<p>Fifth Third Bancorp said Thursday it is buying Charlotte, N.C.-based First Charter Corp. in a deal valued at $1.09 billion, expanding its banking presence in the southeast to North Carolina and suburban Atlanta.</p><p>Cincinnati-based Fifth Third said the deal will be financed with stock and 30 percent cash. The company will pay $31 per share, a 53 percent premium to First Charter's closing price of $20.25 on Wednesday.</p><p>First Charter shares shot up 38 percent, or $7.71, to a 52-week high of $27.96, in Thursday trading. Shares have traded as low as $17.78 in the past year.</p><p>Fifth Third shares hit a 52-week low Thursday, falling as low as $35.27 before rebounding to $36, down 3.6 percent. The shares have been as high as $43.32 in the past year.</p><p>Fifth Third in May announced a $288 million acquisition of R-G Crown Bank, based in Casselberry, Fla. That will add 30 branches to Fifth Third's Florida operations and three in Augusta, Ga.</p><p>The First Charter acquisition will give Fifth Third 57 retail locations and 134 automatic teller machines in North Carolina, as well as five retail locations and six ATMs in Georgia, including First Charter's two Atlanta area branches.</p><p>"This really opens up a very attractive growth market in North Carolina and specifically, some great markets like Charlotte, Raleigh-Durham, and two locations in suburban Atlanta," Kevin Kabat, Fifth Third's president and chief executive, said in an interview.</p><p>Kabat called the price reasonable for the expansion, but an analyst disagreed, downgrading Fifth Third stock from market perform to underperform.</p><p>Gary B. Townsend of Friedman, Billings, Ramsey & Co. Inc. wrote in a client note that the deal is expensive for an out-of-market acquisition that will not help Fifth Third's profits in its first three years.</p><p>Kabat said Fifth Third has long eyed the Carolinas, and is seeking more growth opportunities in the southeast, as well as in the mid-Atlantic states and its home Midwest region.</p><p>Kabat, who took over as CEO at the company's April shareholders meeting, said Fifth Third's growth plans aren't fazed by the credit concerns sweeping the industry.</p><p>"We feel strategically, we're in a very good spot today, even with the challenges going on in the industry," he said. "We're not immune to what's been happening in the credit markets, but we've always been conservative. ... We think we're well-positioned."</p><p>Kabat has picked up the pace again at Fifth Third, which had faltered after a period of growth capped by a major Florida expansion in 2005 with the $1.5 billion acquisition of First National Bankshares of Florida. Profit growth slowed, and the company's stock price slid from a peak of $69.70 in 2002.</p><p>Fifth Third said the First Charter deal will add about $4.9 billion in assets and $3.2 billion in deposits to the company. In the Charlotte area, it now will have $2.2 billion in deposits.</p><p>First Charter will become a Fifth Third affiliate, and Bob James, president and chief executive of First Charter, will be president of the Charlotte-based affiliate.</p><p>The transaction is expected to close in the first quarter of 2008, and will dilute 2008 earnings per share by about 2 percent, Fifth Third said.</p><p>Fifth Third, a financial services company, operates 18 affiliates with 1,171 full-service banks, along with ATMs and locations inside some grocery stores, in Ohio, Kentucky, Indiana, Michigan, Illinois, Florida, Tennessee, West Virginia, Pennsylvania and Missouri.</p><p>___</p><p>On the Net:</p><p>HASH(0x2deecc4)</p><p>HASH(0x2deed6c)</p>
