First Charter Reports Record Total Revenue

First Charter Corporation (NASDAQ: FCTR) today reported second quarter net income of $9.0 million, a 21.9 percent decrease, compared to $11.5 million in the same period a year ago. On a per diluted share basis, net income was $0.26, compared to $0.37 for the same 2006 period and $0.35 in the 2007 first quarter (linked quarter). The previously disclosed provision taken in connection with the Penland lot loan portfolio resulted in a $0.13 per diluted share after-tax reduction to earnings. Excluding the effects of the Penland provision, First Charter would have earned $0.39 on a per diluted share basis.

Total revenue increased 17.8 percent to $58.3 million, compared to $49.5 million in the second quarter of 2006. On a linked-quarter basis, total revenue increased $1.4 million, or 9.6 percent annualized. Return on average tangible equity was 9.97 percent, and return on average assets was 0.74 percent, compared with 14.97 percent and 1.07 percent, respectively, in the 2006 second quarter.

For the first six months of 2007, First Charter earned $21.3 million, or $0.61 per diluted share, compared to $22.7 million, or $0.73 per diluted share, for the same prior year period.

The first half 2007 results include the full financial performance and effect of additional outstanding shares resulting from the fourth quarter 2006 acquisition of GBC Bancorp, Inc. (GBC), compared with no impact in the first half of 2006.

CEO's Comments

President and CEO Bob James commented, "The second quarter demonstrated solid results in our core operating performance, growing net interest income and noninterest income on both a year-over-year and linked-quarter basis. Our performance was driven by strong commercial loan growth, low cost deposit growth, and fee income growth. Additionally, excluding Penland, our asset quality remained sound with low net charge-offs. This quarter's core operating performance reflects the dedicated efforts of all our teammates, who first and foremost are focused on delivering exceptional service to our customers."

Record Net Interest Income Increases 14.9 Percent Over 2006 Second Quarter

Net interest income, on a tax-equivalent basis, increased to $38.2 million, representing a $4.9 million, or 14.9 percent, increase over the second quarter of 2006. The net interest margin, on a tax-equivalent basis, increased six basis points to 3.42 percent in the second quarter of 2007 from 3.36 percent in the second quarter of 2006. On a linked-quarter basis, net interest income increased $0.8 million, or 8.4 percent annualized, and the net interest margin expanded four basis points from 3.38 percent. The margin benefited from continued disciplined pricing of loans and deposits and a greater concentration of higher yielding commercial loans relative to total assets. Placing $5.4 million of the Penland lot loans on nonaccrual status partially offset the increases to net interest income and reduced the margin by one basis point.

Compared to the second quarter of 2006, earning asset yields increased 57 basis points to 7.08 percent. This increase was driven by several factors. First, loan yields increased 44 basis points to 7.61 percent. Second, securities yields increased 69 basis points to 5.06 percent. Third, the mix of higher yielding (loan) assets continued to improve as First Charter continues to focus on generating higher yielding commercial loans, partially funded by runoff in its lower yielding mortgage loan portfolio. Lastly, the percentage of investment security average balances (which typically have lower yields than loans) to total earning asset average balances fell from 22.6 percent to 20.5 percent over the past year.

On the liability side of the balance sheet, the cost of interest bearing liabilities increased 60 basis points to 4.19 percent, compared to the second quarter of 2006. This increase was comprised of a 71 basis point increase in interest bearing deposit costs to 3.82 percent, while borrowing costs increased 49 basis points to 5.10 percent. During 2006, the Federal Reserve raised the rate that banks lend funds to each other (the Fed Funds rate) by 100 basis points. Also, as a result of deposit growth, the percentage of higher cost, other borrowings average balances was reduced from 31.9 percent to 29.0 percent of total interest bearing liabilities average balances over the past year.

Compared to the first quarter of 2007, earning asset yields increased three basis points to 7.08 percent. The cost of interest bearing liabilities was stable at 4.19 percent.

Commercial Lending Leads Loan Growth

Total portfolio loan average balances for the 2007 second quarter increased $512 million, or 16.9 percent, to $3.53 billion, compared to $3.02 billion for the 2006 second quarter. Included in the increase was approximately $337 million of total loans that were added as a result of the GBC acquisition during the fourth quarter of 2006. Additionally, $8 million of loan balances were included in the sale of two financial centers completed in the third quarter of 2006. Commercial loan growth drove the increase, rising $598 million, or 36.5 percent, of which $322 million were added as a result of the GBC acquisition. The remaining growth of $276 million, or 16.9 percent, reflected continued robust commercial lending in the Charlotte and Raleigh markets. James noted, "The Charlotte and Raleigh markets continue to demonstrate steady and consistent growth. Of particular note, office vacancy rates remain low in these markets, and there is balance between new home construction and new home purchases."

Consumer loan average balances decreased $42 million and mortgage loan average balances decreased $45 million compared to the 2006 second quarter. The consumer loan balance decline was driven, in part, by lower consumer borrowing costs of refinancing first mortgages relative to current rates on home equity products. The decline in mortgage loan balances was due to normal loan amortization and First Charter's strategy of selling most of its new mortgage production into the secondary market. GBC had no residential mortgages on its balance sheet at the time of the acquisition.

Compared to the first quarter of 2007, total loan average balances grew $22 million, or 2.5 percent annualized. Commercial loan growth drove the increase, with $61 million in average balance growth, or 11.2 percent annualized. Consumer loan average balances fell $25 million during the second quarter, while mortgage loan average balances declined $13 million.

Organic Deposit Growth

Deposit growth, particularly low cost transaction (or core) deposit growth (money market, demand, and savings accounts), continues to be an area of emphasis at First Charter. For the second quarter of 2007, core deposit average balances increased $117 million, or 8.0 percent, compared to the second quarter of 2006. This includes overcoming the impact of First Charter's sale of two financial centers, which included the sale of $24 million of core deposits, and the benefit of the GBC acquisition, which included $107 million of core deposits. The total core deposit increase was primarily driven by a $46 million, or 12.6 percent, increase in interest checking balances, a $47 million, or 8.5 percent, increase in money market average balances, and a $30 million, or 7.0 percent, increase in noninterest bearing demand deposit average balances.

Compared to the first quarter of 2007, interest checking balances grew $14 million, or 14.0 percent annualized, and noninterest bearing deposits grew $11 million, or 10.0 percent annualized. Money market deposits fell $34 million, primarily due to the transfer of one customer from a money market account to a retail sweep account (classified as a borrowing).

Certificate of deposit (CD) average balances for the second quarter of 2007 grew $319 million from the second quarter of 2006, but fell $18 million from the first quarter of 2007. Included in the year-over-year increase were $249 million of CD balances that were added to the First Charter portfolio during the 2006 fourth quarter as a result of the GBC acquisition. CD growth year-over-year was additionally affected by the sale of $14 million of CDs in conjunction with the previously mentioned financial center sale. The decline in CD balances on a linked-quarter basis was due to a relatively large number of CDs that matured during the first half of 2007. These maturities included a number of high rate public fund CDs which First Charter chose not to renew.

Noninterest Income Increases

Historical noninterest income and expense amounts have been restated to reflect the effect of reporting the previously announced sale of Southeastern Employee Benefits Services (SEBS) in the fourth quarter of 2006 as a discontinued operation and to reflect the implementation of SAB 108 at year end 2006.

Noninterest income for the second quarter of 2007 was a record $20.1 million, up $0.6 million, or 11.8 percent annualized, from the first quarter of 2007 and up $3.8 million, or 23.6 percent annualized, from the second quarter of 2006. Contributing to the growth over the first quarter of 2007 were increases in service charge revenue, mortgage revenue, trust revenue, debit card revenue, and other revenue, somewhat offset by an expected decrease in equity method investment gains.

Noninterest Expense Improves From First Quarter 2007 Levels

Noninterest expense for the second quarter of 2007 was $35.2 million, down $0.7 million from $35.9 million in the first quarter of 2007. On a linked-quarter basis, salaries and benefits expense was essentially unchanged. Data processing and marketing expenses were each $0.3 million lower than the previous quarter. The data processing cost reduction was primarily the result of cost savings from renegotiating a processing contract. Professional fees decreased $0.4 million, and it is expected professional fees expense will continue to decline over time to more historically normalized levels as First Charter continues to strengthen its internal controls, and subsequently reduce its incremental vendor expense.

First Charter's efficiency ratio was 60.4 percent in the second quarter of 2007, compared with 63.1 percent in the first quarter of 2007 and 62.0 percent in the second quarter of 2006. The improvement in the efficiency ratio on both a linked-quarter and year-over-year basis was driven by revenue growth.

Continued Focus on Improving Internal Controls

First Charter is focused and committed to enhancing its control environment and remediating the previously disclosed material weaknesses. Qualified internal and external resources have been retained to address these issues.

James commented, "We are pleased with the progress that we have made in strengthening our internal controls. We have invested in our people and in improving our processes, and are committed to addressing all of the findings in a timely manner."

CFO Search Progresses

First Charter has retained an executive search firm to assist in its efforts to find the best qualified candidate to fill this position. First Charter is pleased with the number and quality of applicants thus far, and is actively qualifying prospective candidates. First Charter hopes to fill this position in the third quarter or early fourth quarter.

Raleigh and Atlanta Market Growth

First Charter expanded into the Raleigh, North Carolina market with the opening of a de novo financial center in October 2005 and three additional centers in mid February, 2006. A fifth financial center opened in Raleigh in late January 2007.

At June 30, 2007, Raleigh related loans totaled $153 million, representing a $19 million increase in balances from year end 2006. Deposit balances in Raleigh were $54 million at the end of the 2007 second quarter, an increase of $22 million from year-end 2006.

The North Atlanta market has continued to soften over the last year. However, First Charter's loan balances have seen continued positive growth in this market. At June 30, 2007, Atlanta related loans totaled $353 million, representing an increase of $16 million, or 7.1 percent annualized, since First Charter's entry into the Atlanta market on November 1, 2006.

"Our progress in these high growth markets is encouraging," James commented. "Raleigh is now contributing positively to net income, which has exceeded expectations, and Atlanta has grown their loan portfolio despite the weakness in their market. We are pleased with the quality of our team in these key markets, and their commitment to deliver exceptional customer service has shown through in the results."

Sound Credit Quality

As previously disclosed, First Charter Corporation recorded an additional $7.8 million provision for loan losses related to the Penland development in the 2007 second quarter.

James commented, "As part of our review, we re-examined our entire lot loan portfolio, including concentrations by subdivision. We believe the Penland loans represent an isolated fraudulent credit event and do not reflect upon the underlying credit quality of the remainder of our lot loan portfolio."

With the exception of the Penland portfolio, overall credit quality continues to be sound, with annualized net charge-offs of 0.02 percent of average portfolio loans in the second quarter of 2007, compared to 0.06 percent in the prior quarter and 0.11 percent in the second quarter of 2006.

Nonaccrual loans were $17.4 million at June 30, 2007, including $5.4 million attributable to Penland. This compares to $10.9 million in nonaccrual loans at March 31, 2007, and $7.8 million at June 30, 2006. Nonaccrual loans as a percentage of total portfolio loans at June 30, 2007 was 49 basis points, including 15 basis points attributable to Penland. Nonaccrual loans as a percentage of total portfolio loans was 31 basis points at March 31, 2007, and 25 basis points at June 30, 2006.

The allowance for loan losses was $44.8 million, or 1.26 percent, of portfolio loans, at June 30, 2007, an increase from 1.02 percent at March 31, 2007 and 0.96 percent at June 30, 2006. The provision for loan losses was $9.1 million for the 2007 second quarter, which includes the previously disclosed $7.8 million additional provision related to the Penland loans, while net charge-offs were $0.2 million. For the same year ago period, the provision for loan losses was $0.9 million and net charge-offs were $0.9 million. In addition to the provision related to Penland that added 22 basis points to the allowance for loan losses, the ratio also increased two basis points linked quarter largely due to a change in the composition of the loan portfolio as the percentage of commercial loans continues to increase.

The Corporation's provision for loan losses and allowance for loan losses is based on consideration of specific loans, past loan loss experience, and other factors that, in management's judgment, deserve current recognition in estimating probable loan losses. Other factors considered by management include the growth and composition of the loan portfolio and current economic conditions.

Balance Sheet Strength and Capital Management

At June 30, 2007, total assets were $4.9 billion, compared with $4.4 billion a year ago. The increase was attributable to the acquisition of GBC and First Charter's organic growth. At June 30, 2007, total deposits were $3.2 billion, including core deposits of $1.6 billion.

At the end of the second quarter, shareholders' equity was $446 million, or 9.1 percent of total assets, compared with $334 million, or 7.7 percent, a year ago. All regulatory capital ratios remain above well-capitalized minimums. As of June 30, 2007, tier 1 capital as a percentage of risk-weighted assets was 10.57 percent, and total risk-based capital was 11.67 percent. Tangible common equity as a percentage of tangible assets was 7.48 percent at June 30, 2007, compared to 7.74 percent at March 31, 2007, and 7.19 percent at June 30, 2006.

Average diluted shares outstanding were 35.1 million in the 2007 first quarter, compared to 35.0 million during the 2007 second quarter.

The Corporation repurchased 500,000 shares of its common stock during the second quarter of 2007. First Charter has remaining authority to repurchase up to 1.1 million additional shares of its common stock.

Conference Call

First Charter Corporation's executive management will host a conference call at 10:00 a.m. (ET) on Tuesday, July 24, 2007, to discuss the second quarter 2007 financial results. Interested parties may access the conference call by dialing 800-379-3953, using the pass code of 10295387. Participants are encouraged to call in 15 minutes prior to the call in order to register for the event. The earnings release and the conference call slide presentation will also be accessible via the Company's Web site, www.firstcharter.com, under the Investor Relations section. A replay of the conference call will be available from 1:00 p.m. (ET) on July 24, 2007, until midnight (ET) on July 31, 2007. The replay will be accessible by calling 800-642-1687, using the pass code of 10295387. An audio replay will also be available on the Company's Web site under the Investor Relations section for 30 days.

Corporate Profile

First Charter Corporation (NASDAQ: FCTR), headquartered in Charlotte, North Carolina, is a regional financial services company with assets of $4.9 billion and is the holding company for First Charter Bank. First Charter operates 58 full-service financial centers, four insurance offices, and 137 ATMs in North Carolina and Georgia, and also operates loan origination offices in Asheville, North Carolina and Reston, Virginia. First Charter provides businesses and individuals with a broad range of financial services, including banking, financial planning, wealth management, investments, insurance, and mortgages.

For more information about First Charter, visit the Corporation's Web site at www.firstcharter.com or call 800-601-8471.

Non-GAAP Financial Measures

This news release contains financial information determined by methods other than U.S. generally accepted accounting principles ("GAAP"), including the presentation of per share earnings excluding the impact of the additional loan loss provision in connection with the Penland Loans. From time to time, First Charter uses this and other non-GAAP measures in its analysis of its performance and believes such presentation provides useful supplemental information and a clearer understanding of its performance, and assists in the comparison of its performance relative to prior periods. First Charter also believes such non-GAAP measures enhance investors' understanding of its business and performance. These measures are also useful in understanding performance trends and facilitate comparisons with the performance of other financial institutions. Reconciliations of these non-GAAP financial measures to GAAP are presented in the accompanying tables.

Forward-Looking Statements

This news release contains forward-looking statements with respect to the financial condition and results of operations of First Charter Corporation. These forward-looking statements involve certain risks and uncertainties. Factors that may cause actual results to differ materially from those contemplated by such forward- looking statements, and which may be beyond the Corporation's control, include, among others, the following possibilities: (1) projected results in connection with management's implementation of, or changes in, the Corporation's business plan and strategic initiatives are lower than expected; (2) competitive pressure among financial services companies increases significantly; (3) costs or difficulties related to the integration of acquisitions, including deposit attrition, customer retention and revenue loss, or expenses in general are greater than expected; (4) general economic conditions, in the markets in which the Corporation does business, are less favorable than expected; (5) risks inherent in making loans, including repayment risks and risks associated with collateral values, are greater than expected, including risks related to the Penland loans; (6) changes in the interest rate environment, or interest rate policies of the Board of Governors of the Federal Reserve System, may reduce interest margins and affect funding sources; (7) changes in market rates and prices may adversely affect the value of financial products; (8) legislation or regulatory requirements or changes thereto, including changes in accounting standards, may adversely affect the businesses in which the Corporation is engaged; (9) regulatory compliance cost increases are greater than expected; (10) the passage of future tax legislation, or any negative regulatory, administrative or judicial position, may adversely impact the Corporation; (11) the Corporation's competitors may have greater financial resources and may develop products that enable them to compete more successfully in the markets in which it operates; (12) changes in the securities markets, including changes in interest rates, may adversely affect the Corporation's ability to raise capital from time to time; (13) the material weaknesses in the Corporation's internal control over financial reporting result in subsequent adjustments to management's projected results; and (14) implementation of management's plans to remediate the material weaknesses takes longer than expected and causes the Corporation to incur costs that are greater than expected. First Charter undertakes no obligation to revise or update any forward-looking statements in order to reflect events or circumstances after the date any such statement is made.
First Charter Corporation
Financial Highlights


----------------------------------------------------------------------
For the Three Months For the Six Months
Ended June 30, Ended June 30,
----------------------------------------------
(Dollars in
thousands,
except per
share data) 2007 2006 2007 2006
----------------------------------------------------------------------

EARNINGS
Total revenue
(1) $ 58,304 $ 49,515 $ 115,248 $ 99,182
Earnings
Income from
continuing
operations, net
of tax 8,950 11,425 21,306 22,578
Net income 8,950 11,455 21,306 22,698
Diluted earnings
per share
Income from
continuing
operations, net
of tax 0.26 0.37 0.61 0.72
Net income 0.26 0.37 0.61 0.73
----------------------------------------------------------------------

PERFORMANCE
RATIOS
Return on
average assets
(3) 0.74% 1.07% 0.88% 1.08%
Return on
average equity
(3) 7.86 13.80 9.46 13.89
Return on
average
tangible equity
(2) 9.97 14.97 11.91 14.02
Net interest
margin (3) 3.42 3.36 3.40 3.38
Efficiency (4) 60.4 62.0 61.7 61.9
----------------------------------------------------------------------

AVERAGE BALANCE
SHEET
Total Portfolio
Loans $3,532,713 $3,021,005 $3,521,637 $2,980,344
Loans held for
sale 11,127 9,810 11,278 8,252
Securities, at
cost 914,606 921,026 920,754 918,668
Earning assets 4,467,031 3,960,835 4,465,107 3,914,229
Assets 4,874,742 4,274,345 4,872,922 4,238,128
Core deposits 1,594,692 1,477,204 1,598,190 1,470,936
Deposits 3,226,308 2,790,197 3,238,653 2,787,929
Other borrowings 1,131,599 1,108,734 1,122,446 1,079,295
Shareholders'
equity 456,634 332,987 454,247 329,482
----------------------------------------------------------------------

ASSET QUALITY
MEASURES
Nonaccrual loans
as a percentage
of total
portfolio loans 0.49% 0.25% 0.49% 0.25%
Nonperforming
assets as a
percentage of
total assets 0.41 0.31 0.41 0.31
Nonperforming
assets as a
percentage of
total portfolio
loans and other
real estate 0.57 0.44 0.57 0.44
Net charge-offs
as a percentage
of average
portfolio loans
(3) 0.02 0.11 0.04 0.11
Allowance for
loan losses as
a percentage of
portfolio loans 1.26 0.96 1.26 0.96
Ratio of
allowance for
loan losses to:
Net charge-
offs (3) 59.40 x 8.51 x 33.35 x 9.13 x
Nonaccrual
loans 2.58 3.80 2.58 3.80

----------------------------------------------------------------------

As of / Quarter Ended
-----------------------------------------------------
6/30/07 3/31/07 12/31/06 9/30/06 6/30/06
----------------------------------------------------------------------
SHARE
INFORMATION
Common stock
prices
High $ 22.83$ 24.97 $ 25.15 $ 24.82 $ 25.50
Low 19.09 21.29 23.05 22.93 23.02
End of period 19.47 21.50 24.60 24.06 24.53
Book value 12.85 12.97 12.81 11.20 10.73
Tangible book
value 10.43 10.58 10.37 10.49 10.02
Market
capitalization 675,414 754,749 859,081 750,696 763,374
Weighted average
shares - basic 34,698 34,770 33,269 31,056 31,059
Weighted average
shares -
diluted 34,987 35,085 33,413 31,427 31,339
End of period
shares
outstanding 34,690 35,105 34,922 31,201 31,120
----------------------------------------------------------------------

(1) Tax-equivalent net interest income plus noninterest income.
Excludes the results of discontinued operations.
(2) Net income, excluding intangibles amortization expense, divided by
average equity, excluding average goodwill and intangible assets.
(3) Annualized.
(4) Noninterest expense less debt extinguishment expense, amortization
of intangibles expense and derivative termination costs divided by
the sum of tax-equivalent net interest income plus noninterest income
less securities gains (losses), net. Excludes the results of
discontinued operations.
First Charter Corporation
Quarterly Earnings Release

----------------------------------------------------------------------
As of / Quarter Ended
------------------------------------------------------
(Dollars in
thousands) 6/30/07 3/31/07 12/31/06 9/30/06 6/30/06
----------------------------------------------------------------------
BALANCE SHEET
Assets:
Cash and due
from banks $ 91,446 $ 95,168 $ 87,771 $ 76,215 $ 115,557
Federal funds
sold 22,495 1,256 10,515 33,690 2,347
Interest-
earning bank
deposits 5,145 4,431 4,541 2,999 13,432
Securities
available for
sale 898,528 897,762 906,415 899,120 884,370
Loans held for
sale 11,471 13,691 12,292 10,923 8,382
Portfolio loans
Commercial and
construction 2,272,154 2,215,413 2,129,582 1,740,072 1,690,508
Mortgage (1) 589,976 604,834 618,142 623,271 637,705
Consumer (1) 691,710 709,628 737,342 728,477 744,133
----------------------------------------------------------------------
Total portfolio
loans 3,553,840 3,529,875 3,485,066 3,091,820 3,072,346
Allowance for
loan losses (44,790) (35,854) (34,966) (29,919) (29,520)
Unearned income (3) (6) (13) (37) (58)
----------------------------------------------------------------------
Portfolio
loans, net 3,509,047 3,494,015 3,450,087 3,061,864 3,042,768
Premises and
equipment, net 112,874 112,145 111,588 106,918 107,244
Goodwill and
other
intangible
assets 84,107 84,010 85,068 22,088 22,025
Other assets 181,608 182,017 188,440 168,690 165,106
----------------------------------------------------------------------
Total Assets $4,916,721 $4,884,495 $4,856,717 $4,382,507 $4,361,231
----------------------------------------------------------------------

Liabilities and
Shareholders'
Equity:
Deposits
Noninterest-
bearing demand$ 480,078 $ 476,122 $ 454,975 $ 452,853 $ 449,732
Demand 427,899 434,412 420,774 381,029 390,393
Money market 587,691 636,586 620,699 583,346 611,886
Savings 114,245 114,785 111,047 114,759 118,194
Certificates of
deposit 1,620,433 1,659,461 1,640,633 1,422,867 1,418,597
----------------------------------------------------------------------
Total deposits 3,230,346 3,321,366 3,248,128 2,954,854 2,988,802
Other
borrowings
Retail 132,046 77,998 97,707 85,902 102,839
Wholesale
short-term 426,950 438,453 513,197 258,086 250,041
Wholesale long-
term 617,762 527,778 487,794 687,810 642,827
----------------------------------------------------------------------
Total other
borrowings 1,176,758 1,044,229 1,098,698 1,031,798 995,707
Accrued
expenses and
other
liabilities 63,789 63,528 62,529 46,417 42,824
----------------------------------------------------------------------
Total
liabilities 4,470,893 4,429,123 4,409,355 4,033,069 4,027,333
Total
shareholders'
equity 445,828 455,372 447,362 349,438 333,898
----------------------------------------------------------------------
Total
Liabilities
and
Shareholders'
Equity $4,916,721 $4,884,495 $4,856,717 $4,382,507 $4,361,231
----------------------------------------------------------------------

SELECTED
AVERAGE
BALANCES
Total Portfolio
Loans $3,532,713 $3,510,437 $3,336,563 $3,070,286 $3,021,005
Loans held for
sale 11,127 11,431 10,757 8,792 9,810
Securities, at
cost 914,606 926,970 924,773 923,293 921,026
Earning assets 4,467,031 4,463,162 4,284,735 4,013,745 3,960,835
Assets 4,874,742 4,871,083 4,664,431 4,336,270 4,274,345
Noninterest-
bearing demand 458,013 446,801 447,269 441,329 427,923
Demand 413,534 399,557 385,464 372,696 367,146
Money market
deposits 608,489 642,383 622,364 599,952 561,005
Savings 114,656 112,988 113,442 116,866 121,130
Core deposits 1,594,692 1,601,729 1,568,539 1,530,843 1,477,204
Certificates of
deposit 1,631,616 1,649,408 1,582,581 1,439,204 1,312,993
Deposits 3,226,308 3,251,137 3,151,120 2,970,047 2,790,197
Other
borrowings 1,131,599 1,113,191 1,054,550 984,504 1,108,734
Interest-
bearing
liabilities 3,899,894 3,917,527 3,758,401 3,513,222 3,471,008
Shareholders'
equity 456,634 451,835 407,929 340,986 332,987
----------------------------------------------------------------------
(1) At the beginning of the third quarter of 2006, approximately $93.9
million of consumer loans secured by real estate were transferred
from the consumer loan category to the home equity ($13.5 million)
and mortgage ($80.4 million) loan categories to make the balance
sheet presentation more consistent with bank regulatory definitions.
The balance sheet transfer had no effect on credit reporting,
underwriting, reported results of operations, or liquidity. Prior
period-end and average loan balances have been reclassifed to conform
with the current period presentation.
First Charter Corporation
Quarterly Earnings Release

----------------------------------------------------------------------
Increase
As of / Quarter Ended (Decrease)
--------------------- -------------------
(Dollars in thousands) 6/30/07 6/30/06 Amount Percentage
----------------------------------------------------------------------
BALANCE SHEET
Assets:
Cash and due from banks $ 91,446 $ 115,557 $(24,111) (20.9)%
Federal funds sold 22,495 2,347 20,148 858.5
Interest-earning bank
deposits 5,145 13,432 (8,287) (61.7)
Securities available for
sale 898,528 884,370 14,158 1.6
Loans held for sale 11,471 8,382 3,089 36.9
Portfolio loans
Commercial and
construction 2,272,154 1,690,508 581,646 34.4
Mortgage (1) 589,976 637,705 (47,729) (7.5)
Consumer (1) 691,710 744,133 (52,423) (7.0)
----------------------------------------------------------------------
Total portfolio loans 3,553,840 3,072,346 481,494 15.7
Allowance for loan losses (44,790) (29,520) (15,270) 51.7
Unearned income (3) (58) 55 (94.8)
----------------------------------------------------------------------
Portfolio loans, net 3,509,047 3,042,768 466,279 15.3
Premises and equipment,
net 112,874 107,244 5,630 5.2
Goodwill and other
intangible assets 84,107 22,025 62,082 281.9
Other assets 181,608 165,106 16,502 10.0
---------------------------------------------------------------------
Total Assets $4,916,721 $4,361,231 $555,490 12.7 %
----------------------------------------------------------------------

Liabilities and
Shareholders' Equity:
Deposits
Noninterest-bearing
demand $ 480,078 $ 449,732 $ 30,346 6.7 %
Interest checking 427,899 390,393 37,506 9.6
Money market 587,691 611,886 (24,195) (4.0)
Savings 114,245 118,194 (3,949) (3.3)
Certificates of deposit 1,620,433 1,418,597 201,836 14.2
----------------------------------------------------------------------
Total deposits 3,230,346 2,988,802 241,544 8.1
Other borrowings
Retail 132,046 102,839 29,207 28.4
Wholesale short-term 426,950 250,041 176,909 70.8
Wholesale long-term 617,762 642,827 (25,065) (3.9)
----------------------------------------------------------------------
Total other borrowings 1,176,758 995,707 181,051 18.2
Accrued expenses and other
liabilities 63,789 42,824 20,965 49.0
----------------------------------------------------------------------
Total liabilities 4,470,893 4,027,333 443,560 11.0
Total shareholders' equity 445,828 333,898 111,930 33.5
----------------------------------------------------------------------
Total Liabilities and
Shareholders' Equity $4,916,721 $4,361,231 $555,490 12.7 %
----------------------------------------------------------------------

SELECTED AVERAGE BALANCES
Total Portfolio Loans $3,532,713 $3,021,005 $511,708 16.9 %
Loans held for sale 11,127 9,810 1,317 13.4
Securities, at cost 914,606 921,026 (6,420) (0.7)
Earning assets 4,467,031 3,960,835 506,196 12.8
Assets 4,874,742 4,274,345 600,397 14.0
Noninterest-bearing demand 458,013 427,923 30,090 7.0
Demand 413,534 367,146 46,388 12.6
Money market deposits 608,489 561,005 47,484 8.5
Savings 114,656 121,130 (6,474) (5.3)
Core deposits 1,594,692 1,477,204 117,488 8.0
Certificates of deposit 1,631,616 1,312,993 318,623 24.3
Deposits 3,226,308 2,790,197 436,111 15.6
Other borrowings 1,131,599 1,108,734 22,865 2.1
Interest-bearing
liabilities 3,899,894 3,471,008 428,886 12.4
Shareholders' equity 456,634 332,987 123,647 37.1
----------------------------------------------------------------------

(1) At the beginning of the third quarter of 2006, approximately $93.9
million of consumer loans secured by real estate were transferred
from the consumer loan category to the home equity ($13.5 million)
and mortgage ($80.4 million) loan categories to make the balance
sheet presentation more consistent with bank regulatory definitions.
The balance sheet transfer had no effect on credit reporting,
underwriting, reported results of operations, or liquidity. Prior
period-end and average loan balances have been reclassifed to conform
with the current period presentation.
First Charter Corporation
Quarterly Earnings Release

----------------------------------------------------------------------
Increase
Quarter Ended (Decrease)
----------------- -----------------
(Dollars in thousands, except per
share data) 6/30/07 6/30/06 Amount Percentage
----------------------------------------------------------------------
INCOME STATEMENT
Tax-equivalent interest income $ 78,910 $ 64,318 $14,592 22.7 %
Interest expense 40,747 31,095 9,652 31.0
----------------------------------------------------------------------
Tax-equivalent net interest income 38,163 33,223 4,940 14.9
Provision for loan losses 9,124 880 8,244 936.8
----------------------------------------------------------------------
Tax-equivalent NII after provision
for loan losses 29,039 32,343 (3,304) (10.2)
Noninterest income 20,141 16,292 3,849 23.6
Noninterest expense 35,207 30,688 4,519 14.7
----------------------------------------------------------------------
Income from continuing operations
before income taxes and tax-
equivalent adjustment 13,973 17,947 (3,974) (22.1)
Tax-equivalent adjustment 619 576 43 7.5
Income tax expense 4,404 5,946 (1,542) (25.9)
----------------------------------------------------------------------
Income from continuing operations,
net of tax 8,950 11,425 (2,475) (21.7)
Income from discontinued
operations, net of tax - 30 (30) (100.0)
----------------------------------------------------------------------
Net income $ 8,950 $ 11,455 $(2,505) (21.9)%
----------------------------------------------------------------------
Effective tax rate (1) 33.0% 34.3%
----------------------------------------------------------------------
PER COMMON SHARE
Basic earnings per share
Income from continuing operations,
net of tax $ 0.26 $ 0.37 $ (0.11) (29.7)%
Net income 0.26 0.37 (0.11) (29.7)
Diluted earnings per share
Income from continuing operations,
net of tax $ 0.26 $ 0.37 $ (0.11) (29.7)%
Net income 0.26 0.37 (0.11) (29.7)
Average shares
Basic 34,698 31,059
Diluted 34,987 31,339
Cash dividends declared $ 0.195 $ 0.195 $ - - %
----------------------------------------------------------------------
PERFORMANCE RATIOS
Return on average assets (2) 0.74 % 1.07 %
Return on average equity (2) 7.86 13.80
Return on average tangible equity
(3) 9.97 14.97
Net interest margin (2) 3.42 3.36
Efficiency (4) 60.4 62.0
----------------------------------------------------------------------
SELECTED ITEMS INCLUDED IN
EARNINGS
Noninterest income
Securities gains (losses), net $ - $ 32
Equity method investment gains
(losses), net 678 11
Property sale gains, net 152 107
Noninterest expense
Separation agreements 183 -
Merger-related costs - -
GBC related executive retirement
expense 245 -
---------------------------------------------------------------------
DISCONTINUED OPERATIONS
Noninterest income $ - $ 844
Noninterest expense - 794
----------------------------------------------------------------------
Income from discontinued
operations - 50
Gain on sale - -
Income tax expense - 20
----------------------------------------------------------------------
Income from discontinued
operations, net of tax $ - $ 30
----------------------------------------------------------------------
(1) The effective tax rate includes the related effects of both
continuing and discontinued operations.
(2) Annualized.
(3) Net income, excluding intangibles amortization expense, divided by
average equity, excluding average goodwill and intangible assets.
(4) Noninterest expense less debt extinguishment expense and
derivative termination costs divided by the sum of tax-equivalent net
interest income plus noninterest income less securities gains
(losses), net. Excludes the results of discontinued operations.
First Charter Corporation
Quarterly Earnings Release

----------------------------------------------------------------------
For the Six Months Increase
Ended (Decrease)
------------------ -----------------
(Dollars in thousands, except
per share data) 6/30/07 6/30/06 Amount Percentage
----------------------------------------------------------------------
INCOME STATEMENT
Tax-equivalent interest income $156,767 $124,550 $32,217 25.9 %
Interest expense 81,226 58,651 22,575 38.5
----------------------------------------------------------------------
Tax-equivalent net interest
income 75,541 65,899 9,642 14.6
Provision for loan losses 10,490 2,399 8,091 337.3
----------------------------------------------------------------------
Tax-equivalent NII after
provision for loan losses 65,051 63,500 1,551 2.4
Noninterest income 39,707 33,283 6,424 19.3
Noninterest expense 71,127 61,429 9,698 15.8
----------------------------------------------------------------------
Income from continuing
operations before income taxes
and tax-equivalent adjustment 33,631 35,354 (1,723) (4.9)
Tax-equivalent adjustment 1,262 1,162 100 8.6
Income tax expense 11,063 11,614 (551) (4.7)
----------------------------------------------------------------------
Income from continuing
operations, net of tax 21,306 22,578 (1,272) (5.6)
Income from discontinued
operations, net of tax - 120 (120) (100.0)
----------------------------------------------------------------------
Net income $ 21,306 $ 22,698 $(1,392) (6.1)%
----------------------------------------------------------------------
Effective tax rate (1) 34.2% 34.0%
----------------------------------------------------------------------
PER COMMON SHARE
Basic earnings per share
Income from continuing
operations, net of tax $ 0.61 $ 0.73 $ (0.12) (16.4)%
Net income 0.61 0.73 (0.12) (16.4)
Diluted earnings per share
Income from continuing
operations, net of tax $ 0.61 $ 0.72 $ (0.11) (15.3)%
Net income 0.61 0.73 (0.12) (16.4)
Average shares
Basic 34,734 30,960
Diluted 35,036 31,249
Cash dividends paid $ 0.390 $ 0.385 $ 0.005 1.3 %
----------------------------------------------------------------------
PERFORMANCE RATIOS
Return on average assets (2) 0.88 % 1.08 %
Return on average equity (2) 9.46 13.89
Return on average tangible
equity (3) 11.91 14.02
Net interest margin (2) 3.40 3.38
Efficiency (4) 61.7 61.9
----------------------------------------------------------------------
SELECTED ITEMS INCLUDED IN
EARNINGS
Noninterest income
Securities gains (losses), net $ (11) $ 32
Equity method investment gains
(losses), net 1,805 556
Property sale gains, net 215 188
Noninterest expense
Separation agreements 241 105
Merger-related costs 237 -
GBC related executive retirement
expense 245 -
----------------------------------------------------------------------
DISCONTINUED OPERATIONS
Noninterest income $ - $ 1,809
Noninterest expense - 1,611
----------------------------------------------------------------------
Income from discontinued
operations - 198
Gain on sale - -
Income tax expense - 78
----------------------------------------------------------------------
Income from discontinued
operations, net of tax $ - $ 120
----------------------------------------------------------------------
(1) The effective tax rate includes the related effects of both
continuing and discontinued operations.
(2) Annualized.
(3) Net income, excluding intangibles amortization expense, divided by
average equity, excluding average goodwill and intangible assets.
(4) Noninterest expense less debt extinguishment expense and
derivative termination costs divided by the sum of tax-equivalent net
interest income plus noninterest income less securities gains
(losses), net. Excludes the results of discontinued operations.
First Charter Corporation
Quarterly Earnings Release

----------------------------------------------------------------------
Quarter Ended
--------------------------------------------------
(Dollars in
thousands, except
per share data) 6/30/07 3/31/07 12/31/06 9/30/06 6/30/06
----------------------------------------------------------------------
INCOME STATEMENT
Tax-equivalent
interest income
Loans $ 67,243 $ 66,239 $ 63,764 $ 56,958 $ 54,167
Securities 11,558 11,440 11,193 10,528 10,054
Other 109 178 150 148 97
----------------------------------------------------------------------
Tax-equivalent
interest income 78,910 77,857 75,107 67,634 64,318
Interest expense
Deposits 26,364 26,541 25,412 22,131 18,343
Other 14,383 13,938 13,029 11,996 12,752
----------------------------------------------------------------------
Total interest
expense 40,747 40,479 38,441 34,127 31,095
----------------------------------------------------------------------
Tax-equivalent net
interest income 38,163 37,378 36,666 33,507 33,223
Provision for loan
losses 9,124 1,366 1,486 1,405 880
----------------------------------------------------------------------
Tax-equivalent net
interest income
after provision for
loan losses 29,039 36,012 35,180 32,102 32,343
Noninterest income
Service charges on
deposits 7,942 7,390 7,442 7,353 7,469
ATM, debit, and
merchant fees 2,636 2,444 2,198 2,182 2,117
Wealth management 944 716 725 729 693
Equity method
investment gains
(losses), net 678 1,127 12 3,415 11
Mortgage services 1,056 901 943 784 812
Gain on sale of
Small Business
Administration
loans 132 377 126 - -
Brokerage services 1,007 1,081 932 847 692
Insurance services 3,422 3,634 3,160 2,974 2,898
Bank-owned life
insurance 1,162 1,139 1,123 722 850
Property sale gains,
net 152 63 49 408 107
Securities gains
(losses), net - (11) - (5,860) 32
Gain on sale of
deposits and loans - - - 2,825 -
Other 1,010 705 678 628 611
----------------------------------------------------------------------
Total noninterest
income 20,141 19,566 17,388 17,007 16,292
Noninterest expense
Salaries and
employee benefits 19,576 19,587 19,628 16,066 16,343
Occupancy and
equipment 4,759 4,612 4,396 4,217 4,826
Data processing 1,492 1,790 1,441 1,469 1,448
Marketing 1,055 1,351 972 1,255 1,196
Postage and supplies 1,164 1,172 1,191 1,179 1,282
Professional
services 3,181 3,586 2,210 2,440 2,258
Telephone 519 671 561 556 513
Amortization of
intangibles 314 223 330 115 107
Foreclosed
properties 226 153 262 21 418
Other 2,921 2,775 2,862 2,337 2,297
----------------------------------------------------------------------
Total noninterest
expense 35,207 35,920 33,853 29,655 30,688
----------------------------------------------------------------------
Income from
continuing
operations before
income taxes and
tax-equivalent
adjustment 13,973 19,658 18,715 19,454 17,947
Tax-equivalent
adjustment 619 643 651 549 576
Income tax expense 4,404 6,659 5,962 6,223 5,946
----------------------------------------------------------------------
Income from
continuing
operations, net of
tax 8,950 12,356 12,102 12,682 11,425
Income (loss) from
discontinued
operations, net of
tax - - (87) - 30
----------------------------------------------------------------------
Net income $ 8,950 $ 12,356 $ 12,015 $ 12,682 $ 11,455
----------------------------------------------------------------------
Effective tax rate
(1) 33.0% 35.0% 36.3% 32.9% 34.3%

----------------------------------------------------------------------
PER COMMON SHARE
Basic earnings per
share
Income from
continuing
operations, net of
tax $ 0.26 $ 0.36 $ 0.36 $ 0.41 $ 0.37
Net income 0.26 0.36 0.36 0.41 0.37
Diluted earnings per
share
Income from
continuing
operations, net of
tax $ 0.26 $ 0.35 $ 0.36 $ 0.40 $ 0.37
Net income 0.26 0.35 0.36 0.40 0.37
Cash dividends
declared 0.195 0.195 0.195 0.195 0.195
----------------------------------------------------------------------
(1)The effective tax rate includes the related effects of both
continuing and discontinued operations.
First Charter Corporation
Quarterly Earnings Release

----------------------------------------------------------------------
Quarter Ended
--------------------------------------------------
(Dollars in
thousands, except
per share data) 6/30/07 3/31/07 12/31/06 9/30/06 6/30/06
----------------------------------------------------------------------
PERFORMANCE RATIOS
Return on average
assets (1) 0.74% 1.03 % 1.02 % 1.16 % 1.07%
Return on average
equity (1) 7.86 11.09 11.69 14.76 13.80
Return on average
tangible equity (1)
(2) 9.97 13.90 14.27 15.98 14.97
Net interest margin
(1) 3.42 3.38 3.40 3.33 3.36
Efficiency (3) 60.4 63.1 62.6 52.6 62.0
Noninterest income as
a percentage of
total revenue (4) 34.55 34.36 32.17 33.67 32.90
Equity as a
percentage of total
assets 9.07 9.32 9.21 7.97 7.66
Tangible equity as a
percentage of total
tangible assets (5) 7.48 7.74 7.59 7.51 7.19
Leverage capital 8.97 9.10 9.32 9.19 9.17
Tier 1 capital 10.57 10.85 10.49 11.19 11.20
Total risk-based
capital 11.67 11.74 11.35 12.04 12.04
----------------------------------------------------------------------

SELECTED ITEMS
INCLUDED IN
EARNINGS

Noninterest income
Securities gains
(losses), net $ - $ (11) $ - $ (5,860) $ 32
Gain on sale of
deposits and loans - - - 2,825 -
Equity method
investment gains
(losses), net 678 1,127 12 3,415 11
Property sale gains,
net 152 63 49 408 107
Bank-owned life
insurance - - - (271) -
Noninterest expense
Separation
agreements 183 58 228 342 -
Merger-related costs - 237 302 - -
GBC related
executive
retirement expense 245 - - - -
Accelerated vesting
of stock options - - 665 - -
----------------------------------------------------------------------

DISCONTINUED
OPERATIONS
Noninterest income $ - $ - $ 444 $ 759 $ 844
Noninterest expense - - 606 759 794
----------------------------------------------------------------------
Income (loss) from
discontinued
operations - - (162) - 50
Gain on sale - - 962 - -
Income tax expense - - 887 - 20
----------------------------------------------------------------------
Income (loss) from
discontinued
operations, net of
tax $ - $ - $ (87) $ - $ 30
----------------------------------------------------------------------
(1)Annualized.
(2)Net income, excluding intangibles amortization expense, divided by
average equity, excluding average goodwill and intangible assets.
(3)Noninterest expense less debt extinguishment expense and derivative
termination costs divided by the sum of tax-equivalent net interest
income plus noninterest income less securities gains (losses), net.
Excludes the results of discontinued operations.
(4)Total revenue equals tax-equivalent net income income plus
noninterest income. Excludes the results of discontinued operations.
(5)Excludes goodwill and other intangible assets.
First Charter Corporation
Quarterly Earnings Release

----------------------------------------------------------------------
As of / Quarter Ended
---------------------------------------------------
(Dollars in
thousands) 6/30/07 3/31/07 12/31/06 9/30/06 6/30/06
----------------------------------------------------------------------
ASSET QUALITY
Allowance for Loan
Losses
Beginning balance $35,854 $34,966 $ 29,919 $29,520 $29,505
Allowance of
acquired company - - 4,211 - -
Provision for loan
losses 9,124 1,366 1,486 1,405 880
Charge-offs (547) (786) (907) (1,307) (1,135)
Recoveries 359 308 257 301 270
----------------------------------------------------------------------
Net charge-offs (188) (478) (650) (1,006) (865)
----------------------------------------------------------------------
Ending balance $44,790 $35,854 $ 34,966 $29,919 $29,520
----------------------------------------------------------------------
Nonperforming
Assets
Nonaccrual loans $17,387 $10,943 $ 8,200 $ 7,090 $ 7,763
Loans 90 days or
more past due
accruing interest - - - - -
----------------------------------------------------------------------
Total nonperforming
loans 17,387 10,943 8,200 7,090 7,763
Other real estate 2,726 6,330 6,477 5,601 5,902
----------------------------------------------------------------------
Total nonperforming
assets $20,113 $17,273 $ 14,677 $12,691 $13,665
----------------------------------------------------------------------
Asset Quality
Ratios
Nonaccrual loans as
a percentage of
total portfolio
loans 0.49 % 0.31 % 0.24 % 0.23 % 0.25 %
Nonperforming
assets as a
percentage of
total assets 0.41 0.35 0.30 0.29 0.31
Nonperforming
assets as a
percentage of
total portfolio
loans and other
real estate 0.57 0.49 0.42 0.41 0.44
Net charge-offs as
a percentage of
average portfolio
loans (1) 0.02 0.06 0.08 0.13 0.11
Allowance for loan
losses as a
percentage of
portfolio loans 1.26 1.02 1.00 0.97 0.96
Ratio of allowance
for loan losses
to:
Net charge-offs
(1) 59.40 x 18.50 x 13.56 x 7.50 x 8.51 x
Nonaccrual loans 2.58 3.28 4.26 4.22 3.80
----------------------------------------------------------------------



Quarter Ended
----------------------------------------------
6/30/07 3/31/07 12/31/06 9/30/06 6/30/06
----------------------------------------------------------------------
YIELDS / RATES (1)
Interest income
Loans and loans held for
sale 7.61 % 7.62 % 7.56 % 7.35 % 7.17 %
Securities 5.06 4.95 4.84 4.56 4.37
----------------------------------------------------------------------
Yield on earning assets 7.08 7.05 6.96 6.70 6.51
Interest expense
Interest-bearing
deposits 3.82 3.84 3.73 3.47 3.11
Retail borrowings 3.28 2.92 2.82 1.94 2.81
Wholesale borrowings 5.26 5.27 5.11 5.11 4.88
----------------------------------------------------------------------
Cost of total borrowings 5.10 5.08 4.90 4.83 4.61
----------------------------------------------------------------------
Cost of interest-bearing
liabilities 4.19 4.19 4.06 3.85 3.59
----------------------------------------------------------------------
Interest rate spread 2.89 2.86 2.90 2.85 2.92
----------------------------------------------------------------------
Net yield on earning
assets 3.42 % 3.38 % 3.40 % 3.33 % 3.36 %
----------------------------------------------------------------------

(1)Annualized
First Charter Corporation
Quarterly Earnings Release

Three Months Ended Six Months Ended
June 30, 2007 June 30, 2007
-------------------------- -------------------------

(Dollars in
thousands,
except per share US GAAP Penland Excluding US GAAP Penland Excluding
data) Basis Impact Penland Basis Impact Penland
----------------------------------------------------------------------
RECONCILIATION OF
NON-GAAP
INCOME STATEMENT
ITEMS
Income from
continuing
operations
before income
tax expense $13,354 $7,786 $ 21,140 $32,369 $7,786 $ 40,155
Income tax
expense 4,404 3,075 7,479 11,063 3,075 14,138
Income from
continuing
operations, net
of tax 8,950 4,711 13,661 21,306 4,711 26,017
Basic earnings
per share $ 0.26 $(0.14) $ 0.39 $ 0.61 $(0.14) $ 0.75
Diluted earnings
per share 0.26 (0.13) 0.39 0.61 (0.13) 0.74
----------------------------------------------------------------------


As of June 30, 2007
-----------------------------
US GAAP Penland Excluding
(Dollars in thousands) Basis Impact Penland
-------------------------------------------------------------
RECONCILIATION OF NON-GAAP
BALANCE SHEET ITEMS
Allowance for loan losses $ 44,790 $(7,786) $ 37,004
Nonperforming assets 20,082 (5,401) 14,681
Total assets 4,916,721 7,786 4,924,507
----------------------------------------------------------------------