:
For 15,463,652
Against 3,326,751
Abstain 318,531
Non-Vote 3,945,870
3. To approve an amendment to the Corporation's
Amended and Restated Articles of Incorporation
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<PAGE> 18
to increase the number of authorized shares
of Common Stock to 100,000,000 shares:
For 20,494,338
Against 2,326,867
Abstain 233,599
4. To approve an amendment to the Corporation's
Amended and Restated Articles of Incorporation
to authorize the issuance of 2,000,000 shares
of Preferred Stock:
For 15,405,012
Against 3,522,165
Abstain 193,931
Non-Vote 3,933,696
5. To ratify the action of our Board of Directors
in selecting KPMG LLP as our independent
certified public accountants for 2000
For 22,753,646
Against 218,343
Abstain 82,815
-18-
<PAGE> 19
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit No.
(per Exhibit Table
in item 601 of
Regulation S-K) Description of Exhibits
3.1 Amended and Restated Articles of
Incorporation of the Corporation,
incorporated herein by reference to Exhibit
3.1 of the Corporation's Annual Report on
Form 10-K for the fiscal year ended December
31, 1998 (Commission File No. 0-15829).
3.2 By-laws of the Corporation, as amended,
incorporated herein by reference to Exhibit
3.2 of the Corporation's Annual Report on
Form 10-K for the fiscal year ended December
31, 1995 (Commission File No. 0-15829).
27.1 Financial Data Schedule (for SEC use only)
27.2 Restated Financial Data Schedule
(for SEC use only)
(b) Reports on Form 8-K
(i) On April 10, 2000, the Corporation filed a Current Report
on Form 8-K, reporting pursuant to Item 2 thereof its
acquisition of Carolina First BancShares, Inc., the holding
company for Lincoln Bank of North Carolina, Cabarrus Bank
of North Carolina and Community Bank and Trust Co., became
effective on April 4, 2000.
(ii) On April 13, 2000, the Corporation filed a Current Report
on Form 8-K, reporting pursuant to Item 5 thereof its
earnings for the fiscal quarter ended March 31, 2000.
(iii) On May 17, 2000, the Corporation filed a Current Report on
Form 8-K/A, reporting pursuant to Item 7 thereof unaudited
pro forma combined financial information as of March 31,
2000 is hereby incorporated by reference from the Company's
Form 10-Q for the quarterly period ended March 31, 2000,
filed on May 15, 2000 with the Commission, under Part II -
Other Information, Item 5 Other Information (Commission
File No. 0-15829).
-19-
<PAGE> 20
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
(Registrant)
Date: August 14, 2000 By: /s/ Robert O. Bratton
------------------------------
Robert O. Bratton
Executive Vice President &
Chief Operating Officer and
Chief Financial Officer
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<PAGE> 21
EXHIBIT INDEX
Exhibit No.
(per Exhibit Table
in item 601 of Sequential
Regulation S-K) Description of Exhibits Page Number
27.1 Financial Data Schedule 23
(for SEC use only)
27.2 Restated Financial Data Schedule
(for SEC use only) 24
-21-
