UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): August 8, 2008
FEDERAL TRUST CORPORATION
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(Exact name of registrant as specified in its charter)
Florida 001-31724 59-2935028
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(State or other jurisdiction Commission File Number (I.R.S. Employer
of incorporation) Identification No.)
312 West First Street
Sanford, Florida 32771
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(address of principal executive offices) (zip code)
(407) 323-1833
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(Registrant's telephone number, including areas code)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instructions A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
FORWARD-LOOKING STATEMENTS
This current report contains forward-looking statements, which can be
identified by the use of words such as "estimate," "project," "believe,"
"intend," "anticipate," "plan," "seek," "expect" and words of similar meaning.
These forward-looking statements are based on current beliefs and
expectations of our management and are inherently subject to significant
business, economic and competitive uncertainties and contingencies, many of
which are beyond our control. In addition, these forward-looking statements are
subject to assumptions with respect to strategic objectives, anticipated
financial results, future business prospects and decisions that are subject to
change.
The following factors, among others, could cause actual results to differ
materially from the anticipated results or other expectations expressed in the
forward-looking statements:
o general economic conditions, either nationally or in our market areas,
that are worse than expected;
o changes in laws or government regulations or policies affecting financial
institutions, including changes in regulatory fees and capital
requirements;
o competition among depository and other financial institutions;
o inflation and changes in the interest rate environment that reduce our
margins or reduce the fair value of financial instruments;
o adverse changes in the securities markets; and
o changes in our organization, compensation and benefit plans.
Because of these and other uncertainties, our actual future results may be
materially different from the results indicated by these forward-looking
statements.
ITEM 1.01. Entry Into A Material Definitive Agreement
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On August 11, 2008, Federal Trust Corporation (the "Company") entered into
a non-binding letter of intent with Sidhu Advisors FDT, LLC ("Sidhu"), whereby
Sidhu, or a newly-formed affiliate, would invest at least $30 million in the
Company and acquire control of the Company. The proposed transaction remains
subject to entering into a definitive agreement between the Company and Sidhu
and other conditions, including completion of an updated due diligence review of
the Company by Sidhu. It is expected that the terms of a proposed transaction
would be subject to shareholder approval, as well as approval by the Office of
Thrift Supervision. The letter of intent expires August 25, 2008.
The Company and Sidhu are currently parties to a Standby Purchase
Agreement, dated May 12, 2008, as disclosed in previous filings with the
Securities and Exchange Commission.
The foregoing description of the non-binding letter of intent is qualified
in its entirety by reference to the non-binding letter of intent, which is
attached hereto as Exhibit 10, and is incorporated by reference into this Item
1.01. A press release announcing the execution of the non-binding letter of
intent is attached hereto as Exhibit 99.
Item 4.02. Non-Reliance on Previously Issued Financial Statements or a Related
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Audit Report or Completed Interim Review
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(a) On August 8, 2008, the Board of Directors of the Company determined
that the financial statements for the three months ended March 31, 2008 as
included in the Company's Amendment No. 1 to its Quarterly Report on Form 10-Q/A
for the Quarter Ended March 31, 2008, and the financial statements for the three
and six months ended June 30, 2008 as included in the Company's press release
dated July 25, 2008, should no longer be relied upon because the Company is
restating earnings previously reported for the quarter ended March 31, 2008 and
the three and six months ended June 30, 2008.
The restatement represents the Company's reassessment of the operating
losses and trends in past due and non-performing loans over the past five
quarters. As a result of this reassessment, the Company determined that it is
more likely than not that the Company's deferred tax asset will not be realized
and, therefore, the Company recorded a deferred tax asset valuation allowance at
March 31, 2008 of $9.1 million.
The valuation allowance and restatement will have no effect on the
regulatory capital position of Federal Trust Bank, which remains "adequately
capitalized" for regulatory purposes as of both March 31, 2008 and June 30,
2008. While the valuation allowance will reduce the previously reported
earnings, it is a non-cash charge that has no effect on the Bank's liquidity.
After this restatement, the Company will report a loss of $11.2 million for the
three months ended March 31, 2008, compared to the $2.2 million loss as
previously reported. For the three and six month periods ended June 30, 2008,
the revised losses would be $4.6 million and $15.8 million, respectively,
compared to losses of $2.8 million and $5.1 million as previously reported for
these periods. These results will be reflected in the Company's Quarterly Report
on Form 10-Q for the Quarterly Period Ended June 30, 2008, and an amendment to
the Company's Quarterly Report on Form 10-Q/A for the Quarterly Period Ended
March 31, 2008, which will be filed on a subsequent date with the Securities and
Exchange Commission.
The Company's Audit Committee has discussed with the Company's independent
registered public accounting firm the matters disclosed in this Item 4.02 of
this Current Report on Form 8-K.
ITEM 8.01. Other Events
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On August 11, 2008, the Company issued a press release announcing the
execution of the non-binding letter of intent and the restatement. A copy of
this press release is attached hereto as Exhibit 99.
ITEM 9.01. Financial Statements and Exhibits
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Exhibit No. Description
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10 Non-binding letter of intent
99 Press Release Dated August 11, 2008
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: August 12, 2008
Federal Trust Corporation
(Registrant)
By:\s\ Dennis T. Ward
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Dennis T. Ward
President and
Chief Executive Officer
EXHIBIT INDEX
Exhibit No. Description
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10 Non-binding letter of intent
99 Press Release Dated August 11, 2008