##### 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, 2006
 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
  Rule 12b-2 o þ
      Documents Incorporated by
    Reference
  Form 10-K,




---



##### 



First Charter
    CorporationFORM 10-K
    FISCAL YEAR ENDED DECEMBER 31, 2006
  Form 10-K, Form 10-Q, Form 8-K,
    TABLE OF
    CONTENTS
  
  PagePART IItem 1.


Business


3Item 1A.


Risk
    Factors


10Item 1B.


Unresolved Staff
    Comments


19Item 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


22Item 7.


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


22Item 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


114Item 9A.


Controls and
    Procedures


114Item 9B.


Other
    Information


117PART IIIItem 10.


Directors,
    Executive Officers and Corporate Governance


118Item 11.


Executive
    Compensation


118Item 12.


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


118Item 13.


Certain
    Relationships and Related Transactions, and Director
    Independence


118Item 14.


Principal
    Accountant Fees and Services


118PART IVItem 15.


Exhibits and
    Financial Statement Schedules


119Exhibit 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.
      de novo
       3




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##### Table of Contents



start-up
  Note 23
  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.
     5




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##### Table of Contents



Interstate Banking and Branching
    Legislation.
  de
    novo
  Consumer Protection.
      The USA PATRIOT Act.
 6




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Sarbanes-Oxley Act of 2002.
  Capital and
    Operational Requirements
      Prompt Corrective Action under FDICIA.
 7




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##### Table of Contents



Note 22
    Distributions. Note 22
    Deposit Insurance.
   8




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##### Table of Contents



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,
 9




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##### Table of Contents



Item 1A.  Risk
    Factors      Risks Related to
    Corporations Internal Controls, and Failure to Timely File
    this Report with the SEC
  The
    Corporations Management has Identified Material Weaknesses
    in its Internal Control Over Financial Reporting.
  Item 9A. Controls and Procedures
    Item 9A.
    Controls and Procedures
 10




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The Corporation
    Expects to Continue to Incur Significant Expenses Related to the
    Remediation Plan and the Preparation of its Consolidated
    Financial Statements.
    The Corporation
    May be Subjected to Negative Publicity That May Adversely Affect
    its Business.
    The Delay In
    Filing this Report with the SEC could cause the NASDAQ Global
    Select Market to Delist the Corporations Common
    Stock.
        
    the liquidity of the Corporations common stock;
    the market price of the Corporations common stock;
    the number of institutional and other investors that will
    consider investing in the Corporations common stock;
    the availability of information concerning the trading prices
    and volume of the Corporations common stock;
    the number of broker-dealers willing to execute trades in shares
    of the Corporations common stock; and
    the Corporations ability to obtain equity financing for
    the continuation of its operations. 11




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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
  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
 12




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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.
    The
    Corporations Profitability Depends Significantly on
    Economic Conditions in its Markets of Operation.
   13




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The Corporation
    Operates in an Industry and in Market Areas That Are Highly
    Competitive.
  out-of-state
    
    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;
    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
 14




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Government Supervision and
    Regulation Business Note 22
  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 Government Supervision and
    Regulation Business Note 22
  Potential
    Acquisitions May Disrupt the Corporations Business and
    Dilute Shareholder Value.
    
    potential exposure to unknown or contingent liabilities of the
    target company;
    potential exposure to 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.   15




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and/or
  Risks Associated
    with the Merger of GBC Bancorp, Inc.
    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.
    The Corporation
    Continually Encounters Technological Advancements.
   16




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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.
    Risks Associated
    With The Corporations Common Stock
  The
    Corporations 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; 17




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
    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;
    negative publicity resulting from, among other things, the delay
    in filing this report with the SEC, and the disclosure of
    material weaknesses in the Corporations internal control
    over financial reporting or other significant developments
    involving the Corporation or its subsidiaries; and
    delisting of the Corporations common stock from the NASDAQ
    Global Select Market.    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.
    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.
   18




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




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Item 4A. Executive Officers of the Registrant    Year PositionName

Age

Office
    and Position

HeldRobert E. James, Jr.

56

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 - 2004Charles A. Caswell

44

Executive Vice President, Chief
    Financial Officer and Treasurer of the Registrant and the Bank

2005 - PresentExecutive Vice President and Chief
    Financial Officer of Integra Bank Corporation

2002 - 2005Chief Financial Officer of RBC
    Centura Banks, Inc.

2001 - 2002Stephen M. Rownd

47

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.

59

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

43

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

57

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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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


Low2006

First

$
25.13


$
23.11Second


25.50



23.02Third


24.82



22.93Fourth


25.15



23.052005

First


26.04



21.91Second


23.34



20.43Third


25.84



21.75Fourth


26.95



22.04       Quarter

Dividend2006

First

$
0.190Second


0.195Third


0.195Fourth


0.1952005

First


0.190Second


0.190Third


0.190Fourth


0.190   Managements Discussion
    and Analysis of Financial Condition and Results of Operations -
    Capital Management Note 22
  Equity
    Compensation Plan Information
    Shares to


Weighted-Average


SharesBe Issued


Option


Available forUpon
    Exercise(1)


Exercise
    Price


Future
    GrantsPlans approved by shareholders


1,273,622


$
19.98



1,985,093Plans not approved by shareholders










Total


1,273,622


$
19.98



1,985,093  (1)
    
    Does not include outstanding
    options to purchase 223,997 shares of Common Stock assumed
    through various acquisitions. As of December 31, 2006,
    these assumed options had a weighted-average exercise price of
    $24.34 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, 2006 -
    October 31, 2006














1,625,400November 1, 2006 -
    November 30, 2006














1,625,400December 1, 2006 -
    December 31, 2006














1,625,400Total














1,625,400         Item 6.
    Selected
    Financial Data  Table One Item 7
  Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations   22




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Factors that May
    Affect Future Results
       Overview
        23




---



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The
    Community-Banking Model
    Existing Markets
    and Expansion
          Recent
    Challenges
  Item 9A. Controls and
    Procedures.
 24




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##### Table of Contents



Financial
    Summary
    Earnings Analysis
    for Fourth Quarter 2006 versus Fourth Quarter 2005
     Discontinued Operations Note 4
 25




---



##### Table of Contents



year-over-year
 26




---



##### Table of Contents



27




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##### Table of Contents



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

2006


2005


2004


2003


2002Income statementInterest income

$
264,929


$
224,605


$
187,303


$
178,292


$
196,388Interest expense


131,219



99,722



64,293



70,490



83,227Net interest income


133,710



124,883



123,010



107,802



113,161Provision for loan losses


5,290



9,343



8,425



27,518



8,270Noninterest income


67,678



46,738



57,038



62,282



47,410Noninterest expense


124,937



127,971



107,496



125,065



97,551Income from continuing operations
    before income tax expense


71,161



34,307



64,127



17,501



54,750Income tax expense


23,799



9,132



21,889



3,313



14,947Income from continuing operations,
    net of tax


47,362



25,175



42,238



14,188



39,803Discontinued operationsIncome (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

$
47,395


$
25,311


$
42,442


$
14,146


$
39,803Per common shareBasic earnings per
    shareIncome from continuing operations

$
1.50


$
0.83


$
1.41


$
0.48


$
1.30Income from discontinued
    operations, net of tax










0.01







Net income


1.50



0.83



1.42



0.47



1.30Diluted earnings per
    shareIncome from continuing operations


1.49



0.82



1.40



0.47



1.30Income from discontinued
    operations, net of tax










0.01







Net income


1.49



0.82



1.40



0.47



1.30Cash dividends declared


0.775



0.76



0.75



0.74



0.73Period-end book value


12.81



10.53



10.47



10.08



10.80Average sharesBasic


31,525,366



30,457,573



29,859,683



29,789,969



30,520,125Diluted


31,838,292



30,784,406



30,277,063



30,007,435



30,702,107RatiosReturn on average equity


13.45
%


7.86
%


14.05
%


4.50
%


12.52
%Return on average assets


1.08



0.56



0.98



0.35



1.13Net yield on earning assets


3.37



3.05



3.14



3.00



3.52Average portfolio loans to average
    deposits


105.72



101.75



92.48



85.56



93.85Average equity to average assets


8.06



7.18



6.99



7.85



9.02Efficiency
    ratio(1)


59.6



59.4



59.8



65.4



64.3Dividend payout


52.0



92.7



53.6



157.4



56.2Selected period-end
    balancesPortfolio loans, net

$
3,450,087


$
2,917,020


$
2,412,529


$
2,227,030


$
2,045,266Loans held for sale


12,292



6,447



5,326



5,137



158,404Allowance for loan losses


34,966



28,725



26,872



25,607



27,204Securities available for sale


906,415



899,111



1,652,732



1,601,900



1,129,212Assets


4,856,717



4,232,420



4,431,605



4,206,693



3,745,949Deposits


3,248,128



2,799,479



2,609,846



2,427,897



2,322,647Other borrowings


1,098,698



1,068,574



763,738



473,106



1,042,440Total liabilities


4,409,355



3,908,825



4,116,918



3,907,254



3,421,263Shareholders equity


447,362



323,595



314,687



299,439



324,686Selected average
    balancesPortfolio loans

$
3,092,801


$
2,788,755


$
2,353,605


$
2,126,821


$
2,112,855Loans held for sale


9,019



6,956



9,502



25,927



10,035Securities available for sale, at
    cost


920,961



1,361,507



1,623,102



1,464,704



1,126,494Earning assets


4,033,031



4,164,969



4,004,678



3,662,460



3,261,842Assets


4,369,834



4,489,083



4,322,727



4,009,511



3,525,090Deposits


2,925,506



2,740,742



2,544,864



2,485,711



2,251,256Other borrowings


1,049,165



1,375,910



1,428,124



1,159,889



906,263Shareholders equity


352,253



322,226



302,101



314,562



317,952   (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. 28




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Critical
    Accounting Estimates and Policies
   Note 1
    Allowance for
    Loan Losses
          60-month
 29




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##### Table of Contents



Allowance
    for Loan Losses.
  Income
    Taxes
    Identified
    Intangible Assets and Goodwill
  Business Combinations.
 30




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Earnings
    Performance
     Net Interest
    Income and Margin
  Table Two. Table Three.
   31




---



##### Table of Contents



32




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##### Table of Contents



Table TwoAverage
    Balances and Net Interest Income Analysis
 For the Calendar
    Year2006


2005


2004Daily


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)

$
3,101,820


$
225,195



7.26
%

$
2,795,711


$
172,961



6.19
%

$
2,363,107


$
124,496



5.27
%Securities -
    taxable(4)


819,791



35,613



4.34



1,251,477



47,657



3.81



1,538,133



59,520



3.87Securities - tax-exempt


101,170



6,012



5.94



110,030



6,100



5.54



84,969



5,224



6.15Federal funds sold


5,369



267



4.97



1,883



60



3.19



1,566



19



1.22Interest-bearing bank deposits


4,881



204



4.18



5,868



163



2.78



16,903



200



1.18Total earning assets


4,033,031


$
267,291



6.63
%


4,164,969


$
226,941



5.45
%


4,004,678


$
189,459



4.73
%Cash and due from banks


81,497











94,971











89,103Other assets


255,306











229,143











228,946Total assets

$
4,369,834










$
4,489,083










$
4,322,727Liabilities and
    shareholders equityInterest-bearing liabilitiesDemand deposits

$
370,458


$
2,949



0.80
%

$
343,663


$
1,111



0.32
%

$
326,365


$
666



0.20
%Money market accounts


589,887



18,718



3.17



496,982



9,220



1.86



522,232



5,977



1.14Savings deposits


117,862



259



0.22



123,305



277



0.22



122,339



321



0.26Retail certificates of deposit


993,631



41,066



4.13



968,752



29,358



3.03



904,907



22,038



2.44Brokered certificates of deposit


421,108



19,456



4.62



409,882



13,490



3.29



306,983



6,348



2.07Retail other borrowings


113,126



2,877



2.54



115,308



1,812



1.57



122,911



1,137



0.93Wholesale other borrowings


936,039



45,894



4.90



1,260,602



44,454



3.53



1,305,213



27,806



2.13Total interest-bearing liabilities


3,542,111



131,219



3.70
%


3,718,494



99,722



2.68
%


3,610,950



64,293



1.77
%Noninterest-bearing deposits


432,560











398,158











362,038Other liabilities


42,910











50,205











47,638Shareholders equity


352,253











322,226











302,101Total liabilities and 
    shareholders equity

$
4,369,834










$
4,489,083










$
4,322,727Net interest spread










2.93
%










2.77
%










2.96
%Contribution of noninterest bearing
    sources










0.44











0.28











0.18Net interest income/
    yield on earning assets





$
136,072



3.37
%





$
127,219



3.05
%





$
125,166



3.14
%  (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 $3,104, $2,343, and $2,616 for 2006, 2005,
    and 2004, 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 2006, 2005, and 2004. The adjustments made to convert to a
    taxable-equivalent basis were $2,362, $2,336 and $2,156 for
    2006, 2005, and 2004, respectively. 33




---



##### Table of Contents



Table
    Three
 Volume and Rate Variance Analysis
 2006 vs
    2005


2005 vs 2004Due 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)

$
20,209


$
32,025


$
52,234


$
24,826


$
23,639


$
48,465Securities -
    taxable(1)


(18,082
)


6,038



(12,044
)


(10,930
)


(933
)


(11,863
)Securities - tax-exempt


(510
)


422



(88
)


1,427



(551
)


876Federal funds sold


159



48



207



5



36



41Interest-bearing bank deposits


(31
)


72



41



(188
)


151



(37
)Total

$
1,745


$
38,605


$
40,350


$
15,140


$
22,342


$
37,482Increase (decrease) in interest
    expenseDeposits:Demand

$
93


$
1,745


$
1,838


$
37


$
408


$
445Money market


1,979



7,519



9,498



(302
)


3,545



3,243Savings


(12
)


(6
)


(18
)


3



(47
)


(44
)Retail certificates of deposit


772



10,936



11,708



1,640



5,680



7,320Brokered certificates of deposit


379



5,587



5,966



2,583



4,559



7,142Retail other borrowings


(35
)


1,100



1,065



(74
)


749



675Wholesale other borrowings


(13,221
)


14,661



1,440



(981
)


17,629



16,648Total

$
(10,045
)

$
41,542


$
31,497


$
2,906


$
32,523


$
35,429Increase in tax-equivalent net
    interest income









$
8,853










$
2,053   (1)
    
    Income on tax-exempt securities
    and loans are stated on a taxable-equivalent basis. Refer to
    Table Twofor further details. 34




---



##### Table of Contents



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

2006


2005


2004Service charges on deposits

$
28,962


$
27,809


$
25,564Wealth management


2,847



2,410



1,997Gain on sale of deposits and loans


2,825







Equity method investment gains
    (losses), net


3,983



(271
)


(349
)Mortgage services


3,062



2,873



1,748Gain on sale of small business
    administration loans


126







Brokerage services


3,182



3,119



3,112Insurance services


13,366



12,546



11,514Bank owned life insurance


3,522



4,311



3,413Property sale gains, net


645



1,853



777ATM, debit, and merchant fees


8,395



6,702



5,160Other


2,591



2,076



1,719Total fees and other income from
    continuing operations


73,506



63,428



54,655Securities gains (losses), net


(5,828
)


(16,690
)


2,383Noninterest income from continuing
    operations


67,678



46,738



57,038Noninterest income from
    discontinued operations


3,012



3,475



3,858Gain on sale from discontinued
    operations


962







Total noninterest
    income

$
71,652


$
50,213


$
60,896       Table FiveSelected
    Items Included in Noninterest Income
 For the Calendar Year(In
    thousands)

2006


2005


2004Gains (losses) on sale of
    securities

$
(5,828
)

$
(16,690
)

$
2,383Gain on sale of deposits and loans


2,825







339Equity method investments gains
    (losses), net


3,983



(271
)


(349
)Bank owned life insurance


(271
)


925



Gain on sale of property


645



1,853



777  35




---



##### Table of Contents



Noninterest
    Expense
      Table SixNoninterest
    Expense
 For the Calendar Year(In
    thousands)

2006


2005


2004Salaries and employee benefits

$
69,237


$
61,428


$
56,103Occupancy and equipment


18,144



16,565



16,938Data processing


5,768



5,171



3,830Marketing


4,711



4,668



4,350Postage and supplies


4,834



4,478



4,772Professional services


8,811



8,072



9,389Telecommunications


2,193



2,139



1,944Amortization of intangibles


654



378



316Foreclosed properties


755



386



161Debt extinguishment expense






6,884



Derivative termination costs






7,770



Other


9,830



10,032



9,693Noninterest expense from
    continuing operations


124,937



127,971



107,496Noninterest expense from
    discontinued operations


2,976



3,251



3,521Total noninterest
    expense

$
127,913


$
131,222


$
111,017Full-time equivalent employees
    at
    year-end(1)


1,099



1,064



1,014   (1) At
    December 31, 2006, full-time equivalent employees excluded
    personnel of Southeastern Employee Benefits Services (SEBS),
    which was sold December 1, 2006. At December 31, 2005
    and 2004, full-time equivalent employees included SEBS personnel
    of 42. At December 31, 2006, full-time equivalent employees
    included Gwinnett Bank personnel of 47.
     36




---



##### Table of Contents



Table SevenSelected
    Items Included in Noninterest Expense
 For the Calendar Year(In
    thousands)

2006


2005


2004Employee benefit plan modification

$



$
1,079


$
Separation agreements


675



1,010



Accelerated vesting of stock
    options


665







Actuarial revision to medical
    reserve


(391
)






Medical claims IBNR reserve


(470
)






Fixed asset correction






(1,386
)


Merger-related costs


302







Debt extinguishment expense






6,884



Derivative termination costs






7,770



   Income Tax
    Expense
  Note 16
 37




---



##### Table of Contents



Table EightSelected
    Financial Data by Quarter
 2006
    Quarters


2005
    Quarters(Dollars in
    thousands, except per share amounts)

Fourth


Third


Second


First


Fourth


Third


Second


FirstIncome
    statementInterest income

$
74,456


$
67,085


$
63,742


$
59,646


$
58,639


$
59,080


$
55,604


$
51,282Interest expense


38,441



34,127



31,095



27,556



26,710



27,990



24,314



20,708Net interest income


36,015



32,958



32,647



32,090



31,929



31,090



31,290



30,574Provision for loan losses


1,486



1,405



880



1,519



1,795



2,770



2,878



1,900Noninterest income (loss)


17,388



17,007



16,292



16,991



(675
)


16,295



16,271



14,847Noninterest expense


33,853



29,655



30,688



30,741



43,249



28,142



28,532



28,048Income (loss) from continuing
    operations before income tax expense


18,064



18,905



17,371



16,821



(13,790
)


16,473



16,151



15,473Income tax expense (benefit)


5,962



6,223



5,946



5,668



(5,510
)


4,389



5,000



5,253Income (loss) from continuing
    operations,
    net of tax


12,102



12,682



11,425



11,153



(8,280
)


12,084



11,151



10,220Discontinued operations:Income (loss) from discontinued
    operations


(162
)






50



148



(83
)


(53
)


214



146Gain on sale


962



























Income tax expense (benefit)


887







20



58



(33
)


(21
)


85



57Income (loss) from discontinued
    operations,
    net of tax


(87
)






30



90



(50
)


(32
)


129



89Net income (loss)

$
12,015


$
12,682


$
11,455


$
11,243


$
(8,330
)

$
12,052


$
11,280


$
10,309Per common shareBasic earnings per
    share(2)Income (loss) from continuing
    operations,
    net of tax

$
0.36


$
0.41


$
0.37


$
0.36


$
(0.27
)

$
0.40


$
0.37


$
0.34Income (loss) from discontinued
    operations,
    net of tax






























Net income (loss)


0.36



0.41



0.37



0.36



(0.27
)


0.39



0.37



0.34Diluted earnings per
    share(2)Income (loss) from continuing
    operations,
    net of tax


0.36



0.40



0.37



0.36



(0.27
)


0.39



0.36



0.33Income (loss) from discontinued
    operations,
    net of tax






























Net income (loss)


0.36



0.40



0.37



0.36



(0.27
)


0.39



0.37



0.34Average
    sharesBasic


33,268,542



31,056,059



31,058,858



30,859,461



30,678,743



30,575,440



30,409,307



30,234,683Diluted


33,583,617



31,426,563



31,339,325



31,153,338



30,678,743



30,891,887



30,679,636



30,630,601Dividends declared


0.195



0.195



0.195



0.190



0.190



0.190



0.190



0.190Period-end book value


12.81



11.20



10.73



10.68



10.53



10.82



10.73



10.31Performance
    ratiosReturn on average
    equity(1)


11.69
%


14.76
%


13.80
%


13.99
%


(10.21
)%


14.57
%


14.12
%


13.21
%Return on average
    assets(1)


1.02



1.16



1.07



1.09



(0.77
)


1.02



1.00



0.94Net yield on earning
    assets(1)


3.40



3.33



3.36



3.40



3.27



2.92



3.03



3.06Average portfolio loans to average
    deposits


105.88



103.37



108.27



105.51



103.01



103.01



103.43



96.86Average equity to average assets


8.75



7.86



7.79



7.76



7.52



7.03



7.05



7.13Efficiency
    ratio(3)


62.6



52.6



62.0



61.9



58.9



58.7



59.3



60.9Selected period-end
    balancesPortfolio loans, net

$
3,450,087


$
3,061,864


$
3,042,768


$
2,981,458


$
2,917,020


$
2,900,357


$
2,829,127


$
2,676,707Loans held for sale


12,292



10,923



8,382



8,719



6,447



7,309



8,159



6,006Allowance for loan losses


34,966



29,919



29,520



29,505



28,725



29,788



29,032



27,483Securities available for sale


906,415



899,120



884,370



900,424



899,111



1,374,163



1,412,885



1,440,494Assets


4,856,717



4,382,507



4,361,231



4,281,417



4,232,420



4,699,722



4,633,236



4,513,053Deposits


3,248,128



2,954,854



2,988,802



2,800,346



2,799,479



2,872,993



2,751,385



2,702,708Other borrowings


1,098,698



1,031,798



995,707



1,103,784



1,068,573



1,438,388



1,503,322



1,451,756Total liabilities


4,409,355



4,033,069



4,027,333



3,950,736



3,908,824



4,368,677



4,305,538



4,200,799Shareholders equity


447,362



349,438



333,898



330,681



323,596



331,045



327,698



312,254Selected average
    balancesPortfolio loans


3,336,563



3,070,286



3,021,005



2,939,233



2,924,064



2,896,794



2,781,606



2,547,225Loans held for sale


10,757



8,792



9,810



6,675



8,131



8,160



6,832



4,651Securities available for sale, at
    cost


924,773



923,293



921,026



914,760



1,028,477



1,420,033



1,441,853



1,560,874Earning assets


4,284,735



4,013,745



3,960,835



3,868,519



3,969,620



4,331,780



4,236,232



4,122,175Assets


4,664,431



4,336,270



4,274,345



4,201,477



4,303,821



4,665,301



4,543,846



4,439,768Deposits


3,151,120



2,970,047



2,790,197



2,785,632



2,838,566



2,812,165



2,689,390



2,629,795Other borrowings


1,054,550



984,504



1,108,734



1,049,529



1,099,350



1,471,482



1,491,636



1,443,909Shareholders equity


407,929



340,986



332,987



325,917



323,753



328,115



320,412



316,476  (1)
    
    Annualized(2)
    
    Due to rounding, earnings per
    share on continuing and discontinued operations may not sum to
    earnings per share on net income.(3)
    
    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. 38




---



##### Table of Contents



Balance Sheet
    Analysis
   Securities
    Available-for-Sale
  available-for-sale, available-for-sale other-than-temporary.
        Table NineInvestment
    Portfolio
 December 31(In
    thousands)

2006


2005


2004U.S. government obligations

$



$
14,878


$
54,374U.S. government agency
    obligations


275,394



320,407



691,970Mortgage-backed securities


412,020



405,450



726,381State, county, and municipal
    obligations


102,602



108,996



115,380Asset-backed securities


65,115



4,994



Equity securities


51,284



44,386



64,627Total

$
906,415


$
899,111


$
1,652,732   Loan
    Portfolio
   39




---



##### Table of Contents



Commercial Non
    Real Estate
  small-to-middle
  Commercial Real
    Estate
  small-to-middle
  Construction
    Mortgage
    Consumer
   40




---



##### Table of Contents



Home
    Equity
      Table TenLoan
    Portfolio Composition
 For the Calendar Year(In
    thousands)

2006


2005


2004


2003


2002Commercial real estate

$
1,034,330


$
780,597


$
776,474


$
724,340


$
798,664Commercial non real estate


301,958



233,409



212,031



212,010



223,178Construction


793,294



517,392



332,264



358,217



215,859Mortgage


618,142



660,720



449,206



391,641



322,775Home equity


447,849



495,181



474,295



400,792



325,132Consumer


289,493



258,619



195,422



165,804



187,109Total portfolio loans


3,485,066



2,945,918



2,439,692



2,252,804



2,072,717Allowance for loan losses


(34,966
)


(28,725
)


(26,872
)


(25,607
)


(27,204
)Unearned income


(13
)


(173
)


(291
)


(167
)


(247
)Portfolio loans, net

$
3,450,087


$
2,917,020


$
2,412,529


$
2,227,030


$
2,045,266   de novo
       41




---



##### Table of Contents



Deposits
    Table
    ElevenDeposits
 December 31(In
    thousands)

2006


2005


2004


2003


2002Noninterest bearing demand

$
454,975


$
429,758


$
377,793


$
326,679


$
305,924Interest bearing demand


420,774



368,291



348,677



322,471



301,329Money market accounts


620,699



559,865



478,314



470,551



305,530Savings deposits


111,047



119,824



119,615



118,025



114,676Certificates of deposit


1,640,633



1,321,741



1,285,447



1,190,171



1,295,188Total deposits

$
3,248,128


$
2,799,479


$
2,609,846


$
2,427,897


$
2,322,647     Other
    Borrowings
  back-up
 42




---



##### Table of Contents



Table
    TwelveOther
    Borrowings
 December 312006


2005


2004(Dollars
    in thousands)

Balance


Rate


Balance


Rate


Balance


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

$
201,713



4.60
%

$
312,283



3.01
%

$
250,314



1.84
%Average balance for the year


260,548



4.24



348,051



2.94



245,394



1.21Maximum outstanding at any month-end


323,775







494,566







297,818Commercial Paper:Balance as of


38,191



2.72



58,432



1.79



59,684



1.30Average balance for the year


26,239



2.41



40,786



1.62



32,658



1.38Maximum outstanding at any month-end


43,057







58,432







59,684Other short-term borrowings:Balance as of


371,000



5.35



140,000



4.39



266,000



2.49Average balance for the year


145,419



5.08



266,121



3.32



383,462



1.59Maximum outstanding at any month-end


371,000







716,000







477,000  43




---



##### Table of Contents



Credit
    Risk Management
     Loan Administration
    and Underwriting
  and/or
       44




---



##### Table of Contents



loan-to-value
  Derivatives
  Asset-Liability
    Management and Interest Rate Risk
  Nonperforming
    Assets
     45




---



##### Table of Contents



Table
    ThirteenNonperforming
    Assets
 December 31(In
    thousands)

2006


2005


2004


2003


2002Nonaccrual loans

$
8,200


$
10,811


$
13,970


$
14,910


$
26,467Loans 90 days or more past due
    accruing interest














21



Total nonperforming loans


8,200



10,811



13,970



14,931



26,467Other real estate


6,477



5,124



3,844



6,836



10,278Nonperforming assets

$
14,677


$
15,935


$
17,814


$
21,767


$
36,745Nonaccrual loans as a percentage of
    total portfolio loans


0.24
%


0.37
%


0.57
%


0.66
%


1.28
%Nonperforming assets as a
    percentage of:Total assets


0.30



0.38



0.40



0.52



0.98Total portfolio loans and other
    real estate


0.42



0.54



0.73



0.96



1.76Net charge-offs to average
    portfolio loans


0.11



0.27



0.28



0.39



0.30Allowance for loan losses to
    portfolio loans


1.00



0.98



1.10



1.14



1.31Allowance for loan losses to net
    charge-offs


10.73
x


3.84
x


4.09
x


3.07
x


4.34
xAllowance for loan losses to
    nonperforming loans


4.26



2.66



1.92



1.72



1.03     Allowance for
    Loan Losses
    Allowance for
    Loan Losses
   46




---



##### Table of Contents



47




---



##### Table of Contents



Table
    FourteenAllowance
    For Loan Losses
  For the Calendar
    Year(In
    thousands)

2006


2005


2004


2003


2002Balance at beginning of period

$
28,725


$
26,872


$
25,607


$
27,204


$
25,843Charge-offsCommercial non real estate


723



3,116



1,449



3,484



2,397Commercial real estate


762



1,967



2,791



1,898



659Construction






7











641Mortgage


148



167



29



31



111Home equity


1,108



857



1,008



685



193Consumer


1,837



2,538



3,275



3,382



2,989Total charge-offs


4,578



8,652



8,552



9,480



6,990RecoveriesCommercial non real estate


643



542



894



451



20Commercial real estate














4



228Construction














24



Mortgage


35



36



29







11Home equity


1



39











Consumer


639



545



1,053



635



337Other














34



132Total recoveries


1,318



1,162



1,976



1,148



728Net charge-offs


3,260



7,490



6,576



8,332



6,262Provision for loan losses


5,290



9,343



8,425



27,518



8,270Allowance of acquired company


4,211















Allowance related to loans sold










(584
)


(20,783
)


(647
)Balance at end of
    period

$
34,966


$
28,725


$
26,872


$
25,607


$
27,204Average portfolio loans

$
3,092,801


$
2,788,755


$
2,353,605


$
2,126,821


$
2,112,855Net charge-offs to average
    portfolio loans (annualized)


0.11
%


0.27
%


0.28
%


0.39
%


0.30
%Allowance for loan losses to
    portfolio loans


1.00



0.98



1.10



1.14



1.31      48




---



##### Table of Contents



Table
    FifteenAllocation
    of the Allowance for Loan Losses
 December 312006

2005

2004

2003

2002Loan/




Loan/




Loan/




Loan/




Loan/(In thousands)

Amount


Total
    Loans

Amount


Total Loans

Amount


Total Loans

Amount


Total Loans

Amount


Total LoansCommercial real estate

$
15,638



45
%

$
9,877



27
%

$
11,317



32
%

$
12,011



32
%

$
12,166



39
%Commercial non real estate


2,847



8



5,007



8



4,496



9



4,368



9



4,529



11Construction


8,059



23



4,559



18



4,842



14



3,584



16



3,384



10Mortgage


2,441



7



2,351



19



980



14



812



13



845



11Home equity


2,550



7



2,887



16



1,392



19



1,263



17



1,720



15Consumer


3,431



10



4,044



12



3,845



12



3,569



13



4,560



14Total

$
34,966



100
%

$
28,725



100
%

$
26,872



100
%

$
25,607



100
%

$
27,204



100
%       Provision for
    Loan Losses
   49




---



##### Table of Contents



Allowance for
    Loan Losses.
      Market
    Risk Management
   Asset-Liability
    Management and Interest Rate Risk
      12-month
   50




---



##### Table of Contents



Table Sixteen Table Sixteen
 51




---



##### Table of Contents



Table
    SixteenMarket
    Risk
 Expected
    Maturity(Dollars in
    thousands)

Total


1 Year


2 Years


3 Years


4 Years


5 Years


ThereafterAssetsDebt securitiesFixed rateCost

$
740,773


$
370,335


$
207,627


$
96,588


$
28,446


$
11,054


$
26,723Weighted-average effective yield


4.58
%Fair value

$
734,274Variable rateCost

$
175,416



27,380



27,437



27,527



4,072



5,177



83,823Weighted-average effective yield


4.97
%Fair value

$
172,141Loans and loans held for
    saleFixed rateBook value

$
932,519



224,445



211,000



144,944



133,115



110,660



108,355Weighted-average effective yield


6.76
%Fair value

$
921,675Variable rateBook value

$
2,529,860



1,229,455



349,101



192,038



104,307



93,223



561,736Weighted-average effective yield


7.47
%Fair value

$
2,503,207LiabilitiesDepositsFixed rateBook value

$
1,640,634



1,477,109



134,307



15,198



7,309



5,923



788Weighted-average effective yield


4.77
%Fair value

$
1,642,983Variable rateBook value

$
1,152,519



291,914



291,652



291,137



127,740



70,470



79,606Weighted-average effective yield


2.12
%Fair value

$
1,073,018Long-term borrowingsFixed rateBook value

$
305,937



160,055



20,058



75,061



64



50,032



667Weighted-average effective yield


5.62
%Fair value

$
298,463Variable rateBook value

$
181,857











120,000











61,857Weighted-average effective yield


5.70
%Fair value

$
179,187  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

$
45,893


$
25,751


$
54,358


$
126,0021-5 years


220,041



54,689



21,685



296,415After 5 years


119,425



52,803



11,936



184,164Total fixed rate


385,359



133,243



87,979



606,581Variable rate:1 year or less


246,208



107,695



567,279



921,1821-5 years


351,645



52,031



126,306



529,982After 5 years


49,401



8,574



11,251



69,226Total variable rate


647,254



168,300



704,836



1,520,390Total commercial and
    construction loans

$
1,032,613


$
301,543


$
792,815


$
2,126,971   Off-Balance-Sheet
    Risk
  Note 19
    Table
    EighteenCommitments
 Less than


1-3


3-5


Over(In
    thousands)

1 year


Years


Years


5 Years


TotalLoan commitments

$
596,479


$
216,184


$
30,914


$
57,404


$
900,981Lines of credit


56,250



2,811



1,571



447,247



507,879Standby letters of credit


20,567



6,100



4







26,671Total commitments

$
673,296


$
225,095


$
32,489


$
504,651


$
1,435,531  53




---



##### Table of Contents



Liquidity
    Risk
        available-for-sale
     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

$
160,000


$
215,000


$



$
112,794


$
487,794Operating lease obligations


3,371



6,586



5,484



31,674



47,115Purchase
    obligations(1)


8,995



4,000



792







13,787Equity method investees funding


1,845















1,845Deposits(2)


3,085,395



149,468



13,232



33



3,248,128Other
    obligations(3)


3,359



3,115



1,427



6,893



14,794Total contractual
    obligations

$
3,262,965


$
378,169


$
20,935


$
151,394


$
3,813,463   (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 312006


2005(Dollars
    in thousands)

Amount


Ratio


Amount


RatioTotal equity/total
    assetsFirst Charter Corporation

$
447,362



9.21
%

$
323,595



7.64
%First Charter Bank


371,459



8.45



365,379



8.64Gwinnett Banking Company


102,189



22.02







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

$
362,294



7.59
%

$
301,698



7.17
%First Charter Bank


351,246



8.03



343,482



8.17Gwinnett Banking Company


37,334



9.35







   (1)
    The tangible equity ratio excludes goodwill and other
    intangible assets from both the numerator and the
    denominator.  available-for-sale
 55




---



##### Table of Contents



Business-Governmental
    Supervision and Regulation, Business-Capital and Operational
    Requirements Note 22
      Business-Governmental Supervision and Regulation,
    Business-Capital and Operational Requirements Note 22
   56




---



##### Table of Contents



Table
    Twenty-OneCapital
    Ratios
 For CapitalAdequacy
    Purposes


To Be Well
    CapitalizedActual








Minimum





Minimum(Dollars in
    thousands)

Amount


Ratio


Amount


Ratio


Amount


RatioLeverageFirst Charter
    Corporation

$
428,136



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

$
428,136



10.49
%

$
163,299



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

$
463,268



11.35
%

$
326,598



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   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 and the total risk-based capital ratios
    are computed by dividing the respective capital amounts by
    risk-weighted assets, as defined.
  2005 VERSUS 2004
   Table One
  Overview
    Net Interest
    Income
   57




---



##### Table of Contents



Provision for
    Loan Losses
      Noninterest
    Income
        Noninterest
    Expense
   58




---



##### Table of Contents



Income Tax
    Expense
  Note 16
  Regulatory
    Recommendations
     Recent Accounting
    Pronouncements and Developments
   Notes 1 2 Managements Discussion and
    Analysis of Financial Condition and Results of Operations Notes to the Consolidated Financial Statements.
  Fair Value Option for Financial Assets and Financial
    Liabilities: The
    Fair Value Option for Financial Assets and Financial
    Liabilities  Including an Amendment of FASB
    Statement 115. Accounting for Certain
    Investments in Debt and Equity Securities, available-for-sale
    Fair
 59




---



##### Table of Contents



Value Measurements.
  Fair Value Measurements: Fair Value Measurements
  Accounting for Uncertainty in Income Taxes: Accounting for Uncertainty in Income Taxes Accounting for Income
    Taxes.
  Accounting for Servicing of Financial
    Assets: Accounting for Servicing of Financial
    Assets
  Accounting for Certain Hybrid Financial
    Instruments: Accounting for Certain Hybrid Financial
    Instruments, , Accounting for
    Derivative Instruments and Hedging Activities, Accounting for Transfers and Servicing of
    Financial
 60




---



##### Table of Contents



Assets and Extinguishments of Liabilities.
  Effects of Prior-Year Misstatements: Considering
    the Effects of Prior Year Misstatements when Quantifying
    Misstatements in Current Year Financial Statements.
  Note 3
    Item 7A.
    Quantitative
    and Qualitative Disclosures about Market Risk  Market Risk Management
 61




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data  Report of
    Independent Registered Public Accounting Firm
     Managements Annual Report on Internal
    Control Over Financial Reporting Internal Control 
    Integrated Framework
          Control Environment
    
    A sufficient complement of skilled finance, tax and accounting
    resources did not exist to perform supervisory reviews and
    monitoring activities over certain financial reporting matters
    and controls. 62




---



##### Table of Contents




    An adequate tone and control consciousness did not exist to
    support effective application of policies and the execution of
    procedures within the daily operation of financial reporting
    controls.  These deficiencies in the control environment were a
    contributing factor in the development of the Significant
    Transactions and Estimates Accounting and
    Reconciliation Function material weaknesses
    described below, and resulted in more than a remote likelihood
    that material misstatements of the annual or interim financial
    statements would not be prevented or detected.  Significant Transactions and Estimates Accounting
    Reconciliation Function
      Internal Control  Integrated Framework Internal Control 
    Integrated Framework
    
    63




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
           Share-Based
    Payment.
  Considering the Effects of
    Prior Year Misstatements when Quantifying Misstatements in
    Current Year Financial Statements
  Internal Control 
    Integrated Framework
  
    64




---



##### Table of Contents



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

2006


2005AssetsCash and due from banks

$
87,771


$
119,080Federal funds sold


10,515



2,474Interest-bearing bank deposits


4,541



3,998Cash and cash equivalents


102,827



125,552Securities available for sale
    (cost of $916,189 and $917,710; carrying amount of pledged
    collateral $632,918 and $557,132 at December 31, 2006 and
    2005, respectively)


906,415



899,111Loans held for sale


12,292



6,447Portfolio loans:Commercial and construction


2,129,582



1,531,398Mortgage


618,142



660,720Consumer


737,342



753,800Total portfolio loans


3,485,066



2,945,918Allowance for loan losses


(34,966
)


(28,725
)Unearned income


(13
)


(173
)Portfolio loans, net


3,450,087



2,917,020Premises and equipment, net


111,588



106,773Goodwill and other intangible
    assets


85,068



21,897Other assets


188,440



155,620Total Assets

$
4,856,717


$
4,232,420LiabilitiesDeposits:Noninterest-bearing demand

$
454,975


$
429,758Demand


420,774



368,291Money market


620,699



559,865Savings


111,047



119,824Certificates of deposit


1,223,252



916,569Brokered certificates of deposit


417,381



405,172Total deposits


3,248,128



2,799,479Federal funds purchased and
    securities sold under agreements to repurchase


201,713



312,283Commercial paper and other
    short-term borrowings


409,191



198,432Long-term debt


487,794



557,859Accrued expenses and other
    liabilities


62,529



40,772Total Liabilities


4,409,355



3,908,825Shareholders
    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 34,922,222 and 30,736,936 shares at
    December 31, 2006 and 2005, respectively


231,602



133,408Common stock held in Rabbi Trust
    for deferred compensation


(1,226
)


(893
)Deferred compensation payable in
    common stock


1,226



893Retained earnings


221,678



201,442Accumulated other comprehensive
    loss


(5,918
)


(11,255
)Total Shareholders
    Equity


447,362



323,595Total Liabilities and
    Shareholders Equity

$
4,856,717


$
4,232,420  See notes to consolidated financial statements.
 65




---



##### Table of Contents



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

2006


2005


2004Interest incomeLoans

$
224,937


$
172,760


$
124,169Securities


39,522



51,622



62,914Federal funds sold


267



60



19Interest-bearing bank deposits


203



163



201Total interest income


264,929



224,605



187,303Interest expenseDeposits


82,448



53,456



35,350Short-term borrowings


19,055



19,740



9,517Long-term debt


29,716



26,526



19,426Total interest expense


131,219



99,722



64,293Net interest income


133,710



124,883



123,010Provision for loan
    losses


5,290



9,343



8,425Net interest income after provision
    for loan losses


128,420



115,540



114,585Noninterest incomeService charges on deposits


28,962



27,809



25,564Wealth management


2,847



2,410



1,997Gain on sale of deposits and loans


2,825







339Equity method investments gains
    (losses), net


3,983



(271
)


(349
)Mortgage services


3,062



2,873



1,748Gain on sale of Small Business
    Administration loans


126







Brokerage services


3,182



3,119



3,112Insurance services


13,366



12,546



11,514Bank owned life insurance


3,522



4,311



3,413Property sale gains, net


645



1,853



777ATM, debit, and merchant fees


8,395



6,702



5,160Other


2,591



2,076



1,380Total fees and other income


73,506



63,428



54,655Securities gains (losses), net


(5,828
)


(16,690
)


2,383Total noninterest income


67,678



46,738



57,038Noninterest expenseSalaries and employee benefits


69,237



61,428



56,103Occupancy and equipment


18,144



16,565



16,938Data processing


5,768



5,171



3,830Marketing


4,711



4,668



4,350Postage and supplies


4,834



4,478



4,772Professional services


8,811



8,072



9,389Telecommunications


2,193



2,139



1,944Amortization of intangibles


654



378



316Foreclosed properties


755



386



161Debt extinguishment expense






6,884



Derivative termination costs






7,770



Other


9,830



10,032



9,693Total noninterest expense


124,937



127,971



107,496Income from continuing
    operations before income tax expense


71,161



34,307



64,127Income tax expense


23,799



9,132



21,889Income from continuing
    operations, net of tax


47,362



25,175



42,238Discontinued
    operationsIncome from discontinued operations
    before gain on sale and income tax expense


36



224



337Gain on sale


962







Income tax expense


965



88



133Income from discontinued
    operations, net of tax


33



136



204Net income

$
47,395


$
25,311


$
42,442Net income per common
    shareBasicIncome from continuing operations,
    net of tax

$
1.50


$
0.83


$
1.41Income from discontinued
    operations, net of tax










0.01Net income


1.50



0.83



1.42DilutedIncome from continuing operations,
    net of tax

$
1.49


$
0.82


$
1.40Income from discontinued
    operations, net of tax










0.01Net income


1.49



0.82



1.40Average common shares
    outstandingBasic


31,525,366



30,457,573



29,859,683Diluted


31,838,292



30,784,406



30,277,063Dividends declared per common
    share

$
0.775


$
0.76


$
0.75  See notes to consolidated
    financial statements.
 66




---



##### 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 per share amounts)

Shares


Amount


Compensation


Stock


Earnings


Income
    (Loss)


TotalBalance, December 31,
    2003


29,720,163


$
115,270


$
(636
)

$
636


$
178,008


$
6,161


$
299,439Comprehensive income:Net income


















42,442







42,442Change in unrealized gains and
    losses on securities, net of reclassification adjustment for net
    losses included in net income






















(11,023
)


(11,023
)Total comprehensive income


























31,419Common stock purchased by Rabbi
    Trust for deferred compensation










(172
)














(172
)Deferred compensation payable in
    common stock














172











172Cash dividends declared,
    $.75 per share


















(22,365
)






(22,365
)Issuance of shares under
    stock-based compensation plans, including related tax effects


286,123



5,019



















5,019Issuance of shares pursuant to
    acquisition


47,970



1,175



















1,175Balance, 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






















(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,
    $.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 3)


















(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






















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,
    $.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
)

$
447,362  See notes to consolidated
    financial statements.
 67




---



##### Table of Contents



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

2006


2005


2004Operating activitiesNet income

$
47,395


$
25,311


$
42,442Adjustments to reconcile net income
    to net cash provided by operating activities:Provision for loan losses


5,290



9,343



8,425Depreciation


8,443



7,876



9,064Amortization of intangibles


823



538



461Amortization of servicing rights


426



514



903Stock-based compensation expense


2,791



196



71Tax benefits from stock-based
    compensation plans


(1,568
)






Premium amortization and discount
    accretion, net


959



2,395



3,296Securities (gains) losses, net


5,828



16,690



(2,383
)Net (gains) losses on sales of
    other real estate owned


87



50



(172
)Write-downs on other real estate
    owned


668



154



116Equipment sale (gains) losses, net


(15
)


(15
)


62Equity method investment (gains)
    losses, net


(3,983
)


271



349Gains on sales of loans held for
    sale


(1,121
)


(1,465
)


(1,035
)Gains on sales deposits and loans


(2,825
)






(339
)Gains on sale of small business
    administration loans


(126
)






Property sale gains, net


(645
)


(1,853
)


(777
)Bank-owned life insurance claims






(935
)


Origination of loans held for sale


(204,320
)


(154,303
)


(95,635
)Proceeds from sale of loans held
    for sale


199,596



154,647



55,739Change in cash surrender value of
    life insurance


(3,604
)


(2,685
)


(3,413
)Change in other assets


19,459



(1,739
)


5,489Change in other liabilities


20,870



(16,564
)


9,425Net cash provided by operating
    activities


94,428



38,426



32,088Investing activitiesProceeds from sales of securities
    available for sale


201,354



652,583



139,261Proceeds from maturities, calls and
    paydowns of securities available for sale


122,691



166,191



419,251Purchases of securities available
    for sale


(329,458
)


(94,866
)


(587,582
)Net change in loans


(554,207
)


(520,366
)


(200,489
)Loans sold in branch sale


8,078







2,209Proceeds from sales of other real
    estate owned


5,840



5,048



5,433Purchase of bank-owned life
    insurance


(15,876
)






Proceeds from equity method
    distributions


4,060







Net purchases of premises and
    equipment


(13,243
)


(17,069
)


(10,136
)Cash paid in business acquisitions,
    net of cash acquired


(27,332
)






(6,755
)Net cash provided by (used in)
    investing activities


(598,093
)


191,521



(238,808
)Financing activitiesNet increase in deposits


486,691



189,633



200,395Deposits sold in branch sale


(38,042
)






(8,947
)Net change in federal funds
    purchased and securities sold under repurchase agreements


(110,570
)


61,968



(68,703
)Net change in commercial paper and
    other short-term borrowings


210,759



(127,252
)


(264,392
)Proceeds from issuance of long-term
    debt and trust preferred securities


265,000



186,857



580,000Retirement of long-term debt


(335,065
)


(502,736
)


(229,368
)Proceeds from issuance of common
    stock


23,649



11,078



4,605Tax benefits from stock-based
    compensation plans


1,568







Cash dividends paid


(23,050
)


(21,954
)


(22,365
)Net cash provided by (used in)
    financing activities


480,940



(202,406
)


191,225Net increase (decrease) in cash and
    cash equivalents


(22,725
)


27,541



(15,495
)Cash and cash equivalents at
    beginning of period


125,552



98,011



113,506Cash and cash equivalents at end
    of period

$
102,827


$
125,552


$
98,011Supplemental information for
    continuing operationsCash paid for:Interest

$
124,152


$
96,857



62,977Income taxes


19,816



21,520



18,548Non-cash items:Transfer of loans to other real
    estate owned


7,772



6,532



2,385Unrealized gains (losses) on
    securities available for sale (net of tax expense (benefit) of
    $3,488, ($4,235), and ($7,045), respectively)


5,337



(6,393
)


(11,023
)Issuance of common stock in
    business acquisitions


72,977



501



1,1751035 exchange of bank-owned life
    insurance


21,541







  See notes to consolidated
    financial statements.
 68




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##### Table of Contents



First Charter
    Corporation
    Notes to Consolidated Financial Statements
  1.
    Summary of
    Significant Accounting Policies  General
        Considering the Effects of
    Prior Year Misstatements When Quantifying Misstatements in
    Current Year Financial Statements. Notes 2 3
  Principles of
    Consolidation and Basis of Presentation
   69




---



##### Table of Contents



Business
    Combinations
  Note 4
  Discontinued
    Operations
  Discontinued Operations Note 4
  Securities
  available-for-sale, held-to-maturity, available-for-sale available-for-sale other-than-temporary Note 8
 70




---



##### Table of Contents



Loans and Loans
    Held for Sale
          Allowance for
    Loan Losses
   71




---



##### Table of Contents



Accounting by Creditors for
    Impairment of a Loan.
      Derivative
    Instruments
  and/or
    Loan Sales and
    Securitizations
   72




---



##### Table of Contents



one-to-four loan-to-collateral
  available-for-sale. available-for-sale
  Servicing
    Rights
    Premises and
    Equipment
      Foreclosed
    Properties
    Intangible
    Assets
     73




---



##### Table of Contents



Income
    Taxes
    Cash and Cash
    Equivalents
  one-day
  Securities Sold
    under Agreements to Repurchase
    Equity Method
    Investments
       74




---



##### Table of Contents



Net Income Per
    Share
      For the Calendar Year2006


2005


2004Basic weighted-average number of
    common shares outstanding


31,525,366



30,457,573



29,859,683Dilutive effect arising from
    potential common stock issuances


312,926



326,833



417,380Diluted weighted-average number of
    common shares outstanding


31,838,292



30,784,406



30,277,063     Dividends Per
    Share
    Share-Based
    Payment
   75




---



##### Table of Contents



Accounting for Stock Issued to
    Employees Share-Based Payment
  For the Calendar Year(Dollars
    in thousands, except per share data)

2005


2004Net income, as reported

$
25,311


$
42,442Add: Stock-based employee
    compensation expense included in reported net income


118



43Add: Effect of change in
    prior-period forfeiture assumptions


932



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


(1,733
)


(1,821
)Pro forma net income

$
24,628


$
40,664Net income per shareBasic - as reported

$
0.83


$
1.42Basic - pro forma


0.81



1.36Diluted - as reported


0.82



1.40Diluted - pro forma


0.80



1.34Average sharesBasic


30,457,573



29,859,683Diluted


30,784,406



30,277,063     2.
    Recently Adopted
    Accounting Pronouncements  Share-Based Payment: Share-Based Payment.
  Note 18
 76




---



##### Table of Contents



Meaning of
    Other-Than-Temporary
    Impairment: (FSP) 115-1, The Meaning of
    Other-Than-Temporary
    Impairment and Its Application to Certain Investments. other-than-temporary other-than-temporary, other-than-temporary Note 7
  Accounting Changes and Error Corrections: Accounting Changes
    and Error Corrections,
  Conditional Asset Retirement Obligations: Accounting for Conditional Asset
    Retirement Obligations Accounting for Asset Retirement
    Obligations
  Exchanges of Nonmonetary Assets: Exchanges of Nonmonetary
    Assets, Accounting
    for Nonmonetary Transactions.
  Employers Accounting for Defined Benefit Pension and
    Other Postretirement Plans: Employers Accounting for
    Defined Benefit Pension and Other Postretirement Plans.
 77




---



##### Table of Contents



Effects of Prior-Year Misstatements: Considering the Effects of Prior Year Misstatements when
    Quantifying Misstatements in Current Year Financial
    Statements. Note 3
  Recent Accounting Developments Managements Discussion and Analysis of Financial
    Condition and Results of Operations
  3.
    Staff Accounting
    Bulletin 108  Considering
    the Effects of Prior Year Misstatements When Quantifying
    Misstatements in Current Year Financial Statements.
      Mortgage Services Revenue.
 78




---



##### Table of Contents



Accounts Payable.
  Salaries and Employee Benefits. five-day 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
)  79




---



##### Table of Contents



As
    of and for the Three Months Ended

Before





AsMarch 31,
    2006

Adjustment


Adjustment


AdjustedOther assets

$
161,878


$
(1,939
)

$
159,939Other liabilities


45,599



1,007



46,606Shareholders equity


333,627



(2,946
)


330,681Mortgage services revenue


808



(285
)


523Total noninterest income


17,276



(285
)


16,991Salaries and employee benefits
    expense


17,154



46



17,200Total noninterest expense


30,695



46



30,741Total income tax expense


5,856



(130
)


5,726Net income


11,444



(201
)


11,243Diluted earnings per share


0.37



(0.01
)


0.36   As
    of and for the Three Months Ended

Before





AsJune 30,
    2006

Adjustment


Adjustment


AdjustedOther assets

$
167,149


$
(2,043
)

$
165,106Other liabilities


41,830



994



42,824Shareholders equity


336,935



(3,037
)


333,898Mortgage services revenue


916



(104
)


812Total noninterest income


16,396



(104
)


16,292Salaries and employee benefits
    expense


16,297



46



16,343Total noninterest expense


30,642



46



30,688Total income tax expense


6,025



(59
)


5,966Net income


11,546



(91
)


11,455Diluted earnings per share


0.37







0.37   As
    of and for the Three Months Ended

Before





AsSeptember 30,
    2006

Adjustment


Adjustment


AdjustedOther assets

$
170,851


$
(2,161
)

$
168,690Other liabilities


45,442



975



46,417Shareholders equity


352,574



(3,136
)


349,438Mortgage services revenue


902



(118
)


784Total noninterest income


17,125



(118
)


17,007Salaries and employee benefits
    expense


16,020



46



16,066Total noninterest expense


29,609



46



29,655Total income tax expense


6,288



(65
)


6,223Net income


12,781



(99
)


12,682Diluted earnings per share


0.41



(0.01
)


0.40   As
    of and for the Three Months Ended

Before





AsDecember 31,
    2006

Adjustment


Adjustment


AdjustedOther assets

$
190,674


$
(2,234
)

$
188,440Other liabilities


61,508



1,021



62,529Shareholders equity


450,617



(3,255
)


447,362Mortgage services revenue


1,016



(73
)


943Total noninterest income


17,461



(73
)


17,388Salaries and employee benefits
    expense


19,504



124



19,628Total noninterest expense


33,729



124



33,853Total income tax expense


6,927



(78
)


6,849Net income


12,134



(119
)


12,015Diluted earnings per share


0.36







0.36  80




---



##### Table of Contents



4.
    Acquisitions and
    Divestitures  GBC Bancorp, Inc.
        Purchase Price
    and Goodwill
 November 1(In
    thousands)

2006Purchase price

$
103,221Capitalized merger costs


1,211Carrying value of net assets
    acquired


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


64,563Purchase accounting
    adjustments:Securities


241Loans


643Deferred taxes


794Subtotal


1,678Core deposit intangibles


(3,091
)Servicing rights


(1,186
)Goodwill

$
61,964  81




---



##### Table of Contents



Statement of Net
    Assets Acquired at Fair Value
 November 1(In
    thousands)

2006AssetsCash and cash equivalents

$
21,428Securities


32,543Loans, net of allowance for loan
    losses of $4,211


331,806Premises and other equipment


3,371Goodwill and other intangibles


66,241Other assets


15,641Total assets


471,030LiabilitiesDeposits


357,287Other liabilities


9,311Total liabilities


366,598Fair value of net assets
    acquired

$
104,432  82




---



##### Table of Contents



Pro Forma Consolidated Condensed Statements of Income
    (Unaudited).
    Pro Forma
    Consolidated Condensed Statements of Income
 For the Calendar
    Year 2006First Charter


GBC


Pro Forma


Pro Forma(In
    thousands)

Corporation
    (1)


Bancorp.
    Inc.
    (2)


Adjustments


CombinedInterest income

$
264,929


$
26,549


$
759


$
292,237Interest expense


131,219



12,495



1,420



145,134Net interest income


133,710



14,054



(661
)


147,103Provision for loan losses


5,290



573







5,863Net interest income after
    provision for loan losses


128,420



13,481



(661
)


141,240Noninterest income


67,678



4,405



(247
)


71,836Noninterest expense


124,937



13,265



1,001



139,203Income from continuing operations
    before income tax expense


71,161



4,621



(1,909
)


73,873Income tax expense


23,799



2,387



(754
)


25,432Income from continuing operations,
    net of tax


47,362



2,234



(1,155
)


48,441Income (loss) from discontinued
    operations, net of tax


33











33Net income

$
47,395


$
2,234


$
(1,155
)

$
48,474Net income per common
    shareBasic

$
1.50


$
1.14


$



$
1.43Diluted

$
1.49


$
1.09


$



$
1.42Average common shares
    outstandingBasic


31,525,366



1,964,084



314,744



33,804,194Diluted


31,838,292



2,055,672



223,156



34,117,120   (1)
    Includes First Charter Corporation for the full-year 2006 and
    GBC Bancorp, Inc. for the two months ended December 31,
    2006.(2)
    Includes GBC Bancorp, Inc. for the ten months ended
    October 31, 2006.  83




---



##### Table of Contents



For the Calendar
    Year 2005First Charter


GBC


Pro Forma


Pro Forma(In
    thousands)

Corporation


Bancorp,
    Inc.


Adjustments


CombinedNet interest income

$
224,605


$
25,192


$
910


$
250,707Interest expense


99,722



9,324



1,704



110,750Net interest income


124,883



15,868



(794
)


139,957Provision for loan losses


9,343



853







10,196Net interest income after
    provision for loan losses


115,540



15,015



(794
)


129,761Noninterest income


46,738



2,983



(296
)


49,425Noninterest expense


127,971



8,356



1,202



137,529Income from continuing operations
    before income tax expense


34,307



9,642



(2,292
)


41,657Income tax expense


9,132



3,441



(905
)


11,668Income from continuing operations,
    net of tax


25,175



6,201



(1,387
)


29,989Income (loss) from discontinued
    operations, net of tax


136











136Net income

$
25,311


$
6,201


$
(1,387
)

$
30,125Net income per common
    shareBasic

$
0.83


$
3.54


$



$
.90Diluted

$
0.82


$
3.17


$



$
.89Average common
    shares outstandingBasic


30,457,573



1,753,453



1,194,538



33,405,564Diluted


30,784,406



1,953,677



994,314



33,732,397         Insurance Agencies.
   84




---



##### Table of Contents



Sale of Employee Benefits Administration
    Business.
    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)

2006(1)


2005


2004Noninterest income

$
3,012


$
3,475


$
3,858Noninterest expense


2,976



3,251



3,521Income from discontinued
    operations before tax


36



224



337Gain on sale


962







Income tax expense


965



88



133Income from discontinued
    operations, after tax

$
33


$
136


$
204  (1)
    Includes the results of SEBS for
    the eleven months ended November 30, 2006. 85




---



##### Table of Contents



5.
    Goodwill and
    Other Intangible Assets    December 312006


2005Gross





Net


Gross





NetCarrying


Accumulated


Carrying


Carrying


Accumulated


Carrying(In
    thousands)

Amount


Amortization


Amount


Amount


Amortization


AmountAmortized intangible assets from
    continuing operations:Core deposits

$
3,091


$
200


$
2,891


$



$



$
Noncompete agreements


90



63



27



90



33



57Customer lists


2,359



1,177



1,182



1,940



752



1,188Total from continuing operations


5,540



1,440



4,100



2,030



785



1,245Amortized intangible assets from
    discontinued operations














1,114



372



742Total

$
5,540


$
1,440


$
4,100


$
3,144


$
1,157


$
1,987Unamortized intangible assets:Goodwill from continuing operations


80,968







80,968



18,635







18,635Goodwill of discontinued operations














1,275







1,275Total

$
80,968


$



$
80,968


$
19,910


$



$
19,910   Note 4
      Note 4
 86




---



##### Table of Contents



For the Calendar Year(In
    thousands)

2006


2005


2004Continuing operations

$
654


$
378


$
316Discontinued operations


169



160



145Total intangibles amortization
    expense

$
823


$
538


$
461     Core


Noncompete


Customer(In
    thousands)

Deposits


Agreements


Lists


Total2007

$
1,120


$
27


$
421


$
1,5682008


691







313



1,0042009


567







204



7712010


393







100



4932011


120







58



1782012 and after










86



86Total intangibles
    amortization

$
2,891


$
27


$
1,182


$
4,100   6.
    Comprehensive
    Income  available-for-sale
    Pre-tax


Tax Expense


After-tax(In
    thousands)

Amount


(Benefit)


Amount2006Comprehensive incomeNet income

$
72,159


$
24,764


$
47,395Other comprehensive
    income:Unrealized losses on
    available-for-sale
    securities:Net unrealized gains


2,997



1,187



1,810Reclassification adjustment for
    losses included in net income


(5,828
)


(2,301
)


(3,527
)Other comprehensive income


8,825



3,488



5,337Total comprehensive
    income

$
80,984


$
28,252


$
52,732Accumulated other comprehensive
    loss at January 1, 2006

$
(18,599
)

$
(7,344
)

$
(11,255
)Other comprehensive income


8,825



3,488



5,337Accumulated other comprehensive
    loss at
    December 31, 2006

$
(9,774
)

$
(3,856
)

$
(5,918
)   87




---



##### Table of Contents



Pre-tax


Tax Expense


After-tax(In
    thousands)

Amount


(Benefit)


Amount2005Comprehensive incomeNet income

$
34,531


$
9,220


$
25,311Other comprehensive income (loss):Unrealized losses on
    available-for-sale
    securities:Net unrealized losses


(27,318
)


(10,886
)


(16,432
)Reclassification adjustment for
    losses included in net income


(16,690
)


(6,651
)


(10,039
)Other comprehensive loss


(10,628
)


(4,235
)


(6,393
)Total comprehensive income

$
23,903


$
4,985


$
18,918Accumulated other comprehensive
    loss at January 1, 2005

$
(7,971
)

$
(3,109
)

$
(4,862
)Other comprehensive loss


(10,628
)


(4,235
)


(6,393
)Accumulated other comprehensive
    loss at
    December 31, 2005

$
(18,599
)

$
(7,344
)

$
(11,255
)   Pre-tax


Tax Expense


After-tax(In
    thousands)

Amount


(Benefit)


Amount2004Comprehensive incomeNet income

$
64,464


$
22,022


$
42,442Other comprehensive income (loss):Unrealized losses on
    available-for-sale
    securities:Net unrealized losses


(15,685
)


(6,116
)


(9,569
)Reclassification adjustment for
    gains included in net income


2,383



929



1,454Other comprehensive loss


(18,068
)


(7,045
)


(11,023
)Total comprehensive income

$
46,396


$
14,977


$
31,419Accumulated other comprehensive
    income at January 1, 2004

$
10,097


$
3,936


$
6,161Other comprehensive loss


(18,068
)


(7,045
)


(11,023
)Accumulated other comprehensive
    loss at
    December 31, 2004

$
(7,971
)

$
(3,109
)

$
(4,862
)   7.
    Securities
    Available-for-Sale  available-for-sale
  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


50,897



387







51,284Total securities

$
916,189


$
2,269


$
12,043


$
906,415  88




---



##### Table of Contents



December 31,
    2005Amortized


Unrealized


Unrealized


Fair(In
    thousands)

Cost


Gains


Losses


ValueU.S. government obligations

$
14,905


$



$
27


$
14,878U.S. government agency
    obligations


327,418



21



7,032



320,407Mortgage-backed securities


417,891



335



12,776



405,450State, county, and municipal
    obligations


108,298



1,125



427



108,996Asset-backed securities


5,000







6



4,994Equity securities


44,198



188







44,386Total securities

$
917,710


$
1,669


$
20,268


$
899,111     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

$
169,748



3.28
%

$
97,875



4.42
%

$
7,771



5.52
%

$





%

$
275,394



3.75
%Mortgage-backed
    securities(1)










270,912



4.58



132,958



5.37



8,150



5.74



412,020



4.86State and municipal
    obligations(2)


19,539



7.28



38,114



5.91



9,968



5.52



34,981



5.95



102,602



6.15Asset-backed securities










14,750



8.11



20,000



6.71



30,365



7.37



65,115



7.34Equity
    securities(3)


























51,284



6.08



51,284



6.08Total

$
189,287



3.69
%

$
421,651



4.79
%

$
170,697



5.54
%

$
124,780



6.34
%

$
906,415



4.91
%Amortized cost of securities
    available for sale

$
190,807






$
429,134






$
171,844






$
124,404






$
916,189   (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 6.08% yield represents the expected dividend yield to
    be earned on equity securities, principally investments in
    Federal Home Loan Bank of Atlanta and Federal Reserve Bank
    stock.      For the Calendar Year(In
    thousands)

2006


2005


2004Gross gains

$
32


$
1,225


$
3,447Gross losses


(5,860
)


(17,915
)


(1,064
)Net gains (losses)

$
(5,828
)

$
(16,690
)

$
2,383    89




---



##### Table of Contents



other-than-temporary
  available-for-sale
      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

$
982


$
74


$
236,996


$
2,996


$
237,978


$
3,070Mortgage-backed securities


65,082



200



246,337



8,372



311,419



8,572State, county, and municipal
    obligations


1,008



4



17,189



360



18,197



364Total AAA/AA-rated securities


67,072



278



500,522



11,728



567,594



12,006A/BBB-RATED SECURITIESAsset-backed securities


17,376



37











17,376



37Total A/BBB-rated securities


17,376



37











17,376



37Total temporarily impaired
    securities

$
84,448


$
315


$
500,522


$
11,728


$
584,970


$
12,043   other-than-temporary,
  8.
    Trading
    Activity  write-up Note 17 over-the-counter available-for-sale
 90




---



##### Table of Contents



9.
    Derivatives    10.
    Loans        December 312006


2005(Dollars
    in thousands)

Amount


Percent


Amount


PercentCommercial real estate

$
1,034,330



29.7
%

$
780,597



26.5
%Commercial non real estate


301,958



8.7



233,409



7.9Construction


793,294



22.8



517,392



17.6Mortgage


618,142



17.7



660,720



22.4Home equity


447,849



12.8



495,181



16.8Consumer


289,493



8.3



258,619



8.8Total portfolio loans

$
3,485,066



100.0
%

$
2,945,918



100.0
%   30-year
    December 31(In
    thousands)

2006


2005Nonaccrual loans

$
8,200


$
10,811Loans 90 days or more past
    due and accruing interest






Total nonperforming
    loans


8,200



10,811Other real estate


6,477



5,124Total nonperforming
    assets

$
14,677


$
15,935  91




---



##### Table of Contents



(In
    thousands)

2006Balance at December 31, 2005

$
1,746New loans


77Principal repayments


(884
)Director and officer changes


(305
)Balance at December 31,
    2006

$
634     11.
    Allowance for
    Loan Losses    For the Calendar Year(In
    thousands)

2006


2005


2004Balance at beginning of
    period

$
28,725


$
26,872


$
25,607Allowance related to acquired
    company


4,211







Provision for loan losses


5,290



9,343



8,425Allowance related to loans sold










(584
)Charge-offs


(4,578
)


(8,652
)


(8,552
)Recoveries


1,318



1,162



1,976Net charge-offs


(3,260
)


(7,490
)


(6,576
)Balance at end of
    period

$
34,966


$
28,725


$
26,872   12.
    Servicing
    Rights    Small Business
    Administration
 92




---



##### Table of Contents



2006


2005


2004(In
    thousands)

MSR


SSR


MSR


SSR


MSR


SSRBalance, January 1

$
1,133


$



$
1,647


$



$
2,106


$
Servicing rights capitalized or
    acquired






1,186











474



Amortization expense


(377
)


(49
)


(514
)






(903
)


Write-downs


















(30
)


Valuation allowance






















Balance,
    December 31

$
756


$
1,137


$
1,133


$



$
1,647


$
         (In
    thousands)

MSR


SSR


Total2007

$
165


$
292


$
4572008


135



261



3962009


111



227



3382010


92



186



2782011


74



130



2042012 and after


179



41



220Total amortization

$
756


$
1,137


$
1,893  93




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##### Table of Contents



13.
    Premises and
    Equipment    December 31(In
    thousands)

2006


2005Land

$
24,467


$
23,817Buildings


78,887



73,954Furniture and equipment


58,077



53,281Leasehold improvements


11,121



10,446Construction in progress


2,247



2,023Total premises and
    equipment


174,799



163,521Less accumulated depreciation and
    amortization


63,211



56,748Premises and equipment,
    net

$
111,588


$
106,773     14.
    Deposits    December 31(In
    thousands)

2006


2005Noninterest bearing demand

$
454,975


$
429,758Interest bearing demand


420,774



368,291Money market accounts


620,699



559,865Savings deposits


111,047



119,824Certificates of deposit


1,223,252



916,569Brokered certificates of deposit


417,381



405,172Total deposits

$
3,248,128


$
2,799,479       December 31(In
    thousands)

2006


20052006

$



$
1,068,9232007


1,477,900



194,5812008


134,368



43,6852009


15,100



8,4722010


7,309



6,0412011


5,923



392012 and after


33



Total certificates of
    deposit

$
1,640,633


$
1,321,741  94




---



##### Table of Contents



15.
    Other
    Borrowings    2006


2005Weighted-





Weighted-Average





AverageContractual





Contractual(In
    thousands)

Balance


Rate


Balance


RateFederal funds purchased and
    securities sold under agreements to repurchase

$
201,713



4.60
%

$
312,283



3.01
%Commercial paper


38,191



2.72



58,432



1.79Other short-term borrowings


371,000



5.35



140,000



4.39Long-term debt


487,794



4.79



557,859



3.84Total other
    borrowings

$
1,098,698



4.87
%

$
1,068,574



3.56
%     back-up
         95




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##### Table of Contents



(Dollars in
    thousands)AggregatePrincipalAmount of


AggregateTrust


Principal


Stated



InterestPreferred


Amount of


Maturity of

Per Annum Interest
    Rate

PaymentIssuer

Issuance Date

Securities


the Notes


the Notes

of the Notes

Dates

Redemption 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)

2007


2008


2009


2010


2011


Thereafter


TotalFederal funds purchased and
    securities sold under agreements to repurchase

$
201,713


$



$



$



$



$



$
201,713Commercial paper


38,191























38,191Other short-term borrowings


371,000























371,000Long-term debt


160,000



20,000



195,000







50,170



62,624



487,794Total other borrowings

$
770,904


$
20,000


$
195,000


$



$
50,170


$
62,624


$
1,098,698   16.
    Income
    Tax    For the Calendar Year(In
    thousands)

2006


2005


2004Current:Federal

$
22,310


$
8,690


$
15,360State


2,883



689



2,403Total current


25,193



9,379



17,763Deferred:Federal


(1,238
)


(219
)


4,193State


(156
)


(28
)


(67
)Total deferred


(1,394
)


(247
)


4,126Income tax expense from
    continuing operations

$
23,799


$
9,132


$
21,889Income tax expense from
    discontinued operations

$
965


$
88


$
133  96




---



##### Table of Contents



For the Calendar Year(In
    thousands)

2006


2005


2004Net income from continuing
    operations

$
23,799


$
9,132


$
21,889Net income from discontinued
    operations


965



88



133Shareholders equity, for
    unrealized losses on securities available for sale


3,488



(4,235
)


(7,045
)Total

$
28,252


$
4,985


$
14,977     For the Calendar Year(Dollars
    in thousands)

2006


2005


2004Tax at statutory federal rate

$
24,906



35.0
%

$
12,008



35.0
%

$
22,445



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


(1,409
)


(2.0
)


(1,335
)


(3.9
)


(1,318
)


(2.1
)Bank-owned life insurance


(1,233
)


(1.7
)


(1,509
)


(4.4
)


(1,195
)


(1.9
)State income tax, net of federal


1,773



2.5



429



1.2



1,519



2.4Change in valuation allowance


(80
)


(0.1
)


(526
)


(1.5
)


(200
)


(0.3
)Other, net


(158
)


(0.3
)


65



0.2



638



1.0Income tax expense from
    continuing operations

$
23,799



33.4
%

$
9,132



26.6
%

$
21,889



34.1
%     For the Calendar Year(In
    thousands)

2006


2005


2004Deferred tax expense (benefit)
    (exclusive of the effects of other components below)

$
(1,394
)

$
(247
)

$
4,126Shareholders equity, for
    unrealized gains (losses) on securities available for sale


3,488



(4,235
)


(7,045
)Purchase accounting adjustment


(2,185
)






(135
)Total

$
(91
)

$
(4,482
)

$
(3,054
)  97




---



##### Table of Contents



December 31(In
    thousands)

2006


2005Deferred tax assets:Allowance for loan losses

$
13,201


$
11,352Unrealized losses on securities
    available for sale


3,726



7,213Deferred compensation


3,464



2,465Investments


805



506Depreciable assets


5,588



4,547Other


3,376



1,955Total deferred tax assets


30,160



28,038Less valuation allowance


30



110Net deferred tax assets


30,130



27,928Deferred tax liabilities:Loan origination costs


2,718



2,605Federal Home Loan Bank of
    Atlanta stock


1,053



1,053Mortgage servicing rights


1,889



447Intangibles


1,501



1,248Other


818



515Total deferred tax liabilities


7,979



5,868Net deferred tax
    asset

$
22,151


$
22,060            98




---



##### Table of Contents



17.
    Employee Benefit
    Plans  First Charter Retirement Savings Plan.
  First Charter Option Plan Trust.
  First Charter Directors Option Deferral
    Plan.
  Supplemental Executive Retirement Plans.
  18.
    Shareholders
    Equity, Stock Plans and Stock Awards     99




---



##### Table of Contents



Stock Repurchase Programs.
    Deferred Compensation for Non-Employee
    Directors.
    Stockholder Protection Rights Agreement.
   100




---



##### Table of Contents



Dividend Reinvestment and Stock Purchase
    Plan.
  Restricted Stock Award Program.
  First Charter Comprehensive Stock Option
    Plan.
  First Charter Corporation Stock Option Plan for Non-Employee
    Directors.
  2000 Omnibus Stock Option and Award Plan.
 101




---



##### Table of Contents



10-year
  Employee Stock Purchase Plans.
  Rule 16b-3
       102




---



##### 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,
    2004(1)


2,742,283


$
19.57Granted


393,134



20.33Exercised


(238,827
)


16.51






$
2,033,207Forfeited or expired


(95,327
)


18.52Outstanding at December 31,
    2004


2,801,263


$
19.97



3.6


$
17,374,803Exercisable at December 31,
    2004


1,948,723


$
20.42



2.9


$
11,220,433Outstanding 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


$
6,308,859   (1) Amounts
    for 2004 have been adjusted to correct an error in the
    calculation of exercised and forfeited options.
         103




---



##### Table of Contents



For the Calendar Year2006


2005


2004Expected volatility


24.8
%


26.4
%


25.6
%Expected dividend yield


3.2



3.2



3.6Risk-free interest rate


4.7



3.9



3.6Expected term (in years)


8.0



7.4



7.0       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


2.7

$  9.04


3,400


2.7

$  9.0410.01 - 12.50


18,702


2.0

11.63


18,702


2.0

11.6312.51 - 15.00


71,525


2.7

14.44


71,525


2.7

14.4415.01 - 17.50


290,124


4.3

16.64


290,124


4.3

16.6417.51 - 20.00


319,834


4.3

18.44


319,834


4.3

18.4420.01 - 22.50


190,885


6.4

20.78


190,885


6.4

20.7822.51 - 25.00


371,682


7.6

23.71


309,832


7.3

23.7225.01 - 27.50


231,467


0.6

25.99


231,467


0.6

25.99Total


1,497,619


4.7

$ 20.57


1,435,769


4.5

$ 20.43   Service-Based and Performance-Based
    Awards.
 104




---



##### Table of Contents



Service-Based


Performance-BasedWeighted-





Weighted-Average





AverageGrant Date





Grant DateShares


Fair
    Value


Shares


Fair
    ValueOutstanding at January 1, 2004


1,000


$
13.44






$
Granted


18,547



22.34







Vested


(1,000
)


13.44







Forfeited














Outstanding at December 31,
    2004


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



58,000



23.66Vested


(1,300
)


23.50







Forfeited


(9,476
)


23.30



(6,400
)


23.66Outstanding at
    December 31, 2006


215,663


$
24.00



51,600


$
23.66       19.
    Commitments,
    Contingencies, and Off-Balance Sheet Risk  Commitments and Off-Balance Sheet Risk. case-by-case
   105




---



##### Table of Contents



Contingencies.
  Note 16
  20.
    Related Party
    Transactions    Note 10
  21.
    Fair Value of
    Financial Instruments     106




---



##### Table of Contents



Cash and cash equivalents:
  Securities Available for Sale:
  Loans held for sale:
  Loans:
  Deposits:
  Short-term borrowings:
  Long-term debt:
    December 312006


2005Estimated





EstimatedCarrying


Fair


Carrying


Fair(In
    thousands)

Amount


Value


Amount


ValueFinancial assetsCash and cash equivalents

$
102,827


$
102,827


$
125,552


$
125,552Securities available for sale


906,415



906,415



899,111



899,111Loans held for sale


12,292



12,292



6,447



6,447Portfolio loans, net of allowance
    for loan losses


3,450,087



3,412,590



2,917,020



2,925,661Financial
    liabilitiesDeposits


3,248,128



3,170,976



2,799,479



2,741,776Short-term borrowings


610,904



606,119



510,715



510,798Long-term debt


487,794



477,650



557,859



557,137  107




---



##### Table of Contents



22.
    Regulatory
    Restrictions and Capital Ratios  off-balance-sheet
     108




---



##### Table of Contents



For CapitalAdequacy
    Purposes


To Be Well
    CapitalizedActual








Minimum





Minimum(Dollars in
    thousands)

Amount


Ratio


Amount


Ratio


Amount


RatioAt December 31,
    2006:LeverageFirst Charter
    Corporation

$
428,136



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

$
428,136



10.49
%

$
163,299



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

$
463,268



11.35
%

$
326,598



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



10.00At December 31, 2005:LeverageFirst Charter Corporation

$
372,953



8.67
%

$
172,102



4.00
%


None



NoneFirst Charter Bank


363,113



8.46



171,688



4.00


$
214,610



5.00
%Tier I CapitalFirst Charter Corporation

$
372,953



11.20
%

$
133,208



4.00
%


None



NoneFirst Charter Bank


363,113



10.91



133,083



4.00


$
199,624



6.00
%Total Risk-Based CapitalFirst Charter Corporation

$
401,760



12.06
%

$
266,416



8.00
%


None



NoneFirst Charter Bank


391,838



11.78



266,166



8.00


$
332,707



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 and the total risk-based capital ratios
    are computed by dividing the respective capital amounts by
    risk-weighted assets, as defined.
       109




---



##### Table of Contents



23.
    Business Segment
    Information  available-for-sale,
  Note 1
      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 loans

$
3,101,820


$



$



$
3,101,820Average assets of continuing
    operations


4,538,879



440,931



(612,208
)


4,367,602Average assets of discontinued
    operations


2,232











2,232   110




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##### 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 loans

$
2,795,711


$



$



$
2,795,711Average assets of continuing
    operations


4,566,915



391,698



(471,903
)


4,486,710Average assets of discontinued
    operations


2,373











2,373   For the Calendar
    Year 2004Consolidated(In
    thousands)

The
    Bank


Other


Eliminations


TotalInterest income

$
187,253


$
50


$



$
187,303Interest expense


63,511



782







64,293Net interest income (expense)


123,742



(732
)






123,010Provision for loan losses


8,425











8,425Noninterest income


55,781



1,257







57,038Noninterest expense


107,294



202







107,496Income from continuing operations
    before income tax expense


63,804



323







64,127Income tax expense


21,779



110







21,889Income (loss) from continuing
    operations, net of tax


42,025



213







42,238Discontinued operations:Income from discontinued operations


337











337Income tax expense


133











133Income from discontinued
    operations, net of tax


204











204Net income

$
42,229


$
213


$



$
42,442Average loans

$
2,363,107


$



$



$
2,363,107Average assets of continuing
    operations


4,360,336



347,441



(388,150
)


4,319,627Average assets of discontinued
    operations


3,100











3,100  111




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##### Table of Contents



24.
    First Charter
    Corporation (Parent Company)      Balance
    Sheets
 December 31(In
    thousands)

2006


2005AssetsCash

$
60,447


$
64,053Securities available for sale


8,715



1,152Investments in subsidiaries


479,028



373,648Receivables from subsidiaries






3,000Other assets


6,945



7,631Total Assets

$
555,135


$
449,484Liabilities and
    Shareholders EquityAccrued liabilities

$
6,988


$
5,600Payable to subsidiaries


737



Commercial paper


38,191



58,432Long-term debt


61,857



61,857Total liabilities


107,773



125,889Shareholders equity


447,362



323,595Total Liabilities and
    Shareholders Equity

$
555,135


$
449,484   Statements of
    Income
 For the Calendar Year(In
    thousands)

2006


2005


2004IncomeDividends from subsidiaries

$
45,000


$
13,724


$
21,290Interest and dividends on
    securities


546



79



50Securities gains, net


6







1,362Noninterest income


3,300



98



Total income


48,852



13,901



22,702ExpenseInterest


4,804



2,232



782Noninterest expense


197



221



308Total expense


5,001



2,453



1,090Income before income tax expense
    (benefit) and equity in undistributed net income of subsidiaries


43,851



11,448



21,612Income tax expense (benefit)


(386
)


(608
)


110Income before equity in
    undistributed net income of subsidiaries


44,237



12,056



21,502Equity in undistributed net income
    of subsidiaries


3,158



13,255



20,940Net Income

$
47,395


$
25,311


$
42,442  112




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##### Table of Contents



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

2006


2005


2004Operating ActivitiesNet income

$
47,395


$
25,311


$
42,442Adjustments to reconcile net
    income to net cash provided by operating activities:Securities gains, net


(6
)






(1,362
)Tax benefits from stock-based
    compensation plans


(1,568
)






Premium amortization and discount
    accretion, net


1







Increase (decrease) in accrued
    liabilities


24



177



(43
)Decrease (increase) in other assets


2,254



(1,787
)


(647
)Decrease (increase) in receivable
    from subsidiaries


3,737



3,000



(500
)Equity in undistributed net income
    of subsidiaries


(3,159
)


(13,255
)


(20,940
)Net cash provided by operating
    activities


48,678



13,446



18,950Investing ActivitiesPurchases of securities available
    for sale


(22,370
)






(665
)Proceeds from sales of securities
    available for sale


14,994







2,004Investments in subsidiaries


498



(53,042
)


9,180Cash paid for acquisitions, net of
    cash acquired


(27,332
)






(6,755
)Net cash provided by (used in)
    investing activities


(34,210
)


(53,042
)


3,764Financing ActivitiesNet increase (decrease) in
    commercial paper and other short-term borrowings


(20,241
)


(13,252
)


21,608Proceeds from issuance of trust
    preferred securities






61,857



Proceeds from issuance of common
    stock


23,649



11,443



5,019Tax benefits from stock-based
    compensation plans


1,568







Cash dividends paid


(23,050
)


(22,227
)


(22,169
)Net cash provided by financing
    activities


(18,074
)


37,821



4,458Net increase (decrease) in cash


(3,606
)


(1,775
)


27,172Cash at beginning of year


64,053



65,828



38,656Cash at end of year

$
60,447


$
64,053


$
65,828Supplemental
    InformationCash paid for interest

$
4,981


$
2,056


$
825Noncash transactions:Issuance of common stock in
    business acquisitions


72,977



501



1,175  113




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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  1)
    Evaluation of
    Disclosure Controls and Procedures  Rule 13(a)-15(e)
  2)
    Managements
    Annual Report on Internal Control Over Financial
    Reporting      Internal
    Control  Integrated Framework
     114




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##### Table of Contents



Control
    Environment
    
    A sufficient complement of skilled finance, tax and accounting
    resources did not exist to perform supervisory reviews and
    monitoring activities over certain financial reporting matters
    and controls.  
    An adequate tone and control consciousness did not exist to
    support effective application of policies and the execution of
    procedures within the daily operation of financial reporting
    controls.  These deficiencies in the control environment were a
    contributing factor in the development of the Significant
    Transactions and Estimates Accounting and
    Reconciliation Function material weaknesses
    described below, and resulted in more than a remote likelihood
    that material misstatements of the annual or interim financial
    statements would not be prevented or detected.  Significant
    Transactions and Estimates Accounting
    Reconciliation
    Function
       115




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##### Table of Contents



3)
    Remediation
    Plan    
    The Registrant is evaluating its personnel resources. The
    finance department is in the process of being reorganized in
    order to ensure a sufficient complement of skilled finance, tax
    and accounting resources performing supervisory review and
    monitoring activities are secured. If permanent staff is not
    secured in a timely manner, the Registrant plans to use external
    resources to supplement the finance, tax and accounting
    functions in order to support the timely and accurate
    preparation of the consolidated financial statements and related
    information. This structure is designed to demonstrate
    segregation of duties and adequate independent review of all
    functions including the review of accounting policies and
    procedures.  
    The Registrant plans to enhance its control environment to
    promote the adherence to appropriate internal control policies
    and procedures. The Registrant intends to reassess current
    policies and procedures and they will be revised as necessary in
    order to develop and deploy effective policies and procedures
    and reinforce compliance in an effort to constantly improve the
    Registrants internal control environment.
    The Registrant intends to augment its mechanism of regular
    education, and communicate to management and employees the
    importance of internal control and raise their level of
    understanding of internal control.
    The Registrant plans to enhance the internal governance and
    compliance function. It is intended that internal control
    weaknesses will be identified and remediated in a timely manner
    in order to strengthen the internal control structure. It is
    intended that, on an ongoing basis, this governance and
    compliance function will evaluate the effectiveness of the
    strengthened internal control, procedures and practices, taking
    corrective action as appropriate, and that the results of the
    evaluation will be communicated to the Registrants Audit
    Committee.
    The Registrant intends to improve strategic planning to assess
    the accounting implications of non- routine transactions.
    Consideration will be given to staffing needs including
    consultations with external legal and accounting experts.
    In advance of the effective dates of new accounting
    pronouncements, the Registrant plans to evaluate the potential
    impact of these pronouncements and assess the staffing
    requirements to effectively implement and report these new
    accounting pronouncements in a timely manner. Consideration will
    also be given to the establishment of new policies, procedures
    and internal controls relative to these new pronouncements.
    The Registrant intends to improve the process for an effective
    evaluation of significant estimates. The appropriate level of
    management is expected to be involved in the decision-making
    process. It is intended that the evaluation process will be
    documented and adequately supported.
    The Registrant plans to perform a thorough assessment of the
    design of the reconciliation process and suspense monitoring
    functions, including a review of each balance sheet account in
    order to understand the manner in which the account is currently
    recorded, reconciled, monitored and managed. It is expected that
    procedures will be implemented to ensure accurate and timely
    general ledger account reconciliations are performed with a
    level of precision to detect misstatements, and that duties will
    be appropriately segregated to mitigate the risk of financial
    misstatements.   116




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##### Table of Contents



4)
    Changes in
    Internal Control over Financial Reporting  Rule 13a-15(f)
  Item 9B.
    Other
    Information   117




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##### Table of Contents



PART III  Item 10.
    Directors,
    Executive Officers and Corporate Governance  Part I, Item 4A
  Item 11.
    Executive
    Compensation   Item 12.Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters  Part II,
    Item 5
  Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence    Item 14.
    Principal
    Accountant Fees and Services   118




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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, 2006 and 2005


65Consolidated Statements of Income
    for the years endedDecember 31, 2006, 2005, and 2004


66Consolidated Statements of
    Shareholders Equity for the years endedDecember 31, 2006, 2005, and 2004


67Consolidated Statements of Cash
    Flows for the years endedDecember 31, 2006, 2005, and 2004


68Notes to Consolidated Financial
    Statements


69(2)

Financial Statement Schedules:None(3)

Exhibits.  119




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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, 2006.3.1

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 (Commission File
    No. 0-15829).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 (Commission File
    No. 0-15829).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 (Commission File
    No. 0-15829).*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 (Commission
    File
    No. 0-15829).10.2

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 (Commission File
    No. 0-15829).*10.4

Amended and Restated Employment
    Agreement dated December 19, 2001 for Robert E. James,
    incorporated herein by reference to Exhibit 10.6 of the
    Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2001 (Commission File
    No. 0-15829).*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 (Commission File
    No. 0-15829).*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 (Commission File
    No. 0-15829).*10.7

Amended and Restated Supplemental
    Agreement dated December 19, 2001 for Robert E. James,
    incorporated herein by reference to Exhibit 10.10 of the
    Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2001 (Commission File
    No. 0-15829).*10.8

Restricted Stock Award Program,
    incorporated herein by reference to Exhibit 99.1 of the
    Registrants Registration Statement No.
    333-60949,
    dated July 10, 1995.*10.9

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

The First Charter Corporation
    Comprehensive Stock Option Plan, incorporated herein by
    reference to Exhibit 99.1 of the Registrants
    Registration Statement
    No. 333-54021,
    dated May 29, 1998. 120




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##### Table of Contents



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

Description of
    Exhibits*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 (Commission File
    No. 0-15829).*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

Agreement and Plan of Merger by
    and between the Registrant and Carolina First Bancshares, Inc.
    dated as of November 7, 1999, incorporated herein by
    reference to Appendix A of the Registrants
    Registration Statement
    No. 333-95003
    filed January 20, 1999.*10.15

Amended and Restated Employment
    Agreement dated December 19, 2001 for Stephen M. Rownd,
    incorporated herein by reference to Exhibit 10.22 of the
    Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2001 (Commission File
    No. 0-15829).*10.16

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.*10.17

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 (Commission File
    No. 0-15829).*10.18

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 (Commission File
    No. 0-15829).*10.19

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 (Commission File
    No. 0-15829).*10.20

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 (Commission File
    No. 0-15829).*10.21

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 (Commission File
    No. 0-15829).*10.22

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 (Commission File
    No. 0-15829).*10.23

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 (Commission File
    No. 0-15829).*10.24

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 (Commission File
    No. 0-15829). 121




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##### Table of Contents



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

Description of
    Exhibits*10.25

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 (Commission File
    No. 0-15829).*10.26

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 (Commission File
    No. 0-15829).*10.27

Supplemental Agreement dated
    December 19, 2001 for Stephen M. Rownd, incorporated herein
    by reference to Exhibit 10.37 of the Registrants
    Annual Report on
    Form 10-K
    for the year ended December 31, 2001 (Commission File
    No. 0-15829).10.28

Stockholder Protection Rights
    Agreement dated July 19, 2000 incorporated herein by
    reference to the Registrants Current Report on
    Form 8-K
    dated July 21, 2000.*10.29

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 (Commission File
    No. 0-15829).*10.30

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 (Commission File
    No. 0-15829).*10.31

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 (Commission File
    No. 0-15829).*10.32

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 (Commission File
    No. 0-15829).*10.33

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 Annual Report on
    Form 8-K
    dated February 27, 2006.*10.34

Separation Agreement and Release,
    dated February 1, 2005, by and between First Charter
    Corporation and Robert O. Bratton, incorporated herein by
    reference to Exhibit 10.1 of the Registrants
    Form 8-K
    dated February 1, 2005.*10.35

Employment Agreement, dated
    April 13, 2005, by and between First Charter Corporation
    and Charles A. Caswell, incorporated herein by reference to
    Exhibit 10.1 of the Registrants
    Form 8-K
    dated April 13, 2005.*10.36

Change in Control Agreement, dated
    April 13, 2005, by and between First Charter Corporation
    and Cecil O. Smith, Jr., incorporated herein by reference
    to Exhibit 10.2 of the Registrants
    Form 8-K
    dated April 13, 2005.*10.37

Change in Control Agreement, dated
    April 13, 2005, by and between First Charter Corporation
    and Stephen J. Antal, incorporated herein by reference to
    Exhibit 10.3 of the Registrants
    Form 8-K
    dated April 13, 2005.*10.38

Transition Agreement and Release,
    dated April 27, 2005, by and between First Charter
    Corporation and Lawrence M. Kimbrough, incorporated herein by
    reference to Exhibit 10.1 of the Registrants
    Form 8-K
    dated April 27, 2005. 122




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##### Table of Contents



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

Description of
    Exhibits*10.39

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
    Form 8-K
    dated February 27, 2006.*10.40

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
    Form 8-K
    dated February 27, 2006.*10.41

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.*10.42

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.*10.43

Change in Control Agreement, dated
    September 21, 2005 by and between the Registrant and
    Josephine Sawyer, incorporated herein by reference to
    Exhibit 10.1 of the Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2006.*10.44

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.*10.45

Amended Change in Control
    Agreement, dated November 6, 2006, by and between the
    Registrant and J. Scott Ensor, incorporated herein by reference
    to Exhibit 10.2 of the Registrants Quarterly Report
    on
    Form 10-Q
    for the quarter ended September 30, 2006.*10.46

Change in Control Agreement, dated
    as of January 26, 2007, by and between the Registrant and
    Sheila Stoke, incorporated herein by reference to
    Exhibit 10.1 of the Registrants Current Report on
    Form 8-K
    dated January 24, 2007.11.1

Statement regarding computation of
    per share earnings, incorporated herein by reference to
    Footnote 1 of the Consolidated Financial Statements.12.1

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 Chief 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 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 Chief 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 123




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##### Table of Contents



SIGNATURES
        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)

April 5, 2007/s/  James
    E. Burt, III(James
    E. Burt, III)

Chairman of the Board
    and Director

April 5, 2007/s/  Michael
    R. Coltrane(Michael
    R. Coltrane)

Vice Chairman of the Board
    and Director

April 5, 2007/s/  Charles
    A. Caswell(Charles
    A. Caswell)

Executive Vice President
    Chief Financial Officer and Treasurer (Principal Financial
    Officer)

April 5, 2007/s/  Sheila
    A. Stoke(Sheila
    A. Stoke)

Senior Vice President and
    Controller
    (Principal Accounting Officer)

April 5, 2007/s/  William
    R. Black(William
    R. Black)

Director

April 5, 2007/s/  Richard
    F. Combs(Richard
    F. Combs)

Director

April 5, 2007/s/  John
    J.
    Godbold, Jr.(John
    J. Godbold, Jr.)

Director

April 5, 2007/s/  Jewell
    D. Hoover(Jewell
    D. Hoover)

Director

April 5, 2007/s/  Charles
    A. James(Charles
    A. James)

Director

April 5, 2007/s/  Walter
    H. Jones, Jr.(Walter
    H. Jones, Jr.)

Director

April 5, 2007/s/  Samuel
    C. King, Jr.(Samuel
    C. King, Jr.)

Director

April 5, 2007 124




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##### Table of Contents



Signature

Title

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

Director

April 5, 2007/s/  Ellen
    L. Messinger(Ellen
    L. Messinger)

Director

April 5, 2007/s/  Hugh
    H. Morrison(Hugh
    H. Morrison)

Director

April 5, 2007/s/  John
    S. Poelker(John
    S. Poelker)

Director

April 5, 2007/s/  Thomas
    R. Revels(Thomas
    R. Revels)

Director

April 5, 2007/s/  Lawrence.
    D.
    Warlick, Jr.(Lawrence.
    D. Warlick, Jr.)

Director

April 5, 2007/s/  William
    W. Waters(William
    W. Waters)

Director

April 5, 2007  125




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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, 2006.3.1

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 (Commission File
    No. 0-15829).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 (Commission File
    No. 0-15829).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 (Commission File
    No. 0-15829).*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 (Commission
    File
    No. 0-15829).10.2

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 (Commission File
    No. 0-15829).*10.4

Amended and Restated Employment
    Agreement dated December 19, 2001 for Robert E. James,
    incorporated herein by reference to Exhibit 10.6 of the
    Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2001 (Commission File
    No. 0-15829).*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 (Commission File
    No. 0-15829).*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 (Commission File
    No. 0-15829).*10.7

Amended and Restated Supplemental
    Agreement dated December 19, 2001 for Robert E. James,
    incorporated herein by reference to Exhibit 10.10 of the
    Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2001 (Commission File
    No. 0-15829).*10.8

Restricted Stock Award Program,
    incorporated herein by reference to Exhibit 99.1 of the
    Registrants Registration Statement
    No. 333-60949,
    dated July 10, 1995.*10.9

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

The First Charter Corporation
    Comprehensive Stock Option Plan, incorporated herein by
    reference to Exhibit 99.1 of the Registrants
    Registration Statement
    No. 333-54021,
    dated May 29, 1998. 126




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##### Table of Contents



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

Description of
    Exhibits*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 (Commission File
    No. 0-15829).*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

Agreement and Plan of Merger by
    and between the Registrant and Carolina First Bancshares, Inc.
    dated as of November 7, 1999, incorporated herein by
    reference to Appendix A of the Registrants
    Registration Statement
    No. 333-95003
    filed January 20, 1999.*10.15

Amended and Restated Employment
    Agreement dated December 19, 2001 for Stephen M. Rownd,
    incorporated herein by reference to Exhibit 10.22 of the
    Registrants Annual Report on
    Form 10-K
    for the year ended December 31, 2001 (Commission File
    No. 0-15829).*10.16

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.*10.17

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 (Commission File
    No. 0-15829).*10.18

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 (Commission File
    No. 0-15829).*10.19

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 (Commission File
    No. 0-15829).*10.20

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 (Commission File
    No. 0-15829).*10.21

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 (Commission File
    No. 0-15829).*10.22

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 (Commission File
    No. 0-15829).*10.23

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 (Commission File
    No. 0-15829).*10.24

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 (Commission File
    No. 0-15829). 127




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##### Table of Contents



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

Description of
    Exhibits*10.25

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 (Commission File
    No. 0-15829).*10.26

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 (Commission File
    No. 0-15829).*10.27

Supplemental Agreement dated
    December 19, 2001 for Stephen M. Rownd, incorporated herein
    by reference to Exhibit 10.37 of the Registrants
    Annual Report on
    Form 10-K
    for the year ended December 31, 2001 (Commission File
    No. 0-15829).10.28

Stockholder Protection Rights
    Agreement dated July 19, 2000 incorporated herein by
    reference to the Registrants Current Report on
    Form 8-K
    dated July 21, 2000.*10.29

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 (Commission File
    No. 0-15829).*10.30

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 (Commission File
    No. 0-15829).*10.31

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 (Commission File
    No. 0-15829).*10.32

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 (Commission File
    No. 0-15829).*10.33

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 Annual Report on
    Form 8-K
    dated February 27, 2006.*10.34

Separation Agreement and Release,
    dated February 1, 2005, by and between First Charter
    Corporation and Robert O. Bratton, incorporated herein by
    reference to Exhibit 10.1 of the Registrants
    Form 8-K
    dated February 1, 2005.*10.35

Employment Agreement, dated
    April 13, 2005, by and between First Charter Corporation
    and Charles A. Caswell, incorporated herein by reference to
    Exhibit 10.1 of the Registrants
    Form 8-K
    dated April 13, 2005.*10.36

Change in Control Agreement, dated
    April 13, 2005, by and between First Charter Corporation
    and Cecil O. Smith, Jr., incorporated herein by reference
    to Exhibit 10.2 of the Registrants
    Form 8-K
    dated April 13, 2005.*10.37

Change in Control Agreement, dated
    April 13, 2005, by and between First Charter Corporation
    and Stephen J. Antal, incorporated herein by reference to
    Exhibit 10.3 of the Registrants
    Form 8-K
    dated April 13, 2005.*10.38

Transition Agreement and Release,
    dated April 27, 2005, by and between First Charter
    Corporation and Lawrence M. Kimbrough, incorporated herein by
    reference to Exhibit 10.1 of the Registrants
    Form 8-K
    dated April 27, 2005. 128




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##### Table of Contents



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

Description of
    Exhibits*10.39

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
    Form 8-K
    dated February 27, 2006.*10.40

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
    Form 8-K
    dated February 27, 2006.*10.41

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.*10.42

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.*10.43

Change in Control Agreement, dated
    September 21, 2005 by and between the Registrant and
    Josephine Sawyer, incorporated herein by reference to
    Exhibit 10.1 of the Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2006.*10.44

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.*10.45

Amended Change in Control
    Agreement, dated November 6, 2006, by and between the
    Registrant and J. Scott Ensor, incorporated herein by reference
    to Exhibit 10.2 of the Registrants Quarterly Report
    on
    Form 10-Q
    for the quarter ended September 30, 2006.*10.46

Change in Control Agreement, dated
    as of January 26, 2007, by and between the Registrant and
    Sheila Stoke, incorporated herein by reference to
    Exhibit 10.1 of the Registrants Current Report on
    Form 8-K
    dated January 24, 2007.11.1

Statement regarding computation of
    per share earnings, incorporated herein by reference to
    Footnote 1 of the Consolidated Financial Statements.12.1

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 Chief 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 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 Chief 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 129