Fifth Third Bank Buys First Charter for $1.09B

Fifth Third Bancorp, one of the largest banks in the U.S. Midwest, has agreed to acquire First Charter Corp. for $1.09 billion in stock and cash, or $31.00/share, which represents a 53% premium over Wednesday's close. First Charter has 57 bank branches in North Carolina and two in Georgia. Fifth Third will pay for 30% of the transaction using cash and the remaining 70% using its shares. The deal is expected to close in fiscal Q1 2008, and will cut full-year 2008 EPS by 2%, be "relatively neutral" to 2009 earnings and be "modestly" accretive to 2009 earnings ex-amortization. First Charter has approximately $4.9B in assets and $3.2B in deposits. Fifth Third CEO Kevin Kabat said the bank expects to make more acquisitions as it expands in the "fast-growing Southeastern metropolitan markets at a reasonable price." Shares of Fifth Third lost 0.1% to $37.38 on Wednesday. First Charter gained 2.3% to $20.25.

Sources: Press release, MarketWatch, Wall Street Journal
Commentary: Stocks With the Least Analyst Love • First Charter Cleans Its Accounting House
Stocks/ETFs to watch: FITB, FCTR. Competitors: NCC, USB. ETFs: PJB, IAT, RKH
Conference call transcripts: Fifth Third Bancorp Q2 2007

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Comments

[ncplumber:]

Post merger blues...

As a First Charter customer for 13 years I was happy, now I am shopping for a new bank. My business checking account was supposed to be fine like it was for a month after the name change (according to the instructions given to the tellers by Fifth Third and passed on to me) while I wait for my new checks, deposit slips, etc. to come in. The day of the change to Fifth Third my checks are useless, my deposit slips are useless, and my business is operating on cash that I happened to set aside in the event of a national crisis involving.... banks. Kind of funny in a way. The customer service department person that I spoke to did not speak clear English, very stressful when you are dealing with 17 digit temporary numbers, confirming information, etc. I am from the Miami, FL area originally and almost never have a hard time understanding broken English.

On a lighter note, the name is silly. Fifth Third is an improper fraction and is hardly appropriate for a financial institution. That is like "Drippy's Plumbing" or "Sparky's Electrical Service". One and two-thirds bank would almost make more sense. I am not a marketing guru, but sheesh!

Seriously, if Fifth Third is planning on making acquisitions a habit I strongly suggest they get a handle on making the changing of the guard much much smoother! And pressing one for English means that I would like to communicate in my native language with a clear dialect.

2008 Jun 11 12:35 AM