 | ||||
| Contacts: | ||||
| Robert E. James, Jr. | Matthew P. Carson, CFA | |||
| Chief Executive Officer | SVP, Finance | |||
| (704) 688-4520 | (704) 688-1824 |
FOR IMMEDIATE RELEASE
November 2, 2007
November 2, 2007
First Charter Reports Third Quarter Net Income of $11.1 Million
Third Quarter 2007 Compared With Third Quarter 2006
| • | Net Income Decreases 12.7 percent On Higher Expenses and Provision | ||
| • | Total Revenue Growth Increases 11.4 percent | ||
| • | Average Commercial Loans Grow $543 Million, or 31.9 percent | ||
| • | Average Low Cost Core Deposits Grow $74 Million, or 4.8 percent | ||
| • | Net Interest Margin Expands to 3.39 percent, Up Six Basis Points | ||
| • | Provision Expense Increases $1.9 Million On Modest Credit Deterioration, Greater Uncertainty In the Credit Environment, and Penland Related Loans |
CHARLOTTE, North Carolina — First Charter Corporation (NASDAQ: FCTR) today reported third quarter net income of $11.1 million, a 12.7 percent decrease, compared to $12.7 million in the same period a year ago. On a per diluted share basis, net income was $0.32, compared to $0.40 for the same 2006 period and $0.26 in the 2007 second quarter (linked quarter). Third quarter results include a change in net tax expense, which negatively impacted earnings by $0.02, and merger related expenses which impacted earnings by $0.01.
Total revenue increased 11.4 percent to $56.3 million, compared to $50.5 million in the third quarter of 2006. On a linked-quarter basis, total revenue decreased $2.0 million, primarily due to a drop in noninterest income. Return on average tangible
equity was 12.24 percent, and return on average assets was 0.91 percent, compared with 15.98 percent and 1.16 percent, respectively, in the 2006 third quarter.
For the first nine months of 2007, First Charter earned $32.4 million, or $0.93 per diluted share, compared to $35.4 million, or $1.13 per diluted share, for the same prior year period.
The results for the first nine months of 2007 include the full financial performance and effect of additional outstanding shares resulting from the fourth quarter 2006 acquisition of GBC Bancorp, Inc. (GBC), compared with no impact in the first nine months of 2006.
CEO’s Comments
President and CEO Bob James commented, “The third quarter demonstrated mixed results in our core operating performance, with net interest income and noninterest income increasing on a year-over-year basis, while declining on a linked-quarter basis. We are in a challenging operating environment; however, we are encouraged by the activity our team continues to generate in our markets, and remain optimistic about our growth prospects in the coming quarters. Most importantly, our team remains dedicated and focused on delivering exceptional service to our customers.”
Net Interest Income Increases 12.9 Percent Over 2006 Third Quarter
Net interest income, on a tax-equivalent basis, increased to $37.8 million, representing a $4.3 million, or 12.9 percent, increase over the third quarter of 2006. The net interest margin, on a tax-equivalent basis, increased six basis points to 3.39 percent in the third quarter of 2007 from 3.33 percent in the third quarter of 2006. On a linked-quarter basis, net interest income decreased $0.3 million, or 3.5 percent annualized, and the net interest margin declined three basis points from 3.42 percent. The primary driver of the margin pressure on a linked-quarter basis was due to increased pricing on interest bearing deposits.
Compared to the third quarter of 2006, earning asset yields increased 39 basis points to 7.09 percent. This increase was driven by several factors. First, loan yields increased 24 basis points to 7.59 percent. Second, securities yields increased 59 basis points to 5.15 percent. Third, the mix of higher yielding (loan) assets continued to improve as First Charter continues to focus on generating higher yielding commercial loans, partially funded by runoff in its lower yielding mortgage loan portfolio. Lastly, the percentage of investment security average balances (which typically have lower yields than loans) to total earning asset average balances fell from 23.0 percent to 20.6 percent over the past year.
On the liability side of the balance sheet, the cost of interest bearing liabilities increased 39 basis points to 4.24 percent, compared to the third quarter of 2006. This increase was comprised of a 40 basis point increase in interest bearing deposit costs to 3.87 percent, while borrowing costs increased 31 basis points to 5.14 percent. During 2006, the Federal Reserve raised the rate that banks lend funds to each other (the Fed Funds rate) by 100 basis points. In September, 2007, the Federal Reserve lowered the Fed Funds rate by 50 basis points.
Compared to the second quarter of 2007, earning asset yields increased one basis point to 7.09 percent, driven by a nine basis point increase in securities yields. The cost of interest bearing liabilities
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increased five basis points to 4.24 percent. Deposit expense and borrowing costs increased five and four basis points, respectively, causing the increase.
Commercial Lending Leads Loan Growth
Total portfolio loan average balances for the 2007 third quarter increased $444 million, or 14.5 percent, to $3.51 billion, compared to $3.07 billion for the 2006 third quarter. Included in the increase was approximately $337 million of total loans that were added as a result of the GBC acquisition during the fourth quarter of 2006. Additionally, $8 million of loan balances were included in the sale of two financial centers completed in the third quarter of 2006. Commercial loan growth drove the increase, rising $543 million, or 31.9 percent, of which $322 million were added as a result of the GBC acquisition. The remaining growth of $221 million, or 13.0 percent, reflected continued robust commercial lending in the Charlotte and Raleigh markets. James noted, “The Charlotte and Raleigh commercial markets remain stable. There is balance between new home construction and new home purchases, new home inventory remains below national averages, and office vacancy rates remain low.”
Consumer loan average balances decreased $53 million and mortgage loan average balances decreased $45 million compared to the 2006 third quarter. The consumer loan balance decline was driven, in part, by decreasing home equity balances as consumers continue to refinance first mortgages and pay off their higher cost home equity loans. The decline in mortgage loan balances was due to normal loan amortization and First Charter’s strategy of selling most of its new mortgage production into the secondary market. GBC had no residential mortgages on its balance sheet at the time of the acquisition.
Compared to the second quarter of 2007, total loan average balances declined $18 million, or 2.0 percent annualized. Commercial loan average balances increased $6.8 million. However, consumer loan average balances fell $12.8 million during the third quarter, and mortgage loan average balances declined $12.0 million.
Core Deposit Focus
Deposit growth, particularly low cost transaction (or core) deposit growth (money market, demand, and savings accounts), continues to be an area of emphasis at First Charter. For the third quarter of 2007, core deposit average balances increased $74 million, or 4.8 percent, compared to the third quarter of 2006. Core deposit average balances were impacted by First Charter’s sale of two financial centers, which included the sale of $24 million of core deposits, and benefited from the GBC acquisition, which included $107 million of core deposits. The total core deposit increase was primarily driven by a $44 million, or 11.9 percent, increase in interest checking balances, a $16 million, or 2.3 percent, increase in money market and savings average balances, and a $14 million, or 3.1 percent, increase in noninterest bearing demand deposit average balances.
Compared to the second quarter of 2007, core deposit average balances grew $10 million, or 2.6 percent annualized. Interest checking balances grew $3 million, or 3.2 percent, and money market and savings grew $10 million, or 5.5 percent. Noninterest bearing deposits fell $3 million, or 2.6 percent annualized.
Certificate of deposit (CD) average balances for the third quarter of 2007 grew $169 million from the third quarter of 2006, but fell $23 million from the second quarter of 2007. Included in the year-over-
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year increase were $249 million of CD balances that were added to the First Charter portfolio during the 2006 fourth quarter as a result of the GBC acquisition. CD growth year-over-year was additionally impacted by the sale of $14 million of CDs in conjunction with the previously mentioned financial center sale. The decline in CD balances on a linked-quarter basis was primarily due to continued pricing discipline. A significant number of high rate CDs matured over the past several quarters, largely comprised of public funds and legacy GBC customers that had no other relationships with First Charter. As of the end of the third quarter, a majority of the GBC CD portfolio has repriced or matured.
Noninterest Income Increases Over Third Quarter 2006
Historical noninterest income and expense amounts have been restated to reflect the effect of reporting the sale of Southeastern Employee Benefits Services (SEBS) in the fourth quarter of 2006 as a discontinued operation and to reflect the implementation of SAB 108 at year end 2006.
Noninterest income for the third quarter of 2007 was $18.4 million, up $1.4 million or 8.3 percent from third quarter 2006, and down $1.7 million from the second quarter 2007. Second quarter 2007 included total revenue of $1.4 million in insurance contingency revenue, mortgage insurance revenue, and venture capital investment gains that did not recur in third quarter 2007. Contributing to the growth over the third quarter of 2006 were increases in service charge revenue, debit card revenue, brokerage, insurance, and gain on sale of SBA loans. The decline linked quarter, exclusive of non-recurring events, was due to a decline in mortgage revenue, and a seasonal dip in deposit service charges.
Noninterest Expense Higher on Merger Related Expenses
Noninterest expense for the third quarter of 2007 was $35.6 million, up $0.3 million from the second quarter of 2007. On a linked-quarter basis, salaries and benefits expense were up $0.8 million, driven by higher medical expenses, merger related expenses, and an adjustment to reduce incentive expense in the second quarter of 2007. Professional fees increased $0.3 million, primarily relating to expenses associated with the pending merger with Fifth Third Bancorp. Professional fees not associated with the merger remain higher than historical norms, and it is expected that this expense will continue to decline over time to more normalized levels as First Charter continues to strengthen its internal controls, and subsequently reduce its incremental vendor expense. Marketing expenses fell $0.2 million, and supplies fell $0.2 million, from the linked quarter.
First Charter incurred $0.7 million of merger related expenses during the third quarter of 2007. Professional fees included expenses attributable to the merger of $0.6 million for services provided in the areas of legal, accounting, and public relations. Salaries and benefits incurred $0.1 million of the expense attributable to the merger. First Charter expects merger related expenses to continue through the close of the transaction.
First Charter’s efficiency ratio was 63.2��percent in the third quarter of 2007, compared with 60.4 percent in the second quarter of 2007 and 52.6 percent in the third quarter of 2006.
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Reversal of Tax Benefit Impacts Results
The effective tax rate for the third quarter of 2007 was 34.1 percent, compared to 33.0 and 32.9 percent in the year-ago and linked quarters, respectively. The tax rate was negatively impacted by legislation passed in the third quarter of 2007. On July 31, 2007, the General Assembly of North Carolina passed House Bill 1473 which includes a provision that disallows the deduction of dividends paid by captive real estate investment trusts (“REITs”) for the purposes of determining North Carolina taxable income. The Corporation, through its subsidiaries, participates in two entities classified as captive REITs from which the Corporation has historically received dividends which resulted in certain tax benefits taken within the Corporation’s tax returns and consolidated financial statements. This legislation was effective for taxable years beginning on or after January 1, 2007.
As a result of this legislation, during the third quarter of 2007, the Corporation recorded $1.0 million, net of reserve reversal, of additional income tax expense as it eliminated the dividend received deduction previously recorded during 2007. This increased the Corporation’s effective tax rate for 2007, and it is expected to increase the effective tax rate for future fiscal years. Additionally, taxes were reduced by $0.4 million due to the expiration of federal statute of limitations. The net impact of these two events was $0.6 million.
Credit Quality
Net charge-offs were $5.1 million, or annualized 57 basis points of average portfolio loans for the third quarter of 2007, including $5.2 million related to the previously disclosed Penland residential loan fraud. This compares to 2 and 13 basis points in the linked and year-ago quarters, respectively.
Nonperforming assets were $31.8 million at September 30, 2007, including $4.5 million attributable to Penland. This compares to $20.1 million at June 30, 2007, and $12.7 million at September 30, 2006. Nonperforming assets as a percentage of total portfolio loans and other real estate was 91 basis points, including 13 basis points attributable to Penland. Nonperforming assets as a percentage of portfolio loans and other real estate was 57 basis points as of June 30, 2007, and 41 basis points as of September 30, 2006. Significant drivers to the increase in nonperforming assets are from the previously mentioned Penland exposure, weakness in the Atlanta market, and a $6.5 million residential A&D loan.
The allowance for loan losses was $43.0 million, or 1.24 percent, of portfolio loans, at September 30, 2007, a decrease from 1.26 percent at June 30, 2007 and an increase from 0.97 percent at September 30, 2006. The provision for loan losses was $3.3 million for the 2007 third quarter, compared to $9.1 million in the second quarter of 2007, and $1.4 million in the third quarter of 2006. The drop in allowance, linked quarter, was a result of the previously reserved Penland charge-offs, partially offset by increases for greater uncertainty in the credit environment, and a modest deterioration in credit trends.
The Corporation’s provision for loan losses and allowance for loan losses is based on consideration of specific loans, past loan loss experience, and other factors that, in management’s judgment, deserve current recognition in estimating probable loan losses. Other factors considered by management include the growth and composition of the loan portfolio and current economic conditions.
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Balance Sheet Strength and Capital Management
At September 30, 2007, total assets were $4.8 billion, compared with $4.4 billion a year ago. The increase was attributable to the acquisition of GBC and First Charter’s organic growth. At September 30, 2007, total deposits were $3.2 billion, including core deposits of $1.6 billion.
At the end of the third quarter, shareholders’ equity was $457 million, or 9.5 percent of total assets, compared with $349 million, or 8.0 percent, a year ago. All regulatory capital ratios remain above well-capitalized minimums. As of September 30, 2007, tier 1 capital as a percentage of risk-weighted assets was 11.0 percent, and total risk-based capital was 12.1 percent. Tangible common equity as a percentage of tangible assets was 7.9 percent at September 30, 2007, compared to 7.5 percent at June 30, 2007, and 7.5 percent at September 30, 2006.
Average diluted shares outstanding were 34.8 million in the third quarter of 2007, compared to 35.0 million during the second quarter of 2007.
Regional Market Update
First Charter opened a new full-service banking center in the Charlotte market in September. This expanded First Charter’s presence to 38 banking centers in the Greater Charlotte area. Commercial loan demand remains strong in our primary market.
The Corporation expanded into the Raleigh, North Carolina market with the opening of ade novo financial center in October 2005 and three additional centers in mid February, 2006. A fifth financial center opened in Raleigh in late January 2007.
At September 30, 2007, Raleigh related loans totaled $171 million, representing a $37 million increase in balances from year-end 2006. Deposit balances in Raleigh were $66 million at the end of the 2007 third quarter, an increase of $34 million from year-end 2006.
The North Atlanta market has continued to soften over the last year. At September 30, 2007, Atlanta related loans totaled $331 million, representing a decline of $6 million, since First Charter’s entry into the Atlanta market on November 1, 2006.
“We are very pleased with our continued strong performance in our Charlotte and Raleigh markets.” James commented. “The Raleigh market is now contributing positively to net income, which has exceeded expectations; however, the Atlanta market has weakened considerably, which has led to a decline in their loan portfolio. We are pleased with the quality of our team in these key markets, and their commitment to deliver exceptional customer service.”
Upcoming Merger with Fifth Third Bancorp
On August 15, 2007, Fifth Third Bancorp (“Fifth Third”) and First Charter Corporation signed a definitive agreement under which Fifth Third will acquire First Charter. The transaction is anticipated to close in the first quarter of 2008.
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James commented, “We look forward to our upcoming merger with Fifth Third. Our planning efforts with our new partner are focused on ensuring a seamless transition for our customers as we prepare to introduce additional products and services as part of the Fifth Third team.”
Continued Focus on Improving Internal Controls
First Charter continues to focus on enhancing its internal controls over financial reporting and remediating the previously disclosed material weaknesses. Qualified internal and external resources have been retained to address these issues.
Conference Call
First Charter will not be holding a conference call this quarter to discuss these results.
Corporate Profile
First Charter Corporation (NASDAQ: FCTR), headquartered in Charlotte, North Carolina, is a regional financial services company with assets of $4.8 billion and is the holding company for First Charter Bank. First Charter operates 60 full-service financial centers, four insurance offices, and 137 ATMs in North Carolina and Georgia, and also operates loan origination offices in Asheville, North Carolina and Reston, Virginia. First Charter provides businesses and individuals with a broad range of financial services, including banking, financial planning, wealth management, investments, insurance, and mortgages.
For more information about First Charter, visit the Corporation’s Web site at www.firstcharter.com or call 800-601-8471.
Where You Can Find More Information
First Charter Corporation (“First Charter”), Fifth Third Bancorp (“Fifth Third”) and Fifth Third Financial Corporation (“Fifth Third Financial”) have entered into an Amended and Restated Agreement and Plan of Merger, pursuant to which First Charter will merge with and into Fifth Third Financial (the “Merger”). The proposed Merger will be submitted to First Charter’s shareholders for consideration. Fifth Third will file a Form S-4 Registration Statement, First Charter will file a Proxy Statement and both companies will file other relevant documents regarding the Merger with the Securities and Exchange Commission (the “SEC”). First Charter will mail the Proxy Statement/Prospectus to its shareholders. These documents, and any applicable amendments or supplements, will contain important information about the Merger, and Fifth Third and First Charter urge you to read these documents when they become available.
You may obtain copies of all documents filed with the SEC regarding the Merger, free of charge, at the SEC’s website (www.sec.gov). You may also obtain these documents free of charge from Fifth Third’s website (www.53.com) under the heading “About Fifth Third” and then under the heading “Media and Investors-Investor Relations” and then under the item “SEC Filings.” You may also obtain these
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documents, free of charge, from First Charter’s website (www.FirstCharter.com) under the section “About First Charter” and then under the heading “Investor Relations” and then under the item “Financial Reports / SEC Filings.”
Participants in The Merger
Fifth Third and First Charter and their respective directors and executive officers may be deemed participants in the solicitation of proxies from First Charter’s shareholders in connection with the Merger. Information about the directors and executive officers of Fifth Third and First Charter and information about other persons who may be deemed participants in the Merger will be included in the Proxy Statement/Prospectus. You can find information about Fifth Third’s executive officers and directors in its definitive proxy statement filed with the SEC on March 9, 2007. You can find information about First Charter’s executive officers and directors in its definitive proxy statement filed with the SEC on April 25, 2007. You can obtain free copies of these documents from the websites of Fifth Third, First Charter or the SEC.
Forward-Looking Statements
This news release contains forward-looking statements with respect to the financial condition and results of operations of First Charter Corporation. These forward-looking statements involve certain risks and uncertainties. Factors that may cause actual results to differ materially from those contemplated by such forward- looking statements, and which may be beyond the Corporation’s control, include, among others, the following possibilities: (1) projected results in connection with management’s implementation of, or changes in, the Corporation’s business plan and strategic initiatives are lower than expected; (2) competitive pressure among financial services companies increases significantly; (3) costs or difficulties related to the integration of acquisitions, including deposit attrition, customer retention and revenue loss, or expenses in general are greater than expected; (4) general economic conditions, in the markets in which the Corporation does business, are less favorable than expected; (5) risks inherent in making loans, including repayment risks and risks associated with collateral values, are greater than expected, including risks related to the Penland loans; (6) changes in the interest rate environment, or interest rate policies of the Board of Governors of the Federal Reserve System, may reduce interest margins and affect funding sources; (7) changes in market rates and prices may adversely affect the value of financial products; (8) legislation or regulatory requirements or changes thereto, including changes in accounting standards, may adversely affect the businesses in which the Corporation is engaged; (9) regulatory compliance cost increases are greater than expected; (10) the passage of future tax legislation, or any negative regulatory, administrative or judicial position, may adversely impact the Corporation; (11) the Corporation’s competitors may have greater financial resources and may develop products that enable them to compete more successfully in the markets in which it operates; (12) changes in the securities markets, including changes in interest rates, may adversely affect the Corporation’s ability to raise capital from time to time; (13) the material weaknesses in the Corporation’s internal control over financial reporting result in subsequent adjustments to management’s projected results; and (14) implementation of management’s plans to remediate the material weaknesses takes longer than expected and causes the Corporation to incur costs that are greater than expected. First Charter undertakes no obligation to revise or update any forward-looking statements in order to reflect events or circumstances after the date any such statement is made.
8
First Charter Corporation
Financial Highlights
Financial Highlights
| For the Three Months | For the Nine Months | |||||||||||||||
| Ended September 30, | Ended September 30, | |||||||||||||||
| (Dollars in thousands, except per share data) | 2007 | 2006 | 2007 | 2006 | ||||||||||||
EARNINGS | ||||||||||||||||
Total revenue(1) | $ | 56,256 | 50,514 | 171,504 | 149,696 | |||||||||||
Earnings | ||||||||||||||||
| Income from continuing operations, net of tax | 11,067 | 12,682 | 32,373 | 35,260 | ||||||||||||
| Net income | 11,067 | 12,682 | 32,373 | 35,380 | ||||||||||||
Diluted earnings per share | ||||||||||||||||
| Income from continuing operations, net of tax | 0.32 | 0.40 | 0.93 | 1.13 | ||||||||||||
| Net income | 0.32 | 0.40 | 0.93 | 1.13 | ||||||||||||
PERFORMANCE RATIOS | ||||||||||||||||
Return on average assets(3) | 0.91 | % | 1.16 | % | 0.89 | % | 1.09 | % | ||||||||
Return on average equity(3) | 9.72 | 14.76 | 9.54 | 13.87 | ||||||||||||
Return on average tangible equity(2) | 12.24 | 15.98 | 12.02 | 15.54 | ||||||||||||
Net interest margin(3) | 3.39 | 3.33 | 3.40 | 3.36 | ||||||||||||
Efficiency(4) | 63.2 | 52.6 | 62.2 | 58.6 | ||||||||||||
AVERAGE BALANCE SHEET | ||||||||||||||||
| Total Portfolio Loans | $ | 3,514,699 | 3,070,286 | 3,519,299 | 3,010,654 | |||||||||||
| Loans held for sale | 9,345 | 8,792 | 10,627 | 8,434 | ||||||||||||
| Securities, at cost | 914,569 | 923,293 | 918,669 | 920,374 | ||||||||||||
| Earning assets | 4,445,923 | 4,013,745 | 4,458,642 | 3,947,635 | ||||||||||||
| Assets | 4,846,399 | 4,336,270 | 4,863,983 | 4,271,329 | ||||||||||||
| Core deposits | 1,605,036 | 1,530,843 | 1,600,497 | 1,491,124 | ||||||||||||
| Deposits | 3,213,507 | 2,970,047 | 3,230,179 | 2,849,301 | ||||||||||||
| Other borrowings | 1,124,021 | 984,504 | 1,122,976 | 1,047,351 | ||||||||||||
| Shareholders’ equity | 451,946 | 340,986 | 453,472 | 333,362 | ||||||||||||
ASSET QUALITY MEASURES | ||||||||||||||||
| Nonaccrual loans as a percentage of total portfolio loans | 0.65 | % | 0.23 | % | 0.65 | % | 0.23 | % | ||||||||
| Nonperforming assets as a percentage of total assets | 0.66 | 0.29 | 0.66 | 0.29 | ||||||||||||
| Nonperforming assets as a percentage of total portfolio loans and other real estate | 0.91 | 0.41 | 0.91 | 0.41 | ||||||||||||
Net charge-offs as a percentage of average portfolio loans(3) | 0.57 | 0.13 | 0.22 | 0.12 | ||||||||||||
| Allowance for loan losses as a percentage of portfolio loans | 1.24 | 0.97 | 1.24 | 0.98 | ||||||||||||
| Ratio of allowance for loan losses to: | ||||||||||||||||
Net charge-offs(3) | 2.13 | x | 7.50 | x | 5.60 | x | 8.57 | x | ||||||||
| Nonaccrual loans | 1.89 | 4.22 | 1.89 | 4.22 | ||||||||||||
| As of / Quarter Ended | ||||||||||||||||||||
| 9/30/07 | 6/30/07 | 3/31/07 | 12/31/06 | 9/30/06 | ||||||||||||||||
SHARE INFORMATION | ||||||||||||||||||||
| Common stock prices | ||||||||||||||||||||
| High | $ | 30.58 | $ | 22.83 | $ | 24.97 | $ | 25.15 | $ | 24.82 | ||||||||||
| Low | 17.78 | 19.09 | 21.29 | 23.05 | 22.93 | |||||||||||||||
| End of period | 30.17 | 19.47 | 21.50 | 24.60 | 24.06 | |||||||||||||||
| Book value | 13.16 | 12.85 | 12.97 | 12.81 | 11.20 | |||||||||||||||
| Tangible book value | 10.75 | 10.43 | 10.58 | 10.37 | 10.49 | |||||||||||||||
| Market capitalization | 1,049,192 | 675,414 | 754,749 | 859,081 | 750,696 | |||||||||||||||
| Weighted average shares - basic | 34,423 | 34,698 | 34,770 | 33,269 | 31,056 | |||||||||||||||
| Weighted average shares - diluted | 34,796 | 34,987 | 35,085 | 33,413 | 31,427 | |||||||||||||||
| End of period shares outstanding | 34,776 | 34,690 | 35,105 | 34,922 | 31,201 | |||||||||||||||
| (1) | Tax-equivalent net interest income plus noninterest income. Excludes the results of discontinued operations. | |
| (2) | Net income, excluding intangibles amortization expense, divided by average equity, excluding average goodwill and intangible assets. | |
| (3) | Annualized. | |
| (4) | Noninterest expense less debt extinguishment expense, amortization of intangibles expense and derivative termination costs divided by the sum of tax-equivalent net interest income plus noninterest income less securities gains (losses), net. Excludes the results of discontinued operations. |
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First Charter Corporation
Quarterly Earnings Release
Quarterly Earnings Release
| As of / Quarter Ended | ||||||||||||||||||||
| (Dollars in thousands) | 9/30/07 | 6/30/07 | 3/31/07 | 12/31/06 | 9/30/06 | |||||||||||||||
BALANCE SHEET | ||||||||||||||||||||
Assets: | ||||||||||||||||||||
| Cash and due from banks | $ | 83,715 | $ | 91,446 | $ | 95,168 | $ | 87,771 | $ | 76,215 | ||||||||||
| Federal funds sold | 16,451 | 22,495 | 1,256 | 10,515 | 33,690 | |||||||||||||||
| Interest-earning bank deposits | 3,824 | 5,145 | 4,431 | 4,541 | 2,999 | |||||||||||||||
| Securities available for sale | 907,608 | 898,528 | 897,762 | 906,415 | 899,120 | |||||||||||||||
| Loans held for sale | 10,362 | 11,471 | 13,691 | 12,292 | 10,923 | |||||||||||||||
| Portfolio loans | ||||||||||||||||||||
| Commercial and construction | 2,217,808 | 2,272,151 | 2,215,407 | 2,129,569 | 1,740,035 | |||||||||||||||
Mortgage(1) | 584,223 | 589,976 | 604,834 | 618,142 | 623,271 | |||||||||||||||
Consumer(1) | 675,375 | 691,710 | 709,628 | 737,342 | 728,477 | |||||||||||||||
| Total portfolio loans | 3,477,406 | 3,553,837 | 3,529,869 | 3,485,053 | 3,091,783 | |||||||||||||||
| Allowance for loan losses | (43,017 | ) | (44,790 | ) | (35,854 | ) | (34,966 | ) | (29,919 | ) | ||||||||||
| Portfolio loans, net | 3,434,389 | 3,509,047 | 3,494,015 | 3,450,087 | 3,061,864 | |||||||||||||||
| Premises and equipment, net | 112,640 | 112,874 | 112,145 | 111,588 | 106,918 | |||||||||||||||
| Goodwill and other intangible assets | 83,819 | 84,107 | 84,010 | 85,068 | 22,088 | |||||||||||||||
| Other assets | 186,885 | 181,608 | 182,017 | 188,440 | 168,690 | |||||||||||||||
Total Assets | $ | 4,839,693 | $ | 4,916,721 | $ | 4,884,495 | $ | 4,856,717 | $ | 4,382,507 | ||||||||||
Liabilities and Shareholders’ Equity: | ||||||||||||||||||||
| Deposits | ||||||||||||||||||||
| Noninterest-bearing demand | $ | 465,600 | $ | 480,078 | $ | 476,122 | $ | 454,975 | $ | 452,853 | ||||||||||
| Demand | 440,558 | 427,899 | 434,412 | 420,774 | 381,029 | |||||||||||||||
| Money market | 611,134 | 587,691 | 636,586 | 620,699 | 583,346 | |||||||||||||||
| Savings | 107,419 | 114,245 | 114,785 | 111,047 | 114,759 | |||||||||||||||
| Certificates of deposit | 1,583,315 | 1,620,433 | 1,659,461 | 1,640,633 | 1,422,867 | |||||||||||||||
| Total deposits | 3,208,026 | 3,230,346 | 3,321,366 | 3,248,128 | 2,954,854 | |||||||||||||||
| Other borrowings | ||||||||||||||||||||
| Retail | 68,281 | 132,046 | 77,998 | 97,707 | 85,902 | |||||||||||||||
| Wholesale short-term | 477,306 | 426,950 | 438,453 | 513,197 | 258,086 | |||||||||||||||
| Wholesale long-term | 567,745 | 617,762 | 527,778 | 487,794 | 687,810 | |||||||||||||||
| Total other borrowings | 1,113,332 | 1,176,758 | 1,044,229 | 1,098,698 | 1,031,798 | |||||||||||||||
| Accrued expenses and other liabilities | 60,847 | 63,789 | 63,528 | 62,529 | 46,417 | |||||||||||||||
| Total liabilities | 4,382,205 | 4,470,893 | 4,429,123 | 4,409,355 | 4,033,069 | |||||||||||||||
| Total shareholders’ equity | 457,488 | 445,828 | 455,372 | 447,362 | 349,438 | |||||||||||||||
Total Liabilities and Shareholders’ Equity | $ | 4,839,693 | $ | 4,916,721 | $ | 4,884,495 | $ | 4,856,717 | $ | 4,382,507 | ||||||||||
SELECTED AVERAGE BALANCES | ||||||||||||||||||||
| Total Portfolio Loans | $ | 3,514,699 | $ | 3,532,713 | $ | 3,510,437 | $ | 3,336,563 | $ | 3,070,286 | ||||||||||
| Loans held for sale | 9,345 | 11,127 | 11,431 | 10,757 | 8,792 | |||||||||||||||
| Securities, at cost | 914,569 | 914,606 | 926,970 | 924,773 | 923,293 | |||||||||||||||
| Earning assets | 4,445,923 | 4,467,031 | 4,463,162 | 4,284,735 | 4,013,745 | |||||||||||||||
| Assets | 4,846,399 | 4,874,742 | 4,871,083 | 4,664,431 | 4,336,270 | |||||||||||||||
| Noninterest-bearing demand | 455,031 | 458,013 | 446,801 | 447,269 | 441,329 | |||||||||||||||
| Demand | 416,873 | 413,534 | 399,557 | 385,464 | 372,696 | |||||||||||||||
| Money market deposits | 622,754 | 608,489 | 642,383 | 622,364 | 599,952 | |||||||||||||||
| Savings | 110,378 | 114,656 | 112,988 | 113,442 | 116,866 | |||||||||||||||
| Core deposits | 1,605,036 | 1,594,692 | 1,601,729 | 1,568,539 | 1,530,843 | |||||||||||||||
| Certificates of deposit | 1,608,471 | 1,631,616 | 1,649,408 | 1,582,581 | 1,439,204 | |||||||||||||||
| Deposits | 3,213,507 | 3,226,308 | 3,251,137 | 3,151,120 | 2,970,047 | |||||||||||||||
| Other borrowings | 1,124,021 | 1,131,599 | 1,113,191 | 1,054,550 | 984,504 | |||||||||||||||
| Interest-bearing liabilities | 3,882,496 | 3,899,894 | 3,917,527 | 3,758,401 | 3,513,222 | |||||||||||||||
| Shareholders’ equity | 451,946 | 456,634 | 451,835 | 407,929 | 340,986 | |||||||||||||||
| (1) | At the beginning of the third quarter of 2006, approximately $93.9 million of consumer loans secured by real estate were transferred from the consumer loan category to the home equity ($13.5 million) and mortgage ($80.4 million) loan categories to make the balance sheet presentation more consistent with bank regulatory definitions. The balance sheet transfer had no effect on credit reporting, underwriting, reported results of operations, or liquidity. Prior period-end and average loan balances have been reclassifed to conform with the current period presentation. |
10
First Charter Corporation
Quarterly Earnings Release
Quarterly Earnings Release
| As of / Quarter Ended | Increase (Decrease) | |||||||||||||||
| (Dollars in thousands) | 9/30/07 | 9/30/06 | Amount | Percentage | ||||||||||||
BALANCE SHEET | ||||||||||||||||
Assets: | ||||||||||||||||
| Cash and due from banks | $ | 83,715 | $ | 76,215 | $ | 7,500 | 9.8 | % | ||||||||
| Federal funds sold | 16,451 | 33,690 | (17,239 | ) | (51.2 | ) | ||||||||||
| Interest-earning bank deposits | 3,824 | 2,999 | 825 | 27.5 | ||||||||||||
| Securities available for sale | 907,608 | 899,120 | 8,488 | 0.9 | ||||||||||||
| Loans held for sale | 10,362 | 10,923 | (561 | ) | (5.1 | ) | ||||||||||
| Portfolio loans | ||||||||||||||||
| Commercial and construction | 2,217,808 | 1,740,035 | 477,773 | 27.5 | ||||||||||||
Mortgage(1) | 584,223 | 623,271 | (39,048 | ) | (6.3 | ) | ||||||||||
Consumer(1) | 675,375 | 728,477 | (53,102 | ) | (7.3 | ) | ||||||||||
| Total portfolio loans | 3,477,406 | 3,091,783 | 385,623 | 12.5 | ||||||||||||
| Allowance for loan losses | (43,017 | ) | (29,919 | ) | (13,098 | ) | 43.8 | |||||||||
| Portfolio loans, net | 3,434,389 | 3,061,864 | 372,525 | 12.2 | ||||||||||||
| Premises and equipment, net | 112,640 | 106,918 | 5,722 | 5.4 | ||||||||||||
| Goodwill and other intangible assets | 83,819 | 22,088 | 61,731 | 279.5 | ||||||||||||
| Other assets | 186,885 | 168,690 | 18,195 | 10.8 | ||||||||||||
Total Assets | $ | 4,839,693 | $ | 4,382,507 | $ | 457,186 | 10.4 | % | ||||||||
Liabilities and Shareholders’ Equity: | ||||||||||||||||
| Deposits | ||||||||||||||||
| Noninterest-bearing demand | $ | 465,600 | $ | 452,853 | $ | 12,747 | 2.8 | % | ||||||||
| Interest checking | 440,558 | 381,029 | 59,529 | 15.6 | ||||||||||||
| Money market | 611,134 | 583,346 | 27,788 | 4.8 | ||||||||||||
| Savings | 107,419 | 114,759 | (7,340 | ) | (6.4 | ) | ||||||||||
| Certificates of deposit | 1,583,315 | 1,422,867 | 160,448 | 11.3 | ||||||||||||
| Total deposits | 3,208,026 | 2,954,854 | 253,172 | 8.6 | ||||||||||||
| Other borrowings | ||||||||||||||||
| Retail | 68,281 | 85,902 | (17,621 | ) | (20.5 | ) | ||||||||||
| Wholesale short-term | 477,306 | 258,086 | 219,220 | 84.9 | ||||||||||||
| Wholesale long-term | 567,745 | 687,810 | (120,065 | ) | (17.5 | ) | ||||||||||
| Total other borrowings | 1,113,332 | 1,031,798 | 81,534 | 7.9 | ||||||||||||
| Accrued expenses and other liabilities | 60,847 | 46,417 | 14,430 | 31.1 | ||||||||||||
| Total liabilities | 4,382,205 | 4,033,069 | 349,136 | 8.7 | ||||||||||||
| Total shareholders’ equity | 457,488 | 349,438 | 108,050 | 30.9 | ||||||||||||
Total Liabilities and Shareholders’ Equity | $ | 4,839,693 | $ | 4,382,507 | $ | 457,186 | 10.4 | % | ||||||||
SELECTED AVERAGE BALANCES | ||||||||||||||||
| Total Portfolio Loans | $ | 3,514,699 | $ | 3,070,286 | $ | 444,413 | 14.5 | % | ||||||||
| Loans held for sale | 9,345 | 8,792 | 553 | 6.3 | ||||||||||||
| Securities, at cost | 914,569 | 923,293 | (8,724 | ) | (0.9 | ) | ||||||||||
| Earning assets | 4,445,923 | 4,013,745 | 432,178 | 10.8 | ||||||||||||
| Assets | 4,846,399 | 4,336,270 | 510,129 | 11.8 | ||||||||||||
| Noninterest-bearing demand | 455,031 | 441,329 | 13,702 | 3.1 | ||||||||||||
| Demand | 416,873 | 372,696 | 44,177 | 11.9 | ||||||||||||
| Money market deposits | 622,754 | 599,952 | 22,802 | 3.8 | ||||||||||||
| Savings | 110,378 | 116,866 | (6,488 | ) | (5.6 | ) | ||||||||||
| Core deposits | 1,605,036 | 1,530,843 | 74,193 | 4.8 | ||||||||||||
| Certificates of deposit | 1,608,471 | 1,439,204 | 169,267 | 11.8 | ||||||||||||
| Deposits | 3,213,507 | 2,970,047 | 243,460 | 8.2 | ||||||||||||
| Other borrowings | 1,124,021 | 984,504 | 139,517 | 14.2 | ||||||||||||
| Interest-bearing liabilities | 3,882,496 | 3,513,222 | 369,274 | 10.5 | ||||||||||||
| Shareholders’ equity | 451,946 | 340,986 | 110,960 | 32.5 | ||||||||||||
| (1) | At the beginning of the third quarter of 2006, approximately $93.9 million of consumer loans secured by real estate were transferred from the consumer loan category to the home equity ($13.5 million) and mortgage ($80.4 million) loan categories to make the balance sheet presentation more consistent with bank regulatory definitions. The balance sheet transfer had no effect on credit reporting, underwriting, reported results of operations, or liquidity. Prior period-end and average loan balances have been reclassifed to conform with the current period presentation. |
11
First Charter Corporation
Quarterly Earnings Release
Quarterly Earnings Release
| Quarter Ended | Increase (Decrease) | |||||||||||||||
| (Dollars in thousands, except per share data) | 9/30/07 | 9/30/06 | Amount | Percentage | ||||||||||||
INCOME STATEMENT | ||||||||||||||||
| Tax-equivalent interest income | $ | 79,325 | $ | 67,634 | $ | 11,691 | 17.3 | % | ||||||||
| Interest expense | 41,496 | 34,127 | 7,369 | 21.6 | ||||||||||||
| Tax-equivalent net interest income | 37,829 | 33,507 | 4,322 | 12.9 | ||||||||||||
| Provision for loan losses | 3,311 | 1,405 | 1,906 | 135.7 | ||||||||||||
| Tax-equivalent NII after provision for loan losses | 34,518 | 32,102 | 2,416 | 7.5 | ||||||||||||
| Noninterest income | 18,427 | 17,007 | 1,420 | 8.3 | ||||||||||||
| Noninterest expense | 35,556 | 29,655 | 5,901 | 19.9 | ||||||||||||
| Income from continuing operations before income taxes and tax-equivalent adjustment | 17,389 | 19,454 | (2,065 | ) | (10.6 | ) | ||||||||||
| Tax-equivalent adjustment | 598 | 549 | 49 | 8.9 | ||||||||||||
| Income tax expense | 5,724 | 6,223 | (499 | ) | (8.0 | ) | ||||||||||
| Income from continuing operations, net of tax | 11,067 | 12,682 | (1,615 | ) | (12.7 | ) | ||||||||||
| Income from discontinued operations, net of tax | — | — | — | N/A | ||||||||||||
Net income | $ | 11,067 | $ | 12,682 | $ | (1,615 | ) | (12.7) | % | |||||||
Effective tax rate(1) | 34.1 | % | 32.9 | % | ||||||||||||
PER COMMON SHARE | ||||||||||||||||
Basic earnings per share | ||||||||||||||||
| Income from continuing operations, net of tax | $ | 0.32 | $ | 0.41 | $ | (0.09 | ) | (22.0) | % | |||||||
| Net income | 0.32 | 0.41 | (0.09 | ) | (22.0 | ) | ||||||||||
Diluted earnings per share | ||||||||||||||||
| Income from continuing operations, net of tax | $ | 0.32 | $ | 0.40 | $ | (0.08 | ) | (20.0) | % | |||||||
| Net income | 0.32 | 0.40 | (0.08 | ) | (20.0 | ) | ||||||||||
Average shares | ||||||||||||||||
| Basic | 34,423,296 | 31,056,059 | ||||||||||||||
| Diluted | 34,795,515 | 31,426,563 | ||||||||||||||
Cash dividends declared | $ | 0.195 | $ | 0.195 | $ | — | — | % | ||||||||
PERFORMANCE RATIOS | ||||||||||||||||
Return on average assets(2) | 0.91 | % | 1.16 | % | ||||||||||||
Return on average equity(2) | 9.72 | 14.76 | ||||||||||||||
Return on average tangible equity(3) | 12.24 | 15.98 | ||||||||||||||
Net interest margin(2) | 3.39 | 3.33 | ||||||||||||||
Efficiency(4) | 63.2 | 52.6 | ||||||||||||||
SELECTED ITEMS INCLUDED IN EARNINGS | ||||||||||||||||
Noninterest income | ||||||||||||||||
Securities losses, net(5) | $ | (48 | ) | $ | (5,860 | ) | ||||||||||
| Equity method investment gains, net | — | 3,415 | ||||||||||||||
| Property sale gains, net | 59 | 408 | ||||||||||||||
Noninterest expense | ||||||||||||||||
| Separation agreements | — | 342 | ||||||||||||||
| Merger-related costs | 696 | — | ||||||||||||||
DISCONTINUED OPERATIONS | ||||||||||||||||
| Noninterest income | $ | — | $ | 759 | ||||||||||||
| Noninterest expense | — | 759 | ||||||||||||||
| Income from discontinued operations | — | — | ||||||||||||||
| Gain on sale | — | — | ||||||||||||||
| Income tax expense | — | — | ||||||||||||||
| Income from discontinued operations, net of tax | $ | — | $ | — | ||||||||||||
| (1) | The effective tax rate includes the related effects of both continuing and discontinued operations. | |
| (2) | Annualized. | |
| (3) | Net income, excluding intangibles amortization expense, divided by average equity, excluding average goodwill and intangible assets. | |
| (4) | Noninterest expense less debt extinguishment expense and derivative termination costs divided by the sum of tax-equivalent net interest income plus noninterest income less securities gains (losses), net. Excludes the results of discontinued operations. | |
| (5) | The $48 of security losses, net for the quarter ended September 30, 2007 is due to recognition of other-than-temporary impairment of certain equity securities. |
12
First Charter Corporation
Quarterly Earnings Release
Quarterly Earnings Release
| For the Nine Months Ended | Increase (Decrease) | |||||||||||||||
| (Dollars in thousands, except per share data) | 9/30/07 | 9/30/06 | Amount | Percentage | ||||||||||||
INCOME STATEMENT | ||||||||||||||||
| Tax-equivalent interest income | $ | 236,092 | $ | 192,184 | $ | 43,908 | 22.8 | % | ||||||||
| Interest expense | 122,722 | 92,778 | 29,944 | 32.3 | ||||||||||||
| Tax-equivalent net interest income | 113,370 | 99,406 | 13,964 | 14.0 | ||||||||||||
| Provision for loan losses | 13,801 | 3,804 | 9,997 | 262.8 | ||||||||||||
| Tax-equivalent NII after provision for loan losses | 99,569 | 95,602 | 3,967 | 4.1 | ||||||||||||
| Noninterest income | 58,134 | 50,290 | 7,844 | 15.6 | ||||||||||||
| Noninterest expense | 106,683 | 91,084 | 15,599 | 17.1 | ||||||||||||
| Income from continuing operations before income taxes and tax-equivalent adjustment | 51,020 | 54,808 | (3,788 | ) | (6.9 | ) | ||||||||||
| Tax-equivalent adjustment | 1,860 | 1,711 | 149 | 8.7 | ||||||||||||
| Income tax expense | 16,787 | 17,837 | (1,050 | ) | (5.9 | ) | ||||||||||
| Income from continuing operations, net of tax | 32,373 | 35,260 | (2,887 | ) | (8.2 | ) | ||||||||||
| Income from discontinued operations, net of tax | — | 120 | (120 | ) | (100.0 | ) | ||||||||||
Net income | $ | 32,373 | $ | 35,380 | $ | (3,007 | ) | (8.5 | )% | |||||||
Effective tax rate(1) | 34.2 | % | 33.6 | % | ||||||||||||
PER COMMON SHARE | ||||||||||||||||
Basic earnings per share | ||||||||||||||||
| Income from continuing operations, net of tax | $ | 0.93 | $ | 1.14 | $ | (0.21 | ) | (18.4 | )% | |||||||
| Net income | 0.93 | 1.14 | (0.21 | ) | (18.4 | ) | ||||||||||
Diluted earnings per share | ||||||||||||||||
| Income from continuing operations, net of tax | $ | 0.93 | $ | 1.13 | $ | (0.20 | ) | (17.7 | )% | |||||||
| Net income | 0.93 | 1.13 | (0.20 | ) | (17.7 | ) | ||||||||||
Average shares | ||||||||||||||||
| Basic | 34,629,178 | 30,937,922 | ||||||||||||||
| Diluted | 34,955,108 | 31,310,939 | ||||||||||||||
Cash dividends declared | $ | 0.585 | $ | 0.580 | $ | 0.005 | 0.9 | % | ||||||||
PERFORMANCE RATIOS | ||||||||||||||||
Return on average assets(2) | 0.89 | % | 1.09 | % | ||||||||||||
Return on average equity(2) | 9.54 | 14.19 | ||||||||||||||
Return on average tangible equity(3) | 12.02 | 15.93 | ||||||||||||||
Net interest margin(2) | 3.40 | 3.36 | ||||||||||||||
Efficiency(4) | 62.2 | 58.6 | ||||||||||||||
SELECTED ITEMS INCLUDED IN EARNINGS | ||||||||||||||||
Noninterest income | ||||||||||||||||
Securities gains (losses), net (5) | $ | (59 | ) | $ | (5,828 | ) | ||||||||||
| Equity method investment gains (losses), net | 1,805 | 3,971 | ||||||||||||||
| Property sale gains, net | 274 | 596 | ||||||||||||||
Noninterest expense | ||||||||||||||||
| Separation agreements | 241 | 447 | ||||||||||||||
| Merger-related costs | 933 | — | ||||||||||||||
| GBC related executive retirement expense | 245 | — | ||||||||||||||
DISCONTINUED OPERATIONS | ||||||||||||||||
| Noninterest income | $ | — | $ | 2,568 | ||||||||||||
| Noninterest expense | — | 2,370 | ||||||||||||||
| Income from discontinued operations | — | 198 | ||||||||||||||
| Gain on sale | — | — | ||||||||||||||
| Income tax expense | — | 78 | ||||||||||||||
| Income from discontinued operations, net of tax | $ | — | $ | 120 | ||||||||||||
| (1) | The effective tax rate includes the related effects of both continuing and discontinued operations. | |
| (2) | Annualized. | |
| (3) | Net income, excluding intangibles amortization expense, divided by average equity, excluding average goodwill and intangible assets. | |
| (4) | Noninterest expense less debt extinguishment expense and derivative termination costs divided by the sum of tax-equivalent net interest income plus noninterest income less securities gains (losses), net. Excludes the results of discontinued operations. | |
| (5) | The $48 of security losses, net for the quarter ended September 30, 2007 is due to recognition of other-than-temporary impairment of certain equity securities. |
13
First Charter Corporation
Quarterly Earnings Release
Quarterly Earnings Release
| Quarter Ended | ||||||||||||||||||||
| (Dollars in thousands, except per share data | 9/30/07 | 6/30/07 | 3/31/07 | 12/31/06 | 9/30/06 | |||||||||||||||
INCOME STATEMENT | ||||||||||||||||||||
Tax-equivalent interest income | ||||||||||||||||||||
| Loans | $ | 67,453 | $ | 67,243 | $ | 66,239 | $ | 63,764 | $ | 56,958 | ||||||||||
| Securities | 11,788 | 11,558 | 11,440 | 11,193 | 10,528 | |||||||||||||||
| Other | 84 | 109 | 178 | 150 | 148 | |||||||||||||||
| Tax-equivalent interest income | 79,325 | 78,910 | 77,857 | 75,107 | 67,634 | |||||||||||||||
Interest expense | ||||||||||||||||||||
| Deposits | 26,932 | 26,364 | 26,541 | 25,412 | 22,131 | |||||||||||||||
| Other | 14,564 | 14,383 | 13,938 | 13,029 | 11,996 | |||||||||||||||
| Total interest expense | 41,496 | 40,747 | 40,479 | 38,441 | 34,127 | |||||||||||||||
Tax-equivalent net interest income | 37,829 | 38,163 | 37,378 | 36,666 | 33,507 | |||||||||||||||
| Provision for loan losses | 3,311 | 9,124 | 1,366 | 1,486 | 1,405 | |||||||||||||||
Tax-equivalent net interest income after provision for loan losses | 34,518 | 29,039 | 36,012 | 35,180 | 32,102 | |||||||||||||||
Noninterest income | ||||||||||||||||||||
| Service charges on deposits | 7,754 | 7,942 | 7,390 | 7,442 | 7,353 | |||||||||||||||
| ATM, debit, and merchant fees | 2,580 | 2,636 | 2,444 | 2,198 | 2,182 | |||||||||||||||
| Wealth management | 925 | 944 | 716 | 725 | 729 | |||||||||||||||
| Equity method investment gains (losses), net | — | 678 | 1,127 | 12 | 3,415 | |||||||||||||||
| Mortgage services | 859 | 1,056 | 901 | 943 | 784 | |||||||||||||||
| Gain on sale of Small Business Administration loans | 426 | 132 | 377 | 126 | — | |||||||||||||||
| Gain on sale of deposits and loans | — | — | — | — | 2,825 | |||||||||||||||
| Brokerage services | 1,044 | 1,007 | 1,081 | 932 | 847 | |||||||||||||||
| Insurance services | 3,048 | 3,422 | 3,634 | 3,160 | 2,974 | |||||||||||||||
| Bank-owned life insurance | 1,160 | 1,162 | 1,139 | 1,123 | 722 | |||||||||||||||
| Property sale gains, net | 59 | 152 | 63 | 49 | 408 | |||||||||||||||
| Securities gains (losses), net | (48 | ) | — | (11 | ) | — | (5,860 | ) | ||||||||||||
| Other | 620 | 1,010 | 705 | 678 | 628 | |||||||||||||||
| Total noninterest income | 18,427 | 20,141 | 19,566 | 17,388 | 17,007 | |||||||||||||||
Noninterest expense | ||||||||||||||||||||
| Salaries and employee benefits | 20,409 | 19,576 | 19,587 | 19,628 | 16,066 | |||||||||||||||
| Occupancy and equipment | 4,801 | 4,759 | 4,612 | 4,396 | 4,217 | |||||||||||||||
| Data processing | 1,690 | 1,492 | 1,790 | 1,441 | 1,469 | |||||||||||||||
| Marketing | 846 | 1,055 | 1,351 | 972 | 1,255 | |||||||||||||||
| Postage and supplies | 1,014 | 1,164 | 1,172 | 1,191 | 1,179 | |||||||||||||||
| Professional services | 3,489 | 3,181 | 3,586 | 2,210 | 2,440 | |||||||||||||||
| Telephone | 549 | 519 | 671 | 561 | 556 | |||||||||||||||
| Amortization of intangibles | 288 | 314 | 223 | 330 | 115 | |||||||||||||||
| Foreclosed properties | 122 | 226 | 153 | 262 | 21 | |||||||||||||||
| Other | 2,348 | 2,921 | 2,775 | 2,862 | 2,337 | |||||||||||||||
| Total noninterest expense | 35,556 | 35,207 | 35,920 | 33,853 | 29,655 | |||||||||||||||
| Income from continuing operations before income taxes and tax-equivalent adjustment | 17,389 | 13,973 | 19,658 | 18,715 | 19,454 | |||||||||||||||
| Tax-equivalent adjustment | 598 | 619 | 643 | 651 | 549 | |||||||||||||||
| Income tax expense | 5,724 | 4,404 | 6,659 | 5,962 | 6,223 | |||||||||||||||
| Income from continuing operations, net of tax | 11,067 | 8,950 | 12,356 | 12,102 | 12,682 | |||||||||||||||
| Income (loss) from discontinued operations, net of tax | — | — | — | (87 | ) | — | ||||||||||||||
Net income | $ | 11,067 | $ | 8,950 | $ | 12,356 | $ | 12,015 | $ | 12,682 | ||||||||||
Effective tax rate(1) | 34.1 | % | 33.0 | % | 35.0 | % | 36.3 | % | 32.9 | % | ||||||||||
PER COMMON SHARE | ||||||||||||||||||||
Basic earnings per share | ||||||||||||||||||||
| Income from continuing operations, net of tax | $ | 0.32 | $ | 0.26 | $ | 0.36 | $ | 0.36 | $ | 0.41 | ||||||||||
| Net income | 0.32 | 0.26 | 0.36 | 0.36 | 0.41 | |||||||||||||||
Diluted earnings per share | ||||||||||||||||||||
| Income from continuing operations, net of tax | $ | 0.32 | $ | 0.26 | $ | 0.35 | $ | 0.36 | $ | 0.40 | ||||||||||
| Net income | 0.32 | 0.26 | 0.35 | 0.36 | 0.40 | |||||||||||||||
Cash dividends declared | 0.195 | 0.195 | 0.195 | 0.195 | 0.195 | |||||||||||||||
| (1) | The effective tax rate includes the related effects of both continuing and discontinued operations. |
14
First Charter Corporation
Quarterly Earnings Release
Quarterly Earnings Release
| Quarter Ended | ||||||||||||||||||||
| (Dollars in thousands, except per share data) | 9/30/07 | 6/30/07 | 3/31/07 | 12/31/06 | 9/30/06 | |||||||||||||||
PERFORMANCE RATIOS | ||||||||||||||||||||
Return on average assets(1) | 0.91 | % | 0.74 | % | 1.03 | % | 1.02 | % | 1.16 | % | ||||||||||
Return on average equity(1) | 9.72 | 7.86 | 11.09 | 11.69 | 14.76 | |||||||||||||||
Return on average tangible equity(1) (2) | 12.24 | 9.97 | 13.90 | 14.27 | 15.98 | |||||||||||||||
Net interest margin(1) | 3.39 | 3.42 | 3.38 | 3.40 | 3.33 | |||||||||||||||
Efficiency(3) | 63.2 | 60.4 | 63.1 | 62.6 | 52.6 | |||||||||||||||
Noninterest income as a percentage of total revenue(4) | 32.76 | 34.55 | 34.36 | 32.17 | 33.67 | |||||||||||||||
| Equity as a percentage of total assets | 9.45 | 9.07 | 9.32 | 9.21 | 7.97 | |||||||||||||||
Tangible equity as a percentage of total tangible assets(5) | 7.86 | 7.48 | 7.74 | 7.59 | 7.51 | |||||||||||||||
| Leverage capital | 9.17 | 8.97 | 9.10 | 9.32 | 9.19 | |||||||||||||||
Tier 1 capital | 11.02 | 10.57 | 10.85 | 10.49 | 11.19 | |||||||||||||||
| Total risk-based capital | 12.10 | 11.67 | 11.74 | 11.35 | 12.04 | |||||||||||||||
SELECTED ITEMS INCLUDED IN EARNINGS | ||||||||||||||||||||
Noninterest income | ||||||||||||||||||||
Securities gains (losses), net(6) | $ | (48 | ) | $ | — | $ | (11 | ) | $ | — | $ | (5,860 | ) | |||||||
| Gain on sale of deposits and loans | — | — | — | — | 2,825 | |||||||||||||||
| Equity method investment gains (losses), net | — | 678 | 1,127 | 12 | 3,415 | |||||||||||||||
| Property sale gains, net | 59 | 152 | 63 | 49 | 408 | |||||||||||||||
| Bank-owned life insurance | — | — | — | — | (271 | ) | ||||||||||||||
Noninterest expense | ||||||||||||||||||||
| Separation agreements | — | 183 | 58 | 228 | 342 | |||||||||||||||
| Merger-related costs | 696 | — | 237 | 302 | — | |||||||||||||||
| GBC related executive retirement expense | — | 245 | — | — | — | |||||||||||||||
| Accelerated vesting of stock options | — | — | — | 665 | — | |||||||||||||||
DISCONTINUED OPERATIONS | ||||||||||||||||||||
| Noninterest income | $ | — | $ | — | $ | — | $ | 444 | $ | 759 | ||||||||||
| Noninterest expense | — | — | — | 606 | 759 | |||||||||||||||
| Income (loss) from discontinued operations | — | — | — | (162 | ) | — | ||||||||||||||
| Gain on sale | — | — | — | 962 | — | |||||||||||||||
| Income tax expense | — | — | — | 887 | — | |||||||||||||||
| Income (loss) from discontinued operations, net of tax | $ | — | $ | — | $ | — | $ | (87 | ) | $ | — | |||||||||
| (1) | Annualized. | |
| (2) | Net income, excluding intangibles amortization expense, divided by average equity, excluding average goodwill and intangible assets. | |
| (3) | Noninterest expense less debt extinguishment expense and derivative termination costs divided by the sum of tax-equivalent net interest income plus noninterest income less securities gains (losses), net. Excludes the results of discontinued operations. | |
| (4) | Total revenue equals tax-equivalent net income income plus noninterest income. Excludes the results of discontinued operations. | |
| (5) | Excludes goodwill and other intangible assets. | |
| (6) | The $48 of security losses, net for the quarter ended September 30, 2007 is due to recognition of other-than-temporary impairment of certain equity securities |
15
First Charter Corporation
Quarterly Earnings Release
Quarterly Earnings Release
| As of / Quarter Ended | ||||||||||||||||||||
| (Dollars in thousands) | 9/30/07 | 6/30/07 | 3/31/07 | 12/31/06 | 9/30/06 | |||||||||||||||
ASSET QUALITY | ||||||||||||||||||||
Allowance for Loan Losses | ||||||||||||||||||||
| Beginning balance | $ | 44,790 | $ | 35,854 | $ | 34,966 | $ | 29,919 | $ | 29,520 | ||||||||||
| Allowance of acquired company | — | — | — | 4,211 | — | |||||||||||||||
| Provision for loan losses | 3,311 | 9,124 | 1,366 | 1,486 | 1,405 | |||||||||||||||
| Charge-offs | (5,582 | ) | (547 | ) | (786 | ) | (907 | ) | (1,307 | ) | ||||||||||
| Recoveries | 498 | 359 | 308 | 257 | 301 | |||||||||||||||
| Net charge-offs | (5,084 | ) | (188 | ) | (478 | ) | (650 | ) | (1,006 | ) | ||||||||||
| Ending balance | $ | 43,017 | $ | 44,790 | $ | 35,854 | $ | 34,966 | $ | 29,919 | ||||||||||
Nonperforming Assets | ||||||||||||||||||||
| Nonaccrual loans | $ | 22,712 | $ | 17,387 | $ | 10,943 | $ | 8,200 | $ | 7,090 | ||||||||||
| Loans 90 days or more past due accruing interest | — | — | — | — | — | |||||||||||||||
| Total nonperforming loans | 22,712 | 17,387 | 10,943 | 8,200 | 7,090 | |||||||||||||||
| Other real estate | 9,134 | 2,726 | 6,330 | 6,477 | 5,601 | |||||||||||||||
| Total nonperforming assets | $ | 31,846 | $ | 20,113 | $ | 17,273 | $ | 14,677 | $ | 12,691 | ||||||||||
Asset Quality Ratios | ||||||||||||||||||||
| Nonaccrual loans as a percentage of total portfolio loans | 0.65 | % | 0.49 | % | 0.31 | % | 0.24 | % | 0.23 | % | ||||||||||
| Nonperforming assets as a percentage of total assets | 0.66 | 0.41 | 0.35 | 0.30 | 0.29 | |||||||||||||||
| Nonperforming assets as a percentage of total portfolio loans and other real estate | 0.91 | 0.57 | 0.49 | 0.42 | 0.41 | |||||||||||||||
| Net charge-offs as a percentage of average portfolio loans (1) | 0.57 | 0.02 | 0.06 | 0.08 | 0.13 | |||||||||||||||
| Allowance for loan losses as a percentage of portfolio loans | 1.24 | 1.26 | 1.02 | 1.00 | 0.97 | |||||||||||||||
| Ratio of allowance for loan losses to: | ||||||||||||||||||||
| Net charge-offs (1) | 2.13 | x | 59.40 | x | 18.50 | x | 13.56 | x | 7.50 | x | ||||||||||
| Nonaccrual loans | 1.89 | 2.58 | 3.28 | 4.26 | 4.22 | |||||||||||||||
| Quarter Ended | ||||||||||||||||||||
| 9/30/07 | 6/30/07 | 3/31/07 | 12/31/06 | 9/30/06 | ||||||||||||||||
YIELDS / RATES (1) | ||||||||||||||||||||
Interest income | ||||||||||||||||||||
| Loans and loans held for sale | 7.59 | % | 7.61 | % | 7.62 | % | 7.56 | % | 7.35 | % | ||||||||||
| Securities | 5.15 | 5.06 | 4.95 | 4.84 | 4.56 | |||||||||||||||
| Yield on earning assets | 7.09 | 7.08 | 7.05 | 6.96 | 6.70 | |||||||||||||||
Interest expense | ||||||||||||||||||||
| Interest-bearing deposits | 3.87 | 3.82 | 3.84 | 3.73 | 3.47 | |||||||||||||||
| Retail borrowings | 2.97 | 3.28 | 2.92 | 2.82 | 1.94 | |||||||||||||||
| Wholesale borrowings | 5.33 | 5.26 | 5.27 | 5.11 | 5.11 | |||||||||||||||
| Cost of total borrowings | 5.14 | 5.10 | 5.08 | 4.90 | 4.83 | |||||||||||||||
| Cost of interest-bearing liabilities | 4.24 | 4.19 | 4.19 | 4.06 | 3.85 | |||||||||||||||
| Interest rate spread | 2.85 | 2.89 | 2.86 | 2.90 | 2.85 | |||||||||||||||
| Net yield on earning assets | 3.39 | % | 3.42 | % | 3.38 | % | 3.40 | % | 3.33 | % | ||||||||||
| (1) | Annualized |
16