First Charter Reports Significant Increase in Net Income for Fourth Qu

First Charter Reports Significant Increase in Net Income for Fourth Quarter and 2004

    Business Editors

    CHARLOTTE, N.C.--(BUSINESS WIRE)--Jan. 13, 2005--First Charter Corp. (NASDAQ: FCTR):

    Long-Term Growth Initiatives Help Drive Improved Performance
    Fourth Quarter 2004 compared to Fourth Quarter 2003

--	Earnings per diluted share increased to $0.38 compared to a net loss of $0.02.
--	Total revenues increased 11 percent to $47.1 million.
--	Strong loan growth helped fuel a 10 percent increase in interest income.
--	Improved asset quality trends resulted in a $1.8 million decrease in the provision for loan losses.
--	Noninterest expense decreased $13.7 million due to prepayment costs associated with refinancing fixed term advances in 2003 that did not recur in 2004.
--	Quarterly Customer Satisfaction Survey score, a key element in our Community Banking strategy, was 83 percent "Very Satisfied" and is significantly higher than the national average of 58 percent.

    First Charter Corporation (NASDAQ: FCTR) today reported significantly improved fourth quarter earnings, continuing the strong financial performance achieved throughout 2004. "We began this year with an effective, long-term strategy to leverage our community banking model and achieve improved financial performance," said Lawrence M. Kimbrough, President & CEO of First Charter Corporation. "The results confirm both the effectiveness of that strategy and the ability of the First Charter organization to implement it."
    Fourth quarter earnings increased to $11.6 million or $0.38 per diluted share compared to a net loss of $0.5 million, or $0.02 per diluted share, for the same period in 2003. Earnings for the fourth quarter of 2003 were impacted by $11.7 million of costs associated with the refinancing of fixed term advances. Total revenues in the fourth quarter of 2004, comprised of net interest income and noninterest income, increased $4.7 million or 11 percent, driven by strong loan growth, higher fee income and an increase in interest rates. Asset quality remained stable, with nonperforming assets at 0.73 percent of loans plus other real estate owned and 30 day past due loans at 0.51 percent of loans.
    "For the fourth quarter and the full year, First Charter grew total revenue, loans, interest income and earnings per share - all while we continued to improve asset quality and to maintain exceptional levels of customer satisfaction," commented Mr. Kimbrough. "This improved performance helped First Charter provide a total return (including dividends) of nearly 38 percent to shareholders in 2004."
    Earnings for 2004 totaled $42.4 million, or $1.40 per diluted share, compared to earnings of $14.1 million, or $0.47 per diluted share, for 2003. Earnings for 2003 were impacted by a higher provision for loan losses primarily attributable to the sale of $60.9 million of nonaccruing and accruing higher risk loans and by $19.1 million of costs associated with the refinancing of fixed term advances. In 2004, net interest income increased 14 percent primarily due to the following: strong loan growth; slower prepayment speeds in the securities-available-for-sale portfolio; the refinancing of fixed term advances during 2003 and certain asset-liability management transactions entered into during 2004.

Financial Highlights (Dollars in thousands except per share data) For The For The Three Months Ended 12 Months Ended Dec. 31, Dec. 31, Earnings 2004 2003 2004 2003 --------------------------------------------------------------------

Total revenues $47,112 $42,459 $183,906 $171,735 Net income 11,559 (490) 42,442 14,146 Diluted earnings per share 0.38 (0.02) 1.40 0.47

Financial Ratios ---------------------------- Return on average assets 1.04 % (0.05)% 0.98 % 0.35% Return on average equity 14.73 (0.64) 14.05 4.50 Efficiency-taxable equivalent ratio (1) 58.57 97.41 60.55 77.45

Asset Quality Ratios (2) ---------------------------- Past due loans over 30 days as a percentage of loans 0.51 1.04 0.51 1.04 Allowance for loan losses as a percentage of loans 1.10 1.14 1.10 1.14 Allowance for loan losses as a percentage of nonaccrual loans 192.35 171.75 192.35 171.75 Net charge-offs as a percentage of average loans- annualized (3) 0.30 0.35 0.28 0.39

Balance Sheet Dec. 31, Dec. 31, Increase (Decrease) (Dollars in thousands) 2004 2003 Amount Percentage ----------------------------------------------------------------------

Loans, net $2,412,529 $2,227,030 $185,499 8.33% Total assets 4,431,605 4,206,693 224,912 5.35 Total deposits 2,609,846 2,427,897 181,949 7.49 Other borrowings 1,449,736 1,432,200 17,536 1.22 Shareholders' equity 314,687 299,439 15,248 5.09

(1) Noninterest expense divided by the sum of taxable equivalent net interest income plus noninterest income less gain on sale of securities. (2) Ratios exclude loans held for sale. (3) Excludes the reduction in the allowance for loan losses related to the sales of nonperforming and higher risk loans.

    Service Quality

    Each quarter, through an independent third party, First Charter completes over 1,500 telephone surveys among the customers who have used at least one of our branches in the past 90 days. The respondents are asked a battery of questions about their satisfaction with the service provided by our branch employees during their most recent visit. In the survey completed in December 2004, 83 percent of the customers reported that they were "Very Satisfied" with the service they received. The national average for customer satisfaction with banks, as reported in the American Banker/Gallup 2004 Consumer Survey, is 58 percent "Very Satisfied".
    "Delivering exceptional service to our customers is at the heart of our Community Banking Model and drives our success in attracting and retaining customers," commented Bob James, President & CEO of First Charter Bank. "Because we encourage the public to Expect More From Us, we frequently ask our customers if we are delivering on that promise. Our goal is to exceed the expectations of our customers, not merely meet them. Our high level of customer satisfaction clearly differentiates First Charter from the large banks that populate our marketplace and will remain a key component in our growth plans for 2005."

    Net Interest Income/Margin

    Fourth Quarter

    Net interest income increased $2.8 million, or 10 percent, to $31.8 million compared to the fourth quarter of 2003. The increase was due to a $5.5 million increase in interest income primarily resulting from strong loan growth and an increase in interest rates. The increase in interest income was partially offset by a $2.7 million increase in interest expense due to an increase in interest rates and higher levels of deposits and other borrowings. The increase in rates was mitigated by the refinancing of $81 million of fixed-term advances in the fourth quarter of 2003 and by certain asset-liability management transactions entered into during 2004.
    The net interest margin increased to 3.14 percent in the fourth quarter of 2004 from 3.10 percent for the same period in 2003 as more interest earning assets repriced upward than did interest bearing liabilities.

    Full Year

    Net interest income increased $15.2 million, or 14 percent, to $123.0 million compared to the same period in 2003. The increase was primarily driven by an $8.6 million increase in interest income due mainly to strong loan growth, increases in the securities-available-for-sale portfolio and a decrease in prepayment speeds in the securities-available-for-sale portfolio. In addition, interest expense decreased $6.2 million. This decrease was primarily due to the following: a shift in funding sources from higher-cost retail CDs to lower-cost transaction based accounts; the repricing of retail CDs at lower rates in 2003 and 2004; the refinancing of $131 million of fixed-term advances in 2003 and certain asset-liability management transactions entered into during 2004. These decreases were partially offset by an increase in interest rates.
    The net interest margin for 2004 increased to 3.13 percent from 3.00 percent for the same period in 2003 due to the asset sensitive nature of the balance sheet. The yield on earning assets and cost of interest paying liabilities declined as the combined impact of loan and deposit repricing from historically low levels in 2003 and first half of 2004 was greater than the impact of increasing rates in the second half of 2004.

    Noninterest Income

    Fourth Quarter

    Noninterest income increased $1.8 million, or 14 percent, to $15.3 million compared to the fourth quarter of 2003. The increase was primarily due to the following: $1.1 million increase in service charges; $0.8 million increase in other noninterest income due to growth in ATM, debit card and other miscellaneous fees and a $0.7 million increase in insurance service income primarily due to increases in contingency income. These increases were partially offset by a $0.2 million decrease in brokerage income, and a $0.2 million decrease in gains on sale of securities.

    Full Year

    Noninterest income decreased $3.0 million, or 5 percent, to $60.9 million compared to the same period in 2003. A number of factors contributed to the decrease. Gains on the sale of securities totaling $2.4 million were recognized in 2004, compared to gains of $10.3 million in 2003, representing a decrease of $7.9 million. In 2003, additional gains of $2.3 million from the sale of the First Charter credit card portfolio and $1.8 million of trading gains were recognized. In addition, 2004 mortgage loan fees decreased $1.2 million as origination volume declined and the bank retained a larger portion of mortgage loans. These decreases in noninterest income were partially offset by the following: $3.4 million increase in service charges; $2.1 million increase in financial management income primarily due to the acquisition of a third party benefits administrator in the third quarter of 2003; $2.2 million increase in other noninterest income due to growth in ATM, debit card and other miscellaneous fees and a $1.9 million increase in insurance services income primarily due to an increase in contingency income and the successful integration of two insurance agencies acquired in 2003 and one insurance agency acquired in the fourth quarter of 2004.

    Noninterest Expense

    Fourth Quarter

    Noninterest expense decreased $13.7 million, or 33 percent, to $27.7 million compared to the fourth quarter of 2003. The decrease was due to $11.7 million of prepayment costs associated with refinancing $81 million in fixed term advances in 2003 that did not recur in 2004. In addition, professional service fees decreased $1.2 million and salaries and employee benefits decreased $1.0 million primarily due to lower medical and dental expenses and decreased commission-based compensation.

    Full Year

    Noninterest expense decreased $15.8 million, or 12 percent, to $111.0 million compared to the same period in 2003. The decrease was due to $19.1 million of prepayment costs associated with refinancing $131 million in fixed term advances in 2003 that did not recur in 2004. In addition, professional service fees decreased $2.0 million. These decreases were partially offset by a $3.7 million increase in salaries and employee benefits due to additional personnel, including the acquisition of a third party benefits administrator and three insurance agencies, increased incentive compensation and employee benefit accruals resulting from an increase in 2004 earnings.

    Efficiency Ratio

    The efficiency ratio decreased to 60.5 percent in 2004 compared to 77.5 percent for 2003. The calculation of the efficiency ratio excludes gains on sale of securities of $2.4 million in 2004 and $10.3 million in 2003.

    Income Tax Expense

    Fourth Quarter

    Total income tax expense for the fourth quarter of 2004 was $6.1 million for an effective tax rate of 34.4 percent compared to an income tax benefit of $2.0 million for the fourth quarter of 2003.

    Full Year

    The income tax expense for 2004 amounted to $22.0 million for an effective tax rate of 34.2 percent compared to $3.3 million for an effective tax rate of 18.9 percent for 2003. The increase in the effective tax rate for 2004 was due to an increase in taxable income relative to nontaxable adjustments and an increase in accrued taxes resulting from a proposed tax assessment received in the third quarter of 2004. First Charter is appealing this assessment.

    Loans Held for Sale

    Loans held for sale consist primarily of 15 and 30 year residential mortgage loans that First Charter intends to sell as whole loans. Loans held for sale increased to $5.3 million at December 31, 2004 as compared to $5.1 million at December 31, 2003. During 2004, $40.7 million of residential mortgage loans were securitized, moved to securities-available-for-sale and subsequently sold.

    Loans

    Gross loans increased $186.9 million, or 8 percent, to $2.44 billion at December 31, 2004 as compared to $2.25 billion at December 31, 2003. The growth in loans was due to a $74.1 million increase in home equity loans, a $66.9 million increase in mortgage loans, a $52.1 million increase in commercial real estate loans and a $19.7 million increase in consumer loans. These increases were partially offset by a $26.0 million decrease in construction loans.

    Securities

    The securities-available-for-sale portfolio increased $50.8 million, or 3 percent, to $1.65 billion at December 31, 2004 as compared to December 31, 2003. The increase in the securities-available-for-sale portfolio was primarily due to the purchase of agency securities funded by the proceeds from the sale of the securitized residential mortgage loans mentioned previously. The securities-available-for-sale portfolio also was impacted by an increase in the pre-tax unrealized net losses in the portfolio due to a rise in short and intermediate-term interest rates. Pre-tax unrealized net losses on securities-available-for-sale were $8.0 million at December 31, 2004 compared to pre-tax unrealized net gains of $10.1 million at December 31, 2003.

    Deposits

    First Charter's CHecking Account Marketing Program (CHAMP) continues to attract new customers and deposits. During 2004, 38,607 new checking accounts were opened. This program is designed to develop new customer relationships, shift our funding mix towards lower-cost funding sources and generate additional fee income opportunities. Mr. James commented, "The ongoing success of the CHAMP program, with its focus on core deposit account relationship growth, supports our Community Banking Model. CHAMP has delivered annual new checking account openings well above the industry average. We believe we can maintain similar levels of checking account growth in 2005, which will strengthen our unique position in the marketplace."
    Total deposits increased $181.9 million, or 7 percent, to $2.61 billion at December 31, 2004 compared to $2.43 billion at December 31, 2003. The increase in deposits was due to a $95.3 million increase in CDs resulting primarily from a promotional campaign launched in November. In addition, low-cost interest checking, savings and noninterest bearing deposits increased $78.9 million and money market accounts increased $7.8 million.

    Shareholders' Equity

    Shareholders' equity at December 31, 2004 increased to $314.7 million, or 5 percent, compared to $299.4 million at December 31, 2003. The after-tax unrealized loss on securities-available-for-sale was $4.9 million at December 31, 2004 compared to an after-tax unrealized gain of $6.2 million at December 31, 2003. The change was due to an increase in short and intermediate-term interest rates. At December 31, 2004, the book value per share was $10.47. Based on the $26.17 closing price of First Charter Corporation common stock at December 31, 2004, First Charter had a market capitalization of $786.5 million.

    Asset Quality

    As a result of First Charter's continued focus on asset quality and the initiatives taken in 2003 and 2004, asset quality remains strong. "Asset quality is a priority for First Charter," said Mr. Kimbrough, "and will continue to be an area of focus as we grow our business in 2005."

Asset Quality Ratios

12/31/04 9/30/04 6/30/04 3/31/04 12/31/03 ----------------------------------------- Past Due ------------------------------- Past due loans over 30 days as a percentage of loans 0.51% 0.61% 0.47% 0.64% 1.04%

Nonaccrual Loans ------------------------------- Nonaccrual loans as a percentage of loans 0.57% 0.59% 0.53% 0.52% 0.66%

Nonperforming Assets ------------------------------- Nonperforming assets as a percentage of loans and other real estate owned 0.73% 0.79% 0.79% 0.79% 0.96%

Charge-offs ------------------------------- Net charge-offs as a percentage of average loans-annualized 0.30% 0.13% 0.29% 0.41% 0.35%

Allowance for Loan Losses ------------------------------- Allowance for loan losses as a percentage of loans 1.10% 1.11% 1.11% 1.13% 1.14% Allowance for loan losses as a percentage of nonaccrual loans 192% 189% 208% 217% 172%

    Provision for Loan Losses

    Fourth Quarter

    The provision for loan losses decreased to $1.8 million for the three months ended December 31, 2004 compared to $3.6 million for the same year ago period. The decrease in the provision for loan losses was due to improved asset quality trends resulting in lower net charge-offs.

    Full Year

    The provision for loan losses for the year ended December 31, 2004 amounted to $8.4 million compared to $27.5 million for the same year ago period. The decrease in the provision for loan losses was primarily attributable to the previously mentioned $60.9 million sale of nonaccruing and accruing higher risk loans, a $2.4 million increase in the provision related to certain residential rental property loans identified in the second quarter of 2003 and improved asset quality trends resulting in lower net charge-offs.

    Net Charge-Offs

    Fourth Quarter

    Net charge-offs for the three months ended December 31, 2004 amounted to $1.8 million, or 0.30 percent of average loans, compared to $1.9 million, or 0.35 percent of average loans for the same 2003 period.

    Full Year

    Net charge-offs for the year ended December 31, 2004 amounted to $6.6 million, or 0.28 percent of average loans, compared to $8.3 million, or 0.39 percent of average loans for the same 2003 period. Net charge-offs benefited from a $0.6 million commercial loan recovery during the second quarter of 2004 and a third quarter 2004 recovery of $0.4 million from the sale of previously charged-off loans.

    Nonperforming Assets

    Nonaccrual loans at December 31, 2004 decreased to $14.0 million compared to $14.9 million at December 31, 2003. The decrease includes the sale of $2.1 million of nonaccrual mortgage loans in the first quarter of 2004. Other real estate owned decreased to $3.8 million at December 31, 2004 from $6.8 million at December 31, 2003.

    Allowance for Loan Losses

    The allowance for loan losses as a percentage of total loans decreased to 1.10 percent at December 31, 2004 compared to 1.14 percent at December 31, 2003. The allowance for loan losses decreased primarily due to improved asset quality trends, as well as a change in the mix of the loan portfolio towards 1-4 family mortgages and home equity lines of credit. This type of secured lending generally carries lower credit risk and thus requires lower allocations in our allowance model. First Charter monitors the adequacy of the allowance for loan losses to cover inherent losses in the loan portfolio through the use of a loan loss migration model. Management believes First Charter is adequately reserved based on its assessment of its credit risk profile.

    Conference Call and 2005 Outlook

    The First Charter executive management team will be available via telephone conference to discuss the contents of this press release, present growth and earnings estimates, as well as strategic plans for 2005 on Friday, January 14, 2005 at 9:00 a.m. The following table outlines access information for the conference call and internet/audio replay:

US/Canada Participants International Participants ---------------------------------------------------------------------- Live Conference Call 800-379-3953 706-679-5254 ID # 3191544 ID # 3191544 ---------------------------------------------------------------------- Internet Live and www.FirstCharter.com www.FirstCharter.com Replay "Investor Relations" "Investor Relations" section section SHOW # 205089 SHOW # 205089 ---------------------------------------------------------------------- Audio Replay 800-642-1687 706-645-9291 ID # 3191544 ID # 3191544

    Corporate Profile

    First Charter Corporation is a regional financial services company with assets of $4.4 billion and is the holding company for First Charter Bank. First Charter operates 53 financial centers, seven insurance offices and 99 ATMs located in 18 counties throughout the piedmont and western half of North Carolina. First Charter also operates one mortgage origination office in Virginia. First Charter provides businesses and individuals with a broad range of financial services, including banking, financial planning, funds management, investments, insurance, mortgages and a full array of employee benefit programs. Additional information about First Charter can be found by visiting www.FirstCharter.com or by calling 1-800-601-8471. First Charter's common stock is traded under the symbol "FCTR" on the Nasdaq National Market.

    Forward Looking Statements

    This news release contains forward looking statements with respect to the financial conditions 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 include, among others, the following possibilities: (1) projected results in connection with the implementation of our 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 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; (6) changes in the interest rate environment 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 adversely affect the businesses in which the Corporation is engaged; (9) regulatory compliance cost increases are greater than expected; and (10) the passage of future tax legislation, or any negative regulatory, administrative or judicial position, may adversely impact the Corporation. For further information and other factors which could affect the accuracy of forward looking statements, please see First Charter's reports filed with the SEC pursuant to the Securities Exchange Act of 1934 which are available at the SEC's website (www.sec.gov) or at First Charter's website (www.FirstCharter.com). Readers are cautioned not to place undue reliance on these forward looking statements, which reflect management's judgments only as of the date hereof. The Corporation undertakes no obligation to publicly revise those forward looking statements to reflect events and circumstances that arise after the date hereof.

First Charter Corporation and Subsidiaries (NASDAQ:FCTR) Quarterly Earnings Release

(Dollars in thousands, except per share data)

As of/For the Increase Twelve Months Ended (Decrease) 12/31/04 12/31/03 Amount Percentage ----------------------------------------------------------------------

BALANCE SHEET ASSETS: Cash and due from banks $ 90,238 $ 88,564 $ 1,674 1.9 % Federal funds sold 1,589 1,311 278 21.2 Interest earning bank deposits 6,184 23,631 (17,447) (73.8) Securities available for sale 1,652,732 1,601,900 50,832 3.2 Loans held for sale 5,326 5,137 189 3.7 Loans Commercial Real Estate 776,474 724,340 52,134 7.2 Commercial Non Real Estate 212,031 212,010 21 0.0 Construction 332,264 358,217 (25,953) (7.2) Mortgage 347,606 280,748 66,858 23.8 Consumer 304,151 284,448 19,703 6.9 Home equity 467,166 393,041 74,125 18.9 ------------------------------------- Total loans 2,439,692 2,252,804 186,888 8.3 Less: Unearned income (291) (167) (124) 74.3 Allowance for loan losses (26,872) (25,607) (1,265) 4.9 ------------------------------------- Loans, net 2,412,529 2,227,030 185,499 8.3 ------------------------------------- Other assets 263,007 259,120 3,887 1.5 ------------------------------------- Total assets $4,431,605 $4,206,693 $224,912 5.3 % -------------------------------------

LIABILITIES AND SHAREHOLDERS' EQUITY: Deposits Noninterest-bearing deposits $ 377,793 $ 326,679 $ 51,114 15.6 % Interest checking and savings 468,292 440,496 27,796 6.3 Money market deposits 478,314 470,551 7,763 1.6 Time deposits 1,285,447 1,190,171 95,276 8.0 ------------------------------------- Total deposits 2,609,846 2,427,897 181,949 7.5 Other borrowings 1,449,736 1,432,200 17,536 1.2 Other liabilities 57,336 47,157 10,179 21.6 ------------------------------------- Total liabilities 4,116,918 3,907,254 209,664 5.4 ------------------------------------- Total shareholders' equity 314,687 299,439 15,248 5.1 ------------------------------------- Total liabilities and shareholders' equity $4,431,605 $4,206,693 $224,912 5.3 % -------------------------------------

--------------------------------------------------------------------- SELECTED AVERAGE BALANCES Loans and loans held for sale $2,363,107 $2,152,748 $210,359 9.8 % Securities 1,623,101 1,464,704 158,397 10.8 Interest earning assets 4,004,678 3,662,460 342,218 9.3 Assets 4,322,727 4,009,511 313,216 7.8 Deposits 2,544,865 2,485,711 59,154 2.4 Interest bearing liabilities 3,610,950 3,310,485 300,465 9.1 Shareholders' equity 302,101 314,562 (12,461) (4.0) ---------------------------------------------------------------------

As of/For the Quarter Ended ---------------------------- 12/31/2004 9/30/2004 6/30/2004 ------------------------------------- MISCELLANEOUS INFORMATION Common stock prices (daily close) High $ 28.11 $ 24.50 $ 21.89 Low 25.00 20.86 20.05 End of period 26.17 24.17 21.79 Book Value 10.47 10.35 9.53 Market Capitalization 786,519,880 720,988,635 648,666,205 Weighted average shares - basic 29,973,996 29,810,917 29,763,619 Weighted average shares - diluted 30,605,826 30,231,191 30,067,462 End of period shares outstanding 30,054,256 29,829,898 29,768,986 ---------------------------------------------------------------------- As of/For the Quarter Ended --------------------------- 3/31/2004 12/31/2003 ---------------------------------

MISCELLANEOUS INFORMATION Common stock prices (daily close) High $ 21.68 $ 21.20 Low 19.52 19.27 End of period 21.14 19.55 Book Value 10.38 10.08 Market Capitalization 628,876,525 581,029,187 Weighted average shares - basic 29,738,553 29,685,088 Weighted average shares - diluted 30,029,056 29,685,088 End of period shares outstanding 29,748,180 29,720,163 ----------------------------------------------------------------- First Charter Corporation and Subsidiaries Quarterly Earnings Release (Dollars in thousands, As of/For the Quarter Ended except per share data) 12/31/2004 9/30/2004 6/30/2004 ----------------------------------------------------------------------

BALANCE SHEET ASSETS: Cash and due from banks $ 90,238 $ 98,000 $ 94,749 Federal funds sold 1,589 2,080 1,960 Interest earning bank deposits 6,184 9,259 19,513 Securities available for sale 1,652,732 1,630,655 1,604,585 Loans held for sale 5,326 5,468 26,768 Loans Commercial Real Estate 776,474 788,539 768,637 Commercial Non Real Estate 212,031 210,214 208,587 Construction 332,264 345,178 332,031 Mortgage 347,606 331,249 315,005 Consumer 304,151 290,569 276,236 Home equity 467,166 459,527 447,739 --------------------------------------- Total loans 2,439,692 2,425,276 2,348,235 Less: Unearned income (291) (301) (197) Allowance for loan losses (26,872) (26,859) (26,052) --------------------------------------- Loans, net 2,412,529 2,398,116 2,321,986 --------------------------------------- Other assets 263,007 265,466 269,652 --------------------------------------- Total assets $ 4,431,605 $ 4,409,044 $4,339,213 ---------------------------------------

LIABILITIES AND SHAREHOLDERS' EQUITY: Deposits Noninterest-bearing deposits $ 377,793 $ 368,156 $ 368,738 Interest checking and savings 468,292 448,799 450,950 Money market deposits 478,314 544,663 563,523 Time deposits 1,285,447 1,195,444 1,211,554 --------------------------------------- Total deposits 2,609,846 2,557,062 2,594,765 Other borrowings 1,449,736 1,482,340 1,410,481 Other liabilities 57,336 60,991 50,186 --------------------------------------- Total liabilities 4,116,918 4,100,393 4,055,432 --------------------------------------- Total shareholders' equity 314,687 308,651 283,781 --------------------------------------- Total liabilities and shareholders' equity $ 4,431,605 $ 4,409,044 $4,339,213 ---------------------------------------

---------------------------------------------------------------------- SELECTED AVERAGE BALANCES Loans and loans held for sale $ 2,444,827 $ 2,393,362 $2,339,435 Securities 1,637,050 1,627,156 1,637,918 Interest earning assets 4,101,708 4,035,259 3,995,390 Assets 4,426,604 4,343,207 4,316,360 Deposits 2,614,161 2,586,524 2,547,909 Interest bearing liabilities 3,666,565 3,625,679 3,610,337 Shareholders' equity 312,122 296,539 296,699 ----------------------------------------------------------------------

(Dollars in thousands, As of/For the Quarter Ended except per share data) 3/31/2004 12/31/2003 ---------------------------------------------------------------------- BALANCE SHEET ASSETS: Cash and due from banks $ 75,040 $ 88,564 Federal funds sold 1,723 1,311 Interest earning bank deposits 17,951 23,631 Securities available for sale 1,622,967 1,601,900 Loans held for sale 17,969 5,137 Loans Commercial Real Estate 749,355 724,340 Commercial Non Real Estate 210,010 212,010 Construction 346,109 358,217 Mortgage 288,505 280,748 Consumer 271,686 284,448 Home equity 414,410 393,041 ---------------------------------- Total loans 2,280,075 2,252,804 Less: Unearned income (209) (167) Allowance for loan losses (25,736) (25,607) ---------------------------------- Loans, net 2,254,130 2,227,030 ---------------------------------- Other assets 258,081 259,120 ---------------------------------- Total assets $4,247,861 $4,206,693 ----------------------------------

LIABILITIES AND SHAREHOLDERS' EQUITY: Deposits Noninterest-bearing deposits $ 353,133 $ 326,679 Interest checking and savings 454,024 440,496 Money market deposits 506,504 470,551 Time deposits 1,193,781 1,190,171 ---------------------------------- Total deposits 2,507,442 2,427,897 Other borrowings 1,377,374 1,432,200 Other liabilities 54,308 47,157 ---------------------------------- Total liabilities 3,939,124 3,907,254 ---------------------------------- Total shareholders' equity 308,737 299,439 ---------------------------------- Total liabilities and shareholders' equity $4,247,861 $4,206,693 ----------------------------------

---------------------------------------------------------------------- SELECTED AVERAGE BALANCES Loans and loans held for sale $2,273,575 $2,188,643 Securities 1,590,083 1,585,679 Interest earning assets 3,884,954 3,792,383 Assets 4,210,401 4,158,189 Deposits 2,436,673 2,496,810 Interest bearing liabilities 3,535,305 3,431,144 Shareholders' equity 303,722 304,097 ----------------------------------------------------------------------

First Charter Corporation and Subsidiaries (NASDAQ:FCTR) Quarterly Earnings Release

(Dollars in thousands, For The Increase except per share data) Three Months Ended (Decrease) -------------------------------------------- 12/31/2004 12/31/2003 Amount Percentage ----------------------------------------------------------------------

INCOME STATEMENT Interest income - taxable equivalent $ 50,523 $ 45,063 $ 5,460 12.1 % Interest expense 18,275 15,570 2,705 17.4 ------------------------------------------- Net interest income - taxable equivalent 32,248 29,493 2,755 9.3 Less: taxable equivalent adjustment 438 513 (75) (14.6) ------------------------------------------- Net interest income 31,810 28,980 2,830 9.8 Provision for loan losses 1,825 3,575 (1,750) (49.0) ------------------------------------------- Net interest income after provision for loan losses 29,985 25,405 4,580 18.0 Noninterest income 15,302 13,479 1,823 13.5 Noninterest expense 27,677 41,365 (13,688) (33.1) ------------------------------------------- Income before income taxes 17,610 (2,481) 20,091 (809.8) Income tax expense 6,051 (1,991) 8,042 (403.9) ------------------------------------------- Net income $ 11,559 $ (490) $ 12,049 (2,459.0)% -------------------------------------------

---------------------------------------------------------------------- EARNINGS PER SHARE DATA Basic $ 0.39 $ (0.02) $ 0.41 (2,050.0)% Diluted 0.38 (0.02) 0.40 (2,000.0) Weighted average shares - basic 29,973,996 29,685,088 Weighted average shares - diluted 30,605,826 29,685,088 Dividends paid on common shares $ 0.190 $ 0.185 $ 0.005 5.3 % --------------------------------------------------------------------- PERFORMANCE RATIOS Return on average assets 1.04 % (0.05)% Return on average equity 14.73 (0.64) Efficiency - taxable equivalent/a 58.57 97.41 ---------------------------------------------------------------------

For the Three Months Ended ------------------------------ SCHEDULE OF SELECTED ITEMS 12/31/2004 12/31/2003 INCLUDED IN EARNINGS ------------------------------ Noninterest income Gain on sale of securities $ 296 $ 505 Gain on sale of deposits and loans - - Gain on sale of credit card loans - - Recovery on sale of overdraft deposit accounts 222 - Equity method investment loss (49) 13 Trading gains 52 47 Gain on sale of properties - - Noninterest expense Prepayment costs on borrowings - (11,723) Reserve for contingent liability - -

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Notes:Applicable ratios are annualized.

/a: Noninterest expense divided by the sum of taxable equivalent net interest income plus noninterest income less gain on sale of securities.

First Charter Corporation and Subsidiaries (NASDAQ: FCTR) Quarterly Earnings Release

For the Increase (Dollars in Thousands, 12 Months Ended (Decrease) except per share data) 12/31/2004 12/31/2003 Amount Percentage ----------------------------------------------------------------------

INCOME STATEMENT Interest income - taxable equivalent $ 189,131 $ 180,533 $ 8,598 4.8 % Interest expense 64,293 70,490 (6,197) (8.8) --------------------------------------- Net interest income - taxable equivalent 124,838 110,043 14,795 13.4 Less: taxable equivalent adjustment 1,828 2,241 (413)(18.4) --------------------------------------- Net interest income 123,010 107,802 15,208 14.1 Provision for loan losses 8,425 27,518 (19,093)(69.4) --------------------------------------- Net interest income after provision for loan losses 114,585 80,284 34,301 42.7 Noninterest income 60,896 63,933 (3,037) (4.8) Noninterest expense 111,017 126,785 (15,768)(12.4) --------------------------------------- Income before income taxes 64,464 17,432 47,032 269.8 Income taxes 22,022 3,286 18,736 570.2 --------------------------------------- Net income $ 42,442 $ 14,146 $ 28,296 200.0 % ---------------------------------------

---------------------------------------------------------------------- EARNINGS PER SHARE DATA Basic $ 1.42 $ 0.47 $ 0.95 202.1 % Diluted 1.40 0.47 0.93 197.9 Weighted average shares - basic 29,859,683 29,789,969 Weighted average shares - diluted 30,277,063 30,001,412 Dividends paid on common shares $ 0.75 $ 0.74 $ 0.01 1.4 % --------------------------------------------------------------------- PERFORMANCE RATIOS Return on average assets 0.98 % 0.35 % Return on average equity 14.05 4.50 Efficiency - taxable equivalent/a 60.55 77.45 ---------------------------------------------------------------------

For the Twelve Months Ended SCHEDULE OF SELECTED ITEMS INCLUDED ------------------------------ IN EARNINGS 12/31/2004 12/31/2003 ------------------------------ Noninterest income Gain on sale of securities $2,383 $10,287 Gain on sale of deposits and loans 339 - Gain on sale of credit card loans - 2,262 Recovery on sale of overdraft deposit accounts 222 - Equity method investment loss (349) (285) Trading gains 163 1,801 Gain on sale of properties 777 382 Noninterest expense Prepayment costs on borrowings - (19,089) ----------------------------------------------------------------------

Notes: Applicable ratios are annualized.

/a: Noninterest expense divided by the sum of taxable equivalent net interest income plus noninterest income less gain on sale of securities.

First Charter Corporation and Subsidiaries (NASDAQ: FCTR) Quarterly Earnings Release

As of/For the Quarter Ended ---------------------------------- (Dollars in thousands, except per share data) 12/31/2004 9/30/2004 6/30/2004 ---------------------------------------------------------------------- INCOME STATEMENT Interest income - taxable equivalent Interest and fees on loans $ 34,426 $ 31,406 $ 29,373 Interest on securities 16,010 16,046 15,960 Other interest income 87 44 42 ---------------------------------------- Total interest income - taxable equivalent 50,523 47,496 45,375 ---------------------------------------- Interest expense Interest on deposits 9,690 8,916 8,619 Other interest expense 8,585 7,371 6,255 ---------------------------------------- Total interest expense 18,275 16,287 14,874 ---------------------------------------- Net interest income - taxable equivalent 32,248 31,209 30,501 Less: Taxable equivalent adjustment 438 414 469 ---------------------------------------- Net interest income 31,810 30,795 30,032 Provision for loan losses 1,825 1,600 2,000 ---------------------------------------- Net interest income after provision for loan losses 29,985 29,195 28,032 ---------------------------------------- Noninterest income Service charges on deposit accounts 6,832 6,781 6,346 Financial management income 1,199 1,602 1,545 Gain on sale of securities 296 1,267 494 Gain on sale of deposits and loans - 339 - (Loss) income from equity method investments (49) - (76) Mortgage loan fees 359 365 596 Brokerage services income 628 612 902 Insurance services income 3,140 2,464 2,634 Trading gains (losses) 52 7 (5) Bank owned life insurance 856 860 847 Gain on sale of properties - - - Other noninterest income 1,989 1,742 1,607 ---------------------------------------- Total noninterest income 15,302 16,039 14,890 ---------------------------------------- Noninterest expense Salaries and employee benefits 14,323 14,779 14,368 Occupancy and equipment 4,495 4,115 4,379 Data processing 1,221 945 1,006 Marketing 966 1,141 1,126 Postage and supplies 1,178 1,204 1,306 Professional services 2,237 2,264 2,361 Telephone 501 496 507 Amortization of intangibles 135 111 96 Prepayment costs on borrowings - - - Other noninterest expense 2,621 2,292 2,536 ---------------------------------------- Total noninterest expense 27,677 27,347 27,685 ---------------------------------------- Income (loss) before taxes 17,610 17,887 15,237 Income tax expense (benefit) 6,051 6,499 4,982 ---------------------------------------- Net income (loss) $ 11,559 $ 11,388 $ 10,255 ----------------------------------------

---------------------------------------------------------------------- EARNINGS (LOSS) PER SHARE DATA Basic $ 0.39 $ 0.38 $ 0.34 Diluted 0.38 0.38 0.34 Dividends paid on common shares 0.190 0.190 0.185 ---------------------------------------------------------------------- PERFORMANCE RATIOS Return on average assets 1.04% 1.04% 0.96% Return on average equity 14.73 15.28 13.90 Efficiency - taxable equivalent /a 58.57 59.47 61.66 Noninterest income as a percentage of total income 32.48 34.25 33.15 Equity as a percentage of total assets 7.10 7.00 6.54 Average earning assets as a percentage of average assets 92.66 92.91 92.56 Average loans as a percentage of average deposits 93.52 92.53 91.82 ---------------------------------------------------------------------- As of/For the Quarter Ended ---------------------------------------- SCHEDULE OF SELECTED ITEMS INCLUDED IN EARNINGS 12/31/2004 9/30/2004 6/30/2004 ----------------------------------------

Noninterest income Gain on sale of securities $ 296 $ 1,267 $ 494 Gain on sale of deposits and loans - 339 - Gain on sale of credit card loans - - - Recovery on sale of overdraft deposit accounts 222 - - Equity method investment (loss) income (49) - (76) Trading gains (losses) 52 7 (5) Gain on sale of properties - - - Noninterest expense Prepayment costs on borrowings - - - ---------------------------------------------------------------------- Notes: Applicable ratios are annualized. /a - Noninterest expense divided by the sum of taxable equivalent net interest income plus noninterest income less gain on sale of securities.

As of/For the Quarter Ended -------------------------------------- (Dollars in thousands, except per share data) 3/31/2004 12/31/2003 ---------------------------------------------------------------------- INCOME STATEMENT Interest income - taxable equivalent Interest and fees on loans $ 29,291 $ 29,282 Interest on securities 16,399 15,743 Other interest income 47 38 -------------------------------------- Total interest income - taxable equivalent 45,737 45,063 -------------------------------------- Interest expense Interest on deposits 8,125 8,449 Other interest expense 6,732 7,121 -------------------------------------- Total interest expense 14,857 15,570 -------------------------------------- Net interest income - taxable equivalent 30,880 29,493 Less: Taxable equivalent adjustment 507 513 -------------------------------------- Net interest income 30,373 28,980 Provision for loan losses 3,000 3,575 -------------------------------------- Net interest income after provision for loan losses 27,373 25,405 -------------------------------------- Noninterest income Service charges on deposit accounts 5,605 5,768 Financial management income 1,502 1,239 Gain on sale of securities 326 505 Gain on sale of deposits and loans - - (Loss) income from equity method investments (224) 13 Mortgage loan fees 428 508 Brokerage services income 970 857 Insurance services income 3,031 2,415 Trading gains (losses) 109 47 Bank owned life insurance 850 983 Gain on sale of properties 777 - Other noninterest income 1,291 1,144 -------------------------------------- Total noninterest income 14,665 13,479 -------------------------------------- Noninterest expense Salaries and employee benefits 15,023 15,372 Occupancy and equipment 4,237 4,346 Data processing 862 792 Marketing 1,118 948 Postage and supplies 1,271 1,251 Professional services 2,712 3,422 Telephone 494 567 Amortization of intangibles 118 152 Prepayment costs on borrowings - 11,723 Other noninterest expense 2,473 2,792 -------------------------------------- Total noninterest expense 28,308 41,365 -------------------------------------- Income (loss) before taxes 13,730 (2,481) Income tax expense (benefit) 4,490 (1,991) -------------------------------------- Net income (loss) $ 9,240 $ (490) --------------------------------------

---------------------------------------------------------------------- EARNINGS (LOSS) PER SHARE DATA Basic $ 0.31 $ (0.02) Diluted 0.31 (0.02) Dividends paid on common shares 0.185 0.185 ---------------------------------------------------------------------- PERFORMANCE RATIOS Return on average assets 0.88% (0.05)% Return on average equity 12.20 (0.64) Efficiency - taxable equivalent /a 62.60 97.41 Noninterest income as a percentage of total income 32.56 31.75 Equity as a percentage of total assets 7.27 7.12 Average earning assets as a percentage of average assets 92.27 91.20 Average loans as a percentage of average deposits 93.31 87.66 ---------------------------------------------------------------------

As of/For the Quarter Ended --------------------------------------- SCHEDULE OF SELECTED ITEMS INCLUDED IN EARNINGS 3/31/2004 12/31/2003 ---------------------------------------

Noninterest income Gain on sale of securities $ 326 $ 505 Gain on sale of deposits and loans - - Gain on sale of credit card loans - - Recovery on sale of overdraft deposit accounts - - Equity method investment (loss) income (224) 13 Trading gains (losses) 109 47 Gain on sale of properties 777 - Noninterest expense Prepayment costs on borrowings - (11,723) ----------------------------------------------------------------------

Notes: Applicable ratios are annualized.

/a - Noninterest expense divided by the sum of taxable equivalent net interest income plus noninterest income less gain on sale of securities.

First Charter Corporation and Subsidiaries (NASDAQ:FCTR) Quarterly Earnings Release As of/For the Quarter Ended ---------------------------- (Dollars in thousands, Dec. 31 Sept. 30, June 30, Mar. 31, Dec. 31, except per share data) 2004 2004 2004 2004 2003 ----------------------------------------------------------------------

ASSET QUALITY ANALYSIS Allowance for Loan Losses Beginning balance $26,859 $26,052 $25,736 $25,607 $23,953 Provision for loan losses 1,825 1,600 2,000 3,000 3,575 Allowance related to loans sold - (35) - (549) - Charge-offs (2,063) (1,432) (2,475) (2,582) (2,304) Recoveries 251 674 791 260 383 -------------------------------------------- Net charge-offs (1,812) (758) (1,684) (2,322) (1,921) -------------------------------------------- Ending balance $26,872 $26,859 $26,052 $25,736 $25,607 --------------------------------------------

Nonperforming Assets and Loans 90 days or more past due accruing interest

Nonaccrual loans $13,970 $14,237 $12,533 $11,845 $14,910 Other real estate 3,844 4,962 6,159 6,199 6,836 -------------------------------------------- Total nonperforming assets 17,814 19,199 18,693 18,044 21,746 -------------------------------------------- Loans 90 days or more past due accruing interest - 56 - - 21 -------------------------------------------- Total $17,814 $19,255 $18,693 $18,044 $21,767 -------------------------------------------- Asset Quality Ratios/a

Nonaccrual loans as a percentage of total loans 0.57 % 0.59 % 0.53 % 0.52 % 0.66 % Nonperforming assets as a percentage of total assets 0.40 0.44 0.43 0.42 0.52 Nonperforming assets as a percentage of total loans and other real estate 0.73 0.79 0.79 0.79 0.96 Net charge-offs as a percentage of average loans (annualized) 0.30 0.13 0.29 0.41 0.35 Allowance for loan losses as a percentage of loans 1.10 1.11 1.11 1.13 1.14 Ratio of allowance for loan losses to: Net charge-offs (annualized) 3.73 x 8.91 x 3.85 x 2.76 x 3.36 x Nonaccrual loans 1.92 1.89 2.08 2.17 1.72 ---------------------------------------------------------------------

As of/For the Increase Twelve Months Ended (Decrease) ------------------------------------------ 12/31/2004 12/31/2003 Amount Percentage ----------------------------------------------------------------------

Allowance for Loan Losses Beginning balance $25,607 $ 27,204 $ (1,597) (5.9)% Provision for loan losses 8,425 27,518 (19,093) (69.4) Allowance related to loans sold (584) (20,783) 20,199 (97.2) Charge-offs (8,552) (9,456) (904) (9.6) Recoveries 1,976 1,124 852 75.8 ------------------------------------ Net charge-offs (6,576) (8,332) (1,756) (21.1) ------------------------------------ Ending balance $26,872 $ 25,607 $ 1,265 4.9 % ------------------------------------ Asset Quality Ratios/a Net charge-offs as a percentage of average loans 0.28 % 0.39 % Ratio of allowance for loan losses to net charge-offs 4.10 x 3.07 x ---------------------------------------------------------------------

For the Quarter Ended 12/31/04 9/30/04 6/30/04 3/31/04 12/31/03 ----------------------------------------------------------------------

ANNUALIZED INTEREST YIELDS/RATES/b Interest income: Yield on loans and loans held for sale 5.60% 5.22% 5.05% 5.18% 5.31% Yield on securities 3.91 3.94 3.90 4.13 3.97 ------------------------------------------ Yield on interest earning assets 4.91 4.69 4.56 4.73 4.73 ------------------------------------------ Interest expense: Cost of interest bearing deposits 1.73 1.60 1.59 1.55 1.59 Cost of borrowings 2.37 2.08 1.77 1.89 2.14 ------------------------------------------ Cost of interest bearing liabilities 1.98 1.79 1.66 1.69 1.80 ------------------------------------------ Interest rate spread 2.93 2.90 2.90 3.04 2.93 ------------------------------------------ Net yield on earning assets 3.14 % 3.09 %3.06 %3.19 %3.10 % ------------------------------------------

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Notes:Applicable ratios are annualized.

/a: Excludes loans held for sale. /b: Fully taxable equivalent yields.

--30--SL/ch*

CONTACT: First Charter Corporation Robert O. Bratton, Chief Financial Officer, 704-688-4473 or Jan H. Hollar, Director of Finance, 704-688-4467

KEYWORD: NORTH CAROLINA INDUSTRY KEYWORD: BANKING EARNINGS CONFERENCE CALLS SOURCE: First Charter Corporation

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