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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1997
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________________ to _____________________
Commission file number 0-15829
FIRST CHARTER CORPORATION
(Exact name of registrant as specified in its Charter)
North Carolina 56-1355866
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
22 Union Street, North, Concord, N.C. 28026 -0228
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (704) 786-3300.
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
N/A N/A
Securities registered pursuant to Section 12(g) of the Act:
Common stock, no par value
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes _X_ No ___
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates of
the registrant as of March 20, 1998 was $183,590,155.
As of March 20, 1998 the Registrant had outstanding 9,328,546 shares of
Common Stock, no par value.
Documents Incorporated by Reference
PARTS I and II: Annual Report to Shareholders for the fiscal year ended
December 31, 1997 (with the exception of those portions which are specifically
incorporated by reference in this Form 10-K, the Annual Report to Shareholders
is not deemed to be filed as part of this report).
PART III: Definitive Proxy Statement to be filed with the Securities and
Exchange Commission pursuant to Regulation 14A promulgated pursuant to the
Securities Exchange Act of 1934 in connection with the 1998 Annual Meeting of
Shareholders (with the exception of those portions which are specifically
incorporated by reference in this Form 10-K, the Proxy Statement is not deemed
to be filed as part of this report).
FIRST CHARTER CORPORATION
AND SUBSIDIARIES
FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
TABLE OF CONTENTS
PART I
Page
----
Item 1. Business........................................................ 1
Item 2. Properties...................................................... 25
Item 3. Legal Proceedings............................................... 27
Item 4. Submission of Matters to a Vote of Security
Holders....................................................... 27
Item 4A. Executive Officers of the Registrant............................ 28
PART II
Item 5. Market For Registrant's Common Equity and
Related Shareholder Matters.................................. 29
Item 6. Selected Financial Data......................................... 29
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................................... 30
Item 7A. Quantitative and Qualitative Disclosures
about Market Risk............................................ 30
Item 8. Financial Statements and Supplementary Data..................... 30
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure....................... 30
PART III
Item 10. Directors and Executive Officers of the
Registrant................................................... 31
Item 11. Executive Compensation.......................................... 31
Item 12. Security Ownership of Certain Beneficial
Owners and Management........................................ 31
Item 13. Certain Relationships and Related
Transactions................................................. 31
PART IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K.......................................... 32
Part I
Item 1. Business
General
First Charter Corporation (hereinafter referred to as either the
"Registrant" or the "Company") is a multi-bank holding company established as a
North Carolina Corporation in 1983 and is registered under the Bank Holding
Company Act of 1956, as amended (the "BHCA"). Its principal assets are the stock
of its banking subsidiaries, First Charter National Bank ("FCNB") and Bank of
Union ("Union," and together with FCNB, the "Banks"). The Banks account for over
85% of the Registrant's consolidated assets and consolidated revenues. The
principal executive offices of the Company are located at 22 Union Street,
North, Concord, North Carolina 28025. Its telephone number is (704) 786-3300.
FCNB, a national banking association, is the successor entity to The
Concord National Bank, which was established in 1888 and acquired by the
Registrant in 1983. On December 22, 1997, the Company acquired Carolina State
Bank ("CSB") which was merged into FCNB. CSB was a state-chartered commercial
bank with four banking offices in Cleveland and Rutherford Counties, North
Carolina. FCNB is a full service bank and trust company with sixteen branch
offices (including the former CSB banking offices), and two limited service
facilities. FCNB has twenty-two ATMs (automatic teller machines) located in
Cabarrus, Cleveland, Rutherford, Rowan and northern Mecklenburg Counties, North
Carolina. The ATMs are part of the HONOR network.
Union is a state-chartered commercial bank organized under the laws of
North Carolina in 1985. It was acquired by the Registrant effective December 21,
1995. Union provides general banking services through a network of five branch
offices and four ATMs located in Union and southern Mecklenburg Counties, North
Carolina.
Through their branch locations, the Banks provide a wide range of banking
products, including checking accounts; NOW accounts; "Money Market Rate"
accounts; certificates of deposit; individual retirement accounts; overdraft
protection; commercial, consumer, agriculture, real estate, residential mortgage
and home equity loans; personal and corporate trust services; safe deposit
boxes; and automated banking. In addition, through BOU Financial, Inc. ("BOU
Financial"), a subsidiary of Union, the Registrant also offers discount
brokerage services, insurance and annuity sales and financial planning services
pursuant to a third party arrangement with UVEST Investment Services.
At December 31, 1997, the Registrant and its subsidiaries had 264 full-time
employees and 68 part-time employees. The Registrant had no employees who were
not also employees of one of its subsidiaries. The Registrant considers its
relations with employees to be good.
As part of its operations, the Registrant is not dependent upon a single
customer or a few customers whose loss would have a material adverse effect on
the Registrant.
1
As part of its operations, the Registrant regularly evaluates the potential
acquisition of or merger with, and holds discussions with, various financial
institutions. The Registrant does not currently have any specific plans or
agreements in effect with respect to any such acquisition or merger. In
addition, the Registrant periodically enters new markets and engages in new
activities in which it competes with established financial institutions. There
can be no assurance as to the success of any such new office or activity.
Furthermore, as the result of such expansions, the Registrant may from time to
time incur start-up costs that could affect the financial results of the
Registrant.
Competition
The banking laws of North Carolina allow banks located in North Carolina to
develop branches throughout the State. In addition, as the result of recent
federal and state legislation, certain out-of-state banks may open de novo
branches in North Carolina as well as acquire or merge with banks located in
North Carolina. See "Government Supervision and Regulation--General." As a
result of such laws, banking activities in North Carolina are highly
competitive.
The Banks' service delivery facilities are located in Union, Cabarrus,
Cleveland, Rutherford Counties and southern Rowan Counties and the northern and
southern edges of Mecklenburg County. A large portion of the population that
resides in these market areas, however, commutes to Charlotte and other
locations within Mecklenburg County, and these locations have numerous branches
of money-center, super-regional, regional, statewide and other Charlotte-based
institutions. In its market area, the Registrant faces competition from other
banks, savings and loan associations, savings banks, credit unions, finance
companies and major retail stores that offer competing financial services. Many
of these competitors have greater resources, broader geographic coverage and
higher lending limits than the Banks. The Banks' primary method of competition
is to provide quality service and fairly priced products.
Government Supervision and Regulation
General. As a registered bank holding company, the Registrant is subject to
the supervision of, and to regular inspection by, the Board of Governors of the
Federal Reserve System (the "Federal Reserve"). FCNB is organized as a national
banking association and is subject to regulation, supervision and examination by
the Office of the Comptroller of the Currency (the "OCC") and to regulation by
the Federal Deposit Insurance Corporation (the "FDIC"). Union is organized as a
state-chartered banking association and is subject to regulation, supervision
and examination by the North Carolina State Banking Commission (the "Banking
Commission"). As a federally insured non-member bank, Union also is subject to
regulation, supervision and examination by the FDIC.
In addition to banking laws, regulations and regulatory agencies, the
Company and its subsidiaries are subject to various other laws and regulations
and supervision and examination by other regulatory agencies, all of which
directly or indirectly affect the Company's operations, management and ability
2
to make distributions. The following discussion summarizes certain aspects of
those laws and regulations that affect the Company.
Restrictions on Bank Holding Companies. The Federal Reserve is authorized
to adopt regulations affecting various aspects of bank holding companies. Under
the BHCA, the Company's activities, and those of companies which it controls or
in which it holds more than 5% of the voting stock, are limited to banking or
managing or controlling banks or furnishing services to or performing services
for its subsidiaries, or any other activity which the Federal Reserve determines
to be so closely related to banking or managing or controlling banks as to be a
proper incident thereto. In making such determinations, the Federal Reserve is
required to consider whether the performance of such activities by a bank
holding company or its subsidiaries can reasonably be expected to produce
benefits to the public such as greater convenience, increased competition or
gains in efficiency that outweigh possible adverse effects, such as undue
concentration of resources, decreased or unfair competition, conflicts of
interest or unsound banking practices.
Generally, bank holding companies are required to obtain prior approval of
the Federal Reserve to engage in any new activity not previously approved by the
Federal Reserve or to acquire more than 5% of any class of voting stock of any
company. The BHCA also requires bank holding companies to obtain the prior
approval of the Federal Reserve before acquiring more than 5% of any class of
voting stock of any bank which is not already majority-owned by the bank holding
company.
The Company is also subject to the North Carolina Bank Holding Company Act
of 1984. As required by this state legislation, the Company, by virtue of its
ownership of the Banks, has registered as a bank holding company with the
Commissioner of Banks of the State of North Carolina. The North Carolina Bank
Holding Company Act also prohibits the Company from acquiring or controlling
certain non-bank banking institutions which have offices in North Carolina.
Interstate Banking and Branching Legislation. Pursuant to the Reigle--Neal
Interstate Banking and Branching Efficiency Act of 1994 (the "Interstate Banking
and Branching Act"), which became effective September 29, 1995, a bank holding
company may now acquire banks in states other than its home state, without
regard to the permissibility of such acquisition under state law, but subject to
any state requirement that the bank has been organized and operating for a
minimum period of time, not to exceed five years, and the requirement that the
bank holding company, prior to or following the proposed acquisition, controls
no more than 10% of the total amount of deposits of insured depository
institutions in the United States and no more than 30% of such deposits in that
state (or such lesser or greater amount set by state law).
The Interstate Banking and Branching Act also authorizes banks to merge
across state lines, thereby creating interstate branches beginning June 1, 1997.
Under such legislation, each state had the opportunity either to "opt out" of
this provision, thereby prohibiting interstate branching in such states, or to
"opt in" at an earlier time, thereby allowing interstate branching within that
state prior to June 1, 1997. The State of North Carolina elected to "opt in" to
such legislation, effective June 22, 1995. Furthermore, pursuant to the
Interstate Banking and Branching Act, a bank is
3
now able to open new branches in a state in which it does not already have
banking operations, if the laws of such state permit such de novo branching.
Regulation of the Banks. As a national banking association, FCNB is subject
to regulation, supervision and examination by the OCC. OCC rules and
requirements applicable to national banking associations such as FCNB relate to
required reserves, allowable investments, loans, mergers, consolidations,
issuance of securities, payment of dividends, establishment of branches,
limitations on credit to subsidiaries and other aspects of the business of such
subsidiaries. The OCC has broad authority to prohibit national banks from
engaging in unsafe or unsound banking practices.
Union is a state-chartered non-member commercial bank. As such, Union must
file various reports with, and is subject to periodic examinations by, the
Banking Commission. As a federally-insured, non-member bank, Union is also
subject to regulation, supervision and examination by the FDIC. North Carolina
and FDIC rules and requirements applicable to state banks such as Union relate
to, among other things, required capital, permissible activities, reserves,
investments, lending authority, branching, mergers and consolidations, payment
of dividends, and transactions with and borrowings by affiliated parties.
Capital and Operational Requirements.
The Federal Reserve, the OCC and the FDIC have issued substantially similar
risk-based and leverage capital guidelines applicable to United States and
state-chartered banking organizations. The risk-based guidelines define a
two-tier capital framework, under which the Company and each of the Banks is
required to maintain a minimum ratio of Tier 1 Capital (as defined) to total
risk-weighted assets of 4.00% and a minimum ratio of Total Capital (as defined)
to risk weighted assets of 8.00%. With respect to the Company, Tier 1 Capital
generally consists of total stockholders' equity calculated in accordance with
generally accepted accounting principals less certain intangibles, and Total
Capital generally consists of Tier 1 Capital plus certain adjustments, the
largest of which for the Company is the general allowance for loan losses (up to
1.25% of risk-weighted assets). Tier 1 Capital must comprise at least 50% of the
Total Capital. Risk-weighted assets refer to the on- and off-balance sheet
exposures of the Company, as adjusted for one of four categories of risk-weights
established in Federal Reserve, OCC and FDIC regulations, based primarily on
relative credit risk. At December 31, 1997, the Company and the Banks were in
compliance with the risk-based capital requirements.
The leverage ratio is determined by dividing Tier 1 Capital by adjusted
total assets. Although the stated maximum ratio is 3 percent, most banking
organizations are required to maintain ratios of at least 100 to 200 basis
points about 3 percent. Management believes that the Company and each of its
banks meet their leverage ratio requirement.
4
The Company's compliance with existing capital requirements is summarized in the
below.
RISK BASED CAPITAL
(Dollars in -------------------------------------------
thousands) Leverage Capital Tier I Capital Total Capital
---------------- -------------- -------------
Amount Percentage (1) Amount Percentage (2) Amount Percentage (2)
Actual $73,919 10.65% $73,919 12.92% $81,079 14.15%
Required 27,773 4.00 22,912 4.00 45,824 8.00
Excess 46,146 6.65 51,007 8.92 35,255 6.15
(1) Percentage of total adjusted average assets. The Federal Reserve minimum
leverage ratio requirement is 3% to 5%, depending on the institution's
composite rating as determined by its regulators. The Federal Reserve Board
has not advised the Company of any specific requirement applicable to it.
(2) Percentage of risk-weighted assets.
In addition to the above described Capital Requirements, the federal
regulatory agencies may from time to time require that a banking organization
maintain capital above the minimum levels whether because of its financial
condition or actual or anticipated growth.
Prompt Corrective Action under FDICIA. The Federal Deposit Insurance
Corporation Improvement Act of 1991 ("FDICIA"), among other things, identifies
five capital categories for insured depository institutions (well capitalized,
adequately capitalized, undercapitalized, significantly under capitalized and
critically undercapitalized) and requires the respective federal regulatory
agencies to implement systems for "prompt corrective action" for insured
depository institutions that do not meet minimum capital requirements within
such categories. FDICIA imposes progressively more restrictive constraints on
operations, management and capital distributions, depending on the category in
which an institution is classified. Failure to meet the capital guidelines could
also subject a banking institution to capital raising requirements. In addition,
pursuant to FDICIA, the various regulatory agencies have prescribed certain
non-capital standards for safety and soundness relating generally to operations
and management, asset quality and executive compensation, and such agencies may
take action against a financial institution that does not meet the applicable
standards.
The various regulatory agencies have adopted substantially similar
regulations that define the five capital categories identified by FDICIA, using
the total risk-based capital, Tier 1 risk-based capital and leverage capital
ratios as the relevant capital measures. Such regulations establish various
degrees of corrective action to be taken when an institution is considered
under-capitalized. Under the regulations, a "well capitalized" institution must
have a Tier 1 Capital ratio of at least 6%, a Total Capital
5
ratio of at least 10% and a leverage ratio of at least 5% and not be subject to
a capital directive order. An "adequately capitalized" institution must have a
Tier 1 Capital ratio of at least 4%, a Total Capital ratio of at least 8% and a
leverage ratio of at least 4%, or 3% in some cases. Under these guidelines, each
of the Banks is considered well capitalized.
Banking agencies have also adopted final regulations which mandate that
regulators take into consideration (i) concentrations of credit risk, (ii)
interest rate risk (when the interest rate sensitivity of an institution's
assets does not match the sensitivity of its liabilities or its
off-balance-sheet position) and (iii) risks from non-traditional activities, as
well as an institution's ability to manage those risks, when determining the
adequacy of an institution's capital. This evaluation will be made as a part of
the institution's regular safety and soundness examination. In addition, the
banking agencies have amended their regulatory capital guidelines to incorporate
a measure for market risk. In accordance with amended guidelines, the Company
and either Bank with a significant trading activity (as defined) must
incorporate a measure for market risk in its regulatory capital calculations
effective for reporting periods after January 1, 1998. The revised guidelines
are not expected to have a material impact on the Company or the Banks'
regulatory capital ratios or their well-capitalized status.
Distributions. The primary source of funds for distributions paid by the
Company to its shareholders is dividends received from the Banks. The amount of
dividends that FCNB may pay is subject to regulation by the OCC. Under current
regulations, the amount that may be declared in any calendar year without
approval of the OCC is the sum of its net profits (as defined by statute) for
that year and its net retained profits for the preceding two years. In 1998,
FCNB can initiate dividend payments without the approval of the OCC of an amount
not exceeding its net retained profits for 1996 and 1997 (approximately
$11,213,000) plus an additional amount equal to its net profits for 1998 up to
the date of any such dividend declaration.
The payment of dividends by Union is subject to restrictions of North
Carolina law applicable to the declaration of distributions by a commercial
bank. In general, Union may declare dividends in an amount that does not exceed
its undivided profits (determined as set forth in Chapter 53 of the North
Carolina General Statutes), as long as the surplus of Union equals at least 50%
of Union's paid-in capital stock. In 1998, Union can initiate dividend payments
without the approval of the North Carolina Banking Commission of an amount of
approximately $7,931,000 plus an additional amount equal to its net profits for
1998 up to the date of any such dividend declaration.
In addition to the foregoing, the ability of the Company and its
subsidiaries to pay dividends may be affected by the various minimum capital
requirements and the capital and non-capital standards established under FDICIA,
as described above. Furthermore, if, in the opinion of a federal regulatory
agency, a bank under its jurisdiction is engaged in or is about to engage in an
unsafe or unsound practice (which, depending on the financial condition of the
bank, could include the payment of dividends), such agency may require, after
notice and hearing, that such bank cease and desist from such practice. The
right of the Company, its shareholders and its creditors
6
to participate in any distribution of assets or earnings of the Banks is further
subject to the prior claims of creditors against the respective Banks.
Deposit Insurance. The deposits of the Banks are insured up to applicable
limits by the FDIC. Accordingly, the Banks are subject to deposit premium
assessments of the Bank Insurance Fund ("BIF") of the FDIC. As mandated by
FDICIA, the FDIC has adopted regulations for a risk-based insurance assessment
system. Under this system, the assessment rates for an insured depository
institution vary according to the level of risk incurred in its activities. To
arrive at a risk assessment for a bank, the FDIC places it in one of nine risk
categories using a process based on capital ratios and on other relevant
information from supervisory evaluations of the bank by the bank's primary
federal regulator (the OCC for FCNB and the FDIC for Union), statistical
analyses of financial statements and other relevant information. Under the
FDIC's risk-based insurance system, assessments currently can range from no
assessment to 0.27% of the bank's average deposits base, with the exact
assessment determined by the bank's capital and the applicable regulatory
agency's opinion of the bank's operations. The range of deposit insurance
assessment rates can change from time to time, in the discretion of the FDIC,
subject to certain limits.
Source of Strength. According to Federal Reserve policy, bank holding
companies are expected to act as a source of financial strength to each
subsidiary bank and to commit resources to support each such subsidiary. This
support may be required at times when a bank holding company may not be able to
provide such support. Similarly, under the cross-guaranty provisions of the
Federal Deposit Insurance Act, in the event of a loss suffered or anticipated by
the FDIC, either as a result of default of a banking or thrift subsidiary of the
Company or related to FDIC assistance provided to a subsidiary in danger of
default, the other banking subsidiaries of the Registrant may be assessed for
the FDIC's loss, subject to certain exceptions.
Future Legislation. Proposals to change the laws and regulations governing
the banking industry are frequently introduced in Congress, in the state
legislatures and before the various bank regulatory agencies. The likelihood and
timing of any such proposals or bills being enacted and the impact they might
have on the Company and its subsidiaries cannot be determined at this time.
7
Statistical Information
The following tables present certain statistical information relating to the
Registrant. The tables should be read in conjunction with the Registrant's
Consolidated Financial Statements and Notes thereto (pages 5 through 29) and
Management's Discussion and Analysis of Financial Condition and Results of
Operations (pages 30 through 43), both of which are incorporated herein by
reference to the First Charter Corporation 1997 Annual Report to Shareholders.
All historical financial data for the periods prior to the respective dates of
acquisition of Union and CSB (each of which was accounted for as a pooling of
interest) has been restated to combine the accounts of Union and CSB with those
of the Company.
The following table includes for the years ended December 31, 1997, 1996, and
1995 interest income on interest earning assets and related average yields, as
well as interest expense on interest bearing liabilities and related average
rates paid. In addition, the table includes the average net yield on average
earning assets. Average balances were calculated based on daily averages.
Table 1
Average Balances and Net Interest Income Analysis
1997 1996 1995
------------------------------- ------------------------------- --------------------------
(Dollars in thousands) Interest Average Interest Average Interest Average
Average Income/ Yield/Rate Average Income/ Yield/Rate Average Income/ Yield/Rate
Balance Expense Paid Balance Expense Paid Balance Expense Paid
------- ------- ---- ------- ------- ---- ------- ------- ----
Interest earning assets:
Loans (1) (2) (3) $488,331 $46,427 9.51% $437,701 $41,170 9.41% $379,472 $36,619 9.65%
Securities available for
sale - taxable 71,942 4,249 5.91 78,941 4,916 6.23 46,217 3,014 6.52
Securities available for
sale - nontaxable (4) 72,468 5,754 7.94 64,511 5,214 8.08 6,421 491 7.65
Investment securities -
taxable 13,375 766 5.73 12,093 707 5.85 46,779 2,852 6.10
Investment securities -
nontaxable (4) 1,251 83 6.66 - - - 39,807 3,398 8.54
Federal funds sold 3,661 160 4.37 4,973 266 5.35 8,136 483 5.94
Interest-bearing bank
deposits 7,529 433 5.75 8,621 460 5.34 7,398 593 8.02
-------- ------- -------- ------- -------- -------
Total $658,557 $57,872 8.79% $606,840 $52,733 8.69% $534,230 $47,450 8.88%
======== ======= ======== ======= ======== =======
Interest bearing liabilities:
Demand deposits $ 88,806 1,622 1.83% $ 82,432 $ 1,605 1.95% $ 75,642 $ 1,546 2.04%
Money market accounts 50,152 1,958 3.90 46,793 1,361 2.91 49,212 1,442 2.93
Savings deposits 118,176 5,223 4.42 119,707 5,866 4.90 108,440 5,281 4.87
Other time deposits 244,682 14,009 5.73 213,579 12,311 5.76 179,026 10,212 5.70
Other borrowings 36,590 1,939 5.30 32,158 1,654 5.14 26,229 1,355 5.17
-------- ------- -------- ------- -------- -------
Total $538,406 $24,751 4.60% $494,669 $22,797 4.61% $438,549 $19,836 4.52%
======== ======= ======== ======= ======== =======
Net interest income and
spread $33,121 4.19% $29,936 4.08% $27,614 4.36%
======= ======= =======
Net yield on interest
earning assets (5) 5.03% 4.93% 5.17%
8
(1) Includes loan fees of approximately $519,000 in 1997, $519,000 in 1996, and
$400,000 in 1995.
(2) The preceding analysis takes into consideration the principal amount of
nonaccruing loans and only income actually collected on such loans.
(3) Loans are shown net of unearned income.
(4) Yields on nontaxable securities are stated on a fully taxable equivalent
basis, assuming a Federal tax rate of 35% for 1997, 1996 and 1995. The
adjustments made to convert to a fully taxable equivalent basis were
$1,918,000 for 1997, $1,826,000 for 1996 and $1,515,000 for 1995.
(5) Represents net interest income as a percentage of total average interest
earning assets.
9
Changes in Interest Income and Expense
The following table contains the dollar amount of change in interest income
and interest expense and segregates the dollar amount of change due to rate and
volume variances for the years ended December 31, 1997 and 1996. The change in
interest income, stated on a tax equivalent basis, or interest expense
attributable to the combination of rate variance and volume variance is included
in the table, but such amount has also been allocated between, and included in
the amounts shown as, changes due to rate and changes due to volume. The
allocation of the change due to rate/volume variance was made equally to rate
variance and to volume variance. Interest income related to tax exempt
securities is stated on a tax equivalent basis using a Federal income tax rate
of 35% in 1997, 1996 and 1995.
Table 2
Volume and Rate Variance Analysis
(Dollars in thousands) From Dec. 31, 1996 to Dec. 31, 1997 From Dec. 31, 1995 to Dec. 31, 1996
------------------------------------- ----------------------------------------
Increase (Decrease) Increase (Decrease)
Due to Change in Due to Change in
------------------------------------- ----------------------------------------
Rate/ Total Rate/ Total
Volume Rate Volume Change Volume Rate Volume Change
------ ---- ------ ------ ------ ---- ------ ------
Interest income:
Loans $ 51 $ 469 $4,788 $5,257 $(142) $ (997) $ 5,548 $ 4,551
Securities Available for
Sale - Taxable 22 (242) (425) (667) (96) (184) 2,086 1,902
Securities Available for
Sale - Non-Taxable (11) (97) 637 540 253 154 4,569 4,723
Investment Securities
Taxable (2) (15) 74 59 87 (74) (2,071) (2,145)
Nontaxable 83 41 42 83 3,397 (1,699) (1,699) (3,398)
------ ------ ------ ------ ----- ------ ----- ------
Total securities 92 (313) 328 15 3,641 (1,803) 2,885 1,082
Federal funds sold 13 (42) (64) (106) 19 (39) (178) (217)
Interest bearing bank deposits (5) 33 (60) (27) (33) (215) 82 (133)
------ ------ ------ ------ ------ ------- ------ -------
Total interest income 151 147 4,992 5,139 3,485 (3,054) 8,337 5,283
------ ------ ------ ------ ------ ------- ------ -------
Interest expense:
Demand deposits (8) (103) 120 17 (7) (76) 135 59
Money market accounts 33 483 114 597 1 (10) (71) (81)
Savings deposits 7 (572) (71) (643) 3 35 550 585
Other time deposits (12) (90) 1,788 1,698 21 118 1,981 2,099
Other borrowings 7 54 231 285 (1) (7) 306 299
------ ------ ------ ------ ------ ------ ------ ------
Total interest expense 27 (228) 2,182 1,954 17 60 2,901 2,961
------ ------ ------ ------ ------ ------- ------ ------
Net interest income $ 124 $ 375 $2,810 $3,185 $3,468 $(3,114) $5,436 $2,322
====== ====== ====== ====== ====== ======= ====== ======
10
Interest Rate Sensitivity
The following table presents the Company's interest sensitivity analysis for
December 31, 1997 and sets forth at various maturity periods the cumulative
interest sensitivity gap, which is the difference between rate sensitive assets
and rate sensitive liabilities for assets and liabilities that management
considers rate sensitive. The mortgage-backed securities are shown at their
weighted average expected life obtained from an outside evaluation of the
average remaining life of each security based on historic prepayment speeds of
the underlying mortgages at December 31, 1997. Demand deposits, money market
accounts and savings deposits are presented in the earliest repricing window
because the rates are subject to immediate repricing.
Table 3 Non-
Interest Rate Sensitivity Sensitive
As of December 31, 1997 and
Interest Sensitivity in Days Sensitive
(Dollars in thousands) --------------------------------- Over 5
1 - 90 91 - 180 181 - 365 Total 1-2 Years 2-5 Years Years Total
--------------------------------------------------------------------------------------------------
Earning Assets
Interest-bearing due
from banks $7,975 $ -- $ -- $ 7,975 $ -- $ -- $ -- $ 7,975
Securities available
for sale, at
amortized cost:
Taxable 22,248 420 3,445 26,113 30,956 15,167 15,773 88,009
Nontaxable 1,170 1,224 101 2,495 7,475 14,688 59,138 83,796
Loans 241,499 7,876 18,063 267,438 82,070 67,402 107,166 524,076
------- ------ ------ ------- ------- ----- ------ -------
Total earning assets 272,892 9,520 21,609 304,021 120,501 97,257 182,077 703,856
------- ------ ------ ------- ------- ----- ------ -------
Interest-Bearing Liabilities
Interest-bearing deposits:
Demand deposits 95,343 -- -- 95,343 -- -- -- 95,343
Money market accounts 63,580 -- -- 63,580 -- -- -- 63,580
Savings deposits 4,703 3,078 16,176 23,957 48,279 -- 45,081 117,317
Other time deposits 88,468 56,396 42,393 187,257 62,660 760 3 250,680
Other borrowings 24,400 -- -- 24,400 260 1,143 27,476 53,279
------- ------ ------ ------- ------- ----- ------ -------
Total interest-bearing
liabilities 276,494 59,474 58,569 394,537 111,199 1,903 72,560 580,199
------- ------ ------ ------- ------- ----- ------ -------
Interest sensitivity
gap $(3,602) $(49,954) $(36,960) $(90,516) $ 9,302 $95,354
======= ======== ======== ======== ======== =======
Cumulative gap $(3,602) $(53,556) $(90,516) $(90,516) $(81,214) $14,140
======= ======== ======== ======== ======== =======
Ratio of earning assets
to interest-bearing
liabilities 98.70% 16.01% 36.89% 77.06% 108.37% 102.00%
11
Distribution of Assets and Liabilities
The following table shows the distribution of the Company's assets, liabilities
and shareholders' equity at December 31, 1997, 1996, and 1995. Average balances
were calculated based on daily averages.
Table 4
Average Balance Sheet
Years Ended December 31,
------------------------------------------------------------------------
1997 1996 1995
---------------------- ---------------------- ----------------------
(Dollars in thousands) Average Percentage Average Percentage Average Percentage
Balance Distribution Balance Distribution Balance Distribution
------- ------------ ------- ------------ ------- ------------
Assets:
Cash and due from banks $ 25,224 3.6% $ 24,650 3.8% $ 28,677 5.0%
Interest bearing bank deposits 7,529 1.1 8,621 1.3 7,398 1.3
Investment securities - taxable 13,375 1.9 12,093 1.9 46,779 8.2
Investment securities - nontaxable 1,251 0.2 -- -- 39,807 7.0
Securities available for sale
- taxable 71,942 10.2 78,941 12.2 46,217 8.1
Securities available for sale
- nontaxable 72,468 10.3 64,511 10.0 6,421 1.1
Loans, net (1) 481,065 68.4 431,216 66.4 373,620 65.3
Federal funds sold 3,661 0.5 4,973 0.8 8,136 1.4
Other assets 26,497 3.8 23,263 3.6 15,047 2.6
-------- ----- -------- ----- -------- -----
Total $703,012 100.0% $648,268 100.0% $572,102 100.0%
======== ===== ======== ===== ======== =====
Liabilities and shareholders' equity Deposits:
Demand (2) $174,099 24.8% $162,801 25.1% $146,981 25.7%
Savings 118,176 16.8 119,707 18.5 108,440 19.0
Insured money market 50,152 7.1 46,793 7.2 49,212 8.6
Time 244,682 34.8 213,579 32.9 179,026 31.2
Other borrowings 36,590 5.2 32,158 5.0 26,229 4.6
Other liabilities 3,210 0.5 5,065 0.8 4,044 0.7
Shareholders' equity 76,103 10.8 68,165 10.5 58,170 10.2
-------- ----- -------- ----- -------- -----
Total $703,012 100.0% $648,268 100.0% $572,102 100.0%
======== ===== ======== ===== ======== =====
(l) Loans, net is net of unearned income and the allowance for loan losses.
(2) Demand includes non-interest bearing and interest bearing demand deposits.
12
Securities Available for Sale
The following table shows, as of December 31, 1997, 1996 and 1995, the
carrying value of (i) U.S. Government obligations, (ii) U.S. Government agency
obligations, (iii) mortgage-backed securities, (iv) state and municipal
obligations, and (v) equity securities.
Table 5
Securities Available for Sale
(Dollars in thousands) December 31,
----------------------------------
Securities Available for Sale:
1997 1996 1995
-------- -------- --------
U.S. Government obligations $ 22,333 $ 39,095 $ 41,964
U.S. Government agency obligations 45,863 11,583 26,524
Mortgage-backed securities 9,676 14,513 18,290
State and municipal obligations 85,532 72,050 59,053
Equity securities 13,627 6,424 5,421
-------- -------- --------
$177,031 $143,665 $151,252
======== ======== ========
Investment Portfolio
The following table shows, as of December 31, 1997, 1996 and 1995, the
amortized cost (face amount, plus unamortized premiums, less unamortized
discounts), of (i) U.S. Government obligations, (ii) U.S. Government agency
obligations, (iii) mortgage-backed securities, and (iv) state and municipal
obligations.
Table 6
Investment Portfolio
(Dollars in thousands) December 31,
---------------------------------
Investment Securities
1997 1996 1995
------- ------- -------
U.S. Government obligations $ -- $13,940 $ 8,959
U.S. Government agency obligations -- -- --
Mortgage-backed securities -- -- --
State and municipal obligations -- -- --
------- ------- -------
$ -- $13,940 $ 8,959
======= ======= =======
13
Securities Available for Sale - Maturities
The following table indicates the carrying value of each significant
securities available for sale category due within one year, after one year but
within five years, after five years but within ten years, and after ten years,
together with the weighted average yield for each range of maturities, as of
December 31, 1997. Mortgage-backed securities are presented at their contractual
maturity date. Actual maturities will differ from contractual maturities because
borrowers have the right to pre-pay these obligations without pre-payment
penalties. Yields are determined based on amortized cost. Yields are stated on a
tax equivalent basis assuming a Federal income tax rate of 35% in 1997.
Table 7
Securities Available for Sale
As of December 31, 1997
(Dollars in thousands)
After Five
Due Within One After One Year but Years But
Year Within Five Years Within Ten Years After Ten Years
----------------- ----------------- ---------------- -----------------
Amount Yield Amount Yield Amount Yield Amount Yield
------ ----- ------ ----- ------ ----- ------ -----
U.S. Government
Obligations $10,016 6.68% $12,317 7.47% $ -- -% $ -- -%
U.S. Government
Agency Obligations 799 5.98 17,838 6.70 27,226 7.24 -- --
Mortgage-Backed
Securities 504 5.40 2,641 6.68 4,649 6.07 1,882 7.81
State & Municipal
Obligations 2,504 9.43 24,035 8.02 37,665 7.06 21,328 7.33
Equity securities -- -- -- -- -- -- 13,627 5.46
------- ------- ------- -------
Total $13,823 7.09% $56,831 7.42% $69,540 6.94% $36,837 6.62%
======= ======= ======= =======
As of December 31, 1997, there were no issues of securities available for
sale (excluding U.S. Government obligations and U.S. Government agency
obligations) which had carrying values that exceeded 10% of shareholders' equity
of the Company.
As of December 31, 1997, there were no investment securities classified as
held to maturity.
14
Loan Portfolio
The table below summarizes loans in the classifications indicated as of
December 31, 1997, 1996, 1995, 1994, and 1993.
Table 8
Loan Portfolio Composition
(Dollars in thousands) December 31,
-------------------------------------------------------------
1997 1996 1995 1994 1993
--------- --------- --------- --------- ---------
Commercial, financial and
agricultural $ 80,656 $ 63,552 $ 66,753 $ 60,414 $ 55,562
Real estate - construction
and development 76,429 47,133 35,578 31,884 23,688
Real estate - mortgage 304,188 277,405 255,513 210,350 175,486
Installment 62,803 68,619 57,269 49,021 39,445
--------- --------- --------- --------- ---------
Total loans 524,076 456,709 415,113 351,669 294,181
--------- --------- --------- --------- ---------
Less - allowance for loan
losses (8,004) (6,528) (6,056) (5,056) (4,605)
Unearned income (273) (193) (296) (201) (88)
--------- --------- --------- --------- ---------
Loans, net $ 515,799 $ 449,988 $ 408,761 $ 346,412 $ 289,488
========= ========= ========= ========= =========
15
Maturities and Sensitivities of Loans to Change in Interest Rates
Set forth in the table below are the amounts of each loan type, except
installment loans and real estate mortgage loans, due in one year, after one
year through five years, and after five years, at December 31, 1997. This table
excludes nonaccrual loans.
Table 9
Maturities and Sensitivity to
Change in Interest Rates
December 31, 1997
------------------------------------------------
(Dollars in thousands) After l
l year Year through After
or less 5 Years 5 Years Total
------- ------- ------- --------
Commercial, financial
and agricultural $36,298 $31,919 $12,439 $ 80,656
Real estate
construction and
development 43,394 32,926 109 76,429
------- ------- ------- --------
Total $79,692 $64,845 $12,548 $157,085
======= ======= ======= ========
The amounts of the above loans with a maturity over one year which have a
predetermined interest rate or a floating or adjustable interest rate are as
follows:
December 31, 1997
(Dollars in thousands) ----------------
Predetermined interest rate $45,303
Floating or adjustable interest rate 32,089
16
Non-performing Loans
Non-performing loans includes non-accrual loans, re-structured loans and
accruing loans which are contractually past due 90 days or more.
See "Management's Discussion and Analysis of Financial Condition and
Results of Operations - Balance Sheet Analysis - Asset Quality" in the First
Charter Corporation 1997 Annual Report to Shareholders, incorporated herein by
reference, for a complete discussion of non-performing assets.
Accruing Loans 90 Days or More Past Due
The following table reflects the dollar amount of loans outstanding in each
category and the amount and percentage of those accruing loans which are 90 days
or more past due as of December 31, 1997, 1996, 1995, 1994, and 1993.
Table 10
Accruing Loans 90 Days or More Past Due
Accruing Percentage of
Loans 90 Such Loans to
Days or Gross Gross Loans
(Dollars in thousands) More Loans Outstanding
Past Due Outstanding By Category
-------- ----------- -----------
December 31, 1997
Commercial, financial and
agricultural $ 999 $ 80,656 1.24%
Real estate - construction
and development 33 76,429 .04
Real estate - mortgage 858 304,188 .28
Installment 219 62,803 .35
-------- --------
Total $ 2,109 $524,076 .40%
======== ========
December 31, 1996
Commercial, financial and
agricultural $ 34 $ 63,552 .05%
Real estate - construction
and development 49 47,133 .10
Real estate - mortgage 469 277,405 .17
Installment 133 68,619 .19
-------- --------
Total $ 685 $456,709 .15%
======== ========
December 31, 1995
Commercial, financial and
agricultural $ 27 $ 66,753 .04%
Real estate - construction
and development 47 35,578 .13
Real estate - mortgage 163 255,513 .06
Installment 164 57,269 .29
-------- --------
Total $ 401 $415,113 .10%
======== ========
December 31, 1994
Commercial, financial and
agricultural $ 219 $ 60,414 .36%
Real estate - construction
and development -- 31,884 --
Real Estate - mortgage 1,109 210,350 .53
Installment 224 49,021 .46
-------- --------
Total $ 1,552 $351,669 .44%
======== ========
Table 10 is continued on page 18
17
Table 10 (Continued)
Accruing Loans 90 Days or More Past Due
Accruing Percentage of
Loans 90 Such Loans to
Days or Gross Gross Loans
(Dollars in thousands) More Loans Outstanding
Past Due Outstanding By Category
-------- ----------- -----------
December 31, 1993
Commercial, financial and
agricultural $ 110 $ 55,562 .20%
Real estate - construction
and development -- 23,688 --
Real estate - mortgage 198 175,486 .11
Installment 82 39,445 .21
-------- --------
Total $ 390 $294,181 .13%
======== ========
Non-Accrual Loans and Restructured Loans
The determination to discontinue the accrual of interest is based on a
review of each loan. Interest is discontinued on loans 90 days past due as to
principal or interest unless in management's opinion collection of both
principal and interest is assured by way of collateralization, guarantees or
other security and the loan is in the process of collection. The table below
summarizes the Company's non-accrual loans and restructured loans as of the
dates indicated.
Table 11
Non-accrual and Restructured Loans
December 31,
------------------------------------------------------------
1997 1996 1995 1994 1993
------ ------ ------ ------ ------
(Dollars in thousands)
Non-accrual loans
Principal balance outstanding $2,105 $1,630 $2,453 $2,857 $2,495
====== ====== ====== ====== ======
Interest income recorded during
the year $ 22 $ 42 $ 82 $ 143 $ 77
Interest income that would have
been recorded if the loans had
been current and accruing $ 225 $ 174 $ 330 $ 356 $ 224
Restructured loans
Principal balance outstanding $ - $ - $ 300 $ 325 $ 795
====== ====== ====== ====== ======
Interest income recorded during
the year $ - $ - $ 45 $ - $ 50
Interest income that would have
been recorded if the loans had
been current and accruing $ - $ - $ 27 $ 36 $ 59
18
Summary of Loan Loss and Recovery Experience
The table below presents certain data for the years ended December 31,
1997, 1996, 1995, 1994, and 1993, including the following: (i) the average
amount of net loans outstanding during the year, (ii) the allowance for loan
losses at the beginning of the year, (iii) the provision for loan losses, (iv)
loans charged off and recoveries of loans previously charged off presented by
major loan categories, (v) loan charge-offs, net, (vi) the allowance for loan
losses at the end of the year, (vii) the ratio of net charge-offs to average
loans, (viii) the ratio of the allowance for loan losses to average loans and
(ix) the ratio of the allowance for loan losses to loans at year-end, excluding
loans held for sale.
Table 12
Summary of Loan Loss and Recovery Experience
(Dollars in thousands) Years Ended December 31,
--------------------------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
Average loans, net of unearned
income $488,331 $437,701 $379,472 $316,103 $273,269
======== ======== ======== ======== ========
Allowance for loan losses:
Beginning balance $ 6,528 $ 6,056 $ 5,056 $ 4,605 $ 4,362
Add provision for loan losses 2,702 1,540 1,991 1,105 1,133
-------- -------- -------- -------- --------
9,230 7,596 7,047 5,710 5,495
-------- -------- -------- -------- --------
Loan charge-offs:
Commercial, financial and
agricultural 347 367 513 625 713
Real estate - construction
and development - - - 132 -
Real estate - mortgage 61 95 196 84 86
Installment 1,218 1,004 498 241 240
-------- -------- -------- -------- --------
1,626 1,466 1,207 1,082 1,039
-------- -------- -------- -------- --------
Recoveries of loans previously
charged-off:
Commercial, financial and
agricultural 123 154 58 187 60
Real estate - construction
and development - 3 - 1 -
Real estate - mortgage 33 16 3 110 19
Installment 244 225 155 59 70
-------- -------- -------- -------- --------
400 398 216 357 149
-------- -------- -------- -------- --------
Loan charge-offs, net 1,226 1,068 991 725 890
-------- -------- -------- -------- --------
Allowance acquired in branch
purchases - - - 71 -
-------- -------- -------- -------- --------
Ending balance $ 8,004 $ 6,528 $ 6,056 $ 5,056 $ 4,605
======== ======== ======== ======== ========
Net charge-offs to average loans .25% .24% .26% .23% .33%
Allowance for loan losses to
average loans, net of
unearned income 1.64 1.49 1.60 1.60 1.69
Allowance for loan losses to
gross loans at year-end, excluding
loans held for sale 1.53 1.43 1.46 1.44 1.57
For a discussion of management's evaluation of the allowance for loan loss,
see "Management's Discussion and Analysis of Financial Condition and Results of
Operations Earnings Performance - Provision for Loan Losses" and "- Balance
Sheet Analysis - Asset Quality" in the First Charter Corporation 1997 Annual
Report to Shareholders, incorporated herein by reference.
19
Allowance for Loan Losses
The following table presents the dollar amount of the allowance for loan
losses applicable to major loan categories (including pro rata share of
unallocated reserves) the percentage of the allowance amount in each category
to the total allowance and the percentage of the loans in each category to
total loans as of December 31, 1997, 1996, 1995, 1994, and 1993. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Earnings Performance - Provision for Loan Losses" and "- Balance
Sheet Analysis - Asset Quality" in the First Charter Corporation 1997 Annual
Report to Shareholders, incorporated herein by reference.
Table 13
Allowance for Loan Losses
Percentage of
(Dollars in thousands) Percentage Gross Loans in
Allowance of Total Each Category
Amount Allowance to Total Loans
December 31, 1997
Type of Loan:
Commercial, financial and
agricultural $1,664 21% 15%
Real estate - construction and
development 1,216 15 15
Real estate - mortgage 4,290 54 58
Installment 834 10 12
------ --- ---
Total $8,004 100% 100%
====== === ===
December 31, 1996
Type of Loan:
Commercial, financial and
agricultural $1,329 20% 14%
Real estate - construction and
development 640 10 10
Real estate - mortgage 4,007 61 61
Installment 552 9 15
------ --- ---
Total $6,528 100% 100%
====== === ===
December 31, 1995
Type of Loan:
Commercial, financial and
agricultural $936 15% 16%
Real estate - construction and
development 477 8 9
Real estate - mortgage 3,933 65 61
Installment 710 12 14
------ --- ---
Total $6,056 100% 100%
====== === ===
Table 13 is continued on page 21.
20
Table 13
Allowance for Loan Losses (Continued)
(Dollars in thousands) Percentage of
Percentage Gross Loans in
Allowance of Total Each Category
Amount Allowance to Total Loans
December 31, 1994
Type of Loan:
Commercial, financial and
agricultural $1,516 30% 17%
Real estate - construction and
development 354 7 9
Real estate - mortgage 2,511 50 60
Installment 675 13 14
------ ------ ------
Total $5,056 100% 100%
====== ====== ======
December 31, 1993
Type of Loan:
Commercial, financial and
agricultural $1,902 41% 19%
Real estate - construction and
development 475 10 8
Real estate - mortgage 1,767 39 60
Installment 461 10 13
------ ------ ------
Total $4,605 100% 100%
====== ====== ======
21
Deposits
The Banks primarily serve individuals and small- to medium-sized businesses with
a variety of deposit accounts, such as NOW accounts, money market accounts,
certificates of deposit and individual retirement accounts. The following table
presents average balances by category and average rates paid for the years ended
December 31, 1997, 1996, and 1995. Average balances were calculated based on
daily averages.
Table 14
Deposits
As of December 31,
1997 1996 1995
-------------------------- ------------------------ -------------------------
Avg. Avg. Avg.
(Dollars in thousands) Average Interest Rate Average Interest Rate Average Interest Rate
Balance Expense Paid Balance Expense Paid Balance Expense Paid
------- ------- ---- ------- ------- ---- ------- ------- ----
Non-interest bearing demand
deposits $ 85,293 $ - - $ 80,369 $- - $ 71,339 $ - -
Interest bearing deposits:
Demand deposits 88,806 1,622 1.83% 82,432 1,605 1.95% 75,642 1,546 2.04%
Insured money markets 50,152 1,958 3.90 46,793 1,361 2.91 49,212 1,442 2.93
Savings deposits 118,176 5,223 4.42 119,707 5,866 4.90 108,440 5,281 4.87
Time deposits 244,682 14,009 5.73 213,579 12,311 5.76 179,026 10,212 5.70
-------- ------- -------- ------ -------- -------
Total $501,816 $22,812 $462,511 $21,143 $412,320 $18,481
-------- ------- -------- ------- -------- -------
Total deposits $587,109 $22,812 $542,880 $21,143 $483,659 $18,481
======== ======= ======== ======= ======== =======
As of December 31, 1997, domestic time deposits of $100,000 or more totaled
$66,135,141, with the following maturities: $35,488,736, three months or less;
$15,479,238, over three months through six months; $5,212,989, over six months
through twelve months and $9,954,178, over one year.
22
Other Borrowings
The following is a schedule of other borrowings which consists of the
following categories: securities sold under repurchase agreements, federal funds
purchased and Federal Home Loan Bank ("FHLB") borrowings for the years ended
December 31, 1997, 1996 and 1995.
Table 15
Other Borrowings
Interest Maximum
Balance Rate Avg. Outstanding
(Dollars in thousands) as of as of Average Int. at Any
Dec. 31 Dec. 31 Balance Rate Month-End
------- -------- ------- ---- ---------
1997
Federal funds purchased,
securities sold under
agreements to purchase
and FHLB borrowings $ 53,279 5.79% $36,590 5.37% $55,789
======== ======= =======
1996
Federal funds purchased,
securities sold
under agreements to
repurchase and
FHLB borrowings $ 32,895 5.23% $32,158 5.14% $36,440
======== ======= =======
1995
Federal funds purchased,
securities sold
under agreements to
repurchase and
FHLB borrowings $ 39,714 5.40% $26,145 5.16% $58,565
======== ======= =======
At December 31, 1997, the Banks had two available lines of credit with the FHLB
totaling $52.5 million with $26,933,275 outstanding. The outstanding amounts
consisted of $24,400,000 maturing in 1998, $260,417 maturing in 1999, $1,142,858
maturing in 2001, $600,000 maturing in 2003, and $530,000 maturing in 2011. At
December 31, 1997, such amounts were outstanding at market interest rates for
the specific advance program and maturity. In addition, the Banks are required
to pledge collateral to secure the advances as described in the line of credit
agreements. The collateral consists of FHLB stock and qualifying 1-4 family
residential mortgage loans.
23
Return on Equity and Assets
The table below indicates the return on average assets (net income divided
by average total assets), return on average equity (net income divided by
average equity), dividend payout ratio (dividends declared divided by net
income), and average equity to average assets ratio (average equity divided by
average total assets) and other key operating data for the years ended December
31, 1997, 1996, and 1995. Averages are based on daily balances.
Table 16
Return on Equity and Assets
December 31,
-------------------------------------
(Dollars in thousands 1997 1996 1995
------- ------- -------
except per share amounts)
Net income $8,401 $10,069 $8,304
Average shareholders' equity 76,103 68,165 58,170
Average total assets 703,012 648,268 572,102
Dividends declared 4,246 3,775 2,618
Dividends per share .53 .50 .43
Basic net income per share 0.91 1.10 0.95
Diluted net income per share 0.90 1.09 0.94
Return on average assets 1.20% 1.55% 1.45%
Return on average equity 11.04 14.77 14.28
Dividend payout ratio 50.54 37.49 31.53
Average equity to average assets ratio 10.83 10.51 10.17
24
Item 2. Properties
The Company -
The trust department and certain corporate offices of the Company and FCNB
are located at Church Street Commons, 845 Church Street, North, Concord, North
Carolina. This property, consisting of approximately 4,633 square feet of office
space, is leased pursuant to an agreement providing for a three year period
beginning October 1, 1996 and ending September 30, 1999, with an option to renew
for one five year period. Lease payments under the agreement are $5,358.84 per
month. The accounting, operations and data processing departments of FCNB, as
well as the principal executive office of the Company and FCNB, currently are
located in a facility at 22 Union Street, North, Concord, North Carolina which
was purchased in 1980 and contains approximately 19,500 square feet of office
space.
The main office of FCNB is located at 4 Union Street, North, Concord, North
Carolina and contains approximately 12,300 square feet of office space, parking
and a three lane drive-in teller facility with an attached full service ATM. The
main office of Union is located at 201 North Charlotte Avenue, Monroe, North
Carolina in a two-story building containing approximately 6,850 square feet,
which was constructed by Union in 1985 and which Union owns in fee simple. Union
owns a vacant lot adjacent to its main office on which it maintains a
full-service ATM.
Union's mortgage loan department is located in Monroe, North Carolina, in a
building containing approximately 2,000 square feet, which is leased from a
third party under an agreement providing for a current term of three years which
expires on February 28, 2000. Union has options to renew the lease for up to
three consecutive additional terms of three years each. As of March 1, 1997,
lease payments under the agreement will be $2,200 per month
In addition to its main office, FCNB has full service branches located in
North Carolina which are listed below:
Boiling Springs Concord - Wilmar (10
Cornelius (1) Davidson Concord - Highway 29
Forest City Harrisburg (1)
Huntersville (1) Kannapolis (1)
Kings Mountain Landis (1)
Midland (1) Mt. Pleasant
Oakdale (1) Shelby
- ----------
(1) Branch maintains an ATM on site
All of these branches, except Davidson, have drive-in teller facilities. In
addition, eight remote ATMs are maintained in various convenience-style
locations throughout Cabarrus and northeast Mecklenburg counties.
The Branchview Shopping Center branch (in Concord), the Huntersville branch
and a small portion of the main office are leased
25
from third parties. The rest of the aforementioned FCNB properties are owned
free of any encumbrances. The monthly rents for the Branchview and Huntersville
branches are $1,152 and $3,500, respectively. The respective leases expire in
2002 and 1999, and each have remaining renewal options of five years.
FCNB owns two separate properties in northeast Mecklenburg County for
future branch expansion. Both properties could accommodate full service branches
with drive-in teller facilities, if desired, for future development.
In addition to its main office, Union has full service branches located in
North Carolina which are listed below:
Indian Trail (2), (1) Skyway Drive (3)
Waxhaw (4), (1) Matthews (5)
- ----------
(1) Branch maintains an ATM on site
(2) The building and the land are leased from a third party under an
agreement providing for an original term of fifteen years which expires on
October 31, 2001. Union has options to renew the lease for up to three
consecutive additional terms of five years each. Lease payments under the
agreement are $2,685 per month.
(3) The building is located on land leased from a third party under an
agreement which provides for an original term of fifteen years which
expires on February 1, 2003. Union has options to renew the lease for up to
five consecutive additional terms of five years each. Lease payments under
the Agreement are $1,450 per month, and Union has an option to purchase the
property at the end of ten years at a price of $200,000.
(4) Branch is owned by Union in fee simple.
(5) The facility is leased from a third party under an agreement which
provided for an original term of one year which expired on March 31, 1993.
The original agreement provided for options to renew the lease for up to
three consecutive additional terms of one year each. Union exercised its
final option to renew, which expired on March 31, 1996. As of April, 1996,
monthly lease payments of $3,000 are being paid per a month-to-month
agreement with the third party. Property for a new branch has been
purchased, and a new building is under construction and is estimated to be
completed during the first quarter of 1998. Management expects it will be
able to continue its month to month lease arrangement with the third party
at the present site until such time as new branch construction is complete
and available for occupancy.
26
Item 3. Legal Proceedings
The Corporation and the Banks are defendants in certain claims and legal
actions arising in the ordinary course of business. In the opinion of
management, after consultation with legal counsel, the ultimate disposition of
these matters is not expected to have a material adverse effect on the
consolidated operations, liquidity or financial position of the Corporation or
the Banks.
Item 4. Submission of Matters to a Vote of Security Holders
A special meeting of the shareholders of the Registrant was held on
December 10, 1997 (the "First Charter Special Meeting") to (A) consider and vote
upon a proposal to approve the Agreement and Plan of Merger dated August 15,
1997, by and between the Registrant and CSB (the "Merger Agreement"), and the
transactions contemplated thereby, including (i) the merger of CSB into FCNB
(the "Merger") and (ii) the issuance of 1.023 shares of common stock of the
Registrant for each outstanding share of common stock of CSB upon the
consummation of the Merger, and (B) consider and vote upon Amended and Restated
Articles of Incorporation for the Registrant, which included amendments to (i)
increase the number of shares of common stock that the Company is authorized to
issue from 10,000,000 to 25,000,000 and (ii) make certain technical changes to
reflect changes in the North Carolina Business Corporation Act.
A motion to approve the Merger Agreement and the transactions contemplated
thereby was adopted by a vote of the majority of the votes cast by shareholders
of the Registrant, as follows:
For: 5,486,170
Against: 13,363
Abstained: 13,092
Broker Non Votes: -
A motion to approve the Amended and Restated Articles of Incorporation of
the Registrant and the amendments contemplated thereby was adopted by a vote of
the majority of the votes cast by shareholders of the Registrant, as follows:
For: 5,137,858
Against: 662,544
Abstained: 13,027
Broker Non Votes: -
27
Item 4A. Executive Officers of the Registrant
The following list sets forth with respect to each of the current executive
officers of the registrant his or her name, age, positions and offices held with
the Registrant and the Banks, the period served in such positions or offices
and, if such person has served in such position and office for less than five
years, the prior employment of such person.
Name Age Office and Position - Year Elected
- ---- --- ----------------------------------
Lawrence M. Kimbrough 57 President and Chief Executive Officer 1986 - Present
of the Registrant and FCNB
Robert O. Bratton 49 Executive Vice President, Chief 1983 - Present
Operating Officer and Chief
Financial Officer of the
Registrant and FCNB
Vice President of Union 1996 - Present
Robert G, Fox, Jr. 48 Executive Vice President 1993 - Present
of the Registrant and FCNB and
Credit Administrator of FCNB
Vice President of Union 1996 - Present
Senior Vice President and 1989 - 1993
Senior Credit Officer
Barclays Bank of NC
H. Clark Goodwin 63 Executive Vice President of the 1995 - Present
Registrant
President and Chief Executive 1985 - Present
Officer of Union
Edward B. McConnell 51 Executive Vice President of the
Registrant and FCNB 1996 - Present
Vice President of Union 1996 - Present
Senior Vice President, FCNB 1995 - 1996
Senior Vice President, First Union 1994 - 1995
President, Crown National Bank 1993 - 1994
John J. Godbold, Jr. 56 Executive Vice President of the
Registrant and FCNB 1997 - Present
President and Chief Executive Officer
of the former Carolina State Bank 1990 - 1997
28
PART II
Item 5. Market For Registrant's Common Equity and Related Shareholder Matters
The information called for by Item 5 with respect to the market price of
and dividends on the Registrant's Common Stock is set forth on the inside back
cover of the First Charter Corporation 1997 Annual Report to Shareholders
(included herewith as Exhibit 13.1) under the caption "Stock Information and
Dividends" and is hereby incorporated by reference.
The Registrant periodically issues unregistered shares of its Common Stock
to key employees pursuant to the exercise of options granted under its
Comprehensive Stock Option Plan pursuant to the exemption from registration set
forth in Section 4(2) of the Securities Act of 1993, as amended. During the year
ended December 31, 1997, the Registrant issued the following shares pursuant to
such option exercises:
On February 4, 1997, the Registrant issued 4,080 shares for an aggregate of
$16,899.00.
On March 20, 1997, the Registrant issued 420 shares for an aggregate of
$2,241.75.
On June 15, 1997, the Registrant issued 600 shares for an aggregate of
$5,250.00.
On July 14, 1997, the Registrant issued 4,320 shares for an aggregate of
$38,892.00.
On July 23, 1997, the Registrant issued 350 shares for an aggregate of
$1,868.13.
On August 7, 1997, the Registrant issued 648 shares for an aggregate of
$5,670.00.
On August 20, 1997, the Registrant issued 180 shares for an aggregate of
$2,207.70.
On October 20, 1997, the Registrant issued 672 shares for an aggregate of
$5,880.00.
On December 19, 1997, the Registrant issued 100 shares for an aggregate of
$1,226.51.
On December 22, 1997, the Registrant issued 375 shares for an aggregate of
$2,001.56.
Item 6. Selected Financial Data
The information called for by Item 6 is set forth on page 1 of the First
Charter Corporation 1997 Annual Report to Shareholders (included herein as
Exhibit 13.l) under the caption "Selected Consolidated Financial Data" and is
hereby incorporated by reference.
29
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The information called for by Item 7 is set forth on pages 30 through 43 of
the First Charter Corporation 1997 Annual Report to Shareholders (included
herein as Exhibit 13.1) under the section entitled "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and is hereby
incorporated by reference.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
The information called for by Item 7A is set forth on pages 32 and 33 of
the First Charter Corporation 1997 Annual Report to Shareholders (included
herein as Exhibit 13.1) under the section entitled "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Results of
Operations and Financial Condition" and is hereby incorporated by reference.
Item 8. Financial Statements and Supplementary Data
The information called for by Item 8 is set forth on pages 5 through 29 of
the First Charter Corporation 1997 Annual Report to Shareholders (included
herein as Exhibit 13.1) and is hereby incorporated by reference.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None
30
PART III
Item 10. Directors and Executive Officers of the Registrant
The information called for by Item 10 with respect to directors and Section
16 matters is set forth in the Registrant's Proxy Statement for its 1998 Annual
Meeting of Shareholders under the captions "Election of Directors", and "Section
16(a) Beneficial Ownership Reporting Compliance," respectively, and is hereby
incorporated by reference. The information called for by Item 10 with respect to
executive officers is set forth in Part I, Item 4A hereof.
Item 11. Executive Compensation
The information called for by Item 11 is set forth in the Registrant's
Proxy Statement for its 1998 Annual Meeting of Shareholders under the captions
"Election of Directors - Compensation of Directors", "Executive Compensation"
and "Compensation Committee Interlocks and Insider Participation in Compensation
Decisions," respectively, and is hereby incorporated by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information called for by Item 12 is set forth in the Registrant's
Proxy Statement for its 1998 Annual Meeting of Shareholders under the captions
"Principal Shareholders" and "Management Ownership of Common Stock,"
respectively, and is hereby incorporated by reference.
Item 13. Certain Relationships and Related Transactions
The information called for by Item 13 is set forth in the Registrant's
Proxy Statement for its 1998 Annual Meeting of Shareholders under the caption
"Certain Relationships and Related Transactions" and is hereby incorporated by
reference.
31
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) (l) Financial Statements.
The following financial statements, together with a report thereon of
independent certified public accountants, are included in this report by
incorporation by reference to the First Charter Corporation 1997 Annual
Report to Shareholders (included herein as Exhibit 13.1) as set forth in
Item 8:
Independent Auditors' Report
Consolidated Balance Sheets, December 31, 1997 and 1996
Consolidated Statements of Income for the years ended December 31, 1997,
1996 and 1995
Consolidated Statements of Shareholders' Equity for the years ended
December 31, 1997, 1996 and 1995
Consolidated Statements of Cash Flows for the years ended December 31,
1997, 1996 and 1995
Notes to Consolidated Financial Statements
(2) Financial Statement Schedules.
Financial statement schedules, for which provision for filing is made in
the applicable accounting regulations of the Securities and Exchange
Commission for bank holding companies, are omitted because the required
information is not applicable or is included elsewhere herein.
(3) Exhibits.
Exhibit No.
(per Exhibit
Table in
Item 601 of
Regulation S-K) Description of Exhibits
- --------------- -----------------------
3.1 Amended and Restated Articles of Incorporation of the
Registrant.
3.2 By-laws of the Registrant, as amended, incorporated herein by
reference to Exhibit 3.2 of the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1995 (Commission File
No. 0-15829).
32
Exhibit No.
(per Exhibit
Table in
Item 601 of
Regulation S-K) Description of Exhibits
- --------------- -----------------------
*10.1 Comprehensive Stock Option Plan, incorporated herein by
reference to Exhibit 10.1 of the Registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 1992
(Commission File No. 0-15829).
10.2 Dividend Reinvestment and Stock Purchase Plan, incorporated
herein by reference to Exhibit 28.1 of the Registrant's
Registration Statement No. 33-52004.
*10.3 Executive Incentive Bonus Plan.
10.4 1996 Employee Stock Purchase Plan, incorporated herein by
reference to Exhibit 99.1 of the Registrant's Registration
Statement No. 333-00321.
*10.5 Change in Control Agreement dated November 16, 1994 for
Lawrence M. Kimbrough, incorporated herein by reference to
Exhibit 10.5 of the Registrant's Annual Report on Form 10-K for
the year ended December 31, 1994 (Commission File No. 0-15829.)
*10.6 Change in Control Agreement dated November 16, 1994 for Robert
O. Bratton incorporated herein by reference to Exhibit 10.6 of
the Registrant's Annual Report on Form 10-K for the year ended
December 31, 1994 (Commission File No. 0-15829.)
*10.7 Change in Control Agreement dated November 16, 1994 for Robert
G. Fox, Jr. incorporated herein by reference to Exhibit 10.7 of
the Registrant's Annual Report on Form 10-K for the year ended
December 31, 1994 (Commission File No. 0-15829.)
*10.8 Amended and Restated Employment Agreement between First Charter
National Bank and John J. Godbold, Jr. dated as of December 22,
1997.
*10.9 Restricted Stock Award Program, incorporated herein by
reference to Exhibit 99.1 of the Registrant's Registration
Statement No. 33-60949.
10.10 Agreement and Plan of Merger between the Registrant and
Carolina State Bank dated as of August 15, 1997, incorporated
herein by reference to Exhibit 2.1 of the Registrant's
Registration Statement No. 333-35905.
33
Exhibit No.
(per Exhibit
Table in
Item 601 of
Regulation S-K) Description of Exhibits
- --------------- -----------------------
10.11 Stock Option Agreement between the Registrant and Carolina
State Bank dated June 30, 1997, incorporated herein by
reference to Exhibit 99.2 of the Registrant's Current Report on
Form 8-K filed July 2, 1997 (Commission File No. 0-15829).
*10.12 Employment Agreement dated as of January 20, 1993, as amended
as of August 31, 1995, between Bank of Union and H. Clark
Goodwin, incorporated herein by reference to Exhibit 10.12 of
the Registrant's Annual Report on Form 10-K for the year ended
December 31, 1995 (Commission File No. 0-15829).
*10.13 Change in Control Agreement dated October 16, 1996 for Edward
B. McConnell, incorporated herein by reference to Exhibit 10.13
of the Registrant's Annual Report on Form 10-K for the
year-ended December 31, 1996 (Commission File No. 0-15829).
10.14 1998 Employee Stock Purchase Plan, incorporated herein by
reference to Exhibit 99.1 of the Registrant's Registration
Statement No. 333-43617.
*10.15 Stock Option Plan For Non-Employee Directors.
*10.16 Amended and Restated Salary Continuation Agreement between
First Charter National Bank and John J. Godbold, Jr. dated as
of December 22, 1997.
11.1 Statement regarding computation of per share earnings.
13.1 First Charter Corporation Annual Report to its shareholders for
the year ended December 31, 1997. Such Annual Report to its
shareholders, except for those portions which are expressly
incorporated by reference in this Form 10-K, is furnished for
the information of the Commission and is not to be deemed
"filed" as part of the Form 10-K.
21.1 List of subsidiaries of the Registrant.
23.1 Consent of KPMG Peat Marwick LLP.
27.1 Financial Data Schedule.
* Indicates a management contract or compensatory plan required to be filed
herein.
34
(b) Reports on Form 8-K.
There were no current reports on Form 8-K filed in the fourth quarter of
1997.
35
SIGNATURES
Pursuant to the requirements of Section 13 or Section 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
FIRST CHARTER CORPORATION
(Registrant)
By: /s/ Lawrence M. Kimbrough
--------------------------------
Lawrence M. Kimbrough, President
Date: March 26, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
Signature Title Date
--------- ----- ----
/s/ Lawrence M. Kimbrough President and Director March 26, 1998
- --------------------------- (Principal Executive
(Lawrence M. Kimbrough) Officer)
- --------------------------- Chairman of the Board
(J. Roy Davis, Jr.) and Director
/s/ Branson C. Jones Vice Chairman of the March 26, 1998
- --------------------------- Board and Director
(Branson C. Jones)
/s/ Robert O. Bratton Executive Vice President March 26, 1998
- --------------------------- (Principal Financial and
(Robert O. Bratton) Principal Accounting Officer)
- --------------------------- Director
(William R. Black)
/s/ Michael R. Coltrane Director March 26, 1998
- ---------------------------
(Michael R. Coltrane)
/s/ T. Carl Dedmon Director March 26, 1998
- ---------------------------
(T. Carl Dedmon)
- --------------------------- Director
(James B. Fincher)
- --------------------------- Director
(John J. Godbold, Jr.)
/s/ H. Clark Goodwin Director March 26, 1998
- ---------------------------
(H. Clark Goodwin)
36
Signature Title Date
--------- ----- ----
/s/ Charles F. Harry III Director March 26, 1998
- ---------------------------
(Charles F. Harry, III)
/s/ Frank H. Hawfield Director March 26, 1998
- ---------------------------
(Frank H. Hawfield)
/s/ J. Knox Hillman, Jr. Director March 26, 1998
- ---------------------------
(J. Knox Hillman, Jr.)
- --------------------------- Director
(Jerry E. McGee)
/s/ Hugh H. Morrison Director March 26, 1998
- ---------------------------
(Hugh H. Morrison)
- --------------------------- Director
(Thomas R. Revels)
37
Exhibit Index
Exhibit No.
(per Exhibit
Table in
Item 601 of Sequential
Regulation S-K) Description of Exhibits Page No
- --------------- ----------------------- -------
3.1 Amended and Restated Articles of Incorporation of the
Registrant.
3.2 By-laws of the Registrant, as amended, incorporated
herein by reference to Exhibit 3.2 of the Registrant's
Annual Report on Form 10-K for the year ended December
31, 1995 (Commission File No. 0-15829).
*10.1 Comprehensive Stock Option Plan, incorporated herein by
reference to Exhibit 10.1 of the Registrant's Annual
Report on Form 10-K for the fiscal year ended December
31, 1992 (Commission File No. 0-15829).
10.2 Dividend Reinvestment and Stock Purchase Plan,
incorporated herein by reference to Exhibit 28.1 of the
Registrant's Registration Statement No. 33-52004.
*10.3 Executive Incentive Bonus Plan.
10.4 1996 Employee Stock Purchase Plan, incorporated herein
by reference to Exhibit 99.1 of the Registrant's
Registration Statement No. 333-00321.
*10.5 Change in Control Agreement dated November 16, 1994 for
Lawrence M. Kimbrough, incorporated herein by reference
to Exhibit 10.5 of the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1994
(Commission File No. 0-15829.)
*10.6 Change in Control Agreement dated November 16, 1994 for
Robert O. Bratton incorporated herein by reference to
Exhibit 10.6 of the Registrant's Annual Report on Form
10-K for the year ended December 31, 1994 (Commission
File No. 0-15829.)
*10.7 Change in Control Agreement dated November 16, 1994 for
Robert G. Fox, Jr. incorporated herein by reference to
Exhibit 10.7 of the Registrant's Annual Report on Form
10-K for the year ended December 31, 1994 (Commission
File No. 0-15829.)
38
Exhibit No.
(per Exhibit
Table in
Item 601 of Sequential
Regulation S-K) Description of Exhibits Page No
- --------------- ----------------------- -------
*10.8 Amended and Restated Employment Agreement between First
Charter National Bank and John J. Godbold, Jr. dated as
of December 22, 1997.
*10.9 Restricted Stock Award Program, incorporated herein by
reference to Exhibit 99.1 of the Registrant's
Registration Statement No. 33-60949.
10.10 Agreement and Plan of Merger between the Registrant and
Carolina State Bank dated as of August 15, 1997,
incorporated herein by reference to Exhibit 2.1 of the
Registrant's Registration Statement No. 333-35905.
10.11 Stock Option Agreement between the Registrant and
Carolina State Bank dated June 30, 1997, incorporated
herein by reference to Exhibit 99.2 of the Registrant's
Current Report on Form 8-K filed July 2, 1997
(Commission File No. 0-15829).
*10.12 Employment Agreement dated as of January 20, 1993, as
amended as of August 31, 1995, between Bank of Union and
H. Clark Goodwin, incorporated herein by reference to
Exhibit 10.12 of the Registrant's Annual Report on Form
10-K for the year ended December 31, 1995 (Commission
File No. 0-15829).
*10.13 Change in Control Agreement dated October 16, 1996 for
Edward B. McConnell, incorporated herein by reference to
Exhibit 10.13 of the Registrant's Annual Report on Form
10-K for the year-ended December 31, 1996 (Commission
File No. 0-15829).
10.14 1998 Employee Stock Purchase Plan, incorporated herein
by reference to Exhibit 99.1 of the Registrant's
Registration Statement No. 333-43617.
*10.15 Stock Option Plan For Non-Employee Directors.
*10.16 Amended and Restated Salary Continuation Agreement
between First Charter National Bank and John J. Godbold,
Jr. dated as of December 22, 1997.
11.1 Statement regarding computation of per share earnings.
39
Exhibit No.
(per Exhibit
Table in
Item 601 of Sequential
Regulation S-K) Description of Exhibits Page No
- --------------- ----------------------- -------
13.1 First Charter Corporation Annual Report to its
shareholders for the year ended December 31, 1996. Such
Annual Report to its shareholders, except for those
portions which are expressly incorporated by reference
in this Form 10-K, is furnished for the information of
the Commission and is not to be deemed "filed" as part
of the Form 10-K.
21.1 List of subsidiaries of the Registrant.
23.1 Consent of KPMG Peat Marwick LLP.
27.1 Financial Data Schedule.
* Indicates a management contract or compensatory plan required to be filed
herein.
40