SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K/A-2
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
Date of Report: May 17, 1998
(Date of earliest event reported)
First Charter Corporation
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
North Carolina
---------------------------------------------
(State or other jurisdiction of incorporation)
0-15829 56-1355866
------- ----------
(Commission File Number) (IRS Employer Identification Number)
22 Union Street, North
Concord, North Carolina
-----------------------
(Address of principal executive offices)
28025
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(Zip Code)
Registrant's telephone number, including area code: (704) 786-3300
INFORMATION TO BE INCLUDED IN THE REPORT
The Current Report on Form 8-K dated May 17, 1998 and filed
with the Securities and Exchange Commission on May 28, 1998, as
amended by Form 8-K/A-1 filed on August 4, 1998, is further amended to
include the following:
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(b) Pro Forma Financial Information.
The following tables contain unaudited pro forma
condensed consolidated financial statements including a balance
sheet as of June 30, 1998 and statements of earnings for the
three and six months ended June 30, 1998 and 1997 and the years ended
December 31, 1997, 1996 and 1995. These statements present on a pro
forma basis historical results for FCC and HFNC as though the Merger
had been consummated as of January 1, 1995.
The pro forma condensed consolidated financial statements and
per share information for the years ended December 31, 1997,
1996 and 1995 include historical operating results of HFNC on a calendar
year basis rather than on a June 30 fiscal year basis as originally
reported. Such calendar year financial results and per share information
for HFNC have not been audited.
The Merger is expected to be accounted for using the
pooling-of-interests method of accounting. Pro forma financial
information is presented for information purposes only and is not
necessarily indicative of the results of operations or combined
financial position that would have resulted had the Merger been
consummated at the dates or during the periods indicated, nor are
they necessarily indicative of future results of operations or
combined financial position.
The unaudited pro forma condensed consolidated financial
statements should be read in conjunction with the consolidated
historical financial statements of FCC and HFNC. Pro forma results are not
necessarily indicative of future operating results.
First Charter Corporation and Subsidiaries
Unaudited Pro Forma Condensed Balance Sheet
June 30, 1998
_________________________________________________
Pro Forma
Pro Forma Combined FCC
FCC HFNC Adjustments and HFNC
__________________________________________________
(Dollars in thousands)
ASSETS
Cash and due from banks $ 40,300 $ 7,403 $ 5,379 (2) $ 53,082
Interest-bearing bank
deposits 342 19,119 - 19,461
Securities available
for sale:
U.S. government
obligations 13,752 - - 13,752
U.S. government
agency obligations 40,347 90,616 - 130,963
Mortgage-backed
securities 8,021 42,106 - 50,127
State and municipal
obligations, nontaxable 86,835 - - 86,835
Other 15,281 16,848 - 32,129
_________ ________ ____________ __________
Total securities available
for sale 164,236 149,570 - 313,806
_________ ________ ____________ __________
Loans 569,852 813,423 - 1,383,275
Less: Unearned income (157) - - (157)
Allowance for loan
losses (8,215) (7,033) - (15,248)
_________ ________ ____________ __________
Loans, net 561,480 806,390 - 1,367,870
_________ ________ ____________ __________
Premises and equipment,
net 17,142 9,832 - 26,974
Other assets 9,552 14,962 2,581 (2) 27,095
_________ _________ ____________ __________
Total assets $793,052 $1,007,276 $ 7,960 $1,808,288
========= ========== ============ ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits, domestic:
Noninterest-bearing $104,746 $ 15,132 $ - $ 119,878
Interest-bearing:
NOW accounts 98,070 77,352 - 175,422
Time 374,442 250,348 - 624,790
Certificates of deposit
greater than $100,000 72,954 87,669 - 160,623
________ __________ _____________ ________
Total deposits 650,212 430,501 - 1,080,713
Other borrowings 53,583 393,800 - 447,383
Other liabilities 5,606 12,080 4,360 (2)(3) 22,046
_______ __________ _____________ ________
Total liabilities 709,401 836,381 4,360 1,550,142
_______ __________ _____________ _________
SHAREHOLDERS' EQUITY
FCC Common Stock -- no par
value; authorized 25,000,000
shares; issued and outstand-
ing, 9,361,319 shares
(pro forma-authorized,
50,000,000 shares; issued
and outstanding
19,161,044 shares)(4) 51,063 - 89,808(1)(2) 140,871
HFNC Common Stock -- $.01
par value; authorized,
25,000,000 shares;
issued and outstanding,
17,192,500 shares - 172 (172)(1) -
Additional paid-in capital - 89,990 (89,990)(1) -
ESOP loan and unvested
restricted stock - (19,415) 19,415 (2) -
Unrealized gain on
securities available
for sale 3,995 1,271 - 5,266
Retained earnings 28,593 98,877 (15,461)(2)(3)112,009
_________ _________ _______________ ________
Total shareholders'
equity 83,651 170,895 3,600 258,146
_________ _________ _______________ ________
Total liabilities
and shareholders'
equity $ 793,052 $1,007,276 $ 7,960 $1,808,288
========= ========= =============== =========
See notes to pro forma condensed financial information.
First Charter Corporation and Subsidiaries
Unaudited Pro Forma Condensed Statement of Earnings
For the Six Months Ended June 30, 1998
_______________________________________________
Pro Forma
Combined
Pro Forma FCC and
FCC HFNC Adjustments HFNC
________________________________________________
(Dollars in thousands, except per share amounts)
Interest and fees on loans $ 25,429 $ 31,564 $ - $ 56,993
Interest on investments
and securities 4,661 5,485 - 10,146
Other interest 74 - - 74
________ ________ ____________ __________
Total interest income 30,164 37,049 - 67,213
________ ________ ____________ __________
Interest on deposits 11,645 11,179 - 22,824
Interest on borrowings 1,284 10,362 - 11,646
________ ________ ____________ __________
Total interest expense 12,929 21,541 - 34,470
________ ________ ____________ __________
Net interest income 17,235 15,508 - 32,743
Provision for loan losses 1,295 (33) - 1,262
________ ________ _____________ __________
Net interest income after
provision for loan
losses 15,940 15,541 - 31,481
Noninterest income 5,587 2,379 - 7,966
Noninterest expense 12,746 7,075 - 19,821
________ ________ _______________ _________
Income before income
taxes 8,781 10,845 - 19,626
Income taxes 2,580 4,243 - 6,823
________ ________ _______________ _________
Net income $ 6,201 $ 6,602 $ - $ 12,803
======== ======== =============== =========
Basic net income per share:
Income from continuing operations
before nonrecurring charges
directly attributable to the
transaction $ 0.66 $ 0.42 $ - $ 0.70
========= ======== =============== ==========
Weighted average common
shares 9,329,106 15,765,064 - 18,315,192
========= ========= =============== ===========
Diluted net income per share:
Income from continuing operations
before nonrecurring charges
directly attributable to the
transaction $ 0.66 $ 0.41 $ - $ 0.68
========== ========= =============== ==========
Weighted average common
shares 9,460,334 16,232,150 - 18,712,660
=========== ========= =============== ===========
See notes to pro forma condensed financial information.
First Charter Corporation and Subsidiaries
Unaudited Pro Forma Condensed Statement of Earnings
For the Six Months Ended June 30, 1997
_______________________________________________
Pro Forma
Combined
Pro Forma FCC and
FCC HFNC Adjustments HFNC
_______________________________________________
(Dollars in thousands, except per share amounts)
Interest and fees on loans $ 22,179 $ 25,872 $ - $ 48,051
Interest on investments
and securities 4,456 7,258 - 11,714
Other interest 160 - - 160
________ ________ ____________ __________
Total interest income 26,795 33,130 - 59,925
________ ________ ____________ __________
Interest on deposits 10,909 11,683 - 22,592
Interest on borrowings 941 6,715 - 7,656
________ ________ ____________ __________
Total interest expense 11,850 18,398 - 30,248
________ ________ ____________ __________
Net interest income 14,945 14,732 - 29,677
Provision for loan losses 1,016 (20) - 996
________ ________ _____________ __________
Net interest income after
provision for loan
losses 13,929 14,752 - 28,681
Noninterest income 4,471 570 - 5,041
Noninterest expense 10,501 8,975 - 19,476
________ ________ _______________ _________
Income before income
taxes 7,899 6,347 - 14,246
Income taxes 2,399 2,443 - 4,842
________ ________ _______________ _________
Net income $ 5,500 $ 3,904 $ - $ 9,404
======== ======== =============== =========
Basic net income per share:
Income from continuing operations
before nonrecurring charges
directly attributable to the
transaction $ 0.60 $ 0.25 $ - $ 0.52
======== ======== ================= ========
Weighted average common
shares 9,224,101 15,675,782 - 18,159,297
========= ======== ================= =========
Diluted net income per share:
Income from continuing operations
before nonrecurring charges
directly attributable to the
transaction $ 0.59 $ 0.24 $ - $ 0.50
======= ======== ================= ==========
Weighted average common
shares 9,257,945 16,473,565 - 18,647,877
========== ========== ============ ==============
See notes to pro forma condensed financial information.
First Charter Corporation and Subsidiaries
Unaudited Pro Forma Condensed Statement of Earnings
For the Three Months Ended June 30, 1998
_________________________________________________
Pro Forma
Combined
Pro Forma FCC and
FCC HFNC Adjustments HFNC
_________________________________________________
(Dollars in thousands, except per share amounts)
Interest and fees on loans $ 12,908 $ 16,010 $ - $ 28,918
Interest on investments
and securities 2,303 2,879 - 5,182
Other interest 23 - - 23
________ ________ ____________ __________
Total interest income 15,234 18,889 - 34,123
________ ________ ____________ __________
Interest on deposits 5,825 5,589 - 11,414
Interest on borrowings 663 5,613 - 6,276
________ ________ ____________ __________
Total interest expense 6,488 11,202 - 17,690
________ ________ ____________ __________
Net interest income 8,746 7,687 - 16,433
Provision for loan losses 585 15 - 600
________ ________ _____________ __________
Net interest income after
provision for loan
losses 8,161 7,672 - 15,833
Noninterest income 3,021 1,208 - 4,229
Noninterest expense 6,657 3,223 - 9,880
________ ________ _______________ _________
Income before income
taxes 4,525 5,657 - 10,182
Income taxes 1,335 2,213 - 3,548
________ ________ _______________ _________
Net income $ 3,190 $ 3,444 $ - $ 6,634
======== ======== =============== =========
Basic net income per share:
Income from continuing operations
before nonrecurring charges
directly attributable to the
transaction $ 0.34 $ 0.22 $ - $ 0.36
======== ========== ================ =========
Weighted average common
shares 9,347,706 15,811,255 - 18,360,121
======== =========== =============== ==========
Diluted net income per share:
Income from continuing operations
before nonrecurring charges
directly attributable to the
transaction $ 0.34 $ 0.21 $ - $ 0.35
========== ========= ============= ==========
Weighted average common
shares 9,471,050 16,271,036 - 18,745,541
========== ========== ============ ===========
See notes to pro forma condensed financial information.
First Charter Corporation and Subsidiaries
Unaudited Pro Forma Condensed Statement of Earnings
For the Three Months Ended June 30, 1997
___________________________________________________
Pro Forma
Combined
Pro Forma FCC and
FCC HFNC Adjustments HFNC
____________________________________________________
(Dollars in thousands, except per share amounts)
Interest and fees on loans $ 11,496 $ 13,266 $ - $ 24,762
Interest on investments
and securities 2,236 3,248 - 5,484
Other interest 73 - - 73
________ ________ ____________ __________
Total interest income 13,805 16,514 - 30,319
________ ________ ____________ __________
Interest on deposits 5,594 5,882 - 11,476
Interest on borrowings 449 3,810 - 4,259
________ ________ ____________ __________
Total interest expense 6,043 9,692 - 15,735
________ ________ ____________ __________
Net interest income 7,762 6,822 - 14,584
Provision for loan losses 607 (259) - 348
________ ________ _____________ __________
Net interest income after
provision for loan
losses 7,155 7,081 - 14,236
Noninterest income 2,257 256 - 2,513
Noninterest expense 5,363 4,031 - 9,394
________ ________ _______________ _________
Income before income
taxes 4,049 3,306 - 7,355
Income taxes 1,235 1,273 - 2,508
________ ________ _______________ _________
Net income $ 2,814 $ 2,033 $ - $ 4,847
======== ======== =============== =========
Basic net income per share:
Income from continuing operations
before nonrecurring charges
directly attributable to the
transaction $ 0.31 $ 0.13 $ - $ 0.27
========= ========= =============== =========
Weighted average common
shares 9,233,420 15,565,989 - 18,106,034
========= =========== ============= ===========
Diluted net income per share:
Income from continuing operations
before nonrecurring charges
directly attributable to the
transaction $ 0.30 $ 0.12 $ - $ 0.26
======== ========= ================ =========
Weighted average common
shares 9,264,852 16,476,494 - 18,656,454
========= ========== ============= ============
See notes to pro forma condensed financial information.
First Charter Corporation and Subsidiaries
Unaudited Pro Forma Condensed Statement of Earnings
For the Fiscal Year Ended December 31, 1997
_______________________________________________
Pro Forma
Combined
Pro Forma FCC and
FCC HFNC Adjustments HFNC
________________________________________________
(Dollars in thousands, except per share amounts)
Interest and fees on loans $ 46,427 $ 54,285 $ - $100,712
Interest on investments
and securities 8,934 12,828 - 21,762
Other interest 593 - - 593
________ ________ ___________ __________
Total interest income 55,954 67,113 - 123,067
________ ________ ___________ __________
Interest on deposits 22,812 23,522 - 46,334
Interest on borrowings 1,939 14,555 - 16,494
________ ________ ___________ __________
Total interest expense 24,751 38,077 - 62,828
________ ________ ___________ __________
Net interest income 31,203 29,036 - 60,329
Provision for loan losses 2,702 (18) - 2,684
________ ________ ____________ __________
Net interest income after
provision for loan
losses 28,501 29,054 - 57,555
Noninterest income 9,452 5,875 - 15,327
Noninterest expense 25,642 17,305 - 42,947
________ ________ ______________ _________
Income before income
taxes 12,311 17,624 - 29,935
Income taxes 3,910 6,855 - 10,765
________ ________ ______________ _________
Net income $ 8,401 $ 10,769 $ - $ 19,170
======== ======== ============== =========
Basic net income per share:
Income from continuing operations
before nonrecurring charges
directly attributable to the
transaction $ 0.91 $ 0.69 $ - $ 1.06
========= ======== =============== =========
Weighted average common
shares 9,236,786 15,644,465 - 18,154,131
========= ========== =============== ==========
Diluted net income per share:
Income from continuing operations
before nonrecurring charges
directly attributable to the
transaction $ 0.90 $ 0.66 $ - $ 1.03
========= ========== =============== =========
Weighted average common
shares 9,339,060 16,418,224 - 18,697,448
========= ========== =============== ==========
See notes to pro forma condensed financial information.
First Charter Corporation and Subsidiaries
Unaudited Pro Forma Condensed Statement of Earnings
For the Fiscal Year Ended December 31, 1996
_______________________________________________
Pro Forma
Combined
Pro Forma FCC and
FCC HFNC Adjustments HFNC
_______________________________________________
(Dollars in thousands, except per share amounts)
Interest and fees on loans $ 41,170 $ 43,774 $ - $ 84,944
Interest on investments
and securities 9,011 16,859 - 25,870
Other interest 726 - - 726
________ ________ ___________ __________
Total interest income 50,907 60,633 - 111,540
________ ________ ___________ __________
Interest on deposits 21,143 24,446 - 45,589
Interest on borrowings 1,654 5,067 - 6,721
________ ________ ___________ __________
Total interest expense 22,797 29,513 - 52,310
________ ________ ___________ __________
Net interest income 28,110 31,120 - 59,230
Provision for loan losses 1,540 333 - 1,873
________ ________ ___________ __________
Net interest income after
provision for loan
losses 26,570 30,787 - 57,357
Noninterest income 7,271 1,266 - 8,537
Noninterest expense 19,354 17,214 - 36,568
________ ________ ___________ __________
Income before income
taxes 14,487 14,839 - 29,326
Income taxes 4,418 5,305 - 9,723
________ ________ ___________ __________
Net income $ 10,069 $ 9,534 $ - $ 19,603
======== ======== =========== ==========
Basic net income per share:
Income from continuing operations
before nonrecurring charges
directly attributable to the
transaction $ 1.10 $ 0.58 $ - $ 1.06
========= ========= =========== ==========
Weighted average common
shares 9,183,738 16,322,582 - 18,487,610
========== ========== =========== ==========
Diluted net income per share:
Income from continuing operations
before nonrecurring charges
directly attributable to the
transaction $ 1.09 $ 0.58 $ - $ 1.06
========= ========= ============ ==========
Weighted average common
shares 9,234,946 16,322,582 - 18,538,818
========= ========== ============ ==========
See notes to pro forma condensed financial information.
First Charter Corporation and Subsidiaries
Unaudited Pro Forma Condensed Statement of Earnings
For the Fiscal Year Ended December 31, 1995
_________________________________________________
Pro Forma
Combined
Pro Forma FCC and
FCC HFNC Adjustments HFNC
_________________________________________________
(Dollars in thousands, except per share amounts)
Interest and fees on loans $ 36,619 $ 39,241 $ - $ 75,860
Interest on investments
and securities 8,240 8,035 - 16,275
Other interest 1,076 - - 1,076
________ ________ ____________ __________
Total interest income 45,935 47,276 - 93,211
________ ________ ____________ __________
Interest on deposits 18,481 26,541 - 45,022
Interest on borrowings 1,355 1,406 - 2,761
________ ________ ____________ __________
Total interest expense 19,836 27,947 - 47,783
________ ________ ____________ __________
Net interest income 26,099 19,329 - 45,428
Provision for loan losses 1,991 340 - 2,331
________ ________ _____________ __________
Net interest income after
provision for loan
losses 24,108 18,989 - 43,097
Noninterest income 6,278 1,964 - 8,242
Noninterest expense 19,181 12,669 - 31,850
________ ________ _______________ _________
Income before income
taxes 11,205 8,284 - 19,489
Income taxes 2,901 2,730 - 5,631
________ ________ _______________ _________
Net income before
cumulative effect of
change in accounting
principle 8,304 5,554 - 13,858
Cumulative effect of
change in accounting
principle - (1,050) - (1,050)
======== ======== =============== ==========
Net income $ 8,304 $ 4,504 $ - $12,808
Basic net income per share:
Income from continuing operations
before nonrecurring charges
directly attributable to the
transaction $ 0.95 n/a $ - $ 1.46
======== ========== ================ =========
Weighted average common
shares 8,779,066 n/a - 8,779,066
=========== ============ ============= =========
Diluted net income per share:
Income from continuing operations
before nonrecurring charges
directly attributable to the
transaction $ 0.94 n/a $ - $ 1.45
========= ========= =============== =========
Weighted average common
shares 8,846,355 n/a - 8,846,355
========= ============= =============== ==========
See notes to pro forma condensed financial information.
Notes to the Unaudited June 30, 1998
Pro Forma Condensed Financial Information
The unaudited FCC and HFNC Pro Forma Condensed Financial
Information is based upon the following adjustments, reflecting
the consummation of the Merger of FCC and HFNC assuming the
two companies had been combined for each period presented
using the pooling-of-interests method of accounting. Actual amounts
may differ from those reflected in the unaudited Pro Forma Condensed
Financial Information.
NOTE 1
FCC will exchange 0.57 of a share of FCC Common Stock for
each share of HFNC Common Stock outstanding immediately prior to
the Effective Time (except for shares of HFNC Common Stock held
by FCC or HFNC or their respective subsidiaries, other than in a
fiduciary capacity or as a result of debts previously contracted,
which shall be canceled). The pro forma issued number of shares
of FCC Common Stock does not reflect the exercise of options to
acquire shares of HFNC Common Stock. Options to acquire 1,545,060
shares of HFNC Common Stock were outstanding at June 30, 1998.
Shares of HFNC Common Stock 17,192,500
Exchange Ratio 0.57
Shares of FCC Common Stock Issued 9,799,725
The following adjusting entry was made to the unaudited Pro
Forma Condensed Balance Sheet to reflect this transaction:
Common Stock -- HFNC $ 171,925
Additional paid-in Capital 89,990,396
Common Stock -- FCC 90,162,321
NOTE 2
At June 30, 1998, HFNC had a $7.5 million loan balance
related to the internally leveraged HFNC ESOP. Pursuant to the
terms of the HFNC ESOP, FCC will sell enough common stock shares to repay
this inter-company debt. All additional shares remaining in the
HFNC ESOP will be allocated to employees' individual
accounts. FCC will incur a one-time charge related to this
allocation of remaining shares, which is reflected in the unaudited
Pro Forma Condensed Balance Sheet as a reduction of retained earnings
of $5,125,645 (see Note 3). At June 30, 1998, the HFNC ESOP had
907,614 shares of stock not allocated to employees' individual
accounts. FCC will exchange 0.57 of a share of FCC Common Stock
for each unallocated share used to pay off the inter-company debt
and allocate remaining shares to HFNC employees' individual
accounts. The following adjusting entry was made to the unaudited
Pro Forma Condensed Balance Sheet to reflect this transaction:
Cash $7,549,138
Retained Earnings 5,125,645
ESOP Loan and Unvested Restricted
Stock 10,694,904
Common Stock --FCC 1,979,879
Upon consummation of the Merger approximately 371,000 shares
of unvested restricted stock grants will vest immediately under
the HFNC Management Retention and Recognition Plan ("MRRP").
This accelerated vesting will result in a one-time
charge to HFNC's income statement upon consummation, which is
reflected in the unaudited Pro Forma Condensed Balance Sheet as a
reduction of retained earnings of $4,533,667, net of tax (see Note 3).
FCC will exchange 0.57 of a share of FCC Common Stock for each vested
share of restricted stock outstanding. All ungranted shares will
be retired. The following adjusting entry was made to the
unaudited Pro Forma Condensed Balance Sheet to reflect this
transaction:
Retained Earnings $4,533,667
Accrued Liabilities 1,441,261
Deferred Tax Asset 2,581,413
Common Stock -- FCC 2,334,275
HFNC ESOP Loan and Unvested
Restricted Stock 8,720,638
Cash 2,169,978
NOTE 3
FCC anticipates one-time merger and related charges of $18.9
million ($15.5 million, net of tax effects) in connection with
the Merger. Dissolution of the HFNC ESOP and the HFNC MRRP
(representing $9.7 million of the $19.7 million) along with
professional fees associated with the transaction (including
fixed financial advisor fees, as well as attorneys' and
accountants' fees) are expected to represent the largest portion
of the expenses and charges, as well as estimated expenses
associated with various severance-related obligations. The
impact of these adjustments, net of tax effects, has been
reflected in the unaudited Pro Forma Condensed Balance Sheet as
of June 30, 1998, but has not been reflected in the unaudited Pro
Forma Condensed Statements of Earnings.
NOTE 4
In connection with the Merger, FCC intends to repurchase,
from time to time in open market purchases or in privately
negotiated transactions, up to 750,000 shares of FCC Common
Stock. FCC may effect such repurchases on an equivalent basis in
shares of HFNC Common Stock. The impact of the stock repurchase
is not reflected in the Pro Forma Condensed Consolidated
Financial Information.
(c) Exhibits.
The following exhibits are filed herewith:
EXHIBIT NO. DESCRIPTION OF EXHIBIT
99.1 Joint News Release (1)
99.2 Analyst Materials (1)
99.3 Consolidated Financial Statements of
HFNC Financial Corp. and Report of
Deloitte & Touche LLP(1)
99.4 Consent of Deloitte & Touche LLP(1)
- ----------
(1) Previously filed.
SIGNATURE
Pursuant to the requirements of the Securities and
Exchange Act of 1934, the Registrant has duly caused this report
to be signed on its behalf by the undersigned hereunto duly
authorized.
FIRST CHARTER CORPORATION
Registrant
By: /s/ ROBERT O. BRATTON
Date: September 10, 1998 Robert O. Bratton
Vice President and Controller