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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K/A-1
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
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(Exact name of registrant as specified in its charter)
North Carolina
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(State or other jurisdiction of incorporation)
0-15829 56-1355866
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(Commission File Number) (IRS Employer Identification Number)
22 Union Street, North
Concord, North Carolina
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(Address of principal executive offices)
28025
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(Zip Code)
Registrant's telephone number, including area code: (704) 786-3300
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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 is amended to include the
following:
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired.
The following consolidated financial statements of HFNC Financial Corp.
and Subsidiaries are incorporated herein by reference to Exhibit 99.3 filed
herewith:
1. Consolidated Statements of Financial Position as of June 30, 1997
and 1996.
2. Consolidated Statements of Income for the years ended June 30,
1997, 1996 and 1995.
3. Consolidated Statements of Changes in Equity for the years ended
June 30, 1997, 1996 and 1995.
4. Consolidated Statements of Cash Flows for the years ended June
30, 1997, 1996 and 1995.
5. Notes to Consolidated Financial Statements for the years ended
June 30, 1997 and 1996.
6. Unaudited Consolidated Condensed Balance Sheets as of March 31,
1998 and June 30, 1997.
7. Unaudited Consolidated Condensed Statements of Income for the
three and nine months ended March 31, 1998 and 1997.
8. Unaudited Consolidated Statements of Changes in Shareholders'
Equity for the nine months ended March 31, 1998 and 1997.
9. Unaudited Consolidated Condensed Statements of Cash Flows for
the nine months ended March 31, 1998 and 1997.
10. Notes to Unaudited Consolidated Condensed Financial Statements
for certain financial periods ended March 31, 1998.
The Other Events in Item 5 of this Form 8-K should be read in
connection with these consolidated financial statements.
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The report of Deloitte & Touche LLP, independent auditors, on the
consolidated financial statements of HFNC Financial Corp. as of June 30, 1997
and 1996 and for each of the years in the three-year period ended June 30, 1997
is filed herewith as part of Exhibit 99.3 and a related consent is filed
herewith as Exhibit 99.4. Both the opinion and consent are incorporated herein
by reference.
(b) Pro Forma Financial Information.
The following tables contain unaudited pro forma condensed consolidated
financial statements including a balance sheet as of March 31, 1998 and
statements of earnings for the three months ended March 31, 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
statements 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.
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FIRST CHARTER CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
MARCH 31, 1998
FCC
PRO FORMA AND
FCC HFNC ADJUSTMENTS HFNC
-------- -------- ----------- ----------
(DOLLARS IN THOUSANDS)
ASSETS
Cash and due from banks............................ $ 32,963 $ 7,550 $ 5,612(2) $ 46,125
Interest-bearing bank deposits..................... 7,870 12,168 20,038
Securities available for sale:
U.S. government obligations...................... 13,811 -- 13,811
U.S. government agency obligations............... 45,313 82,584 127,897
Mortgage-backed securities....................... 8,736 46,777 55,513
State and municipal obligations, nontaxable...... 86,189 -- 86,189
Other............................................ 13,211 16,543 29,754
-------- -------- -------- ----------
Total securities available for sale............ 167,260 145,904 313,164
-------- -------- -------- ----------
Loans.............................................. 548,920 797,339 1,346,259
Less: Unearned income............................ (204) -- (204)
Allowance for loan losses.................... (8,088) (7,085) (15,173)
-------- -------- -------- ----------
Loans, net....................................... 540,628 790,254 1,330,882
-------- -------- -------- ----------
Premises and equipment, net........................ 16,071 9,989 26,060
Other assets....................................... 10,991 13,689 2,581(2) 27,261
-------- -------- -------- ----------
Total assets.............................. $775,783 $979,554 $ 8,193 $1,763,530
======== ======== ======== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits, domestic:
Noninterest-bearing.............................. $ 93,875 $ 9,480 $ $ 103,355
Interest-bearing:
NOW accounts................................... 96,326 76,677 173,003
Time........................................... 373,291 259,527 632,818
Certificates of deposit greater than
$100,000..................................... 72,342 86,370 158,712
-------- -------- -------- ----------
Total deposits................................. 635,834 432,054 1,067,888
Other borrowings................................. 53,017 368,800 421,817
Other liabilities................................ 5,759 9,780 5,086(2)(3) 20,625
-------- -------- -------- ----------
Total liabilities.............................. 694,610 810,634 5,086 1,510,330
SHAREHOLDERS' EQUITY
FCC Common Stock -- no par value; authorized,
25,000,000 shares; issued and outstanding,
9,328,545 shares (pro forma-authorized,
50,000,000 shares; issued and outstanding
19,128,270 shares)(4)............................ 50,516 -- 89,857(1)(2) 140,373
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......................... -- 89,971 (89,971)(1) --
ESOP loan and unvested restricted stock............ -- (19,742) 19,742(2) --
Unrealized gain on securities available for sale... 3,850 1,824 5,674
Retained earnings.................................. 26,807 96,695 (16,349)(2)(3) 107,153
-------- -------- -------- ----------
Total shareholders' equity................ 81,173 168,920 3,107 253,200
-------- -------- -------- ----------
Total liabilities and shareholders'
equity.................................. $775,783 $979,554 $ 8,193 $1,763,530
======== ======== ======== ==========
See notes to pro forma condensed financial information.
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FIRST CHARTER CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED STATEMENT OF EARNINGS
FOR THE THREE MONTHS
ENDED MARCH 31, FOR THE YEARS ENDED DECEMBER 31,
------------------------- --------------------------------------
1998 1997 1997 1996 1995
----------- ----------- ----------- ----------- ----------
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
Interest and fees on loans............. $ 28,076 $ 23,289 $ 100,712 $ 84,944 $ 75,860
Interest on investments and
securities........................... 4,964 6,230 21,762 25,870 16,275
Other interest......................... 51 87 593 726 1,076
----------- ----------- ----------- ----------- ----------
Total interest income................ 33,091 29,606 123,067 111,540 93,211
----------- ----------- ----------- ----------- ----------
Interest on deposits................... 11,410 11,117 46,334 45,589 45,022
Interest on borrowings................. 5,370 3,398 16,494 6,721 2,761
----------- ----------- ----------- ----------- ----------
Total interest expense............... 16,780 14,515 62,828 52,310 47,783
----------- ----------- ----------- ----------- ----------
Net interest income.................. 16,311 15,091 60,239 59,230 45,428
Provision for loan losses.............. 662 648 2,684 1,873 2,331
----------- ----------- ----------- ----------- ----------
Net interest income after provision
for loans losses................... 15,649 14,443 57,555 57,357 43,097
Noninterest income..................... 3,737 2,527 15,327 8,537 8,242
Noninterest expense.................... 9,941 10,081 42,947 36,568 31,850
----------- ----------- ----------- ----------- ----------
Income before income taxes........... 9,445 6,889 29,935 29,326 19,489
Income taxes........................... 3,275 2,334 10,765 9,723 5,631
----------- ----------- ----------- ----------- ----------
Income from continuing operations
before nonrecurring charges
directly attributable to the
transaction and before cumulative
effect of change in accounting
principle.......................... 6,170 4,555 19,170 19,603 13,858
Cumulative effect of change in
accounting principle............... -- -- -- -- (1,050)
----------- ----------- ----------- ----------- ----------
Income from continuing operations
before nonrecurring charges
directly attributable to the
transaction........................ $ 6,170 $ 4,555 $ 19,170 $ 19,603 $ 12,808
=========== =========== =========== =========== ==========
BASIC INCOME PER SHARE:
Income from continuing operations
before nonrecurring charges
directly attributable to the
transaction
FCC -- historical.................. $ 0.32 $ 0.29 $ 0.91 $ 1.10 $ 0.95
HFNC -- historical................. 0.20 0.12 0.69 0.58 n/a
FCC/HFNC -- pro forma combined..... 0.34 0.25 1.06 1.06 1.46
Average common equivalent shares
FCC -- historical.................. 9,310,298 9,205,381 9,236,786 9,183,738 8,779,066
HFNC -- historical................. 15,718,872 15,785,575 15,644,465 16,322,582 n/a
FCC/HFNC -- pro forma combined..... 18,270,055 18,203,159 18,154,131 18,487,610 8,779,066
INCOME DILUTED PER SHARE:
Income from continuing operations
before nonrecurring charges
directly attributable to the
transaction
FCC -- historical.................. $ 0.32 $ 0.29 $ 0.90 $ 1.09 $ 0.94
HFNC -- historical................. 0.20 0.11 0.66 0.58 n/a
FCC/HFNC -- pro forma combined..... 0.33 0.24 1.03 1.06 1.45
Average common equivalent shares
FCC -- historical.................. 9,460,050 9,272,252 9,339,060 9,234,946 8,846,355
HFNC -- historical................. 16,193,264 16,470,636 16,418,224 16,322,582 n/a
FCC/HFNC -- pro forma combined..... 18,690,210 18,660,515 18,697,448 18,538,818 8,846,355
See notes to pro forma condensed financial information.
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NOTES TO THE UNAUDITED MARCH 31, 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
using the pooling-of-interest 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
sharers of HFNC Common Stock. Options to acquire 1,545,510 shares of HFNC Common
Stock were outstanding at March 31, 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.................................. 89,971,485
Common Stock -- FCC.................................... 90,143,410
NOTE 2
At March 31, 1998, HFNC had a $7.7 million loan balance related to the
internally leveraged HFNC ESOP. Pursuant to the terms of 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 pro forma condensed balance sheet as
a reduction of retained earnings of $5,319,048 (see Note 3). At March 31, 1998,
the HFNC ESOP had 935,314 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........................................................ $7,742,584
Retained Earnings........................................... 5,319,048
ESOP Loan and Unvested Restricted Stock................ 11,021,320
Common Stock -- FCC.................................... 2,040,312
Upon consummation of the Merger approximately 371,000 shares of unvested
restricted stock grants will vest immediately under the HFNC MRRP. This
accelerated vesting will result in a one-time charge to HFNC's income statement
upon consummation, which is reflected in the pro forma condensed balance sheet
as a reduction of retained earnings of $5,227,642, 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
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retired. The following adjusting entry was made to the unaudited Pro Forma
Condensed Balance Sheet to reflect this transaction:
Retained Earnings........................................... $5,227,642
Accrued Liabilities......................................... 715,722
Deferred Tax Asset.......................................... 2,581,413
Common Stock -- FCC......................................... 2,326,513
HFNC ESOP Loan and Unvested Restricted Stock.............. 8,720,639
Cash...................................................... 2,130,651
NOTE 3
FCC anticipates one-time merger and related charges of $19.7 million ($16.3
million, net of tax effects) in connection with the Merger. Dissolution of the
HFNC ESOP and the HFNC MRRP (representing $10.5 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 March 31, 1998, but has not
been reflected in the Unaudited Pro Forma Condensed Statement 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
99.4 Consent of Deloitte & Touche LLP
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(1) Previously filed.
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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
/s/ LAWRENCE M. KIMBROUGH
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Date: August 4, 1998 Lawrence M. Kimbrough
President and Chief Executive Officer
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