##### Table of Contents



UNITED STATES
 SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
  FORM 10-K
  ANNUAL REPORT PURSUANT TO SECTIONS 13 OR 15 (d) OF
    THE SECURITIES EXCHANGE ACT
    OF 1934
  þ ANNUAL
    REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934
 For the Fiscal Year Ended
    December 31, 2007
 OR
 o 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(State or Other Jurisdiction of
    Incorporation or Organization)

56-1355866(I.R.S. Employer
    Identification No.)10200 David Taylor Drive, Charlotte, NC(Address of Principal Executive Offices)

28262-2373(Zip Code)   Registrants telephone number,
    including area code(704) 688-4300
  Securities registered pursuant to
    Section 12(b) of the Act:
  Title of each class

Name of each exchange on which registeredN/A

N/A   Securities registered pursuant to
    Section 12(g) of the Act:
 Title of Each Class
  Common stock, no par value
  Series X Junior
    Participating Preferred Stock Purchase Rights
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2
  Large accelerated filer
    þ

Accelerated
    filer o

Non-accelerated
    filer o

Smaller reporting
    company o(Do not check if asmaller reporting company)   Rule 12b-2 o þ
      Documents Incorporated by
    Reference
  Form 10-K Form 10-K/A Form 10-K,




---



##### 



First Charter
    CorporationFORM 10-K
    FISCAL YEAR ENDED DECEMBER 31, 2007
  Form 10-K, Form 10-Q, Form 8-K,
    TABLE OF
    CONTENTS
   
 PagePART IItem 1.


Business


3Item 1A.


Risk Factors


9Item 1B.


Unresolved Staff Comments


18Item 2.


Properties


19Item 3.


Legal Proceedings


19Item 4.


Submission of Matters to a Vote of Security
    Holders


19Item 4A.


Executive Officers of the Registrant


20PART IIItem 5.


Market For Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


21Item 6.


Selected Financial Data


23Item 7.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


23Item 7A.


Quantitative and Qualitative Disclosures about
    Market Risk


61Item 8.


Financial Statements and Supplementary Data


62Item 9.


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


111Item 9A.


Controls and Procedures


111Item 9B.


Other Information


113PART IIIItem 10.


Directors, Executive Officers and Corporate
    Governance


114Item 11.


Executive Compensation


114Item 12.


Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


114Item 13.


Certain Relationships and Related Transactions,
    and Director Independence


114Item 14.


Principal Accountant Fees and Services


114PART IVItem 15.


Exhibits and Financial Statement Schedules


115Exhibit 12.1Exhibit 21.1Exhibit 23.1Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2   2




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##### Table of Contents



Part I  Item 1.
    Business  General
  (704) 688-4300.
             3




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Note 25
  Competition
    Government
    Supervision and Regulation
  General.
   4




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##### Table of Contents



Gramm-Leach-Bliley Financial Modernization Act of
    1999.
  Restrictions on Bank Holding Companies.
      Interstate Banking and Branching
    Legislation.
 5




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##### Table of Contents



de
    novo
  Consumer Protection.
      The USA PATRIOT Act.
  Sarbanes-Oxley Act of 2002.
 6




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Capital and
    Operational Requirements
      Prompt Corrective Action under FDICIA.
   7




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##### Table of Contents



Note 23
    Distributions. Note 23
    Deposit Insurance.
     8




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Source of Strength.
  Future Legislation.
  Regulatory Recommendations.
  Other
    Considerations
  Item 1A. Risk Factors Factors that May Affect Future Results Managements Discussion and Analysis of
    Financial Condition and Results of Operations
  Available
    Information
  Form 10-K, Form 10-Q, Form 8-K,
  Item 1A.
    Risk
    Factors   9




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Risks Related to
    the Merger Agreement
  The Merger
    Agreement with Fifth Third Limits the Corporations Ability
    to Pursue Alternatives.
      The
    Corporations Business and Common Stock Price May be
    Adversely Affected if the Proposed Merger with Fifth Third is
    not Completed.
    
    the Corporations common stock price could decline if the
    proposed merger with Fifth Third is abandoned to the extent that
    the current common stock price includes a premium based on the
    assumption that the proposed merger will be completed;
    the Corporations customers, prospective customers, and
    investors in general may view a failure to complete the proposed
    merger as a poor reflection on the Corporations business
    or its prospects;
    certain of the Corporations suppliers and business
    partners may have sought to change or terminate their
    relationships with the Corporation as a result of the proposed
    merger.
    key employees may have sought other employment opportunities;
    activities and uncertainties relating to the proposed merger may
    have caused a loss of income and market share that the
    Corporation may not be able to regain if the proposed merger
    does not occur;
    the Corporation could be required to pay Fifth Third a
    $32.5 million termination fee in specified circumstances,
    as disclosed in the Merger Agreement; and
    the Corporation would have incurred legal, accounting, and other
    merger related fees with no associated merger-related benefit. 10




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Risks Related to the Corporations Internal Controls and
    the Failure to Timely File its 2006
    Form 10-K
    with the SEC
  The Corporation
    May be Subjected to Negative Publicity That May Adversely Affect
    its Business.
  Form 10-K
  The Corporation
    Could Face Additional Adverse Consequences as a Result of its
    Late SEC Filing.
  Form 10-K Form S-3
  Risks Related to
    the Corporations Business
  The Corporation
    is Subject to Interest Rate Risk.
    Market Risk
    Management  Asset-Liability Management and Interest
    Rate Risk Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations
 11




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The Corporation
    is Subject to Lending Risk.
  and/or
  Balance Sheet Analysis - Loan Portfolio Managements Discussion and
    Analysis of Financial Condition and Results of Operations
  The
    Corporations Allowance for Loan Losses May be
    Insufficient.
  Credit Risk Management 
    Allowance for Loan Losses Managements Discussion and Analysis of Financial
    Condition and Results of Operations
  The Corporation
    is Subject to Environmental Liability Risk Associated with
    Lending Activities.
   12




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The
    Corporations Profitability Depends Significantly on
    Economic Conditions in its Markets of Operation.
    The Corporation
    Operates in a Highly Competitive Industry and Market
    Areas.
      
    the ability to develop, maintain and build upon long-term
    customer relationships based on top quality service, high
    ethical standards and safe, sound assets;
    the ability to expand the Corporations market position; 13




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
    the scope, relevance and pricing of products and services
    offered to meet customer needs and demands;
    the rate at which the Corporation introduces new products and
    services relative to its competitors; and
    customer satisfaction with the Corporations level of
    service.    The Corporation
    Is Subject to Extensive Government Regulation and
    Supervision.
  and/or and/or Government Supervision and Regulation Business Note 23
  New Lines of
    Business or New Products and Services May Subject the
    Corporation to Additional Risks.
  and/or and/or and/or
  The Corporation
    Relies on Dividends from the Bank for Most of its
    Revenue.
  and/or
 14




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Government Supervision and Regulation Business Note 23
  Potential
    Acquisitions May Disrupt the Corporations Business and
    Dilute Shareholder Value.
    
    potential exposure to unknown or contingent liabilities of the
    target company;
    exposure to potential asset quality issues of the target company;
    difficulty and expense of integrating the operations and
    personnel of the target company;
    potential disruption to the Corporations business;
    potential diversion of the time and attention of the
    Corporations management;
    the possible loss of key employees and customers of the target
    company;
    difficulty in estimating the value of the target
    company; and
    potential changes in banking or tax laws or regulations that may
    affect the target company.    and/or
  The Corporation
    May Not Be Able to Attract and Retain Skilled
    Personnel.
    The
    Corporations Information Systems May Experience a Failure,
    Interruption, or Breach in Security.
   15




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The Corporation
    Continually Encounters Technological Advancements.
    The Corporation
    is Subject to Claims and Litigation Pertaining to Fiduciary
    Responsibility.
  and/or
  The Corporation
    May Need Additional Capital Resources in the Future Which May
    Not Be Available When Needed or At All.
    Severe Weather,
    Natural Disasters and Other Adverse External Events Could
    Significantly Impact the Corporations Business.
  and/or
 16




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Risks Associated
    With The Corporations Common Stock
  The
    Corporations Common Stock Price Can Be Volatile.
    
    actual or anticipated variations in quarterly results of
    operations;
    recommendations by securities analysts;
    operating and stock price performance of other financial
    institutions that investors deem comparable to the Corporation;
    news reports relating to trends, concerns and other issues in
    the financial services industry;
    perceptions in the marketplace regarding the Corporation
    and/or its
    competitors;
    new technology used, or services offered, by competitors;
    significant acquisitions, business combinations or capital
    commitments by or involving the Corporation or its competitors;
    failure to integrate acquisitions or realize anticipated
    benefits from acquisitions;
    changes in government regulations;
    geopolitical conditions such as acts or threats of terrorism or
    military conflicts; and
    speculation regarding the status of the pending merger with
    Fifth Third.    The Trading
    Volume in the Corporations Common Stock is Less Than That
    of Other Larger Financial Services Companies.
    An Investment in
    the Corporations Common Stock is Not an Insured
    Deposit.
  Risk Factors
 17




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The
    Corporations Articles of Incorporation, Bylaws and
    Stockholder Protection Rights Agreement, as well as Certain
    Banking Laws, May Have an Anti-Takeover Effect.
    Risks Associated
    With The Corporations Industry
  The Earnings of
    Financial Services Companies Are Significantly Affected by
    General Business and Economic Conditions.
    Financial
    Services Companies Depend on the Accuracy and Completeness of
    Information About Customers and Counterparties.
    Consumers May
    Decide Not to Use Banks to Complete Their Financial
    Transactions.
  and/or
  Item 1B.
    Unresolved
    Staff Comments   18




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Item 2.
    Properties      Item 3.
    Legal
    Proceedings    Item 4.
    Submission
    of Matters to a Vote of Security Holders   19




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##### Table of Contents



Item 4A.
    Executive
    Officers of the Registrant    Year PositionName

Age

Office and Position

HeldRobert E. James, Jr.

57

President and Chief Executive Officer of the Registrant

2005 - PresentPresident and Chief Executive Officer of the Bank

2004 - PresentExecutive Vice President of the Registrant

1999 - 2005Executive Vice President of the Bank

1999 - 2004Stephen M. Rownd

48

Executive Vice President and Chief Banking Officer of the
    Registrant and the Bank

2006 - PresentExecutive Vice President and Chief Risk Officer of the
    Registrant and the Bank

2004 - 2006Executive Vice President and Chief Credit Officer of the
    Registrant and the Bank

2000 - 2004Cecil O. Smith, Jr.

60

Executive Vice President and Chief Information Officer of the
    Registrant and the Bank

2005 - PresentVice President, Duke Energy Business Solutions

2004 - 2005Senior Vice President and Chief Information Officer, Duke Energy
    Corporation

1995 - 2004J. Scott Ensor

44

Executive Vice President and Chief Risk Officer of the
    Registrant and the Bank

2006 - PresentSenior Vice President and Director of Commercial Risk Management
    of the Bank

2004 - 2006Senior Vice President and Area Risk Manager of the Bank

2002 - 2004Senior Vice President and Credit Officer of Allfirst Bank

2000 - 2002Stephen J. Antal

52

Executive Vice President, General Counsel and Corporate
    Secretary of the Registrant and the Bank

2006 - PresentSenior Vice President, General Counsel and Corporate Secretary
    of the Registrant and the Bank

2005 - 2006Member, Womble, Carlyle, Sandridge and Rice, PLLC

2002 - 2005Senior Vice President and Assistant General Counsel, Wachovia
    Corporation (formerly First Union Corporation)

1996 - 2002Sheila A. Stoke

58

Senior Vice President and Controller of the Registrant

2007 - PresentSenior Vice President and Controller of the Bank

2006 - PresentSenior Vice President - Finance, Stock Yards Bank and
    Trust Company

2005 - 2006Senior Vice President and Controller, Integra Bank NA

2003 - 2005Vice President and Controller, Republic Bank and Trust Co.

2002 - 2003Senior Vice President and Controller, Bank of Louisville and
    Trust Company

1985 - 2002Josephine P. Sawyer

58

Senior Vice President (Registrant), Executive Vice President
    (Bank) and Director of Human Resources of the Registrant and the
    Bank

2005 - PresentPrincipal/Search Consultant, JPS Consulting

1995 - 2005  20




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##### Table of Contents



PART II Item 5.Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities  Market
    Information, Holders, and Dividends
    Quarter

High


Low2007

First

$
24.97


$
21.29Second


22.83



19.09Third


30.58



17.78Fourth


30.93



27.752006

First


25.13



23.11Second


25.50



23.02Third


24.82



22.93Fourth


25.15



23.05       Quarter

Dividend2007

First

$
0.195Second


0.195Third


0.195Fourth


0.1952006

First


0.190Second


0.195Third


0.195Fourth


0.195   Managements Discussion
    and Analysis of Financial Condition and Results of Operations -
    Capital Management Note 23
  Equity
    Compensation Plan Information
    Shares to


Weighted-Average


SharesBe Issued


Option


Available forUpon
    Exercise(1)


Exercise Price


Future GrantsPlans approved by shareholders


1,099,948


$
20.37



1,489,285Plans not approved by shareholders










Total


1,099,948


$
20.37



1,489,285  (1)
    
    Does not include outstanding
    options to purchase 24,584 shares of common stock assumed
    through various acquisitions. As of December 31, 2007,
    these assumed options had a weighted-average exercise price of
    $16.25 per share and are all exercisable. 21




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Recent Sales of
    Unregistered Securities
    Issuer Purchases
    of Equity Securities
    Total Number of


Maximum NumberShares Purchased


of SharesTotal Number


Average Price


as Part of


That May Yet beof Shares


Paid


Publicly-Announced


Purchased underPeriod

Purchased


Per Share


Plans or Programs


the Plans or ProgramsOctober 1, 2007 - October 31, 2007














1,125,400November 1, 2007 - November 30, 2007














1,125,400December 1, 2007 - December 31, 2007














1,125,400Total














1,125,400         Item 1 Business - General Form 10-K.
 22




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Five-Year Total
    Return Performance Graph
    Total Return
    Performance
  
  Period EndingIndex

12/31/02

12/31/03

12/31/04

12/31/05

12/31/06

12/31/07First Charter Corporation


100.00



112.78



156.02



145.68



155.17



194.87NASDAQ Composite


100.00



150.01



162.89



165.13



180.85



198.60SNL Southeast Bank Index


100.00



125.58



148.92



152.44



178.75



134.65   Source: SNL Financial LC
  Item 6.Selected
    Financial Data  Table One Item 7
 Item 7.Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations   23




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Factors that May
    Affect Future Results
       Overview
   First Charter Corporation (NASDAQ:
     24




---



##### Table of Contents



Proposed Merger
    with Fifth Third
              The
    Community-Banking Model
   25




---



##### Table of Contents



Existing Markets
    and Expansion
        Recent
    Challenges
  Item 9A. Controls and Procedures.
     26




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##### Table of Contents



Wal-Mart
    Stores East Inc. v Reginald S. Hinton, Secretary of Revenue of
    State of North Carolina
    Financial
    Summary
        Earnings Analysis
    for Fourth Quarter 2007 versus Fourth Quarter 2006
    27




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28




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##### Table of Contents



Table OneSelected
    Financial Data
 For the Calendar Year(Dollars in thousands, except share and per share amounts)

2007


2006


2005


2004


2003Income statementInterest income

$
309,892


$
264,929


$
224,605


$
187,303


$
178,292Interest expense


163,006



131,219



99,722



64,293



70,490Net interest income


146,886



133,710



124,883



123,010



107,802Provision for loan losses


19,945



5,290



9,343



8,425



27,518Noninterest income


78,254



67,678



46,738



57,038



62,282Noninterest expense


142,528



124,937



127,971



107,496



125,065Income from continuing operations before income tax expense


62,667



71,161



34,307



64,127



17,501Income tax expense


21,363



23,799



9,132



21,889



3,313Income from continuing operations, net of tax


41,304



47,362



25,175



42,238



14,188Discontinued operations:Income (loss) from discontinued operations






36



224



337



(69
)Gain on sale






962











Income tax expense (benefit)






965



88



133



(27
)Income (loss) from discontinued operations, net of tax






33



136



204



(42
)Net income

$
41,304


$
47,395


$
25,311


$
42,442


$
14,146Per common shareBasic earnings per shareIncome from continuing operations

$
1.19


$
1.50


$
0.83


$
1.41


$
0.48Income from discontinued operations, net of tax














0.01



Net income


1.19



1.50



0.83



1.42



0.47Diluted earnings per shareIncome from continuing operations


1.18



1.49



0.82



1.40



0.47Income from discontinued operations, net of tax














0.01



Net income


1.18



1.49



0.82



1.40



0.47Average sharesBasic


34,612,184



31,525,366



30,457,573



29,859,683



29,789,969Diluted


34,988,021



31,838,292



30,784,406



30,277,063



30,007,435Cash dividends declared

$
0.78


$
0.78


$
0.76


$
0.75


$
0.74Period-end book value


13.39



12.81



10.53



10.47



10.08RatiosReturn on average equity


9.07
%


13.45
%


7.86
%


14.05
%


4.50
%Return on average assets


0.85



1.08



0.56



0.98



0.35Net yield on earning assets


3.36



3.37



3.05



3.14



3.00Average portfolio loans to average deposits


108.89



105.72



101.75



92.48



85.56Average equity to average assets


9.39



8.06



7.18



6.99



7.85Efficiency
    ratio(1)


62.6



59.6



59.4



59.8



65.4Dividend payout


66.1



52.0



92.7



53.6



157.4Selected period-end balancesPortfolio loans, net

$
3,460,593


$
3,450,087


$
2,917,020


$
2,412,529


$
2,227,030Loans held for sale


14,145



12,292



6,447



5,326



5,137Allowance for loan losses


42,414



34,966



28,725



26,872



25,607Investment in
    securities(2)


909,661



906,415



899,111



1,652,732



1,601,900Assets


4,862,417



4,856,717



4,232,420



4,431,605



4,206,693Deposits


3,221,619



3,248,128



2,799,479



2,609,846



2,427,897Other borrowings


1,120,141



1,098,698



1,068,574



763,738



473,106Total liabilities


4,394,073



4,409,355



3,908,825



4,116,918



3,907,254Shareholders equity


468,344



447,362



323,595



314,687



299,439Selected average balancesPortfolio loans

$
3,511,560


$
3,092,801


$
2,788,755


$
2,353,605


$
2,126,821Loans held for sale


10,476



9,019



6,956



9,502



25,927Investment in
    securities(2)


914,233



920,961



1,361,507



1,623,102



1,464,704Earning assets


4,446,895



4,033,031



4,164,969



4,004,678



3,662,460Assets


4,852,712



4,369,834



4,489,083



4,322,727



4,009,511Deposits


3,224,805



2,925,506



2,740,742



2,544,864



2,485,711Other borrowings


1,118,089



1,049,165



1,375,910



1,428,124



1,159,889Shareholders equity


455,614



352,253



322,226



302,101



314,562   (1)
    
    Noninterest expense less debt
    extinguishment expense and derivative termination costs, divided
    by the sum of taxable-equivalent net interest income plus
    noninterest income less gain (loss) on sale of securities, net.
    Excludes the results of discontinued operations.(2)
    
    Includes available for sale
    securities and Federal Home Loan Bank and Federal Reserve Bank
    stock. 29




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Critical
    Accounting Estimates and Policies
   Note 1
    Allowance for
    Loan Losses
          60-month
 30




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##### Table of Contents



36-month
        Credit
    Risk Management  Allowance for Loan Losses.
  Income
    Taxes
    Accounting for Uncertainties in Income
    Taxes
 31




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##### Table of Contents



Identified
    Intangible Assets and Goodwill
  Business Combinations.
    Earnings
    Performance
       Net Interest
    Income and Margin
  Table Two Table Three
   32




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##### Table of Contents



Table TwoAverage
    Balances and Net Interest Income Analysis
 For the Calendar Year2007


2006


2005Daily


Interest


Average


Daily


Interest


Average


Daily


Interest


AverageAverage


Income/


Yield/Rate


Average


Income/


Yield/Rate


Average


Income/


Yield/Rate(Dollars in thousands)

Balance


Expense


Paid


Balance


Expense


Paid


Balance


Expense


PaidAssetsEarning assetsLoans and loans held for
    sale(1)(2)(3)(4)

$
3,522,036


$
265,119



7.53
%

$
3,101,820


$
225,195



7.26
%

$
2,795,711


$
172,961



6.19
%Investment securities -
    taxable(4)(5)


819,023



41,133



5.02



819,791



35,613



4.34



1,251,477



47,657



3.81Investment securities - tax-exempt


95,210



5,619



5.90



101,170



6,012



5.94



110,030



6,100



5.54Federal funds sold


5,572



282



5.06



5,369



267



4.97



1,883



60



3.19Interest-bearing bank deposits


5,054



224



4.43



4,881



204



4.18



5,868



163



2.78Total earning assets


4,446,895


$
312,377



7.02
%


4,033,031


$
267,291



6.63
%


4,164,969


$
226,941



5.45
%Cash and due from banks


79,902











81,497











94,971Other assets


325,915











255,306











229,143Total assets

$
4,852,712










$
4,369,834










$
4,489,083Liabilities and shareholders equityInterest-bearing liabilitiesDemand deposits

$
417,682


$
5,110



1.22
%

$
370,458


$
2,949



0.80
%

$
343,663


$
1,111



0.32
%Money market accounts


621,398



21,567



3.47



589,887



18,718



3.17



496,982



9,220



1.86Savings deposits


110,343



242



0.22



117,862



259



0.22



123,305



277



0.22Retail certificates of deposit


1,214,037



57,660



4.75



993,631



41,066



4.13



968,752



29,358



3.03Brokered certificates of deposit


408,120



21,720



5.32



421,108



19,456



4.62



409,882



13,490



3.29Retail other borrowings


89,894



2,701



3.00



113,126



2,877



2.54



115,308



1,812



1.57Wholesale other borrowings


1,028,195



54,006



5.25



936,039



45,894



4.90



1,260,602



44,454



3.53Total interest-bearing liabilities


3,889,669



163,006



4.19
%


3,542,111



131,219



3.70
%


3,718,494



99,722



2.68
%Noninterest-bearing deposits


453,225











432,560











398,158Other liabilities


54,204











42,910











50,205Shareholders equity


455,614











352,253











322,226Total liabilities and
    shareholders equity

$
4,852,712










$
4,369,834










$
4,489,083Net interest spread










2.83
%










2.93
%










2.77
%Contribution of noninterest bearing sources










0.53











0.44











0.28Net interest income/
    yield on earning assets





$
149,371



3.36
%





$
136,072



3.37
%





$
127,219



3.05
%  (1)
    
    The preceding analysis takes
    into consideration the principal amount of nonaccruing loans and
    only income actually collected and recognized on such
    loans.(2)
    
    Average loan balances are shown
    net of unearned income.(3)
    
    Includes amortization of
    deferred loan fees of $4,324, $3,104, and $2,343 for 2007, 2006,
    and 2005, respectively.(4)
    
    Yields on tax-exempt securities
    and loans are stated on a taxable-equivalent basis, assuming a
    Federal tax rate of 35 percent and applicable state taxes
    for 2007, 2006, and 2005. The adjustments made to convert to a
    taxable-equivalent basis were $2,486, $2,362, and $2,336 for
    2007, 2006, and 2005, respectively.(5)
    
    Includes available for sale
    securities and Federal Home Loan Bank and Federal Reserve Bank
    stock. 33




---



##### Table of Contents



Table
    Three
 Volume and Rate Variance Analysis
 2007 vs 2006


2006 vs 2005Due to Change in


Net


Due to Change in


Net(In thousands)

Volume


Rate


Change


Volume


Rate


ChangeIncrease (decrease) in tax-equivalent interest incomeLoans and loans held for
    sale(1)

$
31,391


$
8,533


$
39,924


$
20,209


$
32,025


$
52,234Investment securities -
    taxable(1)(2)


(33
)


5,553



5,520



(18,082
)


6,038



(12,044
)Investment securities - tax-exempt


(352
)


(41
)


(393
)


(510
)


422



(88
)Federal funds sold


10



5



15



159



48



207Interest-bearing bank deposits


7



13



20



(31
)


72



41Total

$
31,023


$
14,063


$
45,086


$
1,745


$
38,605


$
40,350Increase (decrease) in interest
    expenseDeposits:Demand

$
415


$
1,746


$
2,161


$
93


$
1,745


$
1,838Money market


1,034



1,815



2,849



1,979



7,519



9,498Savings


(16
)


(1
)


(17
)


(12
)


(6
)


(18
)Retail certificates of deposit


9,922



6,672



16,594



772



10,936



11,708Brokered certificates of deposit


(615
)


2,879



2,264



379



5,587



5,966Retail other borrowings


(648
)


472



(176
)


(35
)


1,100



1,065Wholesale other borrowings


4,705



3,407



8,112



(13,221
)


14,661



1,440Total

$
14,797


$
16,990


$
31,787


$
(10,045
)

$
41,542


$
31,497Increase in tax-equivalent net
    interest income









$
13,299










$
8,853  (1)
    
    Income on tax-exempt securities
    and loans are stated on a taxable-equivalent basis. Refer to
    Table Twofor further details.(2)
    
    Includes available for sale
    securities and Federal Home Loan Bank and Federal Reserve Bank
    stock. 34




---



##### Table of Contents



Noninterest
    Income
        Table FourNoninterest
    Income
 For the Calendar Year(In thousands)

2007


2006


2005Service charges on deposits

$
30,893


$
28,962


$
27,809ATM, debit, and merchant fees


10,366



8,395



6,702Insurance services


13,077



13,366



12,546Brokerage services


4,053



3,182



3,119Mortgage services


3,813



3,062



2,873Wealth management


3,487



2,847



2,410Bank owned life insurance


4,631



3,522



4,311Equity method investment gains (losses), net


1,866



3,983



(271
)Property sale gains, net


1,706



645



1,853Gain on sale of Small Business Administration loans


1,187



126



Securities gains (losses), net


204



(5,828
)


(16,690
)Gain on sale of deposits and loans






2,825



Other


2,971



2,591



2,076Noninterest income from continuing operations


78,254



67,678



46,738Noninterest income from discontinued operations






3,012



3,475Gain on sale from discontinued operations






962



Total noninterest income

$
78,254


$
71,652


$
50,213     Table FiveSelected
    Items Included in Noninterest Income
 For the Calendar Year(In thousands)

2007


2006


2005Equity method investment gains (losses), net

$
1,866


$
3,983


$
(271
)Property sale gains, net


1,706



645



1,853Securities gains (losses), net


204



(5,828
)


(16,690
)Gain on sale of deposits and loans






2,825



Gains related to reinsurance arrangement


335



99



  35




---



##### Table of Contents




    Revenue from deposit service charges increased
    $1.9 million, principally reflecting a growth in the number
    of checking accounts.
    ATM, debit and merchant card services revenue was
    $2.0 million higher, reflecting both a growth in the number
    of accounts and increased transactions.
    The $1.1 million increase in BOLI was the result of the
    restructuring of $21.5 million of BOLI in mid-2006, the
    purchase of $10.0 million in new coverage, and the addition
    of $5.9 million of BOLI from GBC.
    Equity method investment gains were $2.1 million lower in
    2007 as compared with 2006. The returns on the equity method
    investments vary from period to period and income is recorded
    when earned.
    Property sale gains increased $1.1 million. During 2007,
    property sale gains of $1.7 million were principally due to
    two properties. During 2006, the sale of two financial centers
    resulted in property sale gains of $0.4 million.
    Although the Corporation originated SBA loans prior to the GBC
    acquisition, the Corporation retained these loans. The
    Corporation now sells certain of these loans. Gains on SBA loan
    sales were $1.2 million in 2007 and $0.1 million in
    2006.
    During 2007, the Corporation recognized $0.2 million of
    gains related to the sale of certain equity securities, net of
    $48,000 of other-than-temporary impairment charges. The
    Corporation recognized losses of $5.8 million on the sale
    of lower-yielding securities during 2006.
    The sale of two financial centers in 2006 generated gains of
    $2.8 million attributable to the sale of loans and
    deposits. There were no similar gains recognized during 2007. 36




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##### Table of Contents



Noninterest
    Expense
    Table SixNoninterest
    Expense
 For the Calendar Year(Dollars in thousands)

2007


2006


2005Salaries and employee benefits

$
79,136


$
69,237


$
61,428Occupancy and equipment


18,744



18,144



16,565Data processing


6,681



5,768



5,171Marketing


4,587



4,711



4,668Postage and supplies


4,425



4,834



4,478Professional services


14,054



8,811



8,072Telecommunications


2,261



2,193



2,139Amortization of intangibles


1,098



654



378Foreclosed properties


976



755



386Debt extinguishment expense










6,884Derivative termination costs










7,770Other


10,566



9,830



10,032Noninterest expense from continuing operations


142,528



124,937



127,971Noninterest expense from discontinued operations






2,976



3,251Total noninterest expense

$
142,528


$
127,913


$
131,222Full-time equivalent employees at year-end


1,073



1,099



1,064Efficiency
    ratio(1)


62.6
%


59.6
%


59.4%   (1) Noninterest
    expense divided by the sum of taxable-equivalent net interest
    income plus noninterest income less securities gains (losses),
    net. Excludes the results of discontinued operations and the
    impact of the debt extinguishment and derivative termination
    charges related to the balance sheet repositioning in 2005.
    Table SevenSelected
    Items Included in Noninterest Expense
 For the Calendar Year(In thousands)

2007


2006


2005Separation agreements

$
241


$
675


$
1,010Merger-related costs


1,492



302



Accelerated vesting of stock options






665



Actuarial revision to medical reserve






(391
)


Medical claims IBNR reserve






(470
)


Employee benefit plan modification










1,079Fixed asset correction










(1,386
)Debt extinguishment expense










6,884Derivative termination costs










7,770     
    Salaries and benefits expense for 2007 was $79.1 million, a
    $9.9 million increase compared to 2006. The increase in
    salaries and benefits expense was primarily due to higher
    salaries and wages which 37




---



##### Table of Contents



were driven by an increased average number of full-time
    equivalent employees as a result of the GBC acquisition, as well
    as higher stock-based compensation expense, normal salary
    increases and higher medical insurance costs. These increases
    were partially offset by lower incentive compensation due to a
    reduction in earnings. Additionally, salaries and employee
    benefits expense included merger-related costs of
    $0.5 million, representing severance and other
    compensation-related bonuses for certain employees to remain
    with Gwinnett Bank for a transition period following the GBC
    acquisition, as well as executive retirement expenses related to
    Gwinnett Bank.  
    Professional services expense increased $5.2 million,
    primarily related to remediation efforts in connection with the
    Corporations internal control weaknesses, additional costs
    related to the Corporations delayed filing of
    Form 10-K
    for the year-ended December 31, 2006, costs associated with
    the previously disclosed first quarter 2007 audit committee
    inquiry and $1.1 million of Fifth Third merger-related
    costs.
    Data processing expense increased $0.9 million as a result
    of increased transaction volume.
    Other noninterest expense increased $0.7 million,
    principally due to a $0.4 million increase in charitable
    contribution expense, as well as increases in insurance,
    franchise tax, travel and other miscellaneous operational
    expenses.    Income Tax
    Expense
  Note 16
         38




---



##### Table of Contents



Table EightSelected
    Financial Data by Quarter
 2007 Quarters


2006 Quarters(Dollars in thousands, except per share amounts)

Fourth


Third


Second


First


Fourth


Third


Second


FirstIncome statementInterest income

$
75,660


$
78,727


$
78,291


$
77,214


$
74,456


$
67,085


$
63,742


$
59,646Interest expense


40,284



41,496



40,747



40,479



38,441



34,127



31,095



27,556Net interest income


35,376



37,231



37,544



36,735



36,015



32,958



32,647



32,090Provision for loan losses


6,144



3,311



9,124



1,366



1,486



1,405



880



1,519Noninterest income


20,120



18,427



20,141



19,566



17,388



17,007



16,292



16,991Noninterest expense


35,845



35,556



35,207



35,920



33,853



29,655



30,688



30,741Income from continuing operations before income tax expense


13,507



16,791



13,354



19,015



18,064



18,905



17,371



16,821Income tax expense


4,576



5,724



4,404



6,659



5,962



6,223



5,946



5,668Income from continuing operations, net of tax


8,931



11,067



8,950



12,356



12,102



12,682



11,425



11,153Discontinued operations:Income (loss) from discontinued operations


















(162
)






50



148Gain on sale


















962











Income tax expense


















887







20



58Income (loss) from discontinued operations, net of tax


















(87
)






30



90Net income

$
8,931


$
11,067


$
8,950


$
12,356


$
12,015


$
12,682


$
11,455


$
11,243Per common shareBasic earnings per shareIncome from continuing operations, net of tax

$
0.25


$
0.32


$
0.26


$
0.36


$
0.36


$
0.41


$
0.37


$
0.36Income from discontinued operations, net of tax






























Net income


0.25



0.32



0.26



0.36



0.36



0.41



0.37



0.36Diluted earnings per shareIncome from continuing operations, net of tax


0.25



0.32



0.26



0.35



0.36



0.40



0.37



0.36Income from discontinued operations, net of tax






























Net income


0.25



0.32



0.26



0.35



0.36



0.40



0.37



0.36Average sharesBasic


34,562



34,423



34,698



34,770



33,269



31,056



31,059



30,859Diluted


35,053



34,796



34,987



35,086



33,584



31,427



31,339



31,153Dividends declared

$
0.195


$
0.195


$
0.195


$
0.195


$
0.195


$
0.195


$
0.195


$
0.190Period-end book value


13.39



13.16



12.85



12.97



12.81



11.20



10.73



10.68Performance ratiosReturn on average
    equity(1)


7.67
%


9.72
%


7.86
%


11.09
%


11.69
%


14.76
%


13.80
%


13.99
%Return on average
    assets(1)


0.74



0.91



0.74



1.03



1.02



1.16



1.07



1.09Net yield on earning
    assets(1)


3.25



3.39



3.42



3.38



3.40



3.33



3.36



3.40Average portfolio loans to average deposits


108.72



109.37



109.50



107.98



105.88



103.37



108.27



105.51Average equity to average assets


9.59



9.33



9.37



9.28



8.75



7.86



7.79



7.76Efficiency
    ratio(2)


64.2



63.2



60.4



63.1



62.6



52.6



62.0



61.9Selected period-end balancesPortfolio loans, net

$
3,460,593


$
3,434,389


$
3,509,047


$
3,494,015


$
3,450,087


$
3,061,864


$
3,042,768


$
2,981,458Loans held for sale


14,145



10,362



11,471



13,691



12,292



10,923



8,382



8,719Allowance for loan losses


42,414



43,017



44,790



35,854



34,966



29,919



29,520



29,505Investment in
    securities(3)


909,661



907,608



898,528



897,762



906,415



899,120



884,370



900,424Assets


4,862,417



4,839,693



4,916,721



4,884,495



4,856,717



4,382,507



4,361,231



4,281,417Deposits


3,221,619



3,208,026



3,230,346



3,321,366



3,248,128



2,954,854



2,988,802



2,800,346Other borrowings


1,120,141



1,113,332



1,176,758



1,044,229



1,098,698



1,031,798



995,707



1,103,784Total liabilities


4,394,073



4,382,205



4,470,893



4,429,123



4,409,355



4,033,069



4,027,333



3,950,736Shareholders equity


468,344



457,488



445,828



455,372



447,362



349,438



333,898



330,681Selected average balancesPortfolio loans


3,488,598



3,514,699



3,532,713



3,510,437



3,336,563



3,070,286



3,021,005



2,939,233Loans held for sale


10,028



9,345



11,127



11,431



10,757



8,792



9,810



6,675Investment in
    securities(3)


901,068



914,569



914,606



926,970



924,773



923,293



921,026



914,760Earning assets


4,412,038



4,445,923



4,467,031



4,463,161



4,284,735



4,013,745



3,960,835



3,868,519Assets


4,819,264



4,846,399



4,874,742



4,871,083



4,664,431



4,336,270



4,274,345



4,201,477Deposits


3,208,859



3,213,507



3,226,308



3,251,137



3,151,120



2,970,047



2,790,197



2,785,632Other borrowings


1,103,585



1,124,021



1,131,599



1,113,191



1,054,550



984,504



1,108,734



1,049,529Shareholders equity


461,972



451,946



456,634



451,835



407,929



340,986



332,987



325,917  (1)
    
    Annualized.(2)
    
    Noninterest expense less debt
    extinguishment expense and derivative termination costs, divided
    by the sum of taxable-equivalent net interest income plus
    noninterest income less gain (loss) on sale of securities, net.
    Excludes the results of discontinued operations.(3)
    
    Includes available for sale
    securities and Federal Home Loan Bank and Federal Reserve Bank
    stock. 39




---



##### Table of Contents



Balance Sheet
    Analysis
   Securities
    Available for Sale
          (v) asset-backed
  Table NineInvestment
    Portfolio
 December 31(In thousands)

2007


2006


2005U.S. government obligations

$



$



$
14,878U.S. government agency obligations


146,554



275,394



320,407Mortgage-backed securities


565,434



412,020



405,450State, county, and municipal obligations


92,938



102,602



108,996Asset-backed securities


54,229



65,115



4,994Equity securities


1,516



1,356



1,303Total

$
860,671


$
856,487


$
856,028   Loan
    Portfolio
   40




---



##### Table of Contents



Commercial Non
    Real Estate
    Commercial Real
    Estate
    Construction
    Mortgage
  fixed-rate
  Home
    Equity
   41




---



##### Table of Contents



Consumer
      Table TenLoan
    Portfolio Composition
 December 31(In thousands)

2007


2006


2005


2004


2003Commercial real estate

$
1,073,983


$
1,034,317


$
780,597


$
776,474


$
724,340Commercial non real estate


308,792



301,958



233,409



212,031



212,010Construction


871,579



793,294



517,392



332,264



358,217Mortgage


582,398



618,142



660,720



449,206



391,641Home equity


413,873



447,849



495,181



474,295



400,792Consumer


252,382



289,493



258,619



195,422



165,804Total portfolio loans


3,503,007



3,485,053



2,945,918



2,439,692



2,252,804Allowance for loan losses


(42,414
)


(34,966
)


(28,725
)


(26,872
)


(25,607
)Unearned income










(173
)


(291
)


(167
)Portfolio loans, net

$
3,460,593


$
3,450,087


$
2,917,020


$
2,412,529


$
2,227,030        42




---



##### Table of Contents



Deposits
    Table
    ElevenDeposits
 December 31(In thousands)

2007


2006


2005


2004


2003Noninterest bearing demand

$
438,313


$
454,975


$
429,758


$
377,793


$
326,679Interest bearing demand


478,186



420,774



368,291



348,677



322,471Money market accounts


564,053



620,699



559,865



478,314



470,551Savings deposits


101,234



111,047



119,824



119,615



118,025Certificates of deposit


1,639,833



1,640,633



1,321,741



1,285,447



1,190,171Total deposits

$
3,221,619


$
3,248,128


$
2,799,479


$
2,609,846


$
2,427,897       Other
    Borrowings
  back-up
       43




---



##### Table of Contents



Table
    TwelveOther
    Borrowings
 December 312007


2006


2005(Dollars in thousands)

Balance


Rate


Balance


Rate


Balance


RateFederal funds purchased and securities sold under agreements to
    repurchase:Balance as of

$
268,232



3.77
%

$
201,713



4.60
%

$
312,283



3.01
%Average balance for the year


220,352



4.59



260,548



4.24



348,051



2.94Maximum outstanding at any month-end


293,346







323,775







494,566Commercial paper:Balance as of


64,180



2.76



38,191



2.72



58,432



1.79Average balance for the year


28,430



2.91



26,239



2.41



40,786



1.62Maximum outstanding at any month-end


77,844







43,057







58,432Other short-term borrowings:Balance as of


220,000



4.61



371,000



5.35



140,000



4.39Average balance for the year


308,332



5.27



145,419



5.08



266,121



3.32Maximum outstanding at any month-end


467,000







371,000







716,000  44




---



##### Table of Contents



Credit
    Risk Management
     Loan
    Administration and Underwriting
  and/or
       45




---



##### Table of Contents



Derivatives
   46




---



##### Table of Contents



Nonperforming
    Assets
        Table
    ThirteenNonperforming
    Assets
 December 31(Dollars in thousands)

2007


2006


2005


2004


2003Nonaccrual loans

$
28,695


$
8,200


$
10,811


$
13,970


$
14,910Loans 90 days or more past due accruing interest


















21Total nonperforming loans


28,695



8,200



10,811



13,970



14,931Other real estate


10,056



6,477



5,124



3,844



6,836Nonperforming assets

$
38,751


$
14,677


$
15,935


$
17,814


$
21,767Nonaccrual loans as a percentage of total portfolio loans


0.82
%


0.24
%


0.37
%


0.57
%


0.66
%Nonperforming assets as a percentage of:Total assets


0.80



0.30



0.38



0.40



0.52Total portfolio loans and other real estate


1.11



0.42



0.54



0.73



0.96Net charge-offs to average portfolio loans


0.36



0.11



0.27



0.28



0.39Allowance for loan losses to portfolio loans


1.21



1.00



0.98



1.10



1.14Allowance for loan losses to net charge-offs


3.39
x


10.73
x


3.84
x


4.09
x


3.07
xAllowance for loan losses to nonperforming loans


1.48



4.26



2.66



1.92



1.72       Allowance
    for Loan Losses
 47




---



##### Table of Contents



Allowance for
    Loan Losses
  Accounting
    by Creditors for Impairment of a Loan  an Amendment
    to FASB Statements No. 5 and No. 15
         48




---



##### Table of Contents



Table
    FourteenAllowance
    For Loan Losses
  For the Calendar Year(Dollars in thousands)

2007


2006


2005


2004


2003Balance at beginning of period

$
34,966


$
28,725


$
26,872


$
25,607


$
27,204Charge-offsCommercial non real estate


428



723



3,116



1,449



3,484Commercial real estate


1,422



762



1,967



2,791



1,898Construction


365







7







Mortgage


138



148



167



29



31Home equity


482



1,108



857



1,008



685Consumer


11,003



1,837



2,538



3,275



3,382Total charge-offs


13,838



4,578



8,652



8,552



9,480RecoveriesCommercial non real estate


763



643



542



894



451Commercial real estate


2















4Construction


















24Mortgage


54



35



36



29



Home equity






1



39







Consumer


522



639



545



1,053



635Other


















34Total recoveries


1,341



1,318



1,162



1,976



1,148Net charge-offs


12,497



3,260



7,490



6,576



8,332Provision for loan losses


19,945



5,290



9,343



8,425



27,518Allowance of acquired company






4,211











Allowance related to loans sold














(584
)


(20,783
)Balance at end of period

$
42,414


$
34,966


$
28,725


$
26,872


$
25,607Average portfolio loans

$
3,511,560


$
3,092,801


$
2,788,755


$
2,353,605


$
2,126,821Net charge-offs to average portfolio loans


0.36
%


0.11
%


0.27
%


0.28
%


0.39
%Allowance for loan losses to portfolio loans


1.21



1.00



0.98



1.10



1.14      49




---



##### Table of Contents



Table
    FifteenAllocation
    of the Allowance for Loan Losses
 December 312007

2006

2005

2004

2003Loan/




Loan/




Loan/




Loan/




Loan/(Dollars in thousands)

Amount


Total Loans

Amount


Total Loans

Amount


Total Loans

Amount


Total Loans

Amount


Total LoansCommercial real estate

$
19,618



31
%

$
15,638



30
%

$
9,877



27
%

$
11,317



32
%

$
12,011



32
%Commercial non real estate


3,999



9



2,847



8



5,007



8



4,496



9



4,368



9Construction


9,985



25



8,059



23



4,559



18



4,842



14



3,584



16Mortgage


2,533



16



2,441



18



2,351



19



980



14



812



13Home equity


2,291



7



2,550



13



2,887



16



1,392



19



1,263



17Consumer


3,988



12



3,431



8



4,044



12



3,845



12



3,569



13Total

$
42,414



100
%

$
34,966



100
%

$
28,725



100
%

$
26,872



100
%

$
25,607



100
%       Provision for
    Loan Losses
   50




---



##### Table of Contents



Allowance for
    Loan Losses.
    Market Risk
    Management
   Asset-Liability
    Management and Interest Rate Risk
      12-month
     51




---



##### Table of Contents



Table Sixteen Table Sixteen
  Table
    SixteenMarket
    Risk
 Expected Maturity(Dollars in thousands)

Total


1 Year


2 Years


3 Years


4 Years


5 Years


ThereafterAssetsDebt securitiesFixed rateCost

$
555,051


$
284,278


$
171,453


$
67,003


$
19,774


$
2,938


$
9,605Weighted-average effective yield


4.94
%Fair value

$
555,077Variable rateCost

$
306,636



52,756



52,585



52,890



53,313



9,611



85,481Weighted-average effective yield


5.32
%Fair value

$
304,078Loans and loans held for saleFixed rateBook value

$
1,006,920



262,104



195,403



169,564



120,736



118,362



140,751Weighted-average effective yield


7.06
%Fair value

$
1,001,210Variable rateBook value

$
2,467,818



1,307,997



277,011



180,438



99,702



64,746



537,924Weighted-average effective yield


6.97
%Fair value

$
2,484,468LiabilitiesDepositsFixed rateBook value

$
1,639,833



1,526,959



84,975



14,017



6,936



6,351



595Weighted-average effective yield


4.78
%Fair value

$
1,647,780Variable rateBook value

$
1,143,473



280,750



280,583



280,258



131,823



79,593



90,466Weighted-average effective yield


2.02
%Fair value

$
1,087,544Long-term borrowingsFixed rateBook value

$
195,872



20,057



75,060



63



100,032



22



638Weighted-average effective yield


4.79
%Fair value

$
195,765Variable rateBook value

$
371,857







235,000



25,000



50,000







61,857Weighted-average effective yield


4.22
%Fair value

$
372,553  52




---



##### Table of Contents



Table Seventeen
  Table
    SeventeenMaturity
    and Sensitivity to Changes in Interest Rates
 CommercialCommercial


Non Real(In thousands)

Real Estate


Estate


Construction


TotalFixed rate:1 year or less

$
46,083


$
12,075


$
64,798


$
122,9561-5 years


269,933



59,842



33,980



363,755After 5 years


127,622



80,515



27,217



235,354Total fixed rate


443,638



152,432



125,995



722,065Variable rate:1 year or less


314,048



103,499



597,533



1,015,0801-5 years


276,496



37,684



117,105



431,285After 5 years


30,105



10,999



10,275



51,379Total variable rate


620,649



152,182



724,913



1,497,744Total commercial and construction loans

$
1,064,287


$
304,614


$
850,908


$
2,219,809   Off-Balance-Sheet
    Risk
  Note 20 Note 15
 53




---



##### Table of Contents



Table
    EighteenCommitments
 Less than


1-3


4-5


Over


Timing not(In thousands)

1 year


Years


Years


5 Years


determinable


TotalLoan commitments

$
639,812


$
157,611


$
9,977


$
99,279


$



$
906,679Lines of credit


29,928



1,174



4,002



456,451







491,555Standby letters of credit


18,563



8,059















26,622Anticipated tax settlements


















10,189



10,189Total commitments

$
688,303


$
166,844


$
13,979


$
555,730


$
10,189


$
1,435,045     Liquidity
    Risk
             54




---



##### Table of Contents



Table
    NineteenContractual
    Obligations
 Payments Due by PeriodLess than


1-3


4-5


Over(In thousands)

1 year


Years


Years


5 Years


TotalOther borrowings  long-term debt

$
20,000


$
385,000


$
100,130


$
62,599


$
567,729Operating lease obligations


3,813



6,869



5,302



32,125



48,109Purchase
    obligations(1)


9,130



6,803



3,226







19,159Equity method investees funding


1,120















1,120Deposits(2)


3,108,885



99,418



13,286



30



3,221,619Other
    obligations(3)


1,890



2,701



1,392



6,245



12,228Total contractual obligations

$
3,144,838


$
500,791


$
123,336


$
100,999


$
3,869,964   (1)
    
    Represents obligations under
    existing executory contracts.(2)
    
    Deposits with no stated maturity
    (demand, money market, and savings deposits) are presented in
    the less than one year category.(3)
    
    Represents obligations under
    employment, severance and retirement contracts and commitments
    to fund affordable housing investments.  Capital
    Management
       Table
    TwentyCapital
    Measures
 December 312007


2006(Dollars in thousands)

Amount


Ratio


Amount


RatioTotal equity/total assetsFirst Charter Corporation

$
468,344



9.63
%

$
447,362



9.21
%First Charter Bank


499,322



10.30



371,459



8.45Gwinnett Banking Company


N/A



N/A



102,189



22.02Tangible equity/tangible assets(1)First Charter Corporation

$
385,473



8.07
%

$
362,294



7.59
%First Charter Bank


416,450



8.74



351,246



8.03Gwinnett Banking Company


N/A



N/A



37,334



9.35   (1)
    The tangible equity ratio excludes goodwill and other
    intangible assets from both the numerator and the
    denominator.   55




---



##### Table of Contents



Business-Government
    Supervision and Regulation, Business  Capital and
    Operational Requirements Note 23
     56




---



##### Table of Contents



Business  Government Supervision and Regulation,
    Business  Capital and Operational Requirements Note 23
    Table
    Twenty-OneCapital
    Ratios
 For CapitalAdequacy Purposes


To Be Well CapitalizedActual








Minimum





Minimum(Dollars in thousands)

Amount


Ratio


Amount


Ratio


Amount


RatioLeverageFirst Charter Corporation

$
446,890



9.43
%

$
189,630



4.00
%


None



NoneFirst Charter Bank


417,979



8.83



189,252



4.00


$
236,565



5.00
%Tier I CapitalFirst Charter Corporation

$
446,890



11.17
%

$
159,985



4.00
%


None



NoneFirst Charter Bank


417,979



10.47



159,732



4.00


$
239,598



6.00
%Total Risk-Based CapitalFirst Charter Corporation

$
489,389



12.24
%

$
319,970



8.00
%


None



NoneFirst Charter Bank


460,393



11.53



319,464



8.00


$
399,330



10.00
%   Tier 1 Capital consists of total equity plus qualifying
    capital securities and minority interests, less unrealized gains
    and losses accumulated in other comprehensive income, certain
    intangible assets, and adjustments related to the valuation of
    servicing assets and certain equity investments in nonfinancial
    companies (principal investments).
  The leverage ratio reflects Tier 1 Capital divided by
    average total assets for the period. Average assets used in the
    calculation exclude certain intangible and servicing assets.
  Total Risk-Based Capital is comprised of Tier 1 Capital
    plus qualifying subordinated debt and allowance for loan losses
    and a portion of unrealized gains on certain equity
    securities.
  Both the Tier 1 Capital and the Total Risk-Based Capital
    ratios are computed by dividing the respective capital amounts
    by risk-weighted assets, as defined.
  2006 VERSUS
    2005
   Table One
  Overview
     57




---



##### Table of Contents



Net Interest
    Income
      Provision for
    Loan Losses
    Noninterest
    Income
      
    a reduction in net securities losses incurred in the balance
    sheet repositionings of $10.9 million;
    equity method investment gains of $4.3 million;
    gains from the sale of two financial centers and other assets
    (excluding SEBS) of $1.6 million;
    additional debit and ATM fees of $1.7 million; and
    service charges on deposits of $1.2 million.    
    a BOLI revenue decrease of $0.8 million due to death
    benefits received in 2005 that did not recur in 2006; and
    a charge in 2006 of $0.3 million to restructure the BOLI,
    partially offset by increased revenue resulting from the
    restructuring and increased investment.  Noninterest
    Expense
   58




---



##### Table of Contents




    Salaries and employee benefits costs increased $7.8 million
    in 2006. Of the increase, approximately $2.0 million was
    due to additional personnel in the Raleigh market and
    $1.1 million was due to the GBC acquisition. Beginning in
    2006, the Corporation began expensing all stock-based
    compensation awards in accordance with SFAS 123(R).
    Equity-based compensation expense for 2006 totaled
    $2.8 million, including $0.7 million of expense
    related to the vesting of all stock options granted from 2003 to
    2005, whereas restricted stock expense in 2005 was
    $0.2 million. These increases were partially offset by a
    $1.1 million expense associated with a legacy employee
    benefit plan in 2005, which did not recur in 2006, along with a
    $0.4 million favorable actuarial revision to a medical
    reserve and a $0.5 million favorable reduction in the
    medical claims IBNR, both recognized in 2006.
    Occupancy and equipment expense increased $1.6 million due
    to additional financial center lease and depreciation costs, of
    which approximately $1.1 million related to additional
    Raleigh financial centers.
    Professional services expense increased $0.7 million,
    reflecting an increase in outsourced services over 2005.
    Data processing expense increased $0.6 million as a result
    of increased transaction volume.    Income Tax
    Expense
  Note 16
  Regulatory
    Recommendations
     Recent Accounting
    Pronouncements
   Noncontrolling
    Interests in Consolidated Financial Statements   An
    Amendment of ARB No. 51,
 59




---



##### Table of Contents



Business
    Combinations Business
    Combinations
  The Fair
    Value Option for Financial Assets and Financial
    Liabilities  Including an Amendment of FASB Statement
    No. 115 Accounting for Certain
    Investments in Debt and Equity Securities, available-for-sale
  Fair Value
    Measurements
  Accounting for
    Servicing of Financial Assets  An Amendment of FASB
    Statement No. 140
  Accounting
    for Certain Hybrid Financial Instruments  An
    Amendment of FASB Statements No. 133 and 140.
  , Accounting for Uncertainty in
    Income Taxes  an interpretation of FASB Statement
    No. 109
 60




---



##### Table of Contents



No. 06- 4,
    Accounting for Deferred Compensation and Postretirement Benefit
    Aspects of Endorsement Split Dollar Life Insurance Arrangements. EITF 06-4 EITF 06-4, Employers Accounting for Postretirement
    Benefits Other Than Pensions EITF 06-4
  Written Loan
    Commitments Recorded at Fair Value Through Earnings, Loan Commitments Accounted for as
    Derivative Instruments,
   Item 7A. Quantitative
    and Qualitative Disclosures about Market Risk  Item 7. Managements Discussion and Analysis of
    Financial Condition and Results of Operations Market Risk Management
 61




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data  Report of
    Independent Registered Public Accounting Firm
     Internal Control 
    Integrated Framework Managements Report on Internal Control over Financial
    Reporting.
        Internal Control  Integrated
    Framework
    
    62




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
             Internal Control  Integrated
    Framework
  
    63




---



##### Table of Contents



First Charter
    Corporation
    Consolidated Balance Sheets
  December 31(Dollars in thousands, except
    share data)

2007


2006AssetsCash and due from banks

$
85,562


$
87,771Federal funds sold


10,926



10,515Interest-bearing bank deposits


5,710



4,541Cash and cash equivalents


102,198



102,827Securities available for sale (cost of $863,049 and $866,261;
    carrying amount of pledged collateral $654,965 and $632,918 at
    December 31, 2007 and 2006, respectively)


860,671



856,487Federal Home Loan Bank and Federal Reserve Bank stock


48,990



49,928Loans held for sale


14,145



12,292Portfolio loans:Commercial and construction


2,254,354



2,129,569Mortgage


582,398



618,142Consumer


666,255



737,342Total portfolio loans


3,503,007



3,485,053Allowance for loan losses


(42,414
)


(34,966
)Portfolio loans, net


3,460,593



3,450,087Premises and equipment, net


110,763



111,588Goodwill and other intangible assets


82,871



85,068Other assets


182,186



188,440Total Assets

$
4,862,417


$
4,856,717LiabilitiesDeposits:Noninterest-bearing demand

$
438,313


$
454,975Demand


478,186



420,774Money market


564,053



620,699Savings


101,234



111,047Certificates of deposit


1,313,482



1,223,252Brokered certificates of deposit


326,351



417,381Total deposits


3,221,619



3,248,128Federal funds purchased and securities sold under agreements to
    repurchase


268,232



201,713Commercial paper and other short-term borrowings


284,180



409,191Long-term debt


567,729



487,794Accrued expenses and other liabilities


52,313



62,529Total Liabilities


4,394,073



4,409,355Shareholders EquityPreferred stock   no par value; authorized
    2,000,000 shares; no shares issued and outstanding






Common stock  no par value; authorized
    100,000,000 shares; issued and outstanding 34,978,847 and
    34,922,222 shares at December 31, 2007 and 2006,
    respectively


233,974



231,602Common stock held in Rabbi Trust for deferred compensation


(1,687
)


(1,226
)Deferred compensation payable in common stock


1,687



1,226Retained earnings


235,812



221,678Accumulated other comprehensive loss, net of tax


(1,442
)


(5,918
)Total Shareholders Equity


468,344



447,362Total Liabilities and Shareholders Equity

$
4,862,417


$
4,856,717  See notes to consolidated financial statements.
 64




---



##### Table of Contents



First Charter
    Corporation
    Consolidated Statements of Income
  For the Calendar Year(Dollars in thousands, except per share amounts)

2007


2006


2005Interest incomeLoans

$
264,600


$
224,937


$
172,760Securities


44,786



39,522



51,622Federal funds sold


282



267



60Interest-bearing bank deposits


224



203



163Total interest income


309,892



264,929



224,605Interest expenseDeposits


106,300



82,448



53,456Short-term borrowings


26,322



19,055



19,740Long-term debt


30,384



29,716



26,526Total interest expense


163,006



131,219



99,722Net interest income


146,886



133,710



124,883Provision for loan losses


19,945



5,290



9,343Net interest income after provision for loan losses


126,941



128,420



115,540Noninterest incomeService charges on deposits


30,893



28,962



27,809ATM, debit, and merchant fees


10,366



8,395



6,702Wealth management


3,487



2,847



2,410Equity method investments gains (losses), net


1,866



3,983



(271
)Mortgage services


3,813



3,062



2,873Gain on sale of Small Business Administration loans


1,187



126



Gain on sale of deposits and loans






2,825



Brokerage services


4,053



3,182



3,119Insurance services


13,077



13,366



12,546Bank owned life insurance


4,631



3,522



4,311Property sale gains, net


1,706



645



1,853Securities gains (losses), net


204



(5,828
)


(16,690
)Other


2,971



2,591



2,076Total noninterest income


78,254



67,678



46,738Noninterest expenseSalaries and employee benefits


79,136



69,237



61,428Occupancy and equipment


18,744



18,144



16,565Data processing


6,681



5,768



5,171Marketing


4,587



4,711



4,668Postage and supplies


4,425



4,834



4,478Professional services


14,054



8,811



8,072Telecommunications


2,261



2,193



2,139Amortization of intangibles


1,098



654



378Foreclosed properties


976



755



386Debt extinguishment expense










6,884Derivative termination costs










7,770Other


10,566



9,830



10,032Total noninterest expense


142,528



124,937



127,971Income from continuing operations before income tax
    expense


62,667



71,161



34,307Income tax expense


21,363



23,799



9,132Income from continuing operations, net of tax


41,304



47,362



25,175Discontinued operationsIncome from discontinued operations before gain on sale and
    income tax expense






36



224Gain on sale






962



Income tax expense






965



88Income from discontinued operations, net of tax






33



136Net income

$
41,304


$
47,395


$
25,311Net income per common shareBasicIncome from continuing operations, net of tax

$
1.19


$
1.50


$
0.83Income from discontinued operations, net of tax










Net income


1.19



1.50



0.83DilutedIncome from continuing operations, net of tax

$
1.18


$
1.49


$
0.82Income from discontinued operations, net of tax










Net income


1.18



1.49



0.82Average common shares outstandingBasic


34,612,184



31,525,366



30,457,573Diluted


34,988,021



31,838,292



30,784,406Dividends declared per common share

$
0.78


$
0.775


$
0.76  See notes to consolidated financial statements.
 65




---



##### Table of Contents



First Charter
    Corporation
 Consolidated Statements of Shareholders Equity
  Common Stock


Deferredin Rabbi


Compensation





AccumulatedTrust for


Payable in





OtherCommon Stock


Deferred


Common


Retained


Comprehensive(Dollars in thousands, except share and per share amounts)

Shares


Amount


Compensation


Stock


Earnings


Income (Loss)


TotalBalance, December 31, 2004


30,054,256


$
121,464


$
(808
)

$
808


$
198,085


$
(4,862
)

$
314,687Comprehensive income:Net income


















25,311







25,311Change in unrealized gains and losses on securities, net of
    reclassification adjustment for net losses included in net
    income, net of income tax






















(6,393
)


(6,393
)Total comprehensive income


























18,918Common stock purchased by Rabbi Trust for deferred compensation










(85
)














(85
)Deferred compensation payable in common stock














85











85Cash dividends declared, $0.76 per share


















(21,954
)






(21,954
)Issuance of shares under stock-based compensation plans,
    including related tax effects


661,403



11,443



















11,443Issuance of shares pursuant to acquisition


21,277



501



















501Balance, December 31, 2005


30,736,936


$
133,408


$
(893
)

$
893


$
201,442


$
(11,255
)

$
323,595Cumulative adjustment to retained earnings for adoption of
    SAB 108 (Note 4)


















(2,745
)






(2,745
)Comprehensive income:Net income


















47,395







47,395Change in unrealized gains and losses on securities, net of
    reclassification adjustment for net losses included in net
    income, net of income tax






















5,337



5,337Total comprehensive income


























52,732Common stock purchased by Rabbi Trust for deferred compensation










(333
)














(333
)Deferred compensation payable in common stock














333











333Cash dividends declared, $0.775 per share


















(24,414
)






(24,414
)Issuance of shares under stock-based compensation plans,
    including related tax effects


1,196,025



25,217



















25,217Issuance of shares pursuant to acquisition


2,989,261



72,977



















72,977Balance, December 31, 2006


34,922,222


$
231,602


$
(1,226
)

$
1,226


$
221,678


$
(5,918
)

$
447,362Comprehensive income:Net income


















41,304







41,304Change in unrealized gains and losses on securities, net of
    reclassification adjustment for net losses included in net
    income, net of income tax






















4,476



4,476Total comprehensive income


























45,780Cumulative transaction adjustment for FIN 48 (Note 16)


















29







29Common stock purchased by Rabbi Trust for deferred compensation










(461
)














(461
)Deferred compensation payable in common stock














461











461Cash dividends declared, $0.78 per share


















(27,199
)






(27,199
)Issuance of shares under stock-based compensation plans,
    including related tax effects


537,485



13,467



















13,467Repurchase of common stock


(500,000
)


(10,626
)


















(10,626
)Issuance of shares pursuant to acquisition


19,140



(469
)


















(469
)Balance, December 31, 2007


34,978,847


$
233,974


$
(1,687
)

$
1,687


$
235,812


$
(1,442
)

$
468,344  See notes to consolidated financial statements.
 66




---



##### Table of Contents



First Charter
    Corporation
    Consolidated Statements of Cash Flows
  For the Calendar Year(In thousands)

2007


2006


2005Operating activitiesNet income

$
41,304


$
47,395


$
25,311Adjustments to reconcile net income to net cash provided by
    operating activities:Provision for loan losses


19,945



5,290



9,343Depreciation


7,749



8,443



7,876Amortization of intangibles


1,098



823



538Amortization of servicing rights


351



426



514Stock-based compensation expense


3,417



2,791



196Tax benefits from stock-based compensation plans


(1,318
)


(1,568
)


Premium amortization and discount accretion, net


409



959



2,395Securities (gains) losses, net


(204
)


5,828



16,690Net (gains) losses on sales of other real estate owned


(234
)


87



50Write-downs on other real estate owned


795



668



154Equipment sale gains, net


(4
)


(15
)


(15
)Equity method investment (gains) losses, net


(1,866
)


(3,983
)


271Gains on sales of loans held for sale


(2,662
)


(1,121
)


(1,465
)Gains on sales deposits and loans






(2,825
)


Gains on sale of Small Business Administration loans


(1,187
)


(126
)


Debt extinguishment expense










6,884Derivative termination costs










7,696Property sale gains, net


(1,706
)


(645
)


(1,853
)Bank-owned life insurance claims










(935
)Origination of loans held for sale


(270,205
)


(204,320
)


(154,303
)Proceeds from sale of loans held for sale


271,014



199,596



154,647Change in cash surrender value of life insurance


(2,779
)


(3,604
)


(1,587
)Change in other assets


11,302



1,661



(3,202
)Change in other liabilities


(8,865
)


20,870



(16,291
)Net cash provided by operating activities


66,354



76,630



52,914Investing activitiesProceeds from sales of securities available for sale


18,680



160,941



644,770Proceeds from sales of FHLB and Federal Reserve Bank stock


19,874



40,413



7,813Proceeds from maturities, calls and paydowns of securities
    available for sale


258,007



122,691



164,616Proceeds from maturities, calls and paydowns of FHLB and Federal
    Reserve Bank stock


1,770







1,575Purchases of securities available for sale


(273,669
)


(282,200
)


(81,978
)Purchases of FHLB and Federal Reserve Bank stock


(20,706
)


(47,258
)


(12,888
)Net change in loans


(40,381
)


(554,207
)


(520,366
)Loans sold in branch sale






8,078



Proceeds from sales of other real estate owned


5,790



5,840



5,048Purchase of bank-owned life insurance






(15,876
)


Proceeds from equity method distributions






4,060



Net purchases of premises and equipment


(6,920
)


(13,243
)


(17,069
)Cash paid in business acquisitions, net of cash acquired






(9,534
)


Net cash provided by (used in) investing activities


(37,555
)


(580,295
)


191,521Financing activitiesNet change in deposits


(26,509
)


486,691



189,633Deposits sold in branch sale






(38,042
)


Net change in federal funds purchased and securities sold under
    repurchase agreements


66,519



(110,570
)


61,968Net change in commercial paper and other short-term borrowings


(125,011
)


210,759



(127,252
)Proceeds from issuance of long-term debt and trust preferred
    securities


240,000



265,000



186,857Retirement of long-term debt


(160,065
)


(335,065
)


(502,736
)Debt extinguishment expense










(6,884
)Derivative termination costs










(7,696
)Proceeds from issuance of common stock


12,149



23,649



11,443Purchases of common stock


(10,626
)






Tax benefits from stock-based compensation plans


1,318



1,568



Cash dividends paid


(27,203
)


(23,050
)


(22,227
)Net cash provided by (used in) financing activities


(29,428
)


480,940



(216,894
)Net increase (decrease) in cash and cash equivalents


(629
)


(22,725
)


27,541Cash and cash equivalents at beginning of period


102,827



125,552



98,011Cash and cash equivalents at end of period

$
102,198


$
102,827


$
125,552Supplemental information for continuing operationsCash paid for:Interest

$
161,266


$
124,152


$
96,857Income taxes


19,689



19,816



21,520Non-cash items:Transfer of loans to other real estate owned


9,930



7,772



6,532Unrealized gains (losses) on securities available for sale (net
    of tax expense (benefit) of $2,921, $3,488, and ($4,235),
    respectively)


4,476



5,337



(6,393
)Issuance of common stock in business acquisitions


(469
)


72,977



5011035 exchange of bank-owned life insurance






21,541



  See notes to consolidated financial statements.
 67




---



##### Table of Contents



First Charter
    Corporation
    Notes to Consolidated Financial Statements
  1.
    Business and
    Summary of Significant Accounting Policies  Description of
    Business
    Basis of
    Presentation and Principles of Consolidation
      Consolidation of Variable Interest Entities,
 68




---



##### Table of Contents



Business
    Combinations
  Note 5
  Discontinued
    Operations
  Discontinued Operations Note 5
  Investment
    Securities
  Note 9
     69




---



##### Table of Contents



Loans and Loans
    Held for Sale
          Allowance for
    Loan Losses
    Accounting by
    Creditors for Impairment of a Loan.
 70




---



##### Table of Contents



loan-by-loan
      Derivative
    Instruments
    Loan Sales and
    Securitizations
     71




---



##### Table of Contents



Servicing
    Rights
    Premises and
    Equipment
    Foreclosed
    Properties
    Intangible
    Assets
         72




---



##### Table of Contents



Income
    Taxes
    Cash and Cash
    Equivalents
  one-day
    For the Year Ended(In thousands)

December 31, 2006Net cash provided by operating activities, as previously reported

$
94,428Adjustment for cash acquired in acquisition


(17,798
)Net cash provided by operating activities, as reported herein

$
76,630Net cash used in investing activities, as previously reported

$
(598,093
)Adjustment for cash acquired in acquisition


17,798Net cash used in investing activities, as reported herein

$
(580,295
)Net change in cash and cash equivalents

$
     For the Year Ended(In thousands)

December 31, 2005Net cash provided by operating activities, as previously reported

$
38,426Adjustment for debt extinguishment expense


6,884Adjustment for derivative termination costs


7,696Other


(92
)Net cash provided by operating activities, as reported herein

$
52,914Net cash used in financing activities, as previously reported

$
(202,406
)Adjustment for debt extinguishment expense


(6,884
)Adjustment for derivative termination costs


(7,696
)Other


92Net cash used in financing activities, as reported herein

$
(216,894
)Net change in cash and cash equivalents

$
   Securities Sold
    under Agreements to Repurchase
   73




---



##### Table of Contents



Equity Method
    Investments
        Bank Owned Life
    Insurance
    Net Income Per
    Share
      For the Calendar Year2007


2006


2005Basic weighted-average number of common shares outstanding


34,612,184



31,525,366



30,457,573Dilutive effect arising from potential common stock issuances


375,837



312,926



326,833Diluted weighted-average number of common shares outstanding


34,988,021



31,838,292



30,784,406  74




---



##### Table of Contents



Dividends Per
    Share
    Share-Based
    Payments
    Share-Based Payments, , Accounting for Stock Issued to Employees.
  For the Calendar(Dollars in thousands, except per
    share data)

Year 2005Net income, as reported

$
25,311Add: Stock-based employee compensation expense included in
    reported net income


118Add: Effect of change in prior-period forfeiture assumptions


932Less: Stock-based employee compensation expense determined under
    fair value method for all awards, net of related tax effects


(1,733
)Pro forma net income

$
24,628Net income per shareBasic - as reported

$
0.83Basic - pro forma


0.81Diluted - as reported


0.82Diluted - pro forma


0.80Average sharesBasic


30,457,573Diluted


30,784,406   2.
    Recent Accounting
    Pronouncements  Noncontrolling
    Interests in Consolidated Financial Statements  An
    Amendment of ARB No. 51,
 75




---



##### Table of Contents



Business
    Combinations Business
    Combinations
  The Fair
    Value Option for Financial Assets and Financial
    Liabilities  Including an Amendment of FASB Statement
    No. 115 Accounting for Certain
    Investments in Debt and Equity Securities, available-for-sale
  Fair Value
    Measurements
  Accounting for
    Servicing of Financial Assets  An Amendment of FASB
    Statement No. 140
  Accounting
    for Certain Hybrid Financial Instruments  An
    Amendment of FASB Statements No. 133 and 140.
  , Accounting for Uncertainty in
    Income Taxes  an interpretation of FASB Statement
    No. 109
 76




---



##### Table of Contents



No. 06- 4,
    Accounting for Deferred Compensation and Postretirement Benefit
    Aspects of Endorsement Split Dollar Life Insurance Arrangements. EITF 06-4 EITF 06-4, Employers Accounting for Postretirement
    Benefits Other Than Pensions 06-4
  Written Loan
    Commitments Recorded at Fair Value Through Earnings, Loan Commitments Accounted for as
    Derivative Instruments,
    3.
    Proposed Merger
    with Fifth Third     77




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##### Table of Contents



4.
    Staff Accounting
    Bulletin 108  Considering the Effects of Prior Year
    Misstatements When Quantifying Misstatements in Current Year
    Financial Statements,
    Mortgage Services Revenue.
  Accounts Payable.
  Salaries and Employee Benefits Expense. five-day
 78




---



##### Table of Contents



five-day
    Salaries &Mortgage


Employee


Accounts(In thousands)

Services


Benefits


Payable


TotalCumulative effect on shareholders equity as of
    December 31, 2005

$
(1,000
)

$
(729
)

$
(1,016
)

$
(2,745
)Effect on:Net income for the first quarter of 2006


(173
)


(28
)






(201
)Net income for the second quarter of 2006


(63
)


(28
)






(91
)Net income for the third quarter of 2006


(71
)


(28
)






(99
)Net income for the fourth quarter of 2006


(44
)


(75
)






(119
)Net income for the six months ended June 30, 2006


(236
)


(56
)






(292
)Net income for the nine months ended September 30, 2006


(307
)


(84
)






(391
)Net income for the year ended December 31, 2006


(351
)


(159
)






(510
)     Before





AsAs of and for the Year Ended
    December 31, 2006

Adjustment


Adjustment


AdjustedOther assets

$
190,674


$
(2,234
)

$
188,440Accrued expenses and other liabilities


61,508



1,021



62,529Shareholders equity


450,617



(3,255
)


447,362Mortgage services revenue


3,642



(580
)


3,062Total noninterest income


68,258



(580
)


67,678Salaries and employee benefits expense


68,975



262



69,237Total noninterest expense


124,675



262



124,937Total income tax expense


24,131



(332
)


23,799Net income


47,872



(510
)


47,362Diluted earnings per share from continuing operations


1.51



(0.02
)


1.49   5.
    Acquisitions and
    Divestitures  Acquisition of GBC Bancorp, Inc.
  EITF 99-12 ,
    Determination of the Measurement Date for the Market Price of
    Acquirer Securities Issued in a Purchase Business Combination,
 79




---



##### Table of Contents



Initial




FinalPurchase

Purchase


PurchasePrice

Price


Price(In thousands)

Allocation

Refinements


AllocationPurchase price

$
103,221


$
(1,160
)

$
102,061Capitalized merger costs


1,211



88



1,299Carrying value of net assets acquired


39,869







39,869Excess of purchase price and capitalized merger costs over
    carrying value of net assets acquired


64,563



(1,072
)


63,491Purchase accounting adjustments:Securities


241







241Loans


643



(108
)


535Deferred taxes


794



(752
)


42Certificates of deposit






33



33Subtotal


1,678



(827
)


851Core deposit intangibles


(3,091
)


(469
)


(3,560
)Other identifiable intangible assets


(1,186
)


238



(948
)Goodwill

$
61,964


$
(2,130
)

$
59,834   Insurance Agencies.
    Sale of Employee Benefits Administration
    Business.
   80




---



##### Table of Contents



Discontinued Operations
  November 30(In thousands)

2006Goodwill and other intangible assets

$
1,849Other assets


325Total assets of discontinued operations

$
2,174Other operating liabilities

$
409Liabilities incurred in connection with sale


373Total liabilities of discontinued operations

$
782     For the Calendar Year(In thousands)

2007


2006
    (1)


2005Noninterest income

$



$
3,012


$
3,475Noninterest expense






2,976



3,251Income from discontinued operations before tax






36



224Gain on sale






962



Income tax expense






965



88Income from discontinued operations, after tax

$



$
33


$
136  (1)
    Includes the results of SEBS for
    the eleven months ended November 30, 2006.  6.
    Goodwill and
    Other Intangible Assets    December 312007


2006Gross





Net


Gross





NetCarrying


Accumulated


Carrying


Carrying


Accumulated


Carrying(In thousands)

Amount


Amortization


Amount


Amount


Amortization


AmountAmortized intangible assets:Core deposits

$
3,560


$
808


$
2,752


$
3,091


$
200


$
2,891Noncompete agreements


90



90







90



63



27Customer lists


2,615



1,640



975



2,359



1,177



1,182Total amortized intangible assets


6,265



2,538



3,727



5,540



1,440



4,100Goodwill


79,144



N/A



79,144



80,968



N/A



80,968Total goodwill and amortized intangible assets

$
85,409


$
2,538


$
82,871


$
86,508


$
1,440


$
85,068   Note 5
   81




---



##### Table of Contents



Note 5
  Note 5
    For the Calendar Year(In thousands)

2007


2006


2005Continuing operations

$
1,098


$
654


$
378Discontinued operations






169



160Total intangibles amortization expense

$
1,098


$
823


$
538     Core


Customer(In thousands)

Deposits


Lists


Total2008

$
608


$
388


$
9962009


531



263



7942010


453



142



5952011


375



83



4582012


297



48



3452013 and after


488



51



539Total expected future intangibles amortization expense

$
2,752


$
975


$
3,727   7.
    Comprehensive
    Income      For the Calendar Year2007


2006


2005Comprehensive incomeNet income

$
41,304


$
47,395


$
25,311Other comprehensive income (loss)Unrealized gains (losses) on available-for-sale securities, net


7,601



2,997



(27,318
)Reclassification adjustment for gains (losses) included in net
    income


204



(5,828
)


(16,690
)Income tax effect, net


(2,921
)


(3,488
)


4,235Other comprehensive income (loss)


4,476



5,337



(6,393
)Total comprehensive income

$
45,780


$
52,732


$
18,918  82




---



##### Table of Contents



8.
    Securities
    Available for Sale    December 31, 2007Amortized


Unrealized


Unrealized


Fair(In thousands)

Cost


Gains


Losses


ValueU.S. government agency obligations

$
145,810


$
814


$
70


$
146,554Mortgage-backed securities


565,872



4,399



4,837



565,434State, county, and municipal obligations


92,324



692



78



92,938Asset-backed securities


57,681







3,452



54,229Equity securities


1,362



193



39



1,516Total securities

$
863,049


$
6,098


$
8,476


$
860,671   December 31, 2006Amortized


Unrealized


Unrealized


Fair(In thousands)

Cost


Gains


Losses


ValueU.S. government agency obligations

$
278,106


$
358


$
3,070


$
275,394Mortgage-backed securities


419,824



768



8,572



412,020State, county, and municipal obligations


102,221



745



364



102,602Asset-backed securities


65,141



11



37



65,115Equity securities


969



387







1,356Total securities

$
866,261


$
2,269


$
12,043


$
856,487     Due after 1


Due after 5Due in 1 Year


through 5


through 10


Due afteror less


years


years


10 years


Total(Dollars in thousands)

Amount


Yield


Amount


Yield


Amount


Yield


Amount


Yield


Amount


YieldFair value of securities available for saleU.S. government agency obligations

$
115,994



4.71
%

$
26,572



4.39
%

$
3,988



5.43
%

$





%

$
146,554



4.67
%Mortgage-backed
    securities(1)


2,880



4.93



213,469



4.86



304,665



5.47



44,420



5.60



565,434



5.25State and municipal
    obligations(2)


28,727



6.93



24,809



5.19



4,757



5.95



34,645



5.32



92,938



5.81Asset-backed securities










14,204



7.98



19,095



6.40



20,930



6.84



54,229



6.98Equity
    securities(3)


























1,516



3.14



1,516



3.14Total

$
147,601



5.15
%

$
279,054



5.00
%

$
332,505



5.53
%

$
101,511



5.72
%

$
860,671



5.32
%Amortized cost of securities available for sale

$
146,663






$
280,710






$
332,602






$
103,074






$
863,049   (1)
    
    Maturities estimated based on
    average life of security.(2)
    
    Yields on tax-exempt securities
    are calculated on a tax-equivalent basis using the marginal
    Federal income tax rate of 35 percent.(3)
    
    Although equity securities have
    no stated maturity, they are presented for illustrative purposes
    only. The 3.14 percent yield represents the expected
    dividend yield to be earned on equity securities.   83




---



##### Table of Contents



For the Calendar Year(In thousands)

2007


2006


2005Gross gains

$
357


$
32


$
1,225Gross losses


(153
)


(5,860
)


(17,915
)Securities gains (losses), net

$
204


$
(5,828
)

$
(16,690
)         Less than 12 months


12 months or longer


TotalFair


Unrealized


Fair


Unrealized


Fair


Unrealized(In thousands)

Value


Losses


Value


Losses


Value


LossesAAA/AA-RATED SECURITIESU.S. government agency obligations

$



$



$
49,918


$
70


$
49,918


$
70Mortgage-backed securities


74,397



1,414



171,933



3,423



246,330



4,837State, county, and muncipal obligations










8,974



78



8,974



78Total AAA/AA-rated securities


74,397



1,414



230,825



3,571



305,222



4,985A/BBB-RATED SECURITIESAsset-backed securities


45,401



2,278



8,828



1,174



54,229



3,452Total A/BBB-rated securities


45,401



2,278



8,828



1,174



54,229



3,452UNRATED SECURITIESEquity securities


417



39











417



39Total unrated securities


417



39











417



39Total temporarily impairedsecurities

$
120,215


$
3,731


$
239,653


$
4,745


$
359,868


$
8,476     9.
    Trading
    Activity  write-up Note 17
 84




---



##### Table of Contents



10.
    Derivatives    11.
    Loans and
    Allowance for Loan Losses      December 312007


2006(Dollars in thousands)

Amount


Percent


Amount


PercentCommercial real estate

$
1,073,983



30.7
%

$
1,034,317



29.7
%Commercial non real estate


308,792



8.8



301,958



8.7Construction


871,579



24.9



793,294



22.8Mortgage


582,398



16.6



618,142



17.7Home equity


413,873



11.8



447,849



12.8Consumer


252,382



7.2



289,493



8.3Total portfolio loans

$
3,503,007



100.0
%

$
3,485,053



100.0
%   30-year
    For the Calendar Year(In thousands)

2007


2006


2005Balance, January 1

$
34,966


$
28,725


$
26,872Charge-offs


(13,838
)


(4,578
)


(8,652
)Recoveries


1,341



1,318



1,162Net charge-offs


(12,497
)


(3,260
)


(7,490
)Allowance related to acquired company






4,211



Provision for loan losses


19,945



5,290



9,343Balance, December 31

$
42,414


$
34,966


$
28,725  85




---



##### Table of Contents



December 31(In thousands)

2007


2006Nonaccrual loans

$
28,695


$
8,200Loans 90 days or more past due and accruing interest






Total nonperforming loans


28,695



8,200Other real estate


10,056



6,477Total nonperforming assets

$
38,751


$
14,677       Accounting by
    Creditors for Impairment of a Loan  an Amendment to
    FASB Statements No. 5 and No. 15
        (In thousands)

2007Balance at December 31, 2006

$
634New loans


2,682Principal repayments


(51
)Director and officer changes


42Balance at December 31, 2007

$
3,307  86




---



##### Table of Contents



12.
    Servicing
    Rights    Small Business Administration
      2007


2006


2005(In thousands)MSR


SSR


MSR


SSR


MSR


SSRBalance, January 1

$
756


$
1,137


$
1,133


$



$
1,647


$
Servicing rights capitalized or acquired






82







1,186







Amortization expense


(165
)


(189
)


(377
)


(49
)


(514
)


Purchase accounting adjustment






(238
)














Valuation allowance






















Balance, December 31

$
591


$
792


$
756


$
1,137


$
1,133


$
      87




---



##### Table of Contents



(In thousands)

MSR


SSR


Total2008

$
135


$
178


$
3132009


111



150



2612010


92



124



2162011


74



102



1762012


61



83



1442013 and after


118



155



273Total amortization

$
591


$
792


$
1,383     13.
    Premises and
    Equipment    December 31(In thousands)

2007


2006Land

$
24,315


$
24,467Buildings


81,412



78,887Furniture and equipment


60,972



58,077Leasehold improvements


11,551



11,121Construction in progress


1,886



2,247Total premises and equipment


180,136



174,799Less accumulated depreciation and amortization


69,373



63,211Premises and equipment, net

$
110,763


$
111,588     14.
    Deposits    December 31(In thousands)

2007


2006Noninterest bearing demand

$
438,313


$
454,975Interest bearing demand


478,186



420,774Money market accounts


564,053



620,699Savings deposits


101,234



111,047Certificates of deposit


1,313,482



1,223,252Brokered certificates of deposit


326,351



417,381Total deposits

$
3,221,619


$
3,248,128  88




---



##### Table of Contents



(In thousands)2008

$
1,527,0992009


85,3342010


14,0842011


6,9362012


6,3502013 and after


30Total certificates of deposit

$
1,639,833     (In thousands)Less than three months

$
405,921Three to six months


289,886Six to twelve months


217,529Greater than twelve months


44,345Total certificates of deposit with denominations over
    $100,000

$
957,681   15.
    Other
    Borrowings    2007


2006Weighted-





Weighted-Average





AverageContractual





Contractual(Dollars in thousands)

Balance


Rate


Balance


RateFederal funds purchased and securities sold under agreements to
    repurchase

$
268,232



4.59
%

$
201,713



4.60
%Commercial paper


64,180



2.91



38,191



2.72Other short-term borrowings


220,000



5.27



371,000



5.35Long-term debt


567,729



5.26



487,794



4.79Total other borrowings

$
1,120,141



4.97
%

$
1,098,698



4.87
%        89




---



##### Table of Contents



(Dollars in thousands)AggregatePrincipalAmount of


AggregateTrust


Principal


Stated

Per Annum

InterestPreferred


Amount of


Maturity of

Interest Rate

Payment

RedemptionIssuer

Issuance Date

Securities


the Notes


the Notes

of the Notes

Dates

PeriodCapital Trust I

June 2005

$
35,000


$
36,083


September 2035

3 mo. LIBOR + 169 bps

3/15, 6/15, 9/15,12/15

On or after 9/15/2010Capital Trust II

September 2005


25,000



25,774


December 2035

3 mo. LIBOR + 142 bps

3/15, 6/15, 9/15,12/15

On or after 12/15/2010Total



$
60,000


$
61,857       (In thousands)

2008


2009


2010


2011


2012


Thereafter


TotalFederal funds purchased and securities sold under agreements to
    repurchase

$
268,232


$



$



$



$



$



$
268,232Commercial paper


64,180























64,180Other short-term borrowings


220,000























220,000Long-term debt


20,000



310,000



75,000



100,130







62,599



567,729Total other borrowings

$
572,412


$
310,000


$
75,000


$
100,130


$



$
62,599


$
1,120,141  90




---



##### Table of Contents



16.
    Income
    Tax    For the Calendar Year(In thousands)

2007


2006


2005Current:Federal

$
20,439


$
22,310


$
8,690State


4,207



2,883



689Total current


24,646



25,193



9,379Deferred:Federal


(2,820
)


(1,238
)


(219
)State


(463
)


(156
)


(28
)Total deferred


(3,283
)


(1,394
)


(247
)Income tax expense from continuing operations

$
21,363


$
23,799


$
9,132Income tax expense from discontinued operations

$



$
965


$
88     For the Calendar Year(In thousands)

2007


2006


2005Net income from continuing operations

$
21,363


$
23,799


$
9,132Net income from discontinued operations






965



88Shareholders equity, for unrealized losses on securities
    available for sale


2,921



3,488



(4,235
)Total

$
24,284


$
28,252


$
4,985     For the Calendar Year(Dollars in thousands)

2007


2006


2005Tax at statutory federal rate

$
21,934



35.0
%

$
24,906



35.0
%

$
12,008



35.0
%Increase (reduction) in income taxes resulting from:Tax-exempt income


(1,344
)


(2.1
)


(1,409
)


(2.0
)


(1,335
)


(3.9)Bank-owned life insurance


(1,621
)


(2.6
)


(1,233
)


(1.7
)


(1,509
)


(4.4)State income tax, net of federal


2,434



3.8



1,773



2.5



429



1.2Change in valuation allowance


(30
)






(80
)


(0.1
)


(526
)


(1.5)Other, net


(10
)






(158
)


(0.3
)


65



0.2Income tax expense from continuing operations

$
21,363



34.1
%

$
23,799



33.4
%

$
9,132



26.6
%  91




---



##### Table of Contents



For the Calendar Year(In thousands)

2007


2006


2005Deferred tax benefit (exclusive of the effects of other
    components below)

$
(3,283
)

$
(1,394
)

$
(247
)Shareholders equity, for unrealized gains (losses) on
    securities available for sale


2,921



3,488



(4,235
)Purchase accounting adjustment


(134
)


(2,185
)


Total

$
(496
)

$
(91
)

$
(4,482
)     December 31(In thousands)

2007


2006Deferred tax assets:Allowance for loan losses

$
16,107


$
13,201Unrealized losses on securities available for sale


939



3,726Deferred compensation


3,007



3,464Investments


638



805Stock based compensation


2,219



917Depreciable assets


3,486



5,588Other


1,672



2,459Total deferred tax assets


28,068



30,160Less valuation allowance






30Net deferred tax assets


28,068



30,130Deferred tax liabilities:Loan origination costs


1,383



2,718Federal Home Loan Bank of Atlanta stock


242



1,053Mortgage servicing rights


1,633



1,889Intangibles


1,850



1,501Other


313



818Total deferred tax liabilities


5,421



7,979Net deferred tax asset

$
22,647


$
22,151     ,
    Accounting for Uncertainty in Income Taxes  an
    interpretation of FASB Statement No. 109
   92




---



##### Table of Contents



(In thousands)Balance January 1, 2007

$
11.1Expiration of statute


(0.3
)Addition for tax positions of prior periods


0.1Reductions for tax positions of prior periods


(0.1
)Balance December 31, 2007

$
10.8                 Wal-Mart
    Stores East Inc. v Reginald S. Hinton, Secretary of Revenue of
    State of North Carolina
 93




---



##### Table of Contents



Note 24
  17.
    Employee Benefit
    Plans  First Charter Retirement Savings Plan.
  First Charter Option Plan Trust.
  First Charter Directors Option Deferral
    Plan.
  Supplemental Executive Retirement Plans.
  Deferred Compensation for Non-Employee
    Directors.
 94




---



##### Table of Contents



18.
    Share-Based
    Payments        Restricted Stock Award Program.
 95




---



##### Table of Contents



First Charter Comprehensive Stock Option
    Plan.
  First Charter Corporation Stock Option Plan for Non-Employee
    Directors.
  2000 Omnibus Stock Option and Award Plan.
  10-year
  Employee Stock Purchase Plans.
   96




---



##### Table of Contents



Rule 16b-3
       97




---



##### Table of Contents



Summary of Stock Option and Employee Stock Purchase Plan
    Programs.
  Weighted-AverageWeighted-


RemainingAverage


Contractual


AggregateExercise


Term


IntrinsicShares


Price


(in years)


ValueOutstanding at January 1, 2005


2,801,263


$
19.97Granted


461,996



23.55Exercised


(499,194
)


16.93






$
3,103,802Forfeited or expired


(126,007
)


21.68Outstanding at December 31, 2005


2,638,058


$
21.09



3.6


$
7,572,117Exercisable at December 31, 2005


1,786,287


$
21.01



2.4


$
5,498,109Outstanding at January 1, 2006


2,638,058


$
21.09Granted


69,250



23.68Exercised


(883,684
)


21.50






$
2,711,016Forfeited or expired


(326,005
)


22.95Outstanding at December 31, 2006


1,497,619


$
20.57



4.7


$
6,365,913Exercisable at December 31, 2006


1,435,769


$
20.43



4.5


$
6,308,859Outstanding at January 1, 2007


1,497,619


$
20.57Granted


71,500



24.46Exercised


(423,618
)


19.50






$
3,526,979Forfeited or expired


(262,648
)


25.31Outstanding at December 31, 2007


882,853


$
19.98



5.1


$
8,721,221Exercisable at December 31, 2007


788,433


$
19.48



4.6


$
8,181,337          98




---



##### Table of Contents



For the Calendar Year2007


2006


2005Expected volatility


22.4
%


24.8
%


26.4
%Expected dividend yield


3.2



3.2



3.2Risk-free interest rate


4.8



4.7



3.9Expected term (in years)


8.0



8.0



7.4       Outstanding Options

Options ExercisableWeighted-Average

Weighted-




Weighted-Average

Weighted-Number


Remaining Contractual

Average

Number


Remaining Contractual

AverageRange of Exercise Prices

Outstanding


Life (in years)

Exercise Price

Exercisable


Life (in years)

Exercise Price$ 5.01 - 10.00


3,400


1.7


$ 9
.04


3,400


1.7


$ 9
.0410.01 - 12.50


18,702


1.0


11
.63


18,702


1.0


11
.6312.51 - 15.00


34,594


2.0


14
.38


34,594


2.0


14
.3815.01 - 17.50


201,604


3.5


16
.59


201,604


3.5


16
.5917.51 - 20.00


186,536


3.9


18
.44


186,536


3.9


18
.4420.01 - 22.50


123,603


5.9


20
.80


123,603


5.9


20
.8022.51 - 25.00


297,914


7.3


23
.84


203,494


6.6


23
.7125.01 - 27.50


16,500


2.7


26
.42


16,500


2.7


26
.42Total


882,853


5.1


$19
.98


788,433


4.6


$19
.48   Service-Based and Performance-Based
    Awards.
 99




---



##### Table of Contents



Service-Based


Performance-BasedWeighted-





Weighted-Average





AverageGrant Date





Grant DateShares


Fair Value


Shares


Fair ValueOutstanding at January 1, 2005


18,547


$
22.34






$
Granted


17,400



23.98







Vested


(1,300
)


23.50







Forfeited


(2,000
)


25.49







Outstanding at December 31, 2005


32,647



22.97







Granted


193,792



24.14



58,500



23.66Vested


(1,300
)


23.50







Forfeited


(9,476
)


23.30



(6,400
)


23.66Outstanding at December 31, 2006


215,663



24.00



52,100



23.66Granted


112,685



23.74



54,600



22.70Vested


(31,212
)


25.10







Forfeited


(33,968
)


23.22



(16,533
)


22.35Outstanding at December 31, 2007


263,168


$
24.01



90,167


$
22.31         19.
    Shareholders
    Equity Programs  Stock Repurchase Programs.
 100




---



##### Table of Contents



Dividend Reinvestment and Stock Purchase
    Plan.
    Stockholder Protection Rights Agreement. 1/1000
         101




---



##### Table of Contents



20.
    Commitments,
    Contingencies, and Off-Balance Sheet Risk  Commitments and Off-Balance Sheet Risk. case-by-case
    Less than











Timing not(In thousands)

1 Year


1-3 Years


4-5 Years


Over 5 Years


determinable


TotalLoan commitments

$
639,812


$
157,611


$
9,977


$
99,279


$



$
906,679Lines of credit


29,928



1,174



4,002



456,451







491,555Standby letters of credit


18,563



8,059















26,622Anticipated tax settlements


















10,189



10,189Total commitments

$
688,303


$
166,844


$
13,979


$
555,730


$
10,189


$
1,435,045      102




---



##### Table of Contents



(In thousands)2008

$
3,8132009


3,7722010


3,0972011


2,7082012


2,5942013 and after


32,125Total minimum lease payments

$
48,109       Contingencies. Note 16
    21.
    Related Party
    Transactions    Note 11
  22.
    Fair Value of
    Financial Instruments     103




---



##### Table of Contents



Cash and cash equivalents:
  Securities Available for Sale:
  Federal Home Loan Bank and Federal Reserve Bank
    stock:
  Loans held for sale:
  Loans:
  Deposits:
  Short-term borrowings:
  Long-term debt:
    December 312007


2006Estimated





EstimatedCarrying


Fair


Carrying


Fair(In thousands)

Amount


Value


Amount


ValueFinancial assetsCash and cash equivalents

$
102,198


$
102,198


$
102,827


$
102,827Securities available for sale


860,671



860,671



856,487



856,487Federal Home Loan Bank and FederalReserve Bank stock


48,990



48,990



49,928



49,928Loans held for sale


14,145



14,145



12,292



12,292Portfolio loans, net of allowance for loan losses


3,460,593



3,471,532



3,450,087



3,441,803Financial liabilitiesDeposits


3,221,619



3,173,637



3,248,128



3,170,976Short-term borrowings


552,412



548,228



610,904



606,119Long-term debt


567,729



568,318



487,794



477,650  104




---



##### Table of Contents



23.
    Regulatory
    Restrictions and Capital Ratios          For CapitalAdequacy Purposes


To Be Well CapitalizedActual








Minimum





Minimum(Dollars in thousands)

Amount


Ratio


Amount


Ratio


Amount


RatioAt December 31, 2007:LeverageFirst Charter Corporation

$
446,890



9.43
%

$
189,630



4.00
%


None



NoneFirst Charter Bank


417,979



8.83



189,252



4.00


$
236,565



5.00
%Tier I CapitalFirst Charter Corporation

$
446,890



11.17
%

$
159,985



4.00
%


None



NoneFirst Charter Bank


417,979



10.47



159,732



4.00


$
239,598



6.00
%Total Risk-Based CapitalFirst Charter Corporation

$
489,389



12.24
%

$
319,970



8.00
%


None



NoneFirst Charter Bank


460,393



11.53



319,464



8.00


$
399,330



10.00
%At December 31, 2006:LeverageFirst Charter Corporation

$
428,135



9.32
%

$
183,678



4.00
%


None



NoneFirst Charter Bank


362,970



8.36



173,591



4.00


$
216,988



5.00
%Gwinnett Banking Company


37,049



9.75



15,192



4.00



18,991



5.00Tier I CapitalFirst Charter Corporation

$
428,135



10.53
%

$
162,614



4.00
%


None



NoneFirst Charter Bank


362,970



9.99



145,275



4.00


$
217,913



6.00
%Gwinnett Banking Company


37,049



10.38



14,280



4.00



21,420



6.00Total Risk-Based CapitalFirst Charter Corporation

$
463,273



11.40
%

$
325,228



8.00
%


None



NoneFirst Charter Bank


393,664



10.84



290,550



8.00


$
363,188



10.00
%Gwinnett Banking Company


41,321



11.57



28,560



8.00



35,700



10.00  105




---



##### Table of Contents



Tier 1 capital consists of total equity plus qualifying
    capital securities and minority interests, less unrealized gains
    and losses accumulated in other comprehensive income, certain
    intangible assets, and adjustments related to the valuation of
    servicing assets and certain equity investments in nonfinancial
    companies (equity method investments).
  The leverage ratio reflects Tier 1 capital divided by
    average total assets for the period. Average assets used in the
    calculation exclude certain intangible and servicing assets.
  Total risk-based capital is comprised of Tier 1 capital
    plus qualifying subordinated debt and allowance for loan losses
    and a portion of unrealized gains on certain equity
    securities.
  Both the Tier 1 and the total risk-based capital ratios
    are computed by dividing the respective capital amounts by
    risk-weighted assets, as defined.
        24.
    Subsequent
    Event  Note 16
      25.
    Business Segment
    Information   106




---



##### Table of Contents



Note 1
    For the Calendar Year 2007Consolidated(In thousands)

The Bank


Other


Eliminations


TotalInterest income

$
309,787


$
105


$



$
309,892Interest expense


157,787



5,219







163,006Net interest income (expense)


152,000



(5,114
)






146,886Provision for loan losses


19,945











19,945Noninterest income


77,792



462







78,254Noninterest expense


141,641



887







142,528Income (loss) before income tax expense


68,206



(5,539
)






62,667Income tax expense (benefit)


23,251



(1,888
)






21,363Net income (loss)

$
44,955


$
(3,651
)

$



$
41,304Average portfolio loans

$
3,511,560


$



$



$
3,511,560Average assets


4,838,736



546,142



(532,166
)


4,852,712Total assets at December 31, 2007


4,847,132



598,605



(583,320
)


4,862,417   For the Calendar Year 2006Consolidated(In thousands)

The Bank


Other


Eliminations


TotalInterest income

$
264,509


$
420


$



$
264,929Interest expense


126,415



4,804







131,219Net interest income (expense)


138,094



(4,384
)






133,710Provision for loan losses


5,290











5,290Noninterest income


64,247



3,431







67,678Noninterest expense


124,740



197







124,937Income (loss) from continuing operations before income tax
    expense


72,311



(1,150
)






71,161Income tax expense (benefit)


24,185



(386
)






23,799Income (loss) from continuing operations, net of tax


48,126



(764
)






47,362Discontinued operations:Income from discontinued operations


36











36Gain on sale


962











962Income tax expense


965











965Income from discontinued operations, net of tax


33











33Net income (loss)

$
48,159


$
(764
)

$



$
47,395Average portfolio loans

$
3,092,801


$



$



$
3,092,801Average assets of continuing operations


4,538,879



440,931



(612,208
)


4,367,602Average assets of discontinued operations


2,232











2,232Total assets at December 31, 2006


4,737,578



552,045



(432,906
)


4,856,717   107




---



##### Table of Contents



For the Calendar Year 2005Consolidated(In thousands)

The Bank


Other


Eliminations


TotalInterest income

$
224,567


$
38


$



$
224,605Interest expense


97,490



2,232







99,722Net interest income (expense)


127,077



(2,194
)






124,883Provision for loan losses


9,343











9,343Noninterest income


46,599



139







46,738Noninterest expense


127,750



221







127,971Income (loss) from continuing operations before income tax
    expense


36,583



(2,276
)






34,307Income tax expense (benefit)


9,740



(608
)






9,132Income (loss) from continuing operations, net of tax


26,843



(1,668
)






25,175Discontinued operations:Income from discontinued operations


224











224Income tax expense


88











88Income from discontinued operations, net of tax


136











136Net income (loss)

$
26,979


$
(1,668
)

$



$
25,311Average portfolio loans

$
2,788,755


$



$



$
2,788,755Average assets of continuing operations


4,566,915



391,698



(471,903
)


4,486,710Average assets of discontinued operations


2,373











2,373Total assets of continuing operations at December 31, 2005


4,213,424



445,789



(429,432
)


4,229,781Total assets of discontinued operations at December 31, 2005


2,639











2,639  108




---



##### Table of Contents



26.
    First Charter
    Corporation (Parent Company)      Condensed Balance
    Sheets
 December 31(In thousands)

2007


2006AssetsCash

$
83,999


$
60,447Securities available for sale


1,099



8,715Investments in subsidiaries


502,279



479,028Receivables from subsidiaries


7,000



Other assets


7,119



6,945Total Assets

$
601,496


$
555,135Liabilities and Shareholders EquityAccrued liabilities

$
6,951


$
6,988Payable to subsidiaries






737Commercial paper


64,180



38,191Long-term debt


61,857



61,857Other liabilities


164



Total liabilities


133,152



107,773Shareholders equity


468,344



447,362Total Liabilities and Shareholders Equity

$
601,496


$
555,135   Condensed
    Statements of Income
 For the Calendar Year(In thousands)

2007


2006


2005IncomeDividends from subsidiaries

$
28,000


$
45,000


$
13,724Interest and dividends on securities


105



546



79Securities gains, net


348



6



Noninterest income


114



3,300



98Total income


28,567



48,852



13,901ExpenseInterest


5,219



4,804



2,232Noninterest expense


887



197



221Total expense


6,106



5,001



2,453Income before income tax benefit and equity in undistributed net
    income of subsidiaries


22,461



43,851



11,448Income tax benefit


1,888



386



608Income before equity in undistributed net income of subsidiaries


24,349



44,237



12,056Equity in undistributed net income of subsidiaries


16,955



3,158



13,255Net Income

$
41,304


$
47,395


$
25,311  109




---



##### Table of Contents



Condensed
    Statements of Cash Flows
 For the Calendar Year(In thousands)

2007


2006


2005Operating ActivitiesNet income

$
41,304


$
47,395


$
25,311Adjustments to reconcile net income to net cash provided by
    operating activities:Securities gains, net


(348
)


(6
)


Tax benefits from stock-based compensation plans


(1,318
)


(1,568
)


Premium amortization and discount accretion, net


1



1



Change in accrued liabilities


160



24



177Change in other assets


1,144



2,254



(1,787
)Change in receivable from subsidiaries


(7,737
)


3,737



3,000Equity in undistributed net income of subsidiaries


(16,955
)


(3,158
)


(13,255
)Net cash provided by operating activities


16,251



48,679



13,446Investing ActivitiesPurchases of securities available for sale


(1
)


(22,370
)


Proceeds from sales of securities available for sale


7,437



14,994



Investments in subsidiaries


(1,762
)


(17,301
)


(53,042
)Cash paid in business acquisitions, net of cash acquired






(9,534
)


Net cash provided by (used in) investing activities


5,674



(34,211
)


(53,042
)Financing ActivitiesNet change in commercial paper and other short-term borrowings


25,989



(20,241
)


(13,252
)Proceeds from issuance of trust preferred securities










61,857Proceeds from issuance of common stock


12,149



23,649



11,443Purchases of common stock


(10,626
)






Tax benefits from stock-based compensation plans


1,318



1,568



Cash dividends paid


(27,203
)


(23,050
)


(22,227
)Net cash provided by (used in) financing activities


1,627



(18,074
)


37,821Net increase (decrease) in cash and cash equivalents


23,552



(3,606
)


(1,775
)Cash and cash equivalents at beginning of year


60,447



64,053



65,828Cash and cash equivalents at end of year

$
83,999


$
60,447


$
64,053Supplemental InformationCash paid for:Interest

$
5,050


$
4,981


$
2,056Noncash transactions:Issuance of common stock in business acquisitions


(469
)


72,977



501  110




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##### Table of Contents



Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures  Evaluation of
    Disclosure Controls and Procedures
  Rule 13a-15(e) 15d-15(e)
  Remediation of
    Prior Year Material Weaknesses
  Item 9A. Controls and Procedures Form 10-K Form 10-K Form 10-Q
  
    The Registrant evaluated its personnel resources and secured
    permanent skilled finance, tax and accounting resources.
    The Registrant engaged independent consultants to assist with
    the tax function and certain areas of the reconciliation and
    accounting functions.
    The Registrant enhanced its control environment to promote the
    adherence to appropriate internal control policies and
    procedures. These efforts were focused on redesigning the
    reconciliation process, improving strategic planning to assess
    the accounting implications of non-routine transactions, and
    improving the evaluation of significant estimates.
    The Registrant reassessed and revised key policies and
    procedures, including the general ledger, general ledger
    reconciliation, capital expenditure and accounts payable, to
    develop and deploy effective policies and procedures and
    reinforced compliance in an effort to constantly improve the
    Registrants internal control environment.
    The Registrant enhanced its internal governance and compliance
    function. Periodic and regular meetings were held with the
    internal governance and compliance functions to discuss and
    coordinate operational, compliance and financial matters as well
    as the progress of the Remediation Plan. 111




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##### Table of Contents




    The Registrant reassessed, reviewed, and approved the charters
    that govern the internal governance and compliance functions,
    which include, but are not limited to the Disclosure Committee,
    Compliance Risk Committee, Asset and Liability Committee,
    Technology Steering Committee, and the Sarbanes-Oxley Review
    Committee. Where deemed necessary, various amendments to these
    documents were adopted. The Registrants management
    communicated the charters to the respective internal governance
    and compliance functions. These functions also have reassessed
    their reporting practices and have enhanced their evaluation
    processes.
    The Registrant enhanced the tone and control consciousness to
    support effective application of policies and the execution of
    procedures within the daily operation of financial reporting
    controls.
    The Registrant validated and monitored all improvements in the
    internal control environment in order to assess and to evaluate
    the effectiveness of the internal controls within the daily
    operation of financial reporting controls. This included an
    assessment and an evaluation of the application of the newly
    implemented policies and the execution of the appropriate
    internal control procedures.  Rule 13a-15(f) 15d-15(f)
  Changes in
    Internal Control over Financial Reporting
        Managements
    Annual Report on Internal Control Over Financial
    Reporting
  Rule 13a-15(f) 15d-15(f)
 112




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##### Table of Contents



Internal
    Control  Integrated Framework
    Form 10-K Item 8. Financial Statements and Supplementary
    Data  Report of Independent Registered Public
    Accounting Firm
  Item 9B.
    Other
    Information   113




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##### Table of Contents



Part III  Item 10.
    Directors,
    Executive Officers and Corporate Governance  Form 10-K Form 10-K. Part 1, Item 4A Form 10-K Form 10-K.
  Item 11.
    Executive
    Compensation  Form 10-K Form 10-K.
 Item 12.Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters  Form 10-K Form 10-K.
  Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence  Form 10-K Form 10-K.
  Item 14.
    Principal
    Accountant Fees and Services  Form 10-K Form 10-K.
 114




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##### Table of Contents



PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules    Page(1)

Financial Statements:Reports of KPMG LLP, Independent Registered Public Accounting
    Firm


62Consolidated Balance Sheets as of December 31, 2007 and 2006


64Consolidated Statements of Income for the years endedDecember 31, 2007, 2006, and 2005


65Consolidated Statements of Shareholders Equity for the
    years endedDecember 31, 2007, 2006, and 2005


66Consolidated Statements of Cash Flows for the years endedDecember 31, 2007, 2006, and 2005


67Notes to Consolidated Financial Statements


68(2)

Financial Statement Schedules:None(3)

Exhibits   115




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##### Table of Contents



Exhibit No.(per ExhibitTable inItem 601 ofRegulation S-K)

Description of Exhibits2.1

Agreement and Plan of Merger, dated June 1, 2006, by and
    between the Registrant and GBC Bancorp, Inc., incorporated
    herein by reference to Exhibit 2.1 of the Registrants
    Current Report on
    Form 8-K,
    dated June 1, 2006.2.2

Agreement and Plan of Merger dated as of August 15, 2007 by
    and between First Charter Corporation and Fifth Third Bancorp,
    incorporated herein by reference to Exhibit 2.1 of the
    Registrants Current Report on
    Form 8-K,
    dated August 15, 2007.2.3

Amended and Restated Agreement and Plan of Merger dated as of
    September 14, 2007, by and among First Charter Corporation,
    Fifth Third Bancorp, and Fifth Third Financial Corporation,
    incorporated herein by reference to Exhibit 2.1 of the
    Registrants Current Report on
    Form 8-K,
    dated September 14, 2007.3.1

Amended and Restated Articles of Incorporation of the
    Registrant, incorporated herein by reference to Exhibit 3.1
    of the Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 2004.3.2

Amended and Restated By-laws of the Registrant, as amended,
    incorporated herein by reference to Exhibit 3.2 of the
    Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 2004.4.1

Indenture dated June 28, 2005 between First Charter
    Corporation and Wilmington Trust Company, as trustee,
    incorporated herein by reference to Exhibit 4.1 of the
    Registrants Current Report on
    Form 8-K
    dated June 28, 2005.4.2

Indenture dated September 29, 2005 between First Charter
    Corporation and Wilmington Trust Company, as trustee,
    incorporated herein by reference to Exhibit 4.1 of the
    Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2005.4.3

Stockholder Protection Rights Agreement dated July 19, 2000
    between the Registrant and Registrar and Transfer Company,
    incorporated herein by reference to Exhibit 99.1 of the
    Registrants Current Report on
    Form 8-K,
    dated July 19, 2000.4.4

First Amendment to the Stockholder Protection Rights Agreement,
    dated as of August 15, 2007 by and between First Charter
    Corporation and Registrar and Transfer Company, incorporated
    herein by reference to Exhibit 4.1 of the Registrants
    Current Report on
    Form 8-K,
    dated August 15, 2007.*10.1

Comprehensive Stock Option Plan, incorporated herein by
    reference to Exhibit 10.1 of the Registrants Annual
    Report on
    Form 10-K
    for the fiscal year ended December 31, 1992.10.2

Amended and Restated Dividend Reinvestment and Stock Purchase
    Plan, incorporated herein by reference to Exhibit 99.1 of
    the Registrants Registration Statement
    No. 333-60641,
    dated August 8, 1998.*10.3

Executive Incentive Bonus Plan, incorporated herein by reference
    to Exhibit 10.3 of the Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 1998.*10.4

Amended and Restated Employment Agreement dated November 2,
    2007 by and between the Registrant and Robert E. James,
    incorporated herein by reference to Exhibit 10.6 of the
    Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2007.*10.5

Amended and Restated Supplemental Agreement dated
    December 19, 2001 for Lawrence M. Kimbrough, incorporated
    herein by reference to Exhibit 10.8 of the
    Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2001. 116




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##### Table of Contents



Exhibit No.(per ExhibitTable inItem 601 ofRegulation S-K)

Description of Exhibits*10.6

Amended and Restated Supplemental Agreement dated
    December 19, 2001 for Robert O. Bratton, incorporated
    herein by reference to Exhibit 10.9 of the
    Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2001.*10.7

Amended and Restated Supplemental Agreement dated
    November 2, 2007 by and between the Registrant and Robert
    E. James, incorporated herein by reference to Exhibit 10.8
    of the Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2007.*10.8

Restricted Stock Award Program, incorporated herein by reference
    to Exhibit 99.1 of the Registrants Registration
    Statement
    No. 033-60949,
    dated July 10, 1995.*10.9

The 1999 Employee Stock Purchase Plan, incorporated herein by
    reference to Exhibit 99.1 of the Registrants
    Registration Statement
    No. 333-54019,
    dated May 29, 1998.*10.10

The First Charter Corporation Comprehensive Stock Option Plan,
    as amended effective March 26, 1996, incorporated herein by
    reference to Exhibit 99.1 of the Registrants
    Registration Statement
    No. 333-54021,
    dated May 29, 1998.*10.11

The Stock Option Plan for Non-Employee Directors, incorporated
    herein by reference to Exhibit 10.15 of the
    Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 1997.*10.12

The Home Federal Savings and Loan Employee Stock Ownership Plan,
    incorporated herein by reference to the Registrants
    Registration Statement
    No. 333-71495,
    dated January 29, 1999.*10.13

The HFNC Financial Corp. Stock Option Plan, incorporated herein
    by reference to the Registrants Registration Statement
    No. 333-71497,
    dated February 1, 1999.*10.14

Amended and Restated Employment Agreement dated November 2,
    2007 by and between the Registrant and Stephen M. Rownd,
    incorporated herein by reference to Exhibit 10.7 of the
    Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2007.*10.15

The First Charter Corporation 2000 Omnibus Stock Option and
    Award Plan, incorporated herein by reference to
    Exhibit 10.1 of the Registrants Registration
    Statement
    No. 333-132033.*10.16

The First Charter 1994 Deferred Compensation Plan for
    Non-Employee Directors, incorporated herein by reference to
    Exhibit 10.26 of the Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2000.*10.17

The First Charter Option Plan Trust, incorporated herein by
    reference to Exhibit 10.27 of the Registrants Annual
    Report on
    Form 10-K
    for the year ended December 31, 2000.*10.18

The Carolina First BancShares, Inc. Amended 1990 Stock Option
    Plan, incorporated herein by reference to Exhibit 10.28 of
    the Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2000.*10.19

The Carolina First BancShares, Inc. 1999 Long-Term Incentive
    Plan, incorporated herein by reference to Exhibit 10.29 of
    the Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2000.*10.20

Deferred Compensation Agreement dated as of February 18,
    1993 by and between Cabarrus Bank of North Carolina and Ronald
    D. Smith, incorporated herein by reference to Exhibit 10.30
    of the Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2000. 117




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##### Table of Contents



Exhibit No.(per ExhibitTable inItem 601 ofRegulation S-K)

Description of Exhibits*10.21

Deferred Compensation Agreement dated as of December 31,
    1996 by and between Carolina First BancShares, Inc. and James E.
    Burt, III, incorporated herein by reference to
    Exhibit 10.31 of the Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2000.*10.22

Separation and Consulting Agreement between First Charter
    Corporation and James E. Burt, III dated June 29,
    2000, incorporated herein by reference to Exhibit 10.32 of
    the Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2000.*10.23

Carolina First BancShares, Inc. Amended and Restated
    Directors Deferred Compensation Plan, incorporated herein
    by reference to Exhibit 10.33 of the Registrants
    Annual Report on
    Form 10-K
    for the year ended December 31, 2000.*10.24

Amended and Restated Deferred Compensation Plan for Non-Employee
    Directors, incorporated herein by reference to Exhibit 10.1
    of the Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2001.*10.25

First Charter Corporation Directors Option Deferral Plan,
    incorporated herein by reference to Exhibit 10.35 of the
    Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2001.*10.26

Amended and Restated Supplemental Agreement dated
    November 2, 2007 by and between the Registrant and Stephen
    M. Rownd, incorporated herein by reference to Exhibit 10.9
    of the Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2007.*10.27

Form of Award Agreement for Incentive Stock Options Granted
    under the First Charter Corporation 2000 Omnibus Stock Option
    and Award Plan, incorporated herein by reference to
    Exhibit 10.32 of the Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2004.*10.28

Form of Award Agreement for Nonqualified Stock Options Granted
    under the First Charter Corporation 2000 Omnibus Stock Option
    and Award Plan, incorporated herein by reference to
    Exhibit 10.33 of the Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2004.*10.29

Form of First Charter Corporation Incentive Stock Option
    Agreement Pursuant to First Charter Corporation Comprehensive
    Stock Option Plan, incorporated herein by reference to
    Exhibit 10.34 of the Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2004.*10.30

Form of First Charter Corporation Nonqualified Stock Option
    Agreement Pursuant to First Charter Corporation Comprehensive
    Stock Option Plan, incorporated herein by reference to
    Exhibit 10.35 of the Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2004.*10.31

Form of First Charter Corporation Restricted Stock Award
    Agreement for use under the Restricted Stock Award Program,
    incorporated herein by reference to Exhibit 10.5 of the
    Registrants Current Report on
    Form 8-K,
    dated February 27, 2006.*10.32

Separation Agreement and Release, dated February 1, 2005,
    by and between the Registrant and Robert O. Bratton,
    incorporated herein by reference to Exhibit 10.1 of the
    Registrants Current Report on
    Form 8-K,
    dated February 1, 2005.*10.33

Employment Agreement, dated April 13, 2005, by and between
    the Registrant and Charles A. Caswell, incorporated herein by
    reference to Exhibit 10.1 of the Registrants Current
    Report on
    Form 8-K,
    dated April 13, 2005. 118




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##### Table of Contents



Exhibit No.(per ExhibitTable inItem 601 ofRegulation S-K)

Description of Exhibits*10.34

Amended and Restated Change in Control Agreement dated
    November 2, 2007 by and between the Registrant and Cecil O.
    Smith, incorporated herein by reference to Exhibit 10.4 of
    the Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2007.*10.35

Amended and Restated Change in Control Agreement dated
    November 2, 2007 by and between the Registrant and Stephen
    J. Antal, incorporated herein by reference to Exhibit 10.1
    of the Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2007.*10.36

Transition Agreement and Release, dated April 27, 2005, by
    and between the Registrant and Lawrence M. Kimbrough,
    incorporated herein by reference to Exhibit 10.1 of the
    Registrants
    Form 8-K,
    dated April 27, 2005.*10.37

Form of Performance Shares Award Agreement under the First
    Charter Corporation 2000 Omnibus Stock Option and Award Plan,
    incorporated herein by reference to Exhibit 10.1 of the
    Registrants Current Report on
    Form 8-K,
    dated February 27, 2006.*10.38

Form of Restricted Stock Award Agreement under the First Charter
    Corporation 2000 Omnibus Stock Option and Award Plan,
    incorporated herein by reference to Exhibit 10.2 of the
    Registrants Current Report on
    Form 8-K,
    dated February 27, 2006.*10.39

Description of 2006 Compensation for Non-Employee Directors,
    incorporated herein by reference to Item 1.01 of the
    Registrants Current Report on
    Form 8-K,
    dated January 25, 2006.*10.40

Description of 2006 Performance Goals for Executive Officers,
    incorporated herein by reference to Item 1.01 of the
    Registrants Current Report on
    Form 8-K,
    dated February 27, 2006.*10.41

Amended and Restated Change in Control Agreement dated
    November 2, 2007 by and between the Registrant and
    Josephine P. Sawyer, incorporated herein by reference to
    Exhibit 10.2 of the Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2007.*10.42

Transition Agreement and Release, dated September 27, 2006,
    by and between the Registrant and Richard A. Manley,
    incorporated herein by reference to Exhibit 10.1 of the
    Registrants Current Report on
    Form 8-K,
    dated September 27, 2006.*10.43

Amended and Restated Change in Control Agreement dated
    November 2, 2007 by and between the Registrant and Jeffrey
    S. Ensor, incorporated herein by reference to Exhibit 10.3
    of the Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2007.*10.44

Amended and Restated Change in Control Agreement dated
    November 2, 2007 by and between the Registrant and Sheila
    A. Stoke, incorporated herein by reference to Exhibit 10.5
    of the Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2007.*10.45

Transition Agreement, dated May 16, 2007, by and between
    the Registrant and Charles A. Caswell, incorporated herein by
    reference to Exhibit 10.1 of the Registrants Current
    Report on
    Form 8-K,
    dated May 16, 2007.*10.46

Description of retention bonus compensation arrangement between
    the Registrant and Sheila A. Stoke, incorporated herein by
    reference to the Registrants Current Report on
    Form 8-K,
    dated May 16, 2007.11.1

Statement regarding computation of per share earnings,
    incorporated herein by reference to Note 1 of the
    Consolidated Financial Statements. 119




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##### Table of Contents



Exhibit No.(per ExhibitTable inItem 601 ofRegulation S-K)

Description of Exhibits12.1

Computation of Ratio of Earnings to Fixed Charges.21.1

List of subsidiaries of the Registrant.23.1

Consent of KPMG LLP.31.1

Certification of Chief Executive Officer Pursuant to
    Rule 13a-14(a)/15d-14(a)
    of the Securities Exchange Act of 1934, as Adopted Pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.31.2

Certification of principal financial officer Pursuant to
    Rule 13a-14(a)/15d-14(a)
    of the Securities Exchange Act of 1934, as Adopted Pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.32.1

Certification of the Chief Executive Officer Pursuant to
    18 U.S.C. Section 1350, as Adopted Pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.32.2

Certification of the principal financial officer Pursuant to
    18 U.S.C. Section 1350, as Adopted Pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.   *
    
    Indicates a management contract or compensatory plan. 120




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  121




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##### Table of Contents



SIGNATURES
       Date: February 28, 2008
    By:
    /s/  Robert
    E. James, Jr.       Signature

Title

Date/s/  Robert
    E. James, Jr.(Robert
    E. James, Jr.)

President, Chief Executive Officer and Director (principal
    executive officer)

February 28, 2008/s/  James
    E. Burt, III(James
    E. Burt, III)

Chairman of the Board and Director

February 28, 2008/s/  Michael
    R. Coltrane(Michael
    R. Coltrane)

Vice Chairman of the Board and Director

February 28, 2008/s/  Sheila
    A. Stoke(Sheila
    A. Stoke)

Senior Vice President and Corporate Controller (principal
    financial officer and principal accounting officer)

February 28, 2008/s/  William
    R. Black(William
    R. Black)

Director

February 28, 2008/s/  Richard
    F. Combs(Richard
    F. Combs)

Director

February 28, 2008/s/  John
    J. Godbold, Jr.(John
    J. Godbold, Jr.)

Director

February 28, 2008/s/  Jewell
    D. Hoover(Jewell
    D. Hoover)

Director

February 28, 2008/s/  Charles
    A. James(Charles
    A. James)

Director

February 28, 2008/s/  Walter
    H. Jones, Jr.(Walter
    H. Jones, Jr.)

Director

February 28, 2008/s/  Samuel
    C. King, Jr.(Samuel
    C. King, Jr.)

Director

February 28, 2008 122




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##### Table of Contents



Signature

Title

Date/s/  Jerry
    E. McGee(Jerry
    E. McGee)

Director

February 28, 2008/s/  Ellen
    L. Messinger(Ellen
    L. Messinger)

Director

February 28, 2008/s/  Hugh
    H. Morrison(Hugh
    H. Morrison)

Director

February 28, 2008/s/  John
    S. Poelker(John
    S. Poelker)

Director

February 28, 2008/s/  Lawrence.
    D. Warlick, Jr.(Lawrence.
    D. Warlick, Jr.)

Director

February 28, 2008/s/  William
    W. Waters(William
    W. Waters)

Director

February 28, 2008  123