UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) JULY 1, 1994
CHARTER BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
TEXAS 0-13496 74-1967164
(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification No.)
2600 CITADEL PLAZA DRIVE, SUITE 600, HOUSTON, TEXAS 77008
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 692-6121
(Former name or former address, if changed since last report) Not Applicable
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ITEM 5. OTHER EVENTS
On July 1, 1994, Charter Bancshares, Inc. ("Charter") consummated
the acquisition of residential construction loans and selected fixed assets
from Roosevelt Financial Group, Chesterfield, Missouri. The residential
construction loans represented the existing construction portfolio
generated by the construction lending operations of Farm and Home Savings
Association ("Farm and Home") prior to the June 30, 1994 acquisition of
Farm and Home by Roosevelt Financial Group. In addition to purchasing these
construction loans and selected fixed assets, Charter will employ
approximately 20 persons previously employed by Farm and Home and
associated with the construction lending area. The loans and selected fixed
assets were purchased by Charter National Bank-Houston, a wholly-owned
national bank subsidiary of Charter.
The purchased residential construction loans represent approximately
$75 million in outstanding balances, with total credit lines of
approximately $210 million. Approximately one-third of the outstanding
loans are for home construction in Houston, one-third in Dallas, and the
balance are for homes in Austin and San Antonio. A typical interim
construction loan will have an average life of less than one year and earn
interest that floats at prime rate plus one to one and one-half percent
(the prime rate as of July 1, 1994 was 7.25%). Additional fees may be
earned on construction loans in the form of origination fees, inspection
fees, appraisal fees, and extension fees. The purchased fixed assets of
approximately $267,000 are primarily comprised of the furniture and
equipment used in Farm and Home's construction lending area. Except for
approximately $11,000 in miscellaneous accounts payable related to
construction loans, there were no other liabilities assumed by Charter in
the transaction. All of the loans and selected fixed assets were purchased
at the existing net book values as reflected on Roosevelt Financial Group's
books, which amounts approximate their fair value. No purchase premium or
discount was paid to or received from Roosevelt Financial Group.
A portion of the purchase price was financed by $38 million in
borrowings from the Federal Home Loan Bank of Dallas. The remaining
purchase price was funded through the utilization of existing liquid assets
in the form of federal funds sold and short-term investments.
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This acquisition will be accounted for under the purchase method of
accounting. The following pro forma financial information consists of a pro
forma condensed balance sheet as of March 31, 1994. Pro forma adjustments
related to the pro forma condensed balance sheet have been computed
assuming the acquisition was consummated March 31, 1994. Pro forma
condensed statements of operations are not presented since this transaction
is not considered an acquisition of a continuing business. This acquisition
is a purchase of short-lived assets at amounts considered to be their fair
value.
<TABLE>
PRO FORMA CONDENSED BALANCE SHEET (UNAUDITED)
<CAPTION>
March 31, 1994
===========================================================================================================================
Purchased
Charter Assets Adjustments Pro Forma
- ---------------------------------------------------------------------------------------------------------------------------
(in thousands, except per share amounts)
<S> <C> <C> <C> <C>
Assets:
Cash and short-term investments (Note A) $ 69,077 $ $ (27,685) $ 41,392
Securities (Note B) 314,616 (9,965) 304,651
Loans 252,923 74,857 327,780
Less: Allowance for credit losses 4,367 4,367
- ---------------------------------------------------------------------------------------------------------------------------
Loans, net 248,556 74,857 323,413
Other assets (Note C) 26,751 804 27,555
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $659,000 $ 75,661 $ (37,650) $697,011
===========================================================================================================================
Liabilities and Shareholders' Equity:
- ---------------------------------------------------------------------------------------------------------------------------
Liabilities:
Deposits:
Non-interest-bearing deposits $169,248 $ $ $169,248
Interest-bearing deposits 409,153 409,153
- ---------------------------------------------------------------------------------------------------------------------------
Total Deposits 578,401 578,401
- ---------------------------------------------------------------------------------------------------------------------------
Securities sold under agreement to repurchase 14,921 14,921
Other borrowings (Note D) -- 38,000 38,000
Long-term debt and debentures 12,550 12,550
Other liabilities (Note E) 6,396 11 6,407
- ---------------------------------------------------------------------------------------------------------------------------
Total Liabilities 612,268 11 38,000 650,279
- ---------------------------------------------------------------------------------------------------------------------------
Total Shareholders' Equity 46,732 46,732
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $659,000 $ 11 $ 38,000 $697,011
===========================================================================================================================
</TABLE>
The accompanying notes are an integral part of the proforma condensed
balance sheet.
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<PAGE>
NOTES TO THE PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
Note A - CASH AND SHORT-TERM INVESTMENTS
Cash and short-term investments include cash, due from banks, federal
funds sold, securities purchased under agreements to resell and trading
account assets. Pro forma cash and due from banks were $37,070,000 at
March 31, 1994. Pro forma federal funds sold, securities purchased under
agreement to resell and trading account assets were $4,322,000 at March
31, 1994. The adjustments to this category include the reduction of
approximately $27,685,000 in short-term investments and $9,965,000 in
securities maturing within 90 days (from the date of the purchase). The
reduction in these liquid assets combined with the other borrowings (see
Note D) were used to fund the purchase.
Note B - SECURITIES
Securities include investments held to maturity of $189,850,000 and
securities available for sale of $124,766,000 at March 31, 1994.
Note C - OTHER ASSETS
Included within the category of purchased other assets are $537,000 of
accrued interest on purchased loans and $267,000 of fixed assets. All
assets acquired were purchased at amounts considered to approximate their
fair values. Accordingly, no intangible assets are reflected on the pro
forma condensed balance sheet.
Note D - OTHER BORROWINGS
A portion of the funds used to purchase the assets were provided by
advances from the Federal Home Loan Bank of Dallas. The terms of these
advances are as follows: (a) $23,000,000 prepayable floating rate based
on the 1-month LIBOR plus 10 basis points (initial rate of 4.66%) due
December 30, 1996, and (b) $15,000,000 at a fixed rate of 4.84% due
August 29, 1994. These advances are collateralized by a blanket pledge of
the subsidiary banks' residential mortgage loans.
Note E - OTHER LIABILITIES
The pro forma adjustment to other liabilities includes $11,000 of
accounts payable related to the purchased loans.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused the report to be signed on its behalf by the
undersigned thereunto duly authorized.
CHARTER BANCSHARES, INC.
(Registrant)
By: WILLIAM S. SHROPSHIRE, JR.
William S. Shropshire, Jr.
Chief Financial Officer
and Treasurer
(Principal financial and
accounting officer)
Date: July 14, 1994
