First Charter Corp., pegged by many on Wall Street as a candidate to be bought out, is talking about buying rather than selling.
Lawrence Kimbrough, the $4.2 billion-asset company's president and chief executive officer, said that its hometown of Charlotte, along with Raleigh and Greenville-Spartanburg, S.C., are the "most attractive areas" for First Charter but that it would consider bank acquisitions in other markets.
"The main thing that we would like to see is growth," Mr. Kimbrough said in a telephone interview Thursday.
First Charter has 54 branches in North Carolina and a small mortgage operation in Virginia. It has not acquired a bank since buying the $775 million-asset Carolina First Bancshares Inc. of Lincolnton, N.C., for $260 million in April 2000. On Dec. 1 it bought Smith & Associates Insurance Services Inc., a property/casualty agency in Charlotte. Smith & Associates, which specializes in middle-market commercial insurance, will become part of First Charter's insurance subsidiary.
On the flip side, as Charlotte's fourth-biggest banking company by deposit market share (behind Wachovia Corp., Bank of America Corp., and BB&T Corp.) First Charter is considered a choice takeover target.
Kevin Fitzsimmons, an analyst with Sandler O'Neill & Partners LP, downgraded First Charter's shares from "hold" to "sell" Thursday, citing a 9% runup in the stock in the previous eight days.
Mr. Kimbrough, who declined to say whether he had been approached by prospective buyers, said, "If you've got to have a downgrade, that's the best reason to have a downgrade."
Mr. Fitzsimmons said SunTrust Banks Inc. of Atlanta would be the most logical buyer of First Charter. SunTrust, which declined to comment Friday, is still integrating National Commerce Financial Corp. of Memphis, which it bought Oct. 1.
Anthony R. Davis, an analyst at Ryan Beck & Co., wrote in a report issued Friday that SunTrust is much more inclined toward internal growth.
"Whole bank acquisitions probably will play a reduced role in SunTrust's future expansion," he wrote.
Mr. Davis initiated coverage of SunTrust with an "outperform" rating, pointing to the likelihood of a pickup in corporate borrowing and to the purchase of National Commerce.
As for First Charter, Christopher W. Marinac of FIG Partners LLC in Atlanta, who rates it "underperform," said in an interview that he believes it is putting organic growth ahead of acquisition right now.
Mr. Fitzsimmons said problems First Charter had in 2003 may still be too fresh for it to do mergers or acquisitions at this time.
In September 2003 the company was under an enforcement order from the Federal Reserve for Bank Secrecy Act violations. First Charter signed an agreement with regulators after an examination showed lapses in currency transaction reporting policies and procedures. The order was lifted in July.
Shares of First Charter fell 2.8%Friday. SunTrust fell 1.1%.
