UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2000

OR

[  ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Commission file number 0-16311

CHARTER ONE FINANCIAL, INC.

(Exact name of registrant as specified in its charter)

Delaware	34-1567092
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1215 Superior Avenue, Cleveland, Ohio	44114
(Address of principal executive offices)	(Zip Code)

(216) 566-5300

(Registrant’s telephone number, including area code)

NOT APPLICABLE

(Former name, former address and former fiscal year, if changed since report)

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes   X    No              

      The number of shares outstanding of the registrant’s sole class of common stock as of November 3, 2000 was 207,875,519.

EXPLANATORY NOTE

The Registrant hereby amends Part I, Item 2 of its Quarterly Report on Form 10-Q for the quarter ended September 30, 2000, to correct the amount of the Registrant's loans of concern reported at September 30, 2000, which were inadvertently reported in the paragraph immediately following the Nonperforming Assets table in the Form 10-Q as “$53.7 million” rather than “$99.1 million.” To the extent the original filing is unaffected by this amendment, the original filing has not been updated or corrected to reflect events occurring subsequent to the date of the original filing.

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

HOLDING COMPANY BUSINESS

The following financial review presents an analysis of the asset and liability structure of Charter One Financial, Inc. and a discussion of the results of operations for each of the periods presented.

General

Headquartered in Cleveland, Ohio, Charter One Financial, Inc., hereafter referred to as “Charter One” or the “Company,” is a financial holding company. Charter One is a Delaware corporation and owns all of the outstanding capital stock of Charter Michigan Bancorp, Inc. and Charter One Commercial. Charter Michigan Bancorp, Inc. owns all of the outstanding capital stock of Charter One Bank, F.S.B., a federally chartered thrift. The primary business of Charter One is operating these financial institutions which we sometimes refer to in this document collectively as the “Bank.” The Bank’s primary business is providing consumer banking services to certain major markets in Ohio, Michigan, Illinois, New York, Vermont and in some markets of Massachusetts. As of September 30, 2000, the Bank and its subsidiaries were doing business through 421 full-service branches and 35 loan production offices.

Forward-Looking Statements

This document, including information included or incorporated by reference, contains, and future filings by the Company on Form 10-K, Form 10-Q and Form 8-K and future oral and written statements by the Company and its management may contain, forward-looking statements about Charter One and its subsidiaries which we believe are within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, without limitation, statements with respect to anticipated future operating and financial performance, growth opportunities, interest rates, acquisition and divestiture opportunities, and synergies, efficiencies, cost savings and funding advantages expected to be realized from prior acquisitions. Words such as “may,” “could,” “should,” “would,” “believe,” “anticipate,” “estimate,” “expect,” “intend,” “plan,” and similar expressions are intended to identify these forward-looking statements. Forward-looking statements by the Company and its management are based on beliefs, plans, objectives, goals, expectations, anticipations, estimates and intentions of management and are not guarantees of future performance. The Company disclaims any obligation to update or revise any forward-looking statements based on the occurrence of future events, the receipt of new information, or otherwise. The factors we discuss in this document and identified in our filings with the Securities and Exchange Commission and those presented elsewhere by our management from time to time, could cause actual results to differ materially from those indicated by the forward-looking statements made in this document.

RESULTS OF OPERATIONS

Performance Overview

Charter One reported net income of $109.6 million, or $.51 per diluted share, for the three months ended September 30, 2000. This was a $5.1 million, or 4.9%, increase over the results of the third quarter of 1999 when net income was $104.5 million, or $.46 per diluted share. Both periods included merger-related charges. Excluding the after-tax impact of merger-related charges, our net income resulted in a return on average equity of 18.96% and a return on average assets of 1.37% for the three months ended September 30, 2000. The comparable returns for the third quarter of 1999 were 17.03% and 1.34%, respectively. The increase in our operating returns was primarily attributable to increases in income from retail banking. See “Other Income” for further discussion regarding income from retail banking.

For the nine months ended September 30, 2000, Charter One reported net income of $324.6 million, or $1.48 per diluted share. This was an $8.8 million, or 2.8%, increase over the results for the same period in 1999. Both periods included merger-related charges. Our net income, excluding the after-tax impact of merger-related charges, resulted in a return on average equity of 18.88% and a return on average assets of 1.46% for the nine months ended September 30, 2000. The comparable returns for the 1999 period were 17.32% and 1.39%, respectively. The increase in our operating returns, just as with the third quarter results, was primarily attributable to increases in income from retail banking. Additionally, the year-over-year comparison was affected by an increase in income from leasing operations as well as income from our Bank Owned Life Insurance (“BOLI”) program. See “Other

6

Income” for further discussion regarding income from retail banking, leasing operations and the BOLI program.

Figure 1 sets forth selected financial results and annualized performance ratios for the three and nine months ended September 30, 2000 and 1999, respectively. The table reflects these financial results and ratios on both an actual and operating return basis. Operating earnings and returns are computed using net income excluding the after-tax impact of merger-related charges for each of the periods presented. We believe that presentation of operating earnings and returns will provide comparability and insight into the operations of Charter One.

Selected Financial Results and Ratios (Figure 1)

		Three Months Ended						Nine Months Ended
		9/30/00			9/30/99			9/30/00			9/30/99
		(Dollars in thousands, except per share data)
Actual:
	Net income	$	109,592		$	104,502		$	324,588		$	315,824
	Diluted earnings per share		.51			.46			1.48			1.38
	Return on average assets		1.35	%		1.33	%		1.38	%		1.37	%
	Return on average equity		18.73			16.83			17.91			17.05
	Average equity to average assets		7.21			7.89			7.71			8.01
	Net interest income to administrative expenses		1.50	x		1.62	x		1.50	x		1.62	x
	Administrative expenses to average assets		1.83	%		1.83	%		1.95	%		1.87	%
	Efficiency ratio		45.54			45.81			46.66			46.49
Operating:
	Operating earnings	$	110,925		$	105,751		$	342,214		$	320,866
	Operating earnings per share		.52			.46			1.56			1.40
	Return on average assets		1.37	%		1.34	%		1.46	%		1.39	%
	Return on average equity		18.96			17.03			18.88			17.32
	Net interest income to administrative expenses		1.52	x		1.64	x		1.59	x		1.65	x
	Administrative expenses to average assets		1.81	%		1.81	%		1.84	%		1.84	%
	Efficiency ratio		44.93			45.18			43.94			45.65

Net Interest Income

Net interest income is the difference between the interest and dividend income earned on our loans and investments and the interest expense on our deposits and borrowings. Net interest income is our principal source of earnings. Net interest income is affected by a number of factors including the level, pricing and maturity of interest-earning assets and interest-bearing liabilities, interest rate fluctuations and asset quality, as well as general economic conditions and regulatory policies.

The following table shows average balances, interest earned or paid, and average interest rates for the periods indicated. Average balances are calculated on a daily basis. Nonaccrual loans are included in the average balance of loans. The mark-to-market adjustments on securities available for sale are included in noninterest-earning assets. The cost of liabilities includes the annualized effect of interest rate risk management instruments.

7

Average Balances, Interest Rates and Yields/ Costs (Figure 2)

				Three Months Ended
				9/30/00								9/30/99
									Avg.								Avg.
				Average					Yield/			Average					Yield/
				Balance			Interest		Cost			Balance			Interest		Cost
				(Dollars in thousands)
Interest-earning assets:
	Loans and leases			$	24,185,872		$	462,766		7.64	%	$	22,656,483		$	420,295		7.41	%
	Mortgage-backed securities:
		Available for sale			3,631,734			66,222		7.29			3,491,780			58,909		6.75
		Held to maturity			1,634,755			29,442		7.20			2,083,367			35,629		6.84
	Investment securities:
		Trading			—			—		—			14,040			147		4.19
		Available for sale			441,466			8,142		7.38			888,428			14,177		6.38
		Held to maturity			28,090			417		5.94			33,525			510		6.09
	Other interest-earning assets				554,356			10,529		7.43			533,142			9,171		6.73
			Total interest-earning assets		30,476,273			577,518		7.57			29,700,765			538,838		7.24
Allowance for loan and lease losses					(186,036	)							(181,580	)
Noninterest-earning assets					2,184,945								1,955,911
			Total assets	$	32,475,182							$	31,475,096
Interest-bearing liabilities:
	Deposits:
		Checking accounts		$	3,708,654			15,516		1.66	%	$	2,950,726			7,934		1.07	%
		Savings accounts			1,521,419			5,877		1.54			2,252,240			10,845		1.91
		Money market accounts			3,959,127			39,554		3.97			3,278,637			26,474		3.20
		Certificates of deposit			9,321,115			131,452		5.61			10,268,028			133,025		5.14
			Total deposits		18,510,315			192,399		4.14			18,749,631			178,278		3.77
	FHLB advances				10,336,097			151,549		5.83			8,887,304			114,539		5.11
	Other borrowings				550,075			10,401		7.53			826,138			12,912		6.17
			Total borrowings		10,886,172			161,950		5.91			9,713,442			127,451		5.20
			Total interest-bearing liabilities		29,396,487			354,349		4.79			28,463,073			305,729		4.26
Noninterest-bearing liabilities					738,021								528,320
			Total liabilities		30,134,508								28,991,393
Shareholders’ equity					2,340,674								2,483,703
			Total liabilities and shareholders’ equity	$	32,475,182							$	31,475,096
Net interest income							$	223,169							$	233,109
Interest rate spread										2.78								2.98
Net yield on average interest-earning assets										2.93								3.14
Average interest-earning assets to average interest-bearing liabilities										103.67	%							104.35	%

8

				Nine Months Ended
				9/30/00								9/30/99
									Avg.								Avg.
				Average					Yield/			Average					Yield/
				Balance			Interest		Cost			Balance			Interest		Cost
				(Dollars in thousands)
Interest-earning assets:
	Loans and leases			$	23,605,514		$	1,337,985		7.56	%	$	22,556,299		$	1,257,160		7.44	%
	Mortgage-backed securities:
		Available for sale			3,180,808			171,761		7.20			3,036,018			151,903		6.67
		Held to maturity			1,741,174			92,704		7.10			2,352,585			121,459		6.88
	Investment securities:
		Trading			244			38		20.63			7,240			205		3.77
		Available for sale			461,581			25,355		7.32			601,009			27,100		6.01
		Held to maturity			30,961			1,261		5.43			40,612			1,883		6.18
	Other interest-earning assets				520,611			28,082		7.09			569,330			27,346		6.33
			Total interest-earning assets		29,540,893			1,657,186		7.48			29,163,093			1,587,056		7.26
Allowance for loan and lease losses					(184,903	)							(182,181	)
Noninterest-earning assets					1,987,550								1,866,285
			Total assets	$	31,343,540							$	30,847,197
Interest-bearing liabilities:
	Deposits:
		Checking accounts		$	3,600,759			40,479		1.50	%	$	2,933,106			20,255		.92	%
		Savings accounts			1,753,507			20,205		1.54			2,420,372			36,077		1.99
		Money market accounts			3,661,626			103,023		3.76			3,031,878			74,509		3.29
		Certificates of deposit			9,733,695			390,615		5.36			10,470,567			407,246		5.20
			Total deposits		18,749,587			554,322		3.95			18,855,923			538,087		3.82
	FHLB advances				9,285,482			390,673		5.61			8,239,890			311,535		5.05
	Other borrowings				414,585			23,986		7.68			742,448			35,603		6.35
			Total borrowings		9,700,067			414,659		5.70			8,982,338			347,138		5.16
			Total interest-bearing liabilities		28,449,654			968,981		4.55			27,838,261			885,225		4.25
Noninterest-bearing liabilities					476,946								538,742
			Total liabilities		28,926,600								28,377,003
Shareholders’ equity					2,416,940								2,470,194
			Total liabilities and shareholders’ equity	$	31,343,540							$	30,847,197
Net interest income							$	688,205							$	701,831
Interest rate spread										2.93								3.01
Net yield on average interest-earning assets										3.11								3.21
Average interest-earning assets to average interest-bearing liabilities										103.84	%							104.76	%

9

Figure 3 sets forth the approximate relative contribution of changes in average interest rates and volume to changes in net interest income for the periods indicated. Changes not solely attributable to volume or rate have been allocated in proportion to the changes due to volume and rate.

Rate/ Volume Analysis (Figure 3)

				Three Months Ended September 30,									Nine Months Ended September 30,
				2000 v. 1999									2000 v. 1999
				Increase (decrease) due to									Increase (decrease) due to
				Rate			Volume			Total			Rate			Volume			Total
				(Dollars in thousands)
Interest income:
	Loans and leases			$	12,131		$	30,340		$	42,471		$	17,900		$	62,925		$	80,825
	Mortgage-backed securities:
		Available for sale			4,889			2,424			7,313			12,397			7,461			19,858
		Held to maturity			1,812			(7,999	)		(6,187	)		3,692			(32,447	)		(28,755	)
	Investment securities:
		Trading			(89	)		(58	)		(147	)		915			(1,082	)		(167	)
		Available for sale			1,945			(7,980	)		(6,035	)		5,249			(6,994	)		(1,745	)
		Held to maturity			(12	)		(81	)		(93	)		(211	)		(411	)		(622	)
	Other interest-earning assets				982			376			1,358			3,200			(2,464	)		736
			Total		21,658			17,022			38,680			43,142			26,988			70,130
Interest expense:
	Checking accounts				5,190			2,392			7,582			14,840			5,384			20,224
	Savings accounts				(1,885	)		(3,083	)		(4,968	)		(7,165	)		(8,707	)		(15,872	)
	Money market accounts				6,987			6,093			13,080			11,711			16,803			28,514
	Certificates of deposit				11,232			(12,805	)		(1,573	)		12,665			(29,296	)		(16,631	)
	FHLB advances				16,913			20,097			37,010			36,630			42,508			79,138
	Other borrowings				(558	)		(1,953	)		(2,511	)		(173	)		(11,444	)		(11,617	)
			Total		37,879			10,741			48,620			68,508			15,248			83,756
Change in net interest income				$	(16,221	)	$	6,281		$	(9,940	)	$	(25,366	)	$	11,740		$	(13,626	)

Our net interest income for the three months ended September 30, 2000 was $223.2 million, a decrease of $9.9 million from the three months ended September 30, 1999. The net yield on interest-earning assets during the third quarter of 2000 declined to 2.93% from 3.14% for the comparable period of 1999, reflecting in part, our stock buyback program. Additionally, as reflected in Figure 4, the net yield on interest-earning assets at September 30, 2000 declined to 2.85% from 3.19% at December 31, 1999. The compression in the net yield on interest-earning assets is primarily attributed to the fact that our liabilities have repriced more quickly than our assets. Interest rates have risen considerably over the past year. This increase has been accompanied by a flattening of the yield curve. Given this interest rate environment, management has decided to slow balance sheet growth, with particular emphasis on accelerating the shift away from residential loans and securities by selling more of those portfolios. Instead, balance sheet capacity will be preserved for a more favorable interest rate environment, and existing capital will be allocated to our stock buyback program. Based on the current interest rate environment and repricing trends, management anticipates the net interest margin will stabilize by the end of the fourth quarter of 2000. Our production level of higher yielding and shorter term consumer and commercial loans has reached the level where it can provide for future balance sheet growth and improvement in net interest income. See Figure 6 for a summary of our loan and lease originations.

Our net interest income for the nine months ended September 30, 2000 was $688.2 million, a decrease of $13.6 million from the nine months ended September 30, 1999. The net yield on average interest-earning assets decreased by ten basis points during the nine months ended September 30, 2000 to 3.11% from 3.21% in the comparable period of 1999. The reasons for the decrease in the net yield on average interest-earning assets are substantially the same as for the third quarter results discussed in the above paragraph.

Figure 4 sets forth Charter One’s yields and costs at period end for the dates indicated. The yields on leases excludes the impact of the related tax benefit. The cost of liabilities includes the annualized effect of interest rate risk management instruments.

10

Yields and Costs at End of Period (Figure 4)

				9/30/00			12/31/99
Weighted average yield:
	Real estate loans				7.41	%		7.28	%
	Automobile loans				8.62			8.52
	Retail consumer loans				7.99			7.93
	Leases				6.28			6.08
	Corporate banking loans				8.91			8.58
		Total loans and leases			7.66			7.53
	Mortgage-backed securities				7.24			7.04
	Investment securities				7.39			7.26
	Other interest-earning assets				7.44			6.97
		Total interest-earning assets			7.58			7.41
Weighted average cost:
	Checking				1.66			1.27
	Money market				4.26			3.41
	Savings				1.54			1.61
	Certificates of deposit				5.73			5.13
		Total deposits			4.27			3.79
	FHLB advances				5.77			5.32
	Other borrowings				7.06			6.99
			Total interest-bearing liabilities		4.88			4.34
Interest rate spread					2.70			3.07
Net yield on interest-earning assets					2.85	%		3.19	%

Other Income

Other income for the three months ended September 30, 2000 was $99.8 million, an increase of $27.7 million, or 38.4%, over the $72.1 million for the three months ended September 30, 1999. The increase was primarily attributable to income from retail banking. Retail banking income increased $15.1 million, or 30.7%, over the comparable period in 1999. Growth in income from retail banking continues to be driven by recent mergers, account acquisition in mature markets and continual product development.

Other income for the nine months ended September 30, 2000 was $281.3 million, an increase of $62.8 million, or 28.7%, over the $218.5 million for the nine months ended September 30, 1999. The increase was primarily attributable to income from retail banking, leasing operations, and the BOLI program. The reasons for the increase in income from retail banking are substantially the same as for the third quarter results discussed in the above paragraph. Income from leasing operations increased $6.2 million, primarily driven by residual values on underlying equipment realized upon termination of leases. The increase in the line item “other” was primarily attributable to the BOLI program. During the year ended December 31, 1999, we increased our BOLI portfolio by $630.0 million. The related income on the BOLI asset increased $12.3 million over the comparable period in 1999 and is the primary reason for the increase in the line item “other.”

Administrative Expenses

Administrative expenses were $148.6 million for the three months ended September 30, 2000, an increase of $4.6 million, or 3.2%, as compared to the third quarter of 1999. Each year included merger-related expenses. There were $2.0 million of merger-related expenses recorded in the three months ended September 30, 2000, and $1.9 million for the three months ended September 30, 1999. Excluding these merger-related charges, our administrative expenses were $146.7 million for the three months ended September 30, 2000 and $142.1 million for the three months ended September 30, 1999. This resulted in a comparable ratio of administrative expenses to average assets (excluding the merger-related charges) of 1.81% for both the three months ended September 30, 2000 and 1999, respectively. Our efficiency ratio (excluding the merger-related charges) was 44.93% for the three months ended September 30, 2000, an improvement when compared to 45.18% for the three months ended September 30, 1999. See the above discussion in “Other Income” regarding additional factors that contributed to the improvement in our efficiency ratio.

11

Administrative expenses were $458.9 million for the nine months ended September 30, 2000, an increase of $26.5 million, or 6.1%, as compared to the nine months ended September 30, 1999. Each year included merger-related expenses. There were $26.1 million of merger-related expenses recorded in the nine months ended September 30, 2000, and $7.6 million for the nine months ended September 30, 1999. Excluding these merger-related charges, our administrative expenses were $432.8 million for the nine months ended September 30, 2000 and $424.7 million for the nine months ended September 30, 1999. This resulted in a comparable ratio of administrative expenses to average assets (excluding the merger-related charges) of 1.84% for both the nine months ended September 30, 2000 and 1999, respectively. Our efficiency ratio (excluding the merger-related charges) was 43.94% for the nine months ended September 30, 2000, an improvement when compared to 45.65% for the nine months ended September 30, 1999. See the above discussion in “Other Income” regarding additional factors that contributed to the improvement in our efficiency ratio.

Federal Income Taxes

Federal income tax expense for the three months ended September 30, 2000 was $51.6 million, as compared to $49.4 million for the same period in 1999. The primary reason for this 4.5% increase in the provision for federal income taxes was a 4.7% increase in pre-tax book income. The effective tax rate was 32.0% for the 2000 period and 32.1% for the comparable 1999 period.

Federal income tax expense for the nine months ended September 30, 2000 was $152.8 million, as compared to $150.2 million for the same period in 1999. The effective tax rates were 32.0% and 32.2% for the 2000 and 1999 periods, respectively.

FINANCIAL CONDITION

Overview

At September 30, 2000, total assets were $32.8 billion, as compared to total assets of $31.8 billion at December 31, 1999. Contributing to the increase in total assets was the growth in our loan portfolio since December 31, 1999. Figure 5 illustrates our continued emphasis in originating consumer and commercial loans due to the higher yields and shorter terms provided by these types of loans.

12

Loans and Leases

Composition of Loans and Leases (Figure 5)

				9/30/00			12/31/99
				(Dollars in thousands)
Loan and lease portfolio, net
	One-to-four family:
		Permanent:
			Fixed rate	$	4,666,771		$	5,755,393
			Adjustable rate		6,373,274			5,703,042
		Construction			325,385			276,172
					11,365,430			11,734,607
	Commercial real estate:
		Multifamily			1,181,941			1,276,004
		Other			849,999			673,972
					2,031,940			1,949,976
	Consumer:
		Retail			5,411,900			4,502,023
		Automobile			3,002,714			2,497,956
					8,414,614			6,999,979
	Business:
		Leasing			1,583,840			1,137,895
		Corporate banking			731,080			676,793
					2,314,920			1,814,688
	Loans and leases before allowance for loan and lease losses				24,126,904			22,499,250
	Allowance for loan and lease losses				(189,583	)		(186,400	)
			Loans and leases, net	$	23,937,321		$	22,312,850
Portfolio of loans serviced for others				$	12,568,760		$	10,798,563

Loan and Lease Activity (Figure 6)

					Three Months Ended				Nine Months Ended
					9/30/00		9/30/99		9/30/00		9/30/99
							(Dollars in thousands)
Originations:
Real estate:
	Permanent:
		One-to-four family			$	1,381,679	$	1,305,158	$	3,796,381	$	3,997,780
		Multifamily				15,380		48,265		29,636		192,464
		Commercial				61,687		51,946		171,224		186,988
			Total permanent loans			1,458,746		1,405,369		3,997,241		4,377,232
	Construction:
		One-to-four family				173,190		149,410		441,707		412,045
		Multifamily				23,494		10,742		67,357		52,692
		Commercial				31,036		23,002		83,820		74,360
			Total construction loans			227,720		183,154		592,884		539,097
				Total real estate loans originated		1,686,466		1,588,523		4,590,125		4,916,329
Retail consumer						690,608		605,607		1,895,425		1,887,073
Automobile						597,303		346,391		1,341,498		1,087,495
Leases						258,647		190,814		566,146		323,334
Corporate banking						211,515		171,127		569,747		468,345
			Total loans and leases originated			3,444,539		2,902,462		8,962,941		8,682,576
Loans purchased						8,984		4,767		16,890		376,770
Sales and principal reductions:
	Loans sold					125,852		212,486		327,375		852,520
	Loans exchanged for mortgage-backed securities					1,310,813		647,560		2,781,889		2,513,605
	Principal reductions					1,532,501		1,794,709		4,154,534		5,442,896
			Total sales and principal reductions			2,969,166		2,654,755		7,263,798		8,809,021
				Increase before net items	$	484,357	$	252,474	$	1,716,033	$	250,325

13

Investment and Mortgage-Backed Securities

Figures 7 and 8 summarize our investment and mortgage-backed securities portfolios at September 30, 2000 and December 31, 1999. The amounts reflected represent the fair values of securities held for trading and available for sale and the amortized cost of securities held to maturity.

Investment Securities (Figure 7)

			9/30/00			12/31/99
			(Dollars in thousands)
Trading
	Other		$	—		$	13,380
		Total investment securities held for trading		—			13,380
Available for Sale
	U.S. Treasury and agency securities			334,935			339,687
	Corporate notes and commercial paper			67,125			88,368
	Other			35,782			54,640
		Total investment securities available for sale		437,842			482,695
Held to Maturity
	U.S. Treasury and agency securities			15,234			17,058
	Corporate notes and commercial paper			—			15,659
	Other			8,250			13,289
		Total investment securities held to maturity		23,484			46,006
		Total	$	461,326		$	542,081
	Weighted average rate			7.39	%		7.26	%

Mortgage-Backed Securities (Figure 8)

					9/30/00			12/31/99
					(Dollars in thousands)
Available for Sale
	Participation certificates:
		Government agency issues:
			FNMA		$	2,675,901		$	3,023,228
			FHLMC			205,190			95,034
			GNMA			2,314			2,608
	Collateralized mortgage obligations:
		Government agency issues:
			FHLMC			295,842			232,906
			FNMA			228,496			304,018
			GNMA			6,311			7,349
		Private issues				516,808			527,991
		Total mortgage-backed securities available for sale				3,930,862			4,193,134
Held to Maturity
	Participation certificates:
		Government agency issues:
			FNMA			461,648			549,866
			FHLMC			165,051			196,704
			GNMA			88,999			101,468
		Private issues				135,301			162,485
	Collateralized mortgage obligations:
		Government agency issues:
			FNMA			208,766			221,934
			FHLMC			71,480			82,838
		Private issues				470,382			591,951
			Total mortgage-backed securities held to maturity			1,601,627			1,907,246
				Total	$	5,532,489		$	6,100,380
		Weighted average rate				7.24	%		7.04	%

14

Asset Quality

Analysis of the Allowance for Loan and Lease Losses (Figure 9)

				Three Months Ended						Nine Months Ended
				9/30/00			9/30/99			9/30/00			9/30/99
							(Dollars in thousands)
Allowance for loan and lease losses
	Balance, beginning of period			$	186,194		$	182,349		$	186,400		$	184,989
	Provision for loan and lease losses				13,178			7,366			33,285			21,979
	Loans and leases charged off:
		Mortgage			(1,117	)		(1,815	)		(4,402	)		(5,539	)
		Automobile			(6,414	)		(6,482	)		(20,295	)		(20,791	)
		Retail consumer			(3,946	)		(577	)		(11,333	)		(2,559	)
		Leases			—			—			—			(900	)
		Corporate banking			(153	)		(1,472	)		(589	)		(2,006	)
			Total charge-offs		(11,630	)		(10,346	)		(36,619	)		(31,795	)
	Recoveries:
		Mortgage			179			65			743			827
		Automobile			1,402			1,673			4,502			4,727
		Retail consumer			229			255			993			521
		Leases			—			—			—			—
		Corporate banking			31			79			279			193
			Total recoveries		1,841			2,072			6,517			6,268
			Net loan and lease charge-offs		(9,789	)		(8,274	)		(30,102	)		(25,527	)
	Balance, end of period			$	189,583		$	181,441		$	189,583		$	181,441
	Net charge-offs to average loans and leases (annualized)				.16	%		.15	%		.17	%		.19	%

Figure 10 sets forth information concerning nonperforming assets and additional information on the allowance for loan and lease losses.

15

Nonperforming Assets (Figure 10)

					9/30/00			12/31/99
					(Dollars in thousands)
Nonperforming loans and leases:
	Nonaccrual loans and leases:
		Real estate mortgage loans:
			One-to-four family(1)		$	70,692		$	75,682
			Multifamily and commercial			6,869			3,369
			Construction and land			5,606			1,095
				Total real estate mortgage loans		83,167			80,146
		Retail consumer				55,903			39,638
		Automobile				229			482
		Corporate banking				17,973			6,037
		Leases				—			—
				Total nonaccrual loans and leases		157,272			126,303
	Accruing loans and leases delinquent more than 90 days:
		Real estate mortgage loans				—			—
		Retail consumer(1)				2,055			2,562
		Automobile				5,842			4,973
		Corporate banking				3,808			2,463
		Leases				3,044			—
				Total accruing loans and leases delinquent more than 90 days		14,749			9,998
	Restructured real estate mortgage loans					669			1,009
				Total nonperforming loans and leases		172,690			137,310
Real estate acquired through foreclosure and other						23,495			24,453
				Total nonperforming assets		196,185			161,763
				Less government guaranteed loans		20,105			18,841
				Nonperforming assets net of government guaranteed loans	$	176,080		$	142,922
Ratio of:
	Nonperforming loans and leases to total loans and leases					.72	%		.62	%
	Nonperforming assets to total assets					.60			.51
	Allowance for loan and lease losses to:
		Nonperforming loans and leases				109.78			135.75
		Total loans and leases before allowance				.79			.83
Ratio of (excluding government guaranteed nonperforming loans):
	Nonperforming loans and leases to total loans and leases					.64			.53
	Nonperforming assets to total assets					.54			.45
	Allowance for loan and lease losses to:
		Nonperforming loans and leases				124.25			157.34
		Total loans and leases before allowances				.79	%		.83	%

(1)  Includes government guaranteed loans.

At September 30, 2000, there were $99.1 million of loans and leases not reflected in the table above, where known information about possible credit problems of borrowers caused management to have doubts as to the ability of the borrower to comply with present repayment terms and that may result in disclosure of such loans and leases in the future.

16

SOURCES OF FUNDS

General

Deposits have historically been the most important source of our funds for use in lending and for general business purposes. We also derive funds from FHLB advances, reverse repurchase agreements and other borrowings, principal repayments on loans and mortgage-backed securities, funds provided by operations and proceeds from the sale of loans and loan participations.

Deposits

Deposit inflows and outflows are significantly influenced by general interest rates, market conditions and competitive factors. We reprice our deposits primarily based on competitive conditions. In order to decrease the volatility of our deposits, we impose stringent early withdrawal penalties on our certificates of deposit. Consumer and commercial deposits are attracted principally from within our primary market areas through the offering of a broad range of deposit instruments.

Composition of Deposits (Figure 11)

			9/30/00					12/31/99
					Weighted					Weighted
					Average					Average
			Amount		Rate			Amount		Rate
					(Dollars in thousands)
Checking accounts:
	Interest-bearing		$	2,416,001		2.62	%	$	2,066,453		2.05	%
	Noninterest-bearing			1,390,720		—			1,263,290		—
Savings accounts				1,450,104		1.54			2,065,127		1.61
Money market accounts				3,963,608		4.26			3,170,435		3.41
Certificates of deposit				9,501,825		5.84			10,508,670		5.31
		Total deposits, net	$	18,722,258		4.32		$	19,073,975		3.89
Including the annualized effect of applicable interest rate risk management instruments						4.27	%				3.79	%

Investment securities and mortgage-backed securities with a book value of $515.3 million at September 30, 2000 and $544.4 million at December 31, 1999, were pledged to secure public deposits and for other purposes required or permitted by law.

Borrowings

At September 30, 2000, borrowings primarily consisted of FHLB advances. These positions were secured by our investment in the stock of the FHLB, as well as $13.5 billion in certain real estate loans and $2.3 billion in mortgage-backed securities.

Federal Home Loan Bank Advances (Figure 12)

			9/30/00					12/31/99
					Weighted					Weighted
					Average					Average
			Amount		Rate			Amount		Rate
					(Dollars in thousands)
Short-term			$	4,685,247		6.01	%	$	4,115,000		5.43	%
Long-term:
	Fixed-rate advances			4,656,231		5.47			4,512,941		5.10
	Variable-rate advances			424,478		6.53			598,209		6.21
		Total advances, net	$	9,765,956		5.77	%	$	9,226,150		5.32	%

Interest Rate Risk Management

We utilize various types of interest rate contracts in managing our interest rate risk profile. We utilize fixed receipt

17

swaps to convert certain of our longer term callable certificates of deposit into short-term variable instruments. Under these agreements we have agreed to receive interest from the counterparty on a notional amount at a fixed rate defined in the agreement, and to pay interest at a floating rate indexed to LIBOR. We utilize fixed payment swaps to convert certain of our floating-rate or short-term, fixed-rate liabilities into longer term, fixed-rate instruments. Under these agreements we have agreed to pay interest to the counterparty on a notional principal amount at a fixed rate defined in the agreement, and receive interest at a floating rate indexed to LIBOR. The amounts of interest exchanged are calculated on the basis of notional principal amounts.

Interest Rate Swaps (Figure 13)

			9/30/00								12/31/99
			Notional		Receiving			Paying			Notional		Receiving			Paying
			Principal		Interest			Interest			Principal		Interest			Interest
			Amount		Rate			Rate			Amount		Rate			Rate
								(Dollars in thousands)
Fixed Payment and Variable Receipt Maturing in:
	2002		$	25,000		6.94	%(1)		6.44	%	$	25,000		5.58	%(1)		6.44	%
Variable Payment and Fixed Receipt Maturing in:
	2000		$	20,000		5.46	%		6.70	%		40,000		5.55	%		6.16	%
	2001			420,000		6.38			6.70			420,000		6.38			6.14
	2002			325,000		7.53			6.69			—		—			—
	2003			120,000		6.14			6.69			120,000		6.14			6.14
	2004			580,000		7.01			6.70			580,000		7.01			6.15
	2005			425,000		7.91			6.68			25,000		7.00			5.87
	2006			60,000		7.08			6.53			40,000		7.00			6.37
	2009			65,000		7.32			6.53			65,000		7.32			6.16
	2010			10,000		7.40			6.59			—		—			—
		Total	$	2,025,000		7.10	%		6.58	%(1)	$	1,290,000		6.69	%		6.15	%(1)

(1)  Rates are based upon LIBOR.

Interest rate risk management instruments reduced interest expense as follows:

Net Benefit of Interest Rate Risk Management (Figure 14)

			Three Months Ended						Nine Months Ended
			9/30/00			9/30/99			9/30/00			9/30/99
						(Dollars in
						thousands)
Interest expense (income):
	Deposits		$	(1,548	)	$	(2,534	)	$	(7,220	)	$	(6,841	)
	FHLB advances			—			—			—			86
	Reverse repurchase agreements			—			—			—			(236	)
	Other borrowings			—			58			—			227
		Total net benefit	$	(1,548	)	$	(2,476	)	$	(7,220	)	$	(6,764	)

Liquidity

Our principal sources of funds are deposits, advances from the FHLB of Cincinnati, reverse repurchase agreements, repayments and maturities of loans and securities, proceeds from the sale of loans and securities, and funds provided by operations. While scheduled loan, security and interest-bearing deposit amortization and maturity are relatively predictable sources of funds, deposit flows and loan and mortgage-backed securities repayments are greatly influenced by economic conditions, the general level of interest rates and competition. We utilize particular sources of funds based on comparative costs and availability. We generally manage the pricing of deposits to maintain a steady deposit balance, but from time to time may decide not to pay rates on deposits as high as our competition and, when necessary, to supplement deposits with longer term and/or lower cost alternative sources of funds such as FHLB advances and reverse repurchase agreements. Management also considers our interest-sensitivity profile when deciding on alternative sources of funds. At September 30, 2000, our one-year gap was a negative 11.14% of total assets. See Item 3 “Quantitative and Qualitative Disclosure About Market Risk” regarding further information on our interest rate risk profile.

18

We are required by regulation to maintain specific minimum levels of liquid investments. Regulations currently in effect require us to maintain average liquid assets at least equal to 4.0% of the sum of the average daily balance of net withdrawable accounts and borrowed funds due in one year or less. This regulatory requirement may be changed from time to time to reflect current economic conditions. Charter One Bank’s average regulatory liquidity ratio for the third quarter of 2000 was 4.23%.

We anticipate that we will have sufficient funds available to meet our commitments. At September 30, 2000, we had outstanding commitments to originate loans and leases of $1.6 billion, unfunded consumer lines of credit totaling $2.8 billion and unfunded corporate banking lines of credit totaling $173.8 million. We do not expect all of these lines to be used by the borrowers. Outstanding letters of credit totaled $78.3 million as of September 30, 2000. Certificates of deposit scheduled to mature in one year or less at September 30, 2000 totaled $7.7 billion. We believe that a significant portion of the amounts maturing will remain with us because they are retail deposits. We believe we have significant borrowing capacity with the FHLB and investment banking firms to meet any need for additional borrowings and sources of funds.

Capital and Dividends

On October 20, 1999, our Board of Directors authorized a buyback to repurchase up to 3.3 million shares of Charter One common stock in a program of open market or privately negotiated transactions. As of March 31, 2000, we had purchased all of the shares authorized under this buyback for a total cost of $68.6 million. The repurchased shares were later reissued in connection with the 5% stock dividend distributed September 30, 2000, as well as employee benefit plans.

On April 26, 2000, our Board of Directors authorized a new buyback to repurchase up to 7.5 million shares of Charter One common stock in a program of open market purchases or privately negotiated transactions. As of June 30, 2000, we had purchased all of the shares authorized under this buyback for a total cost of $170.7 million. The repurchased shares were later reissued in connection with the 5% stock dividend distributed September 30, 2000, as well as employee benefit plans.

On July 18, 2000, the Board of Directors of Charter One authorized management to repurchase up to 10% of the Company’s outstanding common stock in a buyback program of open market purchases or privately negotiated transactions. As of September 30, 2000, we had purchased 5.1 million shares authorized under this buyback for a total cost of $115.2 million. Of the 5.1 million shares purchased, 152,335 shares were later reissued in connection with the 5% stock dividend distributed September 30, 2000. The remaining repurchased shares will be reserved in treasury for later reissue in connection with employee benefit plans.

As a financial holding company, Charter One is subject to regulation by the Federal Reserve Board (“FRB”) under the Bank Holding Company Act of 1956 as amended, and the regulations of the FRB, including various capital requirements. Charter One Commercial and Charter One Bank, F.S.B. are subject to various regulatory capital requirements administered by the Federal Deposit Insurance Corporation and the Office of Thrift Supervision (“OTS”), respectively. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly discretionary, actions by each regulator that, if undertaken, could have a direct material effect on our financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, specific capital guidelines must be met that involve quantitative measures of assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The institution’s capital classification is also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy require Charter One and Charter One Commercial to individually maintain minimum amounts and ratios (set forth in the table below) of total and Tier 1 capital to risk-weighted assets, and of Tier 1 capital to average assets. Charter One Bank, F.S.B. is required to maintain minimum amounts and ratios (also set forth in the table below) of total and Tier 1 capital to risk-weighted assets, of core capital to adjusted tangible assets, and of tangible capital to tangible assets.

The actual regulatory capital ratios calculated for Charter One, Charter One Commercial and Charter One Bank, F.S.B., along with the capital amounts and ratios for capital adequacy purposes and the amounts required to be categorized as well capitalized under the regulatory framework for prompt corrective action are as follows:

19

The actual regulatory capital ratios calculated for Charter One, Charter One Commercial and Charter One Bank, F.S.B., along with the capital amounts and ratios for capital adequacy purposes and the amounts required to be categorized as well capitalized under the regulatory framework for prompt corrective action are as follows:

Regulatory Capital (Figure 15)

		9/30/00
												To Be “Well
												Capitalized”
												Under Prompt
							For Capital					Corrective
		Actual					Adequacy Purposes					Action Provisions
		Amount		Ratio			Amount		Ratio			Amount		Ratio
							(Dollars in thousands)
Charter One:
	Total capital to risk-weighted assets	$	2,369,019		9.99	%	$	1,896,624	*	8.00	%	$	2,370,780	*	10.00	%
	Tier 1 capital to risk-weighted assets		2,174,964		9.17			948,312	*	4.00			1,422,468	*	6.00
	Tier 1 capital to average assets		2,174,964		6.72			1,294,239	*	4.00			1,617,799	*	5.00
Charter One Commercial:
	Total capital to risk-weighted assets		39,977		47.37			6,752	*	8.00			8,440	*	10.00
	Tier 1 capital to risk-weighted assets		39,977		47.37			3,376	*	4.00			5,064	*	6.00
	Tier 1 capital to average assets		39,977		16.59			9,638	*	4.00			12,048	*	5.00
Charter One Bank, F.S.B.:
	Total capital to risk-weighted assets		2,360,964		10.11			1,867,986	*	8.00			2,334,983	*	10.00
	Tier 1 capital to risk-weighted assets		1,857,023		7.95			N/A		N/A			1,400,990	*	6.00
	Core capital to adjusted tangible assets		1,879,417		5.77			1,302,467	*	4.00			1,628,083	*	5.00
	Tangible capital to tangible assets		1,878,948		5.77			488,418	*	1.50			N/A		N/A

		12/31/99
												To Be “Well
												Capitalized”
												Under Prompt
							For Capital					Corrective
		Actual					Adequacy Purposes					Action Provisions
		Amount		Ratio			Amount		Ratio			Amount		Ratio
							(Dollars in thousands)
Charter One:
	Total capital to risk-weighted assets	$	2,404,336		11.16	%	$	1,722,825	*	8.00	%	$	2,153,532	*	10.00	%
	Tier 1 capital to risk-weighted assets		2,213,534		10.28			861,413	*	4.00			1,292,119	*	6.00
	Tier 1 capital to average assets		2,213,534		7.05			1,255,645	*	4.00			1,569,567	*	5.00
Charter One Commercial:
	Total capital to risk-weighted assets		41,337		40.92			8,081	*	8.00			10,101	*	10.00
	Tier 1 capital to risk-weighted assets		41,337		40.92			4,040	*	4.00			6,061	*	6.00
	Tier 1 capital to average assets		41,337		13.66			12,104	*	4.00			15,129	*	5.00
Charter One Bank, F.S.B.:
	Total capital to risk-weighted assets		2,115,164		10.00			1,691,462	*	8.00			2,114,327	*	10.00
	Tier 1 capital to risk-weighted assets		1,605,506		7.59			N/A		N/A			1,268,596	*	6.00
	Core capital to adjusted tangible assets		1,619,927		5.10			1,270,858	*	4.00			1,588,572	*	5.00
	Tangible capital to tangible assets		1,618,856		5.10			476,566	*	1.50			N/A		N/A
* Greater than or equal to

As of December 31, 1999, the most recent notification from the OTS categorized Charter One Bank, F.S.B. as “well capitalized” under the regulatory framework for Prompt Corrective Action. As of December 31, 1999, the most recent notification from the FRB categorized Charter One as “well capitalized” under the regulatory framework for Prompt Corrective Action. To be categorized as well capitalized, Charter One and Charter One Bank, F.S.B. must maintain minimum total risk-based, Tier 1 risk-based and Tier 1 leverage ratios as set forth in the table above. Charter One Commercial’s capital ratios exceed the minimum required to be well capitalized. Management does not know of any reasons why Charter One Commercial would not be considered well capitalized; however, as of September 30, 2000, Charter One Commercial had not received a classification from its regulator. As of September 30, 2000, Charter One's total capital to risk-weighted assets ratio was 9.99%, which was slightly below the well-capitalized ratio requirement of 10.00%. Charter One anticipates being in excess of this well-capitalized ratio requirement at December 31, 2000.

Management believes that, as of September 30, 2000, Charter One, Charter One Commercial and Charter One Bank, F.S.B. individually met the capital adequacy requirements to which they were subject. Events beyond management's control, such as fluctuations in interest rates or a downturn in the economy in areas in which the institution’s loans and securities are concentrated could adversely affect future earnings and, consequently, the institution's ability to meet its future capital requirements.

20

SIGNATURES

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

CHARTER ONE FINANCIAL, INC.

Date: March 21, 2001 /s/ Richard W. Neu

Richard W. Neu

Executive Vice President and Chief Financial Officer

(Duly Authorized Officer and Principal

Financial Officer)

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