<PAGE>   1

   
                                  FORM 10-K/A-1
    
                       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, 1998                     
                          -------------------------------------------------
                                       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 18, 1999 was $309,363,827.

         As of March 18, 1999 the Registrant had outstanding 18,487,776 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, 1998 (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 1999 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).


<PAGE>   2


   

                           FIRST CHARTER CORPORATION
                                AND SUBSIDIARIES

           FORM 10-K/A-1 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998

                               TABLE OF CONTENTS
                                     PART I

<TABLE>
<CAPTION>

                                                              Page
                                                              ----

<S>       <C>                                                 <C>
Item 1.   Business......................................        1
</TABLE>
    


<PAGE>   3

                                     Part I

   
         Item 1 of the Company's Annual Report on Form 10-K for the fiscal year 
ended December 31, 1998, filed effective March 22, 1999, is amended as follows:
    

Item 1.  Business

General

         First Charter Corporation (hereinafter referred to as either the
"Registrant" or the "Corporation") is a 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 asset is the stock
of its subsidiary, First Charter National Bank ("FCNB" or the "Bank"). The Bank
accounts for over 85% of the Registrant's consolidated assets and consolidated
revenues. The principal executive offices of the Corporation are located at 22
Union Street, North, Concord, North Carolina 28025. Its telephone number is
(800) 422-4650.

         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 21, 1995, the Corporation purchased Bank of
Union ("Union"), a state-chartered commercial bank organized under the laws of
North Carolina in 1985. Union, a full-service bank with five offices located in
Union and southern Mecklenburg Counties, North Carolina, was merged into FCNB
effective September 10, 1998. On December 22, 1997, the Corporation acquired
Carolina State Bank ("CSB") which was also merged into FCNB. CSB was a
state-chartered commercial bank with four banking offices in Cleveland and
Rutherford Counties, North Carolina. During 1998, the Corporation acquired HFNC
Financial Corp. ("HFNC"), which merged into the Corporation effective September
30, 1998. The merger was accounted for as a pooling of interests, and
accordingly all financial information presented herein has been restated for
all periods presented to reflect this merger. HFNC was the unitary holding
company of Home Federal Savings and Loan Association ("Home Federal"). Home
Federal, which dates back to 1883, was based in Charlotte, North Carolina, and
operated nine full service branch offices and a loan origination office, all
located in Mecklenburg County, North Carolina. These offices operated under the
Home Federal name until its merger into FCNB in March 1999. FCNB is a full
service bank and trust company which now operates thirty branch offices and two
limited service facilities in addition to its main office, as well as
sixty-five ATMs (automated teller machines) located in Mecklenburg, Cabarrus,
Cleveland, Rutherford, Rowan, and Union Counties in North Carolina.

         Through its branch locations, the Bank provides a wide range of
banking products, including interest bearing and non-interest bearing checking
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
First Charter Brokerage Services, a subsidiary of FCNB, the Registrant offers
discount brokerage services, insurance and annuity sales and financial planning
services pursuant to a third party arrangement with UVEST Investment Services.
FCNB also operates three other subsidiaries. First Charter Insurance Services,
Inc. is a North Carolina corporation formed to meet the insurance needs of
businesses and individuals throughout the Charlotte metropolitan area. First
Charter Realty Investment Inc. is a Delaware corporation organized as a holding
company for FCNB Real Estate Inc, a real estate investment trust organized in
North Carolina.

         At December 31, 1998, the Registrant and its subsidiary had 390
full-time employees and 104 part-time employees. The Registrant had no
employees who were not also employees of FCNB. The Registrant considers its
relations with its 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
<PAGE>   4


         As part of its operations, the Registrant regularly holds discussions
and evaluates the potential acquisition of, or merger 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, out-of-state institutions may open de
novo branches in North Carolina as well as acquire or merge with institutions
located in North Carolina. As a result of such laws, banking activities in
North Carolina are highly competitive.

         FCNB's service delivery facilities are located in Mecklenburg,
Cabarrus, Union, Rowan, Cleveland, and Rutherford counties. These locations
also have numerous branches of money-center, super-regional, regional, and
statewide institutions, many of them based in Charlotte. 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 Bank. The Bank's 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"). The Federal
Deposit Insurance Corporation ("FDIC") insures FCNB's deposits through the Bank
Insurance Fund ("BIF") to the maximum extent permitted by law.

         In addition to banking laws, regulations and regulatory agencies, the
Corporation and FCNB are subject to various other laws and regulations and
supervision and examination by other regulatory agencies, all of which directly
or indirectly affect the Corporation's operations, management and ability to
make distributions. The following discussion summarizes certain aspects of
those laws and regulations that affect the Corporation.

         Restrictions on Bank Holding Companies. The Federal Reserve is
authorized to adopt regulations affecting various aspects of bank holding
companies. Under the BHCA, the Corporation'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 





                                       2
<PAGE>   5


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 Corporation is also subject to the North Carolina Bank Holding
Company Act of 1984. As required by this state legislation, the Corporation, by
virtue of its ownership of FCNB, 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 Corporation 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 authorized 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 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 FCNB. 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
FDIC. 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.
The Bank is also subject to certain reserve requirements established by the
Federal Reserve Board and is a member of the Federal Home Loan Bank ("FHLB") of
Atlanta, which is one of the 12 regional banks comprising the FHLB System.

Capital and Operational Requirements.

         The Federal Reserve, the OCC and the FDIC have issued substantially
similar risk-based and leverage capital guidelines applicable to federally
chartered banking organizations. The risk-based guidelines define a two-tier
capital framework, under which the Corporation and the Bank are 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 Corporation, Tier 1 Capital
generally consists of total shareholders' equity calculated in accordance with
generally accepted accounting principles less certain intangibles, and Total
Capital generally consists of Tier 1 Capital plus certain adjustments, the
largest of which for the Corporation 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 Corporation, as adjusted for one of four 



                                       3
<PAGE>   6


categories of risk-weights established in Federal Reserve, OCC and FDIC
regulations, based primarily on relative credit risk. At December 31, 1998, the
Corporation the Bank 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 minimum ratio is 3.00%, most banking
organizations are required to maintain ratios of at least 100 to 200 basis
points above 3.00%. Management believes that the Corporation and the Bank meet
their leverage ratio requirement.

         The Corporation's compliance with existing capital requirements is
summarized in the table below.


<TABLE>
<CAPTION>


                            Leverage Capital           Tier 1 Capital               Total Capital
                        -----------------------   ------------------------      ------------------------
 (Dollars in
 thousands)               Amount     Percentage     Amount      Percentage       Amount       Percentage
                                         (1)                        (2)                           (2)

<S>                     <C>          <C>          <C>           <C>             <C>           <C>
Actual                  $ 236,666        13.36%   $ 236,666         19.34%      $ 251,965        20.59%

Required                   70,850         4.00       48,957          4.00          97,913         8.00

Excess                    165,816         9.36      187,709         15.34         154,052        12.59
</TABLE>


(1)      Percentage of total adjusted average assets. The Federal Reserve
         minimum leverage ratio requirement is 3.00% to 5.00%, depending on the
         institution's composite rating as determined by its regulators. The
         Federal Reserve Board has not advised the Corporation 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 undercapitalized 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
undercapitalized. Under the regulations, a "well capitalized" institution must
have a Tier 1 Capital ratio of at least 6.00%, a Total Capital ratio of at
least 10.00% and a leverage ratio of at least 5.00% and 



                                       4
<PAGE>   7


not be subject to a capital directive order. An "adequately capitalized"
institution must have a Tier 1 Capital ratio of at least 4.00%, a Total Capital
ratio of at least 8.00% and a leverage ratio of at least 4.00%, or 3.00% in
some cases. Under these guidelines, FCNB 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 is 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, a
Corporation or Bank with 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
do not materially impact the Corporation's or FCNB's regulatory capital ratios
or their well-capitalized status.

         Distributions. The primary source of funds for distributions paid by
the Corporation to its shareholders is dividends received from FCNB. Certain
regulatory and other requirements restrict the amount of dividends that FCNB
can pay to the Corporation. The OCC regulates the amount of FCNB dividends
payable to the Corporation based on undivided profits for the last two years,
less dividends already paid. As of December 31, 1998, FCNB had paid the full
allowable amount of dividends to the Corporation.

         In addition to the foregoing, the ability of the Corporation and FCNB
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 Corporation, its shareholders and its creditors to participate in
any distribution of assets or earnings of FCNB is further subject to the prior
claims of creditors against the Bank.

         Deposit Insurance. The deposits of FCNB are insured up to applicable
limits by the FDIC, and are backed by the full faith and credit of the U.S.
government. As insurer, the FDIC is authorized to conduct examinations of, and
to require reporting by, FDIC-insured institutions. It also may prohibit any
FDIC-insured institution from engaging in any activity the FDIC determines by
regulation or order to pose a serious threat to the FDIC. The FDIC also has the
authority to initiate enforcement actions against banking institutions, after
giving the institution's primary regulator an opportunity to take such action.
In addition, the Bank is subject to deposit premium assessments by 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 banking institution, 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, statistical analyses of
financial statements and other relevant information.

         The deposits of FCNB are insured by the BIF, administered by the FDIC.
Under the FDIC's risk-based insurance system, assessments currently can range
from no assessment to 0.27% of a participating 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



                                       5
<PAGE>   8


insurance assessment rates can change from time to time, in the discretion of
the FDIC, subject to certain limits.

         The former Home Federal deposits are insured by the SAIF, also
administered by the FDIC. Unlike the BIF, which met its target reserve level in
September 1995, the Savings Association Insurance Fund ("SAIF") was not
expected to meet its target reserve level until at least 2002. Consequently,
while insurance premiums for BIF insured deposits were reduced beginning in
1996, premiums for SAIF members were maintained at their existing levels,
creating a significant premium disparity. On September 30, 1996, legislation
was passed to eventually eliminate this premium differential between
SAIF-insured institutions and BIF-insured institutions by recapitalizing the
SAIF's reserves by way of a one-time special assessment equal to 65.7 basis
points for all SAIF-assessable deposits as of March 31, 1995. This special
assessment was accrued by Home Federal at September 30, 1996 and paid on
November 27, 1996. As a result of this recapitalization, during the period from
1997 through 1999, FDIC-insured institutions in the lowest risk category will
pay approximately 1.2 basis points of their BIF-assessable deposits and 6.1
basis points of their SAIF-assessable deposits to fund the insurance fund. FCNB
will continue to pay the SAIF assessment rate on former Home Federal deposits
through the end of 1999.

         Source of Strength. According to Federal Reserve policy, bank holding
companies are expected to act as a source of financial strength to subsidiary
banks 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
Corporation 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 Corporation and FCNB cannot be determined at this
time.

Other Considerations

         There are particular risks and uncertainties that are applicable to an
investment in our common stock. Specifically, there are risks and uncertainties
that bear on our future financial results that may cause our future earnings
and financial condition to be less than our expectations. Some of the risks and
uncertainties relate to the Year 2000 issue or to economic conditions
generally, and would affect other financial institutions in similar ways. These
aspects are discussed under the headings "Year 2000 Consideration" and "Factors
that May Affect Future Results" in the accompanying "Management's Discussion
and Analysis of Financial Condition and Results of Operations" included in the
First Charter Corporation 1998 Annual Report to Shareholders, incorporated
herein by reference. This section addresses particular risks and uncertainties
that are specific to our business.



                                       6
<PAGE>   9


         Completion of the merger with HFNC significantly expanded the scope
and complexity of our business and operations and more than doubled our asset
base. While the merger with HFNC represents significant opportunities for us to
expand our franchise and increase shareholder value, it also creates certain
risks of execution in successfully assimilating the HFNC franchise and
achieving our previous financial performance level. Successful assimilation of
HFNC's operations will require that we:

         -        hire and retain additional senior management personnel,

         -        upgrade the technological and other platforms utilized by 
                  HFNC,

         -        retrain the HFNC workforce as well as instill in that 
                  workforce a sales culture,

         -        conform HFNC's funding cost to that of our cost, and

         -        otherwise integrate two companies that have previously 
                  operated independently pursuant to different cultures.

         Successful integration of HFNC's operations will depend in part on our
ability to consolidate operations, systems, and procedures, and to eliminate
redundancies in costs. We may not be successful in integrating our operations
with those of HFNC without encountering difficulties, including, without
limitation, the loss of key employees and customers, the disruption of its
business, or possible inconsistencies in standards, controls, procedures, and
policies.

         In addition to the execution risks related to the assimilation of
HFNC, due to the increase in interest rates that has occurred since January
1999, we are considering the possible sale or securitization of up to $250
million of our loans, primarily consisting of one- to four-family residential
mortgages, and the repayment of Federal Home Loan Bank ("FHLB") advances with
the proceeds of such sales. If we are unable to reinvest the sales proceeds of
these loans in comparable or higher yielding assets, or if our costs of future
borrowings from FHLB increase, the sale of such loans could have an adverse
impact on our future earnings.



                                       7
<PAGE>   10

Statistical Information

   The following tables present certain statistical information relating to the
Corporation. The tables should be read in conjunction with the Corporations's
Consolidated Financial Statements and Notes thereto and Management's Discussion
and Analysis of Financial Condition and Results of Operations, both of which
are incorporated by reference herein. All historical financial data for the
periods prior to the respective dates of the mergers with Union, CSB, and Home
Federal (each of which was accounted for as a pooling of interests) have been
restated to combine the accounts of Union, CSB and Home Federal with those of
the Corporation.

   The following table includes for the years ended December 31, 1998, 1997,and
1996 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

   
<TABLE>
<CAPTION>

                                              1998                            1997                             1996         
                                -------------------------------- -------------------------------- --------------------------------
(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
                                -------------------------------------------------------------------------------------------------   
<S>                             <C>          <C>      <C>        <C>         <C>      <C>         <C>         <C>       <C>
Interest earning assets:
Loans  (1) (2) (3)              $ 1,358,949  $ 116,777  8.59%    $ 1,143,448  $ 100,921  8.83%    $ 1,022,119  $  90,545  8.86%
Securities available for
   sale - taxable                   221,860     14,591  6.58         246,937     15,717  6.36         304,922     19,721  6.47
Securities available for
   sale - nontaxable (4)             84,673      6,640  7.84          72,468      5,754  7.94          64,511      5,214  8.08
Investment securities held
   to maturity - taxable                 --         --    --          13,375        766  5.73          12,093        707  5.85
Investment securities held
   to maturity - nontaxable(4)           --         --    --           1,251         83  6.63              --         --  
Federal funds sold                   18,450      1,042  5.65          18,238      1,012  5.55          20,013      1,102  5.51
Interest-bearing bank
   deposits                           3,902        185  4.74          13,835        795  5.75          13,642        908  6.66
                                -----------  ---------           -----------  ---------           -----------  ---------
      Total                     $ 1,687,834  $ 139,235  8.25%    $ 1,509,552  $ 125,048  8.29%    $ 1,437,300  $ 118,197  8.22%
                                ===========  =========           ===========  =========           ===========  =========       
Interest bearing liabilities:
   Demand deposits              $   173,153  $   3,794  2.19%    $   128,703  $   2,054  1.60%    $    97,181  $   2,016  2.07%
   Money market accounts             75,558      3,439  4.55          70,496      3,290  4.67          77,606      2,245  2.89
   Savings deposits                 135,309      5,387  3.98         132,615      5,520  4.16         134,636      6,239  4.63
   Other time deposits              587,261     33,520  5.71         611,038     35,468  5.80         585,536     34,208  5.84
   Other borrowings                 433,399     24,482  5.65         283,167     16,495  5.83         218,815     12,708  5.81
                                -----------  ---------           -----------  ---------           -----------  ---------      
      Total                     $ 1,404,680  $  70,622  5.03%    $ 1,226,019  $  62,827  5.12%    $ 1,113,774  $  57,416  5.16%
                                ===========  =========           ===========  =========           ===========  =========       
Net interest income and
   spread                                    $  68,613  3.22%                 $  62,221  3.17%                 $  60,781  3.06%
                                             =========                        =========                        =========       
Net yield on interest
   earning assets (5)                                   4.07%                            4.12%                            4.23%
</TABLE>
    


                                       8
<PAGE>   11


(1)      Includes loan fees of approximately $3,482,000 in 1998, $2,375,000 in 
         1997 and $2,307,000 in 1996.

(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 1998, 1997
         and 1996. The adjustments made to convert to a fully taxable
         equivalent basis were $2,324,000 for 1998, $2,043,000 for 1997, and
         $1,826,000 for 1996.
    

(5)      Represents net interest income as a percentage of total average 
         interest earning assets.



                                       9
<PAGE>   12

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, 1998 and 1997. 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 1998, 1997 and 1996.

                                    Table 2
                       Volume and Rate Variance Analysis

   
<TABLE>
<CAPTION>


(Dollars in thousands)                  From Dec. 31, 1997 to Dec. 31, 1998              From Dec. 31, 1996 to Dec. 31, 1997   
                                    -------------------------------------------      ------------------------------------------
                                                Increase (Decrease)                              Increase (Decrease)          
                                                 Due to Change in                                 Due to Change in 
                                    --------------------------------------------     ------------------------------------------
                                     Rate/                                Total       Rate/                               Total
                                    Volume        Rate       Volume       Change     Volume      Rate       Volume       Change
                                    ------     -------     --------     --------     ------     -----     --------     --------

<S>                                 <C>        <C>         <C>          <C>          <C>        <C>       <C>          <C>  
Interest income:
 Loans                               $(502)    $(2,913)    $ 18,769     $ 15,856       $(39)    $(352)    $ 10,728     $ 10,376
 Securities available for
        sale - taxable                 (53)        497       (1,623)      (1,126)        60      (284)      (3,721)      (4,005)
 Securities available for
        sale - non-taxable             (12)        (77)         963          886        (11)      (97)         637          540
 Investment securities held to
        maturity - taxable             766        (383)        (383)        (766)        (2)      (15)          74           59
 Investment securities held to
        maturity - nontaxable           83         (41)         (42)         (83)        83        42           42           84
                                     -----     -------     --------     --------       ----     -----     --------     --------
 Total securities                      784          (4)      (1,085)      (1,089)       130      (354)      (2,968)      (3,322)
 Federal funds sold                      0          18           12           30         (1)        8          (98)         (90)
 Interest bearing bank deposits        100         (89)        (521)        (610)        (2)     (125)          12         (113)
                                     -----     -------     --------     --------       ----     -----     --------     --------
 Total interest income                 382      (2,988)      17,175       14,187         88      (823)       7,674        6,851
                                     -----     -------     --------     --------       ----     -----     --------     --------

Interest expense:
 Demand deposits                       265         898          842        1,740       (151)     (540)         578           38
 Money market accounts                  (6)        (84)         233          149       (126)     1314         (269)        1,045
 Savings deposits                       (5)       (243)         110         (133)        10      (630)         (89)        (719)
 Other time deposits                    23        (579)      (1,369)      (1,948)       (10)     (225)       1,485        1,260
 Other borrowings                     (265)       (632)       8,619        7,987         11        44        3,743        3,787
                                     -----     -------     --------     --------       ----     -----     --------     --------
Total interest expense                  12        (640)       8,435        7,795       (266)      (38)       5,449        5,411
                                     -----     -------     --------     --------       ----     -----     --------     --------
 Net interest income                 $ 370     $(2,348)     $ 8,740     $  6,392      $ 354     $(785)    $  2,225     $  1,440
                                     =====     =======     ========     ========       ====     =====     ========     ========
</TABLE>
    

                                      10
<PAGE>   13


Interest Rate Sensitivity

The following table presents the Corporations's interest sensitivity analysis
for December 31, 1998 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, 1998. Demand deposits, money market
accounts and certain savings deposits are presented in the earliest repricing
window because the rates are subject to immediate repricing.



                                    Table 3
                           Interest Rate Sensitivity
                            As of December 31, 1998

<TABLE>
<CAPTION>
                                                                                                          Non-
                                                                                                       Sensitive
                                                                                                          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
                                   -------------------------------------------------------------------------------------------
<S>                                <C>        <C>        <C>        <C>            <C>        <C>       <C>         <C>
Interest-Earning Assets
  Interest-bearing due
     from banks                    $  11,713  $      --  $      --  $    11,713    $      --  $      --  $      --  $   11,713
   Fed funds sold                      6,402         --         --        6,402           --         --         --       6,402
   Securities available
     for sale, at
     amortized cost:
     Taxable                          24,745      9,746     19,553       54,044       54,427     35,860     83,409     227,740
     Nontaxable                        2,385      4,861      1,664        8,910        4,027     30,728     50,351      94,016
   Loans                             319,160     35,039     68,890      423,089      105,157    353,335    541,775   1,423,356
                                   ---------  ---------  ---------  -----------    ---------  ---------   --------  ----------
     Total earning assets            364,405     49,646     90,107      504,158      163,611    419,923    675,535   1,763,227
                                   ---------  ---------  ---------  -----------    ---------  ---------   --------  ----------

  Interest-Bearing Liabilities
   Interest-bearing deposits:
   Demand deposits                   132,581         --         --      132,581           --         --         --     132,581
   Money market accounts             142,077         --         --      142,077           --         --         --     142,077
   Savings deposits                   81,496      9,276     11,590      102,362       31,682        579         --     134,623
   Other time deposits               174,865    157,354    172,176      504,395       44,491     45,275         74     594,235
Other borrowings                     242,660     51,060     31,213      324,933          426    115,705     26,290     467,354
                                   ---------  ---------  ---------  -----------    ---------  ---------   --------  ----------
   Total interest-bearing
    liabilities                      773,679    217,690    214,979    1,206,348       76,599    161,559     26,364   1,470,870
                                   ---------  ---------  ---------  -----------    ---------  ---------  ---------  ----------
   Interest sensitivity
     gap                           $(409,274) $(168,044) $(124,872) $  (702,190)   $  87,012  $ 258,364  $ 649,171  $  292,357
                                   =========  =========  =========  ===========    =========  =========  =========  ==========
     Cumulative gap                $(409,274) $(577,318) $(702,190) $  (702,190)   $(615,178) $(356,814) $ 292,357  $  292,357
                                   =========  =========  =========  ===========    =========  =========  =========  ==========
  Ratio of earning assets
   to interest-bearing
   liabilities                         47.10%     22.81%     41.91%       41.79%      213.59%    259.92%
</TABLE>



                                      11
<PAGE>   14


Distribution of Assets and Liabilities

         The following table shows the distribution of the Corporation's
assets, liabilities and shareholders' equity at December 31, 1998, 1997, and
1996. Average balances were calculated based on daily averages.

                                    Table 4
                             Average Balance Sheet


<TABLE>
<CAPTION>

                                                                        Years Ended December 31,                          
                                        --------------------------------------------------------------------------------------
                                                    1998                         1997                         1996            
                                        ----------------------------  --------------------------  ----------------------------
  (Dollars in thousands)                   Average       Percentage     Average      Percentage     Average        Percentage
                                           Balance      Distribution    Balance     Distribution    Balance       Distribution
                                        -------------   ------------  -----------   ------------  -----------     ------------
<S>                                     <C>             <C>           <C>           <C>           <C>             <C>
 Assets:
 Cash and due from banks                  $    34,609         1.9%    $    28,373         1.8%    $    24,650         1.6%
 Interest bearing bank deposits                 3,902         0.2          13,835         0.9          13,642         0.9
 Investment securities - taxable                   --         0.0          13,375         0.8          12,093         0.8
 Investment securities - nontaxable                --         0.0           1,251         0.1              --          --
 Securities available for sale
   - taxable                                  221,860        12.5         246,937        15.6         304,922        20.3
 Securities available for sale
   - nontaxable                                84,673         4.8          72,468         4.6          64,511         4.3
 Loans, net (1)                             1,358,949        76.3       1,143,448        72.1       1,022,119        68.1
 Federal funds sold                            18,450         1.0          18,238         1.1          20,013         1.3
 Other assets                                  58,077         3.3          47,506         3.0          41,093         2.7
                                          -----------       -----     -----------       -----     -----------       -----
  Total                                   $ 1,780,545       100.0%    $ 1,585,431       100.0%    $ 1,503,043       100.0%
                                          ===========       =====     ===========       =====     ===========       =====

Liabilities and Shareholders' Equity
 Deposits:
  Demand (2)                              $   260,670        14.6%    $   189,807        12.0%    $   177,550        11.8%
  Savings                                     135,309         7.6         132,615         8.4         134,636         8.9
  Insured money market                         75,558         4.2          86,215         5.4          77,606         5.2
  Time                                        587,261        33.0         611,038        38.5         585,536        39.0
 Other borrowings                             433,399        24.4         283,167        17.9         218,815        14.6
 Other liabilities                             37,453         2.1          25,874         1.6          27,646         1.8
 Shareholders' equity                         250,895        14.1         256,715        16.2         281,254        18.7
                                          -----------       -----     -----------       -----     -----------       -----
  Total                                   $ 1,780,545       100.0%    $ 1,585,431       100.0%    $ 1,503,043       100.0%
                                          ===========       =====     ===========       =====     ===========       =====
</TABLE>


(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
<PAGE>   15


Securities Available for Sale

        The following table shows, as of December 31, 1998, 1997 and 1996, 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

<TABLE>
<CAPTION>

(Dollars in thousands)                                         December 31,            
                                                  -------------------------------------
                                                    1998          1997          1996
                                                  ---------     ---------     ---------
<S>                                               <C>           <C>           <C>
U.S. government obligations                       $  10,205     $  22,333     $  39,095
U.S. government agency obligations                  154,653       120,739       125,844
Mortgage-backed securities                           36,200        59,548        67,711
State and municipal obligations                      97,435        85,532        72,050
Equity securities                                    33,306        27,413        21,125
                                                  ---------     ---------     ---------
                                                  $ 331,799     $ 315,565     $ 325,825
                                                  =========     =========     =========
</TABLE>

Investment Securities Held to Maturity

        The following table shows, as of December 31, 1998, 1997 and 1996, the
amortized cost (face amount, plus unamortized premiums, less unamortized
discounts), of U.S. Government obligations, included in investment securities
held to maturity.

                                    Table 6
                             Investment Securities
                                Held to Maturity

<TABLE>
<CAPTION>

(Dollars in thousands)                              December 31,         
                                         ---------------------------------
                                           1998         1997         1996
                                         -------      -------      -------
<S>                                      <C>          <C>          <C>
U.S. government obligations              $     -      $     -      $13,940
                                         -------      -------      -------
                                         $     -      $     -      $13,940
                                         =======      =======      =======
</TABLE>




                                      13
<PAGE>   16


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, 1998. 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 1998.



                                    Table 7
                         Securities Available for Sale
                            As of December 31, 1998
(Dollars in thousands)

<TABLE>
<CAPTION>

                                                                             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
                         --------      -----     --------     -----      --------       -----    ---------       -----
<S>                      <C>           <C>       <C>          <C>        <C>            <C>      <C>             <C>
U.S. government
 obligations             $  4,027      7.45%     $  6,177      6.98%     $     --          --%   $      --          --%
U.S. government
 agency obligations         4,030      6.94        65,320      5.97        44,439        6.29       40,864        6.86
Mortgage-backed
 securities                    --        --           152      6.38           143        8.65       35,904        7.38
State & municipal
 obligations                  757      6.86        26,124      8.09        42,171        7.55       28,383        7.32
Equity securities          17,880      3.09            --        --            --          --       15,426        4.83
                         --------                --------                --------                ---------
 Total                   $ 26,694      4.44%     $ 97,773      6.60%     $ 86,753        6.91%   $ 120,577        6.86%
                         ========                ========                ========                =========
</TABLE>



        As of December 31, 1998, 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 Corporation.

        As of December 31, 1998, there were no investment securities classified
as held to maturity.



                                      14
<PAGE>   17


Loan Portfolio

         The table below summarizes loans in the classifications indicated as
of December 31, 1998, 1997, 1996, 1995, and 1994.

                                    Table 8
                           Loan Portfolio Composition

<TABLE>
<CAPTION>

(Dollars in thousands)                                            December 31,                                  
                                -------------------------------------------------------------------------------
                                    1998              1997             1996             1995             1994 
                                -----------       -----------       -----------       ---------       ---------

<S>                             <C>               <C>               <C>               <C>             <C>
Commercial, financial and
  agricultural                  $    94,425       $    80,675       $    63,686       $  66,944       $  61,054
Real estate - construction
  and development                   180,475           132,758           102,460          84,591          76,635
Real estate - mortgage            1,077,044           959,785           863,931         696,317         549,116
Installment                          70,732            88,546            92,567          79,888          74,096
                                -----------       -----------       -----------       ---------       ---------
Total loans                       1,422,676         1,261,764         1,122,644         927,740         760,901
                                -----------       -----------       -----------       ---------       ---------
Less - allowance for loan
  losses                            (15,554)          (15,263)          (14,140)        (13,552)        (13,144)
Unearned income                        (155)             (273)             (193)           (296)           (201)
                                -----------       -----------       -----------       ---------       ---------
                                                                                                           
Loans, net                      $ 1,406,967       $ 1,246,228       $ 1,108,311       $ 913,892       $ 747,556
                                ===========       ===========       ===========       =========       =========
</TABLE>




                                      15
<PAGE>   18


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, 1998. This table
excludes non-accrual loans.

                                    Table 9
                         Maturities and Sensitivity to
                            Change in Interest Rates

<TABLE>
<CAPTION>

                                                 December 31, 1998               
                             ---------------------------------------------------------
(Dollars in thousands)                         After l
                               l year       Year through      After
                              or less         5 Years        5 Years           Total
                             ---------      ------------     --------        ---------

<S>                          <C>            <C>              <C>             <C>
Commercial, financial
  and agricultural           $  42,560        $ 45,114       $  6,751        $  94,425
Real estate
  construction and
  development                  118,706          50,497         11,272          180,475
                             ---------        --------       --------        ---------
  Total                      $ 161,266        $ 95,611       $ 18,023        $ 274,900
                             =========        ========       ========        =========
</TABLE>


         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:

<TABLE>
<CAPTION>

                                                          December 31, 1998 
                                                          -----------------
(Dollars in thousands)

<S>                                                       <C>
Predetermined interest rate                                   $ 77,398
Floating or adjustable interest rate                            36,236
</TABLE>



                                      16
<PAGE>   19


Non-performing Loans

         Non-performing loans include non-accrual loans, restructured loans and
accruing loans which are contractually 90 days or more past due.

         See "Management's Discussion and Analysis of Financial Condition and
Results of Operations - Balance Sheet Analysis - Asset Quality" in the
Corporation's 1998 Annual Report to Shareholders, incorporated herein by
reference, for additional information.

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, 1998, 1997, 1996, 1995, and 1994.

                                    Table 10
                    Accruing Loans 90 Days or More Past Due

<TABLE>
<CAPTION>
                                         Accruing                       Percentage of
                                         Loans 90                       Such Loans to
                                         Days or        Gross           Gross Loans
(Dollars in thousands)                   More           Loans           Outstanding
                                         Past Due       Outstanding     By Category  
                                         --------       -----------     -------------
<S>                                      <C>            <C>             <C>
December 31, 1998
  Commercial, financial and
   agricultural                          $    10        $    94,425         .01%
  Real estate - construction
   and development                           215            180,475         .12
  Real estate - mortgage                   1,916          1,077,044         .18
  Installment                                129             70,732         .18
                                         -------        -----------       
   Total                                 $ 2,270        $ 1,422,676         .16%
                                         =======        ===========     

December 31, 1997
  Commercial, financial and
   agricultural                          $   999        $    80,675        1.24%
  Real estate - construction
   and development                            33            132,758         .02
  Real estate - mortgage                     858            959,785         .09
   Installment                               219             88,546         .25
                                         -------        -----------       
    Total                                $ 2,109        $ 1,261,764         .17%
                                         =======        ===========     

December 31, 1996
  Commercial, financial and
   agricultural                          $    34        $    63,686         .05%
  Real estate - construction
   and development                            49            102,460         .05
  Real estate - mortgage                     469            863,931         .05
  Installment                                133             92,567         .14
                                         -------        -----------       
   Total                                 $   685        $ 1,122,644         .06%
                                         =======        ===========     

December 31, 1995
  Commercial, financial and
   agricultural                          $    27        $    66,944         .04%
  Real estate - construction
   and development                            47             84,591         .06
  Real Estate - mortgage                     163            696,317         .02
  Installment                                164             79,888         .21
                                         -------        -----------       
   Total                                 $   401        $   927,740         .04%
                                         =======        ===========     
</TABLE>

Table 10 is continued on next page.



                                      17
<PAGE>   20



                              Table 10 (Continued)
                    Accruing Loans 90 Days or More Past Due

<TABLE>
<CAPTION>

                                         Accruing                      Percentage of
                                         Loans 90                      Such Loans to
                                         Days or        Gross          Gross Loans
(Dollars in thousands)                   More           Loans          Outstanding
                                         Past Due       Outstanding    By Category  
                                         --------       -----------    -------------
<S>                                      <C>            <C>            <C>
December 31, 1994
  Commercial, financial and
   agricultural                          $   219        $    61,054       .36%
  Real estate - construction
   and development                            --             76,635        --
  Real estate - mortgage                   1,109            549,116       .20
  Installment                                224             74,096       .30
                                         -------        -----------       
   Total                                 $ 1,552        $   760,901       .20%
                                         =======        ===========    
</TABLE>

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 Corporation's non-accrual loans and restructured loans as of the
dates indicated.

                                    Table 11
                       Non-accrual and Restructured Loans

<TABLE>
<CAPTION>

                                                                  December 31,                      
                                            --------------------------------------------------------
                                              1998       1997       1996         1995         1994  
                                            -------    -------     -------     --------     --------
<S>                                         <C>        <C>         <C>         <C>          <C>
(Dollars in thousands)

Non-accrual loans

Principal balance outstanding               $ 5,758    $ 6,119     $ 7,949     $ 10,497     $ 11,258
                                            =======    =======     =======     ========     ========
Interest income recorded during
  the year                                  $   103    $   317     $    94     $    267     $    386
Interest income that would have
  been recorded if the loans had
  been current and accruing                 $   436    $   701     $ 1,057     $  1,120     $  1,407

Restructured loans

Principal balance outstanding               $   577    $   587     $   643     $    825     $  2,747
                                            =======    =======     =======     ========     ========
Interest income recorded during
  the year                                  $    21    $    66     $    61     $     95     $    230
Interest income that would have
  been recorded if the loans had
  been current and accruing                 $    21    $    66     $    61     $     77     $    260
</TABLE>



                                      18
<PAGE>   21


Summary of Loan Loss and Recovery Experience

         The table below presents certain data for the years ended December 31,
1998, 1997, 1996, 1995, and 1994, 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
   
<TABLE>
<CAPTION>

(Dollars in thousands)                                          Years Ended December 31,                        
                                      ---------------------------------------------------------------------------
                                          1998            1997             1996            1995           1994  
                                      -----------      -----------      -----------      ---------      ---------
<S>                                   <C>              <C>              <C>              <C>            <C>
Average loans, net of unearned
  income                              $ 1,358,949      $ 1,143,448      $ 1,022,119      $ 841,560      $ 758,635
                                      ===========      ===========      ===========      =========      =========
Allowance for loan losses:
  Beginning balance                   $    15,263      $    14,140      $    13,552      $  13,144      $  12,433

 Add provision for loan losses              2,376            2,684            1,481          2,328          1,591
                                      -----------      -----------      -----------      ---------      ---------
                                           17,639           16,824           15,033         15,472         14,024
                                      -----------      -----------      -----------      ---------      ---------
  Loan charge-offs:
   Commercial, financial and
     agricultural                             751              712              600          1,599            770
   Real estate - construction
     and development                          390               --               --            349            148
   Real estate - mortgage                     101              251              111            212            147
   Installment                              1,495            1,298            1,099            539            412
                                      -----------      -----------      -----------      ---------      ---------
                                            2,737            2,261            1,810          2,699          1,477
                                      -----------      -----------      -----------      ---------      ---------
  Recoveries of loans previously
   charged-off:
   Commercial, financial and
     agricultural                             285              135              654             58            272
   Real estate - construction
     and development                           76               --                3             25              1
   Real estate - mortgage                      --               44               27              3            190
   Installment                                291              252              233            693             63
                                      -----------      -----------      -----------      ---------      ---------
                                              652              431              917            779            526
                                      -----------      -----------      -----------      ---------      ---------
     Loan charge-offs, net                  2,085            1,830              893          1,920            951
                                      -----------      -----------      -----------      ---------      ---------
  Adjustment for merged banks                  --              269               --             --             71
                                      -----------      -----------      -----------      ---------      ---------
  Ending balance                      $    15,554      $    15,263      $    14,140      $  13,552      $  13,144
                                      ===========      ===========      ===========      =========      =========

Net charge-offs to average loans              .15%             .16%             .09%           .23%           .13%
Allowance for loan losses to
  gross loans at year-end                    1.09             1.20             1.25           1.45           1.73
</TABLE>
    

         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 1998
Annual Report to Shareholders, incorporated herein by reference.



                                      19
<PAGE>   22


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, 1998, 1997, 1996, 1995, and 1994. 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 1998 Annual
Report to Shareholders, incorporated herein by reference.

                                    Table 13
                           Allowance for Loan Losses

<TABLE>
<CAPTION>

                                                                        Percentage of
(Dollars in thousands)                                   Percentage    Gross Loans in
                                           Allowance       of Total     Each Category
                                              Amount      Allowance    to Total Loans
                                           ---------     ----------    --------------
<S>                                        <C>           <C>           <C>

December 31, 1998

Type of Loan:
 Commercial, financial and
  agricultural                              $  2,085             13%                7%
 Real estate - construction and
  development                                  2,567             17                13
 Real estate - mortgage                       10,122             65                75
 Installment                                     780              5                 5
                                            --------            ---               ---
  Total                                     $ 15,554            100%              100%
                                            ========            ===               ===

December 31, 1997

Type of Loan:
 Commercial, financial and
  agricultural                              $  1,664             11%                6%
 Real estate - construction and
  development                                  2,421             16                11
 Real estate - mortgage                       10,028             66                76
 Installment                                   1,155              7                 7
                                            --------            ---               ---
  Total                                     $ 15,268            100%              100%
                                            ========            ===               ===

December 31, 1996

Type of Loan:
 Commercial, financial and
  agricultural                              $  1,329              9%                6%
 Real estate - construction and
  development                                  3,117             22                 9
 Real estate - mortgage                        8,869             63                77
 Installment                                     825              6                 8
                                            --------            ---               ---
  Total                                     $ 14,140            100%              100%
                                            ========            ===               ===
</TABLE>



Table 13 is continued on next page.



                                      20
<PAGE>   23



                                    Table 13
                     Allowance for Loan Losses (Continued)

<TABLE>
<CAPTION>

                                                                        Percentage of
(Dollars in thousands)                                   Percentage    Gross Loans in
                                           Allowance       of Total     Each Category
                                             Amount       Allowance    to Total Loans
                                           ---------     ----------    --------------
<S>                                        <C>           <C>           <C>

December 31, 1995

Type of Loan:
 Commercial, financial and
  agricultural                              $    936              7%                7%
 Real estate - construction and
  development                                  3,839             28                 9
 Real estate - mortgage                        7,851             58                75
 Installment                                     926              7                 9
                                            --------            ---               ---
 Total                                      $ 13,552            100%              100%
                                            ========            ===               ===

December 31, 1994

Type of Loan:
 Commercial, financial and
  agricultural                              $  1,516             12%                8%
 Real estate - construction and
  development                                  3,970             30                 9
 Real estate - mortgage                        6,608             50                73
 Installment                                   1,050              8                10
                                            --------            ---               ---
 Total                                      $ 13,144            100%              100%
                                            ========            ===               ===
</TABLE>



                                      21
<PAGE>   24

Deposits

The Bank primarily serves 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, 1998, 1997, and 1996. Average balances were
calculated based on daily averages.

                                    Table 14
                                    Deposits
   
<TABLE>
<CAPTION>

                                                                  As of December 31,                                          
                             -------------------------------------------------------------------------------------------------
                                           1998                          1997                               1996        
                             ------------------------------  -------------------------------    ------------------------------
                                                       Avg.                             Avg.                              Avg.
(Dollars in thousands)         Average    Interest     Rate    Average     Interest     Rate     Average     Interest     Rate
                               Balance    Expense      Paid    Balance      Expense     Paid     Balance     Expense      Paid
                             -----------  --------     ----  -----------   --------     ----    ---------    --------     ----
<S>                          <C>          <C>          <C>   <C>           <C>          <C>     <C>          <C>          <C>
Non-interest bearing demand
 deposits                    $   125,178  $     --      --   $   116,990    $     --      --    $  88,820    $     --       --
 
Interest bearing deposits:
  Demand deposits                173,153     3,794     2.19      128,703       2,054     1.60%     97,181       2,016     2.07%
  Insured money markets           75,558     3,439     4.55       70,496       3,290     4.67      77,606       2,245     2.89
  Savings deposits               135,309     5,387     3.98      132,615       5,520     4.16     134,636       6,239     4.63
  Time deposits                  587,261    33,520     5.71      611,038      35,468     5.80     585,536      34,208     5.84
                             -----------  --------           -----------    --------            ---------    --------
   Total                         971,281    46,140               942,852      46,332              894,959    $ 44,708    
                             -----------  --------           -----------    --------            ---------    --------

   Total deposits            $ 1,096,459  $ 46,140           $ 1,059,842    $ 46,332            $ 983,779    $ 44,708    
                             ===========  ========           ===========    ========            =========    ========
</TABLE>
    

As of December 31, 1998, domestic time deposits of $100,000 or more totaled
$201,918,000, with the following maturities: $89,846,436, three months or less;
$47,105,916, over three months through six months; $38,983,074, over six months
through twelve months and $25,982,574, over one year.



                                      22
<PAGE>   25


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, 1998, 1997 and 1996.

                                    Table 15
                                Other Borrowings


<TABLE>
<CAPTION>
                                                      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
                                       ---------      --------            ---------        ----           -----------
<S>                                    <C>            <C>                 <C>              <C>            <C>

         1998

Federal funds purchased,
  securities sold under
  agreements to purchase
  and FHLB borrowings                  $ 469,944         5.51%            $ 434,260         5.64%            $ 484,927
                                       =========                          =========                          =========


         1997

Federal funds purchased,
  securities sold under
  agreements to purchase
  and FHLB borrowings                  $ 350,079         5.59%            $ 283,167         5.88%            $ 413,789
                                       =========                          =========                          =========


         1996

Federal funds purchased,
  securities sold
  under agreements to
  repurchase and
  FHLB borrowings                      $ 309,895         6.07%            $ 218,948         5.84%            $ 259,036
                                       =========                          =========                          =========
</TABLE>



         At December 31, 1998, the FCNB and Home Federal had two available
lines of credit with the FHLB totaling $405,000,000 with approximately
$345,000,000 outstanding. The outstanding amounts consisted of $202,152,000
maturing in 1999, $857,000 maturing in 2001, $102,000,000 maturing in 2002,
$13,500,000 maturing in 2003, $26,000,000 maturing in 2008, and $490,000
maturing in 2011. At December 31, 1998, such amounts were outstanding at market
interest rates for the specific advance program and maturity. In addition, the
FHLB requires banks 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.

See also note 9 to Consolidated Financial Statements.



                                      23
<PAGE>   26


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, 1998, 1997, and 1996. Averages are based on daily balances.

                                    Table 16
                          Return on Equity and Assets

<TABLE>
<CAPTION>

                                                               December 31, 
                                            ---------------------------------------------------
(Dollars in thousands                           1998                1997                1996    
 except per share amounts)                  -----------         -----------         -----------
 
<S>                                         <C>                 <C>                 <C>
Net income                                  $     9,236         $    19,171         $    17,433
Average shareholders' equity                    250,895             256,715             281,254
Average total assets                          1,780,545           1,585,431           1,503,043
Dividends per share (1)                            0.61                0.53                0.50
Basic net income per share                         0.51                1.06                0.95
Diluted net income per share                       0.50                1.03                0.94

Return on average assets                           0.52%               1.21%               1.16%
Return on average equity                           3.68                7.47                6.20
Dividend payout ratio (1)                        119.61*              50.00*              52.63*
Average equity to average assets ratio            14.09               16.19               18.71
</TABLE>

*Excludes HFNC Financial information for comparison purposes.

(1)      Computed using the Corporation's historical dividends declared per 
share. Dividends declared per share were $0.61 per share, $0.53 per share and
$0.50 per share for the years ended December 31, 1998, 1997 and 1996,
respectively. Dividends declared per share by HFNC were $0.24, $5.28 per share
and $0.12 per share for the years ended December 31, 1998, 1997 and 1996, as
adjusted to conform to the Corporation's December 31 fiscal year. Dividends
declared per share by HFNC in the year ended December 31, 1997 includes a
special distribution of $5.00 per share to HFNC shareholders, substantially all
of which was deemed to be a return of capital to shareholders.



                                      24
<PAGE>   27

                                   SIGNATURE

         Pursuant to the requirements of the Securities and Exchange Act of 
1934, as amended, the Registrant has caused this report to be signed on its 
behalf by the undersigned hereunto duly authorized.

                                             FIRST CHARTER CORPORATION
                                             Registrant

                                             By: /s/ ROBERT O. BRATTON
Date: March 24, 1999                             Robert O. Bratton
                                                 Executive Vice President
                                                   and Chief Financial Officer