Exhibit 99.1
NEWS RELEASE DATED 1-14-2003
For Additional Information,
Contact Robert O. Bratton,
Chief Financial Officer
(704) 688-4473
or
Jan H. Hollar,
Director of Finance
(704) 688-4467
FOR IMMEDIATE RELEASE
January 14, 2003
FIRST CHARTER ANNOUNCES 35 PERCENT INCREASE IN FOURTH QUARTER EPS;
2002 EARNINGS INCREASE TO $39.8 MILLION, OR $1.30 PER SHARE
Charlotte, North Carolina - First Charter Corporation (NASDAQ: FCTR) reported
today fourth quarter diluted earnings per share of $0.35, a 35 percent increase
from diluted earnings per share of $0.26 in the fourth quarter of 2001. Earnings
for the fourth quarter amounted to $10.6 million compared to $8.2 million in the
fourth quarter of 2001, an increase of 29 percent or $2.4 million.
For the full year, First Charter reported diluted earnings per share of $1.30, a
16 percent increase from diluted earnings per share of $1.12 for 2001. Earnings
for the full year amounted to $39.8 million compared to $35.3 million for 2001,
an increase of 13 percent or $4.5 million. During the fourth quarter of 2002 the
Corporation adopted SFAS No. 147, which eliminated goodwill amortization for
2002 on certain acquisition of branches. This resulted in the reversal of
$716,000 ($520,000 or $0.02 diluted earnings per share, after-tax) of
amortization for the nine months ended September 30, 2002. Fourth quarter 2002
earnings were also positively impacted by $239,000 ($173,000 or $0.01 diluted
earnings per share, after-tax) due to the adoption of SFAS No. 147.
"First Charter is pleased to report increased earnings for the fourth quarter of
2002 as we continued to grow loans and deposits," commented President and Chief
Executive Officer Lawrence M. Kimbrough. "By delivering industry-leading
service, maintaining a disciplined approach to noninterest expense, and the
execution of our Community Banking Strategy, First Charter ended the year with a
13 percent increase in net income and a strong platform for growth in 2003."
Fourth Quarter 2002 Highlights (compared to fourth quarter 2001)
- Net interest income increased 5 percent.
- Noninterest income increased 46 percent or $5.1 million.
- Noninterest expense increased $2.9 million.
- Customer satisfaction scores increased from 72 percent to 83 percent "Very
Satisfied".
- First Charter launched CHAMP, a strategy for developing new customer
relationships.
- Deposits increased 7 percent to $2.32 billion.
- The Corporation continued its share repurchase program, with the
repurchase and retirement of 111,000 shares in the fourth quarter of 2002.
Full Year 2002 Highlights (compared to full year 2001)
- Net interest income increased 7 percent.
- Noninterest income increased 23 percent or $8.9 million.
- Noninterest expense increased 12 percent.
- Loans and loans held for sale increased 14 percent to $2.2 billion.
- Demand and savings account balances increased 10 percent.
- Dividends paid increased for the 11th consecutive year.
- The Corporation repurchased and retired 809,600 shares under its share
repurchase program.
- Return on average equity increased 110 basis points.
FINANCIAL HIGHLIGHTS
For the Three Months Ended For the Years Ended
Ended December 31 Ended December 31
------------------------------ ------------------------------
(Dollars in thousands, except per share data) 2002 2001 2002 2001
------------ ------------ ------------ ------------
EARNINGS
Total revenues $ 44,317 $ 37,997 $ 160,792 $ 144,137
Net income 10,549 8,150 39,803 35,325
Diluted earnings per share 0.35 0.26 1.30 1.12
Return on average assets 1.14% 1.00% 1.13% 1.14%
Return on average equity 12.57 9.88 12.13 11.03
Efficiency-taxable equivalent ratio 70.17 66.16 64.74 60.97
As of December 31 Increase (Decrease)
------------------------------ ------------------------------
2002 2001 Amount Percentage
------------ ------------ ------------ ------------
BALANCE SHEET
Loans held for sale $ 158,404 $ 7,334 $ 151,070 2,059.86%
Loans, net 2,045,266 1,921,718 123,548 6.43
Investments 1,129,212 1,076,324 52,888 4.91
Total assets 3,745,949 3,332,737 413,212 12.40
Demand, savings and money market deposits 1,027,459 941,693 85,766 9.11
Total deposits 2,322,647 2,162,945 159,702 7.38
Other borrowings 1,042,440 808,512 233,928 28.93
Shareholders' equity 324,686 309,341 15,345 4.96
For the Three Months Ended For the Years Ended
Ended December 31 Ended December 31
------------------------------ ------------------------------
2002 2001 2002 2001
------------ ------------ ------------ ------------
ASSET QUALITY RATIOS (1)
Nonaccrual loans as a percentage of total loans 1.28% 1.22% 1.28% 1.22%
Allowance for loan losses as a percentage of loans 1.31 1.33 1.31 1.33
Net charge-offs as a percentage of average loans 0.36 0.72 0.29 0.33
Nonperforming assets as a percentage of
total loans and other real estate 1.76 1.63 1.76 1.63
(1) Ratios exclude loans held for sale.
NET INTEREST INCOME/MARGIN
Fourth Quarter
Net interest income increased 5 percent to $28.0 million. Net interest income
increased primarily due to an increase in average earning assets and a decrease
in interest expense. The decrease in interest expense was due to the lower cost
of funding in a declining interest rate environment. The net interest margin
decreased to 3.32 percent in the fourth quarter of 2002 from 3.62 percent for
the same period in 2001. This decrease was driven by the continued effects of
the 475 basis point reduction in the prime rate during 2001 and the 50 basis
point reduction during the fourth quarter of 2002. This significantly reduced
the net interest margin due to the asset sensitive nature of the balance sheet.
In addition, assets added to the balance sheet during 2002 have been added at
rates below the weighted average yield of assets previously on the balance
sheet.
Year-to-Date
Net interest income increased $7.8 million to $113.2 million. Net interest
income increased primarily due to an increase in average earning assets and a
decrease in interest expense due to the lower cost of funding in a declining
interest rate environment. The net interest margin for 2002 decreased to 3.52
percent from 3.72 percent in 2001. As noted above, the asset sensitive nature of
the balance sheet has led to this decrease.
NONINTEREST INCOME
Fourth Quarter
Noninterest income increased 46 percent to $16.3 million. The increase was
primarily due to the active management of our securities portfolio. In addition,
noninterest income was positively impacted by increases in mortgage loan fees,
service charges on deposit accounts, brokerage revenues, financial management
income and insurance services income. These improvements were partially offset
by lower trading gains and the write down on mortgage servicing rights due to
the increased rate of prepayments in the current low interest rate environment.
Year-to-Date
Noninterest income increased 23 percent to $47.6 million. The primary drivers of
this increase were gains on the sale of securities of $11.5 million and
increases in service charges on deposit accounts. In addition, noninterest
income was positively impacted by a $1.0 million gain on the sale of excess bank
property, increases in brokerage revenues and insurance services income. Net
losses of $5.8 million from equity method investments and decreased mortgage fee
income offset a portion of these increases. While First Charter has experienced
record mortgage loan volume during 2002, a portion of mortgage loans originated
has been retained by the bank to replace normal amortization and run-off due to
refinancings. By placing these mortgage loans on the balance sheet, the mortgage
fee income is recognized over the life of the loan versus at the time of sale as
in prior periods.
First Charter's equity method investments represent investments in venture
capital limited partnerships, and gains or losses are recognized based upon
changes in its share of the fair market value of the limited partnership's
investee companies. At December 31, 2002, the total book value in equity method
investments was $3.7 million and the remaining commitment to fund equity method
investments was $1.8 million. Due to the nature of these investments, further
volatility in fair value may occur.
NONINTEREST EXPENSE
Fourth Quarter
Noninterest expense increased $2.9 million compared to the fourth quarter of
2001. The increase was primarily due to $3.3 million of prepayment costs
associated with the refinancing of $100 million of the Corporation's fixed-term
advances and the reserve for a contingent liability of $840,000. Noninterest
expense was positively impacted by $239,000 due to the adoption of SFAS No. 147,
which eliminated goodwill amortization for 2002 on certain acquisitions of
branches. Excluding the costs of the debt prepayment and the offsetting effects
of eliminating goodwill amortization, noninterest expense was essentially
unchanged mainly due to the Corporation's expense control efforts.
Year-to-Date
Noninterest expense increased 12 percent to $97.8 million. The major
contributing factors to this increase were costs associated with the debt
prepayment, the reserve for a contingent liability, additional personnel,
increased incentive compensation based on increases in certain noninterest
income categories and increased occupancy and equipment depreciation expense
attributable to the First Charter Center which was placed into service during
April of 2001. In addition, 2002 results reflect the depreciation and data
processing costs associated with the implementation of a new operating system
placed into service during the fourth quarter of 2001. Noninterest expense was
positively impacted by $955,000 due to the adoption of SFAS No. 147 in 2002.
The efficiency ratio increased to 64.74 percent compared to 60.97 percent for
the year ended December 31, 2001. A significant portion of the increase in the
efficiency ratio relates to the net losses from equity method investments and
costs associated with the debt prepayment. Excluding these two items, the
efficiency ratio for 2002 was 60.25 percent.
INCOME TAX EXPENSE
In the normal course of business, First Charter evaluates and implements
tax-planning initiatives. As a result of these initiatives, the effective tax
rate for the fourth quarter of 2002 and the year ended December 31, 2002
decreased to 27.3 percent compared to 32.2 percent for the three months and year
ended December 31, 2001.
LOANS
Net loans and loans held for sale increased 14 percent to $2.2 billion. During
the fourth quarter of 2002 $130 million of mortgage loans were reclassified to
loans held for sale. These loans will be securitized during the first quarter of
2003. The Corporation's primary strength is in building customer relationships
and growing market share in deposits, loans and related services. While
commercial and construction loans accounted for 22 percent of the growth in
loans and loans held for sale, mortgages (including loans held for sale)
accounted for approximately 36 percent of the growth in loans and loans held for
sale, and home equity lines of credit and other secured retail credit accounted
for the remaining 42 percent of the growth.
SECURITIES
The securities available for sale portfolio increased to $1.13 billion at
December 31, 2002. The Corporation repositioned approximately $249 million of
the portfolio to reduce interest rate risk by shortening the average life of the
portfolio. Net additions to the portfolio have been in the one-to-five year
average life range. Combined, these activities have shortened the average life
of the portfolio from 4.77 years at December 31, 2001 to 3.0 years at December
31, 2002. Concurrently, the weighted average
yield has declined to 5.01 percent at December 31, 2002 compared to 6.23 percent
at December 31, 2001.
DEPOSITS
Total deposits increased 7 percent to $2.3 billion. Deposit growth has occurred
across every major deposit category. During the fourth quarter of 2002, the
Corporation introduced the CHecking Account Marketing Program ("CHAMP"). The
emphasis of this program is to develop new customer relationships, generate
additional fee income opportunities, and to shift our funding mix towards lower
cost funding sources. As a result, 300 percent more checking accounts were
opened during the fourth quarter of 2002 than the fourth quarter of 2001.
OTHER BORROWINGS
Other borrowings increased 29 percent to $1.04 billion at December 31, 2002. The
increase was primarily due to increases in Federal Home Loan Bank borrowings,
which were at rates better than comparable retail funding rates. The proceeds of
these borrowings were used to fund loan growth and security purchases. During
the fourth quarter of 2002, the Corporation incurred $3.3 million in prepayment
penalties associated with the refinancing of $100 million in fixed-term
advances.
SHAREHOLDERS' EQUITY
First Charter intends to leverage its capital through growth of the balance
sheet and share repurchases. Shareholders' equity at December 31, 2002 increased
5 percent to $324.7 million and represented 8.66 percent of period-end assets.
During the year, 809,600 shares had been repurchased and retired under the
January 24, 2002 authorization to repurchase 1.5 million shares. At December 31,
2002 the book value per share was $10.80. Based on the $18.01 closing price of
First Charter Corporation common stock at December 31, 2002, the Corporation had
a market capitalization of $541.5 million.
ASSET QUALITY
Provision for Loan Losses
The provision for loan losses for the three months ended December 31, 2002
amounted to $2.2 million compared to $1.2 million for the same period in 2001.
The provision for loan losses for the year ended December 31, 2002 was $8.3
million, compared to $4.5 million for the same period in 2001. The increase in
the provision for loan losses was due to increased loan growth and higher levels
of nonaccrual loans.
Net Charge-Offs
Net charge-offs for the three months ended December 31, 2002 amounted to $2.1
million, or 0.36 percent of average loans, compared to $3.7 million, or 0.72
percent of average loans for same 2001 period. Net charge-offs for the year
ended December 31, 2002 amounted to $6.3 million, or 0.29 percent of average
loans compared to $6.7 million or 0.33 percent of average loans for the same
2001 period. The $0.4 million decrease in net charge-offs was due to lower
commercial loan charge-offs.
Nonperforming Assets
Nonaccrual loans at December 31, 2002 increased to $26.5 million from $23.8
million a year earlier. The increase in nonaccrual loans was primarily due to
the addition of several commercial loans to nonaccrual status. This increase was
partially offset by the sale of $3.1 million of residential nonaccrual loans
during the third quarter of 2002 and the transfer of one commercial loan from
nonaccrual status to other real estate. Other real estate, received through loan
foreclosure, increased to $10.3 million from $8.0 million a year earlier.
Allowance for Loan Losses
The allowance for loan losses as a percentage of total loans amounted to 1.31
percent at December 31, 2002 down from 1.33 percent a year ago. The allowance
for loan losses was reduced by (i) $0.3 million due to the sale of $3.1 million
of residential nonaccrual loans during the third quarter of 2002 and (ii) $0.3
million due to the reclassification of $130 million of mortgage loans to loans
held for sale during the fourth quarter of 2002. These loans consisted of
residential mortgage loans that generally have a lower percentage of allocated
allowance for loan losses. First Charter monitors the adequacy of the allowance
for loan losses to cover inherent losses in the loan portfolio through the use
of a loan loss migration model. Management believes the Corporation is
adequately reserved based on its methodology and migration analysis.
CONFERENCE CALL
First Charter executive management will be available via telephone conference to
discuss the contents of this press release, present growth and earnings
estimates for 2003 as well strategic plans for 2003 on Tuesday, January 14, 2003
at 11:00 a.m. The following table outlines access information for the conference
call and internet/audio replay:
US/CANADA PARTICIPANTS INTERNATIONAL PARTICIPANTS
---------------------- --------------------------
LIVE CONFERENCE CALL 800-379-3953 706-679-5254
ID # 7390804 ID # 7390804
INTERNET LIVE AND REPLAY www.FirstCharter.com www.FirstCharter.com
"Investor Relations" section "Investor Relations" section
SHOW # 84206 SHOW # 84206
AUDIO REPLAY 800-642-1687 706-645-9291
ID # 7390804 ID # 7390804
CORPORATE PROFILE
First Charter Corporation is a regional financial services company with assets
of $3.7 billion and is the holding company for First Charter Bank. First Charter
operates 52 financial centers, five insurance offices and 93 ATMs located in 17
counties throughout the piedmont and western half of North Carolina. First
Charter also operates one mortgage origination office in Virginia. First Charter
provides businesses and individuals with a broad range of financial services,
including banking, financial planning, funds management, investments, insurance,
mortgages and a full array of employee benefit programs. Additional information
about First Charter can be found by visiting WWW.FIRSTCHARTER.COM or by calling
1-800-601-8471. First Charter's common stock is traded under the symbol "FCTR"
on the NASDAQ National Market.
FORWARD LOOKING STATEMENTS
This news release contains forward looking statements with respect to the
financial conditions 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 include, among others, the
following possibilities: (1) projected business increases in connection with the
implementation of our business plan are lower than expected; (2) competitive
pressure among financial services companies increases significantly; (3) costs
or difficulties related to the integration of acquisitions or expenses in
general are greater than expected; (4) general economic conditions, in the
markets in which the company 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; (6) changes in the
interest rate environment 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 adversely affect the businesses in which the
company is engaged; and (9) decisions to change the business mix of the company.
For further information and other factors which could affect the accuracy of
forward looking statements, please see First Charter's reports filed with the
SEC pursuant to the Securities Exchange Act of 1934 which are available at the
SEC's website (WWW.SEC.GOV) or at First Charter's website
(WWW.FIRSTCHARTER.COM). Readers are cautioned not to place undue reliance on
these forward looking statements, which reflect management's judgments only as
of the date hereof. The company undertakes no obligation to publicly revise
those forward looking statements to reflect events and circumstances that arise
after the date hereof.
(SELECTED FINANCIAL INFORMATION IS ATTACHED)
FIRST CHARTER CORPORATION AND SUBSIDIARIES (NASDAQ: FCTR)
QUARTERLY EARNINGS RELEASE
As of/For the Twelve Months Ended Increase (Decrease)
--------------------------------- ------------------------------
(Dollars in thousands, except per share data) 12/31/2002 12/31/2001 Amount Percentage
------------ ------------ ------------ ------------
BALANCE SHEET
ASSETS:
Cash and due from banks $ 162,087 $ 134,084 $ 28,003 20.9%
Federal funds sold 1,154 1,161 (7) (0.6)
Interest earning bank deposits 6,609 6,220 389 6.3
Securities available for sale 1,129,212 1,076,324 52,888 4.9
Loans held for sale 158,404 7,334 151,070 2,059.9
Loans
Commercial Real Estate 798,664 631,814 166,850 26.4
Commercial Non Real Estate 223,178 222,497 681 0.3
Construction 215,859 321,716 (105,857) (32.9)
Mortgage 237,085 289,953 (52,868) (18.2)
Consumer 280,201 253,603 26,598 10.5
Home equity 317,730 228,169 89,561 39.3
------------ ------------ ------------ ------------
Total loans 2,072,717 1,947,752 124,965 6.4
Less: Unearned income (247) (191) (56) 29.3
Allowance for loan losses (27,204) (25,843) (1,361) 5.3
------------ ------------ ------------ ------------
Loans, net 2,045,266 1,921,718 123,548 6.4
------------ ------------ ------------ ------------
Other assets 243,217 185,896 57,321 30.8
------------ ------------ ------------ ------------
Total assets $ 3,745,949 $ 3,332,737 $ 413,212 12.4%
============ ============ ============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY:
Deposits
Noninterest-bearing deposits $ 305,924 $ 276,699 $ 29,225 10.6%
Interest checking and savings 416,005 378,341 37,664 10.0
Money market deposits 305,530 286,653 18,877 6.6
Time deposits 1,295,188 1,221,252 73,936 6.1
------------ ------------ ------------ ------------
Total deposits 2,322,647 2,162,945 159,702 7.4
Other borrowings 1,042,440 808,512 233,928 28.9
Other liabilities 56,176 51,939 4,237 8.2
------------ ------------ ------------ ------------
Total liabilities 3,421,263 3,023,396 397,867 13.2
------------ ------------ ------------ ------------
Total shareholders' equity 324,686 309,341 15,345 5.0
------------ ------------ ------------ ------------
Total liabilities and shareholders' equity $ 3,745,949 $ 3,332,737 $ 413,212 12.4%
============ ============ ============ ============
SELECTED AVERAGE BALANCES
Loans $ 2,122,890 $ 1,990,406 $ 132,484 6.7%
Securities 1,126,495 877,376 249,119 28.4
Interest earning assets 3,261,844 2,881,295 380,549 13.2
Assets 3,535,180 3,104,952 430,228 13.9
Deposits 2,251,256 2,085,669 165,587 7.9
Interest bearing liabilities 2,883,151 2,486,616 396,535 15.9
Shareholders' equity 328,036 320,215 7,821 2.4
As of / For the Quarter Ended
----------------------------------------------------------------------------
12/31/2002 9/30/2002 6/30/2002 3/31/2002 12/31/2001
------------ ------------ ------------ ------------ ------------
MISCELLANEOUS INFORMATION
Common stock prices (daily close)
High $ 19.1900 $ 17.9900 $ 20.5700 $ 19.4500 $ 18.4900
Low 16.0500 15.3300 17.3000 16.7500 15.8500
End of period 18.0100 16.5700 18.0800 18.6700 16.9100
Book Value 10.80 10.78 10.52 9.87 10.06
Market Capitalization 541,545,337 499,413,073 557,404,502 575,138,200 519,856,216
Weighted average shares - basic 30,081,995 30,379,838 30,829,356 30,798,728 31,197,190
Weighted average shares - diluted 30,220,294 30,506,426 31,098,379 30,993,981 31,364,373
End of period shares outstanding 30,069,147 30,139,594 30,829,895 30,805,474 30,742,532
Note: Balances for 2002 have been restated to reflect the adoption of SFAS No.
147. The restatement resulted in the reversal of $716,000 ($520,000 net of
tax) of goodwill amortization expense for the nine months ended September
30, 2002. Goodwill is included in other assets.
8
FIRST CHARTER CORPORATION AND SUBSIDIARIES (NASDAQ: FCTR)
QUARTERLY EARNINGS RELEASE
As of / For the Quarter Ended
--------------------------------------------------------------------------------
(Dollars in thousands, except per share data) 12/31/2002 9/30/2002 6/30/2002 3/31/2002 12/31/2001
----------- ----------- ----------- ----------- -----------
BALANCE SHEET
ASSETS:
Cash and due from banks $ 162,087 $ 85,811 $ 93,287 $ 89,611 $ 134,084
Federal funds sold 1,154 3,570 948 1,363 1,161
Interest earning bank deposits 6,609 9,849 16,513 16,984 6,220
Securities available for sale 1,129,212 1,212,742 1,104,995 1,107,939 1,076,324
Loans held for sale 158,404 14,532 1,486 5,400 7,334
Loans
Commercial Real Estate 798,664 730,601 682,301 638,339 631,814
Commercial Non Real Estate 223,178 230,809 237,120 242,679 222,497
Construction 215,859 307,802 304,921 314,855 321,716
Mortgage 237,085 378,088 349,931 321,147 289,953
Consumer 280,201 283,990 279,778 266,239 253,603
Home equity 317,730 296,073 270,282 241,078 228,169
----------- ----------- ----------- ----------- -----------
Total loans 2,072,717 2,227,363 2,124,333 2,024,337 1,947,752
Less: Unearned income (247) (225) (254) (277) (191)
Allowance for loan losses (27,204) (27,411) (27,213) (26,576) (25,843)
----------- ----------- ----------- ----------- -----------
Loans, net 2,045,266 2,199,727 2,096,866 1,997,484 1,921,718
----------- ----------- ----------- ----------- -----------
Other assets 243,217 174,698 176,637 187,077 185,896
----------- ----------- ----------- ----------- -----------
Total assets $ 3,745,949 $ 3,700,929 $ 3,490,732 $ 3,405,858 $ 3,332,737
=========== =========== =========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Deposits
Noninterest-bearing deposits $ 305,924 $ 302,584 $ 282,324 $ 257,864 $ 276,699
Interest checking and savings 416,005 407,019 390,270 383,145 378,341
Money market deposits 305,530 299,456 295,243 298,574 286,653
Time deposits 1,295,188 1,304,729 1,295,122 1,270,725 1,221,252
----------- ----------- ----------- ----------- -----------
Total deposits 2,322,647 2,313,788 2,262,959 2,210,308 2,162,945
Other borrowings 1,042,440 1,004,836 847,752 836,769 808,512
Other liabilities 56,176 57,550 55,623 54,863 51,939
----------- ----------- ----------- ----------- -----------
Total liabilities 3,421,263 3,376,174 3,166,334 3,101,940 3,023,396
----------- ----------- ----------- ----------- -----------
Total shareholders' equity 324,686 324,755 324,398 303,918 309,341
----------- ----------- ----------- ----------- -----------
Total liabilities and shareholders' equity $ 3,745,949 $ 3,700,929 $ 3,490,732 $ 3,405,858 $ 3,332,737
=========== =========== =========== =========== ===========
SELECTED AVERAGE BALANCES
Loans $ 2,253,317 $ 2,170,961 $ 2,080,227 $ 1,983,455 $ 1,977,638
Securities 1,144,045 1,129,206 1,130,552 1,101,683 1,001,763
Interest earning assets 3,418,176 3,311,707 3,219,752 3,093,516 3,005,225
Assets 3,678,945 3,586,969 3,491,868 3,377,791 3,246,863
Deposits 2,309,971 2,278,758 2,230,620 2,183,990 2,169,743
Interest bearing liabilities 2,999,871 2,914,391 2,859,137 2,756,185 2,605,572
Shareholders' equity 332,998 333,165 322,508 321,966 327,410
Note: Balances for 2002 have been restated to reflect the adoption of SFAS No.
147. The restatement resulted in the reversal of approximately $239,000
($173,000 net of tax) of goodwill amortization expense for each of the
three months ended March 31, 2002, June 30, 2002 and September 30, 2002.
Goodwill is included in other assets.
9
FIRST CHARTER CORPORATION AND SUBSIDIARIES (NASDAQ: FCTR)
QUARTERLY EARNINGS RELEASE
For the Three Months Ended Increase (Decrease)
---------------------------- -----------------------------
(Dollars in thousands, except per share data) 12/31/2002 12/31/2001 Amount Percentage
----------- ----------- ----------- -----------
INCOME STATEMENT
Interest income - taxable equivalent $ 48,562 $ 51,628 $ (3,066) (5.9)%
Interest expense 20,095 24,352 (4,257) (17.5)
----------- ----------- ----------- ----------
Net interest income - taxable equivalent 28,467 27,276 1,191 4.4
Less: Taxable equivalent adjustment 429 462 (33) (7.1)
----------- ----------- ----------- ----------
Net interest income 28,038 26,814 1,224 4.6
Provision for loan losses 2,175 1,200 975 81.3
----------- ----------- ----------- ----------
Net interest income after provision for loan losses 25,863 25,614 249 1.0
Noninterest income 16,279 11,183 5,096 45.6
Noninterest expense 27,631 24,766 2,865 11.6
----------- ----------- ----------- ----------
Income before income taxes 14,511 12,031 2,480 20.6
Income taxes 3,962 3,881 81 2.1
----------- ----------- ----------- ----------
NET INCOME $ 10,549 $ 8,150 $ 2,399 29.4%
=========== =========== =========== ==========
EARNINGS PER SHARE DATA
Basic $ 0.35 $ 0.26 $ 0.09 34.6%
Diluted 0.35 0.26 0.09 34.6
Weighted average shares - basic 30,081,995 31,197,190
Weighted average shares - diluted 30,220,294 31,364,373
Dividends paid on common shares $ 0.185 $ 0.180 $ 0.01 5.6%
PERFORMANCE RATIOS
Return on average assets 1.14% 1.00%
Return on average equity 12.57 9.88
Efficiency - taxable equivalent (*) 70.17 66.16
For the Three Months Ended
----------------------------
SCHEDULE OF OTHER ITEMS INCLUDED IN EARNINGS 12/31/2002 12/31/2001
----------- -----------
Noninterest income
Gain on sale of securities $ 5,371 $ 1,026
Equity method income (loss) (340) (524)
Gain (loss) on sale of properties (109) 287
Noninterest expense
Prepayment costs on borrowings (3,284) --
Reserve for contingent liability (840) --
Amortization of intangibles (89) (466)
----------- -----------
Total other items $ 709 $ 323
=========== ===========
Other items, net of tax $ 515 $ 220
=========== ===========
Notes: Applicable ratios are annualized.
* - Noninterest expense divided by the sum of taxable equivalent net
interest income plus noninterest income less gain on sale of
securities.
10
FIRST CHARTER CORPORATION AND SUBSIDIARIES (NASDAQ: FCTR)
QUARTERLY EARNINGS RELEASE
For the Twelve Months Ended Increase (Decrease)
------------------------------ ------------------------------
(Dollars in thousands, except per share data) 12/31/2002 12/31/2001 Amount Percentage
------------ ------------ ------------ ------------
INCOME STATEMENT
Interest income - taxable equivalent $ 198,152 $ 217,180 $ (19,028) (8.8)%
Interest expense 83,227 109,912 (26,685) (24.3)
------------ ------------ ------------ ------------
Net interest income - taxable equivalent 114,925 107,268 7,657 7.1
Less: Taxable equivalent adjustment 1,764 1,904 (140) (7.4)
------------ ------------ ------------ ------------
Net interest income 113,161 105,364 7,797 7.4
Provision for loan losses 8,270 4,465 3,805 85.2
------------ ------------ ------------ ------------
Net interest income after provision for loan losses 104,891 100,899 3,992 4.0
Noninterest income 47,631 38,773 8,858 22.8
Noninterest expense 97,772 87,579 10,193 11.6
------------ ------------ ------------ ------------
Income before income taxes 54,750 52,093 2,657 5.1
Income taxes 14,947 16,768 (1,821) (10.9)
------------ ------------ ------------ ------------
NET INCOME $ 39,803 $ 35,325 $ 4,478 12.7%
============ ============ ============ ============
EARNINGS PER SHARE DATA
Basic $ 1.30 $ 1.12 $ 0.18 16.1%
Diluted 1.30 1.12 0.18 16.1
Weighted average shares - basic 30,520,125 31,480,109
Weighted average shares - diluted 30,702,107 31,660,985
Dividends paid on common shares $ 0.73 $ 0.72 $ 0.01 1.4%
PERFORMANCE RATIOS
Return on average assets 1.13% 1.14%
Return on average equity 12.13 11.03
Efficiency - taxable equivalent (*) 64.74 60.97
For the Twelve Months Ended
---------------------------
SCHEDULE OF OTHER ITEMS INCLUDED IN EARNINGS 12/31/2002 12/31/2001
---------- ----------
Noninterest income
Gain on sale of securities $ 11,539 $ 2,399
Equity investment write down (20) (144)
Equity method income (loss) (5,801) (442)
Gain on sale of properties 904 416
Noninterest expense
Prepayment costs on borrowings (3,284) --
Reserve for contingent liability (840) --
Amortization of intangibles (367) (1,875)
---------- ----------
Total other items $ 2,131 $ 354
========== ==========
Other items, net of tax $ 1,549 $ 241
========== ==========
Notes: Balances for 2002 have been restated to reflect the adoption of SFAS No.
147. The restatement resulted in the reversal of $716,000 ($520,000 net
of tax) of goodwill amortization expense for the nine months ended
September 30, 2002.
Applicable ratios are annualized.
* - Noninterest expense divided by the sum of taxable equivalent net
interest income plus noninterest income less gain on sale of
securities.
11
FIRST CHARTER CORPORATION AND SUBSIDIARIES (NASDAQ: FCTR)
QUARTERLY EARNINGS RELEASE
As of / For the Quarter Ended
------------------------------------------------------------------
(Dollars in thousands, except per share data) 12/31/2002 9/30/2002 6/30/2002 3/31/2002 12/31/2001
---------- ---------- ---------- ---------- ----------
INCOME STATEMENT
INTEREST INCOME - TAXABLE EQUIVALENT
Interest and fees on loans $ 34,166 $ 34,828 $ 33,600 $ 32,920 $ 35,735
Interest on securities 14,327 15,340 16,239 16,543 15,764
Other interest income 69 50 38 32 129
---------- ---------- ---------- ---------- ----------
Total interest income - taxable equivalent 48,562 50,218 49,877 49,495 51,628
---------- ---------- ---------- ---------- ----------
INTEREST EXPENSE
Interest on deposits 12,016 12,498 12,694 13,749 16,781
Other interest expense 8,079 8,319 8,131 7,741 7,571
---------- ---------- ---------- ---------- ----------
Total interest expense 20,095 20,817 20,825 21,490 24,352
---------- ---------- ---------- ---------- ----------
Net interest income - taxable equivalent 28,467 29,401 29,052 28,005 27,276
Less: Taxable equivalent adjustment 429 436 444 455 462
---------- ---------- ---------- ---------- ----------
NET INTEREST INCOME 28,038 28,965 28,608 27,550 26,814
Provision for loan losses 2,175 1,750 2,240 2,105 1,200
---------- ---------- ---------- ---------- ----------
NET INTEREST INCOME AFTER PROVISION FOR
LOAN LOSSES 25,863 27,215 26,368 25,445 25,614
---------- ---------- ---------- ---------- ----------
NONINTEREST INCOME
Service charges on deposit accounts 4,998 4,689 4,781 4,665 4,255
Financial management income 483 566 679 668 339
Gain on sale of securities 5,371 1,416 989 3,763 1,026
Income (loss) from equity method investments (340) (2,525) 23 (2,959) (524)
Mortgage loan fees 1,137 504 409 407 723
Brokerage services income 591 640 420 637 356
Insurance services income 2,112 2,313 2,114 2,231 1,866
Trading gains 1,038 298 322 420 1,530
Other noninterest income 889 829 1,957 1,096 1,612
---------- ---------- ---------- ---------- ----------
Total noninterest income 16,279 8,730 11,694 10,928 11,183
---------- ---------- ---------- ---------- ----------
NONINTEREST EXPENSE
Salaries and employee benefits 12,213 11,988 13,208 12,897 12,501
Occupancy and equipment 3,768 3,839 4,184 4,241 3,804
Data processing 760 758 828 622 615
Marketing 658 630 634 640 575
Postage and supplies 1,099 967 1,078 1,189 1,155
Professional services 1,841 1,393 1,719 1,662 2,531
Telephone 376 461 568 546 448
Amortization of intangibles 89 88 90 100 466
Prepayment cost on borrowings 3,284 -- -- -- --
Other noninterest expense 3,544 1,616 1,775 2,420 2,671
---------- ---------- ---------- ---------- ----------
Total noninterest expense 27,631 21,740 24,084 24,317 24,766
---------- ---------- ---------- ---------- ----------
Income before taxes 14,511 14,205 13,978 12,056 12,031
Income taxes 3,962 3,878 3,816 3,291 3,881
---------- ---------- ---------- ---------- ----------
NET INCOME $ 10,549 $ 10,327 $ 10,162 $ 8,765 $ 8,150
========== ========== ========== ========== ==========
EARNINGS PER SHARE DATA
Basic $ 0.35 $ 0.34 $ 0.33 $ 0.28 $ 0.26
Diluted 0.35 0.34 0.33 0.28 0.26
Dividends paid on common shares 0.185 0.185 0.180 0.180 0.180
PERFORMANCE RATIOS
Return on average assets 1.14% 1.14% 1.17% 1.05% 1.00%
Return on average equity 12.57 12.30 12.64 11.04 9.88
Efficiency - taxable equivalent (*) 70.17 59.21 60.58 69.14 66.16
Noninterest income as a percentage of total income 36.73 23.16 29.02 28.40 29.43
Equity as a percentage of total assets 8.67 8.77 9.29 8.92 9.28
Average earning assets as a percentage of average assets 92.91 92.33 92.21 91.58 92.56
Average loans as a percentage of average deposits 97.55 95.27 93.26 90.82 91.15
As of / For the Quarter Ended
--------------------------------------------------------------------------
SCHEDULE OF OTHER ITEMS INCLUDED IN EARNINGS 12/31/2002 9/30/2002 6/30/2002 3/31/2002 12/31/2001
---------- ---------- ---------- ---------- ----------
Noninterest income
Gain on sale of securities $ 5,371 $ 1,416 $ 989 $ 3,763 $ 1,026
Equity investment write down -- -- -- (20) --
Equity method income (loss) (340) (2,525) 23 (2,959) (524)
Gain (loss) on sale of properties (109) -- 1,013 -- 287
Noninterest expense
Prepayment costs on borrowings (3,284) -- -- -- --
Reserve for contingent liability (840) -- -- -- --
Amortization of intangibles (89) (88) (90) (100) (466)
---------- ---------- ---------- ---------- ----------
Total other items $ 709 $ (1,197) $ 1,935 $ 684 $ 323
========== ========== ========== ========== ==========
Other items, net of tax $ 515 $ (870) $ 1,407 $ 497 $ 220
========== ========== ========== ========== ==========
Notes: Balances for 2002 have been restated to reflect the adoption of SFAS No.
147. The restatement resulted in the reversal of approximately $239,000
($173,000 net of tax) of amortization for each of the three months ended
March 31, 2002, June 30, 2002 and September 30, 2002.
Applicable ratios are annualized.
* - Noninterest expense divided by the sum of taxable equivalent net
interest income plus noninterest income less gain on sale of
securities.
12
FIRST CHARTER CORPORATION AND SUBSIDIARIES (NASDAQ: FCTR)
QUARTERLY EARNINGS RELEASE
As of / For the Quarter Ended
----------------------------------------------------------------------
(Dollars in thousands, except per share data) 12/31/2002 9/30/2002 6/30/2002 3/31/2002 12/31/2001
---------- ---------- ---------- ---------- ----------
ASSET QUALITY ANALYSIS
ALLOWANCE FOR LOAN LOSSES
Beginning balance $ 27,411 $ 27,213 $ 26,576 $ 25,843 $ 28,221
Provision for loan losses 2,175 1,750 2,240 2,105 1,200
Allowance related to loans sold or transferred
to held for sale (325) (322) -- -- --
Charge-offs (2,138) (1,517) (1,778) (1,557) (3,719)
Recoveries 81 287 175 185 141
---------- ---------- ---------- ---------- ----------
Net charge-offs (2,057) (1,230) (1,603) (1,372) (3,578)
---------- ---------- ---------- ---------- ----------
Ending balance $ 27,204 $ 27,411 $ 27,213 $ 26,576 $ 25,843
========== ========== ========== ========== ==========
NONPERFORMING ASSETS AND LOANS 90 DAYS
OR MORE PAST DUE ACCRUING INTEREST
Nonaccrual loans $ 26,467 $ 24,418 $ 30,656 $ 27,558 $ 23,824
Other real estate 10,278 9,675 8,367 7,208 8,049
---------- ---------- ---------- ---------- ----------
Total nonperforming assets 36,745 34,093 39,023 34,766 31,873
---------- ---------- ---------- ---------- ----------
Loans 90 days or more past due accruing interest -- -- -- 38 152
---------- ---------- ---------- ---------- ----------
TOTAL $ 36,745 $ 34,093 $ 39,023 $ 34,804 $ 32,025
========== ========== ========== ========== ==========
ASSET QUALITY RATIOS (*)
Nonaccrual loans as a percentage of
total loans 1.28% 1.10% 1.44% 1.36% 1.22%
Nonperforming assets as a percentage of
total assets 0.98 0.92 1.12 1.02 0.96
Nonperforming assets as a percentage of
total loans and other real estate 1.76 1.52 1.83 1.71 1.63
Net charge-offs as a percentage of
average loans (annualized) 0.36 0.22 0.31 0.28 0.72
Allowance for loan losses as a
percentage of loans 1.31 1.23 1.28 1.31 1.33
Ratio of allowance for loan losses to:
Net charge-offs 3.33X 5.62x 4.23x 4.78x 1.82x
Nonaccrual loans 1.03 1.12 0.89 0.96 1.08
As of / For the
Twelve Months Ended Increase (Decrease)
------------------------ ------------------------
12/31/2002 12/31/2001 Amount Percentage
---------- ---------- ---------- ----------
ALLOWANCE FOR LOAN LOSSES
Beginning balance $ 25,843 $ 28,447 $ (2,604) (9.2)%
Provision for loan losses 8,270 4,465 3,805 85.2
Allowance related to loans sold or transferred to held for sale (647) (417) (230) 55.2
Charge-offs (6,990) (7,406) (416) (5.6)
Recoveries 728 754 (26) (3.4)
---------- ---------- ---------- ----------
Net charge-offs (6,262) (6,652) (390) (5.9)
---------- ---------- ---------- ----------
Ending balance $ 27,204 $ 25,843 $ 1,361 5.3%
========== ========== ========== ==========
ASSET QUALITY RATIOS (*)
Net charge-offs as a percentage of
average loans 0.29% 0.33%
Ratio of allowance for loan losses to
net charge-offs 4.34X 3.88x
For the Quarter Ended
---------------------------------------------------------------
12/31/2002 9/30/2002 6/30/2002 3/31/2002 12/31/2001
---------- --------- --------- --------- ----------
ANNUALIZED INTEREST YIELDS / RATES (**)
INTEREST INCOME:
Yield on loans 6.02% 6.36% 6.48% 6.73% 7.17%
Yield on securities 5.01 5.43 5.75 6.01 6.29
---------- --------- --------- --------- ----------
Yield on interest earning assets 5.65 6.03 6.21 6.46 6.83
---------- --------- --------- --------- ----------
INTEREST EXPENSE:
Cost of interest bearing deposits 2.37 2.49 2.58 2.89 3.50
Cost of borrowings 3.26 3.57 3.67 3.80 4.27
---------- --------- --------- --------- ----------
Cost of interest bearing liabilities 2.66 2.83 2.92 3.16 3.71
---------- --------- --------- --------- ----------
Interest rate spread 2.99 3.20 3.29 3.30 3.12
---------- --------- --------- --------- ----------
Net yield on earning assets 3.32% 3.54% 3.61% 3.64% 3.62%
========== ========= ========= ========= ==========
Notes: Applicable ratios are annualized.
(*) - Ratios exclude loans held for sale.
(**) - Fully taxable equivalent yields.
13