CHARTER ONE FINANCIAL INC, S-4, 1999-08-13

CHARTER ONE FINANCIAL INC
S-4, 1999-08-13
SAVINGS INSTITUTION, FEDERALLY CHARTERED

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<PAGE> 1
As filed with the Securities and Exchange Commission on August 13, 1999
Registration No. 333-

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM S-4
Registration Statement Under the Securities Act of 1933

CHARTER ONE FINANCIAL, INC.
(Exact name of registrant as specified in its charter)

DELAWARE 6120 34-1567092
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)

ROBERT J. VANA, ESQ.
1215 SUPERIOR AVENUE CHARTER ONE FINANCIAL, INC.
CLEVELAND, OHIO 44114 1215 SUPERIOR AVENUE
(216) 589-8320 CLEVELAND, OHIO 44114
(216) 566-5300
(Address, including ZIP code, and (Name, address, including ZIP code,
telephone number, including area code, of and telephone number, including area
registrant's principal executive offices) code, of agent for service)

COPIES TO:

MICHAEL S. SADOW, P.C. CLIFFORD M. SLADNICK, ESQ. STUART M. LITWIN, ESQ.
SILVER, FREEDMAN & TAFF, L.L.P. ST. PAUL BANCORP, INC. MAYER, BROWN & PLATT
1100 NEW YORK AVENUE, N.W. 6700 W. NORTH AVENUE 190 SOUTH LASALLE STREET
WASHINGTON, D.C. 20005 CHICAGO, IL 60707 CHICAGO, IL 60603

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as practicable after this Registration Statement becomes
effective.

If the securities being registered on this Form are being offered in
connection with formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]

The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.

<TABLE>
<CAPTION>
Calculation of Registration Fee
======================================================================================================
Title of each class of Proposed maximum Proposed maximum Amount of
securities to be Amount to offering price aggregate offering registration
registered be registered(2) per share(3) price(3) fee(4)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, 43,973,909 shares $22.80 $1,002,680,451 $278,746
$.01 par value(1)
======================================================================================================
</TABLE>

(1) Includes one attached Right per share to purchase preferred stock upon the
occurrence of certain events. See "Comparison of Rights of Stockholders of
Charter One Financial, Inc. and St. Paul Bancorp, Inc. - Rights Agreement."

(2) Based upon the estimated maximum number of shares of common stock, par
value $.01 per share of Charter One Financial, Inc. that may be issued upon
consummation of the merger ("Merger") of St. Paul Bancorp, Inc. into
Charter Michigan Bancorp, Inc., a first-tier subsidiary of Charter One
Financial, Inc.

(3) Estimated solely for the purpose of calculating the registration fee.
Pursuant to Rule 457(f)(1) and 457(c), and solely for purposes of
calculating the registration fee, the proposed maximum aggregate offering
price is $1,002,680,451, which equals (x) the average of the high and low
sale prices of the common stock, par value $.01 per share, of St. Paul
Bancorp, of $22.625 as reported on the Nasdaq National Market on August 10,
1999, multiplied by (y) 44,317,368, the total number of shares of St. Paul
Bancorp common stock (including shares issuable pursuant to the exercise of
outstanding options to purchase St. Paul Bancorp common stock) to be
canceled in the Merger. The proposed maximum offering price per share is
equal to the proposed maximum aggregate offering price determined in the
manner described in the preceding sentence divided by the maximum number of
shares of Charter One Financial common stock that could be issued in the
Merger.

(4) In accordance with Rule 457(b), the filing fee of $223,833.89 paid
pursuant to Section 14(g) of the Securities Exchange Act of 1934 and Rule
0-11 thereunder at the time of the filing of the Joint Proxy
Statement/Prospectus contained in the Registration Statement as
preliminary proxy materials of St. Paul Bancorp has been credited to
offset the $278,746 registration fee that would otherwise be payable.
<PAGE> 2

[CHARTER ONE FINANCIAL, INC. LOGO] [ST. PAUL BANCORP, INC. LOGO]

MERGER PROPOSED -- YOUR VOTE IS VERY IMPORTANT

The Boards of Directors of Charter One Financial, Inc. and St. Paul Bancorp,
Inc. have agreed to merge and are seeking your approval of this important
transaction. The merger is governed by the Agreement and Plan of Merger. We
commonly refer to it in this document as the "merger agreement."

Charter One believes that the merger will, among other things, create a major
Great Lakes/Northeast banking franchise, provide entry into the important
Chicago market, create opportunities for significant cost savings and revenue
enhancements, and strengthen the combined businesses' competitive and capital
position in the rapidly changing financial services industry. St. Paul is
recommending the merger because, among other things, it enables St. Paul
shareholders to participate as shareholders in the future growth of the combined
businesses, which are expected to benefit from opportunities for significant
cost savings and revenue enhancements.

Upon completion of the merger, St. Paul's shareholders will receive .99225 of a
share of Charter One common stock, after taking into account the 5% stock
dividend payable on September 30, 1999 to Charter One shareholders of record on
September 14, 1999, in exchange for each share of St. Paul common stock they
own. Charter One shareholders will continue to own their existing shares. The
.99225 exchange ratio is subject to possible further adjustment as described on
page 44.

On August 17, 1999, the closing price of Charter One common stock was $____,
making .99225 of a share worth $_____. The closing price of St. Paul common
stock on that date was $_____. These prices will, however, fluctuate between now
and the completion of the merger. Charter One common stock is listed on the
Nasdaq National Market under the symbol "COFI." St. Paul common stock is listed
on the Nasdaq National Market under the symbol "SPBC."

The merger cannot be completed unless St. Paul shareholders adopt the merger
agreement by an affirmative vote of two-thirds of the outstanding shares of St.
Paul common stock and Charter One shareholders approve the issuance of the
Charter One common stock in the merger by at least a majority of the total votes
cast at its special meeting.

Charter One and St. Paul have scheduled special meetings to vote on the matters
necessary to complete the merger. The dates, times and places of the special
meetings are as follows:

FOR CHARTER ONE SHAREHOLDERS:

September 30, 1999; 10:00 a.m., local time
Forum Conference and Education Center
One Cleveland Center
1375 East Ninth Street
Cleveland, Ohio

FOR ST. PAUL SHAREHOLDERS:

September 30, 1999; 10:00 a.m., local time
Hyatt Regency Oak Brook
1909 Spring Road
Oak Brook, Illinois

Whether or not you plan to attend your shareholder meeting, please take the time
to vote by signing, dating and mailing your enclosed proxy card. REGARDLESS OF
THE NUMBER OF SHARES YOU OWN, YOUR VOTE IS VERY IMPORTANT. PLEASE ACT TODAY.

Both Boards of Directors have unanimously approved the merger and recommend you
vote "FOR" the proposal to be voted on at your meeting.

WE ENCOURAGE YOU TO READ THIS DOCUMENT CAREFULLY.

Thank you for your continued interest and support.
<TABLE>
<CAPTION>
<S> <C>
/s/Charles John Koch /s/Joseph C. Scully
- ----------------------------------------------- ------------------------------------
Charles John Koch Joseph C. Scully
Chairman, President and Chief Executive Officer Chairman and Chief Executive Officer
Charter One Financial, Inc. St. Paul Bancorp, Inc.

</TABLE>

NEITHER THE SEC NOR ANY STATE SECURITIES REGULATOR HAS APPROVED THE CHARTER ONE
COMMON SHARES TO BE ISSUED UNDER THIS DOCUMENT OR DETERMINED IF THIS DOCUMENT IS
ACCURATE OR ADEQUATE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THESE SECURITIES ARE NOT SAVINGS OR DEPOSIT ACCOUNTS OR OTHER OBLIGATIONS OF ANY
BANK OR NONBANK SUBSIDIARY OF ANY OF THE PARTIES, AND THEY ARE NOT INSURED BY
THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE BANK INSURANCE FUND OR ANY OTHER
GOVERNMENTAL AGENCY.

Joint Proxy Statement/Prospectus dated as of August __, 1999 and first mailed to
shareholders on or about August 25, 1999.

<PAGE> 3

CHARTER ONE FINANCIAL, INC.
1215 Superior Avenue
Cleveland, Ohio 44114

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

NOTICE OF SPECIAL MEETING
TO BE HELD ON SEPTEMBER 30, 1999

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

To the Shareholders of Charter One Financial, Inc.:

You are cordially invited to attend a special meeting of shareholders of Charter
One Financial, Inc. at 10:00 a.m., local time, on September 30, 1999, at the
Forum Conference and Education Center, One Cleveland Center, 1375 East Ninth
Street, Cleveland, Ohio. At this meeting you will be asked to approve a proposal
to issue shares of Charter One common stock in connection with the merger of St.
Paul Bancorp, Inc. into Charter Michigan Bancorp, Inc., a wholly-owned
subsidiary of Charter One. Your Board of Directors has unanimously approved the
Agreement and Plan of Merger and recommends you vote "FOR" the proposal.

Only shareholders of record at the close of business on August 16, 1999 are
entitled to notice of and to vote at the special meeting or any adjournments or
postponements of the special meeting. A list of Charter One shareholders
entitled to vote at the special meeting will be available for examination by any
shareholder at the main office of Charter One during ordinary business hours for
at least ten days prior to the special meeting, as well as at the special
meeting.

YOUR VOTE IS VERY IMPORTANT

To ensure that your shares are voted at the special meeting, please sign, date
and promptly mail the accompanying proxy card in the enclosed envelope. Any
shareholder of record present at this meeting or at any adjournments or
postponements of the meeting may revoke his or her proxy and vote personally on
each matter brought before the meeting. You may revoke your proxy at any time
before it is voted.

Remember, if your shares are held in the name of a broker, only your broker can
vote your shares and only after receiving your instructions. Please contact the
person responsible for your account and instruct him/her to execute a proxy card
on your behalf. You should also sign, date and mail your proxy at your earliest
convenience.

Please review the joint proxy statement/prospectus accompanying this notice for
more complete information regarding the matter proposed for your consideration
at the special meeting. Should you have any questions or require assistance,
please call Georgeson & Company, Inc., who is assisting us, at (800) 233-2064.

By Order of the Board of Directors

/s/Charles John Koch

Charles John Koch
Chairman, President and Chief Executive Officer
August 25, 1999

THE BOARD OF DIRECTORS OF CHARTER ONE UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR"
THE PROPOSAL. YOUR SUPPORT IS APPRECIATED.

<PAGE> 4

ST. PAUL BANCORP, INC.
6700 W. North Avenue
Chicago, Illinois 60707

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

NOTICE OF SPECIAL MEETING
TO BE HELD ON SEPTEMBER 30, 1999

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

To the Shareholders of St. Paul Bancorp, Inc.:

You are cordially invited to attend a special meeting of shareholders of St.
Paul Bancorp, Inc. at 10:00 a.m., local time, on September 30, 1999, at the
Hyatt Regency Oak Brook, 1909 Spring Road, Oak Brook, Illinois. At this meeting
you will be asked to approve a proposal to adopt the Agreement and Plan of
Merger dated as of May 17, 1999, by and among Charter One Financial, Inc.,
Charter Michigan Bancorp, Inc. and St. Paul. Your Board of Directors has
unanimously approved the Agreement and Plan of Merger and recommends you vote
"FOR" the proposal.

Only shareholders of record at the close of business on August 16, 1999 are
entitled to notice of and to vote at the special meeting or any adjournments or
postponements of the special meeting. A list of St. Paul shareholders entitled
to vote at the special meeting will be available for examination by any
shareholder at the main office of St. Paul during ordinary business hours for at
least ten days prior to the special meeting, as well as at the special meeting.

YOUR VOTE IS VERY IMPORTANT

Please review the joint proxy statement/prospectus accompanying this notice for
more complete information regarding the matter proposed for your consideration
at the special meeting. Should you have any questions or require assistance,
please call D.F. King & Co., Inc., who is assisting us, at (800) 714-3312.

By Order of the Board of Directors

/s/ Clifford M. Sladnick
Clifford M. Sladnick
Senior Vice President, General Counsel and
Corporate Secretary

August 25, 1999

THE BOARD OF DIRECTORS OF ST. PAUL UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR"
THE ADOPTION OF THE MERGER AGREEMENT. YOUR SUPPORT IS APPRECIATED.

<PAGE> 5

Table of Contents
<TABLE>
<CAPTION>

Page

<S> <C>
Table of Contents..........................................................................................i

QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE MEETINGS....................................................1

SUMMARY....................................................................................................2
The Companies........................................................................................2
The Shareholder Meetings.............................................................................2
Our Reasons and Recommendation for the Merger........................................................3
The Merger and the Merger Agreement..................................................................3
Share Ownership of Management and Directors..........................................................6
The Stock Option Agreement...........................................................................6
Adjustment of Joint Proxy Statement/Prospectus Information for the Charter One Stock Dividend........7
Comparative Market Value Information.................................................................7

DISCLOSURE REGARDING FORWARD-LOOKING INFORMATION...........................................................8

SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA...........................................................9
How We Prepared the Financial Statements.............................................................9
Pooling of Interests Accounting Treatment............................................................9
Merger-Related and Integration-Related Expenses......................................................9
Periods Covered......................................................................................9
Selected Historical Financial Data of Charter One...................................................10
Selected Historical Financial Data of St. Paul......................................................11
Selected Unaudited Pro Forma Condensed Combined Financial Data......................................12
Comparative Pro Forma Per Share Data................................................................13

THE SHAREHOLDER MEETINGS..................................................................................14
Times and Places of the Special Meetings; Matters to be Considered at the Special Meetings..........14
Voting Rights of Shareholders; Votes Required for Approval..........................................14
Voting of Proxies; Revocability of Proxies; Proxy Solicitation Costs................................15

THE MERGER................................................................................................17
Background of the Merger............................................................................17
Our Reasons and Recommendation for the Merger ......................................................19
Opinion of Charter One's Financial Advisor..........................................................22
Opinion of St. Paul's Financial Advisor.............................................................30
Accounting Treatment................................................................................37
Federal Income Tax Consequences of the Merger.......................................................37
Regulatory Matters..................................................................................38
No Appraisal Rights.................................................................................40
Restrictions on Resale of Charter One Common Stock by Affiliates....................................40

</TABLE>

i
<PAGE> 6

<S> <C>
INTERESTS OF INSIDERS IN THE MERGER.......................................................................41

THE MERGER AGREEMENT......................................................................................43
Time of Completion..................................................................................44
Consideration to be Received in the Merger..........................................................44
Possible Adjustment to the Exchange Ratio...........................................................44
Exchange of Certificates............................................................................46
Treatment of St. Paul Stock Options.................................................................47
Conduct of Business Pending the Merger and Certain Covenants........................................47
Representations and Warranties......................................................................48
Conditions to Completion of the Merger..............................................................50
Termination.........................................................................................51
Waiver; Amendment...................................................................................53
Expenses............................................................................................53
Nasdaq Listing......................................................................................53

THE STOCK OPTION AGREEMENT................................................................................53

COMPARATIVE STOCK PRICES AND DIVIDEND INFORMATION.........................................................56
Effect of Merger on St. Paul's Dividend Reinvestment Plan...........................................57

UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS AND PER SHARE DATA......................................58

Unaudited Pro Forma Combined Statement of Financial Condition as of June 30, 1999.........................59

Notes to Unaudited Pro Forma Combined Statement of Financial Condition....................................60
Unaudited Pro Forma Condensed Combined Statements
of Income For the Six Months Ended June 30, 1999...................................................61
Unaudited Pro Forma Condensed Combined Statements
of Income For the Six Months Ended June 30, 1998...................................................62
Unaudited Pro Forma Condensed Combined Statements
of Income For the Year Ended December 31, 1998.....................................................63
Unaudited Pro Forma Condensed Combined Statements
of Income For the Year Ended December 31, 1997.....................................................64
Unaudited Pro Forma Condensed Combined Statements
of Income For the Year Ended December 31, 1996.....................................................65

COMPARISON OF SHAREHOLDER RIGHTS..........................................................................66
Authorized Capital Stock............................................................................66
Payment of Dividends................................................................................66
Advance Notice Requirements for Presentation of Business
and Nominations of Directors at Annual Meetings of Shareholders..................................66
Cumulative Voting for Election of Directors.........................................................66
Restrictions on Voting Rights.......................................................................67
Quorum..............................................................................................67
Number of Directors.................................................................................67
Classification of Board of Directors................................................................67
Removal of Directors................................................................................67
Filling Vacancies on the Board of Directors.........................................................67
Amendment to Certificate of Incorporation and Bylaws................................................68
Approvals for Acquisitions of Control and Offers to Acquire Control.................................68
Business Combinations with Certain Persons..........................................................68
Prevention of Greenmail.............................................................................69
Limitations on Directors' Liability.................................................................70
Indemnification.....................................................................................70

</TABLE>

ii
<PAGE> 7

<S> <C>
Mergers, Acquisitions and Certain Other Transactions................................................70
Criteria for Evaluating Certain Offers..............................................................71
Action Without a Meeting............................................................................71
Special Meetings of Shareholders....................................................................71
Preemptive Rights...................................................................................71
Appraisal Rights of Dissenting Shareholders.........................................................71
Special Provisions in Charter One's Bylaws..........................................................72
Rights Agreement....................................................................................72

DESCRIPTION OF CHARTER ONE FINANCIAL, INC. CAPITAL STOCK..................................................73
General.............................................................................................73
Common Stock........................................................................................74
Preferred Stock.....................................................................................74

LEGAL MATTERS.............................................................................................74

EXPERTS...................................................................................................75

INDEPENDENT PUBLIC ACCOUNTANTS............................................................................75

FUTURE SHAREHOLDER PROPOSALS..............................................................................75

WHERE YOU CAN FIND MORE INFORMATION.......................................................................76

APPENDICES
A Agreement and Plan of Merger by and among Charter One, Charter Michigan and St. Paul
B Stock Option Agreement by and between Charter One and St. Paul
C Opinion of Salomon Smith Barney Inc.
D Opinion of Merrill Lynch, Pierce, Fenner & Smith Incorporated

</TABLE>

iii

<PAGE> 8

QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE MEETINGS

Q: WHAT WILL HAPPEN TO OUTSTANDING SHARES OF ST. PAUL AND CHARTER ONE COMMON
STOCK?

A: Upon completion of the merger, each outstanding share of St. Paul common
stock will be converted into .99225 of a share of Charter One common stock,
after taking into account the 5% stock dividend payable on September 30, 1999
to Charter One shareholders of record on September 14, 1999, subject to
possible further adjustment as described on page 44. Outstanding shares of
Charter One common stock will remain outstanding with no change. After the
merger, shares of Charter One common stock will represent the combined assets
and business of Charter One and St. Paul.

Q: IS THE MERGER TAXABLE?

A: Charter One and St. Paul each expect the merger to be tax-free. We have
structured the merger so that our legal counsel will be able to deliver
opinions that neither Charter One, St. Paul nor the St. Paul shareholders
should recognize any gain or loss for U.S. federal income tax purposes in the
merger, except with respect to any cash that St. Paul shareholders will
receive instead of fractional shares. In addition, no gain or loss should be
recognized by Charter One shareholders with respect to their Charter One
common stock as a result of the merger.

We describe the material federal income tax consequences of the transaction
in more detail on page 37. The tax consequences to you will depend on the
facts of your own situation. Please consult your tax advisor for a full
understanding of the tax consequences that the merger will have on you.

Q: AM I ENTITLED TO APPRAISAL RIGHTS?

A: No. Holders of Charter One common stock and St. Paul common stock are not
entitled to appraisal rights in connection with the merger.

Q: WHEN DO YOU EXPECT THE MERGER TO BE COMPLETED?

A: We expect to complete the merger early in the fourth quarter of 1999.
However, because the merger is subject to governmental approvals, we cannot
predict the exact timing.

Q: SHOULD I SEND IN MY STOCK CERTIFICATES NOW?

A: No. After we complete the merger, Charter One will send instructions to St.
Paul shareholders whose shares are converted in the merger. These
instructions will explain how to exchange your St. Paul stock certificates
for Charter One stock certificates. Charter One shareholders will keep their
current stock certificates.

Q: HOW DO I VOTE?

A: Just mail your signed proxy card in the enclosed return envelope as soon as
possible so that your shares may be represented at your shareholder's
meeting. In order to assure that your vote is counted, please give your proxy
as instructed on your proxy card even if you currently plan to attend the
meeting in person. If you sign and send in your proxy card and do not
indicate how you want to vote, we will count your proxy card as a vote in
favor of the proposal submitted at your shareholder's meeting.

Q: CAN I CHANGE MY VOTE?

A: Yes. You can change your vote at any time prior to the special meeting by
submitting a later-dated signed proxy card or by attending the meeting and
voting in person.

Q: IF MY SHARES ARE HELD IN "STREET NAME" BY A BROKER, WILL THE BROKER VOTE THE
SHARES FOR ME?

A: No. You must instruct your broker to vote your shares on your company's
proposal, following the directions provided to you by your broker. Your
failure to instruct your broker to vote on your company's proposal will, in
the case of St. Paul shareholders, be the equivalent of voting against the
merger, and, in the case of Charter One, have no effect on the outcome of the
vote.

Q: WHO DO I CALL IF I HAVE QUESTIONS ABOUT THE MEETINGS OR THE MERGER?

A: Charter One shareholders may call (800) 262-6301.

St. Paul shareholders may call (773) 804-2284.

<PAGE> 9

SUMMARY

This section highlights selected information in this joint proxy
statement/prospectus and may not contain all of the information important to
you. To understand the merger more fully and for a more complete description of
the legal terms of the merger, you should read this entire document carefully,
including Appendices, and the documents to which we refer to in this joint proxy
statement/prospectus. A list of the documents that we incorporate by reference
appears on page 76 under the heading "Where You Can Find More Information."

THE COMPANIES

CHARTER ONE FINANCIAL, INC.
1215 Superior Avenue
Cleveland, Ohio 44114
Telephone: (216) 566-5300

Headquartered in Cleveland, Ohio, Charter One Financial, Inc. is the publicly
traded parent company of Charter Michigan Bancorp, Inc., which is the parent
company of Charter One Bank, F.S.B. With nearly $25 billion in total assets,
Charter One Bank is one of the largest thrift institutions in the country.
Charter One Bank currently has 340 branch locations in Ohio, Michigan, New York,
Massachusetts and Vermont. Additionally, Charter One Mortgage Corp., Charter One
Bank's mortgage banking subsidiary, operates loan production offices in 12
states, and Charter One Auto Finance, Charter One Bank's indirect auto finance
subsidiary, generates loans in nine states. As of June 30, 1999, Charter One had
total consolidated assets of $24.95 billion, deposits of $15.09 billion and
shareholders' equity of $1.96 billion.

ST. PAUL BANCORP, INC.
6700 W. North Avenue
Chicago, Illinois 60707
Telephone: (773) 622-5000

St. Paul Bancorp, Inc. is the holding company for St. Paul Federal Bank For
Savings, the largest independent savings institution in the state of Illinois.
At June 30, 1999, St. Paul Federal Bank For Savings' branch network consisted of
60 locations. St. Paul Federal Bank For Savings also operates one of the largest
networks of automated teller machines in the Chicagoland area with approximately
550 machines. Both St. Paul and St. Paul Federal Bank For Savings operate other
wholly owned financial services companies, including Investment Network, Inc.,
Annuity Network, Inc., SPF Insurance Agency, Inc., St. Paul Financial
Development Corporation, St. Paul Trust Company and Serve Corps Mortgage
Corporation. As of June 30, 1999, St. Paul had total consolidated assets of
$6.03 billion, deposits of $3.76 billion and shareholders' equity of $502.5
million.

THE SHAREHOLDER MEETINGS
(PAGE 14)

CHARTER ONE SHAREHOLDERS

Special Meeting. The Charter One special meeting will be held on September 30,
1999, at 10:00 a.m. local time, at the Forum Conference and Education Center,
One Cleveland Center, 1375 East Ninth Street, Cleveland, Ohio, unless adjourned
or postponed. At this special meeting, Charter One shareholders will be asked
to:

1. approve the issuance of Charter One common stock in the merger; and

2. act on any other items that may be submitted to a vote at the special
meeting.

Record Date. You can vote at the Charter One special meeting if you owned
Charter One common stock at the close of business on August 16, 1999. You can
cast one vote for each share of Charter One common stock you owned at that time.

Vote Required. The holders of a majority of the Charter One common stock present
and voting at the Charter One special meeting must approve the proposal to issue
the Charter One common stock required to complete the merger.

Proxies. You can vote your shares at the Charter One special meeting by marking
the enclosed proxy card with your vote, signing it and mailing it in the
enclosed return envelope. You can revoke your proxy at any time before it is
voted either by sending to Charter One a revocation notice or a new proxy or by
attending the Charter One special meeting and voting in person. Simply attending
the Charter One special meeting will not revoke your proxy.

ST. PAUL SHAREHOLDERS

Special Meeting. The St. Paul special meeting will be held on September 30,
1999, at 10:00 a.m., local time, at the Hyatt Regency Oak Brook, 1909 Spring
Road,

<PAGE> 10

Oak Brook, Illinois, unless adjourned or postponed. At this special meeting, St.
Paul shareholders will be asked to:

1. adopt the Agreement and Plan of Merger by and between Charter One,
Charter Michigan and St. Paul; and

2. act on any other items that may be submitted to a vote at the special
meeting.

Record Date. You can vote at the St. Paul special meeting if you owned St. Paul
common stock at the close of business on August 16, 1999. You can cast one vote
for each share of St. Paul common stock you owned at that time.

Vote Required. Adoption of the merger agreement will require the affirmative
vote of two-thirds of the outstanding St. Paul common stock.

Proxies. You can vote your shares at the St. Paul special meeting by marking the
enclosed proxy card with your vote, signing it and mailing it in the enclosed
return envelope. You can revoke your proxy at any time before it is voted either
by sending to St. Paul a revocation notice or a new proxy or by attending the
St. Paul special meeting and voting in person. Simply attending the St. Paul
special meeting will not revoke your proxy.

OUR REASONS AND RECOMMENDATION
FOR THE MERGER (PAGE 19)

Charter One believes that the merger will:

- create a major Great Lakes/Northeast banking franchise, and provide an
ideal entry vehicle into the Chicago market;

- create opportunities for significant operational benefits and financial
cost savings and revenue enhancements through the integration of
Charter One's and St. Paul's operations;

- enable it to duplicate its prior successful experiences of quickly
introducing its strong sales culture into an organization and
introducing a product set that matches the needs of the market; and

- strengthen its competitive and capital position in the financial
services industry, which is rapidly changing and growing more
competitive.

Charter One's board of directors believes the merger is in its shareholders'
interests and unanimously recommends that Charter One shareholders vote "FOR"
the proposal to approve the issuance of Charter One common stock in the merger.

St. Paul believes that the merger will:

- enable St. Paul shareholders to participate in the future growth of the
combined businesses of Charter One and St. Paul, which are expected to
benefit from opportunities for significant cost savings and revenue
enhancements; and

- provide its customers with a broader range of products and services.

St. Paul's board of directors believes the merger is in its shareholders' best
interests and unanimously recommends that St. Paul shareholders vote "FOR" the
proposal to adopt the merger agreement.

You should note, however, that achieving these objectives is subject to
particular risks and uncertainties, including possible difficulties in combining
the operations of the two companies, in achieving anticipated cost savings and
other financial and operating benefits from the merger, and in the introduction
and acceptance of new products and services into St. Paul's market place. See
"Disclosure Regarding Forward-Looking Information." To review our reasons for
the merger in greater detail, as well as how we came to agree on the merger,
please see pages 17 through 41.

THE MERGER AND THE MERGER AGREEMENT
(PAGES 17 AND 43)

We have attached the Agreement and Plan of Merger to this document as Appendix
A. Please read the merger agreement carefully. It is the legal document that
governs the merger.

WHAT ST. PAUL SHAREHOLDERS WILL RECEIVE (PAGE 44)

As a result of the merger, St. Paul shareholders will receive, for each share of
St. Paul common stock, .99225 of a share of Charter One common stock. This
exchange ratio has been adjusted from .945 to .99225 to account for the 5% stock
dividend payable on September 30, 1999, to Charter One shareholders of record on
September 14, 1999, and is subject to possible further adjustment as

<PAGE> 11

described on page 44. Charter One will not issue any fractional shares. St. Paul
shareholders will receive a check for any fractional share in an amount equal to
the share fraction multiplied by the closing price of Charter One common stock
on the day before we complete the merger.

For example, if you currently own 1,700 shares of St. Paul common stock, after
the merger you will receive 1,686 shares of Charter One common stock and a check
for an amount equal to .825 multiplied by the closing price of one share of
Charter One common stock on the day before we complete the merger. The value of
the stock that you will receive will fluctuate as the price of Charter One
common stock changes.

On August 17, 1999, the latest available date prior to the mailing of this
document, the closing share price of Charter One common stock as reported on the
Nasdaq National Market was $____. Applying the .99225 exchange ratio to the
Charter One closing price on that date, each holder of St. Paul common stock
would be entitled to receive Charter One common stock with a market value of
approximately $______ for each share of St. Paul common stock. The value of
Charter One and St. Paul common stock, however, is likely to change between now
and completion of the merger. You should obtain current price quotes for Charter
One and St. Paul common stock. See "Selected Historical and Pro Forma Financial
Data" on page 9.

OWNERSHIP OF CHARTER ONE AFTER THE MERGER

Charter One will issue approximately ___ million shares of Charter One common
stock to St. Paul shareholders in the merger. The shares of Charter One common
stock to be issued to St. Paul shareholders in the merger will represent
approximately __% of the outstanding Charter One common stock after the merger.
This information is based on the number of Charter One and St. Paul shares
outstanding on August 16, 1999 and does not take into account stock options.

BOARD OF DIRECTORS OF CHARTER ONE AFTER THE MERGER

Following the merger, Charter One's board of directors will have 22 members,
including the 20 current Charter One directors plus two St. Paul directors. The
St. Paul directors to be appointed to the board of Charter One are Joseph C.
Scully, Chairman of the Board and Chief Executive Officer of St. Paul, and
Patrick J. Agnew, President, Chief Operating Officer and a director of St. Paul.

INTERESTS OF ST. PAUL'S OFFICERS AND DIRECTORS IN THE MERGER (PAGE 41)

You should be aware that a number of St. Paul directors and executive officers
may have interests in the merger that are different from, or in addition to,
their interests as shareholders. These interests exist because of the rights
that these directors and executive officers have under the terms of their St.
Paul benefit and compensation plans and also, in the case of the executive
officers, under the terms of various agreements with St. Paul. These agreements
provide some executive officers with severance benefits if Charter One
terminates their employment under specified circumstances following the merger.
Some plans provide for accelerated vesting of stock options. These interests
also arise from provisions of the merger agreement relating to appointments to
the Charter One board, director and officer indemnification and insurance, and
employment arrangements and employee benefits after the merger.

The members of St. Paul's board of directors knew about and considered these
additional interests when they approved the merger agreement.

OPINIONS OF FINANCIAL ADVISORS (PAGES 22 AND 30)

Charter One. Among other factors considered in deciding to approve the merger,
the Charter One board of directors received the opinion of its financial
advisor, Salomon Smith Barney, to the effect that, as of the date of the
opinion, the exchange ratio was fair to the holders of Charter One common stock
from a financial point of view. We have attached a copy of this opinion to this
joint proxy statement/prospectus as Appendix C. You should read this opinion
completely to understand the assumptions made, matters considered and
limitations of the review undertaken by Salomon Smith Barney in providing its
opinion.

St. Paul. Among other factors considered in deciding to approve the merger, the
St. Paul board of directors received the opinion of its financial advisor,
Merrill Lynch, Pierce, Fenner & Smith Incorporated that, as of May 17, 1999 (the
date of the St. Paul board's vote on the merger) and updated through the date of
this joint proxy statement/prospectus, the exchange ratio was fair to the
holders of St. Paul common stock from a financial point of view. We have
attached a copy of this opinion to this joint proxy statement/prospectus as
Appendix D. You should read this opinion completely to understand the
assumptions made, matters considered and limitations of the review undertaken by
Merrill Lynch in providing its opinion.

<PAGE> 12

MATERIAL FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER (PAGE 37)

We have structured the merger so that Charter One, Charter Michigan, St. Paul
and the holders of St. Paul common stock will not recognize any income, gain or
loss for federal income tax purposes as a result of the merger, except for gain
on cash received by St. Paul shareholders for fractional shares.

It is a condition to closing the merger that Charter One receives an opinion of
Silver, Freedman & Taff, L.L.P., its special counsel, and that St. Paul receives
an opinion from Mayer, Brown & Platt, its special counsel, that the merger will
be a tax-free reorganization for federal income tax purposes.

TAX MATTERS ARE VERY COMPLICATED AND THE TAX CONSEQUENCES THAT THE MERGER WILL
HAVE ON YOU WILL DEPEND ON THE FACTS OF YOUR OWN SITUATION. YOU SHOULD CONSULT
YOUR TAX ADVISORS FOR A COMPLETE DESCRIPTION OF THE TAX CONSEQUENCES OF THE
MERGER TO YOU.

ACCOUNTING TREATMENT (PAGE 37)

We expect the merger to qualify for "pooling-of-interests" accounting treatment.
This means we will treat our companies as if they had always been combined for
accounting and financial reporting purposes at their current book values.

SHAREHOLDERS DO NOT HAVE APPRAISAL RIGHTS (PAGE 40)

St. Paul is a Delaware corporation. Under Delaware law, St. Paul shareholders
have no right to an appraisal of the value of their St. Paul shares in
connection with the merger.

REGULATORY APPROVALS REQUIRED (PAGE 38)

The merger must be approved by the Board of Governors of the Federal Reserve
System and the Office of Thrift Supervision. The U.S. Department of Justice may
review the merger's impact on competition. Once the Office of Thrift Supervision
approves the merger, we must wait for up to 30 days before we can complete the
merger. However, if we do not receive any adverse comments from the U.S.
Department of Justice, the merger may be completed on or after the 15th day
after final approval from the Office of Thrift Supervision.

In addition, state and other regulatory authorities, including the Illinois
Commission of Banks and Real Estate, will need to approve or be notified of the
merger before we can complete it.

We have filed all of the required applications or notices with the Federal
Reserve Board, Office of Thrift Supervision and these other regulatory
authorities.

There can be no assurance that all regulatory approvals will be obtained or the
dates of those approvals. There can also be no assurance that regulatory
approvals received will not contain a condition or requirement that causes the
approvals to fail to satisfy the conditions set forth in the merger agreement.

WHAT NEEDS TO BE DONE TO COMPLETE THE MERGER
(PAGE 50)

The completion of the merger depends on a number of conditions being met. In
addition to compliance with the merger agreement, these conditions include:

- approval of the share issuance by Charter One shareholders and adoption
of the merger agreement by St. Paul shareholders;

- approval of the merger by federal and state regulatory authorities;

- receipt of opinions regarding the federal income tax consequences and
accounting treatment of the merger; and

- the absence of any injunction or legal restraint blocking the merger or
government proceeding preventing the completion of the merger.

Charter One or St. Paul could decide to complete the merger even though one or
more of the conditions in the merger agreement has not been met. We cannot be
certain when (or if) the conditions to the merger will be satisfied or waived,
or that the merger will be completed.

TERMINATION OF THE MERGER AGREEMENT (PAGE 51)

We can mutually agree at any time to terminate the merger agreement prior to
completing the merger. In addition, either of us may terminate the merger
agreement if:

- the other party violates a material provision of the merger agreement
and does not cure the violation within 30 days;

- the merger has not been completed by February 28, 2000;

<PAGE> 13

- a regulatory authority does not grant an approval needed to complete
the merger;

- St. Paul's shareholders do not adopt the merger agreement or Charter
One's shareholders do not approve the issuance of Charter One common
stock in connection with the merger; or

- other conditions to closing of the merger have not been satisfied.

St. Paul can also terminate the merger agreement if:

- Charter One's average common stock price during a valuation period
prior to the anticipated closing date is less than $23.79 and the
decline in Charter One's average common stock price is at least 17.5
percentage points more than the decline in the weighted average stock
price of the group of similar companies designated in the merger
agreement; provided that Charter One may void such termination by
increasing the exchange ratio to a specified minimum; or

- St. Paul receives a proposal more favorable to its shareholders from a
financial point of view and its board of directors determines that
proceeding with the merger would violate its fiduciary duties.

FEES ASSOCIATED WITH TERMINATION OF THE MERGER AGREEMENT (PAGE 52)

St. Paul must pay a termination fee of $45.0 million in cash to Charter One if
it receives a competing acquisition proposal and any one of the following events
occurs:

- the St. Paul board fails to unanimously recommend adoption of the
merger agreement to its shareholders, withdraws its recommendation or
modifies or changes its recommendation in a manner adverse to the
interests of Charter One;

- St. Paul is in material and willful violation of any of its specified
agreements contained in the merger agreement such that Charter One
would be entitled to terminate the merger agreement; or

- the shareholders of St. Paul do not adopt the merger agreement at the
St. Paul special meeting.

Charter One must pay a termination fee of $45.0 million in cash to St. Paul
under circumstances similar to those stated above.

St. Paul must also pay Charter One the $45.0 million termination fee if it
enters into an acquisition agreement with a third party that its board of
directors determines provides more favorable consideration to St. Paul's
shareholders from a financial point of view than the consideration to be
received by its shareholders in the merger with Charter One.

St. Paul will not have to pay the $45.0 million termination fee if St. Paul has
the right to terminate the merger agreement in certain circumstances or Charter
One profits from the stock option granted to Charter One by St. Paul as
described below.

SHARE OWNERSHIP OF MANAGEMENT
AND DIRECTORS

On August 16, 1999, the record date for the Charter One special meeting,
directors and executive officers of Charter One and their affiliates
beneficially owned and were entitled to vote ________ shares of Charter One
common stock, or ___% of the Charter One shares outstanding on that date. These
individuals have indicated that they intend to vote in favor of the proposal to
issue Charter One common stock in the merger.

On August 16, 1999, the record date for the St. Paul special meeting, directors
and executive officers of St. Paul and their affiliates beneficially owned and
were entitled to vote ________ shares of St. Paul common stock, or ___% of the
St. Paul shares outstanding on that date. The St. Paul directors have entered
into support agreements with Charter One whereby they have agreed to vote at the
St. Paul special meeting ________ shares of St. Paul common stock owned or
controlled by them in favor of the proposal to adopt the merger agreement. St.
Paul believes its executive officers intend to vote in favor of the proposal to
adopt the merger agreement.

THE STOCK OPTION AGREEMENT (PAGE 53)

To increase the likelihood that the merger will be completed, and to discourage
other persons who may be interested in acquiring St. Paul, Charter One required
St. Paul to grant it a stock option. This option allows Charter One to purchase
up to 4,384,730 shares of St. Paul common stock, which represents 9.9% of the
outstanding shares of St. Paul common stock after giving effect to the exercise
of the entire option. The exercise price of the option is $24.828 per share,

6
<PAGE> 14

subject to adjustment under specified circumstances. St. Paul may be required to
repurchase the option or shares acquired upon exercise of the option. Under the
terms of the merger agreement, the total profit that a holder, including Charter
One, may realize from exercising the option may not exceed $45.0 million. A copy
of the Stock Option Agreement is attached to this document as Appendix B.

ADJUSTMENT OF JOINT PROXY
STATEMENT/PROSPECTUS INFORMATION
FOR THE CHARTER ONE STOCK DIVIDEND

All of the information contained in this Joint Proxy Statement/Prospectus has
been adjusted or restated, as the case may be, to reflect the 5% stock dividend
declared by Charter One on July 21, 1999, payable on September 30, 1999, to
Charter One shareholders of record at the close of business on September 14,
1999, except for the information set forth under the captions "The Merger --
Opinion of Charter One's Financial Advisor" and "The Merger -- Opinion of St.
Paul's Financial Advisor."

COMPARATIVE MARKET VALUE INFORMATION

The following table sets forth the last reported sale prices per share of
Charter One common stock and St. Paul common stock and the equivalent per share
price for St. Paul common stock giving effect to the merger on (i) May 14, 1999,
the last trading day before public announcement of the signing of the merger
agreement; and (ii) August 17, 1999, the latest available date prior to the
mailing of this document. The equivalent price per St. Paul share at each
specified date in the following table represents the closing market price of a
share of Charter One common stock on that date multiplied by the exchange ratio
of .99225.

Charter One St. Paul EQUIVALENT PRICE PER
Common Stock Common Stock ST. PAUL SHARE
------------ ------------ --------------------
<S> <C> <C> <C>
May 14, 1999...................... $28.84 $24.656 $28.62
August 17, 1999................... $_____ $ $

</TABLE>

As of the August 16, 1999 record date for voting at the Charter One and St. Paul
special meetings, ___________ outstanding shares of Charter One common stock
were held by approximately ________ record owners and __________ outstanding
shares of St. Paul common stock were held by approximately ______ record owners.

St. Paul shareholders should obtain current market quotations for Charter One
common stock. The market price of Charter One common stock may fluctuate between
the date of this document and completion of the merger. Fluctuations in the
market price of Charter One common stock will result in an increase or decrease
in the value of the Charter One shares to be received by holders of St. Paul
common stock in the merger. The market value of the Charter One shares at the
time of the merger will depend upon the market value of a share of Charter One
common stock at that time. We cannot give you any assurance about the market
price of Charter One common stock before or after the merger. See "The Merger
Agreement -- Consideration to be Received in the Merger."

<PAGE> 15

DISCLOSURE REGARDING FORWARD-LOOKING INFORMATION

This document, including information included or incorporated by reference,
contains forward-looking statements about Charter One, St. Paul and the combined
company which we believe are within the meaning of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements include
information in this document regarding the financial condition, results of
operations and business of Charter One following the consummation of the merger.
They also include statements relating to the synergies, efficiencies, cost
savings and funding advantages that are expected to be realized from the merger
and the expected impact of the merger on Charter One's financial performance and
earnings estimates for the combined company.

The sections of this document which contain forward-looking statements include
"Questions and Answers About the Merger and the Meetings, " o "Summary," o
"Selected Historical and Pro Forma Financial Data -- Selected Unaudited Pro
Forma Condensed Combined Financial Data," o "The Merger -- Background of the
Merger," o "The Merger -- Our Reasons and Recommendation for the Merger," o "The
Merger -- Opinion of Charter One's Financial Advisor," o "The Merger -- Opinion
of St. Paul's Financial Advisor," o and "Unaudited Pro Forma Combined Financial
Statements and Per Share Data." Forward-looking statements are also identified
by words such as "believes," "anticipates," "estimates," "expects," "intends,"
"plans" or similar expressions.

Forward-looking statements involve certain risks and uncertainties. You should
understand that the following important factors, in addition to those discussed
elsewhere in this document and in the documents which are incorporated into this
joint proxy statement/prospectus by reference, could affect the future results
of Charter One and St. Paul, and of Charter One after the merger and could cause
those results to differ materially from those expressed in our forward-looking
statements:

- expected cost savings from the merger may not be fully realized or may
not be realized within the expected time frame;

- revenues following the merger may be lower than expected, or
withdrawals of customer deposits, operating costs, customer loss and
business disruption following the merger may be greater than expected;

- costs or difficulties related to the integration of the businesses of
Charter One and St. Paul may be greater than expected;

- changes in the interest rate environment may reduce margins more than
planned;

- general economic conditions, either nationally or regionally, may be
less favorable than expected, resulting in, among other things, a
deterioration in the credit quality of our loan assets;

- legislative or regulatory changes may adversely affect the business in
which we are engaged;

- the willingness of users to substitute our products and services for
competitors' products and services may be less than expected;

- competitive pressure in the banking industry, and in particular the
Chicago banking market, may increase; and

- technological changes (including Year 2000 data systems compliance
issues) may be more difficult or expensive than anticipated.

Further information on other factors which could affect the financial results of
Charter One after the merger is included in the SEC filings incorporated by
reference into this joint proxy statement/prospectus. See "Where You Can Find
More Information."

<PAGE> 16

SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA

HOW WE PREPARED THE FINANCIAL STATEMENTS

We are providing the following information to aid you in your analysis of the
financial aspects of the merger. We derived this information from (i) the
audited financial statements of Charter One for the years 1994 through 1998 and
the unaudited financial statements of Charter One for the six months ended June
30, 1999 and 1998, and (ii) the audited financial statements of St. Paul for the
years 1994 through 1998 and the unaudited financial statements of St. Paul for
the six months ended June 30, 1999 and 1998. All information is presented in
accordance with generally accepted accounting principles, and per common share
data has been restated where necessary to reflect the issuance of stock
dividends.

The following information is only a summary. You should read it together with
our historical financial statements and related notes contained in the annual
reports and other information that we have filed with the SEC and have
incorporated by reference into this joint proxy statement/prospectus. We have
listed the documents that we incorporate by reference under the heading "Where
You Can Find More Information" on page 76.

POOLING OF INTERESTS ACCOUNTING TREATMENT

We expect that the merger will be accounted for as a "pooling-of-interests."
This means that, for accounting and financial reporting purposes, we will treat
our companies as if they had always been combined. For a more detailed
description of pooling of interests accounting, see "The Merger -- Accounting
Treatment" on page 37.

We have presented unaudited pro forma condensed combined financial information
that reflects the "pooling-of-interests" method of accounting to give you a
better picture of the types of changes to our financial statement that will be
made to reflect the merger. We prepared the pro forma condensed combined
statements of income and pro forma condensed combined statements of financial
condition by adding or combining the historical amounts of each company. The
accounting policies of Charter One and St. Paul are substantially comparable.
Consequently, we did not make adjustments to the unaudited pro forma condensed
combined financial statements to conform the accounting policies of the
combining companies. The pro forma information, while helpful in illustrating
the financial characteristics of the combined company under one set of
assumptions, is not necessarily indicative of the results of operations which
would have occurred had Charter One and St. Paul constituted a single entity
since January 1, 1996, and does not attempt to predict or suggest future
results.

MERGER-RELATED AND INTEGRATION-RELATED EXPENSES

We expect that we will incur restructuring and merger-related expenses as a
result of combining our companies. We estimate that merger-related fees and
expenses, consisting primarily of SEC filing fees, fees and expenses of
investment bankers, attorneys and accountants, and financial printing and other
related charges, will be approximately $9.0 million. We estimate that pre-tax
costs of between approximately $73.0 million and $87.0 million will be incurred
for severance and other integration-related expenses, including the elimination
of duplicate facilities and excess capacity, operational realignment and related
workforce reductions. These expenditures are necessary to reduce costs and
operate efficiently. These costs will be charged to operations in the relevant
period and therefore are not reflected in the unaudited pro forma condensed
combined statements of income. These charges are reflected in the unaudited pro
forma condensed combined statement of financial condition as of June 30, 1999.
See note 1 on page 60.

PERIODS COVERED

The unaudited pro forma condensed combined statements of income combine Charter
One's historical results for the six-month periods ended June 30, 1999 and 1998,
and the years ended 1998, 1997 and 1996 with St. Paul's results for the same
periods, giving effect to the merger as if it had occurred on January 1, 1996.
The unaudited pro forma condensed combined statement of financial condition
combines the historical consolidated statements of financial condition of
Charter One and St. Paul as of June 30, 1999, giving effect to the merger as if
it had occurred on June 30, 1999. The selected unaudited pro forma condensed
combined financial data have been derived from and should be read with the
"Unaudited Pro Forma Combined Financial Statements and Per Share Data" and
related notes on pages 58 through 65.

<PAGE> 17

SELECTED HISTORICAL FINANCIAL DATA OF CHARTER ONE

AT AND FOR THE SIX
MONTHS ENDED JUNE 30, AT AND FOR THE YEAR ENDED DECEMBER 31,(1)
---------------------------- -----------------------------------------------
1999 1998(1) 1998 1997 1996
------------ ------------ ------------ ------------ ------------
(IN THOUSANDS, EXCEPT SHARES AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
OPERATING DATA(2):
Interest income ............................... $ 857,535 $ 882,176 $ 1,760,371 $ 1,672,580 $ 1,567,147
Interest expense .............................. 471,705 519,972 1,031,299 999,596 923,540
------------ ------------ ------------ ------------ ------------
Net interest income ......................... 385,830 362,204 729,072 672,984 643,607
Provision for loan and lease losses ........... 14,614 13,768 29,465 48,293 23,484
------------ ------------ ------------ ------------ ------------
Net interest income after provision for
loan and lease losses ...................... 371,216 348,436 699,607 624,691 620,123
Other income:
Net (loss) gain ............................. 9,832 8,612 20,963 (2,351) 2,178
Other ....................................... 107,842 92,252 190,682 131,623 128,022
Administrative expenses ....................... 221,536 220,473 492,513 472,156 460,328
------------ ------------ ------------ ------------ ------------
Income before income taxes and
extraordinary item ......................... 267,354 228,827 418,739 281,807 289,995
Income taxes .................................. 86,718 75,415 141,720 84,686 95,303
------------ ------------ ------------ ------------ ------------
Income before extraordinary item .............. 180,636 153,412 277,019 197,121 194,692
Extraordinary item - early extinguishment
of debt, net of tax benefit ................... -- -- 61,658 2,728 --
------------ ------------ ------------ ------------ ------------
Net income .................................. $ 180,636 $ 153,412 $ 215,361 $ 194,393 $ 194,692
============ ============ ============ ============ ============
PER SHARE DATA:
Basic earnings per share:
Income before extraordinary item ............. $ 1.04 $ .88 $ 1.59 $ 1.15 $ 1.12
Extraordinary item - early extinguishment
of debt, net of tax benefit ................. -- -- (.35) (.02) --
------------ ------------ ------------ ------------ ------------
Net income .................................. $ 1.04 $ .88 $ 1.24 $ 1.13 $ 1.12
============ ============ ============ ============ ============
Diluted earnings per share:
Income before extraordinary item ............. $ 1.01 $ .85 $ 1.55 $ 1.11 $ 1.07
Extraordinary item - early extinguishment
of debt ..................................... -- -- (.34) (.02) --
------------ ------------ ------------ ------------ ------------
Net income .................................. $ 1.01 $ .85 $ 1.21 $ 1.09 $ 1.07
============ ============ ============ ============ ============
Cash dividends declared and paid per
common share(3) ............................. $ .29 $ .25 $ .50 $ .43 $ .37
Book value per share .......................... $ 11.27 $ 11.24 $ 10.80 $ 10.14 $ 9.19
FINANCIAL CONDITION:
Total assets .................................. $ 24,952,604 $ 24,326,695 $ 24,467,255 $ 24,207,748 $ 21,738,522
Mortgage-backed securities .................... 5,182,059 5,877,117 4,968,184 5,788,057 6,638,225
Investment securities ......................... 196,322 342,127 295,573 943,502 701,563
Loans and leases, net ......................... 17,630,239 16,467,262 17,677,836 15,863,483 12,967,356
Deposits ...................................... 15,087,605 14,755,347 15,165,064 14,029,725 13,516,569
FHLB advances and other borrowings ............ 7,516,344 7,178,661 7,001,478 7,802,696 6,161,502
Shareholders' equity .......................... 1,955,415 1,885,523 1,875,112 1,761,897 1,588,103

OTHER PERIOD-END DATA:
Number of full service offices ................ 340 340 340 329 256
Number of loan origination offices ............ 39 39 39 37 49

SELECTED RATIOS(2):
Net yield on average interest-earning asset for
the periods .................................. 3.32% 3.14% 3.14% 3.09% 3.16%
Return on average shareholders' equity ........ 18.40 16.68 11.48 11.71 12.09
Return on average assets ...................... 1.47 1.26 .88 0.86 0.92
Average shareholders' equity to average assets 7.98 7.58 7.71 7.31 7.59

</TABLE>

AT AND FOR THE YEAR ENDED
DECEMBER 31,(1)
-----------------------------
1995 1994
------------ ------------
(In thousands, except shares
and per share data)
<S> <C> <C>
OPERATING DATA(2):
Interest income ............................... $ 1,591,552 $ 1,468,519
Interest expense .............................. 1,037,455 917,843
------------ ------------
Net interest income ......................... 554,097 550,676
Provision for loan and lease losses ........... 13,260 23,659
------------ ------------
Net interest income after provision for
loan and lease losses ...................... 540,837 527,017
Other income:
Net (loss) gain ............................. (94,385) (116,279)
Other ....................................... 101,436 93,249
Administrative expenses ....................... 399,504 380,416
------------ ------------
Income before income taxes and
extraordinary item ......................... 148,384 123,571
Income taxes .................................. 46,479 33,519
------------ ------------
Income before extraordinary item .............. 101,905 90,052
Extraordinary item - early extinguishment
of debt, net of tax benefit ................... -- 12,348
------------ ------------
Net income .................................. $ 101,905 $ 77,704
============ ============
PER SHARE DATA:
Basic earnings per share:
Income before extraordinary item ............. $ .55 $ .48
Extraordinary item - early extinguishment
of debt, net of tax benefit ................. -- (.07)
------------ ------------
Net income .................................. $ .55 $ .41
============ ============
Diluted earnings per share:
Income before extraordinary item ............. $ .53 $ .47
Extraordinary item - early extinguishment
of debt ..................................... -- (.07)
------------ ------------
Net income .................................. $ .53 $ .40
============ ============
Cash dividends declared and paid per
common share(3) ............................. $ .30 $ .24
Book value per share .......................... $ 9.52 $ 8.85
FINANCIAL CONDITION:
Total assets .................................. $ 20,761,806 $ 21,217,191
Mortgage-backed securities .................... 7,028,503 8,012,048
Investment securities ......................... 993,609 1,349,050
Loans and leases, net ......................... 10,881,965 10,492,345
Deposits ...................................... 12,068,774 11,949,024
FHLB advances and other borrowings ............ 6,468,747 7,269,646
Shareholders' equity .......................... 1,606,614 1,509,594

OTHER PERIOD-END DATA:
Number of full service offices ................ 246 242
Number of loan origination offices ............ 56 48

SELECTED RATIOS(2):
Net yield on average interest-earning asset for
the periods .................................. 2.66% 2.69%
Return on average shareholders' equity ........ 6.47 5.16
Return on average assets ...................... 0.47 0.36
Average shareholders' equity to average assets 7.30 7.07

</TABLE>

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

(1) As restated for completed mergers and acquisitions, as applicable.

(2) Due, among other things, to the effect of acquisitions, amounts are not
necessarily indicative of future results.

(3) Dividends are historical per share amounts declared and paid by Charter One,
as adjusted for stock splits and stock dividends. No adjustment has been
made for mergers accounted for as a "pooling-of-interests."

<PAGE> 18

SELECTED HISTORICAL FINANCIAL DATA OF ST. PAUL

AT AND FOR THE SIX
MONTHS ENDED
JUNE 30, AT AND FOR THE YEARS ENDED DECEMBER 31,
----------------------------- ------------------------------------------------
1999 1998 1998 1997 1996
------------- ------------- ------------- ------------- -------------
(In thousands, except shares and per share data)
<S> <C> <C> <C> <C> <C>
SUMMARY OF FINANCIAL CONDITION:
ASSETS:
Cash and cash equivalents ...................... $ 242,615 $ 381,427 $ 439,320 $ 238,133 $ 220,806
Investment securities .......................... 413,869 267,805 213,882 187,576 203,598
Mortgage-backed securities/securities due from
brokers ..................................... 654,616 752,639 602,102 955,290 1,214,814
Loans receivable-net of allowance .............. 4,497,190 3,662,271 4,542,935 3,646,037 3,162,710
Other assets ................................... 224,487 206,927 235,877 198,808 185,286
------------- ------------- ------------- ------------- -------------
Total assets .............................. $ 6,032,777 $ 5,271,069 $ 6,034,116 $ 5,225,844 $ 4,987,214
============= ============= ============= ============= =============

LIABILITIES AND SHAREHOLDERS' EQUITY:
Deposits ....................................... $ 3,757,789 $ 3,882,190 $ 3,894,971 $ 3,871,400 $ 3,897,201
Borrowings ..................................... 1,677,130 798,133 1,520,679 792,994 563,786
Other liabilities .............................. 95,323 77,769 108,542 75,119 76,171
Shareholders' equity ........................... 502,535 512,977 509,924 486,331 450,056
------------- ------------- ------------- ------------- -------------

Total liabilities and shareholders' equity $ 6,032,777 $ 5,271,069 $ 6,034,116 $ 5,225,844 $ 4,987,214
============= ============= ============= ============= =============

SUMMARY OF OPERATIONS:
Interest income ................................ $ 191,074 $ 180,003 $ 370,963 $ 359,863 $ 338,384
Interest expense ............................... 107,791 101,454 212,809 205,645 190,998
------------- ------------- ------------- ------------- -------------

Net interest income ....................... 83,283 78,549 158,154 154,218 147,386
Provision for loan losses ...................... -- (640) 1,860 360 1,905
------------- ------------- ------------- ------------- -------------

Net interest income after provision for loan
losses .................................. 83,283 79,189 156,294 153,858 145,481
Other income ................................... 27,264 28,887 57,047 56,308 44,848
Cost reduction plan charge ..................... -- -- 25,000 -- --
Merger related charge .......................... -- -- 9,025 -- --
SAIF recapitalization .......................... -- -- -- -- 21,000
Other general and administrative expense ....... 65,528 68,388 135,906 125,884 119,294
Gain (loss) on foreclosed real estate .......... (176) (79) 4 386 (607)
Income taxes ................................... 14,157 12,393 14,709 28,206 16,382
------------- ------------- ------------- ------------- -------------

Income before extraordinary item .......... 30,686 27,216 28,705 56,462 33,046
Extraordinary loss, net of income taxes ........ -- -- -- 403 --
------------- ------------- ------------- ------------- -------------
Net income ................................ $ 30,686 $ 27,216 $ 28,705 $ 56,059 $ 33,046
============= ============= ============= ============= =============

Basic earnings per share before extraordinary
item (1) ................................... $ .76 $ .68 $ 0.71 $ 1.41 $ 0.85
Diluted earnings per share before extraordinary
item (1) ................................... .74 .65 0.69 1.37 0.81
Basic earnings per share (1) ................... .76 .68 0.71 1.40 0.85
Diluted earnings per share (1) ................. .74 .65 0.69 1.36 0.81

SELECTED FINANCIAL AND OTHER DATA:
Weighted average basic shares outstanding (1) .. 40,188,897 40,086,898 40,296,222 39,905,921 39,059,590
Weighted average diluted shares outstanding (1) 141,280,603 41,822,130 41,511,580 41,292,684 41,020,068
Dividends per share (1) ........................ $ .40 $ .20 $ 0.50 $ 0.36 $ 0.23
Dividend payout ratio (2) ...................... 54.05% 30.77% 72.46% 26.28% 28.40%
Nonperforming assets to total assets ........... 0.35 0.33 0.33 0.25 0.29
Return on average assets ....................... 1.03 1.03 0.52 1.09 0.68
Average equity as a percentage of average assets 8.43 9.45 9.08 9.08 8.88
Return on average shareholders' equity
(net worth) ................................. 12.27 10.85 5.71 11.99 7.67
Number of office locations ..................... 60 65 65 66 64

</TABLE>

AT AND FOR THE YEARS ENDED
DECEMBER 31,
-------------------------------
1995 1994
------------- -------------
(In thousands, except shares
and per share data)
<S> <C> <C>
SUMMARY OF FINANCIAL CONDITION:
ASSETS:
Cash and cash equivalents ...................... $ 239,331 $ 195,020
Investment securities .......................... 277,543 286,648
Mortgage-backed securities/securities due from
brokers ..................................... 998,264 1,153,377
Loans receivable-net of allowance .............. 3,008,109 2,865,583
Other assets ................................... 184,635 192,248
------------- -------------
Total assets .............................. $ 4,707,882 $ 4,692,876
============= =============

LIABILITIES AND SHAREHOLDERS' EQUITY:
Deposits ....................................... $ 3,758,941 $ 3,737,348
Borrowings ..................................... 458,719 504,341
Other liabilities .............................. 65,064 58,982
Shareholders' equity ........................... 425,158 392,205
------------- -------------

Total liabilities and shareholders' equity $ 4,707,882 $ 4,692,876
============= =============

SUMMARY OF OPERATIONS:
Interest income ................................ $ 318,720 $ 288,468
Interest expense ............................... 179,300 148,018
------------- -------------

Net interest income ....................... 139,420 140,450
Provision for loan losses ...................... 2,059 5,461
------------- -------------

Net interest income after provision for loan
losses .................................. 137,361 134,989
Other income ................................... 41,591 37,788
Cost reduction plan charge ..................... -- --
Merger related charge .......................... -- --
SAIF recapitalization .......................... -- --
Other general and administrative expense ....... 111,607 108,171
Gain (loss) on foreclosed real estate .......... (1,133) (2,015)
Income taxes ................................... 23,614 21,663
------------- -------------

Income before extraordinary item .......... 42,598 40,928
Extraordinary loss, net of income taxes ........ -- --
------------- -------------
Net income ................................ $ 42,598 $ 40,928
============= =============

Basic earnings per share before extraordinary
item (1) ................................... $ 1.06 $ 0.99
Diluted earnings per share before extraordinary
item (1) ................................... 1.01 0.94
Basic earnings per share (1) ................... 1.06 0.99
Diluted earnings per share (1) ................. 1.01 0.94

SELECTED FINANCIAL AND OTHER DATA:
Weighted average basic shares outstanding (1) .. 40,277,889 41,375,283
Weighted average diluted shares outstanding (1) 42,336,300 43,567,705
Dividends per share (1) ........................ $ 0.16 $ 0.16
Dividend payout ratio (2) ...................... 15.84% 17.02%
Nonperforming assets to total assets ........... 0.68 0.65
Return on average assets ....................... 0.92 0.92
Average equity as a percentage of average assets 8.99 8.86
Return on average shareholders' equity
(net worth) ................................. 10.25 10.36
Number of office locations ..................... 63 62

</TABLE>

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

(1) All share and per share amounts have been restated for all stock splits and
stock dividends.
(2) Based upon diluted earnings per share.

<PAGE> 19

SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA

AT AND FOR THE SIX
MONTHS ENDED
JUNE 30, AT AND FOR THE YEARS ENDED DECEMBER 31,
--------------------------- ------------------------------------------
1999 1998 1998 1997 1996
------------ ------------ ------------ ------------ ------------
(IN THOUSANDS, EXCEPT SHARES AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
PRO FORMA CONDENSED COMBINED
STATEMENT OF INCOME
Interest income ............................. $ 1,048,609 $ 1,062,179 $ 2,131,334 $ 2,032,443 $ 1,905,531
Interest expense ............................ 579,496 621,426 1,244,108 1,205,241 1,114,538
------------ ------------ ------------ ------------ ------------
Net interest income ....................... 469,113 440,753 887,226 827,202 790,993
Provision for loan and lease losses ......... 14,614 13,128 31,325 48,653 25,389
------------ ------------ ------------ ------------ ------------
Net interest income after provision for
loan and lease losses ..................... 454,499 427,625 855,901 778,549 765,604
Net gain on sales ........................... 10,176 11,503 27,241 314 4,186
Other income ................................ 134,762 118,248 241,451 185,266 170,862
Merger expenses ............................. 5,719 -- 64,682 60,617 --
Federal Deposit Insurance Corporation
special assessment .......................... -- -- -- -- 87,655
Cost reduction charge ....................... -- -- 25,000 -- --
Other expenses .............................. 281,521 288,940 572,758 537,037 513,574
------------ ------------ ------------ ------------ ------------
Income before income taxes and
extraordinary item ...................... 312,197 268,436 462,153 366,475 339,423
Provision for income taxes .................. 100,875 87,808 156,429 112,892 111,685
------------ ------------ ------------ ------------ ------------
Net income before extraordinary item ........ $ 211,322 $ 180,628 $ 305,724 $ 253,583 $ 227,738
============ ============ ============ ============ ============

Earnings per share before extraordinary item:
Basic ...................................... $ 0.99 $ 0.84 $ 1.43 $ 1.20 $ 1.07
============ ============ ============ ============ ============
Diluted .................................... $ 0.96 $ 0.81 $ 1.39 $ 1.16 $ 1.02
============ ============ ============ ============ ============

Weighted average shares:
Basic ...................................... 214,187,266 213,835,855 213,768,051 211,040,947 210,055,611
============ ============ ============ ============ ============
Diluted .................................... 219,593,985 222,010,289 220,464,808 218,620,687 223,348,848
============ ============ ============ ============ ============

PRO FORMA CONDENSED COMBINED
STATEMENT OF FINANCIAL CONDITION
Total assets ................................ $ 30,930,381 $ 29,597,764 $ 30,501,371 $ 29,433,592 $ 26,725,736
Mortgage-backed securities .................. 5,836,675 6,629,756 5,570,286 6,743,347 7,853,039
Loans and leases, net ....................... 22,127,429 20,129,533 22,220,771 19,509,520 16,130,066
Total deposits .............................. 18,845,394 18,637,537 19,060,035 17,901,125 17,413,770
Total borrowings ............................ 9,193,474 7,976,794 8,522,157 8,595,690 6,725,288
Total shareholders' equity .................. 2,402,950 2,398,500 2,385,036 2,248,228 2,038,159

</TABLE>

<PAGE> 20

COMPARATIVE PRO FORMA PER SHARE DATA

Set forth below are the book value, cash dividends, and basic and diluted
earnings per common share data for each of Charter One and St. Paul on an
historic basis, for Charter One on a pro forma combined basis and on a pro forma
combined basis per St. Paul equivalent share. The pro forma St. Paul equivalent
shares shows the effect of the merger from the perspective of an owner of St.
Paul common stock. The information was computed by multiplying the combined pro
forma amounts for the merger by the exchange ratio of .99225.

COMBINED PRO FORMA
PRO FORMA ST. PAUL
CHARTER ONE ST. PAUL AMOUNTS FOR EQUIVALENT
AS REPORTED AS REPORTED THE MERGER SHARES
-------------- ---------------- ------------------ -------------
<S> <C> <C> <C> <C>
BOOK VALUE PER SHARE AT:
June 30, 1999.................................. $ 11.27 $ 12.56 $ 11.27 $ 11.18
December 31, 1998.............................. 10.80 12.52 11.14 11.05

SHARES OUTSTANDING AT:
June 30, 1999.................................. 173,526,589 40,019,551 213,235,988 N/A
December 31, 1998.............................. 173,669,139 40,724,824 214,078,346 N/A

CASH DIVIDENDS DECLARED PER COMMON SHARE
FOR THE:
Six months ended June 30, 1999................. $ 0.29 $ 0.40 $ 0.29 $ 0.29
Six months ended June 30, 1998................. 0.25 0.20 0.25 0.25
Year ended December 31, 1998................... 0.50 0.50 0.50 0.50
Year ended December 31, 1997................... 0.43 0.36 0.43 0.43
Year ended December 31, 1996................... 0.37 0.23 0.37 0.37

BASIC EARNINGS PER SHARE BEFORE
EXTRAORDINARY ITEM FOR THE:

Six months ended June 30, 1999................. 1.04 0.76 0.99 0.98
Six months ended June 30, 1998................. 0.88 0.68 0.84 0.83
Year ended December 31, 1998................... 1.59 0.71 1.43 1.42
Year ended December 31, 1997................... 1.15 1.41 1.20 1.19
Year ended December 31, 1996................... 1.12 0.85 1.07 1.06

DILUTED EARNINGS PER SHARE BEFORE
EXTRAORDINARY ITEM FOR THE:

Six months ended June 30, 1999................. 1.01 0.74 0.96 0.95
Six months ended June 30, 1998................. 0.85 0.65 0.81 0.80
Year ended December 31, 1998................... 1.55 0.69 1.39 1.38
Year ended December 31, 1997................... 1.11 1.37 1.16 1.15
Year ended December 31, 1996................... 1.07 0.81 1.02 1.01

</TABLE>

<PAGE> 21

THE SHAREHOLDER MEETINGS

Charter One's board of directors is using this joint proxy statement/prospectus
to solicit proxies from the holders of Charter One common stock for use at the
Charter One special meeting. St. Paul's board of directors is using this
document to solicit proxies from the holders of St. Paul common stock for use at
the St. Paul special meeting. We are first mailing this joint proxy
statement/prospectus and accompanying form of proxy to Charter One and St. Paul
shareholders on or about August 25, 1999.

TIMES AND PLACES OF THE SPECIAL MEETINGS; MATTERS TO BE CONSIDERED AT THE
SPECIAL MEETINGS

<S> <C>
Time and Place of the Charter One Special Meeting: Time and Place of the St. Paul Special Meeting:

September 30, 1999 September 30, 1999
10:00 a.m., local time 10:00 a.m., local time
Forum Conference and Education Center Hyatt Regency Oak Brook
One Cleveland Center 1909 Spring Road
1375 East Ninth Street Oak Brook, Illinois
Cleveland, Ohio
</TABLE>

Matters to be Considered at the Charter One Special Meeting. At the Charter One
special meeting of shareholders, Charter One shareholders will be asked to
consider and vote upon the proposal to issue Charter One common stock in the
merger. Approximately ___ million shares of Charter One common stock are
expected to be issued in the merger, including __ million shares which may be
issued on the exercise of stock options. Charter One shareholders also may
consider and vote upon any other matters that may properly come before the
Charter One special meeting, including approval of any adjournment or
postponement of the special meeting. As of the date of this document, the
Charter One board of directors is not aware of any other business to be
presented for consideration at the Charter One special meeting other than the
matters described in this document.

Matters to be Considered at the St. Paul Special Meeting. At the St. Paul
special meeting of shareholders, St. Paul shareholders will be asked to consider
and vote upon the proposal to adopt the merger agreement. St. Paul shareholders
also may consider and vote upon any other matters that may properly come before
the St. Paul special meeting, including approval of any adjournment or
postponement of the special meeting. As of the date of this document, the St.
Paul board of directors is not aware of any other business to be presented for
consideration at the St. Paul special meeting other than the matters described
in this document.

VOTING RIGHTS OF SHAREHOLDERS; VOTES REQUIRED FOR APPROVAL

Voting Rights of Charter One Shareholders. The Charter One board of directors
has fixed the close of business on August 16, 1999 as the record date for
shareholders entitled to notice of and to vote at the Charter One special
meeting. Only holders of record of Charter One common stock on that record date
are entitled to notice of and to vote at the Charter One special meeting. Each
share of Charter One common stock you own entitles you to one vote. On the
Charter One record date, approximately _________ shares of Charter One common
stock were outstanding and entitled to vote at the Charter One special meeting,
held by approximately ______ shareholders of record.

Each participant in the Charter One Bank Retirement Savings Plan, the Albany
Savings Bank, F.S.B. Incentive Savings and Employee Stock Ownership Plan which
was assumed by Charter One in connection with its acquisition of ALBANK
Financial Corporation, and the Haverfield Corporation Employee Stock Ownership
Plan which was assumed by Charter One in connection with its acquisition of
Haverfield Corporation, instructs the trustee of such plans how to vote his or
her shares. As to shares for which the trustees receive no timely voting
instructions, the trustee of the Charter One Bank Retirement Savings Plan,
pursuant to its trust agreement, will vote such shares in its sole discretion,
and the trustees of the other plans, pursuant to their particular trust
agreements, will not vote any such shares. The trustee of the Charter One Bank
Retirement Savings Plan has indicated that it intends to vote shares for which
it does not receive timely voting instructions in accordance with the Charter
One board's

<PAGE> 22

recommendation. The trustees, pursuant to their particular trust agreements,
will vote unallocated shares in the same proportion as they vote all the shares
as to which they receive timely voting instructions.

Vote Required for Approval of the Charter One Proposal. The affirmative vote of
the holders of a majority of the Charter One common stock present and voting is
required to approve the proposal to issue Charter One common stock in connection
with the merger. THE CHARTER ONE BOARD UNANIMOUSLY RECOMMENDS THAT CHARTER ONE
SHAREHOLDERS VOTE "FOR" THE SHARE ISSUANCE.

Because approval of the Charter One proposal requires the affirmative vote of a
majority of the Charter One common stock present and voting at the special
meeting, abstentions will have the same effect as a vote against the proposal.
Under The Nasdaq Stock Market rules, your broker may not vote your shares on the
proposal to issue Charter One common stock in connection with the merger without
instructions from you. Without your voting instructions, a broker non-vote will
occur. Broker non-votes have no effect on the outcome of the vote on the Charter
One proposal. Similarly, your failure to vote will have no effect on the share
issuance proposal.

The affirmative vote of the holders of a majority of the shares of Charter One
common stock present and voting on the matter may authorize the adjournment or
postponement of the Charter One special meeting. No proxy that is voted against
the proposal to issue shares of Charter One common stock in the merger will be
voted in favor of adjournment or postponement to solicit further proxies for
such proposal.

Voting Rights of St. Paul Shareholders. The St. Paul board of directors has
fixed the close of business on August 16, 1999 as the record date for
shareholders entitled to notice of and to vote at the St. Paul special meeting.
Only holders of record of St. Paul common stock on the record date are entitled
to notice of and to vote at the St. Paul special meeting. Each share of St. Paul
common stock you own entitles you to one vote. On the St. Paul record date,
there were approximately _________ shares of St. Paul common stock outstanding
and entitled to vote at the St. Paul special meeting, held by approximately
______ shareholders of record.

Each participant in the St. Paul Federal Bank For Savings Employee Stock
Ownership Plan and Trust and the St. Paul Federal Bank For Savings Profit
Sharing & Savings Plan instructs the trustee of such plans how to vote his or
her shares. As to shares for which the trustees receive no timely voting
instructions, the trustees will not vote any such shares.

Vote Required for Approval of the St. Paul Proposal. The affirmative vote of the
holders of two-thirds of the St. Paul common stock outstanding is required to
adopt the merger agreement. THE ST. PAUL BOARD UNANIMOUSLY RECOMMENDS THAT ST.
PAUL SHAREHOLDERS VOTE "FOR" THE ADOPTION OF THE MERGER AGREEMENT.

Because approval of the St. Paul proposal to adopt the merger agreement requires
the affirmative vote of the holders of two-thirds of the St. Paul common stock
outstanding, abstentions and failures to vote will have the same effect as votes
against the proposal. Under The Nasdaq Stock Market rules, your broker may not
vote your shares on the St. Paul proposal to adopt the merger agreement without
instructions from you. Without your voting instructions, a broker non-vote will
occur. Broker non-votes have the same effect as votes against the St. Paul
proposal.

The affirmative vote of the holders of a majority of the shares of St. Paul
common stock present and voting on the matter may authorize the adjournment or
postponement of the St. Paul special meeting. No proxy that is voted against the
proposal to adopt the merger agreement will be voted in favor of adjournment or
postponement to solicit further proxies for such proposal.

VOTING OF PROXIES; REVOCABILITY OF PROXIES; PROXY SOLICITATION COSTS

Voting of Proxies. You may vote in person at your special meeting or by proxy.
To ensure your representation at the special meeting, we recommend you vote by
proxy even if you plan to attend your special meeting. You can always change
your vote at the meeting. Remember, if your shares are held in the name of a
broker or other nominee, only your broker or such nominee can vote your shares
and only after receiving instructions from you on how to vote the shares. Please
contact the person responsible for your account and instruct him or her to
execute a proxy card on your behalf.

<PAGE> 23

Voting instructions are included on your proxy card. If you properly give your
proxy and submit it to us in time to vote, the persons named as your proxy will
vote your shares as you have directed. You may vote for or against the proposal
set forth on your proxy card and described in this document or abstain from
voting. If you submit your proxy but do not make a specific choice as to how to
vote, your proxy will follow the Charter One board's or St. Paul board's
recommendation and vote your shares, in the case of Charter One shareholders,
"FOR" the Charter One proposal to issue Charter One common stock in connection
with the merger, and in the case of St. Paul shareholders, "FOR" the St. Paul
proposal to adopt the merger agreement.

If any other matters are properly presented for consideration at the Charter One
special meeting or St. Paul special meeting, the persons named in the relevant
form of proxy will have the discretion to vote on those matters in accordance
with their best judgment. If a proposal to adjourn the Charter One special
meeting or St. Paul special meeting is properly presented, the persons named in
the enclosed form of proxy will not have discretion to vote shares voted against
the Charter One or St. Paul proposal related to approval of the share issuance
or adoption of the merger agreement, as the case may be, in favor of adjournment
to solicit further proxies for such proposal. Neither Charter One nor St. Paul
is aware of any other matters to be presented at its respective shareholders'
meeting other than those described in its respective notice of special meeting
of shareholders.

You may receive more than one proxy card depending on how your shares are held.
For example, you may hold some of your shares individually, some jointly with
your spouse and some in trust for your children -- in which case you will
receive three separate proxy cards to vote.

Revocability of Proxies. You may revoke your proxy before it is voted by:

- submitting a new proxy with a later date,

- notifying your company's secretary in writing before the special
meeting that you have revoked your proxy, or

- voting in person at the special meeting.

If you plan to attend your company's special meeting and wish to vote in person,
we will give you a ballot at the special meeting. However, if your shares are
held in the name of your broker, bank or other nominee, you must bring an
account statement or letter from the nominee as follows: (i) in the case of a
Charter One shareholder, indicating that you were the beneficial owner of
Charter One common stock on August 16, 1999, the record date for voting at the
Charter One special meeting, or (ii) in the case of a St. Paul shareholder,
indicating that you were the beneficial owner of St. Paul common stock on August
16, 1999, the record date for voting at the St. Paul special meeting .

Proxy Solicitation Costs. We will pay our own costs of soliciting proxies. In
addition to this mailing, Charter One and St. Paul directors, officers and
employees may also solicit proxies personally, electronically or by telephone.
Charter One is paying Georgeson & Company, Inc. a fee of $8,000 plus expenses to
help with the solicitation. St. Paul is paying D. F. King & Co., Inc. a fee of
$20,000 plus expenses to help with the solicitation. We will also reimburse
brokers and other nominees for their expenses in sending these materials to you
and obtaining your voting instructions.

DO NOT SEND IN ANY STOCK CERTIFICATES WITH YOUR PROXY CARDS. AS SOON AS
PRACTICABLE AFTER THE COMPLETION OF THE MERGER, THE EXCHANGE AGENT WILL MAIL
TRANSMITTAL FORMS WITH INSTRUCTIONS FOR THE SURRENDER OF STOCK CERTIFICATES FOR
ST. PAUL COMMON STOCK TO FORMER ST. PAUL SHAREHOLDERS.

<PAGE> 24

THE MERGER

The merger agreement provides for the merger of St. Paul with and into Charter
Michigan, which is a wholly-owned subsidiary of Charter One. Charter Michigan
will be the surviving corporation in the merger. The merger will become
effective in accordance with the certificates of merger to be filed with both
the Michigan Department of Commerce and the Secretary of State of the State of
Delaware. We anticipate filing these documents as soon as practicable after the
last of the conditions precedent to the merger has been satisfied or waived. See
"The Merger Agreement -- Conditions to Completion of the Merger." We have
attached a copy of the merger agreement as Appendix A to this document. We urge
all Charter One and St. Paul shareholders to read the merger agreement in its
entirety as it is the legal document governing the merger.

BACKGROUND OF THE MERGER

Over the last several years the financial services industry has become
increasingly competitive and has undergone industry-wide consolidation. The
Chicago market has been acutely affected by this trend, experiencing a period of
rapid acquisition and consolidation that has affected many of the banks and
thrift institutions competing in that market. In addition, many large financial
institutions entered the Chicago market through acquisitions of other financial
institutions. During this period, both financial analysts and the press have
frequently identified St. Paul as a possible acquisition target.

In response to these developments, the St. Paul board has, on an ongoing basis,
considered strategic options for increasing shareholder value, including
potential business combinations with other institutions. During the mid and late
1990s, St. Paul has contacted and has been contacted by several financial
institutions to explore whether there was a basis for a strategic transaction
between the companies.

In July 1998, a large bank holding company with operations concentrated in the
midwest ("Party A") approached St. Paul about a possible acquisition of St.
Paul. After meetings and discussions between Mr. Scully and Mr. Agnew and
representatives of Party A, Party A decided in early 1999 not to pursue a
transaction with St. Paul.

In early and mid 1998, a shareholder communicated to St. Paul and the press on
several occasions that he believed the company should be sold. On August 20,
1998, St. Paul retained Merrill Lynch & Co. as its exclusive defensive advisor.
On November 23, 1998, this shareholder submitted for consideration at the 1999
Annual Meeting a proposal that the St. Paul board take steps to pursue a sale or
merger of St. Paul. After consulting its defensive advisor, the St. Paul board
decided at its December 10, 1998 board meeting to oppose the proposal. As a
result of this shareholder proposal, St. Paul received further discussion in the
press as an acquisition target and speculation about St. Paul's future strategic
plans intensified.

During February 1999, another large bank holding company ("Party B") approached
St. Paul to inquire whether St. Paul would be interested in pursuing a
transaction with it. At St. Paul's request, Merrill Lynch contacted Party B to
discuss the possibility of Party B acquiring St. Paul. In March 1999, Party B
expressed an interest in acquiring St. Paul at a price that St. Paul deemed to
be unacceptable.

In mid-March 1999, Charles J. Koch, Chief Executive Officer of Charter One,
contacted Mr. Scully to determine if St. Paul would consider a strategic
transaction with Charter One. Mr. Koch and Mr. Scully decided it would be
appropriate to meet to discuss the possibility of a strategic combination of the
companies and, on March 31, 1999, Mr. Scully and Mr. Koch met. At this meeting,
Mr. Scully and Mr. Koch discussed the nature of a transaction between the
companies and Mr. Koch provided a range of potential prices. Informal
discussions concerning the general terms of a possible acquisition by Charter
One continued in the following weeks. On April 13, 1999, the parties executed a
mutual confidentiality agreement and began exchanging certain public documents
as well as detailed business and financial information.

During the week of April 19, 1999, another large bank holding company operating
in the midwest ("Party C") contacted St. Paul to indicate its interest in
investigating the possibility of a strategic transaction with St. Paul.

<PAGE> 25

Certain senior executives of Charter One met with Mr. Scully and Mr. Agnew on
April 23, 1999 to continue the exchange of information.

On April 26, 1999, the St. Paul board met. At this meeting, the board authorized
retaining Merrill Lynch to act as St. Paul's financial advisor in connection
with any proposed business combination involving St. Paul and another party.
Representatives of Merrill Lynch then made a presentation to the board regarding
each of Charter One and Party C. Afterward, the St. Paul board reached a
consensus to pursue discussions with Party C and to continue discussions with
Charter One.

On the next day, Mr. Scully contacted a representative of Party C and arranged a
meeting for May 4, 1999. Representatives of Merrill Lynch also had discussions
with Party C during the last week of April 1999. On April 29, 1999, St. Paul and
Party C entered into a confidentiality agreement and, on the following day, St.
Paul sent to Party C detailed business and financial information for its review.

On May 3, 1999, Robert Parke, Chief Financial Officer of St. Paul, met with
Richard Neu, Chief Financial Officer of Charter One, to exchange and discuss
organizational, financial and tax information about their companies. The same
day, representatives of Merrill Lynch spoke with representatives of Party C.

Mr. Scully and Mr. Agnew met with representatives of Party C on May 4, 1999.
During the May 4 meeting, the participants exchanged additional information and
discussed Party C's proposed transaction structure and business plan for St.
Paul. On May 6, 1999, Party C provided St. Paul with an oral indication of
interest.

On May 6, 1999, certain senior executives of St. Paul and Charter One met to
conclude the preliminary discussions regarding the terms of a potential
transaction. The following morning, Charter One sent to St. Paul a written
indication of interest, including an indication of price, a proposed transaction
structure and other terms. The consideration offered by Charter One was greater
than that offered by Party C.

On May 7, 1999, the St. Paul board met to discuss the indications of interest
from Party C and Charter One and to determine which, if any, possible
transaction to pursue. Because the price indication from Charter One was
superior to that from Party C, the St. Paul board directed St. Paul's management
to continue to explore a possible transaction with Charter One and to seek
certain improvements to Charter One's indication of interest. During the two
days after the St. Paul board meeting, Mr. Scully and representatives of Merrill
Lynch engaged in separate discussions with Mr. Koch concerning the terms of the
proposed transaction. On May 9, 1999, Charter One indicated to Merrill Lynch
that it would increase the proposed exchange ratio to .945, which has been
subsequently adjusted to .99225 to give effect to the 5% stock dividend payable
on September 30, 1999, to Charter One shareholders of record on September 14,
1999. Charter One then instructed its special counsel to begin drafting the
necessary transaction documents.

On May 10, 1999, the St. Paul board convened a special telephone meeting to
discuss the revised terms of the Charter One proposal. The consensus of the St.
Paul board was to move ahead with the transaction with Charter One on the terms
proposed. During the period from May 11, 1999 to May 17, 1999, the parties
negotiated the terms of the merger agreement and completed their respective due
diligence efforts. The terms of the merger agreement were finalized on May 17,
1999.

The same day, the St. Paul board and the Charter One board each met with their
respective financial advisors and special counsel to review the financial and
legal arrangements of the proposed merger. After meeting with their advisors,
each board authorized the execution of the merger agreement.

Following the conclusion of the board meetings, on May 17, 1999, St. Paul
amended its rights agreement to allow the merger, and St. Paul and Charter One
executed and delivered the merger agreement and the stock option agreement. Each
of St. Paul's directors also executed a support agreement obligating each of
them to vote for adoption of the merger agreement.

<PAGE> 26

OUR REASONS AND RECOMMENDATION FOR THE MERGER

Charter One's Reasons for the Merger. Charter One believes that the merger will:

- create a major Great Lakes/Northeast banking franchise, and provide an
ideal entry vehicle into the Chicago market;

- create opportunities for significant operational benefits and financial
cost savings and revenue enhancements through the integration of
Charter One's and St. Paul's operations;

- enable it to duplicate its prior successful experiences of quickly
introducing its strong sales culture into an organization and
introducing a product set that matches the needs of the market; and

- strengthen its competitive and capital position in the financial
services industry, which is rapidly changing and growing more
competitive.

The Charter One board has determined that the terms of the merger and the merger
agreement and the issuance of Charter One common stock in connection with the
merger are advisable and fair to, and in the best interests of, Charter One and
its shareholders. In reaching its determination, the Charter One board
considered the opinion of its financial advisor with respect to the fairness of
the exchange ratio from a financial point of view. In arriving at its
determination, the Charter One board also considered a number of factors which
would indicate that the merger should produce an institution that is well
capitalized and one which should enjoy an enhanced retail lending franchise as
well as a number of financial benefits that should foster the potential for
earnings growth. The Charter One board did not assign any specific or relative
weights to the factors considered, and individual directors may have given
different weights to different factors. The material factors considered by the
Charter One board in reaching its determination in May 1999 were as follows:

- Information concerning the businesses, earnings, operations, financial
condition, prospects, capital levels and asset quality of St. Paul,
individually and as combined with Charter One. From a financial
perspective, it was determined that St. Paul's then existing retail
deposit base of approximately $3.8 billion, substantial ATM network of
approximately 550 machines, and high equity to asset ratio of 8.42%
served as a complement to Charter One's statement of financial
condition and operating profile. Additionally, an integral component of
this consideration was the determination that the merger would be a
natural continuation of the market extension efforts of Charter One.

- The opinion rendered by Charter One's financial advisor that as of the
date of the opinion the exchange ratio was fair, from a financial point
of view, to the holders of Charter One common stock. See "-Opinion of
Charter One's Financial Advisor" for the assumptions made in connection
with, and limitations on, such opinion.

- The terms of the merger agreement, the stock option agreement and the
other documents executed in connection with the merger. See "The Merger
Agreement" and "The Stock Option Agreement."

- The anticipated cost savings available to the combined company as a
result of the merger. Upon completion of systems conversions in
mid-year 2000, it is anticipated that future after-tax cost savings
will be approximately $27.0 to $31.0 million per year.

- The current and prospective economic, competitive and regulatory
environment facing each institution and financial institutions
generally.

- The results of the due diligence investigation conducted by the
management of Charter One, including assessment of credit policies,
asset quality, interest rate risk, litigation and adequacy of loan loss
reserves.

<PAGE> 27

- The expectation that the merger would be tax-free to Charter One and
its shareholders for federal income tax purposes and accounted for
under the "pooling-of-interests" method of accounting. See "-- Federal
Income Tax Consequences of the Merger" and "-- Accounting Treatment."

- The prospects for growth and expanded products and services, and other
anticipated impacts on depositors, employees, customers and communities
served by Charter One and St. Paul, respectively.

Recommendation of the Charter One Board. At a meeting held on May 17, 1999,
after due consideration, the Charter One board of directors voted unanimously to
enter into the merger agreement and to recommend that the Charter One
shareholders vote to approve the issuance of Charter One common stock in
connection with the merger. CHARTER ONE'S BOARD DEEMS THE MERGER AGREEMENT
ADVISABLE AND BELIEVES THAT THE TERMS OF THE MERGER ARE FAIR TO, AND IN THE BEST
INTERESTS OF, CHARTER ONE AND ITS SHAREHOLDERS AND UNANIMOUSLY RECOMMENDS TO ITS
SHAREHOLDERS THAT THEY VOTE "FOR" THE PROPOSAL TO ISSUE CHARTER ONE COMMON STOCK
IN CONNECTION WITH THE MERGER.

St. Paul's Reasons for the Merger. In deciding to approve the merger agreement,
the stock option agreement and the transactions contemplated by such agreements,
the St. Paul board considered, among other factors, the following factors in May
1999:

- The St. Paul board's familiarity with and review of St. Paul's
business, operations, earnings, prospects, financial condition, asset
quality and capital levels.

- The St. Paul board's review of the business, operations, prospects,
earnings, financial condition, asset quality and capital levels of
Charter One on both a historical and a prospective basis, the enhanced
opportunities for operating efficiencies and revenue enhancements that
could result from the merger, and the respective contributions the
parties would bring to a combined institution. The St. Paul board
considered the results of the due diligence investigation conducted by
St. Paul's management and legal and financial advisors, including,
among other things, assessments of Charter One's credit policies, asset
quality, year 2000 compliance and interest rate risk. The St. Paul
board took into account Charter One's record of successfully completing
acquisitions and integrating the acquired companies.

- The terms of the merger agreement and the transactions contemplated by
it, including the exchange ratio, noting that it reflected a 16.1%
premium for St. Paul shareholders based on the closing price of Charter
One common stock and St. Paul common stock on May 14, 1999 (the last
trading day prior to the meeting of the St. Paul board at which the
merger was approved) and that it compared favorably, based on price-to-
earnings ratios and price-to-book value ratios, to other similar
transactions. The St. Paul board considered the long-term benefits of
the merger and that it would have the right to terminate the merger
agreement in the event of a specified significant decline in the price
of Charter One common stock coupled with a decline in the price of
Charter One common stock relative to an index of bank and thrift stock
prices, prior to the completion of the merger unless Charter One then
elected to increase the exchange ratio to a specified minimum.

- The existence of the stock option agreement, together with the
termination fee of $45.0 million, might discourage third parties from
seeking to acquire St. Paul by increasing the cost of such an
acquisition (noting, in this regard, a $45.0 million cap on the amount
of profit which could be realized by Charter One from the option and
the termination fee combined), and might also preclude any third party
from being able to effect a merger with St. Paul that would qualify for
"pooling-of-interests" accounting treatment. The St. Paul board also
considered that St. Paul would receive a $45.0 million termination fee
if the transaction was not consummated under certain circumstances. See
"The Stock Option Agreement" and "The Merger Agreement -- Termination."

- The presentations of Merrill Lynch to the St. Paul board and the
opinion of Merrill Lynch, rendered on May 17, 1999 that, as of that
date and based upon and subject to the procedures followed, assumptions

<PAGE> 28

made, matters considered, and limitations on the analyses undertaken,
the exchange ratio was fair, from a financial point of view, to the St.
Paul shareholders. For a discussion of the opinion of Merrill Lynch,
see "-- Opinion of St. Paul's Financial Advisor."

- The complementary nature of the businesses, business strategies,
cultures and products of St. Paul and Charter One, including the fact
that St. Paul's loan portfolio, with its relatively greater emphasis on
commercial lending, would complement Charter One's loan portfolio, with
its relatively greater emphasis on consumer lending, that St. Paul's
core deposits would enhance Charter One's deposit mix and that St.
Paul's branches would extend and not compete with Charter One's
existing branch network. The board also considered the opportunities
for expense reduction and increased revenue in a combined entity.

- The merger is expected to be tax-free for federal income tax purposes
to St. Paul's shareholders (except for cash paid in lieu of fractional
shares) and to be accounted for under the "pooling-of-interests" method
of accounting. See "--Federal Income Tax Consequences of the Merger"
and "--Accounting Treatment."

- The nature of, and likelihood of obtaining, the regulatory approvals
that would be required with respect to the merger. See "--Regulatory
Matters." The St. Paul board also considered the nature and scope of
the conditions to the merger and the likelihood of these conditions
being satisfied.

- The Financial Accounting Standards Board has proposed eliminating
"pooling-of-interests" accounting treatment for acquisitions, which
action has raised concerns as to the future likelihood and timing of
whether financial institutions pursue business combinations of the type
being contemplated by the St. Paul board.

- That many large financial institutions had already entered the Chicago
market and that most existing financial institutions in the Chicago
market have a substantial number of branches, and that, therefore, the
number of potential acquirors of St. Paul was declining.

- The various parties that had formally or informally contacted St. Paul
or its representatives or with whom St. Paul or its representatives had
made contacts or engaged in formal or informal discussions regarding a
business combination. In addition, the board considered that St. Paul
had been discussed as a possible acquisition target for several years,
that the pending shareholder proposal at the 1999 Annual Meeting had
increased speculation in the press about St. Paul's future, and that,
in spite of this speculation, only three parties expressed an interest
in 1999.

- The current and prospective economic and competitive environment facing
the financial services industry generally, and St. Paul in particular,
including the continued rapid consolidation in the industry and the
increasing importance of operational scale and financial resources in
maintaining efficiency and remaining competitive over the long term and
in being able to capitalize on technological developments which
significantly impact industry competition. The St. Paul board
considered that the combined company resulting from the merger would be
the 30th largest bank holding company, the fourth largest thrift
institution in terms of assets and the third largest thrift institution
in terms of market capitalization based on market prices as of May 14,
1999. The board also considered the combined company's prospects for
future growth.

- The general impact the merger would have on the various constituencies
served by St. Paul, including its customers, its employees, its
community and others. The St. Paul board took into account that the
combined entity would be able to offer a more extensive range of
products and banking services to St. Paul's customers. The St. Paul
board also took into account the ratings of Charter One Bank under the
Community Reinvestment Act.

In reaching its determination to approve and deem advisable the merger
agreement, and to approve the stock option agreement and the transactions
contemplated in those agreements, the St. Paul board did not assign any relative
or specific weights to the various factors considered by it, and individual
directors may have given differing weights to different factors.

<PAGE> 29

Recommendation of the St. Paul Board. At a meeting held on May 17, 1999, after
due consideration, the St. Paul board of directors voted unanimously to enter
into the merger agreement and to recommend that the St. Paul shareholders vote
to adopt the merger agreement. ST. PAUL'S BOARD DEEMS THE MERGER AGREEMENT
ADVISABLE AND BELIEVES THAT THE TERMS OF THE MERGER ARE FAIR TO, AND IN THE BEST
INTERESTS OF, ST. PAUL AND ITS SHAREHOLDERS AND UNANIMOUSLY RECOMMENDS TO ITS
SHAREHOLDERS THAT THEY VOTE "FOR" THE PROPOSAL TO ADOPT THE MERGER AGREEMENT.

OPINION OF CHARTER ONE'S FINANCIAL ADVISOR

Pursuant to a letter agreement dated May 17, 1999, Charter One retained Salomon
Smith Barney to review the fairness of the exchange ratio to the holders of
Charter One common stock. Salomon Smith Barney rendered an opinion to the
Charter One board of directors on May 17, 1999, to the effect that, based upon
and subject to the limitations and considerations set forth in the opinion, as
of that date, the exchange ratio was fair, from a financial point of view, to
the holders of Charter One common stock.

The full text of Salomon Smith Barney's opinion, which sets forth the
assumptions made, general procedures followed, matters considered and limits on
the review undertaken, is included as Appendix C to this document. The summary
of Salomon Smith Barney's opinion set forth below is qualified in its entirety
by reference to the full text of the opinion. SHAREHOLDERS SHOULD READ THE
SALOMON SMITH BARNEY OPINION CAREFULLY AND IN ITS ENTIRETY.

In connection with rendering its opinion, Salomon Smith Barney reviewed, among
other things, the following:

- the merger agreement;

- publicly available information concerning Charter One and St. Paul;

- other financial information with respect to Charter One and St. Paul
that was provided to Salomon Smith Barney by Charter One and St. Paul,
respectively, including estimates of the cost savings and other
synergies forecasted to result from the merger that were provided to
Salomon Smith Barney by Charter One;

- publicly available information prepared by third-parties, including
equity research analysts, concerning the business and financial
prospects of Charter One and St. Paul;

- publicly available information concerning the trading of, and the
trading market for, Charter One common stock and St. Paul common stock;

- publicly available information with respect to other companies that
Salomon Smith Barney believed to be comparable to Charter One or St.
Paul and the trading markets for those companies' securities; and

- publicly available information concerning the nature and terms of
selected transactions that Salomon Smith Barney considered relevant to
its inquiry.

Salomon Smith Barney also considered such other information, financial studies,
analyses, investigations and financial, economic and market criteria as it
deemed relevant. Salomon Smith Barney also discussed the past and current
business operations and financial conditions of Charter One and St. Paul as well
as other matters Salomon Smith Barney believed relevant to its inquiry with
officers and employees of Charter One and St. Paul, respectively.

In its review and analysis and in arriving at its opinion, Salomon Smith Barney
assumed and relied upon the accuracy and completeness of all of the financial
and other information provided to it or publicly available and neither attempted
independently to verify nor assumed any responsibility for verifying any of that
information. Salomon Smith Barney did not make an independent evaluation of the
adequacy of the allowance for loan losses of Charter One or St. Paul, and
assumed that the aggregate allowances for loan losses are adequate to cover such
losses of each individual company and of the combined entity following
completion of the merger. Salomon Smith Barney did not review any individual
loan files of Charter One or St. Paul. Salomon Smith Barney did not conduct a

<PAGE> 30

physical inspection of any of the properties or facilities of Charter One or St.
Paul, nor make or obtain, or assume any responsibility for making or obtaining,
any independent evaluations or appraisals of any assets (including properties
and facilities) or liabilities of Charter One or St. Paul. With respect to
financial forecasts regarding Charter One and St. Paul, at the direction of
Charter One, Salomon Smith Barney relied on publicly available forecasts
prepared by third-party equity research analysts, and expressed no view with
respect to those forecasts or the assumptions on which they were based. Salomon
Smith Barney also relied on forecasts provided to them by management of Charter
One regarding cost savings and other synergies expected to result from the
merger as discussed below. Salomon Smith Barney assumed that those forecasts had
been reasonably prepared and reflected the best currently available estimates
and judgment of the management of Charter One as to the future financial
performance of the combined entity following completion of the merger, and
expressed no view with respect to those forecasts or the assumptions on which
they were based. Salomon Smith Barney also assumed that the merger will be
consummated in a timely manner and in accordance with the terms of the merger
agreement, without waiver of any of the conditions precedent to the merger
contained in the merger agreement. Salomon Smith Barney understood, and assumed,
that the merger will qualify as a tax-free reorganization under the provisions
of the Internal Revenue Code of 1986, as amended, and that the merger will be
accounted for as a "pooling-of-interests" for financial reporting purposes. In
rendering its opinion, Salomon Smith Barney assumed that in the course of
obtaining the necessary regulatory approvals for the merger and the subsequent
planned merger of certain subsidiaries of Charter One and St. Paul, no
restrictions will be imposed that would have a material adverse effect on the
contemplated benefits of the merger.

In conducting its analysis and arriving at its opinion, Salomon Smith Barney
considered such financial and other factors as it deemed appropriate under the
circumstances including, among others, the following:

- the historical and current financial position and results of operations
of Charter One and St. Paul;

- the business prospects of Charter One and St. Paul;

- the historical and current market for Charter One common stock, St.
Paul common stock and the equity securities of certain other companies
that Salomon Smith Barney believed to be comparable to Charter One or
St. Paul; and

- the nature and terms of certain other transactions that Salomon Smith
Barney believed to be relevant.

Salomon Smith Barney was not asked to consider, and its opinion does not
address, the relative merits of the merger as compared to any alternative
business strategy that might exist for Charter One. Salomon Smith Barney's
opinion necessarily was based on conditions as they existed and could be
evaluated on the date of its opinion and Salomon Smith Barney assumed no
responsibility to update or revise its opinion based upon circumstances or
events occurring after that date. SALOMON SMITH BARNEY'S OPINION WAS, IN ANY
EVENT, LIMITED TO THE FAIRNESS, FROM A FINANCIAL POINT OF VIEW, OF THE EXCHANGE
RATIO TO CHARTER ONE AND DID NOT ADDRESS CHARTER ONE'S UNDERLYING BUSINESS
DECISION TO EFFECT THE MERGER OR CONSTITUTE A RECOMMENDATION OF THE MERGER TO
CHARTER ONE OR A RECOMMENDATION TO ANY HOLDER OF CHARTER ONE COMMON STOCK AS TO
HOW SUCH HOLDER SHOULD VOTE WITH RESPECT TO THE MERGER. NOR DID SALOMON SMITH
BARNEY'S OPINION CONSTITUTE AN OPINION OR IMPLY ANY CONCLUSION AS TO THE LIKELY
TRADING RANGE FOR CHARTER ONE COMMON STOCK FOLLOWING CONSUMMATION OF THE MERGER.

In connection with rendering its opinion, Salomon Smith Barney made a
presentation to the Charter One board of directors on May 17, 1999, with respect
to certain analyses performed by Salomon Smith Barney in evaluating the fairness
of the exchange ratio. The following is a summary of this presentation. The
summary includes information presented in tabular format. IN ORDER TO UNDERSTAND
FULLY THE FINANCIAL ANALYSES USED BY SALOMON SMITH BARNEY, THESE TABLES MUST BE
READ TOGETHER WITH THE TEXT OF EACH SUMMARY. THE TABLES ALONE DO NOT CONSTITUTE
A COMPLETE DESCRIPTION OF THE FINANCIAL ANALYSES. The following quantitative
information, to the extent it is based on market data, is, except as otherwise
indicated, based on market data as it existed at or prior to May 14, 1999 and is
not necessarily indicative of current or future market conditions.

Implied Premium Analysis. Salomon Smith Barney performed analyses summarizing
the premiums implied by the exchange ratio. Salomon Smith Barney calculated
that, by multiplying a .945 exchange ratio by the closing price of

<PAGE> 31

Charter One common stock on May 14, 1999 of $30.28 per share, the implied price
of St. Paul common stock in the merger is $28.62 per share. The following table
compares the premium represented by this $28.62 implied price per share to the
closing price per share of St. Paul common stock on May 14, 1999 and to the
average closing price per share of St. Paul common stock for the 30 trading days
through May 14, 1999.

Premium of
$28.62 to
Applicable Price
----------------
Closing Price on May 14, 1999....................... 16.1%
Average Closing Price for 30 Trading Days
through May 14, 1999............................... 19.3%

As set forth in the table below, Salomon Smith Barney also derived the ratio of
the $28.62 implied price per share of St. Paul common stock to (a) St. Paul's
book value per share of common stock and (b) St. Paul's tangible book value per
share of common stock, in each case based on St. Paul's financial statements as
of March 31, 1999.

Ratio of Implied Price Per Share to:
(a) Book Value..................................... 2.30x
(b) Tangible Book Value............................ 2.31x

Salomon Smith Barney also noted that the aggregate implied consideration to be
paid in the merger, based on a .945 exchange ratio and the closing price per
share of Charter One common stock on May 14, 1999 of $30.28, less the aggregate
book value of the shares of St. Paul common stock, represented an 18.0% premium
to St. Paul's aggregate deposits.

Analysis of Selected Merger and Acquisition Transactions. Salomon Smith Barney
analyzed publicly available financial, operating and stock market information
for twenty-nine selected merger and acquisition transactions involving thrift
institutions that have been announced since the beginning of 1997. Each of the
earlier transactions involved total consideration of over $250 million. Salomon
Smith Barney considered a subset of ten of these earlier transactions as
"out-of-market transactions," which, like the merger, were transactions in which
the acquired company sought to expand into new markets beyond those in which it
already operated. The following transactions were reviewed by Salomon Smith
Barney (in each case, the first-named company is the acquiror and the second-
named company is the acquired company in the transaction; out-of-market
transactions are italicized): Republic Bancorp Inc./D&N Financial Corporation;
Sovereign Bancorp, Inc./Peoples Bancorp Inc.; Peoples Heritage Financial Group,
Inc./SIS Bancorp, Inc.; Charter One Financial, Inc./ALBANK Financial
Corporation; Roslyn Bancorp, Inc./TR Financial Corp.; Astoria Financial
Corporation/Long Island Bancorp, Inc.; Washington Mutual, Inc./H.F. Ahmanson &
Company; Commercial Federal Corporation/First Colorado Bancorp, Inc.; Fifth
Third Bancorp/State Savings Company; UST Corp./Affiliated Community Bancorp,
Inc.; BB&T Corporation/Life Bancorp, Inc.; First Empire State
Corporation/ONBANCorp., Inc.; Peoples Heritage Financial Group, Inc./CFX
Corporation; Webster Financial Corporation/Eagle Financial Corp.; North Fork
Bancorporation, Inc./New York Bancorp, Inc.; H. F. Ahmanson & Company/Coast
Savings Financial, Inc.; Sovereign Bancorp, Inc./ML Bancorp, Inc.; Star Banc
Corporation/Great Financial Corporation; Charter One Financial, Inc./RCSB
Financial Inc.; Union Planters Corporation/Magna Bancorp, Inc.; Bay View Capital
Corporation/America First Financial Fund; Astoria Financial, Inc./The Greater
New York Savings Bank; TCF Financial Corporation/Standard Financial, Inc.;
Marshall & Ilsey Corporation/Security Capital Corporation; Washington Mutual,
Inc./Great Western Financial Corporation; Summit Bancorp./Collective Bancorp,
Inc.; CCB Financial Corporation/American Federal Bank, FSB; and Sovereign
Bancorp, Inc./Bankers Corp.. Salomon Smith Barney considered the earlier
transactions to be reasonably similar to the merger, but none of these
transactions is identical to the merger.

For each of the earlier transactions and the merger, Salomon Smith Barney
derived, among other things:

- the premium represented by the implied per share transaction
consideration to the closing price of the acquired company's common
stock one month prior to the announcement of the transaction;

<PAGE> 32

- the ratio of the implied per share transaction consideration to
forecasted earnings per share for the year following the announcement
of the transaction of (a) the acquired company on a stand-alone basis,
and (b) the acquired company on a stand-alone basis including cost
savings and synergies projected by management to result from the
merger;

- the ratio of the implied per share transaction consideration to the
acquired company's (a) earnings per share for the twelve months
preceding the announcement of the transaction, (b) book value, based on
the latest financial statements of the acquired company available at
the time of the announcement of the transaction, and (c) tangible book
value at the time of the announcement of the transaction, which is book
value less intangible assets such as goodwill;

- the give-get ratio, which is the ratio of (a) the pro forma ownership
stake of the acquired company's shareholders in the combined company,
to (b) the acquired company's forecasted contribution to the combined
company's net income for the year following the transaction, in each
case, derived before taking into account any cost savings or other
synergies expected to result from the transaction; and

- the premium represented by the aggregate implied consideration to be
paid in the transaction less the aggregate book value of the shares of
the acquired company's common stock to the acquired company's aggregate
deposits, based on the latest financial statements of the acquired
company available at the time of the announcement of the transaction.

The following table sets forth the median results for all the earlier
transactions, the median results for only the out- of-market earlier
transactions, the median results for all earlier transactions which were
announced between January 1, 1998 and May 14, 1999, and the results for the
merger.

Earlier Transactions
Out-Of Median Charter
Median Market for 1998- One/St.
For All Median YTD Paul
------- ------ --------- -------
<S> <C> <C> <C> <C>
(1) Premium of Transaction Consideration to Acquired Company's
Closing Stock Price 30 Days Prior to Announcement................ 32.1% 33.3% 35.9% 16.1%
(2) Ratio of Transaction Consideration to Forecasted Earnings
Per Share:
(a) Acquired Company Stand-Alone............................ 19.5x 18.7x 23.2x 17.3x
(b) Acquired Company Stand-Alone Including Forecasted Synergies 12.8x 12.5x 16.4x 12.5x
(3) Ratio of Transaction Consideration to Acquired Company's:
(a) Latest Twelve Months' Earnings Per Share................ 22.7x 22.5x 26.9x 21.3x
(b) Book Value.............................................. 2.47x 2.45x 3.10x 2.30x
(c) Tangible Book Value..................................... 2.26x 2.08x 3.22x 2.31x
(4) Give-Get Ratio............................................... 1.15x 1.49x 1.10x 1.37x
(5) Premium of Implied Consideration to Acquired Company's Deposits 21.8% 19.1% 24.5% 18.0%

</TABLE>

Salomon Smith Barney noted that the results derived for the merger were below
(or in one case, equal to) the median derived for all the earlier transactions,
the out-of-market earlier transactions and the earlier transactions that were
announced between January 1, 1998 and May 14, 1999 with respect to the:

- premium represented by the implied per share transaction consideration
over the acquired company's closing stock price 30 days prior to
announcement of the transaction;

- ratio of the implied per share transaction consideration to the
acquired company's forecasted earnings per share on a stand-alone
basis;

- ratio of the implied per share transaction consideration to the
acquired company's forecasted earnings per share on a stand-alone basis
including synergies projected to result from the merger;

<PAGE> 33

- ratio of the implied per share transaction consideration to the
acquired company's earnings per share for the twelve months preceding
the announcement of the transaction; and

- premium represented by the aggregate implied consideration to be paid
in the transaction (less book value of the acquired company's common
stock) to the acquired company's aggregate deposits.

Comparable Company Analysis. Salomon Smith Barney reviewed certain publicly
available financial, operating and stock market information for St. Paul,
Charter One and the following twelve publicly-traded thrift institutions:

<S> <C>
- Washington Mutual, Inc. - Golden West Financial Corporation

- GreenPoint Financial Corp. - North Fork Bancorporation, Inc.

- Astoria Financial Corporation - Dime Bancorp, Inc.

- TCF Financial Corporation - Sovereign Bancorp, Inc.

- Peoples Heritage Financial Group, Inc. - Peoples Bank

- Commercial Federal Corporation - Webster Financial Corporation

</TABLE>

Salomon Smith Barney considered these companies to be reasonably similar to St.
Paul and Charter One insofar as they participate in businesses similar to those
of St. Paul and Charter One, but noted that none of these companies has the same
management, capital structure, operations and combination of businesses and
markets as St. Paul or Charter One.

For St. Paul, Charter One and each of the comparable companies, Salomon Smith
Barney derived and compared:

(1) return on average assets;

(2) return on average common equity;

(3) the ratio of the company's closing stock price on May 14, 1999 to (a)
forecasted earnings per share for 1999 based on Institutional Broker's
Estimate System forecasts, (b) forecasted earnings per share for 2000
based on Institutional Broker's Estimate System forecasts, (c) tangible
book value per share and (d) forecasted cash flow per share for 2000
(defined as net income plus amortization of intangible assets) based on
Institutional Broker's Estimate System forecasts; and

(4) forecasted growth in earnings per share from 1999 to 2000 based on
Institutional Broker's Estimate System forecasts.

<TABLE>
<CAPTION>
Comparable Companies
Charter
Range Median St. Paul One
----- ------ -------- -------
<S> <C> <C> <C> <C>
(1) Return on Average Assets............................ 0.72% - 1.71% 1.07% 1.01% 1.34%
(2) Return on Average Common Equity..................... 10.1% - 20.6% 15.1% 11.4% 17.1%
(3) Ratio of Closing Stock Price on May 14, 1999 to:
(a) Forecasted 1999 Earnings Per Share............. 10.8x - 16.8x 12.4x 16.2x 13.5x
(b) Forecasted 2000 Earnings Per Share............. 9.8x - 15.1x 11.4x 14.9x 12.0x
(c) Tangible Book Value Per Share.................. 1.90x - 4.12x 2.62x 1.99x 2.81x
(d) Forecasted 2000 Cash Flow Per Share............ 9.2x - 14.1x 10.5x 14.9x 11.6x
(4) Forecasted 1999-2000 Earnings Per Share Growth...... 8.0% - 14.7% 11.4% 8.6% 12.4%
</TABLE>

Salomon Smith Barney noted that the multiples for St. Paul and Charter One were
within the range calculated for the comparable companies in all cases, except
for St. Paul's ratio of loans to assets and St. Paul's ratio of its closing
stock price on May 14, 1999 to its estimated cash flow for 2000, both of which
were above the upper limit of the relevant range.

<PAGE> 34

Contribution Analyses. Salomon Smith Barney performed analyses of the relative
contributions of each of Charter One and St. Paul to the pro forma merged entity
with respect to selected market and financial data.

The following table compares, based on historical financial data for each of
Charter One and St. Paul at or for the twelve months ended March 31, 1999
(unless otherwise specified), and without taking into account any anticipated
cost savings, revenue enhancements or other potential effects of the merger
(unless otherwise specified), the relative contributions of Charter One and St.
Paul, respectively, to the combined company in, among others, the following
categories:

Charter One St. Paul
Contribution Contribution
------------ ------------
<S> <C> <C>
Gross Loans .................................................. 78.9% 21.1%
Total Assets ................................................. 80.4% 19.6%
Deposits ..................................................... 79.9% 20.1%
Total Equity ................................................. 79.7% 20.3%
Net Interest Income .......................................... 82.2% 17.8%
Net Income ................................................... 85.4% 14.6%
Noninterest Income ........................................... 78.8% 21.2%
Forecasted Net Income for 2000
(a) Without synergies ....................................... 86.3% 13.7%
(b) Including projected cost savings ........................ 82.0% 18.0%
(c) Including projected cost savings, increases in fee income 78.2% 21.8%
and earnings on excess capital
</TABLE>

With respect to the projected cost savings used in this analysis, Salomon Smith
Barney assumed, based on Charter One management forecasts, that the combined
entity would save approximately 30% of St. Paul's pre-tax, non-interest expense
in each of 1999 and 2000 (using St. Paul's annualized first quarter 1999
pre-tax, non-interest expense as a basis for the calculation). With respect to
fee income and earnings on excess capital used in this analysis, Salomon Smith
Barney assumed, based on Charter One management forecasts, that the combined
company would achieve an increase of $5.0 million in after-tax fee income and
$8.0 million in after-tax income from the redeployment of assets. Salomon Smith
Barney compared each of the results set forth in the table above to the pro
forma ownership share of the shareholders of Charter One and St. Paul in the
combined company of 79.7% and 20.3%, respectively.

Salomon Smith Barney also derived give-get ratios with respect to forecasted net
income for 2000, which is the ratio of (A) the pro forma ownership share of St.
Paul's shareholders in the combined company, to (B) St. Paul's forecasted
contribution to the combined company's net income for 2000. Salomon Smith Barney
derived the following give-get ratios:

<TABLE>
<CAPTION>
Give-Get Ratio
--------------
<S> <C>
Without synergies ........................................... 1.37x
Including projected cost savings ............................ 1.03x
Including projected cost savings, increases in fee income
and earnings on excess capital .......................... 0.85x
</TABLE>

Accretion/Dilution Analysis. Salomon Smith Barney performed an analysis of the
impact of the merger on Charter One's forecasted earnings per share. Salomon
Smith Barney utilized Institutional Broker's Estimate System forecasts for 1999
and 2000 earnings per share and the long-term growth rates for Charter One and
St. Paul. Salomon Smith Barney made pro forma adjustments to forecasted combined
earnings based on estimates of Charter One management as to:

- synergies consisting of (a) cost savings of 30% to 35% of St. Paul's
pre-tax non-interest expense of $130.4 million (using first quarter
pre-tax, non-interest expense on an annualized basis), or $26.6 million
to $31.0 million after-tax, realized in each of 1999 and 2000, (b)
asset redeployment income of $8.0 million to

<PAGE> 35

$11.0 million after-tax, realized in each of 1999 and 2000, (c) fee
income of $5.0 million to $7.0 million after-tax, realized in each of
1999 and 2000, and (d) earnings on excess capital of $8.0 million to
$11.4 million and $12.5 million to $18.0 million after-tax, realized in
1999 and 2000, respectively, assuming excess capital above a 6.50%
tangible common ratio is invested at a 0.75% to 1.00% pre-tax rate;

- a growth rate of 3% for the projected cost savings following 2000 and a
growth rate of 5% for the projected fee income following 2000;

- total diluted shares outstanding of 170.5 million and 41.3 million of
Charter One and St. Paul, respectively;

- an effective tax rate of 32%; and

- a restructuring charge of $62.5 million in 1999.

The following table shows the accretion or dilution to Charter One's earnings
from the merger derived based on the assumptions stated above.

Cost Savings, Fee Income, Redeployment
Cost Savings Only Income and Earnings from Excess Capital
-------------------- ---------------------------------------
30% Cost 35% Cost
Savings Savings 30% Cost Savings 35% Cost Savings
------- ------- ---------------- ----------------
<S> <C> <C> <C> <C>
Forecasted 1999 Earnings .. 0.3% 1.3% 4.8% 7.5%
Forecasted 2000 Earnings .. (0.8) 0.1 4.0 6.9
Forecasted 1999 Cash Flow . 0.1 1.0 4.4 7.1
Forecasted 2000 Cash Flow . 0.7 1.6 5.5 8.4
Book Value ................ 0.7 0.8 1.4 1.7
Tangible Book Value ....... 2.3 2.5 3.0 3.4

</TABLE>

Salomon Smith Barney noted that, based on the assumptions described above, the
merger would be generally accretive to Charter One.

Discounted Cash Flow Analyses. Salomon Smith Barney performed discounted cash
flow analyses with respect to St. Paul on a stand-alone basis and including
certain cost savings and other synergies forecasted by Charter One management to
result from the merger. Salomon Smith Barney utilized a discount rate of 12.4%,
an estimated earnings per share growth rate ranging from 8% to 14% and terminal
value multiples for forecasted 2004 earnings ranging from 12x to 16x. With
respect to synergies, Salomon Smith Barney included cost savings (using the 30%
case), earnings on excess capital, fee income and redeployment income synergies
and the restructuring charge, each as described above under "Accretion/Dilution
Analysis". Based on these assumptions, Salomon Smith Barney derived the
following ranges of the implied equity value per share of St. Paul common stock.

Implied Equity Value Per Share of St.
Paul Common Stock
----------------
<S> <C>
St. Paul stand-alone ....................................... $25.12 to $37.12
St. Paul including cost savings and other synergies......... $35.99 to $50.96
</TABLE>

Salomon Smith Barney noted that the implied price per share of St. Paul common
stock in the merger obtained by multiplying a .945 exchange ratio by the closing
price of Charter One common stock on May 14, 1999 ($30.28 per share) is $28.62
per share, which is within, but at the low end, of the range of the implied
equity value per share of St. Paul common stock on a stand-alone basis and below
the lower end of the range of the implied equity value per share of St. Paul
common stock including cost savings and other synergies forecasted by Charter
One management to result from the merger.

Internal Rate of Return Analyses. Utilizing the same growth rates and multiples
as used in the discounted cash flow analyses, Salomon Smith Barney analyzed the
internal rate of return to Charter One's shareholders resulting from

<PAGE> 36

the acquisition of St. Paul. Salomon Smith Barney examined the impact of several
different cost savings and other synergy assumptions on the internal rate of
return. The table below sets forth the assumptions and the resulting internal
rate of return range derived from this analysis. In addition to the synergies
listed below, Salomon Smith Barney assumed in each case that the redeployment
income discussed above would be realized and the restructuring charge above
would be taken.

Internal Rate of Return
30% Cost Savings 35% Cost Savings
---------------- ----------------
<S> <C> <C>
Cost savings only............................................... 10.3% - 19.7% 11.3% - 20.6%
Cost savings, earnings on excess capital and fee income......... 18.3% - 27.6% 22.0% - 31.2%

</TABLE>

Implied Historical Exchange Ratio. Salomon Smith Barney derived implied
historical exchange ratios by dividing the closing price per share of St. Paul
common stock by the closing price per share of Charter One common stock for each
trading day in the periods from May 13, 1994 through May 14, 1999 and from
January 2, 1998 through May 14, 1999. Salomon Smith Barney calculated that
during these periods the median implied historical exchange ratio was 0.939 and
0.788, respectively.

***

The foregoing is a summary of the material financial analyses furnished by
Salomon Smith Barney to the Charter One board of directors but it does not
purport to be a complete description of the analyses performed by Salomon Smith
Barney or of its presentation to the Charter One board of directors. The
preparation of financial analyses and fairness opinions is a complex process
involving subjective judgments and is not necessarily susceptible to partial
analysis or summary description. Salomon Smith Barney made no attempt to assign
specific weights to particular analyses or factors considered, but rather made
qualitative judgments as to the significance and relevance of the analyses and
factors considered. Accordingly, Salomon Smith Barney believes that its analyses
and the summary set forth above must be considered as a whole, and that
selecting portions of such analyses and of the factors considered by Salomon
Smith Barney, without considering all of such analyses and factors, could create
a misleading or incomplete view of the processes underlying the analyses
conducted by Salomon Smith Barney and its opinion. With regard to the comparable
public company analysis summarized above, Salomon Smith Barney selected
comparable public companies on the basis of various factors, including the size
of the public company and its business; however, no public company utilized as a
comparison in such analysis, and no transaction utilized as a comparison in the
comparable transaction analyses summarized above, is identical to Charter One or
St. Paul, any business segment of Charter One or St. Paul or the merger. As a
result, these analyses are not purely mathematical, but also take into account
differences in financial and operating characteristics of the comparable
companies and other factors that could affect the transaction or public trading
value of the comparable companies and transactions to which Charter One and St.
Paul, the business segments of Charter One and St. Paul and the merger are being
compared. In its analyses, Salomon Smith Barney made numerous assumptions with
respect to Charter One, St. Paul, industry performance, general business,
economic, market and financial conditions and other matters, many of which are
beyond the control of Charter One and St. Paul. Any estimates contained in
Salomon Smith Barney's analyses are not necessarily indicative of actual values
or predictive of future results or values, which may be significantly more or
less favorable than those suggested by such analyses. Estimates of values of
companies do not purport to be appraisals or necessarily to reflect the prices
at which companies may actually be sold. Because such estimates are inherently
subject to uncertainty, none of Charter One, St. Paul, the Charter One board of
directors, Salomon Smith Barney or any other person assumes responsibility if
future results or actual values differ materially from the estimates. Salomon
Smith Barney's analyses were prepared solely as part of Salomon Smith Barney's
analysis of the fairness of the exchange ratio and were provided to the Charter
One board of directors in that connection.

Salomon Smith Barney is an internationally recognized investment banking firm
engaged, among other things, in the valuation of businesses and their securities
in connection with mergers and acquisitions, restructurings, leveraged buyouts,
negotiated underwritings, competitive biddings, secondary distributions of
listed and unlisted securities, private placements and valuations for estate,
corporate and other purposes. Charter One selected Salomon Smith Barney to act
as its financial advisor on the basis of Salomon Smith Barney's international
reputation and Salomon Smith Barney's familiarity with Charter One. Salomon
Smith Barney and its predecessors and affiliates had

<PAGE> 37

previously rendered investment banking and financial advisory services to
Charter One, for which they received customary compensation. In addition, in the
ordinary course of its business, Salomon Smith Barney and its affiliates may
actively trade the debt and equity securities of both Charter One and St. Paul
for its own account and for the accounts of customers and, accordingly, may at
any time hold a long or short position in such securities. Salomon Smith Barney
and its affiliates, including Citigroup Inc. and its affiliates, may have other
business and financial relationships with Charter One and St. Paul.

Pursuant to Salomon Smith Barney's engagement letter, the following fees are
payable by Charter One to Salomon Smith Barney: (i) $100,000, which became
payable upon execution of the engagement letter, (ii) an additional $400,000,
which became payable upon execution of the merger agreement, and (iii) an
additional $500,000, which will become payable upon consummation of the merger.
Charter One has also agreed to reimburse Salomon Smith Barney for its reasonable
travel and other out-of-pocket expenses incurred in connection with its
engagement, including the reasonable fees and disbursements of its counsel, and
to indemnify Salomon Smith Barney against certain liabilities and expenses
relating to or arising out of its engagement, including certain liabilities
under the federal securities laws.

As noted under the caption "--Our Reasons and Recommendation for the Merger" the
fairness opinion of Salomon Smith Barney was only one of several factors
considered by the Charter One board of directors in determining to approve the
merger agreement and the merger.

OPINION OF ST. PAUL'S FINANCIAL ADVISOR

St. Paul retained Merrill Lynch to act as its financial advisor in connection
with the merger. On May 17, 1999, the St. Paul board held a meeting to evaluate
the proposed merger. At this meeting, Merrill Lynch rendered its written opinion
that, as of that date and based upon and subject to the factors and assumptions
set forth in its opinion, the exchange ratio was fair, from a financial point of
view, to the St. Paul shareholders. Merrill Lynch subsequently confirmed and
updated its May 17, 1999 opinion in writing by delivering to the St. Paul board
a written opinion dated as of the date of this joint proxy statement/prospectus.
In connection with its written opinion, Merrill Lynch confirmed the
appropriateness of its reliance on the analyses used to render its earlier
opinion. It also performed procedures to update certain of its analyses and
reviewed the assumptions used in its analyses and the factors considered in
connection with its earlier opinion.

The full text of the Merrill Lynch opinion, which describes, among other things,
the assumptions made, matters considered, and qualifications and limitations on
the review undertaken by Merrill Lynch is attached as Appendix D to this joint
proxy statement/prospectus and is incorporated in this joint proxy
statement/prospectus by reference. St. Paul shareholders are urged to, and
should, read Merrill Lynch's opinion carefully and in its entirety. Merrill
Lynch's opinion is directed to the St. Paul board and addresses only the
fairness, from a financial point of view, of the exchange ratio to the St. Paul
shareholders. The opinion does not address any other aspect of the merger or any
related transaction, nor does it constitute a recommendation to any shareholder
as to how to vote at the St. Paul special meeting. The summary of the fairness
opinion set forth in this joint proxy statement/prospectus is qualified in its
entirety by reference to the full text of the opinion.

In arriving at its opinion, Merrill Lynch, among other things:

- reviewed certain publicly available business and financial information
relating to St. Paul and Charter One that Merrill Lynch deemed to be
relevant;

- reviewed certain information, including financial forecasts, relating
to the respective businesses, earnings, assets, liabilities and
prospects of St. Paul and Charter One furnished to Merrill Lynch by the
senior management of St. Paul and Charter One, as well as the amount
and timing of the cost savings, revenue enhancements and related
expenses expected to result from the merger furnished to Merrill Lynch
by senior management of Charter One;

<PAGE> 38

- conducted discussions with members of senior management of St. Paul and
Charter One concerning the matters described in the bullet points set
forth above, as well as their respective businesses and prospects
before and after giving effect to the merger and the expected cost
savings, revenue enhancements and related expenses expected to result
from the merger;

- reviewed the market prices and valuation multiples for St. Paul common
stock and Charter One common stock and compared them with those of
certain publicly traded companies that Merrill Lynch deemed to be
relevant;

- reviewed the publicly reported financial conditions and results of
operations of St. Paul and Charter One and compared them with those of
certain publicly traded companies that Merrill Lynch deemed to be
relevant;

- compared the proposed financial terms of the merger with the financial
terms of certain other transactions that Merrill Lynch deemed to be
relevant;

- participated in certain discussions and negotiations with
representatives of St. Paul and Charter One and their financial and
legal advisors with respect to the merger;

- reviewed the potential pro forma impact of the merger;

- reviewed the merger agreement; and

- reviewed such other financial studies and analyses and took into
account such other matters as Merrill Lynch deemed necessary, including
Merrill Lynch's assessment of general economic, market and monetary
conditions.

In rendering its opinion, Merrill Lynch assumed and relied on the accuracy and
completeness of all information supplied or otherwise made available to Merrill
Lynch, discussed with, or reviewed by, or for Merrill Lynch, or publicly
available, and Merrill Lynch did not assume any responsibility for independently
verifying this information or undertake an independent evaluation or appraisal
of the assets or liabilities of St. Paul or Charter One nor has Merrill Lynch
been furnished any such evaluation or appraisal. Merrill Lynch is not an expert
in the evaluation of allowances for loan losses, and neither made an independent
evaluation of the adequacy of the allowances for loan losses of St. Paul or
Charter One nor reviewed any individual credit files of St. Paul or Charter One,
nor has it been requested to conduct such a review, and as a result Merrill
Lynch has assumed that the aggregate allowances for loan losses for both St.
Paul and Charter One are adequate to cover such losses and will be adequate on a
pro forma basis for the combined company. In addition, Merrill Lynch did not
assume any obligation to conduct, nor did Merrill Lynch conduct, any physical
inspection of the properties or facilities of St. Paul or Charter One.

With respect to the financial and operating forecast information furnished to or
discussed with Merrill Lynch by St. Paul or Charter One, including the cost
savings, revenue enhancements and related expenses expected to result from the
merger, Merrill Lynch assumed that the information was reasonably prepared and
reflected the best currently available estimates and judgments of the senior
management of each of St. Paul and Charter One as to the future financial and
operating performance of St. Paul, Charter One or the combined entity, as the
case may be. Merrill Lynch's opinion is necessarily based upon market, economic
and other conditions as in effect on, and on the information made available to
Merrill Lynch as of, the date of its opinion.

For purposes of rendering its opinion, Merrill Lynch assumed that, in all
respects material to its analyses:

- the merger will be consummated substantially in accordance with the
terms set forth in the merger agreement;

- the representations and warranties of each party in the merger
agreement and in all related documents and instruments referred to in
the merger agreement are true and correct;

<PAGE> 39

- each party to the merger agreement and all related documents will
perform all of the covenants and agreements required to be performed by
such party under the documents;

- all conditions to the completion of the merger will be satisfied
without any waivers; and

- in the course of obtaining the necessary regulatory, contractual or
other consents or approvals for the merger, no restrictions, including
any divestiture requirements or amendments or modifications, will be
imposed that will have a material adverse effect on the future results
of operations or financial condition of the combined entity or the
contemplated benefits of the merger, including the cost savings,
revenue enhancements and related expenses expected to result from the
merger.

Merrill Lynch further assumed that the merger will be accounted for as a
"pooling-of-interests" under generally accepted accounting principles, and that
the merger will qualify as a tax-free reorganization for U.S. federal income tax
purposes. Merrill Lynch's opinion is not an expression of an opinion as to the
prices at which shares of St. Paul common stock or shares of Charter One common
stock will trade following the announcement of the merger or the actual value of
the shares of common stock of the combined company when issued pursuant to the
merger, or the prices at which the shares of common stock of the combined
company will trade following the completion of the merger.

Analyses of Merrill Lynch

In performing its analyses, Merrill Lynch made numerous assumptions with respect
to industry performance, general business, economic, market and financial
conditions and other matters, many of which are beyond the control of Merrill
Lynch, St. Paul and Charter One. Any estimates contained in the analyses
performed by Merrill Lynch are not necessarily indicative of actual values or
future results, which may be significantly more or less favorable than suggested
by these analyses. Additionally, estimates of the value of businesses or
securities do not purport to be appraisals or to reflect the prices at which
such businesses or securities might actually be sold. Accordingly, these
analyses and estimates are inherently subject to substantial uncertainty. In
addition, the Merrill Lynch opinion was among several factors taken into
consideration by the St. Paul board in making its determination to approve the
merger agreement and the merger. Consequently, the analyses described below
should not be viewed as determinative of the decision of the St. Paul board or
management of St. Paul with respect to the fairness of the exchange ratio.

The following is a summary of the material financial analyses presented by
Merrill Lynch to the St. Paul board on May 17, 1999 in connection with the
rendering of its opinion on that date. The summary below is not a complete
description of the analyses underlying the Merrill Lynch opinion or the
presentation made by Merrill Lynch to the St. Paul board, but summarizes the
material analyses performed and presented in connection with such opinion. The
preparation of a fairness opinion is a complex analytic process involving
various determinations as to the most appropriate and relevant methods of
financial analysis and the application of those methods to the particular
circumstances. Therefore, a fairness opinion is not readily susceptible to
partial analysis or summary description. In arriving at its opinion, Merrill
Lynch did not attribute any particular weight to any analysis or factor that it
considered, but rather made qualitative judgments as to the significance and
relevance of each analysis and factor. The financial analyses summarized below
include information presented in tabular format. Accordingly, Merrill Lynch
believes that its analyses and the summary of its analyses must be considered as
a whole and that selecting portions of its analyses and factors or focusing on
the information presented below in tabular format, without considering all
analyses and factors or the full narrative description of the financial
analyses, including the methodologies and assumptions underlying the analyses,
could create a misleading or incomplete view of the process underlying its
analyses and opinion. The tables alone do not constitute a complete description
of the financial analyses.

Calculation of Implied Value of Exchange Ratio. Merrill Lynch reviewed the terms
of the merger. It noted that the exchange ratio of .945 shares of Charter One
common stock for each share of St. Paul common stock had an implied value of
$28.62 per share of St. Paul common stock based upon the closing price of
Charter One common stock on May 14, 1999 of $30.28 (the last trading day prior
to the presentation by Merrill Lynch to the St. Paul

<PAGE> 40

board). Merrill Lynch also noted that this resulted in a premium of
approximately 16.1% to the closing price of St. Paul common stock on May 14,
1999 of $24.66.

Transaction Pricing Multiples. Based on an exchange ratio of .945 and the
closing price of Charter One common stock on May 14, 1999 of $30.28, Merrill
Lynch also analyzed the per share transaction value as a multiple of St. Paul's
fully diluted book value per share, fully diluted tangible book value per share,
last twelve months fully diluted earnings per share, and estimated earnings per
share for the years 1999 and 2000.

The analyses performed indicated that the per share transaction value as a
multiple of St. Paul's fully diluted book value per share would be 2.43x and
further indicated that the per share transaction value as a multiple of St.
Paul's fully diluted tangible book value per share would be 2.44x, in each case
based on financial data for the period ending March 31, 1999, with fully diluted
shares including options accounted for under the treasury stock method. The
transaction value as a multiple of the last twelve months fully diluted earnings
per share would be 21.84x. The analyses also indicated that the transaction
value as a multiple of St. Paul's estimated earnings per share in each of 1999
and 2000 would be 18.70x and 17.24x, respectively, in each case based on
consensus First Call earnings estimates as of May 14, 1999. First Call is a
recognized data service that monitors and publishes compilations of earnings
estimates by selected research analysts regarding companies of interest to
institutional investors.

Merrill Lynch also analyzed the per share transaction value as a premium to the
closing price of the St. Paul common stock at different intervals prior to the
announcement of the merger. The analyses performed indicated the per share
transaction value as a premium to: (i) the closing price of St. Paul common
stock on the day immediately prior to the announcement of the merger was 16.1%;
(ii) the average closing price of St. Paul common stock for the 30 days prior to
the announcement of the merger was 22.4%; and (iii) the average closing price of
St. Paul common stock for the period from January 1, 1999 to May 14, 1999 was
26.1%.

Discounted Dividend Analysis -- St. Paul. Merrill Lynch performed a discounted
dividend analysis to estimate a range of present values per share of St. Paul
common stock assuming St. Paul continued to operate as a stand-alone entity.
This range was determined by adding (1) the present value of the estimated
future dividend stream that St. Paul could generate, and (2) the present value
of the "terminal value" of St. Paul common stock at December 31, 2004.

In calculating a terminal value of St. Paul common stock at December 31, 2004,
Merrill Lynch applied a multiple of 11.0x to 13.0x to year 2005 forecasted cash
earnings. The dividend stream and terminal value were then discounted back to
March 31, 1999 using discount rates ranging from 12.0% to 14.0%, which rates
Merrill Lynch viewed as the appropriate range of discount rates for a company
with St. Paul's risk characteristics.

In performing this analysis, Merrill Lynch used First Call earnings estimates
for 1999 and 2000. For periods after 2000, earnings were assumed to increase at
First Call's estimated annual long-term earnings growth rate of 8%. Merrill
Lynch also assumed an annual asset growth rate of 5%. Merrill Lynch further
assumed that earnings in excess of those necessary to maintain St. Paul's
tangible common equity ratio at 6.00% could be paid out to shareholders as
dividends. Based on the above assumptions, the stand-alone present value of the
St. Paul common stock ranged from $18.78 to $22.33 per share.

Discounted Dividend Analysis -- Charter One. Merrill Lynch also performed a
discounted dividend analysis to estimate a range of present values per share of
Charter One common stock assuming Charter One continued to operate as a
stand-alone entity. As with the analysis performed with regard to St. Paul, this
range was determined by adding (1) the present value of the estimated future
dividend stream that Charter One could generate, and (2) the present value of
the "terminal value" of Charter One common stock at December 31, 2004.

In calculating a terminal value of Charter One common stock at December 31,
2004, Merrill Lynch applied a multiple of 11.0x to 13.0x to year 2005 forecasted
cash earnings. The dividend stream and terminal value were then discounted back
to March 31, 1999 using discount rates ranging from 13.0% to 15.0%, which rates
Merrill Lynch viewed as the appropriate range of discount rates for a company
with Charter One's risk characteristics.

<PAGE> 41
In performing this analysis, Merrill Lynch used First Call earnings estimates
for 1999 and 2000. For periods after 2000, earnings were assumed to increase at
First Call's estimated annual long-term earnings growth rate of 12%. Merrill
Lynch also assumed an annual asset growth rate of 5%. Merrill Lynch further
assumed that earnings in excess of those necessary to maintain Charter One's
tangible common equity ratio at 6.00% could be paid out to shareholders as
dividends. Based on the above assumptions, the stand-alone present value of the
Charter One common stock ranged from $29.85 to $36.16 per share.

Pro Forma Discounted Dividend Analysis. Merrill Lynch also performed a pro forma
discounted dividend analysis to estimate a range of present values per share of
Charter One common stock and St. Paul common stock based on the pro forma
combined company. This range was determined by using the same valuation
methodology applied in the preceding six paragraphs in terms of calculating the
terminal value of the combined company and the discount rates applicable to that
value. Merrill Lynch also made the same assumptions as set forth in the
preceding six paragraphs, except that: (1) earnings estimates for pro forma
Charter One are based on First Call's Combined Consensus Equity Analysts'
Estimates assumed to increase at 12% after 2001; (2) synergies are assumed to
equal $33.5 million (excluding capital leverage) after-tax in 2000, and $43.24
million (excluding capital leverage) after-tax in 2001 (synergies represent the
low end of Charter One management estimates), with synergies increasing at 12%
thereafter; (3) earnings in excess of those necessary to maintain pro forma
Charter One's tangible common equity ratio at 6.00% could be paid out to
shareholders as dividends; (4) a restructuring charge was assumed to equal $52.5
million after-tax (equal to the average of Charter One's estimated restructuring
charge range); and (5) the discount rates were 13.0% to 15.0%, which rates
Merrill Lynch viewed as the appropriate range of discount rates for a company
with pro forma Charter One's and St. Paul's risk characteristics.

Based on the above assumptions, the present value of Charter One common stock,
pro forma for the completion of the merger, ranged from $29.92 to $36.61 per
share. Merrill Lynch then applied the exchange ratio to this range of values and
determined that the theoretical present value of the consideration to be
received by St. Paul shareholders, based on this analysis, ranged from $28.28 to
$34.60 per share.

The analyses set forth in each of the preceding ten paragraphs do not
necessarily indicate actual values or actual future results and do not purport
to reflect the prices at which any securities may trade at the present or at any
time in the future. Dividend discount analysis is a widely used valuation
methodology, but the results of this methodology are highly dependent upon the
numerous assumptions that must be made, including earnings growth rates,
dividend payout rates, terminal values and discount rates.

Peer Group Stock Trading Multiple Analysis - St. Paul. Merrill Lynch compared
selected operating and stock market results of St. Paul to the publicly
available corresponding data for the following non-California savings and loan
companies that Merrill Lynch determined were comparable to St. Paul:

- - Bank United Corp. - MAF Bancorp, Inc.
- - Peoples Heritage Financial Group, Inc. - Charter One Financial, Inc.
- - Sovereign Bancorp, Inc. - Commercial Federal Corporation
- - Webster Financial Corporation

Merrill Lynch then determined the imputed per share value of St. Paul common
stock based on the multiples arrived at by Merrill Lynch in its comparability
analysis.

The following table compares selected financial data of St. Paul with
corresponding median data for the companies selected by Merrill Lynch, which
data is based on financial data at or for the quarter ended March 31, 1999,
earnings estimates from First Call as of May 14, 1999, and market prices as of
May 14, 1999. The calculations of price-to-1999 and price-to-2000 First Call
estimated earnings per share are based on estimated earnings per share
calculated in accordance with generally accepted accounting principles. The
calculations of price-to-1999 and price-to-2000 First Call estimated cash
earnings per share are based on estimated earnings per share plus amortization
of intangible assets.

Price/ Price/ Price/ Price/ Price/
1999 2000 1999 2000 Price/ Stated
Estimated Estimated Estimated Estimated Stated Tangible
GAAP GAAP Cash Cash Book Book
EPS EPS EPS EPS Value Value
--------- --------- --------- --------- ------ --------
<S> <C> <C> <C> <C> <C> <C>
Merrill Lynch Selected
Company Median................. 12.67x 11.53x 11.40x 10.42x 1.84x 2.52x

St. Paul......................... 16.12 14.85 16.12 14.85 1.98 1.99

Imputed Median Value Per Share
Based on Selected Company Data... $19.38 $19.14 $17.44 $17.30 $22.98 $31.19

</TABLE>

First Call
Projected 2000
Five-Year Price
Tangible Return EPS Earnings
Equity/ on Growth Growth
Assets Equity Rate Ratio
-------- ------ ---------- --------
<S> <C> <C> <C> <C>
Merrill Lynch Selected
Company Median................. 5.84% 14.72% 12.0% 100%

St. Paul......................... 8.27 12.16 8.0 186

Imputed Median Value Per Share
Based on Selected Company Data...

</TABLE>

Peer Group Stock Trading Multiple Analysis - Charter One. Merrill Lynch also
compared selected operating and stock market results of Charter One to the
publicly available corresponding data for the following non-California savings
and loan companies that Merrill Lynch determined were comparable to Charter One:

- - Peoples Bank (MHC) - Dime Bancorp, Inc.
- - Astoria Financial Corporation - Peoples Heritage Financial Group, Inc.
- - GreenPoint Financial Corp. - Sovereign Bancorp, Inc.

Merrill Lynch then determined the imputed per share value of Charter One common
stock based on the multiples arrived at by Merrill Lynch in its comparability
analysis.

The following table compares selected financial data of Charter One with
corresponding median data for the companies selected by Merrill Lynch, which
data is based on financial data at or for the quarter ended March 31, 1999,
earnings estimates from First Call as of May 14, 1999, and market prices as of
May 14, 1999. The calculations of price-to-1999 and price-to-2000 First Call
estimated earnings per share are based on estimated earnings per share
calculated in accordance with generally accepted accounting principles.

First Call
Price/ Price/ Price/ Price/ Price/ Projected 2000
1999 2000 1999 2000 Price/ Stated Five-Year Price
Estimated Estimated Estimated Estimated Stated Tangible Tangible Return EPS Earnings
GAAP GAAP Cash Cash Book Book Equity/ on Growth Growth
EPS EPS EPS EPS Value Value Assets Equity Rate Ratio
--------- --------- --------- --------- ------ -------- -------- ------ ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Merrill Lynch Selected
Company Median .................. 12.14x 10.97x 10.86x 9.82x 1.84x 2.58x 5.92% 14.73% 13.0% 88%

Charter One...................... 13.52 12.02 13.05 11.64 2.58 2.81 7.35 17.94 12.0 100

Imputed Median Value Per Share
Based on Selected Company Data... $27.19 $27.65 $25.20 $25.54 $21.63 $27.81

</TABLE>

No company or transaction used in the comparable company analyses described
above is identical to St. Paul, Charter One, the pro forma combined company, or
the merger, as the case may be. Accordingly, an analysis of the results of the
foregoing necessarily involves complex considerations and judgments concerning
financial and operating characteristics and other factors that could affect the
merger, public trading or other values of the companies to which they are being
compared. Mathematical analysis (such as determining the average or median) is
not in itself a meaningful method of using comparable transaction data or
comparable company data.

Imputed Valuation Analysis. Merrill Lynch also analyzed certain multiples
achieved in selected domestic merger transactions in the thrift industry for the
twelve months ended May 14, 1999, that were valued at greater than $50 million
to determine the imputed per share value of St. Paul common stock based on the
comparable multiples achieved in such transactions. The following table sets
forth the imputed per share value of St. Paul common stock, based upon selected
multiples achieved in the selected transactions.

35
<PAGE> 43

Announcement
Price/Last 12 Months Announcement Announcement Price/
Earnings Per Share Price/Book Value Tangible Book Value
------------------ ---------------- -------------------
<S> <C> <C> <C>
Selected Transaction Median................. 21.70x 2.23x 2.33x

Imputed St. Paul Value Per Share............ $28.43 $26.20 $27.26

</TABLE>

Pro Forma Financial Impact. Based on an exchange ratio of .945, Merrill Lynch
also analyzed the pro forma per share financial impact of the merger on pro
forma Charter One's earnings per share, book value per share, tangible book
value per share, and tangible common equity. This analysis was based on the
assumption that the combined company would realize 100% of Charter One
management's projected cost savings in 2000 and that cost savings would increase
at 12% per year thereafter (which is Charter One's estimated growth rate), and
further assumed that revenue enhancements and capital leverage benefits are
realized 50% in 2000 and 100% in 2001.

The analyses performed indicated that, on a per share basis, the merger would be
accretive to pro forma Charter One's estimated earnings per share in each of
2000 and 2001 based on consensus First Call earnings estimates and estimated
annual after-tax cost savings of $27.0 million (realized 100% in 2000) and
estimated after-tax revenue enhancements and capital leverage benefits of $10.0
million in 2000 and $20.0 million in 2001, with each component representing the
low end of Charter One management estimates. The pro forma impact on earnings
did not include the impact of the merger-related restructuring charge.

The analyses performed also indicated that the merger would be dilutive to pro
forma Charter One's book value per share and further indicated that the merger
would be dilutive to pro forma Charter One's tangible book value per share, in
each case as of the completion of the merger. The book value per share and
tangible book value per share analyses include the impact of an estimated
merger-related restructuring charge of $52.5 million after-tax (equal to the
average of Charter One's estimated restructuring charge range). The analysis
performed further indicated that the merger would result in a tangible common
equity ratio of 7.85% after taking into account the impact of the pro forma
adjustments.

The actual operating and financial results achieved by the pro forma combined
company may vary from projected results and variations may be material as a
result of business and operational risks, the timing, amount and costs
associated with achieving cost savings and revenue enhancements, as well as
other factors.

St. Paul retained Merrill Lynch based upon its experience and expertise. Merrill
Lynch is an internationally recognized investment banking and advisory firm. As
part of its investment banking business, Merrill Lynch is regularly engaged in
the valuation of businesses and securities in connection with mergers and
acquisitions, negotiated underwritings, competitive biddings, secondary
distributions of listed and unlisted securities, private placements and
valuations for estate, corporate and other purposes.

In addition, in the ordinary course of its business, Merrill Lynch and its
affiliates may actively trade the debt and equity securities of St. Paul and
Charter One for their own account and/or the accounts of their respective
customers, and, accordingly, may at any time hold long or short positions in
these securities. In the past two years, Merrill Lynch has provided to St. Paul
and Charter One, financial advisory, investment banking and other services
unrelated to the proposed merger, and has received fees for the rendering of
these services. Merrill Lynch may provide these types of services to the
combined company in the future and receive fees for those services.

Pursuant to a letter agreement between St. Paul and Merrill Lynch, dated as of
April 26, 1999, St. Paul agreed to pay Merrill Lynch for financial advisory
services rendered through the closing of the merger (1) an advisory fee of
$750,000 payable upon the execution of the merger agreement and payable
regardless of whether the merger is completed, and (2) a transaction fee equal
to 0.625% of the aggregate purchase price payable (as determined on the date the
St. Paul board approved the merger) if and when the merger or any other merger
transaction with Charter One is completed. Any advisory fee paid to Merrill
Lynch will be credited against the transaction fee paid to Merrill Lynch. St.
Paul also agreed, among other things, to reimburse Merrill Lynch for certain
expenses incurred in connection with the services provided by Merrill Lynch, and
to indemnify Merrill Lynch and its affiliates from

<PAGE> 44

and against certain liabilities and expenses, which may include certain
liabilities under federal securities laws, in connection with its engagement.

ACCOUNTING TREATMENT

We intend that the merger be accounted for under the "pooling-of-interests"
method of accounting in accordance with Opinion No. 16 of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
the rules and regulations of the SEC. Under the "pooling-of-interests" method of
accounting, the assets and liabilities of Charter One and St. Paul will be
carried forward at their historical recorded bases. Charter One's results of
operations will include the results of both Charter One and St. Paul for the
entire fiscal year in which the merger occurs and all prior and future periods.
The reported statement of financial condition amounts and results of operations
of the separate companies for prior periods will be restated, as appropriate, to
reflect the combined financial position and results of operations of Charter
One.

As of the date of this joint proxy statement/prospectus, neither Charter One nor
St. Paul is aware of any reason why the merger will not qualify for
"pooling-of-interests" accounting treatment. It is a condition to the completion
of the merger that Charter One receive letters from Deloitte & Touche LLP, its
independent auditors, and Ernst & Young LLP, St. Paul's independent auditors,
stating their opinions that the merger will qualify for "pooling-of-interests"
accounting treatment. See "The Merger Agreement -- Conditions to Completion of
the Merger."

FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER

General. The following discussion summarizes the opinions of Silver, Freedman &
Taff, L.L.P. and Mayer, Brown & Platt as to the anticipated material federal
income tax consequences of the merger. We have filed these opinions with the SEC
as exhibits to the registration statement related to this joint proxy
statement/prospectus. See "Where You Can Find More Information." This discussion
is based upon the Internal Revenue Code of 1986, the regulations adopted
thereunder, Internal Revenue Service rulings, and judicial and administrative
rulings in effect as of the date of this joint proxy statement/prospectus, all
of which are subject to change, possibly with retroactive effect. This
discussion does not address all aspects of federal income taxation that may be
relevant to a shareholder in light of the shareholder's particular circumstances
or to shareholders that are subject to special rules, such as shareholders who
are not citizens or residents of the United States, financial institutions,
tax-exempt organizations, insurance companies, dealers in securities,
shareholders who acquired their stock pursuant to the exercise of options or
similar derivative securities or otherwise as compensation, or shareholders who
hold their stock as part of a straddle or conversion transaction. This
discussion assumes that St. Paul shareholders hold their respective shares of
St. Paul stock as capital assets within the meaning of Section 1221 of the
Internal Revenue Code. This summary does not address state, local or foreign tax
consequences of the merger. This summary does not address the tax consequences
of the conversion of St. Paul stock options into options to purchase Charter One
common stock. Consequently, each St. Paul shareholder should consult his or her
own tax adviser as to the specific tax consequences of the merger to him or her.

It is a condition to the obligations of Charter One and St. Paul to complete the
merger that each receive a legal opinion from its counsel that the merger
constitutes a tax-free reorganization, within the meaning of Section 368 of the
Internal Revenue Code, for federal income tax purposes. These legal opinions
will assume the absence of changes in the existing facts and will rely on
assumptions, representations and covenants made by Charter One, St. Paul and
others, including those contained in certificates of officers of Charter One and
St. Paul. If any of these factual assumptions, representations or covenants are
inaccurate, the tax consequences of the merger could differ from those described
in this joint proxy statement/prospectus. The opinions regarding the tax-free
nature of the merger neither bind the Internal Revenue Service nor preclude the
Internal Revenue Service from adopting a contrary position. Neither Charter One
nor St. Paul intends to obtain a ruling from the Internal Revenue Service with
respect to the tax consequences of the merger.

In the opinions of Silver, Freedman & Taff, L.L.P. and Mayer, Brown & Platt, the
merger will be treated for federal income tax purposes as a reorganization
within the meaning of Sections 368(a)(1)(A) and 368(a)(2)(D) of the Internal
Revenue Code. The discussion assumes that the merger will be treated as a
reorganization within the meaning of Sections 368(a)(1)(A) and 368(a)(2)(D) of
the Internal Revenue Code.

<PAGE> 45

Federal Income Tax Consequences to Charter One Shareholders. Holders of Charter
One common stock will not recognize any gain or loss for federal income tax
purposes as a result of the merger.

Federal Income Tax Consequences to St. Paul Shareholders. Except as described
below, holders of St. Paul common stock will (i) not recognize any gain or loss
for federal income tax purposes as a result of the exchange of their shares of
St. Paul common stock for Charter One common stock in the merger, except with
respect to cash received in payment for a fractional share of Charter One common
stock and (ii) have a tax basis in the Charter One common stock received in the
merger equal to the tax basis of the St. Paul common stock surrendered in
connection with the merger, less any tax basis of the St. Paul common stock
surrendered that is allocable to a fractional share of Charter One common stock
for which cash is received. The St. Paul shareholders' holding period with
respect to the Charter One common stock received in the merger will include the
holding period of the St. Paul common stock surrendered in the merger.

To the extent that a holder of shares of St. Paul common stock receives cash
instead of a fractional share of Charter One common stock, the holder will be
treated as having received the fractional share of Charter One common stock and
then as having received cash in redemption by Charter One of the fractional
interest. Under the Internal Revenue Service's present advance ruling position,
since the cash is being distributed in lieu of fractional shares solely for
purposes of saving Charter One the expense and inconvenience of issuing and
transferring fractional shares, and is not separately bargained-for
consideration, the cash received will be treated as having been received in part
or full payment in exchange for the fractional share of stock redeemed.
Accordingly, the holder will be required to recognize gain or loss for federal
income tax purposes, measured by the difference between the amount of cash
received and the portion of the tax basis of the holder's share of St. Paul
common stock allocable to such fractional share of Charter One common stock.
This gain or loss will be a capital gain or loss and will be a long-term capital
gain or loss if the share of St. Paul common stock exchanged for the fractional
share of Charter One common stock was held for more than one year at the
completion of the merger.

Federal Income Tax Consequences to Charter One, Charter Michigan and St. Paul.
None of Charter One, Charter Michigan or St. Paul will recognize gain or loss
for federal income tax purposes as a result of the merger.

THIS DISCUSSION IS INTENDED TO PROVIDE ONLY A SUMMARY OF THE MATERIAL FEDERAL
INCOME TAX CONSEQUENCES OF THE MERGER AND IS NOT INTENDED TO BE A COMPLETE
ANALYSIS OR DESCRIPTION OF ALL POTENTIAL FEDERAL INCOME TAX CONSEQUENCES OF THE
MERGER. WE DO NOT ADDRESS THE TAX CONSEQUENCES THAT MAY VARY WITH OR ARE
CONTINGENT UPON INDIVIDUAL CIRCUMSTANCES. MOREOVER, WE DO NOT ADDRESS ANY
NON-INCOME TAX OR ANY FOREIGN, STATE OR LOCAL TAX CONSEQUENCES OF THE MERGER.
ACCORDINGLY, WE STRONGLY URGE YOU TO CONSULT YOUR TAX ADVISOR AS TO THE SPECIFIC
TAX CONSEQUENCES OF THE MERGER TO YOU.

Under the terms of the merger agreement, the conditions of the merger, including
receipt by each party of opinions of counsel relating to tax matters, may be
waived by Charter One or St. Paul, as applicable. Charter One does not currently
intend to waive this condition. In the unlikely event that Charter One does
waive this condition because the merger is taxable to Charter One, Charter One
would recirculate this joint proxy statement/prospectus to its shareholders to
disclose the waiver of this condition and the resulting risk to Charter One
shareholders, including all material related disclosures, and would resolicit
proxies from its shareholders. Similarly, St. Paul does not currently intend to
waive this condition. In the unlikely event that St. Paul does waive this
condition because the merger is a taxable transaction to St. Paul shareholders,
St. Paul would recirculate this joint proxy statement/prospectus to its
shareholders to disclose the waiver of this condition and the resulting risk to
St. Paul shareholders, including all material related disclosures, and would
resolicit proxies from its shareholders.

REGULATORY MATTERS

General. Charter One is a bank holding company and is subject to regulation and
supervision by the Board of Governors of the Federal Reserve System. Therefore,
the merger of St. Paul with and into Charter Michigan, a wholly-owned subsidiary
of Charter One, must be approved by the Board of Governors of the Federal
Reserve System. The merger must also be approved by the Illinois Commissioner of
Banks and Real Estate with respect to the change of control of St. Paul's
subsidiary, St. Paul Trust Company. The subsidiary bank merger, whereby St.

<PAGE> 46

Paul Federal Bank For Savings will be merged with and into Charter One Bank,
must be approved by the Office of Thrift Supervision. The U.S. Department of
Justice also has the legal right to review the merger for competitive reasons.

Federal Reserve Board. The merger is subject to prior notice to the Federal
Reserve Board under Section 4 of the Bank Holding Company Act of 1956. Charter
One filed a notice with the Federal Reserve Board on July 5, 1999. Under the
Bank Holding Company Act, the Federal Reserve Board must consider whether the
performance of the non-banking activities of Charter One and St. Paul can
reasonably be expected to produce benefits to the public, such as greater
convenience, increased competition or gains in efficiency, that outweigh
possible adverse effects, such as undue concentration of resources, decreased or
unfair competition, conflicts of interest or unsound banking practices. This
consideration includes an evaluation of the financial and managerial resources
of Charter One and St. Paul and the effect of the proposed transaction on those
resources.

Illinois Commissioner of Banks and Real Estate. The merger is subject to prior
approval by the Illinois Commissioner of Banks and Real Estate. Charter One has
filed a change in control application with the Illinois Commissioner for the
acquisition of St. Paul Trust Company. Charter One filed this application and
notice with the Illinois Commissioner on July 5, 1999. In reviewing this
application, the Illinois Commissioner will consider Charter One's financial and
managerial resources, and whether the business affairs of Charter One have been
conducted in a safe, sound and lawful manner.

Office of Thrift Supervision. The subsidiary bank merger is anticipated to occur
simultaneously with, or as soon as practicable after completion of, the merger.
Charter One Bank filed an application with the Office of Thrift Supervision on
July 5, 1999 for approval of the subsidiary bank merger. In reviewing proposed
mergers the Office of Thrift Supervision will consider the financial and
managerial resources and future prospects of the existing and proposed
institutions and the convenience and needs of the communities to be served. In
addition, under the Community Reinvestment Act of 1977, as amended, the Office
of Thrift Supervision will take into account the record of performance of the
existing institutions in meeting the credit needs of the entire community,
including low- and moderate-income neighborhoods, served by such institutions.
If the Office of Thrift Supervision finds that either bank's performance under
the Community Reinvestment Act is unsatisfactory, it may deny or condition its
approval of the subsidiary bank merger.

In their reviews, the Office of Thrift Supervision and the Federal Reserve Board
will, among other things, evaluate the adequacy of the capital levels of the
parties to the proposed transaction and of the resulting institution and the
readiness of the computer systems of the resulting institution for the
transition to the year 2000.

Federal law prohibits the Office of Thrift Supervision from approving a merger
if it would result in a monopoly or be in furtherance of any combination or
conspiracy to monopolize or to attempt to monopolize the business of banking in
any part of the United States, or if its effect in any section of the country
may be substantially to lessen competition or to tend to create a monopoly, or
if it would in any other manner result in a restraint of trade, unless the
Office of Thrift Supervision finds that the anti-competitive effects of the
proposed merger are clearly outweighed in the public interest by the probable
effect of the transaction in meeting the convenience and needs of the
communities to be served.

The subsidiary bank merger may not be consummated for a period of 30 days after
receipt of the final approval of the Office of Thrift Supervision, unless no
adverse comment has been received from the Department of Justice, in which case
the merger may be consummated on or after the 15th day after such final
approval.

THE MERGER CANNOT PROCEED IN THE ABSENCE OF THE REQUISITE REGULATORY APPROVALS.
THERE CAN BE NO ASSURANCE THAT ALL REGULATORY APPROVALS WILL BE OBTAINED OR THE
DATES OF THOSE APPROVALS. THERE CAN ALSO BE NO ASSURANCE THAT REGULATORY
APPROVALS RECEIVED WILL NOT CONTAIN A CONDITION OR REQUIREMENT THAT CAUSES SUCH
APPROVALS TO FAIL TO SATISFY THE CONDITIONS SET FORTH IN THE MERGER AGREEMENT.
SEE "THE MERGER AGREEMENT -- CONDITIONS TO COMPLETION OF THE MERGER."

<PAGE> 47

NO APPRAISAL RIGHTS

Shareholders of a corporation that is proposing to merge or consolidate with
another entity are sometimes entitled under relevant state laws to appraisal or
dissenters' rights in connection with the proposed transaction depending on the
circumstances. These rights generally confer on shareholders who oppose a merger
or the consideration to be received in a merger the right to receive, in lieu of
the consideration being offered in the merger, the fair value for their shares
as determined in a judicial appraisal proceeding. See "Comparison of Shareholder
Rights -- Appraisal Rights of Dissenting Shareholders."

St. Paul shareholders are not entitled to appraisal or dissenters' rights under
Delaware law in connection with the merger because the St. Paul common stock was
listed on the Nasdaq National Market on the record date for its special meeting
of shareholders, and the Charter One common stock that St. Paul shareholders
will be entitled to receive in the merger will be listed on the Nasdaq National
Market upon completion of the merger.

Charter One shareholders are not entitled to appraisal or dissenters' rights
under Delaware law in connection with the merger because Charter One is not a
constituent corporation in the merger.

RESTRICTIONS ON RESALE OF CHARTER ONE COMMON STOCK BY AFFILIATES

This joint proxy statement/prospectus does not cover any resales of the Charter
One common stock to be received by St. Paul's shareholders upon completion of
the merger, and no person is authorized to make any use of this joint proxy
statement/prospectus in connection with any such resale.

All shares of Charter One common stock issued to shareholders of St. Paul in
connection with the merger will be freely transferable, except that shares
received by persons deemed to be "affiliates" of St. Paul under the Securities
Act of 1933, as amended, at the time of the St. Paul special meeting may be
resold by them only in transactions permitted by Rule 145 under the Securities
Act of 1933 or as otherwise permitted under the Securities Act of 1933. Persons
who may be deemed affiliates of St. Paul for this purpose generally include
directors, the chief executive officer, the president and shareholders of 10% or
more of the outstanding common stock of St. Paul.

Generally, pursuant to Rule 145 of the Securities Act of 1933, during the
one-year period following completion of the merger, affiliates of St. Paul may
not resell publicly the Charter One common stock received by them in connection
with the merger except in compliance with certain limitations as to the amount
of Charter One common stock sold in any three-month period and as to the manner
of sale. After the initial one-year period, affiliates of St. Paul who are not
affiliates of Charter One may resell their shares without restriction. The
ability of affiliates to resell shares of Charter One common stock received in
the merger under Rule 145 as summarized in this section generally will be
subject to Charter One having satisfied its reporting requirements under the
Securities Exchange Act of 1934 for specified periods prior to the time of sale.
Affiliates also would be permitted to resell Charter One common stock received
in the merger pursuant to an effective registration statement under the
Securities Act of 1933 covering the shares or an available exemption from the
Securities Act of 1933 registration requirements.

SEC guidelines for use of the "pooling-of-interests" method of accounting also
limit sales by affiliates of Charter One and St. Paul common stock. SEC
guidelines indicate that the "pooling-of-interests" method of accounting
generally will not be challenged on the basis of sales by affiliates if they do
not dispose of any of the shares of either combining company they owned prior to
the completion of a merger, or shares of the surviving company received in
connection with a merger during the period beginning 30 days before the
completion of the merger and ending when financial results covering at least 30
days of post-merger operations of the surviving company have been published.

The merger agreement provides that St. Paul will use its reasonable best efforts
to cause each person who is deemed by St. Paul to be an affiliate (for purposes
of Rule 145 and for purposes of qualifying the merger for the
"pooling-of-interests" method of accounting treatment) to execute and deliver a
written agreement with Charter One and St. Paul, which is intended to ensure
such affiliate's compliance with the Securities Act of 1933 and to ensure

<PAGE> 48

that the affiliate will not take any steps that would cause the merger not to
qualify for "pooling-of-interests" accounting treatment. The merger agreement
also provides that Charter One will use its reasonable best efforts to cause its
affiliates to execute and deliver a written agreement with Charter One to ensure
that its affiliates will not take any steps that would cause the merger not to
qualify for "pooling-of-interests" accounting treatment.

INTERESTS OF INSIDERS IN THE MERGER

St. Paul's Chairman and President. Charter One has agreed to appoint Joseph C.
Scully, Chairman of the Board and Chief Executive Officer of St. Paul, and
Patrick J. Agnew, President and Chief Operating Officer of St. Paul, as
directors of Charter One, Charter Michigan and Charter One Bank upon completion
of the merger, in each case for a term expiring in April 2002.

The employment of Messrs. Scully and Agnew will be terminated as of the
completion of the merger. In return for the cancellation of their employment
agreements and the release of claims that they may have against St. Paul and its
subsidiaries, Messrs. Scully and Agnew will each receive:

- a lump sum cash payment under their employment agreements equal to
approximately $2.7 million in the case of Mr. Scully and $2.0 million
in the case of Mr. Agnew;

- continuation of certain perquisites through December 31, 2002,
including the payment of country club membership dues, annual premiums
on a $250,000 whole life insurance policy maintained by St. Paul for
the benefit of Mr. Scully and a $200,000 whole life insurance policy
maintained by St. Paul for the benefit of Mr. Agnew, and tax
preparation services relating to their federal and state income taxes;
and

- an amount equal to the present value of the amount of pay-based
employer contributions that would have been contributed on behalf of
Mr. Scully and Mr. Agnew to the St. Paul Bank Employees' Pension Plan
for the period beginning January 1, 2000 and ending December 31, 2002.
The amount of this payment will be approximately $48,000 for Mr. Scully
and $40,000 for Mr. Agnew.

In addition, in return for entering into a three year non-competition agreement,
Messrs. Scully and Agnew will each receive the following:

- $310,000, payable monthly over the three-year term of the agreement;

- up to $15,000 for reimbursement for financial planning expenses;

- ownership of his company-owned automobile;

- continued health coverage until age 65 or, if earlier, the date of his
death; and

- use of office space and secretarial support through April 30, 2002.

Upon completion of the merger, no deferred compensation credits will be made
under any arrangements maintained by St. Paul and its subsidiaries in connection
with employment agreements with Messrs. Scully and Agnew.

Other Executive Officers of St. Paul. Charter One or Charter One Bank will
assume the severance payment agreements between St. Paul and Robert N. Parke,
Thomas J. Rinella, Donald G. Ross (sometimes referred to as the "named executive
officers") and each of the other executive officers of St. Paul, other than
Messrs. Scully and Agnew. Charter One will pay the severance amounts to the
executive officers in accordance with those agreements unless the executive
officer agrees to modify the definition of "good reason" under his severance
agreement for purposes of the termination provisions of the agreement. Under the
severance agreements, as modified, "good reason" will include a reduction in the
executive officer's base salary, relocation in excess of 50 miles from the
executive officer's current office, increased travel obligations and the
imposition of other onerous working conditions. If the executive officer agrees
to the modification, he will be entitled to the following at the effective time
of the merger:

<PAGE> 49

- a lump sum cash payment equal to the amount of pay-based employer
contributions that would have been contributed on behalf of the
executive officer to the pension plan for the period beginning January
1, 2000 and ending December 31, 2002; in the cases of Messrs. Parke,
Rinella and Ross, these amounts are approximately $42,000, $48,000 and
$42,000, respectively;

- a $50,000 cash payment; and

- ownership of his company-owned automobile.

If the executive officer agrees to the modification, Charter One will also
contribute an amount equal to the maximum cash severance payment to which the
executive officer may become entitled under the severance payment agreement to a
grantor trust which will earn interest at the annual rate of five percent. In
the event the executive officer's employment is terminated within two years of
the effective time of the merger for any reason other than for cause and
provided a proper release is signed, the executive officer will be entitled to
receive a payment from the grantor trust equal to the amount that would have
otherwise been payable to the executive officer under the severance payment
agreement, plus interest on such amount to the date of payment. Assuming Messrs.
Parke, Rinella and Ross enter into the modification to their severance
agreements, Charter One will contribute to the grantor trust approximately
$841,000 for the account of Mr. Parke, $848,000 for the account of Mr. Rinella
and $799,000 for the account of Mr. Ross, which amounts represent the maximum
cash severance payments Messrs. Parke, Rinella and Ross are entitled to receive
under their severance payment agreements.

The following additional benefits are available under the modified severance
agreements:

- termination of employment on account of death or disability within two
years after the effective time of the merger will be treated as an
involuntary termination for reasons other than cause, entitling such
officer to his maximum cash severance payment under the severance
agreement;

- the executive officer may voluntarily terminate employment at any time
after the first anniversary of the merger and prior to the second
anniversary of the merger and receive his maximum cash severance
payment;

- if an executive officer is entitled to receive his maximum cash
severance payment after termination of employment, he will also receive
(i) continued health, dental, life and long-term disability coverage
for a period of three years after termination of employment (or for a
shorter period if he is entitled to receive a lesser cash severance
payment), (ii) if the executive officer is at least 50 years old at the
end of the three year period or otherwise has a medical need, continued
group health coverage, to the extent permitted by Charter One's
coverage, at the executive officer's sole cost, until age 65, and (iii)
reimbursement for outplacement costs and financial planning expenses in
an aggregate amount not to exceed $15,000; and

- if the executive officer continues employment with Charter One for a
period of at least one year after the effective time of the merger or
if the executive officer's employment is involuntarily terminated
without cause or terminated upon certain other agreed upon events at
the effective time of the merger or prior to the first anniversary of
the merger, the executive officer will be entitled to a cash bonus
substantially equal to the amount of the 1998 annual incentive bonus he
received from St. Paul or St. Paul Federal Bank For Savings. This
amount would be approximately $126,000 in the case of Mr. Parke,
$118,000 in the case of Mr. Rinella, and $114,000 in the case of Mr.
Ross. Only executive officers who have agreed to modify their severance
agreements and signed releases will be entitled to this bonus payment.

At least one executive officer, other than the named executive officers, and
certain first vice presidents of St. Paul will enter into

<PAGE> 50

non-competition agreements with Charter One and its subsidiaries. These
agreements will range in term from one year to three years. One named executive
officer of St. Paul may enter into a consulting arrangement with Charter One and
its subsidiaries, the term and conditions of which have not yet been determined.
The executive officers and first vice presidents will be compensated for
entering into these agreements and arrangements.

All Directors and Executive Officers. After the merger, St. Paul's Nonqualified
Retirement Plan for Directors and its Supplemental Retirement Plan and Excess
Benefit Plan, each of which was frozen prior to execution of the merger
agreement, will be terminated and benefits will be distributed to the
participants in lump sum payments as soon as practicable after termination.

The St. Paul Bank Employees' Pension Plan will be continued in its current form
through December 31, 1999. If the effective time of the merger occurs before
December 31, 1999, Charter One will make credits to the accounts of participants
in the Pension Plan for the remainder of calendar year 1999 in accordance with
the terms of the Pension Plan.

Charter One has agreed to indemnify, defend and hold harmless the present and
former directors and officers of St. Paul to the fullest extent permitted under
applicable law and the certificate of incorporation and bylaws of St. Paul as in
effect on the date of the merger agreement with respect to claims arising from
facts or events occurring at or prior to completion of the merger. Charter One
is also required to advance expenses to the fullest extent permitted by law to
any individual subject to a right of indemnification. Charter One has also
agreed, for a period of six years after the merger, to maintain officers' and
directors' liability insurance to reimburse persons currently covered by St.
Paul's officers' and directors' liability insurance policy with respect to
claims arising from facts or events occurring at or prior to the completion of
the merger. The terms of such insurance are to be at least as favorable as the
current St. Paul policy; provided that Charter One will not be required to
expend in the aggregate during the coverage period more than an amount equal to
300% of the annual premium most recently paid by St. Paul. If Charter One is
unable to maintain or obtain the insurance required, Charter One must use its
reasonable best efforts to obtain as much comparable insurance as is available
for the amount specified.

Establishment of an Illinois Advisory Board. Charter One has agreed to
establish an Illinois advisory board to advise Charter One with respect to the
geographic areas in which St. Paul has operated. Each director of St. Paul will
be offered the opportunity to serve on the Illinois advisory board for a three
year term, except for Messrs. Scully and Agnew who will be appointed to the
Charter One, Charter Michigan and Charter One Bank Boards upon completion of
the merger. Any St. Paul director who chooses to become a member of the
Illinois advisory board will be paid an annual retainer of $30,000 during his
or her term of service. Clifford M. Sladnick, Senior Vice President, General
Counsel and Corporate Secretary of St. Paul, will be offered the opportunity to
serve on the Illinois advisory board for a two year term and will be paid an
annual retainer of $30,000 during his term of service. Any person serving
on the Illinois advisory board who subsequently becomes a director of Charter
One or any of its subsidiaries will cease to be a member of the advisory board
on the date that he or she commences service as a director.

THE MERGER AGREEMENT

Under the merger agreement, St. Paul will merge with and into Charter Michigan,
which is a wholly-owned subsidiary of Charter One. At the completion of the
merger, the separate corporate existence of St. Paul will cease and Charter
Michigan will survive and continue to exist as a Michigan corporation and a
wholly-owned subsidiary of Charter One.

The following summary of the merger agreement is qualified by reference to the
complete text of the merger agreement. A copy of the merger agreement is
attached as Appendix A to this joint proxy statement/prospectus and is
incorporated by reference into this joint proxy statement/prospectus. We
encourage you to read the merger agreement completely and carefully as it,
rather than this description, is the legal document that governs the merger.

43
<PAGE> 51

TIME OF COMPLETION

The completion of the merger will occur on the fifth business day after the day
on which the last of the conditions set forth in the merger agreement has been
satisfied or waived, or, at Charter One's option, the last business day of the
month if such fifth business day occurs within the last ten days of the month,
unless Charter One and St. Paul agree to a different date. The completion of the
merger is sometimes referred to in this joint proxy statement/prospectus as the
"effective time."

CONSIDERATION TO BE RECEIVED IN THE MERGER

Each share of St. Paul common stock outstanding immediately prior to the
effective time will, at the effective time, be converted into the right to
receive .99225 of a share of Charter One common stock, together with associated
stock purchase rights under the Charter One Rights Agreement described under the
heading "Comparison of Shareholder Rights -- Rights Agreement." This exchange
ratio has been adjusted from .945 to .99225 to account for the 5% stock dividend
payable on September 30, 1999, to Charter One shareholders of record on
September 14, 1999. The exchange ratio will again be proportionately adjusted in
the event Charter One, prior to completion of the merger, changes the number of
shares of its common stock issued and outstanding through a stock split, another
stock dividend, recapitalization or similar transaction. The exchange ratio is
also subject to possible further adjustment as described in detail under the
heading "-- Possible Adjustment to the Exchange Ratio" below.

Cash will be paid in lieu of any fractional share of Charter One common stock
that would otherwise be issuable in connection with the merger. No interest will
be paid on the cash payable in lieu of fractional share interests.

Each share of Charter One common stock outstanding immediately prior to the
effective time will remain outstanding and unchanged as a result of the merger.

POSSIBLE ADJUSTMENT TO THE EXCHANGE RATIO

The merger agreement provides that upon completion of the merger, St. Paul's
shareholders will receive .99225 of a share of Charter One common stock in
exchange for each share of St. Paul common stock they own. The .99225 exchange
ratio reflects the 5% stock dividend declared by Charter One on July 21, 1999,
payable on September 30, 1999, to Charter One shareholders of record on
September 14, 1999. The .99225 share exchange ratio, under the specific
conditions set forth in the merger agreement and summarized below, may be
further adjusted upward in the event of a substantial decline in the trading
price of Charter One common stock relative to the trading prices of the common
stock of a group of peer institutions. The increase in the exchange ratio, if
made, would be designed to minimize the effect of this decline.

An upward adjustment to the exchange ratio could only occur if:

(i) the "average closing price" of Charter One common stock is less than
$23.79 (the product of 0.825 and $28.84, the closing price of Charter
One common stock on May 14, 1999); and

(ii) the "Charter One Ratio," determined by dividing the average closing
price by $28.84 (the closing price of Charter One common stock on May
14, 1999), is less than the "Index Ratio" (as defined below).

- The "average closing price" is the average of the last daily sale
prices of Charter One common stock as reported on the Nasdaq
National Market for the ten consecutive full trading days ending
at the close of trading on the determination date.

- The "determination date" means the latest of (i) the day on which
the last waiting period expires with respect to any approval of
any regulatory agency required for completion of the merger, (ii)
the day on which the last of these approvals is obtained, and
(iii) the day on which the last of the required shareholder
approvals has been received.

<PAGE> 52

- The "Index Ratio" is the number obtained by dividing the "index
price" (the weighted average of the closing prices of the common
stock of the index group consisting of the 16 financial
institutions and financial institution holding companies specified
in the merger agreement) on the determination date by $40.22, the
index price on May 14, 1999, and subtracting .175 from such
quotient.

If the conditions set forth in items (i) and (ii) above are satisfied, St. Paul
will have the right to terminate the merger agreement if the St. Paul board so
determines by a majority vote at any time during the ten-day period beginning
two days after the "determination date" (or such shorter period as set forth in
the merger agreement). If St. Paul exercises this termination right, then
Charter One will have the right, during the five-day period commencing with its
receipt of St. Paul's termination notice, to avoid termination of the merger
agreement by adjusting the exchange ratio to equal the lesser of:

(i) the product of $23.79 and the exchange ratio as then in effect,
divided by the average closing price; and

(ii) the product of the Index Ratio and the exchange ratio as then in
effect, divided by the Charter One Ratio.

If Charter One elects to adjust the exchange ratio as described above, it must
give written notice to St. Paul of its election and the revised exchange ratio,
whereupon the merger agreement will remain in full force and effect in
accordance with its terms, except that the exchange ratio will have been
modified and the completion of the merger may be delayed as a result of the
foregoing procedures.

The provisions in the merger agreement governing St. Paul's termination right
and the Charter One adjustment provision are by necessity extremely detailed and
complex and may be more understandable by way of illustrations.

ILLUSTRATION 1. Assume that the average closing price is $25.00 and
that the index price on the determination date is $30.00. Under these
assumptions, since the average closing price is not less than the
$23.79, St. Paul would not have the right to terminate the merger
agreement and there would be no adjustment to the exchange ratio. This
is the case even though the value of the consideration to be received
by St. Paul shareholders would have fallen from a pro forma $28.62 per
share as of May 14, 1999 to $24.81 per share as of the determination
date.

ILLUSTRATION 2. Assume that the average closing price is $20.00 and
that the index price on the determination date is $30.00. Under these
assumptions, the average closing price of Charter One common stock
would be less than $23.79, but the Charter One Ratio of .69348 (the
$20.00 average closing price divided by the $28.84 closing price of
Charter One common stock on May 14, 1999) would not be less than the
Index Ratio of .5709 (the $30.00 index price on the determination date
divided by the $40.22 index price on May 14, 1999, less .175) --
meaning the decline in the price of the Charter One common stock did
not exceed the decline of the weighted average common stock prices of
the index group by more than 17.5%. Therefore, since the Charter One
Ratio was not below the Index Ratio, there would be no adjustment to
the exchange ratio even though the value of the consideration to be
received by St. Paul shareholders would have fallen from a pro forma
$28.62 per share as of May 14, 1999 to $19.85 per share as of the
determination date.

ILLUSTRATION 3. Assume that the average closing price is $20.00 and
that the index price on the determination date is $40.00. Under these
assumptions, St. Paul would have the right to terminate the merger
agreement because both conditions to termination would be met, as
follows:

(i) the average closing price of $20.00 would be less than
$23.79; and

(ii) the average closing price of $20.00 divided by $28.84 would
equal .69348 and would be less than the Index Ratio of .8195
(the $40.00 index price on the determination date divided by
the $40.22 index price on May 14, 1999, less .175).

<PAGE> 53

Charter One would then have the right, but would not be obligated, to
adjust the exchange ratio to avoid termination of the merger agreement
to the lesser of the following:

(i) 1.18028, which is the product of $23.79 and the exchange
ratio of .99225, divided by the average closing price of
$20.00; and

(ii) 1.17256, which is the product of the Index Ratio of .8195 and
the exchange ratio of .99225, divided by the Charter One
Ratio of .69348.

Therefore, Charter One could elect to increase the exchange ratio to
1.17256 and proceed with the merger. In that event, each share of St.
Paul common stock would be canceled at the effective time in exchange
for the right to receive 1.17256 shares of Charter One common stock.
Alternatively, Charter One could elect not to increase the exchange
ratio and the merger agreement would terminate.

The determinations of whether the above tests are met, whether to terminate the
merger agreement and whether to avoid any such termination by increasing the
exchange ratio will be based on market conditions at the determination date and
accordingly, those determinations cannot be made until after the date of this
joint proxy statement/prospectus. If the above tests are met, there can be no
assurances as to whether the St. Paul board will exercise its right to terminate
the merger agreement or, if so, whether Charter One will avoid such termination
by increasing the exchange ratio.

In making its determination of whether to terminate the merger agreement, the
St. Paul board will take into account, consistent with its fiduciary duties, all
relevant facts and circumstances that exist at that time, including, without
limitation, information concerning the business, financial condition, results of
operations and prospects of Charter One, including the recent performance of
Charter One common stock, customary statistical measurements of Charter One's
financial performance, and the future prospects for Charter One common stock
following the merger, as well as the advice of its financial advisor and legal
counsel. If the St. Paul board elects to terminate the merger agreement, Charter
One would then determine whether to proceed with the merger at the higher
exchange ratio. In making this determination, the principal factors Charter One
will consider include the projected effect of the merger on Charter One's pro
forma earnings per share and whether Charter One's assessment of St. Paul's
earning potential as part of Charter One justifies the issuance of an increased
number of Charter One's shares. If Charter One declines to adjust the exchange
ratio, St. Paul may elect to proceed without the adjustment, provided it does so
within the period provided for in the merger agreement. CHARTER ONE IS UNDER NO
OBLIGATION TO ADJUST THE EXCHANGE RATIO.

The average closing price of Charter One common stock for the ten trading days
before ___________, 1999 was $______. Based on this price, neither termination
condition would be triggered and St. Paul would not have the right to terminate
the merger agreement under the terms of this provision.

EXCHANGE OF CERTIFICATES

We will appoint an exchange agent to handle the exchange of St. Paul common
stock in the merger for Charter One common stock and the payment of cash for any
fractional share resulting from the exchange. Promptly after the effective time,
the exchange agent will send to each holder of St. Paul common stock a letter of
transmittal for use in the exchange and instructions explaining how to surrender
St. Paul common stock certificates to the exchange agent. Holders of St. Paul
common stock that surrender their certificates to the exchange agent, together
with a properly completed letter of transmittal, will receive the appropriate
merger consideration. Holders of unexchanged shares of St. Paul common stock
will not be entitled to receive any dividends or other distributions payable by
Charter One after the effective time until their certificates are surrendered.
However, when those certificates are surrendered for shares of Charter One
common stock, any unpaid dividends or distributions will be paid, without
interest.

ST. PAUL COMMON STOCK CERTIFICATES SHOULD NOT BE RETURNED WITH THE ENCLOSED
PROXY AND SHOULD NOT BE FORWARDED TO THE EXCHANGE AGENT UNTIL YOU RECEIVE THE
TRANSMITTAL FORM.

<PAGE> 54

TREATMENT OF ST. PAUL STOCK OPTIONS

At the effective time of the merger, each St. Paul stock option will be
converted automatically into an option to purchase shares of Charter One common
stock. The number of shares subject to, and the exercise price of, each of those
St. Paul stock options will be adjusted to reflect the exchange ratio in the
merger.

CONDUCT OF BUSINESS PENDING THE MERGER AND CERTAIN COVENANTS

Conduct of Business Pending the Merger. Pursuant to the merger agreement, we
have agreed to certain restrictions on our activities until the merger is
completed or terminated. In general, St. Paul and its subsidiaries are required
to conduct their business in the ordinary course consistent with past practice
and to use their reasonable efforts to preserve intact their business
organizations and relationships with third parties. Charter One and its
subsidiaries also are required to use their reasonable efforts to preserve
intact their business organizations and relationships with third parties. The
companies have also agreed to specific restrictions which are subject to
exceptions described in the merger agreement.

The following is a summary of the more significant of the activity restrictions
undertaken by St. Paul:

- amending organization documents;

- issuing or redeeming its securities;

- entering into, terminating or amending material contracts;

- increasing employee compensation or benefits;

- buying, selling or leasing assets;

- lending or borrowing in excess of specified amounts;

- changing its accounting policies;

- changing existing banking and investment policies;

- taking or failing to take any action which might prevent or impede the
merger from qualifying for "pooling-of-interests" accounting treatment
or from qualifying as a tax-free reorganization within the meaning of
Section 368 of the Internal Revenue Code; and

- taking or failing to take any action which would make any
representation or warranty by it inaccurate in any material respect.

The following is a summary of the more significant of the activity restrictions
undertaken by Charter One:

- making, declaring, paying or setting aside for payment any
extraordinary dividends or distributions;

- changing its accounting policies;

- taking or failing to take any action which would make any
representation or warranty by it inaccurate in any material respect.

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<PAGE> 55

Third-party Proposals. St. Paul has agreed that it will not encourage any
third-party proposal to acquire St. Paul and will not engage in negotiations
regarding such a proposal. However, St. Paul may provide information and
negotiate with a third party if the failure to do so would violate the fiduciary
duties of its directors. St. Paul must notify Charter One if it receives such a
proposal.

Additional Covenants. The merger agreement also contains various covenants,
including, among others, those requiring Charter One and St. Paul: to use their
reasonable best efforts in good faith to take all necessary actions to effect
the merger; to recommend approval, subject to the fiduciary obligations of the
Charter One board and the St. Paul board, and to take all action necessary to
convene a shareholders' meeting of each company to vote on, in the case of St.
Paul, the merger agreement and, in the case of Charter One, the issuance of
Charter One common stock; to cooperate in the preparation of the registration
statement and this joint proxy statement/prospectus; to refrain from issuing
press releases regarding the merger without the other party's prior approval,
subject to certain exceptions; to provide the other party with reasonable access
to information regarding such party under the condition that such information be
kept confidential; to take all steps within their control to exempt the
transactions contemplated by the merger agreement and the stock option agreement
from any applicable state anti-takeover law; and to cooperate and use their
reasonable best efforts to prepare all documentation, to effect all filings and
to obtain all permits, consents, approvals and authorizations of all third
parties and regulatory authorities necessary to complete the transactions
contemplated by the merger agreement.

The merger agreement and the supplemental letter incorporated by reference
therein also contain certain covenants relating to employee benefits, including
those that require Charter One: to assume and continue certain St. Paul benefit
and welfare plans for specified periods and to provide to each full-time
employee of St. Paul and its subsidiaries as of the effective time or as soon
thereafter as is practicable the opportunity to participate in certain Charter
One benefit and welfare plans for similarly situated employees; to provide
indemnification and insurance to the current officers and directors of St. Paul;
to add two St. Paul directors to the Charter One board and to offer the
remaining St. Paul directors positions on an advisory board; and to fulfill and
discharge various contracts and plans involving St. Paul's senior employees. See
"Interests of Insiders in the Merger."

Termination Fees. Charter One and St. Paul have each agreed to pay the other a
termination fee of $45.0 million if the merger agreement is terminated under the
circumstances described under "-- Termination -- Termination Fees Payable by St.
Paul" and "-- Termination Fees Payable by Charter One."

REPRESENTATIONS AND WARRANTIES

The merger agreement contains a number of reciprocal representations and
warranties made by Charter One and St. Paul to each other. The more significant
of these relate to:

- corporate organization and existence;

- capitalization;

- ownership of subsidiaries;

- corporate authorization to enter into the merger;

- regulatory approvals required in connection with the merger;

- absence of any breach of organizational documents, law or certain
material agreements as a result of the merger;

- absence of governmental and third-party approvals other than those
specified in the merger agreement;

- financial statements;

- filings with the SEC;

<PAGE> 56

- absence of certain changes in each party's business since a specified
date;

- litigation;

- agreements between each party and regulatory agencies;

- compliance with laws;

- material contracts;

- finders' or advisors' fees;

- employee benefits and labor matters;

- inapplicability to the merger of the Delaware takeover laws;

- environmental matters;

- tax matters;

- insurance matters;

- absence of circumstances inconsistent with the intended accounting
treatment of the merger;

- Year 2000 compliance;

- absence of any pending or threatened reviews by governmental
authorities other than normal regulatory examinations; and

- the receipt of a fairness opinion from each party's financial advisor.

Many of the representations and warranties are qualified by a material adverse
effect standard, which for purposes of the merger agreement, means an effect
that (i) is material and adverse to the financial condition, business or
operations of the party making the representation and warranty and its
subsidiaries, taken as a whole, or (ii) would materially impair the ability of
Charter One, Charter Michigan or St. Paul to perform its obligations under the
merger agreement or otherwise materially impede the consummation of the merger,
other than any material adverse effects arising out of any change or development
relating to:

- changes in thrift, banking and similar laws of general applicability or
interpretations thereof by courts or governmental authorities, or other
changes affecting depository institutions generally, including changes
in general economic conditions and changes in prevailing interest and
deposit rates;

- changes in generally accepted accounting principles or regulatory
accounting requirements applicable to thrifts, banks and their holding
companies generally;

- any modifications or changes to valuation policies and practices or
restructuring charges, in each case taken by any of the parties or
their subsidiaries pursuant to the merger agreement or otherwise by
Charter One or any of its subsidiaries in accordance with generally
accepted accounting principles;

- changes resulting from expenses, such as legal, accounting and
investment bankers' fees, incurred in connection with the merger and
the merger agreement; and

- actions or omissions of Charter One or St. Paul taken with the prior
written consent of St. Paul or Charter One, as applicable, in
contemplation of the transactions contemplated by the merger agreement.

49
<PAGE> 57

For a complete statement of the representations and warranties, see Article V of
the merger agreement which appears as Appendix A to this joint proxy
statement/prospectus.

CONDITIONS TO COMPLETION OF THE MERGER

Mutual Closing Conditions. The obligations of Charter One, Charter Michigan and
St. Paul to complete the merger are subject to the satisfaction or waiver of the
following conditions:

- absence of legal prohibition on completing the merger;

- receipt of all regulatory approvals required to complete the merger and
the expiration of all statutory waiting periods;

- adoption of the merger agreement by St. Paul shareholders and the
approval of the issuance of Charter One common stock in connection with
the merger by Charter One shareholders;

- Charter One's registration statement on Form S-4, which includes this
joint proxy statement/prospectus, being effective and not subject to
any stop order by the SEC;

- approval for listing on the Nasdaq National Market of the shares of the
Charter One common stock to be issued in the merger;

- receipt of all approvals required under state securities laws to
complete the merger; and

- receipt of all required permits, authorizations, consents, waivers and
approvals required to complete the merger as contemplated by the merger
agreement.

Additional Closing Conditions for the Benefit of Charter One. Charter One's
obligation to complete the merger is subject to the satisfaction or waiver of
the following conditions:

- accuracy as of the closing of the representations and warranties made
by St. Paul to the extent specified in the merger agreement;

- performance in all material respects by St. Paul and its subsidiaries
of the obligations required to be performed by them at or prior to
closing;

- receipt of an opinion of Charter One's counsel that the merger will
qualify as a tax-free reorganization; and

- receipt of letters from the independent public accountants of Charter
One and St. Paul stating that in their opinion the merger will qualify
for "pooling-of-interests" accounting treatment.

Additional Closing Conditions for the Benefit of St. Paul. St. Paul's obligation
to complete the merger is subject to the satisfaction or waiver of the following
conditions:

- accuracy as of the closing of the representations and warranties made
by Charter One to the extent specified in the merger agreement;

- performance in all material respects by Charter One and its
subsidiaries of the obligations required to be performed by them at or
prior to closing; and

- receipt of an opinion of St. Paul's counsel that the merger will
qualify as a tax-free reorganization.

There can be no assurance that the conditions to completion of the merger will
be satisfied or waived. For detailed information on conditions to the merger,
see Article VII of the merger agreement included as Appendix A to this joint
proxy statement/prospectus.

<PAGE> 58

TERMINATION

Right to Terminate. The merger agreement may be terminated under any of the
following circumstances:

(a) The merger agreement may be terminated by the mutual written consent of
Charter One and St. Paul.

(b) The merger agreement may be terminated by either Charter One or St.
Paul if:

- at any time prior to closing, a breach by or failure to perform on
the part of the other party has occurred and cannot be or has not
been cured within 30 days after the giving of written notice of
such breach and such breach would result in a failure to satisfy a
condition to closing of the terminating party;

- the merger has not been completed by February 28, 2000; provided,
however, that the right to terminate the merger agreement will not
be available to any party whose breach of any obligation under the
merger agreement has been the cause of or resulted in the failure
of the merger to occur on or before February 28, 2000;

- approval of any regulatory authorities required for completion of
the merger is denied by final nonappealable action of such
authority; or

- any shareholder approval required under the merger agreement is
not obtained.

(c) The merger agreement may be terminated by Charter One at any time prior
to the St. Paul special meeting, if the St. Paul board has failed to
unanimously recommend adoption of the merger agreement, has withdrawn
such recommendation or has modified or changed such recommendation in
any manner adverse in any respect to the interests of Charter One.

(d) The merger agreement may be terminated by St. Paul at any time prior to
the Charter One special meeting, if the Charter One board has failed to
unanimously recommend approval of the issuance of Charter One common
stock in connection with the merger, has withdrawn such recommendation
or has modified or changed such recommendation in a manner adverse in
any respect to the interests of St. Paul.

(e) The merger agreement may be terminated by St. Paul, subject to Charter
One's right to adjust the exchange ratio, if both of the following
conditions are satisfied:

- Charter One's average common stock price during the valuation
period specified in the merger agreement is less than $23.79; and

- the decline in Charter One's average common stock price is at
least 17.5 percentage points more than the decline in the weighted
average stock price of the 16 financial institutions and financial
institution holding companies identified in the merger agreement.

(f) The merger agreement may be terminated by St. Paul if two-thirds of the
members of the St. Paul board authorize St. Paul pursuant to the
exercise of its fiduciary duties to enter into an agreement concerning
an acquisition transaction with another party which provides more
favorable consideration to its shareholders from a financial point of
view.

In the event St. Paul exercises its termination right described in subparagraph
(e) above, Charter One will have the option, beginning five days from receipt of
such written notice, to avoid the termination of the merger agreement by
increasing the exchange ratio pursuant to the formula specified in the merger
agreement. See "-- Possible Adjustment to the Exchange Ratio."

Liabilities and Remedies for Breach. If the merger agreement is terminated, no
party will have any liability to any other party under the merger agreement,
except that termination will not relieve a breaching party from liability for

<PAGE> 59

any willful breach giving rise to such termination. If, however, Charter One or
St. Paul pursues its right to a $45.0 million termination fee as described
below, then such party will not be entitled to any other relief, including in
the case of Charter One, any right under the St. Paul stock option agreement.
Conversely, if Charter One or St. Paul pursues a remedy for willful breach, then
it will waive its rights to any termination fee. In addition, Charter One may
have certain rights under the St. Paul stock option agreement in the event of a
termination of the merger agreement. See "The Stock Option Agreement."

Termination Fee Payable by St. Paul. St. Paul has agreed to pay Charter One
$45.0 million in cash if St. Paul receives an acquisition proposal from a third
party and any of the following events occurs:

- Charter One terminates the merger agreement as described in paragraph
(c) under "-- Right to Terminate" above;

- St. Paul is in material and willful breach of any of its covenants
contained in the merger agreement such that Charter One is entitled to
terminate the merger agreement;

- St. Paul shareholders do not adopt the merger agreement at the St. Paul
special meeting; or

- St. Paul terminates this agreement as described in paragraph (f) under
"-- Right to Terminate" above.

The $45.0 million termination fee is not payable by St. Paul if it terminates,
or has or had the right to terminate, the merger agreement as a result of: (i)
Charter One being in breach of any representations, warranties, covenants and
agreements as specified in the merger agreement; (ii) the denial by final
nonappealable action of any required approval of any regulatory authority; (iii)
the failure of Charter One shareholders to approve the issuance of Charter One
common stock in connection with the merger; or (iv) the Charter One board
failing to unanimously recommend approval of the issuance of Charter One common
stock in connection with the merger, withdrawing its recommendation or modifying
or changing its recommendation in a manner adverse in any respect to the
interests of St. Paul.

In addition, the $45.0 million termination fee will not be payable if: (i)
Charter One has acquired St. Paul common stock pursuant to the exercise of the
St. Paul stock option, St. Paul has repurchased the option or St. Paul has paid
the surrender fee as defined in the St. Paul stock option agreement; or (ii)
Charter One refuses to execute and deliver a written release of all of its
rights under the St. Paul stock option agreement against delivery and payment of
the full $45.0 million termination fee. See "The Stock Option Agreement."

Termination Fee Payable by Charter One. Charter One has agreed to pay St. Paul
$45.0 million in cash if Charter One receives an acquisition proposal from a
third party and any of the following events occurs:

- St. Paul terminates the merger agreement as described in paragraph (d)
under "-- Right to Terminate" above;

- Charter One is in material and willful breach of any of its covenants
contained in the merger agreement such that St. Paul is entitled to
terminate the merger agreement; or

- Charter One shareholders do not approve the issuance of Charter One
common stock in connection with the merger.

The $45.0 million termination fee is not payable by Charter One if it
terminates, or has or had the right to terminate, the merger agreement as a
result of: (i) St. Paul being in breach of any representations, warranties,
covenants and agreements as specified in the merger agreement; (ii) the denial
by final nonappealable action of any required approval of any regulatory
authority; (iii) the failure of St. Paul shareholders to adopt the merger
agreement; or (iv) the St. Paul board failing to unanimously recommend adoption
of the merger agreement, withdrawing its recommendation or modifying or changing
its recommendation in a manner adverse in any respect to the interests of
Charter One.

52
<PAGE> 60

WAIVER; AMENDMENT

Any provision of the merger agreement may be amended or waived prior to closing
by an agreement in writing signed between the parties, except that, after the
St. Paul special meeting, the consideration to be received by St.
Paul shareholders in the merger may not be decreased.

EXPENSES

All expenses incurred in connection with the merger agreement and the related
transactions are to be paid by the party incurring the expenses, provided that
printing expenses and SEC fees are to be shared equally. We estimate that the
merger-related fees and expenses, consisting primarily of SEC filing fees, fees
and expenses of investment bankers, attorneys and accountants, and financial
printing and other related charges, will total approximately $9.0 million,
assuming the merger is completed.

NASDAQ LISTING

Charter One common stock and St. Paul common stock are each quoted on the Nasdaq
National Market. It is a condition to consummation of the merger that the
Charter One common stock to be issued to the shareholders of St. Paul pursuant
to the merger agreement will be approved for listing on the Nasdaq National
Market or any other nationally recognized securities exchange, subject to
official notice of issuance. See "-- Conditions to Completion of the Merger."

THE STOCK OPTION AGREEMENT

The following summary of the St. Paul stock option agreement is qualified by
reference to the complete text of the agreement, which is incorporated by
reference and attached as Appendix B.

General. At the same time that Charter One and St. Paul entered into the merger
agreement and as an important inducement to Charter One entering into the merger
agreement, we also entered into a stock option agreement. Under the stock option
agreement, St. Paul granted Charter One an irrevocable option to purchase up to
4,384,730 shares of St. Paul common stock at a price per share of $24.828. The
exercise price and number of option shares are subject to certain anti-dilution
and other adjustments specified in the stock option agreement. The option is
exercisable in the circumstances described below.

Effect of Option. The option is intended to make it more likely that the merger
will be completed on the agreed terms and to compensate Charter One for its
efforts and costs in case the merger is not completed under circumstances
generally involving a third party proposal for a business combination with St.
Paul. Among other effects, the option could prevent an alternative business
combination with St. Paul from being accounted for as a "pooling-of-interests".
The option may therefore discourage proposals for alternative business
combinations with St. Paul, even if a third party were prepared to offer St.
Paul shareholders consideration with a higher market value than the value of the
Charter One common stock to be exchanged for St. Paul common stock in the
merger.

Exercise of the Stock Option. Charter One can exercise the option in whole or in
part at any time after the occurrence of both an "initial triggering event" and
a "subsequent triggering event," and prior to termination of the option.

Generally, the right to exercise the option terminates upon the earliest of:

- completion of the merger;

- termination of the merger agreement in accordance with its terms,
absent the occurrence of events specified in the St. Paul stock option
agreement and summarized below;

- 15 months after the termination of the merger agreement if the
termination follows the occurrence of events specified in the St. Paul
stock option agreement and summarized below; or

53
<PAGE> 61

- the date on which Charter One shareholders have voted and failed to
approve the issuance of Charter One common stock in connection with the
merger.

Charter One may not exercise the St. Paul stock option if, at the time of
exercise, it is in material breach of the merger agreement such that St. Paul is
entitled to terminate the merger agreement. Moreover, St. Paul's obligations
under the St. Paul stock option agreement will terminate and the option will no
longer be exercisable if:

- the merger agreement is properly terminated by St. Paul as a result of
Charter One's breach of any covenant or agreement as specified in the
merger agreement;

- the merger agreement is properly terminated by St. Paul or Charter One
as a result of the denial by final nonappealable action of any required
approval of any regulatory authority; or

- Charter One accepts the $45.0 million termination fee from St. Paul
described above under "The Merger Agreement -- Termination --
Termination Fee Payable by St. Paul."

For purposes of the stock option agreement, an "initial triggering event" means
the occurrence of any of the following events or transactions:

- St. Paul or any significant subsidiary of St. Paul, without having
received Charter One's prior written consent, enters into an agreement
to engage in an "acquisition transaction" with any person other than
Charter One or any of its subsidiaries or the St. Paul board recommends
that St. Paul shareholders approve or accept any acquisition
transaction other than the merger. For purposes of the stock option
agreement, "acquisition transaction" means (x) a merger or
consolidation, or any similar transaction, involving St. Paul or any
St. Paul subsidiary, (y) a purchase, lease or other acquisition of all
or any substantial part of the assets or deposits of St. Paul or any
St. Paul subsidiary, or (z) a purchase or other acquisition, including
by way of merger, consolidation, share exchange or otherwise, of
securities representing 10% or more of the voting power of St. Paul or
any St. Paul subsidiary;

- any person other than Charter One or any Charter One subsidiary
acquires beneficial ownership or the right to acquire beneficial
ownership of 10% or more of the outstanding shares of St. Paul common
stock;

- St. Paul shareholders vote and fail to adopt the merger agreement at
the St. Paul special meeting, or the special meeting is, in violation
of the merger agreement, not held or is canceled prior to termination
of the merger agreement if, prior to the special meeting (or if the
special meeting has not been held or has been canceled, prior to such
termination), it has been publicly announced that any person other than
Charter One or any of its subsidiaries has made, or publicly disclosed
an intention to make, a proposal to engage in an acquisition
transaction;

- the St. Paul board withdraws or modifies, or publicly announces its
intention to withdraw or modify, in a manner adverse in any respect to
Charter One its recommendation that St. Paul shareholders adopt the
merger agreement;

- St. Paul or any St. Paul subsidiary, without having received Charter
One's prior written consent, authorizes, recommends, proposes, or
publicly announces its intention to authorize, recommend or propose, an
agreement to engage in an acquisition transaction with any person other
than Charter One or a Charter One subsidiary;

- St. Paul provides information to or engages in negotiations with a
third party relating to a possible acquisition transaction;

- any person other than Charter One or any Charter One subsidiary makes a
proposal to St. Paul or its shareholders to engage in an acquisition
transaction and that proposal is publicly announced;

54
<PAGE> 62

- any person other than Charter One or any Charter One subsidiary files
with the SEC a registration statement or tender offer materials with
respect to a potential exchange or tender offer that would constitute
an acquisition transaction or files a preliminary proxy statement with
the SEC with respect to a potential vote by its shareholders to approve
the issuance of shares to be offered in the exchange offer;

- St. Paul willfully breaches any covenant or obligation contained in the
merger agreement in anticipation of engaging in an acquisition
transaction, and following the breach Charter One is entitled to
terminate the merger agreement; or

- any person other than Charter One or any Charter One subsidiary other
than in connection with a transaction to which Charter One has given
its prior written consent files an application or notice with a federal
or state thrift or bank regulatory or antitrust authority, which
application or notice has been accepted for processing, for approval to
engage in an acquisition transaction with St. Paul.

For purposes of the stock option agreement, a "subsequent triggering event"
means the occurrence of any of the following events or transactions:

- the acquisition by any person, other than Charter One or any Charter
One subsidiary, of beneficial ownership of 25% or more of the then
outstanding St. Paul common stock; or

- the occurrence of the initial triggering event described in the first
bullet point of the description of initial triggering event, except
that the percentage referred to in clause (z) of the definition of
"acquisition transaction" is 25%.

Listing and Registration Rights. St. Paul has agreed to list the option shares
on the Nasdaq National Market and to grant Charter One customary rights to
require registration by St. Paul of option shares for sale by Charter One under
applicable securities laws.

Repurchase Election. The stock option agreement further provides that St. Paul,
or its successors, is required to repurchase the option if requested to do so by
Charter One or a subsequent holder of the option. Such a request can only be
made after the occurrence of a repurchase event and prior to termination of the
stock option agreement. The repurchase price will be equal to the amount by
which (i) the market/offer price, as described in detail in the stock option
agreement, exceeds (ii) the purchase price of the option, multiplied by the
number of shares for which the St. Paul stock option may then be exercised. In
determining the market/offer price, the value of consideration other than cash
shall be determined by a nationally recognized investment banking firm elected
by the option holder and reasonably acceptable to St. Paul.

For purposes of the stock option agreement, a repurchase event means generally
(i) the acquisition by a third party of beneficial ownership of 50% or more of
the then outstanding St. Paul common stock or (ii) the consummation of (x) a
merger or consolidation, or any similar transaction, involving St. Paul or any
St. Paul subsidiary, (y) a purchase, lease or other acquisition or assumption of
all or any substantial part of the assets or deposits of St. Paul or any St.
Paul subsidiary, or (z) a purchase or other acquisition, including by way of
merger, consolidation, share exchange or otherwise, of securities representing
50% or more of the voting power of St. Paul or any St. Paul subsidiary.

Surrender Election. Charter One may, at any time following a repurchase event
and prior to the termination of the option, relinquish the option, together with
any option shares issued to and then owned by Charter One, to St. Paul in
exchange for an amount equal to $45.0 million (i) plus, if applicable, Charter
One's purchase price with respect to any option shares and (ii) minus, if
applicable, the excess of (A) the net cash amounts, if any, received by Charter
One pursuant to the arms' length sale of option shares to any unaffiliated
party, over (B) Charter One's purchase price of such option shares.

Limitation on Total Profit. The stock option agreement provides that,
notwithstanding any other provision of that agreement, Charter One's total
profit will not exceed $45.0 million in the aggregate. If Charter One's total
profit otherwise would exceed such amount, Charter One, at its sole election,
may (a) reduce the number of shares of St.

55
<PAGE> 63

Paul common stock subject to the option, (b) deliver to St. Paul for
cancellation option shares previously acquired by Charter One, (c) pay cash to
St. Paul, or (d) any combination thereof, so that Charter One's actually
realized total profit does not exceed $45.0 million after taking into account
the foregoing actions.

COMPARATIVE STOCK PRICES AND DIVIDEND INFORMATION

Charter One common stock and St. Paul common stock are traded on the Nasdaq
National Market (symbols: COFI and SPBC, respectively). The following table sets
forth the reported high and low sales prices of shares of Charter One common
stock and St. Paul common stock, as reported on the Nasdaq National Market, and
the quarterly cash dividends per share declared, in each case for the periods
indicated. The stock prices and dividend amounts have been restated to give
effect to stock splits and stock dividends.

CHARTER ONE ST. PAUL
COMMON STOCK COMMON STOCK
------------------------------------ ------------------------------
HIGH LOW DIVIDENDS HIGH LOW DIVIDENDS
---- --- --------- ---- --- ---------
<S> <C> <C> <C> <C> <C> <C>
1997 FISCAL YEAR
First Quarter........................ $21.65 $17.77 $.105 $19.33 $15.20 $.08
Second Quarter....................... 23.32 18.25 .105 23.08 17.50 .08
Third Quarter........................ 26.56 22.25 .105 25.38 21.83 .10
Fourth Quarter....................... 29.03 24.54 .114 29.00 22.50 .10

1998 FISCAL YEAR
First Quarter........................ 30.90 21.77 .124 27.13 21.75 .10
Second Quarter....................... 33.23 27.21 .124 26.75 22.38 .10
Third Quarter........................ 32.54 20.81 .124 25.25 17.25 .15
Fourth Quarter....................... 29.10 16.79 .133 27.50 16.56 .15

1999 FISCAL YEAR
First Quarter........................ 30.53 23.99 .133 27.25 19.63 .20
Second Quarter....................... 30.60 25.18 .152 27.13 20.63 .20
Third Quarter
(through August 17, 1999)............ [ ] [ ] .152 [ ] [ ] .20

</TABLE>

St. Paul intends to declare and pay cash dividends on St. Paul common stock at a
quarterly rate not to exceed $.20 per share in a manner, on dates and with
respect to record dates consistent with past practice. However, with respect to
the payment of its last dividend prior to completion of the merger, St. Paul is
required to coordinate such payment with, and such payment is subject to the
prior approval of, Charter One to preclude any duplication of dividend payments.
Under the merger agreement, St. Paul may not declare or pay any other dividends
or make any other capital distribution with respect to its capital stock without
the prior written consent of Charter One. The St. Paul board is under no
obligation to declare dividends on St. Paul common stock.

The timing and amount of future dividends on Charter One common stock will
depend upon earnings, cash requirements, Charter One's financial condition and
other factors deemed relevant by the Charter One board. Dividends may also be
limited by certain regulatory restrictions. The Charter One board has not yet
determined the dividend policy of Charter One after completion of the merger.

56
<PAGE> 64

EFFECT OF MERGER ON ST. PAUL'S DIVIDEND REINVESTMENT PLAN

Charter One currently maintains an Automatic Dividend Reinvestment and Cash
Stock Purchase Plan. This plan provides shareholders of Charter One with a
simple and convenient method of investing cash dividends, as well as voluntary
cash payments, in additional shares of Charter One common stock. St. Paul
currently has a similar plan, which will be terminated prior to completion of
the merger. It is anticipated that, after the merger, Charter One will continue
to offer its plan, and shareholders of St. Paul who become shareholders of
Charter One will be eligible to participate in the plan.

<PAGE> 65

UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS AND PER SHARE DATA

The following unaudited pro forma combined statement of financial condition as
of June 30, 1999 combines the historical consolidated statements of financial
condition of Charter One and its subsidiaries and St. Paul and its subsidiaries
as if we had merged on June 30, 1999, after giving effect to certain pro forma
adjustments described in the accompanying notes. The following unaudited pro
forma combined statements of income for the six-month periods ended June 30,
1999 and 1998 and for each of the years in the three-year period ended December
31, 1998 present the combined historical results of operations of Charter One
and its subsidiaries and St. Paul and its subsidiaries as if we had merged
effective as of January 1, 1996. Both Charter One's and St. Paul's fiscal years
end December 31. Pro forma per share amounts are based on an exchange ratio of
.99225 of a share of Charter One common stock for each share of St. Paul common
stock. The merger is expected to close in the fourth quarter of 1999.

The unaudited pro forma combined financial statements and related footnotes
account for the merger using the "pooling-of-interests" method of accounting.
Under the "pooling-of-interests" method of accounting, the recorded assets,
liabilities, shareholders' equity, income and expenses of Charter One and St.
Paul are combined and recorded at their historical cost-based amounts, except as
described below and in the footnotes. The accounting policies of Charter One and
St. Paul are substantially comparable.

The unaudited pro forma combined financial statements are for illustrative
purposes only. The companies may have performed differently had they been
combined during the periods presented. You should not rely on the unaudited pro
forma combined financial information as being indicative of the historical
results that we would have had or the future results that we will experience
after the merger. These unaudited pro forma combined financial statements should
be read in conjunction with, and are qualified in their entirety by, the
separate historical consolidated financial statements and notes thereto of
Charter One and St. Paul. See "Where You Can Find More Information."

<PAGE> 66

UNAUDITED PRO FORMA COMBINED STATEMENT OF FINANCIAL CONDITION AS OF
JUNE 30, 1999

Combined
Charter One St. Paul Pro Forma Pro Forma
Historical Historical Adjustments Amounts
----------- ----------- ----------- ------------
(In thousands)
<S> <C> <C> <C> <C>
ASSETS:
Cash and cash equivalents .............. $ 221,132 $ 242,615 ($56,000)(1) $ 407,747
Investment securities:
Available for sale, at fair value .. 174,897 384,435 559,332
Held to maturity ................... 21,425 10,451 31,876
Trading ............................ -- 18,983 18,983
Mortgage-backed securities:
Available for sale, at fair value .. 3,155,462 463,596 3,619,058
Held to maturity ................... 2,026,597 191,020 2,217,617
Loans and leases, net .................. 17,553,669 4,455,779 22,009,448
Loans held for sale .................... 76,570 41,411 117,981
Federal Home Loan Bank stock ........... 367,514 70,304 437,818
Premises and equipment ................. 237,815 73,018 (24,000)(1) 286,833
Accrued interest receivable ............ 118,088 33,970 152,058
Real estate and other collateral owned . 19,357 6,426 25,783
Loans servicing assets ................. 101,011 1,568 102,579
Goodwill ............................... 152,021 578 152,599
Other assets ........................... 727,046 38,623 25,000(2) 790,669
------------ ----------- -------- ------------
Total assets ..................... $ 24,952,604 $ 6,032,777 ($55,000) $ 30,930,381
============ =========== ======== ============

LIABILITIES AND SHAREHOLDERS' EQUITY:
LIABILITIES:
Deposits ............................... $ 15,087,605 $ 3,757,789 $ 18,845,394
Federal Home Loan Bank advances ........ 7,256,870 1,371,085 8,627,955
Reverse repurchase agreements .......... 128,541 -- 128,541
Other borrowings ....................... 130,933 306,045 436,978
Advance payments by borrowers for taxes
and insurance ....................... 59,237 15,014 74,251
Accrued interest payable ............... 39,726 20,011 59,737
Accrued expenses and other liabilities . 294,277 60,298 354,575
------------ ------------ -------- ------------
Total liabilities ................. 22,997,189 5,530,242 -- 28,527,431
------------ ------------ -------- ------------

SHAREHOLDERS' EQUITY:
Common stock and paid-in capital ....... 1,140,090 158,804 (33,004)(3) 1,265,890
Retained earnings ...................... 835,493 378,623 (55,000)(4) 1,159,116
Treasury stock ......................... (32,038) (33,004) 33,004 (3) (32,038)
Borrowings of employee investment
and stock ownership plan .......... (4,223) -- -- (4,223)
Accumulated other comprehensive
income ............................ 16,093 (1,888) -- 14,205
------------ ------------ -------- ------------
Total shareholders' equity ........ 1,955,415 502,535 (55,000) 2,402,950
------------ ------------ -------- ------------
Total liabilities and shareholders'

equity ....................... $ 24,952,604 $ 6,032,777 ($ 55,000) $ 30,930,381
============ ============ ======== ============

</TABLE>

<PAGE> 67

NOTES TO UNAUDITED PRO FORMA COMBINED STATEMENT OF FINANCIAL CONDITION

1. Transaction costs of the merger (primarily investment banking and other
professional fees) and costs to combine operations are expected to be in the
range of $73.0 million to $87.0 million on a pre-tax basis, or $50.0 million
to $60.0 million on an after-tax basis. The Unaudited Pro Forma Condensed
Combined Statements of Income on pages 61 through 65 do not reflect these
charges. The Unaudited Pro Forma Combined Statement of Financial Condition on
the preceding page reflects these charges at the mid-point of the expected
pre-tax range ($80.0 million). It is anticipated that these charges will be
incurred and recognized during the fourth quarter of 1999 and the first
quarter of the year 2000. In addition, it is anticipated that cash charges
will be substantially paid by the first quarter of the year 2000. The
following table provides details of the estimated charges by type of cost:

Expected Expected
Type of Cost Pre-Tax Range After-Tax Range
- ------------------------------------------- -------------------- -------------------
(In millions)
<S> <C> <C>
Transaction Costs $ 8.0 to 10.0 $ 8.0 to 10.0
Costs to combine operations:
Severance and other employee
termination costs 38.0 to 45.0 25.0 to 29.0
Duplicative systems and facilities costs 22.0 to 26.0 14.0 to 17.0
Other costs incidental to the merger 5.0 to 6.0 3.0 to 4.0
------------- -------------
Total $73.0 to 87.0 $50.0 to 60.0
============= =============
</TABLE>

2. Represents the expected income tax benefit associated with the pro forma
adjustments.

3. Elimination of St. Paul's treasury shares.

4. Represents the after-tax effect of the pro forma adjustments, as described in
note (1) above, using a federal income tax rate of 35%.

<PAGE> 68

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME FOR THE SIX MONTHS
ENDED JUNE 30, 1999

Combined
Charter One St. Paul Pro Forma
Historical Historical Amounts
---------------- ------------------ ------------------
(Amounts in thousands, except shares and per share data)

<S> <C> <C> <C>
Interest income ................................ $ 857,535 $ 191,074 $ 1,048,609
Interest expense ............................... 471,705 107,791 579,496
------------ ------------ ------------
Net interest income ........................ 385,830 83,283 469,113
Provision for loan and lease losses ............ 14,614 -- 14,614
------------ ------------ ------------
Net interest income after provision for loan
and lease losses ......................... 371,216 83,283 454,499
Net gain on sales .............................. 9,832 344 10,176
Other income ................................... 107,842 26,920 134,762
Merger expenses ................................ 5,719 -- 5,719
Other expenses ................................. 215,817 65,704 281,521
------------ ------------ ------------
Income before income taxes ..................... 267,354 44,843 312,197
Provision for income taxes ..................... 86,718 14,157 100,875
------------ ------------ ------------
Net income ................................. $ 180,636 $ 30,686 $ 211,322
============ ============ ============

Earnings per share:
Basic ..................................... $ 1.04 $ 0.76 $ 0.99
============ ============ ============
Diluted ................................... $ 1.01 $ 0.74 $ 0.96
============ ============ ============

Weighted average shares:
Basic ..................................... 174,309,833 40,188,897 214,187,266
============ ============ ============
Diluted ................................... 178,633,307 41,280,603 219,593,985
============ ============ ============

</TABLE>

<PAGE> 69

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME FOR THE SIX MONTHS
ENDED JUNE 30, 1998

Combined
Charter One St. Paul Pro Forma
Historical Historical Amounts
------------ ------------ ------------
(Amounts in thousands, except shares and per share data)
<S> <C> <C> <C>
Interest income ................................ $ 882,176 $ 180,003 $ 1,062,179
Interest expense ............................... 519,972 101,454 621,426
------------ ------------ ------------
Net interest income ........................ 362,204 78,549 440,753
Provision for loan and lease losses ............ 13,768 (640) 13,128
------------ ------------ ------------
Net interest income after provision for loan
and lease losses ......................... 348,436 79,189 427,625
Net gain on sales .............................. 8,612 2,891 11,503
Other income ................................... 92,252 25,996 118,248
Other expenses ................................. 220,473 68,467 288,940
------------ ------------ ------------
Income before income taxes ..................... 228,827 39,609 268,436
Provision for income taxes ..................... 75,415 12,393 87,808
------------ ------------ ------------
Net income ................................. $ 153,412 $ 27,216 $ 180,628
============ ============ ============

Earnings per share:
Basic ..................................... $ 0.88 $ 0.68 $ 0.84
============ ============ ============
Diluted ................................... $ 0.85 $ 0.65 $ 0.81
============ ============ ============

Weighted average shares:
Basic ..................................... 174,059,630 40,086,898 213,835,855
============ ============ ============
Diluted ................................... 180,512,281 41,822,130 222,010,289
============ ============ ============

</TABLE>

<PAGE> 70

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME FOR THE YEAR ENDED
DECEMBER 31, 1998

<TABLE>
<CAPTION>
Combined
Charter One St. Paul Pro Forma
Historical Historical Amounts
------------ ---------- -------------
(Amounts in thousands, except shares and per share data)

<S> <C> <C> <C>
Interest income..................................... $1,760,371 $370,963 $2,131,334
Interest expense.................................... 1,031,299 212,809 1,244,108
------------ ---------- -------------
Net interest income............................. 729,072 158,154 887,226
Provision for loan and lease losses................. 29,465 1,860 31,325
------------ ---------- -------------
Net interest income after provision for loan
and lease losses.............................. 699,607 156,294 855,901
Net gain on sales................................... 20,963 6,278 27,241
Other income........................................ 190,682 50,769 241,451
Merger expenses..................................... 55,657 9,025 64,682
Cost reduction charge............................... --- 25,000 25,000
Other expenses...................................... 436,856 135,902 572,758
------------ ---------- -------------
Income before income taxes and
extraordinary item................................ 418,739 43,414 462,153
Provision for income taxes.......................... 141,720 14,709 156,429
------------ ---------- -------------
Net income before extraordinary item............ $277,019 $28,705 $305,724
======== ======= ========

Earnings per share before extraordinary item:
Basic.......................................... $1.59 $0.71 $1.43
===== ===== =====
Diluted........................................ $1.55 $0.69 $1.39
===== ===== =====

Weighted average shares:
Basic.......................................... 173,784,125 40,296,222 213,768,051
=========== ========== ===========
Diluted........................................ 179,274,943 41,511,580 220,464,808
=========== ========== ===========
</TABLE>

<PAGE> 71

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME FOR THE YEAR ENDED
DECEMBER 31, 1997

<TABLE>
<CAPTION>
Combined
Charter One St. Paul Pro Forma
Historical Historical Amounts
------------ ----------- -------------
(Amounts in thousands, except shares and per share data)

<S> <C> <C> <C>
Interest income..................................... $1,672,580 $359,863 $2,032,443
Interest expense.................................... 999,596 205,645 1,205,241
------------ ----------- -------------
Net interest income............................. 672,984 154,218 827,202
Provision for loan and lease losses................. 48,293 360 48,653
------------ ----------- -------------
Net interest income after provision for loan
and lease losses................................. 624,691 153,858 778,549
Net gain (loss) on sales............................ (2,351) 2,665 314
Other income........................................ 131,623 53,643 185,266
Merger expenses..................................... 60,617 --- 60,617
Other expenses...................................... 411,539 125,498 537,037
--------- --------- ---------
Income before income taxes and
extraordinary item................................ 281,807 84,668 366,475
Provision for income taxes.......................... 84,686 28,206 112,892
---------- -------- ---------
Net income before extraordinary item............ $197,121 $56,462 $253,583
======== ======= ========

Earnings per share before extraordinary item:
Basic.......................................... $1.15 $1.41 $1.20
===== ===== =====
Diluted........................................ $1.11 $1.37 $1.16
===== ===== =====

Weighted average shares:
Basic.......................................... 171,444,297 39,905,921 211,040,947
=========== ========== ===========
Diluted........................................ 177,648,021 41,292,684 218,620,687
=========== ========== ===========
</TABLE>

<PAGE> 72

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME FOR THE YEAR ENDED
DECEMBER 31, 1996

<TABLE>
<CAPTION>
Combined
Charter One St. Paul Pro Forma
Historical Historical Amounts
------------- ----------- -------------
(Amounts in thousands, except shares and per share data)

<S> <C> <C> <C>
Interest income..................................... $1,567,147 $338,384 $1,905,531
Interest expense.................................... 923,540 190,998 1,114,538
------------- ----------- -------------
Net interest income............................. 643,607 147,386 790,993
Provision for loan and lease losses................. 23,484 1,905 25,389
------------- ----------- -------------
Net interest income after provision for loan
and lease losses.............................. 620,123 145,481 765,604
Net gain on sales................................... 2,178 2,008 4,186
Other income........................................ 128,022 42,840 170,862
Federal deposit insurance special assessment........ 66,655 21,000 87,655
Other expenses...................................... 393,673 119,901 513,574
--------- -------- ---------
Income before income taxes.......................... 289,995 49,428 339,423
Provision for income taxes.......................... 95,303 16,382 111,685
---------- -------- ---------
Net income...................................... $194,692 $33,046 $227,738
======== ======= ========

Earnings per share:
Basic.......................................... $1.12 $0.85 $1.07
===== ===== =====
Diluted........................................ $1.07 $0.81 $1.02
===== ===== =====

Weighted average shares:
Basic.......................................... 171,298,733 39,059,590 210,055,611
=========== ========== ===========
Diluted........................................ 182,646,686 41,020,068 223,348,848
=========== ========== ===========
</TABLE>

<PAGE> 73

COMPARISON OF SHAREHOLDER RIGHTS

At present, the St. Paul certificate of incorporation and bylaws govern the
rights of St. Paul shareholders. Upon the completion of the merger, however, the
rights of St. Paul shareholders will be governed by Charter One's certificate of
incorporation and bylaws because St. Paul shareholders will become Charter One
shareholders. Delaware law will continue to govern the rights of St. Paul
shareholders because both St. Paul and Charter One are Delaware corporations.
The following discussion summarizes material differences between the rights of
St. Paul and Charter One shareholders and does not contain a complete
description of all the differences. This discussion is qualified in its entirety
by reference to Delaware law, Charter One's certificate of incorporation and
bylaws and St. Paul's certificate of incorporation and bylaws.

AUTHORIZED CAPITAL STOCK

The authorized capital stock of St. Paul consists of 80.0 million shares of
common stock, par value $.01 per share, and 10.0 million shares of preferred
stock, par value $.01 per share. The authorized capital stock of Charter One
consists of 360.0 million shares of common stock, par value $.01 per share, and
20.0 million shares of preferred stock, par value $.01 per share. St. Paul and
Charter One are each authorized under their respective certificates of
incorporation to issue shares of capital stock, up to the amount authorized,
without obtaining shareholder approval.

PAYMENT OF DIVIDENDS

Delaware law governs Charter One's and St. Paul's ability to pay dividends on
their common stock. As Delaware corporations, Charter One and St. Paul may pay
dividends out of their surplus or, if there is no surplus, out of their net
profits for the fiscal year in which the dividend is declared and/or for the
preceding fiscal year. Delaware law also provides that dividends may not be paid
out of net profits if, after the payment of the dividends, the capital of the
corporation would be less than the capital represented by the outstanding stock
of all classes having a preference upon the distribution of assets.

ADVANCE NOTICE REQUIREMENTS FOR PRESENTATION OF BUSINESS AND NOMINATIONS OF
DIRECTORS AT ANNUAL MEETINGS OF SHAREHOLDERS

The St. Paul bylaws specify that the secretary of St. Paul must receive notice
of any shareholder nomination or proposal for business no later than 30 days or
earlier than 90 days before the date of the annual meeting of shareholders.
However, in the event that fewer than 45 days' notice or prior public disclosure
of the date of the meeting is given or made to shareholders, written notice to
the secretary of St. Paul must be received no later than the 15th day following
the earlier of the date the notice of the annual meeting date is mailed or
public disclosure is made.

The Charter One bylaws specify that the secretary of Charter One must receive
notice of any shareholder nomination or proposal for business at least 60 days
in advance of the annual meeting, but no earlier than 90 days before the date of
the annual meeting. However, in the event that fewer than 70 days' notice or
prior public disclosure of the date of the meeting is given or made to
shareholders, written notice to the secretary of Charter One must be submitted
no later than the tenth day following the earlier of the date the notice of the
annual meeting is mailed or public disclosure is made.

CUMULATIVE VOTING FOR ELECTION OF DIRECTORS

Under Delaware law, a corporation may permit cumulative voting in its
certificate of incorporation. Neither St. Paul nor Charter One shareholders are
permitted to cumulate their votes in the election of directors pursuant to their
respective certificates of incorporation. The absence of cumulative voting
rights means that the holders of a majority of the shares voted at a meeting of
shareholders may, if they so choose, elect all the directors to be selected at
that meeting, and thus preclude minority shareholder representation on the board
of directors.

<PAGE> 74

RESTRICTIONS ON VOTING RIGHTS

The St. Paul certificate of incorporation prohibits any shareholder from voting
more than 10% of the then-outstanding shares of St. Paul capital stock acquired
in violation of its certificate of incorporation. See "-- Approvals for
Acquisitions of Control and Offers to Acquire Control." The Charter One
certificate of incorporation restricts the voting rights of any shareholder with
respect to each vote in excess of 20% of the voting power of the outstanding
shares to 1/100 of a vote.

QUORUM

The St. Paul bylaws provide that presence in person or by proxy of holders of
one-third of the capital stock issued and outstanding and entitled to vote at a
meeting of shareholders constitutes a quorum. The Charter One bylaws provide
that the presence in person or by proxy of holders of a majority of the shares
of common stock entitled to vote at a meeting of shareholders constitutes a
quorum. The Charter One certificate of incorporation provides that to the extent
the voting rights of any shareholder are reduced, the reduction in voting power
will be considered for purposes of determining a quorum.

NUMBER OF DIRECTORS

The St. Paul certificate of incorporation states that the St. Paul board will
consist of not less than seven nor more than 15 directors. The number of
directors within this range may be determined by the affirmative vote of at
least two-thirds of the St. Paul directors at a duly constituted meeting or by
the affirmative vote of at least two-thirds of the total votes at a duly
constituted shareholders meeting. The St. Paul bylaws currently set the number
of directors at ten.

The Charter One certificate of incorporation provides that the Charter One board
may consist of the number of directors fixed by, or in the manner provided in,
the Charter One bylaws. The Charter One bylaws provide that the number of
directors shall be determined by a resolution adopted by the affirmative vote of
a majority of Charter One's continuing directors, as defined in the certificate
of incorporation. The Charter One board currently consists of 20 directors.

If the merger is completed, the Charter One board will be expanded to 22
members, consisting of the 20 current Charter One directors plus two St. Paul
directors. The St. Paul directors to be appointed to the board of Charter One
are Joseph C. Scully, the current Chairman of the Board and Chief Executive
Officer of St. Paul, and Patrick J. Agnew, the current President, Chief
Operating Officer and a director of St. Paul.

CLASSIFICATION OF BOARD OF DIRECTORS

The St. Paul and Charter One boards are divided into three classes as equal in
number as possible, with each class serving a staggered three-year term.

REMOVAL OF DIRECTORS

Delaware law provides that a company with a classified board of directors may
remove a director only for cause, unless its certificate of incorporation
provides otherwise. The St. Paul certificate of incorporation provides that
directors may be removed only for cause and only by the affirmative vote of at
least two-thirds of the shares entitled to vote at a meeting of shareholders
called for the purpose of conducting such vote. The Charter One certificate of
incorporation provides that directors may be removed only for cause by a vote of
a majority of the shares entitled to vote.

FILLING VACANCIES ON THE BOARD OF DIRECTORS

Both the St. Paul certificate of incorporation and the Charter One certificate
of incorporation provide that any vacancy that occurs on the board of directors
will be filled by a majority vote of the board of directors. Both certificates
of incorporation also provide that any director so chosen will hold the office
for the term of the class to which such director has been elected.

<PAGE> 75

AMENDMENT TO CERTIFICATE OF INCORPORATION AND BYLAWS

Generally, the St. Paul certificate of incorporation may be amended by the
affirmative vote of at least two-thirds of its board of directors and a majority
of the shares entitled to vote at an annual or special meeting. The amendment of
certain specified provisions in the St. Paul certificate of incorporation,
however, requires the affirmative vote of at least two-thirds of the voting
power of St. Paul's outstanding voting stock. These include certificate of
incorporation provisions relating to the number of directors, classification of
directors, vacancies on the board, removal and personal liability of directors;
amendments to the bylaws; the call of special shareholders' meetings; approval
of acquisitions of control and offers to acquire control; criteria for
evaluating certain offers; limitations on greenmail; and shareholder action. In
addition, the provisions regarding certain business combinations may be amended
only by the affirmative vote of at least 80% of the shares entitled to vote at a
meeting.

The St. Paul bylaws may be amended by the affirmative vote of at least
two-thirds of its board of directors or two-thirds of the shares entitled to
vote at a meeting.

Generally, the Charter One certificate of incorporation may be amended by the
majority vote of the Charter One board and a majority of the outstanding shares
of its voting stock. See, however, "-- Special Provisions in Charter One's
Bylaws." To amend the provision of the certificate of incorporation providing
for approval by 90% of the shareholders of certain business combinations with a
10% or greater shareholder, however, requires an affirmative vote of 90% of the
outstanding voting stock. In addition, the amendment of certain specified
provisions in the Charter One certificate of incorporation requires the
affirmative vote of at least 75% of the voting power of Charter One's
outstanding voting stock. These include certificate of incorporation provisions
relating to the number, classification, election and removal of directors; the
call of special shareholders' meetings; criteria for evaluating certain offers;
certain business combinations; limitations on payment of greenmail; shareholder
action without a meeting; indemnification of directors; limitation of directors'
liability; and amendments to these provisions of the certificate of
incorporation and bylaws.

Generally, the Charter One bylaws may be amended by the affirmative vote of
either a majority of the board of directors or 75% of the shares entitled to
vote at a meeting. See, however, "-- Special Provisions in Charter One's
Bylaws."

APPROVALS FOR ACQUISITIONS OF CONTROL AND OFFERS TO ACQUIRE CONTROL

St. Paul's certificate of incorporation prohibits any person, whether an
individual, company or group acting in concert, from acquiring beneficial
ownership of 10% or more of St. Paul's voting stock, unless the acquisition has
received the prior approval of at least two-thirds of the outstanding shares of
voting stock at a duly called meeting of shareholders held for such purpose and
of all required federal regulatory authorities. Furthermore, no person may make
an offer to acquire 10% or more of St. Paul's voting stock without obtaining
prior approval of the offer by at least two-thirds of St. Paul's board of
directors or, alternatively, before the offer is made, obtaining approval of the
acquisition from the Office of Thrift Supervision. These provisions do not apply
to the purchase of shares by underwriters in connection with a public offering
or employee stock ownership plan or other employee benefit plan of St. Paul or
any of its subsidiaries, and the provisions remain effective only so long as an
insured institution is a majority-owned subsidiary of St. Paul. Shares acquired
in excess of these limitations are not entitled to vote or take other
shareholder action or be counted in determining the total number of outstanding
shares in connection with any matter involving shareholder action. These excess
shares are also subject to transfer to a trustee, selected by St. Paul, for sale
on the open market or otherwise, with the expenses of the trustee to be paid out
of the proceeds of the sale. The Charter One certificate of incorporation does
not contain a similar provision.

BUSINESS COMBINATIONS WITH CERTAIN PERSONS

Section 203 of the Delaware General Corporation Law provides that if a person
acquires 15% or more of the stock of a Delaware corporation, thereby becoming an
"interested shareholder," that person may not engage in certain

<PAGE> 76

business combination transactions with the corporation for a period of three
years unless one of the following three exceptions applies:

- the board of directors approved the acquisition of stock or the
business combination transaction prior to the time that the person
became an interested shareholder;

- the person became an interested shareholder and 85% owner of the voting
stock of the corporation in the transaction in which it became an
interested shareholder, excluding voting stock owned by directors who
are also officers and certain employee stock plans; or

- the business combination transaction is approved by the board of
directors and by the affirmative vote of two-thirds of the outstanding
voting stock which is not owned by the interested shareholder at an
annual or special meeting.

A Delaware corporation may elect not to be governed by Section 203. Neither
Charter One nor St. Paul has made such an election and the St. Paul board of
directors has taken the necessary action to make Section 203 inapplicable to the
merger and the related transactions, including the St. Paul stock option
agreement.

The St. Paul certificate of incorporation provides that any business combination
with an interested shareholder of St. Paul requires, in addition to any vote
required by law, the affirmative approval of at least 80% of the outstanding
shares of voting stock, unless (i) two-thirds of St. Paul's continuing
directors, as defined in St. Paul's certificate of incorporation, have expressly
approved the business combination and (ii) certain fair price and procedure
requirements are satisfied.

Charter One's certificate of incorporation prohibits certain business
combinations between it and a related person. Specifically, a business
combination between Charter One and a related person that is to be consummated
within five years after the related person has attained such status must be
approved by at least 90% of the voting stock, unless the business combination or
the related person's becoming a 10% holder was approved by a majority of the
continuing directors (i.e., directors serving prior to the related person
becoming such or appointed by continuing directors) prior to the related person
becoming a related person. After the five year period lapses, a business
combination with a related person must be approved by 75% of the voting stock,
excluding shares held by or attributed to the related person, unless the
transaction is approved by a majority of the continuing directors or satisfies
certain fair price criteria. If continuing director approval is given or the
fair price criteria are met, other shareholder approval requirements would apply
and, depending on the nature of the business combination, would likely require a
majority vote of the outstanding shares.

"Business combination" is defined in St. Paul's and Charter One's certificates
of incorporation to generally include a merger, share exchange, significant
asset sales, significant stock issuances, and certain other significant
transactions. "Interested shareholder" is also defined in St. Paul's certificate
of incorporation and generally means a 5% shareholder of St. Paul. "Related
person" is defined in Charter One's certificate of incorporation and generally
means a 10% shareholder of Charter One.

The St. Paul board has taken the necessary action to make the foregoing
provisions of its certificate of incorporation inapplicable to the merger and
the related transactions, including the St. Paul stock option agreement.

PREVENTION OF GREENMAIL

St. Paul's certificate of incorporation requires approval by a majority of the
outstanding shares of voting stock before St. Paul may directly or indirectly
purchase or otherwise acquire any voting stock beneficially owned by a holder of
5% or more of St. Paul's voting stock, if such holder has owned the shares for
less than two years. Any shares beneficially held by such person are required to
be excluded in calculating majority shareholder approval. This provision would
not apply to a pro rata offer made by St. Paul to all of its shareholders in
compliance with the Securities Exchange Act of 1934 and the rules and
regulations thereunder or a purchase of voting stock by St. Paul if its board of
directors has determined that the purchase price per share does not exceed the
fair market value of such voting stock.

The Charter One certificate of incorporation generally would prohibit Charter
One from acquiring, directly or indirectly, from a beneficial owner of 5% or
more of Charter One's voting stock any of its equity securities of any class,
unless (i) the acquisition is approved by the holders of at least 75% of Charter
One's voting stock not owned

<PAGE> 77

by the beneficial owner; (ii) the acquisition is made as part of a tender or
exchange offer by Charter One or a subsidiary of Charter One to purchase
securities of the same class on the same terms to all holders of such securities
and in compliance with the Securities Exchange Act of 1934 and the rules and
regulations thereunder; (iii) the acquisition is pursuant to an open market
purchase program approved by a majority of the board of directors; or (iv) the
acquisition is at or below the market price of the Charter One common stock and
is approved by a majority of the board of directors.

LIMITATIONS ON DIRECTORS' LIABILITY

The Charter One and St. Paul certificates of incorporation provide that no
director shall be personally liable to the corporation or any of its
shareholders for monetary damages for any breach of fiduciary duty except as
follows:

(i) A director would be liable under Section 174 of the Delaware General
Corporation Law, which creates liability for unlawful payment of
dividends and unlawful stock purchases or redemptions; and

(ii)A director would also be liable for:

- breaching his or her duty of loyalty to the corporation or its
shareholders;

- acting in bad faith, failing to act in good faith or acting in a
manner involving intentional misconduct or a knowing violation of
law; or

- deriving an improper personal benefit from a transaction with the
corporation.

INDEMNIFICATION

Under Delaware law, directors, officers, employees and certain other individuals
may be indemnified against expenses. These expenses include attorneys' fees,
judgments, fines and amounts paid in settlement in connection with specified
actions, suits or proceedings. Generally, the indemnification will cover
expenses regardless of whether the action stems from a civil, criminal,
administrative or investigative proceeding if the individual acted in good faith
and in a manner he or she reasonably believed to be in, or not opposed to, the
best interests of the corporation. With regard to a criminal action or
proceeding, however, the individual may be indemnified against expenses if he or
she had no reasonable cause to believe their conduct was unlawful. A similar
standard applies in a proceeding that involves the right of the corporation
except that indemnification only extends to expenses incurred in connection with
the defense or settlement of such an action. In cases involving the right of the
corporation, Delaware law requires court approval before there can be any
indemnification when the person seeking the indemnification has been found
liable to the corporation. To the extent that a person otherwise eligible to be
indemnified is successful on the merits or otherwise in defense in any action,
suit or proceeding described above, indemnification for expenses, including
attorneys' fees, actually and reasonably incurred is mandatory under Delaware
law.

The Charter One certificate of incorporation and the St. Paul bylaws generally
provide for the same indemnification as Delaware law, including the payment of
expenses in advance of the final disposition of an action to the extent
permitted by law. The Charter One certificate of incorporation and the St. Paul
bylaws also provide for the continuation of indemnification after the
termination of the indemnified person's association with Charter One or St.
Paul, respectively.

MERGERS, ACQUISITIONS AND CERTAIN OTHER TRANSACTIONS

Delaware law, unless a corporation's certificate of incorporation requires
otherwise, generally requires approval of mergers, consolidations and
dispositions of all or substantially all of a corporation's assets by a majority
of the voting power of the corporation. Neither the Charter One certificate of
incorporation nor the St. Paul certificate of incorporation specifies a
different percentage, except as discussed above with regard to acquisitions of
control and business combinations with certain persons. See "--Approvals for
Acquisitions of Control and Offers to Acquire Control" and "--Business
Combinations with Certain Persons."

<PAGE> 78

CRITERIA FOR EVALUATING CERTAIN OFFERS

Both St. Paul's and Charter One's certificates of incorporation grant the board
of directors flexibility to consider various factors when evaluating tender
offers, mergers and dispositions of substantially all of the assets of the
corporation. These factors include the economic effects of a transaction on
customers, employees and local communities.

ACTION WITHOUT A MEETING

Under Delaware law, unless otherwise provided in a corporation's certificate of
incorporation, shareholders may act by written consent if the consent is signed
by the holders of the number of shares that would have been required to effect
the action at an actual meeting of the shareholders. Generally, holders of a
majority of outstanding shares can effect an action. However, the Charter One
certificate of incorporation and bylaws provide that any action required or
permitted to be taken by the shareholders must be effected at a duly called
annual or special meeting of shareholders and not by written consent. The St.
Paul's certificate of incorporation permits shareholder action without a meeting
if the consent is unanimous, a practical impossibility in a public corporation
such as St. Paul.

SPECIAL MEETINGS OF SHAREHOLDERS

Delaware law provides that the board of directors or those persons authorized by
the corporation's certificate of incorporation or bylaws may call a special
meeting of the corporation's shareholders. The St. Paul certificate of
incorporation permits a special meeting to be called only by the Chairman, the
President or the board of directors. The Charter One certificate of
incorporation permits a special meeting to be called only by a majority of the
board of directors, which includes a majority of continuing directors as defined
in the Charter One certificate of incorporation.

PREEMPTIVE RIGHTS

Under Delaware law, statutory preemptive rights will not exist unless a
corporation's certificate of incorporation specifically provides for these
rights. Neither the St. Paul nor Charter One certificates of incorporation
provide for preemptive rights.

APPRAISAL RIGHTS OF DISSENTING SHAREHOLDERS

Under Delaware law, the rights of dissenting shareholders to obtain the fair
value for their shares (so-called "appraisal rights") may be available in
connection with a statutory merger or consolidation in certain specific
situations. Appraisal rights are not available to a corporation's shareholders
under Delaware law when the corporation is to be the surviving corporation and
no vote of its shareholders is required to approve the merger.

In addition, unless otherwise provided in the certificate of incorporation, no
appraisal rights are available under Delaware law to holders of shares of any
class of stock which is either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the NASD or (ii) held of record by more than 2,000 shareholders,
unless such shareholders are required by the terms of the merger to accept
anything other than:

- shares of stock of the surviving corporation;

- shares of stock of another corporation which, as of the effective date
of the merger or consolidation, are of the kind described in (i) or
(ii) immediately above;

- cash instead of fractional shares of such stock; or

- any combination of consideration described in the above three bullets.

Other than as set forth above, appraisal rights are not available under Delaware
law in the event of the sale of all or substantially all of a corporation's
assets or the adoption of an amendment to its certificate of incorporation,
unless

<PAGE> 79

such rights are granted in the corporation's certificate of incorporation.
Neither the St. Paul certificate of incorporation nor the Charter One
certificate of incorporation provides for appraisal rights beyond those
specifically provided under Delaware law.

SPECIAL PROVISIONS IN CHARTER ONE'S BYLAWS

In accordance with the merger agreement by and between Charter One and FirstFed
Michigan Corporation, dated May 30, 1995, Charter One adopted certain provisions
to its bylaws regarding directors, executive officers and committees to the
exclusion of any other provision in its bylaws.

The provisions provided that the Charter One board was to consist of 16
directors, one-half of whom were selected by Charter One and one-half of whom
were selected by FirstFed Michigan. The number of directors was subsequently
increased to 20, see "-- Number of Directors." For a period of four years
following the effective date of the merger with FirstFed Michigan, Charles J.
Koch and Jerome L. Schostak shall serve as Chairman and Vice Chairman,
respectively, of the Charter One board of directors. The Charter One bylaws also
provide that for four years following the effective date of the merger with
FirstFed Michigan, if any person leaves the board, his or her successor will be
the person recommended by the directors who were directors of Charter One prior
to the merger with FirstFed Michigan, or their successors, if such departing
director was a director of Charter One prior to the merger with FirstFed
Michigan, or by the directors who were directors of FirstFed Michigan prior to
its merger with Charter One, or their successors, if the departing director was
a director of FirstFed Michigan prior to its merger with Charter One. The
effective date of the Charter One/FirstFed Michigan merger was October 31, 1995.

The Charter One bylaws also provide that for a period of four years following
the effective date of the merger, a vote of two-thirds of the entire Charter One
board is necessary to approve:

- any amendment to the Charter One certificate of incorporation or
bylaws;

- any merger, acquisition, sale of substantially all of its assets or
other extraordinary corporate transaction involving Charter One,
Charter One Bank or any other significant financial institution
subsidiary of Charter One; or

- the dismissal or replacement of any of the executive officers of
Charter One or Charter One Bank or other significant financial
institution subsidiary.

The Charter One bylaws also provide that for a period of at least four years
following the merger with FirstFed Michigan, the Charter One board as the
surviving corporation shall have a five person Executive Committee and such
other committees as the Charter One board shall establish.

RIGHTS AGREEMENT

St. Paul and Charter One each have a shareholder rights plan which could
discourage unwanted or hostile takeover attempts which are not negotiated with
the board of directors. These plans discourage such attempts by causing
substantial dilution to any person who acquires an amount in excess of a
specified percentage of the company's common stock and by making an acquisition
of the company without the consent of its board of directors prohibitively
expensive.

Each share of Charter One common stock has attached to it a right having the
terms set forth in the Charter One rights plan. Under the Charter One rights
plan, each right will separate from the common stock and become a freely
tradable security independent of the common stock (1) if a person acquires 20%
or more of Charter One common stock or (2) ten days after a person has commenced
or announced an intention to commence a tender or exchange offer to acquire 20%
or more of Charter One common stock. The ten-day period referred to in the
immediately preceding sentence may be extended by the Charter One board
indefinitely. After separation, the holder of the right will be entitled to
purchase one one-hundredth of a share of Charter One Series A preferred stock at
a price of $16.46, subject to adjustment for additional stock dividends, stock
splits and similar transactions. The liquidation, dividend, voting and other
rights of the Charter One Series A preferred stock are such that the market

<PAGE> 80

value of one one-hundredth of a share of Charter One Series A preferred stock
should approximately equal the value of one share of Charter One common stock.

If a person acquires 20% or more of Charter One common stock, each right not
held by the acquiring person will entitle its holder, for a limited period of
time, to purchase shares of Charter One Series A preferred stock or, at the
option of the Charter One board, shares of Charter One common stock, at a 50%
discount. However, rights holders will not be entitled to buy Charter One stock
at a 50% discount if the acquisition was pursuant to a permitted offer. A
"permitted offer" refers to a tender or exchange offer for all shares of Charter
One common stock at a price and on terms deemed by the Charter One board to be
adequate and in the best interests of Charter One and its shareholders. In
addition, if after a person has acquired 20% or more of Charter One common
stock, Charter One is acquired, whether by that person or another entity,
through a merger or a sale of a majority of its assets or earning power, each
right will entitle its holder to purchase common stock of the acquiring entity
at a 50% discount. However, rights holders will not be entitled to buy the
acquiring entity's stock at a 50% discount if the acquiring entity previously
bought Charter One common stock through a permitted offer and the payment per
share made by the acquiring entity to holders of Charter One common stock in the
acquisition of Charter One is the same in amount and form as the payment per
share made in the permitted offer.

The rights will expire on November 20, 1999 and may be redeemed by Charter One
for a nominal price at any time before a person acquires 20% or more of Charter
One common stock, and, under very limited circumstances, after a person has
acquired 20% or more of Charter One common stock. It is expected that before the
expiration of the Charter One rights plan, the Charter One board will adopt a
new rights plan with terms similar to those described above.

St. Paul's rights plan is substantially similar to Charter One's, except that
the percentage of outstanding shares triggering separation of the rights from
St. Paul common stock and entitling holders of rights to purchase St. Paul stock
at half-price is 10%, rather than 20%, and there is no exemption under the St.
Paul rights plan for permitted offers. By its terms, the St. Paul rights plan
will expire on November 13, 2002 unless the rights are redeemed before that
date. By amending its shareholder rights plan immediately prior to executing the
merger agreement, St. Paul has taken all steps necessary to render the rights
issued pursuant to the terms of its shareholder rights plan inapplicable to the
merger and the related agreements and transactions.

DESCRIPTION OF CHARTER ONE FINANCIAL, INC. CAPITAL STOCK

The following information regarding the material terms of Charter One's capital
stock is subject to and qualified in its entirety by reference to the Charter
One certificate of incorporation.

GENERAL

The authorized capital stock of Charter One consists of:

- 360,000,000 shares of Charter One common stock, par value $.01 per
share; and

- 20,000,000 shares of Charter One preferred stock, par value $.01 per
share.

At August 16, 1999, there were issued and outstanding:

- __________ shares of Charter One common stock;

- employee stock options to purchase an aggregate of approximately
________ shares of Charter One common stock; and

- no shares of Charter One preferred stock.

Charter One common stock is traded on the Nasdaq National Market under the
symbol "COFI." See "Comparative Stock Prices and Dividend Information." The
stock transfer agent and registrar for Charter One common stock is BankBoston,
N.A.

<PAGE> 81

COMMON STOCK

Each share of Charter One common stock has the same relative rights and is
identical in all respects with each other share of Charter One common stock.
Charter One common stock represents non-withdrawable capital, is not of an
insurable type and is not insured by the Federal Deposit Insurance Corporation
or any other government agency.

Subject to any prior rights of the holders of any Charter One preferred stock
then outstanding, holders of Charter One common stock are entitled to receive
such dividends as are declared by the Charter One board out of funds legally
available for dividends. Full voting rights are vested in the holders of Charter
One common stock; each share is entitled to one vote. See "Comparison of
Shareholders Rights -- Restrictions on Voting Rights"; "-- Quorum" and "--
Rights Agreement." Subject to any prior rights of the holders of any Charter One
preferred stock then outstanding, in the event of liquidation, dissolution or
winding up of Charter One, holders of shares of Charter One common stock are
entitled to receive, pro rata, any assets distributable to shareholders in
respect of shares held by them. Holders of shares of Charter One common stock do
not have any preemptive rights to subscribe for any additional securities which
may be issued by Charter One, nor do they have cumulative voting rights. The
outstanding shares of Charter One common stock are fully paid and
non-assessable.

Certain provisions of the Charter One certificate of incorporation may have the
effect of delaying, deferring or preventing a change in control of Charter One
pursuant to an extraordinary corporate transaction involving Charter One,
including a merger, reorganization, tender offer, transfer of substantially all
of its assets or a liquidation. Attached to each share of Charter One common
stock is a "right" entitling the holder to purchase shares of Series A
participating preferred stock of Charter One upon the occurrence of certain
events as more fully described in the Charter One Rights Agreement. See
"Comparison of Shareholder Rights -- Rights Agreement."

The foregoing discussion of the Charter One common stock is qualified in its
entirety by reference to the description of the Charter One common stock
contained in Charter One's Registration Statement on Form 8-A (as amended),
which is incorporated by reference in this joint proxy statement/prospectus. See
"Where You Can Find More Information."

PREFERRED STOCK

The Charter One certificate of incorporation authorizes the issuance by Charter
One of up to 20,000,000 shares of Charter One preferred stock, none of which was
issued and outstanding as of the Charter One record date.

The Charter One preferred stock may be issued in one or more series at such time
or times and for such consideration as the Charter One board may determine. The
Charter One board is expressly authorized at any time, and from time to time, to
issue Charter One preferred stock with such voting and other powers, preferences
and relative, participating, optional or other special rights, and
qualifications, limitations or restrictions, as shall be stated and expressed in
the Charter One board resolution providing for the issuance. The Charter One
board is authorized to designate the series and the number of shares comprising
such series, the dividend rate on the shares of such series, the redemption
rights, if any, any purchase, retirement or sinking fund provisions, any
conversion rights and any special voting rights. The ability of the Charter One
board to issue Charter One preferred stock without shareholder approval could
make an acquisition by an unwanted suitor of a controlling interest in Charter
One more difficult, time-consuming or costly, or otherwise discourage an attempt
to acquire control of Charter One.

Shares of Charter One preferred stock redeemed or acquired by Charter One may
return to the status of authorized but unissued shares, without designation as
to series, and may be reissued by the Charter One board.

See also "Comparison of Shareholder Rights -- Rights Agreement."

LEGAL MATTERS

The validity of the Charter One common stock to be issued in connection with the
merger will be passed upon by Silver, Freedman & Taff, L.L.P., 1100 New York
Avenue, N.W., Suite 700, Washington, D.C. 20005. It is a condition to the
completion of the merger that Charter One and St. Paul receive opinions from
Silver, Freedman & Taff, L.L.P. and Mayer, Brown & Platt, respectively, with
respect to the tax consequences of the merger.

<PAGE> 82

EXPERTS

The consolidated financial statements incorporated in this joint proxy
statement/prospectus by reference to the Charter One Annual Report on Form 10-K
for the year ended December 31, 1998 have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report (which expresses an unqualified
opinion and refers to the reports of other auditors on the consolidated
financial statements of RCSB Financial, Inc. and ALBANK Financial Corporation,
each of which were merged with Charter One), which is incorporated herein by
reference, and have been so incorporated in reliance upon the report of such
firm given upon their authority as experts in accounting and auditing.

The consolidated financial statements of Charter One rely in part upon the
financial statements of RCSB Financial, Inc. (which was merged into Charter One
in 1997) as audited by KPMG LLP, in reliance upon their authority as experts in
accounting and auditing.

The consolidated financial statements of Charter One rely in part upon the
financial statements of ALBANK Financial Corporation (which was merged into
Charter One in 1998) as audited by KPMG LLP, in reliance upon their authority as
experts in accounting and auditing.

The consolidated financial statements of St. Paul incorporated by reference in
St. Paul's Annual Report on Form 10- K for the year ended December 31, 1998 and
incorporated by reference in this joint proxy statement/prospectus have been
audited by Ernst & Young LLP, independent auditors, to the extent indicated in
their report thereon incorporated by reference therein and incorporated by
reference herein. Such consolidated financial statements are incorporated by
reference herein in reliance upon such report given on the authority of such
firm as experts in accounting and auditing.

The consolidated financial statements of St. Paul also rely in part upon the
financial statements of Beverly Bancorporation, Inc. (which was merged into St.
Paul in 1998) as audited by Grant Thornton LLP, independent accountants, given
upon the authority of that firm as experts in accounting and auditing.

INDEPENDENT PUBLIC ACCOUNTANTS

Representatives of Deloitte & Touche LLP are expected to be present at the
Charter One special meeting, and representatives of Ernst & Young LLP are
expected to be present at the St. Paul special meeting. In each case, such
representatives will have the opportunity to make a statement if they desire to
do so and are expected to be available to respond to appropriate questions.

FUTURE SHAREHOLDER PROPOSALS

In order to be eligible for inclusion in Charter One's proxy materials for next
year's annual meeting of shareholders, any shareholder proposal must be received
at Charter One's executive office at 1215 Superior Avenue, Cleveland, Ohio 44114
on or before November 26, 1999. To be considered for presentation at next year's
annual meeting, although not included in the proxy statement, any shareholder
proposal must be received at Charter One's executive office not less than 60
days nor more than 90 days prior to the scheduled annual meeting, regardless of
any postponements, deferrals or adjournments of that meeting to a later date;
provided, however, that in the event that less than 70 days' notice or prior
public disclosure of the date of the scheduled annual meeting is given or made,
the shareholder proposal must be received on or before the close of business on
the tenth day following the day on which notice of the date of the annual
meeting was mailed or public announcement of the date of such meeting was made,
whichever occurs first.

All shareholder proposals for inclusion in Charter One's proxy materials shall
be subject to the requirements of the proxy rules adopted under the Securities
Exchange Act of 1934, and, as with any shareholder proposal (regardless of
whether it is included in Charter One's proxy materials), Charter One's
certificate of incorporation and bylaws, and Delaware law.

<PAGE> 83

If the merger takes place, St. Paul will have no more annual meetings. If the
merger does not take place, any St. Paul shareholder who wishes to submit a
shareholder proposal for possible inclusion in the proxy statement and proxy for
St. Paul's 2000 annual meeting of shareholders must do so on or before December
18, 1999. The proposal must comply with the rules and regulations of the SEC
then in effect and the certificate of incorporation and bylaws of St.
Paul.

WHERE YOU CAN FIND MORE INFORMATION

Charter One and St. Paul file annual, quarterly and current reports, proxy
statements and other information with the SEC. You may read and copy such
information at the following public reference rooms of the SEC:

450 Fifth Street, N.W. 7 World Trade Center Citicorp Center
Room 1024 Suite 1300 500 West Madison Street
Washington, D.C. 20549 New York, NY 10048 Suite 1400
Chicago, IL 60661-2511

Please call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms. Our SEC filings are also available to the public from
commercial document retrieval services and at the world wide web site maintained
by the SEC at "http://www.sec.gov." You may also obtain copies of such
information by mail from the Public Reference Section of the SEC, at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates.

Charter One filed with the SEC a registration statement on Form S-4 under the
Securities Act of 1933 to register the shares of Charter One common stock to be
issued to St. Paul shareholders in the merger. This joint proxy
statement/prospectus is a part of that registration statement and constitutes a
prospectus of Charter One in addition to being a proxy statement of Charter One
and St. Paul for their special meetings. As permitted by SEC rules, this joint
proxy statement/prospectus does not contain all the information contained in the
registration statement or the exhibits to the registration statement. Such
additional information may be inspected and copied as set forth above.

The SEC allows us to "incorporate by reference" information into this joint
proxy statement/prospectus, which means that we can disclose important business
and financial information to you by referring you to another document filed
separately with the SEC. The information incorporated by reference is considered
to be part of this joint proxy statement/prospectus, except for any information
superseded by information contained in this joint proxy statement/prospectus or
in later filed documents incorporated by reference in this joint proxy
statement/prospectus. This joint proxy statement/prospectus incorporates by
reference the documents set forth below that we have previously filed with the
SEC. These documents contain important information about our companies and their
finances.

All of the documents filed with the SEC by Charter One (File No. 0-17901)
pursuant to the Securities Exchange Act of 1934 since the end of its fiscal year
ended December 31, 1998 are incorporated by reference in this joint proxy
statement/prospectus. These documents consist of the following:

- Charter One's Annual Report on Form 10-K for the year ended December 31,
1998.

- Charter One's Annual Meeting Proxy Statement on Form 14A filed March 19,
1999.

- Charter One's Quarterly Report on Form 10-Q for the quarter ended March
31, 1999.

- Charter One's Quarterly Report on Form 10-Q for the quarter ended June
30, 1999.

<PAGE> 84

- Charter One's Current Reports on Form 8-K filed April 20, 1999, May 3,
1999, May 18, 1999 and June 9, 1999.

The documents filed with the SEC describing the common stock of Charter One are
incorporated by reference in this joint proxy statement/prospectus. These
documents consist of the following:

- The description of the Charter One common stock contained in Charter
One's Registration Statement on Form 8-A with respect thereto dated
January 12, 1988 (and any amendment or report filed for the purpose of
updating the description).

- The description of the rights issued pursuant to the Rights Agreement
contained in Charter One's Registration Statement on Form 8-A with
respect thereto dated November 21, 1989, as amended on May 26, 1995
(and any amendment or report filed for the purpose of updating the
description).

All of the documents filed with the SEC by St. Paul (File No. 0-15580) pursuant
to the Securities Exchange Act of 1934 since the end of its fiscal year ended
December 31, 1998 are incorporated by reference in this joint proxy
statement/prospectus. These documents consist of the following:

- St. Paul's Annual Report on Form 10-K for the year ended December 31,
1998.

- St. Paul's Annual Meeting Proxy Statement on Form 14A filed April 15,
1999.

- St. Paul's Quarterly Report on Form 10-Q for the quarter ended March
31, 1999.

- St. Paul's Quarterly Report on Form 10-Q for the quarter ended June
30, 1999.

- St. Paul's Current Reports on Form 8-K filed January 28, 1999, April
9, 1999, May 19, 1999 and May 27, 1999.

We are also incorporating by reference additional documents that we file with
the SEC between the date of this joint proxy statement/prospectus and the date
of the special meetings. This incorporation by reference by us will not be
deemed to specifically incorporate by reference the information relating to
board compensation committee reports on executive compensation and performance
graphs (as permitted under Item 402(a)(8) of Regulation S-K).

Charter One supplied all information contained or incorporated by reference in
this joint proxy statement/prospectus relating to Charter One and St. Paul
supplied all such information relating to St. Paul.

If you are a shareholder, we may have sent you some of the documents
incorporated by reference, but you can obtain any of them through us or the SEC.
Documents incorporated by reference are available from us without charge.
Exhibits will not be sent, however, unless those exhibits have specifically been
incorporated by reference in this joint proxy statement/prospectus. Shareholders
may obtain documents incorporated by reference in this joint proxy
statement/prospectus by writing or telephoning the appropriate party at the
addresses and telephone numbers that follow:

Charter One Documents St. Paul Documents
- --------------------- ------------------

Charter One Financial, Inc. St. Paul Bancorp, Inc.
1215 Superior Avenue 6700 W. North Avenue
Cleveland, Ohio 44114 Chicago, Illinois 60707
Attention: Robert J. Vana Attention: Clifford M. Sladnick
(216) 566-5300 (773) 622-5000

IF YOU WOULD LIKE TO REQUEST DOCUMENTS FROM CHARTER ONE OR ST. PAUL, PLEASE DO
SO BY SEPTEMBER 23, 1999 TO RECEIVE THEM BEFORE THE SPECIAL MEETINGS.

YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE
IN THIS JOINT PROXY STATEMENT/PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE TO
PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT FROM WHAT IS CONTAINED IN THIS
JOINT PROXY STATEMENT/PROSPECTUS. YOU SHOULD NOT ASSUME THAT THE INFORMATION
CONTAINED IN THIS JOINT PROXY STATEMENT/PROSPECTUS IS ACCURATE AS OF ANY DATE
OTHER THAN THE DATE OF THIS JOINT PROXY STATEMENT/PROSPECTUS, AND NEITHER THE
MAILING OF THIS JOINT PROXY STATEMENT/PROSPECTUS TO SHAREHOLDERS NOR THE
ISSUANCE OF CHARTER ONE COMMON STOCK IN THE MERGER SHALL CREATE ANY IMPLICATION
TO THE CONTRARY.

<PAGE> 85
Appendix A

AGREEMENT AND PLAN OF MERGER

dated as of May 17, 1999

by and between

CHARTER ONE FINANCIAL, INC.

CHARTER MICHIGAN BANCORP, INC.

and

ST. PAUL BANCORP, INC.

<PAGE> 86

TABLE OF CONTENTS

ARTICLE I

CERTAIN DEFINITIONS

<S> <C> <C>
1.01 Certain Definitions..................................................2

ARTICLE II

THE TRANSACTION

2.01 The Company Merger...................................................8
2.02 Bank Merger..........................................................9
2.03 Effective Date and Effective Time...................................10
2.04 Reservation of Right to Revise Transaction..........................10

ARTICLE III

CONSIDERATION; EXCHANGE PROCEDURES

3.01 Merger Consideration................................................10
3.02 Rights as Stockholders; Stock Transfers.............................11
3.03 Fractional Shares...................................................11
3.04 Exchange Procedures.................................................11
3.05 Anti-Dilution Provisions............................................13
3.06 Options.............................................................13

ARTICLE IV

ACTIONS PENDING TRANSACTION

4.01 Forbearances of St. Paul............................................14
4.02 Forbearances of COFI................................................18

</TABLE>

<PAGE> 87

ARTICLE V

REPRESENTATIONS AND WARRANTIES

<S> <C> <C>
5.01 Disclosure Schedules................................................19
5.02 Standard............................................................20
5.03 Representations and Warranties of St. Paul..........................20
5.04 Representations and Warranties of COFI..............................31

ARTICLE VI

COVENANTS

6.01 Reasonable Best Efforts.............................................37
6.02 Stockholder Approvals...............................................37
6.03 Registration Statement..............................................38
6.04 Press Releases......................................................39
6.05 Access; Information.................................................39
6.06 St. Paul Proposal...................................................40
6.07 Affiliate Agreements................................................40
6.08 Takeover Laws.......................................................41
6.09 Certain Policies....................................................41
6.10 Listing.............................................................41
6.11 Regulatory Applications.............................................41
6.12 Officers' and Directors' Insurance; Indemnification.................42
6.13 Benefit Plans.......................................................44
6.14 Notification of Certain Matters.....................................44
6.15 Directors...........................................................44
6.16 Advisory Board Membership...........................................44
6.17 COFI Fee............................................................45
6.18 St. Paul Fee........................................................45

ARTICLE VII

CONDITIONS TO CONSUMMATION OF THE COMPANY MERGER

7.01 Conditions to Each Party's Obligation to Effect the Company Merger..46
7.02 Conditions to Obligation of St. Paul................................47
7.03 Conditions to Obligation of COFI....................................48
</TABLE>

<PAGE> 88

ARTICLE VIII

TERMINATION

<S> <C> <C>
8.01 Termination.........................................................49
8.02 Effect of Termination and Abandonment...............................53

ARTICLE IX

MISCELLANEOUS

9.01 Survival............................................................53
9.02 Waiver; Amendment...................................................53
9.03 Counterparts........................................................53
9.04 Governing Law.......................................................53
9.05 Expenses............................................................54
9.06 Notices.............................................................54
9.07 Entire Understanding; No Third Party Beneficiaries..................55
9.08 Interpretation; Effect..............................................55

EXHIBIT A Form of Stock Option Agreement
EXHIBIT B Form of Support Agreement
EXHIBIT C Form of Subsidiary Plan of Merger
EXHIBIT D Form of St. Paul Affiliate Agreement
EXHIBIT E Form of COFI Affiliate Agreement

</TABLE>

iii

<PAGE> 89

AGREEMENT AND PLAN OF MERGER, dated as of May 17, 1999 (this "AGREEMENT"),
by and between St. Paul Bancorp, Inc. ("ST. PAUL"), Charter One Financial, Inc.
("COFI") and Charter Michigan Bancorp Inc., a wholly-owned first-tier Subsidiary

of COFI ("CHARTER MICHIGAN").

RECITALS

A. ST. PAUL. St. Paul is a Delaware corporation, having its principal place
of business in Chicago, Illinois.

B. COFI. COFI is a Delaware corporation, having its principal place of
business in Cleveland, Ohio.

C. CHARTER MICHIGAN. Charter Michigan is a Michigan corporation, having its
principal place of business in Dearborn, Michigan.

D. STOCK OPTION AGREEMENT. As an inducement to the willingness of COFI to
enter into this Agreement , St. Paul has agreed to grant to COFI on the date
hereof an option pursuant to a stock option agreement ("Stock Option
Agreement"), in the form of EXHIBIT A.

E. SUPPORT AGREEMENTS. As a further inducement to the willingness of COFI
to enter into this Agreement, each director of St. Paul has agreed to enter into
a support agreement with COFI (each a "Support Agreement") on the date hereof,
in the form of EXHIBIT B; provided however the aggregate number of shares that
shall be subject to all of the Support Agreements shall not exceed 4.9% of the
outstanding St. Paul Common Stock (as hereinafter defined) as of the date
hereof.

F. INTENTIONS OF THE PARTIES. It is the intention of the parties to this
Agreement that the combination of St. Paul and Charter Michigan be accounted for
under the "pooling-of-interests" accounting method and that each of the business
combinations contemplated hereby be treated as a "reorganization" under Section
368 of the Internal Revenue Code of 1986, as amended (the "CODE").

G. BOARD ACTION. The respective Boards of Directors of each of COFI,
Charter Michigan and St. Paul have determined that it is in the best interests
of their respective companies and their stockholders to consummate a strategic
business alliance between St. Paul and COFI by the merger of St. Paul with and
into Charter Michigan and the other business combination contemplated herein.

NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements contained herein the
parties agree as follows:

<PAGE> 90

ARTICLE I

CERTAIN DEFINITIONS

1.01 CERTAIN DEFINITIONS. The following terms are used in this Agreement
with the meanings set forth below:

"ADMINISTRATOR" means the chief officer of the Michigan Department of
Commerce.

"AGREEMENT" means this Agreement, as amended or modified from time to time
in accordance with Section 9.02.

"ANNUAL PROXY STATEMENT" means in the case of either St. Paul or COFI its
Proxy Statement for its Annual Meeting of Shareholders held in 1999 as filed
with the SEC and submitted to its shareholders.

"AVERAGE CLOSING PRICE" has the meaning set forth in Section 8.01(f).

"BANK MERGER" has the meaning set forth in Section 2.02.

"CHARTER MICHIGAN" has the meaning set forth in the preamble to this
Agreement.

"CHARTER MICHIGAN BOARD" means the Board of Directors of Charter Michigan.

"CHARTER ONE BANK" has the meaning set forth in Section 2.02.

"CODE" has the meaning set forth in the Recitals to this Agreement.

"COFI" has the meaning set forth in the preamble to this Agreement.

"COFI ACQUISITION TRANSACTION" has the meaning set forth in Section 6.18.

"COFI AFFILIATE" has the meaning set forth in Section 6.07(a).

"COFI BOARD" means the Board of Directors of COFI.

"COFI COMMON STOCK" means the common stock, par value $0.01 per share, of
COFI.

"COFI MEETING" has the meaning set forth in Section 6.02.

"COFI PROPOSAL" has the meaning set forth in Section 6.18.

"COFI RATIO" has the meaning set forth in Section 8.01(f).

<PAGE> 91

"COFI RIGHTS AGREEMENT" means that certain Rights Agreement between COFI
and The First National Bank of Boston, as Rights Agent, dated November 24, 1989,
as amended on May 26, 1995.

"COMMISSIONER" means the Illinois Commissioner of Banks and Real Estate.

"COMPANY MERGER" has the meaning set forth in Section 2.01.

"COMPENSATION AND BENEFIT PLANS" has the meaning set forth in Section
5.03(m).

"COSTS" has the meaning set forth in Section 6.12(a).

"DELAWARE SECRETARY" means the Secretary of State of the State of Delaware.

"DETERMINATION DATE" has the meaning set forth in Section 8.01(f).

"DGCL" means the Delaware General Corporation Law.

"DISCLOSURE SCHEDULE" has the meaning set forth in Section 5.01.

"DOJ" means the United States Department of Justice.

"DOL" means the United States Department of Labor.

"EFFECTIVE DATE" means the date on which the Effective Time occurs.

"EFFECTIVE TIME" means the effective time of the Company Merger as provided
for in Section 2.03.

"ENVIRONMENTAL LAWS" shall mean any federal, state or local law, statute,
ordinance, rule, regulation, code, license, permit, authorization, approval,
consent, order, judgment, decree, injunction or agreement with any Governmental
Authority relating to (i) the protection, preservation or restoration of the
environment (including, without limitation, air, water vapor, surface water,
groundwater, drinking water supply, surface soil, subsurface soil, plant and
animal life or any other natural resource), and/or (ii) the use, storage,
recycling, treatment, generation, transportation, processing, handling,
labeling, production, release or disposal of Materials of Environmental Concern.
The term Environmental Law includes without limitation (i) the Comprehensive
Environmental Response, Compensation and Liability Act, as amended, 42 U.S.C.
ss.9601, ET SEQ; the Resource Conservation and Recovery Act, as amended, 42
U.S.C. ss.6901, ET SEQ; the Clean Air Act, as amended, 42 U.S.C. ss.7401, ET
SEQ; the Federal Water Pollution Control Act, as amended, 33 U.S.C. ss.1251, ET
SEQ; the Toxic Substances Control Act, as amended, 15 U.S.C. ss.9601, ET SEQ;
the Emergency Planning and Community Right to Know Act, 42 U.S.C. ss.1101, ET
SEQ; the Safe Drinking Water Act, 42 U.S.C. ss.300f, ET SEQ; and all comparable
state and local laws, and (ii) any common law (including without limitation

<PAGE> 92

common law that may impose strict liability) that may impose liability or
obligations for injuries or damages due to, or threatened as a result of, the
presence of or exposure to any Materials of Environmental Concern.

"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.

"ERISA AFFILIATE" has the meaning set forth in Section 5.03(m).

"ERISA AFFILIATE PLAN" has the meaning set forth in Section 5.03(m).

"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations thereunder.

"EXCHANGE AGENT" has the meaning set forth in Section 3.04(a).

"EXCHANGE FUND" has the meaning set forth in Section 3.04(a).

"EXCHANGE RATIO" has the meaning set forth in Section 3.01(a).

"FDIC" means the Federal Deposit Insurance Corporation.

"FFIEC" means the Federal Financial Institutions Examination Council.

"FRB" means the Board of Governors of the Federal Reserve System.

"GOVERNMENTAL AUTHORITY" means any court, administrative agency or
commission or other federal, state or local governmental authority or
instrumentality.

"INDEMNIFIED PARTIES" has the meaning set forth in Section 6.12(c).

"INDEX GROUP" has the meaning set forth in Section 8.01(f).

"INDEX PRICE" has the meaning set forth in Section 8.01(f).

"INDEX RATIO" has the meaning set forth in Section 8.01(f).

"INSURANCE AMOUNT" has the meaning set forth in Section 6.12(a).

"IRS" means the Internal Revenue Service.

"KNOWLEDGE" means to the actual knowledge of any director, executive
officer, or officer responsible for environmental matters of a party to this
Agreement or any of its Subsidiaries but also including its general counsel if
he is not an executive officer.

<PAGE> 93

"LIEN" means any charge, mortgage, pledge, security interest, restriction,
claim, lien, or encumbrance.

"MATERIAL ADVERSE EFFECT" means, with respect to COFI or St. Paul, any
effect that (i) is material and adverse to the financial position, results of
operations, business, or operations of COFI and its Subsidiaries taken as a
whole or St. Paul and its Subsidiaries taken as a whole, respectively, or (ii)
would materially impair the ability of COFI, Charter Michigan or St. Paul to
perform its obligations under this Agreement or otherwise materially impede the
consummation of the Company Merger; PROVIDED, HOWEVER, that Material Adverse
Effect shall not be deemed to include the impact of (a) changes in thrift,
banking and similar laws of general applicability or interpretations thereof by
courts or governmental authorities, or other changes affecting depository
institutions generally, including changes in general economic conditions and
changes in prevailing interest and deposit rates, (b) changes in generally
accepted accounting principles or regulatory accounting requirements applicable
to thrifts, banks and their holding companies generally, (c) any modifications
or changes to valuation policies and practices or restructuring charges, in each
case taken pursuant to this Agreement by any of the parties hereto or their
respective Subsidiaries or otherwise by COFI or its Subsidiaries in accordance
with generally accepted accounting principles, (d) changes resulting from
expenses (such as legal, accounting and investment bankers' fees) incurred in
connection with this Agreement and (e) actions or omissions of COFI or St. Paul
taken with the prior written consent of St. Paul or COFI, as applicable, in
contemplation of the transactions contemplated hereby.

"MATERIALS OF ENVIRONMENTAL CONCERN" shall mean pollutants, contaminants,
wastes, toxic substances, petroleum and petroleum products and any other
materials regulated under Environmental Laws.

"MBCA" means the Michigan Business Corporation Act.

"MERGER CONSIDERATION" has the meaning set forth in Section 2.04.

"NASDAQ" means The Nasdaq National Market.

"NEW CERTIFICATES" has the meaning set forth in Section 3.04(a).

"1998 FORM 10-K" means the Annual Report on Form 10-K for the fiscal year
ended December 31, 1998 of St. Paul or COFI, whichever is applicable, in the
form filed with the SEC.

"NYSE" means the New York Stock Exchange, Inc.

"OLD CERTIFICATES" has the meaning set forth in Section 3.04(a).

"OTS" means the Office of Thrift Supervision.

"PBGC" means the Pension Benefit Guaranty Corporation.

<PAGE> 94

"PENSION PLAN" has the meaning set forth in Section 5.03(m).

"PERSON" means any individual, bank, corporation, partnership, limited
liability company, association, joint-stock company, business trust or
unincorporated organization.

"PREVIOUSLY DISCLOSED" by a party shall mean information set forth in its
Disclosure Schedule or in its Annual Proxy Statement or 1998 Form 10-K.

"PROXY STATEMENT" has the meaning set forth in Section 6.03.

"REGISTRATION STATEMENT" has the meaning set forth in Section 6.03.

"REGULATORY AUTHORITY" has the meaning set forth in Section 5.03(i).

"REPRESENTATIVES" means, with respect to any Person, such Person's
directors, officers, employees, accountants, legal or financial advisors or any
representatives of such legal or financial advisors.

"RIGHTS" means, with respect to any Person, securities or obligations
convertible into or exercisable or exchangeable for, or giving any person any
right to subscribe for or acquire, or any options, calls or commitments relating
to, or any stock appreciation right or other instrument the value of which is
determined in whole or in part by reference to the market price or value of,
shares of capital stock of such Person.

"SEC" means the Securities and Exchange Commission.

"SEC DOCUMENTS" has the meaning set forth in Section 5.03(g).

"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder.

"SPECIFIED REPRESENTATIONS" has the meaning set forth in Section 5.02.

"STARTING DATE" has the meaning set forth in Section 8.01(f).

"STARTING PRICE" has the meaning set forth in Section 8.01(f).

"STOCK OPTION AGREEMENT" has the meaning set forth in the Recitals to this
Agreement.

"ST. PAUL" has the meaning set forth in the preamble to this Agreement.

"ST. PAUL ACQUISITION TRANSACTION" has the meaning set forth in Section
6.17.

"ST. PAUL AFFILIATE" has the meaning set forth in Section 6.07(a).

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"ST. PAUL ARRANGEMENTS" has the meaning set forth in Section 6.13(a).

"ST. PAUL BANK" has the meaning set forth in Section 2.02.

"ST. PAUL BOARD" means the Board of Directors of St. Paul.

"ST. PAUL BY-LAWS" means the Bylaws of St. Paul.

"ST. PAUL CERTIFICATE" means the Certificate of Incorporation of St. Paul.

"ST. PAUL COMMON STOCK" means the common stock, par value $0.01 per share,
of St. Paul.

"ST. PAUL MEETING" has the meaning set forth in Section 6.02.

"ST. PAUL PREFERRED STOCK" means the serial preferred stock, par value
$0.01 per share, of St. Paul.

"ST. PAUL PROPOSAL" has the meaning set forth in Section 6.17.

"ST. PAUL RIGHTS" has the meaning set forth in Section 5.03(o).

"ST. PAUL RIGHTS AGREEMENT" means that certain Rights Agreement between St.
Paul and The First National Bank of Boston, Rights Agent, dated as of October

26, 1992.

"ST. PAUL STOCK" means, collectively, St. Paul Common Stock and St. Paul
Preferred Stock.

"ST. PAUL STOCK OPTION" has the meaning set forth in Section 3.06(a).

"ST. PAUL STOCK PLANS" means the St. Paul Bancorp, Inc. Stock Option Plan
dated ___________, 1998 as modified by Amendments No. 1 and 2 thereto approved
by shareholders on May 13, 1992 and May 4, 1994, respectively; the St. Paul
Bancorp, Inc. 1995 Incentive Plan approved by shareholders on May 3, 1995 as
modified by an amendment thereto approved by shareholders on May 6 ,1998; the
St. Paul Bancorp, Inc. Employee Incentive Plan as approved by the Board of
Directors on May 19, 1997; and the Beverly Bancorporation Stock Option Plan and
the Beverly Bancorporation, Inc. 1997 Long-Term Stock Incentive Plan to the
extent assumed by St. Paul in connection with the conversion of Beverly
Bancorporation, Inc., stock options to rights to acquire St. Paul Common Stock
pursuant to the merger of Beverly Bancorporation, with and into St. Paul.

"SUBSIDIARY" has the meaning ascribed to it in Rule 1-02 of Regulation S-X
of the SEC.

"SUPPORT AGREEMENT" has the meaning set forth in the Recitals to this
Agreement.

"SURVIVING CORPORATION" has the meaning set forth in Section 2.01.

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"TAKEOVER LAWS" has the meaning set forth in Section 5.03 (o).

"TAX" AND "TAXES" means all federal, state, local or foreign taxes,
charges, fees, levies or other assessments, however denominated, including,
without limitation, all net income, gross income, gains, gross receipts, sales,
use, ad valorem, goods and services, capital, production, transfer, franchise,
windfall profits, license, withholding, payroll, employment, disability,
employer health, excise, estimated, severance, stamp, occupation, property,
environmental, unemployment or other taxes, custom duties, fees, assessments or
charges of any kind whatsoever, together with any interest and any penalties,
additions to tax or additional amounts, in each case imposed by any taxing or
Governmental Authority whether arising before, on or after the Effective Date.

"TAX RETURNS" means any return, amended return or other report (including
elections, declarations, disclosures, schedules, estimates and information
returns) required to be filed with any Governmental Authority with respect to
any Tax.

"TRANSACTION" means the Company Merger and the Bank Merger.

"TREASURY STOCK" shall mean shares of St. Paul Stock held by St. Paul or
any of its Subsidiaries or by COFI or any of its Subsidiaries, in each case
other than in a fiduciary capacity or as a result of debts previously contracted
in good faith.

ARTICLE II

THE TRANSACTION

2.01 THE COMPANY MERGER.

(a) COMPANY MERGER. At the Effective Time, St. Paul shall
merge with and into Charter Michigan (the "COMPANY MERGER"), the
separate corporate existence of St. Paul shall cease and Charter
Michigan shall survive and continue to exist as a Michigan corporation
(Charter Michigan, as the surviving corporation in the Company Merger,
sometimes being referred to herein as the "SURVIVING CORPORATION").

(b) CORPORATE LAW FILINGS. Subject to the satisfaction or
waiver of the conditions set forth in Article VII, the Company Merger
shall become effective upon the occurrence of the filing in the office
of the Delaware Secretary of a certificate of merger in accordance with
Section 252 of the DGCL and the filing in the office of and endorsement
by the Administrator of a certificate of merger in accordance with
Section 735 of the MBCA or such later date and time as may be set forth
in such certificates of merger.

(c) EFFECTS OF COMPANY MERGER. The Company Merger shall have
the effects prescribed in the DGCL and the MBCA, including but not
limited to, Charter Michigan, as the Surviving Corporation, thereupon
and thereafter possessing all of the rights, privileges, immunities and
franchises, of a public as well as of a private nature, of each of the

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corporations so merged and Charter Michigan, as the Surviving
Corporation, becoming responsible and liable for all the liabilities,
obligations and penalties of each of the corporations so merged. All
rights of creditors and obligors and all liens on the property of each
of St. Paul and Charter Michigan shall be preserved unimpaired.

(d) ARTICLES OF INCORPORATION AND BY-LAWS OF SURVIVING
CORPORATION. The Articles of Incorporation and Bylaws of Charter
Michigan immediately after the Company Merger shall be those of Charter
Michigan as in effect immediately prior to the Effective Time.

(e) DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. The
directors and officers of Charter Michigan immediately after the
Company Merger shall be the directors and officers of Charter Michigan
immediately prior to the Effective Time, until such time as their
successors shall be duly elected and qualified. Immediately after the
Effective Time, COFI and Charter Michigan shall cause each of Joseph C.
Scully and Patrick J. Agnew to be added to the Charter Michigan Board
for a term expiring in April 2002, unless such individual does not
qualify to serve under guidelines of applicable Regulatory Authorities.

(f) SERVICE OF PROCESS. At the Effective Time, Charter
Michigan, as the Surviving Corporation, consents to be sued and served
with process in the State of Delaware and irrevocably appoints the
Delaware Secretary as its agent to accept service of process in any
proceeding in the State of Delaware to enforce against it any
obligation of St. Paul.

(g) PRINCIPAL OFFICE. The location of the principal office of
Charter Michigan, as the Surviving Corporation, in the State of
Michigan is 13606 Michigan Avenue, 2nd Floor, Dearborn, Michigan 48126.

(h) PLAN OF MERGER. At the reasonable request of any party,
St. Paul, COFI and Charter Michigan shall enter into a separate plan of
merger reflecting the terms of the Company Merger for purposes of any
state law filing requirement.

2.02 BANK MERGER. As soon as practicable at or after the Effective
Time, unless otherwise determined by COFI, St. Paul Federal Bank For Savings, a
federally chartered savings bank and wholly owned Subsidiary of St. Paul ("ST.
PAUL BANK"), shall be merged with and into Charter One Bank, F.S.B., a federally
chartered savings bank and wholly-owned Subsidiary of Charter Michigan ("CHARTER
ONE BANK"). Such merger is hereinafter sometimes referred to as the "BANK
MERGER". The Bank Merger shall be implemented pursuant to the Subsidiary Plan of
Merger, in substantially the form of Exhibit C. In order to obtain the necessary
regulatory approvals for the Bank Merger, the parties hereto shall cause the
following to be accomplished prior to the filing of applications for regulatory

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approval: (a) St. Paul shall cause the Board of Directors of St. Paul Bank to
approve the Subsidiary Plan of Merger, St. Paul as the sole stockholder of St.
Paul Bank shall approve the Subsidiary Plan of Merger, and St. Paul shall cause
the Subsidiary Plan of Merger to be duly executed by St. Paul Bank and delivered
to COFI; and (b) Charter Michigan shall cause the Board of Directors of Charter
One Bank to approve the Subsidiary Plan of Merger, Charter Michigan as the sole
stockholder of Charter One Bank shall approve the Subsidiary Plan of Merger, and
Charter Michigan shall cause the Subsidiary Plan of Merger to be duly executed
by Charter One Bank and delivered to St. Paul. At the request of COFI, St. Paul
shall cause St. Paul Bank, and Charter Michigan shall cause Charter One Bank, to
execute articles of combination to make effective the Bank Merger and cause such
articles to be timely and appropriately filed and endorsed by OTS so that the
Bank Merger shall become effective as soon as practicable at or after the
Effective Time.

2.03 EFFECTIVE DATE AND EFFECTIVE TIME. Subject to the satisfaction or
waiver of the conditions set forth in Article VII, the parties shall cause the
effective date of the Company Merger (the "EFFECTIVE DATE") to occur on (i) the
fifth business day (the "Fifth Business Day") after the last of the conditions
set forth in Article VII to be satisfied prior to the Effective Date shall have
been satisfied or waived in accordance with the terms of this Agreement (or, if
the Fifth Business Day would be within the last ten days of a calendar month, at
the election of COFI by written notice to St. Paul not later than two business
days after the last such condition in Article VII is satisfied or waived, on the
last business day of the month in which such satisfaction or waiver occurs) or
(ii) such other date to which St. Paul and COFI may agree in writing. The time
on the Effective Date when the Company Merger shall become effective is referred
to as the "EFFECTIVE TIME."

2.04 RESERVATION OF RIGHT TO REVISE TRANSACTION. COFI may at any time
prior to the Effective Time, with the prior written consent of St. Paul (such
consent not to be unreasonably withheld or delayed), change the method of
effecting the Company Merger if and to the extent it deems such change to be
necessary, appropriate or desirable; PROVIDED, HOWEVER, that no such change
shall (i) alter or change the amount or kind of consideration to be issued to
holders of St. Paul Common Stock as provided for in this Agreement (the "MERGER
CONSIDERATION"), (ii) adversely affect the tax treatment of St. Paul's
stockholders as a result of receiving the Merger Consideration or the Company
Merger qualifying for "pooling-of-interests" accounting treatment, (iii)
materially impede or delay consummation of the Company Merger, (iv) result in
any representation or warranty of any party set forth in this Agreement becoming
incorrect in any material respect, or (v) diminish the benefits, including
membership on the COFI Board or COFI advisory board, to be received by the
directors, officers or employees of St. Paul and its Subsidiaries as set forth
in this Agreement or in any separate agreement entered into by COFI and St. Paul
on the date hereof.

ARTICLE III

CONSIDERATION; EXCHANGE PROCEDURES

3.01 MERGER CONSIDERATION. Subject to the provisions of this Agreement,
at the Effective Time, automatically by virtue of the Company Merger and without
any action on the part of any Person:

(a) OUTSTANDING ST. PAUL COMMON STOCK. Each share, excluding
Treasury Stock, of St. Paul Common Stock issued and outstanding
immediately prior to the Effective Time shall become and be converted
into, subject to Sections 3.03, 3.05 and 8.01(f) hereof, .945 of a
share of COFI Common Stock (the "EXCHANGE RATIO"), including the

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corresponding number of Rights associated with the COFI Common Stock
pursuant to the COFI Rights Agreement. The Exchange Ratio shall be
subject to adjustment as set forth in Sections 3.05 and 8.01(f).

(b) OUTSTANDING CHARTER MICHIGAN COMMON STOCK. Each share of
Charter Michigan common stock issued and outstanding or held in
treasury immediately prior to the Effective Time shall remain issued
and outstanding or held in treasury and continue to be an identical
issued and outstanding or treasury share of Charter Michigan common
stock after the Effective Time.

(c) OUTSTANDING COFI COMMON STOCK. Each share of COFI Common
Stock issued and outstanding or held in treasury immediately prior to
the Effective Time shall remain issued and outstanding or held in
treasury and shall be unaffected by the Company Merger.

(d) TREASURY SHARES. Each share of St. Paul Common Stock held
as Treasury Stock immediately prior to the Effective Time shall be
canceled and retired at the Effective Time, and no consideration shall
be issued in exchange therefor.

3.02 RIGHTS AS STOCKHOLDERS; STOCK TRANSFERS. At the Effective Time,
holders of St. Paul Stock shall cease to be, and shall have no rights as,
stockholders of St. Paul, other than to receive any dividend or other
distribution with respect to such St. Paul Common Stock permitted under this
Agreement with a record date occurring prior to the Effective Time and the
consideration provided under this Article III. After the Effective Time, there
shall be no transfers on the stock transfer books of St. Paul or the Surviving
Corporation of shares of St. Paul Stock.

3.03 FRACTIONAL SHARES. Notwithstanding any other provision hereof, no
fractional shares of COFI Common Stock and no certificates or scrip therefor, or
other evidence of ownership thereof, will be issued in the Company Merger;
instead, COFI shall pay to each holder of St. Paul Common Stock who would
otherwise be entitled to a fractional share of COFI Common Stock (after taking
into account all Old Certificates delivered by such holder) an amount in cash
(without interest) determined by multiplying such fraction by the closing sale
price of COFI Common Stock, on the NASDAQ or the NYSE, whichever is applicable
(as reported in THE WALL STREET JOURNAL or, if not reported therein, in another
authoritative source), for the last trading day immediately preceding the
Effective Date.

3.04 EXCHANGE PROCEDURES.

(a) DEPOSIT OF NEW CERTIFICATES, ETC. At or prior to the
Effective Time, COFI shall deposit, or shall cause to be deposited,
with an independent exchange agent to be selected by COFI and
reasonably acceptable to St. Paul (the "EXCHANGE AGENT"), for the
benefit of the holders of certificates formerly representing shares of
St. Paul Common Stock ("OLD CERTIFICATES"), for exchange in accordance
with this Article III, certificates representing the shares of COFI
Common Stock ("NEW CERTIFICATES") and an estimated amount of cash (such

<PAGE> 100

cash and New Certificates, together with any dividends or
distributions with a record date occurring after the Effective Date
with respect thereto (without any interest on any such cash, dividends
or distributions), being hereinafter referred to as the "EXCHANGE
FUND") to be paid pursuant to this Article III in exchange for
outstanding shares of St. Paul Common Stock.

(b) TRANSMITTAL AND DELIVERIES. As promptly as practicable
after the Effective Date, COFI shall send or cause to be sent to each
former holder of record of shares of St. Paul Common Stock immediately
prior to the Effective Time transmittal materials (which shall specify
that risk of loss and title to Old Certificates shall pass only upon
acceptance of such Old Certificates by COFI or the Exchange Agent) for
use in exchanging such stockholder's Old Certificates for the
consideration set forth in this Article III. COFI shall cause the New
Certificates or uncertificated shares of COFI Common Stock registered
on the stock transfer books of COFI ("Registered Shares") into which
shares of a stockholder's St. Paul Common Stock are converted on the
Effective Date and/or any check in respect of any fractional share
interest or dividends or distributions which such person shall be
entitled to receive to be delivered to such stockholder upon delivery
to the Exchange Agent of Old Certificates representing such shares of
St. Paul Common Stock (or indemnity reasonably satisfactory to COFI and
the Exchange Agent, if any of such certificates are lost, stolen or
destroyed) owned by such stockholder. No interest will be paid on any
such cash to be paid in lieu of a fractional share interest or in
respect of dividends or distributions which any such person shall be
entitled to receive pursuant to this Article III upon such delivery.
Old Certificates surrendered for exchange by any person identified by
St. Paul pursuant to Section 6.07 as a St. Paul Affiliate shall not be
exchanged for New Certificates or Registered Shares representing COFI
Common Stock until COFI has received a written agreement from such
person as specified in Section 6.07. COFI and the Exchange Agent shall
be entitled to rely upon the stock transfer books of St. Paul to
establish the identity of those persons entitled to receive the
consideration specified in this Agreement, which books shall be
conclusive with respect thereto. In the event of a dispute with respect
to ownership of stock represented by any Old Certificate, COFI or the
Exchange Agent shall be entitled to deposit any consideration in
respect thereof in escrow with an independent third party and
thereafter be relieved with respect to any claims thereto.

(c) ESCHEAT. Notwithstanding the foregoing, neither the
Exchange Agent nor any party hereto shall be liable to any former
holder of St. Paul Stock for any amount properly delivered to a public
official pursuant to applicable abandoned property, escheat or similar
laws.

(d) RESTRICTIONS ON THE PAYMENT OF DIVIDENDS AND VOTING. No
dividends or other distributions with respect to COFI Common Stock with
a record date occurring after the Effective Time shall be paid to the
holder of any unsurrendered Old Certificates representing shares of St.
Paul Common Stock converted in the Company Merger into the right to
receive shares of such COFI Common Stock until the holder thereof shall
be entitled to receive New Certificates or Registered Shares in
exchange therefor in accordance with the procedures set forth in this

<PAGE> 101

Section 3.04. Registered holders of unsurrendered Old Certificates
shall be entitled to vote after the Effective Time at any meeting of
COFI stockholders with a record date at or after the Effective Time the
number of whole shares of COFI Common Stock represented by such Old
Certificates, regardless of whether such holders have exchanged their
Old Certificates. After becoming so entitled in accordance with this
Section 3.04, the record holder thereof also shall be entitled to
receive any such dividends or other distributions, without any interest
thereon, which theretofore had become payable with respect to shares of
COFI Common Stock such holder had the right to receive upon surrender
of the Old Certificates.

(e) RETURN OF EXCHANGE FUND TO COFI. Any portion of the
Exchange Fund that remains unclaimed by the stockholders of St. Paul
for twelve months after the Effective Time shall be paid to COFI. Any
stockholder of St. Paul who has not theretofore complied with this
Article III shall thereafter look only to COFI for payment of the
shares of COFI Common Stock, cash in lieu of any fractional share and
unpaid dividends and distributions on COFI Common Stock deliverable in
respect of shares of St. Paul Common Stock such stockholder holds as
determined pursuant to this Agreement, in each case, without any
interest thereon.

3.05 ANTI-DILUTION PROVISIONS. In the event COFI changes (or
establishes a record date for changing) the number of shares of COFI Common
Stock issued and outstanding prior to the Effective Date as a result of a stock
split, stock dividend, recapitalization or similar transaction with respect to
the outstanding COFI Common Stock and the record date therefor shall be prior to
the Effective Date, the Exchange Ratio shall be proportionately adjusted.

3.06 OPTIONS.

(a) CONVERSION. At the Effective Time, each option outstanding
on the date of this Agreement to purchase shares of St. Paul Common
Stock under the St. Paul Stock Plans (each, a "ST. PAUL STOCK OPTION")
and remaining outstanding immediately prior to the Effective Time
shall, at the Effective Time, be assumed by COFI and each such St. Paul
Stock Option shall continue to be outstanding, but shall represent an
option to purchase shares of COFI Common Stock in an amount and at an
exercise price determined as provided below (and otherwise subject to
the terms of the applicable St. Paul Stock Plan and St. Paul Stock
Option):

(i) the number of shares of COFI Common Stock to be
subject to the continuing St. Paul Stock Option shall be equal
to the product of the number of shares of St. Paul Common
Stock subject to the St. Paul Stock Option immediately prior
to the Effective Time and the Exchange Ratio, provided that
any fractional share of COFI Common Stock resulting from such
multiplication shall be rounded down to the nearest whole
share; and

<PAGE> 102

(ii) the exercise price per share of COFI Common
Stock under the continuing St. Paul Stock Option shall be
equal to the exercise price per share of St. Paul Common Stock
under the St. Paul Stock Option immediately prior to the
Effective Time divided by the Exchange Ratio, provided that
such exercise price shall be rounded down to the nearest cent.

It is intended that the foregoing assumption shall be
undertaken consistent with and in a manner that will not constitute a
"modification" under Section 424 of the Code as to any St. Paul Stock
Option which is an "incentive stock option".

(b) RESERVATION OF COFI COMMON STOCK AND SECURITIES FILINGS.
At all times after the Effective Time, COFI shall reserve for issuance
such number of shares of COFI Common Stock as necessary so as to permit
the exercise of continuing options in the manner contemplated by this
Agreement and the instruments pursuant to which such options were
granted. COFI shall make all filings required under federal and state
securities laws promptly after the Effective Time so as to permit the
exercise of such continuing options and the sale of the shares received
by the optionee upon such exercise at and after the Effective Time and
COFI shall continue to make such filings thereafter as may be necessary
to permit the continued exercise of continuing options and sale of such
shares.

ARTICLE IV

ACTIONS PENDING TRANSACTION

4.01 FORBEARANCES OF ST. PAUL. From the date hereof until the Effective
Time, except as expressly contemplated by this Agreement or any separate
agreement entered into by St. Paul and COFI on the date hereof, without the
prior written consent of COFI (which consent under subsections (h), (k), (l) and
(m) shall not be unreasonably withheld or delayed), St. Paul will not, and will
cause each of its Subsidiaries not to:

(a) ORDINARY COURSE. Conduct the business of St. Paul and its
Subsidiaries other than in the ordinary and usual course consistent
with past practice or fail to use reasonable efforts to (i) preserve
intact in any material respect their business organizations and assets
and (ii) maintain their rights, franchises and existing relations with
customers, suppliers, employees and business associates, or take any
action reasonably likely to materially impair St. Paul's ability to
perform any of its obligations under this Agreement.

(b) ST. PAUL STOCK. Other than pursuant to St. Paul Stock
Options outstanding on the date hereof and the Serve Corps Mortgage
Corporation earn out, in each case as Previously Disclosed (i) issue,
sell or otherwise permit to become outstanding, or authorize the
creation of, any additional shares of St. Paul Stock or any Rights,
(ii) enter into any agreement with respect to the foregoing, or (iii)
permit any additional shares of St. Paul Stock to become subject to new
grants of employee or director stock options, other Rights or similar
stock-based employee rights.

<PAGE> 103

(c) OTHER SECURITIES. Issue any other capital securities,
capital stock of any Subsidiary, debentures, or subordinated notes.

(d) DIVIDENDS, ETC. (i) Make, declare, pay or set aside for
payment any dividend (other than (A), quarterly cash dividends on St.
Paul Common Stock in an amount not to exceed $0.20 per share with
record and payment dates consistent with past practice, (provided the
declaration of the last quarterly dividend by St. Paul prior to the
Effective Time and the payment thereof shall be coordinated with COFI
so that holders of St. Paul Common Stock do not receive dividends on
both St. Paul Common Stock and COFI Common Stock received in the
Company Merger in respect of such calendar quarter or fail to receive a
dividend on either St. Paul Common Stock or COFI Common Stock received
in the Company Merger in respect of such calendar quarter) and (B)
dividends from wholly owned Subsidiaries to St. Paul or another wholly
owned Subsidiary of St. Paul) on or in respect of, or declare or make
any distribution on any shares of St. Paul Stock or (ii) directly or
indirectly adjust, split, combine, redeem, reclassify, purchase or
otherwise acquire, any shares of its capital stock or Rights.

(e) COMPENSATION; EMPLOYMENT AGREEMENTS, ETC. Enter into or
amend or renew any employment, consulting, severance or similar
agreements or arrangements with any director, officer or employee of
St. Paul or its Subsidiaries, or grant any salary or wage increase or
increase any employee benefit (including incentive or bonus payments)
except (i) for oral at will employment agreements, (ii) for normal
individual increases in compensation to employees in the ordinary
course of business consistent with past practice, (iii) for other
changes that are required by applicable law, or (iv) to satisfy
contractual obligations existing as of the date hereof that are
Previously Disclosed provided, however, that St. Paul and its
Subsidiaries may consistent with past practice extend employment and
severance agreements in effect on the date hereof that contain
evergreen provisions for an additional one year period.

(f) BENEFIT PLANS. Enter into, establish, adopt, renew, or
amend (except as may be required by existing contractual obligations
existing as of the date hereof that are Previously Disclosed or
applicable law) any pension, profit sharing, employee stock ownership,
retirement, stock option, stock appreciation, phantom stock, stock
purchase, savings, deferred compensation, consulting, bonus, group
insurance or other employee benefit, incentive or welfare contract,
plan or arrangement, or any trust agreement (or similar arrangement)
related thereto, in respect of any director, officer or employee of St.
Paul or its Subsidiaries, or take any action to accelerate the vesting
or exercisability of stock options or other compensation or benefits
payable thereunder.

(g) DISPOSITIONS. Except as Previously Disclosed, sell,
transfer, mortgage, encumber or otherwise dispose of or discontinue any
of its assets, deposits, business or properties except in the ordinary
course of business for fair value consistent with past practice.

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(h) ACQUISITIONS. Except as permitted by Section 4.01(s)
acquire (other than by way of foreclosures or acquisitions of control
in a bona fide fiduciary capacity or in satisfaction of debts
contracted prior to the date hereof in good faith, in each case in the
ordinary and usual course of business consistent with past practice)
all or any portion of, the assets, business, deposits or properties of
any Person or entity.

(i) GOVERNING DOCUMENTS. Amend the St. Paul Certificate, St.
Paul By-laws or the certificate or articles of incorporation, charter
or by-laws (or similar governing documents) of any of St. Paul's
Subsidiaries.

(j) ACCOUNTING METHODS. Implement or adopt any change in its
accounting principles, practices or methods, other than as may be
required by generally accepted accounting principles.

(k) CONTRACTS. Except to satisfy Previously Disclosed written
commitments outstanding on the date hereof, to extend the term of
employment and severance agreements to the extent permitted by Section
4.01(e), and to renew real and personal property leases in the ordinary
course of business where the renewal option would otherwise expire,
enter into or terminate any material agreement or amend or modify in
any material respect or renew any of its existing material agreements.

(l) CLAIMS. Except in the ordinary course of business
consistent with past practice or involving an amount not in excess of
$250,000, settle any claim, action or proceeding.

(m) FORECLOSE. Foreclose upon or otherwise take title to or
possession or control of any real property without first obtaining a
phase one environmental report thereon; provided, however, that St.
Paul and its Subsidiaries shall not be required to obtain such a report
with respect to any real property having a fair market value of less
than $1,000,000 or one-to four-family, non-agricultural residential
property of five acres or less to be foreclosed upon unless it has
reason to believe that such property might be in violation of or
require remediation under Environmental Laws.

(n) DEPOSIT TAKING AND OTHER BANK ACTIVITIES. In the case of
St. Paul Bank (i) voluntarily make any material changes in or to its
deposit mix; (ii) increase or decrease the rate of interest paid on
time deposits or on certificates of deposit, except in a manner and
pursuant to policies consistent with past practice; or (iii) incur any
liability or obligation relating to retail banking and branch
merchandising, marketing and advertising activities and initiatives
materially in excess of the amounts Previously Disclosed;

(o) FACILITIES. Except for ATMs and a new branch to be located
in Naperville, Illinois, open any new offices or facilities or expand
any existing office or facility; and except for the Morton Grove branch
and any in-store locations whose host stores are closing or relocating,
or as Previously Disclosed, close or relocate any office or facility.

<PAGE> 105

(p) INVESTMENTS. Enter into any material securities
transaction for its own account or purchase or otherwise acquire any
material amount of investment securities for its own account except
purchases and sales of securities consistent with past practice in
order to maintain investment portfolios at St. Paul and its
Subsidiaries that have risk and asset mix characteristics substantially
similar to those of the respective investment portfolios as of the date
hereof.

(q) CAPITAL EXPENDITURES. Purchase or lease fixed assets where
the amount paid or committed thereof is in excess of $450,000
individually or $1,500,000 in the aggregate, except for amounts
Previously Disclosed or for emergency repairs or replacements.

(r) LENDING. (i) Make any material changes in its policies
concerning loan underwriting or which persons may approve loans or fail
to comply with such policies as previously provided in writing to COFI;
or (ii) make or commit to make any new loan or letter of credit, or any
new or additional discretionary advance under any existing loan or line
of credit, or restructure any existing loan or line of credit (other
than (A) in the case of a consumer loan or extension of credit
consistent with policies currently in effect as previously provided in
writing to COFI, (B) in the case of a loan secured by a first mortgage
on an owner occupied one-to-four single-family principal residence
consistent with policies currently in effect as previously provided in
writing to COFI and in a principal amount not in excess of $1,250,000,
(C) in the case of a loan secured by a first mortgage on commercial
real property (i) which is with full personal recourse to the borrower
and made in accordance with underwriting policies currently in effect
as previously provided in writing to COFI in a principal amount not in
excess of $5,000,000 or (ii) which is an exception to its underwriting
policies currently in effect as previously provided in writing to COFI,
or without full personal recourse to the borrower, in a principal
amount not in excess of $2,000,000, (D) in the case of a commercial
loan secured by a first lien on accounts receivable, inventory or other
tangible assets which also provides full personal recourse to the
borrower in a principal amount not in excess of $2,000,000, or (E) in
the case of loans outstanding on the date hereof to one borrower (or
group of affiliated borrowers) the restructuring of loans with an
aggregate principal balance not in excess of $2,000,000; provided in
the case of subparts (A)-(D) the loan exposure to one borrower (or
group of affiliated borrowers) shall not exceed $25,000,000) in each
case without the prior written consent of COFI acting through its Chief
Executive Officer or Executive Vice President of Lending in a written
notice to St. Paul, which approval or rejection shall be given within
three business days after delivery by St. Paul to such officer of COFI
of the complete loan package;

(s) ACQUISITION OF LOANS. Purchase any loan, loan
participation or other interest in any loan, except for the purchase by
St. Paul Bank of adjustable rate first mortgage whole loans in an
aggregate amount not to exceed $750 million through December 31, 1999
(and $100 million per month thereafter) on owner occupied one-to-four
single family principal residences (and non-owner occupied rental
property to the extent provided below) with each individual loan having
a principal amount not in excess of $1.5 million consistent with

<PAGE> 106

current policies and guidelines in effect on the date hereof as
Previously Disclosed, such purchases are to be from existing servicers
only with each purchased pool of mortgages not exceeding $100 million
with whole loans secured by one-to-four single family non-owner
occupied property representing not more than 15% of the dollar value of
any mortgage pool.

(t) LAND DEVELOPMENT OPERATIONS. Engage in any single land
development acquisition transaction involving an amount in excess of
$250,000.

(u) ADVERSE ACTIONS. (i) Take any action or fail to take any
action while knowing that such action or inaction would, or is
reasonably likely to, prevent or impede (A) the Company Merger from
qualifying for "pooling-of-interests" accounting treatment or (B) the
Company Merger or the Bank Merger from qualifying as a reorganization
within the meaning of Section 368 of the Code; or (ii) knowingly take
any action or fail to take any action that is intended or is reasonably
likely to result in (A) any of its representations and warranties set
forth in this Agreement being or becoming untrue in any material
respect at any time at or prior to the Effective Time except as
expressly permitted by this Agreement, (B) any of the conditions to the
Company Merger set forth in Article VII not being satisfied except as
expressly permitted by this Agreement or (C) a material violation of
any provision of this Agreement except, in each case, as may be
required by applicable law or regulation.

(v) RISK MANAGEMENT. Except as required by applicable law or
regulation, (i) implement or adopt any material change in its interest
rate and other risk management policies, procedures or practices; (ii)
fail to follow its existing policies or practices with respect to
managing its exposure to interest rate and other risk; or (iii) fail to
use commercially reasonable means to avoid any material increase in its
aggregate exposure to interest rate risk.

(w) INDEBTEDNESS. Incur any indebtedness for borrowed money
other than Federal Home Loan Bank advances with a term not in excess of
three years in an aggregate amount not to exceed $750 million through
December 31, 1999 (and $100 million per month thereafter) in the
ordinary course of business.

(x) COMMITMENTS. Agree or commit to do any of the foregoing.

4.02 FORBEARANCES OF COFI. From the date hereof until the Effective
Time, except as expressly contemplated by this Agreement, without the prior
written consent of St. Paul, COFI will not, and will cause each of its
Subsidiaries not to:

(a) PRESERVATION. Fail to use reasonable efforts to (i)
preserve intact in any material respect their business organizations
and assets and (ii) maintain their rights, franchises and existing
relations with customers, suppliers, employees and business associates,
or take any action reasonably likely to materially impair the ability
of COFI or Charter Michigan to perform any of its obligations under
this Agreement.

<PAGE> 107

(b) EXTRAORDINARY DIVIDENDS. Make, declare, pay or set aside
for payment any extraordinary dividend or distribution other than in
the form of COFI Stock.

(c) ADVERSE ACTIONS. (i) Take any action or fail to take any
action while knowing that such action or inaction would, or is
reasonably likely to, prevent or impede (A) the Company Merger from
qualifying for "pooling-of-interests" accounting treatment or (B) the
Company Merger or the Bank Merger from qualifying as a reorganization
within the meaning of Section 368 of the Code; or (ii) knowingly take
any action or fail to take any action that is intended or is reasonably
likely to result in (A) any of its representations and warranties set
forth in this Agreement being or becoming untrue in any material
respect at any time at or prior to the Effective Time except as
expressly permitted by this Agreement, (B) any of the conditions to the
Company Merger set forth in Article VII not being satisfied except as
expressly permitted by this Agreement or (C) a material violation of
any provision of this Agreement except, in each case, as may be
required by applicable law or regulation; PROVIDED, HOWEVER, that
nothing contained herein shall limit the ability of COFI to exercise
its rights under the Stock Option Agreement.

(d) ACCOUNTING METHODS. Implement or adopt any material change
in its accounting principles, practices or methods, other than as may
be required by generally accepted accounting principles.

(e) COMMITMENTS. Agree or commit to do any of the foregoing.

ARTICLE V

REPRESENTATIONS AND WARRANTIES

5.01 DISCLOSURE SCHEDULES. On or prior to the date hereof, COFI has
delivered to St. Paul a schedule and St. Paul has delivered to COFI a schedule
(respectively, its "DISCLOSURE SCHEDULE") which sets forth, among other things,
items the disclosure of which is necessary or appropriate either in response to
an express disclosure requirement contained in a provision hereof or as an
exception to one or more representations or warranties contained in Section 5.03
(other than Section 5.03(f)(ii)(A)-(C) for which no disclosure is permitted) or
5.04 or to one or more of its covenants contained in Article IV and which are
not disclosed in such party's Annual Proxy Statement or 1998 Form 10-K;
PROVIDED, that (a) no such item is required to be set forth in a Disclosure
Schedule as an exception to a Specified Representation if its absence would not
be reasonably likely to result in the Specified Representation being deemed
untrue or incorrect under the standard established by Section 5.02 and (b) the
mere inclusion of an item in a Disclosure Schedule as an exception to a
Specified Representation shall not be deemed an admission by a party that such
item represents a material exception or fact, event or circumstance or that such
item is reasonably likely to result in a Material Adverse Effect on the party
making the representation, and St. Paul's representations, warranties and
covenants contained in this Agreement shall not be deemed to be untrue or
breached as a result of effects arising solely from actions taken in compliance
with a written request of COFI.

<PAGE> 108

5.02 STANDARD. No representation or warranty of St. Paul or COFI
contained in Section 5.03(a), (c)(iii), (d), (e), (f)(i), (n), (o), (p), (q),
(r), (s), (t), (v) and (x) or 5.04(a), (c), (d), (e), (f), (k), (l), (m), (n),
(o) (q) and (r) (collectively, the "Specified Representations") shall be deemed
untrue or incorrect, and no party hereto shall be deemed to have breached a
Specified Representation, as a consequence of the existence of any fact, event
or circumstance unless such fact, circumstance or event, individually or taken
together with all other facts, events or circumstances inconsistent with such
Specified Representation has had or is reasonably likely to have a Material
Adverse Effect.

5.03 REPRESENTATIONS AND WARRANTIES OF ST. PAUL. Subject to Sections
5.01 and 5.02 and except as Previously Disclosed (which exception shall not
apply to Section 5.03(f)(ii)(A)-(C)) (with St. Paul using its reasonable best
efforts to disclose information in its Disclosure Schedule corresponding to the
relevant paragraph below), St. Paul hereby represents and warrants to COFI:

(a) ORGANIZATION, STANDING AND AUTHORITY. St. Paul is a
corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware. St. Paul is duly qualified to do
business and is in good standing in the states of the United States and
any foreign jurisdictions where its ownership or leasing of property or
assets or the conduct of its business requires it to be so qualified.

(b) ST. PAUL STOCK. The authorized capital stock of St. Paul
consists solely of (i) 80,000,000 shares of St. Paul Common Stock, of
which 40,010,058 shares were outstanding, and 1,608,791 shares were
held in treasury, as of the business day prior to the date hereof, and
(ii) 10,000,000 shares of St. Paul Preferred Stock, of which no shares
are outstanding. The outstanding shares of St. Paul Stock have been
duly authorized and are validly issued and outstanding, fully paid and
nonassessable, and subject to no preemptive rights (and were not issued
in violation of any preemptive rights). As of the date hereof, there
are no shares of St. Paul Stock authorized and reserved for issuance,
St. Paul does not have any Rights issued or outstanding with respect to
St. Paul Stock, and St. Paul does not have any commitment to authorize,
issue or sell any St. Paul Stock or Rights, other than pursuant to this
Agreement and the Stock Option Agreement. The number of shares of St.
Paul Common Stock which are issuable upon exercise of each St. Paul
Stock Option outstanding as of the date hereof and the exercise price
per share are Previously Disclosed.

(c) SUBSIDIARIES. (i)(A) St. Paul has Previously Disclosed a
list of all of its Subsidiaries together with the jurisdiction of
organization of each such Subsidiary, (B) it owns, directly or
indirectly, all the issued and outstanding equity securities of each of
its Subsidiaries, (C) no equity securities of any of St. Paul's
Subsidiaries are or may become required to be issued (other than to St.
Paul or its wholly-owned Subsidiaries) by reason of any Right or
otherwise, (D) there are no contracts, commitments, understandings or
arrangements by which any of St. Paul's Subsidiaries is or may become
bound to sell or otherwise transfer any equity securities of any such
Subsidiaries (other than to St. Paul or its wholly-owned Subsidiaries),
(E) there are no contracts, commitments, understandings, or
arrangements relating to St. Paul's rights to vote or to dispose of
such securities of its Subsidiaries and (F) all the equity securities

<PAGE> 109

of each St. Paul Subsidiary held by St. Paul or its Subsidiaries are
fully paid and nonassessable and are owned by St. Paul or its
Subsidiaries free and clear of any Liens.

(ii) Except for stock in the Federal Home Loan Bank
of Chicago and readily marketable securities, neither St. Paul
nor any St. Paul Subsidiary owns beneficially any equity
securities or similar interests of any Person, or any interest
in a partnership, limited liability company, or joint venture
of any kind, other than a St. Paul Subsidiary.

(iii) Each of St. Paul's Subsidiaries has been duly
organized and is validly existing in good standing under the
laws of the jurisdiction of its organization, and is duly
qualified to do business and in good standing in the
jurisdictions where its ownership or leasing of property or
the conduct of its business requires it to be so qualified.

(d) CORPORATE POWER. Each of St. Paul and its Subsidiaries has
the corporate power and authority to carry on its business as it is now
being conducted and to own all its properties and assets; and St. Paul
has the corporate power and authority to execute, deliver and perform
its obligations under this Agreement and the Stock Option Agreement and
to consummate the transactions contemplated hereby and thereby.

(e) CORPORATE AUTHORITY. Subject in the case of this Agreement
to receipt of the requisite approval of this Agreement (including the
agreement of merger set forth herein) by the holders of two-thirds of
the outstanding shares of St. Paul Common Stock entitled to vote
thereon (which is the only St. Paul stockholder vote required thereon),
this Agreement, the Stock Option Agreement and the transactions
contemplated hereby and thereby have been authorized, deemed advisable
and approved by all necessary corporate action of St. Paul and the St.
Paul Board (by unanimous vote) on or prior to the date hereof. This
Agreement is a valid and legally binding obligation of St. Paul,
enforceable in accordance with its terms (except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors' rights or by general
equity principles).

(f) REGULATORY FILINGS; NO DEFAULTS. (i) No consents or
approvals of, or filings or registrations with, any Governmental
Authority are required to be made or obtained by St. Paul or any of its
Subsidiaries in connection with the execution, delivery or performance
by St. Paul of this Agreement or the Stock Option Agreement or the
consummation of the Company Merger or the Bank Merger except for (A)
filings of applications or notices with Regulatory Authorities, (B)
filings with the SEC and state securities authorities, and (C) the
filing of (and endorsement of, if required) certificates of merger and
articles of combination with the Delaware Secretary, the Administrator
and the OTS. As of the date hereof, St. Paul is not aware of any reason
why the approvals set forth in Section 7.01(b) will not be received in
a timely manner without the imposition of a condition, restriction or
requirement of the type described in Section 7.01(b).

<PAGE> 110

(ii) Subject to receipt from Regulatory Authorities
of the regulatory approvals referred to in the preceding
paragraph, and expiration of related waiting periods, and
required filings under federal and state securities laws, the
execution, delivery and performance of this Agreement (other
than the Bank Merger) and the Stock Option Agreement and the
consummation of the Company Merger and the exercise of rights
under the Stock Option Agreement do not and will not (A)
constitute a breach or violation of, or a default under, or
give rise to any Lien, any acceleration of remedies or any
right of termination under, any law, rule or regulation or any
judgment, decree, order, governmental permit or license, or
agreement, license, indenture or instrument of St. Paul or of
any of its Subsidiaries or to which St. Paul or any of its
Subsidiaries or properties is subject or bound, (B) constitute
a breach or violation of, or a default under, the St. Paul
Certificate or the St. Paul ByLaws, (C) require any consent or
approval under any such law, rule, regulation, judgment,
decree, order, governmental permit or license, agreement,
license, indenture or instrument or (D) result in any penalty
payment relating to borrowed funds, advances or financial
instruments; subject in the case of subparts A-C hereof to
breaches, violations, defaults or rights of termination
arising out of the consummation of the Company Merger that
would not have a Material Adverse Effect, individually or in
the aggregate, on St. Paul and the St. Paul Subsidiaries taken
as a whole; and provided real property leases to which St.
Paul is the successor in interest by virtue of the merger of
Beverly Bancorporation, with and into St. Paul (the "Beverly
Leases") shall not be taken into account, individually or in
the aggregate, in determining whether the representations in
this Section 5.03(f)(ii) have been breached.

(g) FINANCIAL REPORTS, SEC DOCUMENTS, AND MATERIAL ADVERSE
EFFECT. (i) St. Paul's 1998 Form 10-K and all other reports,
registration statements, definitive proxy statements or information
statements filed or to be filed by it or any of its Subsidiaries
subsequent to December 31, 1998 under the Securities Act, or under
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, in the form
filed or to be filed (collectively, St. Paul's "SEC DOCUMENTS") with
the SEC, as of the date filed, (A) complied or will comply in all
material respects with the applicable requirements under the Securities
Act or the Exchange Act, as the case may be, and (B) did not and will
not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading; and each of the balance sheets or statements of
condition contained in or incorporated by reference into any such SEC
Document (including the related notes and schedules thereto) fairly
presents, or will fairly present, the financial position of St. Paul
and its Subsidiaries as of its date, and each of the statements of
income or results of operations and changes in stockholders' equity and
cash flows or equivalent statements in such SEC Documents (including
any related notes and schedules thereto) fairly presents, or will
fairly present, in all material respects, the results of operations,
changes in stockholders' equity and cash flows, as the case may be, of
St. Paul and its Subsidiaries for the periods to which they relate, in

<PAGE> 111

each case in accordance with generally accepted accounting principles
consistently applied during the periods involved, except in each case
as may be noted therein, subject to normal year-end audit adjustments
and the absence of footnotes in the case of unaudited statements.

(ii) Except for liabilities incurred in connection
with negotiation of and compliance with this Agreement and
otherwise in connection with the transactions contemplated
hereby, since December 31, 1998 to the date hereof, St. Paul
and its Subsidiaries have not incurred any material liability
other than in the ordinary course of business consistent with
past practice.

(iii) Since December 31, 1998, (A) St. Paul and its
Subsidiaries have to the date hereof conducted their
respective businesses in the ordinary and usual course
consistent with past practice (excluding matters related to
this Agreement and the transactions contemplated hereby) and
(B) there has not occurred any event or circumstance that,
individually or taken together with all other facts,
circumstances and events (described in any paragraph of
Section 5.03 or otherwise), would constitute a Material
Adverse Effect with respect to St. Paul.

(h) LITIGATION. No material litigation, claim or other
proceeding before any Governmental Authority is pending against St.
Paul or any of its Subsidiaries and, to St. Paul's knowledge, no such
litigation, claim or other proceeding has been threatened.

(i) REGULATORY MATTERS. (i) Neither St. Paul nor any of its
Subsidiaries or properties is a party to or is subject to any order,
decree, agreement, memorandum of understanding or similar arrangement
with, or a commitment letter to, or extraordinary supervisory letter
from, any federal or state governmental agency or authority charged
with the supervision or regulation of financial institutions and trust
companies (or their holding companies) or issuers of securities or
engaged in the insurance of deposits (including, without limitation,
the FRB, the OTS, the Commissioner, the DOJ, and the FDIC) or the
supervision or regulation of it or any of its Subsidiaries
(collectively, the "REGULATORY AUTHORITIES").

(ii) Neither St. Paul nor any of its Subsidiaries has
been advised by any Regulatory Authority that such Regulatory
Authority is contemplating issuing or requesting (or is
considering the appropriateness of issuing or requesting) any
such order, decree, agreement, memorandum of understanding,
commitment letter, or extraordinary supervisory letter.

<PAGE> 112

(j) COMPLIANCE WITH LAWS. Except for violations and acts of
noncompliance that are not material to the business, assets,
properties, operations or financial performance or condition of St.
Paul or any of its Subsidiaries, each of St. Paul and its Subsidiaries:

(i) is in substantial compliance with all applicable
federal, state, local and foreign statutes, laws, regulations,
ordinances, rules, judgments, orders or decrees applicable
thereto or to the employees conducting such businesses,
including, without limitation, the Equal Credit Opportunity
Act, the Fair Housing Act, the Community Reinvestment Act of
1977, the Home Mortgage Disclosure Act and all other
applicable fair lending laws and other laws relating to
discriminatory business practices;

(ii) has all permits, licenses, authorizations,
orders and approvals of, and has made all filings,
applications and registrations with, all Governmental
Authorities that are required in order to permit them to own
or lease their properties and to conduct their businesses as
presently conducted; all such permits, licenses, certificates
of authority, orders and approvals are in full force and
effect and, to St. Paul's knowledge, no suspension or
cancellation of any such permit, license, certificate, order
or approval is threatened or will result from the consummation
of the transactions contemplated by this Agreement; and

(iii) has received, since December 31, 1998, no
notification or communication from any Governmental Authority
(A) asserting that St. Paul or any of its Subsidiaries is not
in compliance in any material respect with any of the
statutes, regulations, or ordinances which such Governmental
Authority enforces or (B) threatening to revoke any material
license, franchise, permit, or governmental authorization
(nor, to St. Paul's knowledge, do any grounds for any of the
foregoing exist).

(k) MATERIAL CONTRACTS; REAL ESTATE LEASES; DEFAULTS. As of
the date hereof, except for this Agreement, the Stock Option Agreement
and those agreements and other documents filed as exhibits to its SEC
Documents, neither it nor any of its Subsidiaries is a party to, bound
by or subject to any agreement, contract, arrangement, commitment or
understanding (whether written or oral) (i) that is a "material
contract" within the meaning of Item 601(b)(10) of the SEC's Regulation
S-K or (ii) that restricts or limits in any material way the conduct of
business by it or any of its Subsidiaries (it being understood that any
non-compete or similar provision shall be deemed material). Each real
estate lease (including White Hen Pantry Store ATMs but excluding other
ATMs) that may require the consent of the lessor or its agent resulting
from the Company Merger or the Bank Merger by virtue of a prohibition
or restriction relating to assignment, by operation of law or
otherwise, or change in control, is listed in the St. Paul Disclosure
Schedule identifying the section of the lease that contains such
prohibition or restriction. Neither St. Paul nor any of its
Subsidiaries is in default in any material respect under any material
contract, agreement, commitment, arrangement, lease, insurance policy
or other instrument to which it is a party, by which its respective

<PAGE> 113

assets, business, or operations may be bound or affected, or under
which it or its respective assets, business, or operations receive
benefits, and there has not occurred any event that, with the lapse of
time or the giving of notice or both, would constitute such a default.

(l) BROKERS. No action has been taken by St. Paul that would
give rise to any valid claim against any party hereto for a brokerage
commission, finder's fee or other like payment with respect to the
transactions contemplated by this Agreement, excluding a Previously
Disclosed fee to be paid by St. Paul to Merrill Lynch & Co.

(m) EMPLOYEE BENEFIT PLANS. (i) St. Paul has Previously
Disclosed a complete and accurate list of all existing bonus,
incentive, deferred compensation, pension, retirement, profit-sharing,
thrift, savings, employee stock ownership, stock bonus, stock purchase,
restricted stock, stock option, stock appreciation, phantom stock,
severance, welfare and fringe benefit plans, employment, severance and
change in control agreements and all similar practices, policies and
arrangements maintained by St. Paul or any of its Subsidiaries in which
any employee or former employee, consultant or former consultant or
director or former director of St. Paul or any of its Subsidiaries
participates or to which any such employees, consultants or directors
are a party other than plans and programs involving immaterial
obligations (the "COMPENSATION AND BENEFIT PLANS"). Except as expressly
contemplated by a separate agreement entered into by St. Paul and COFI
on the date hereof, neither St. Paul nor any of its Subsidiaries has
any commitment to create any additional Compensation and Benefit Plan
or to modify, change or renew any existing Compensation and Benefit
Plan.

(ii) Each Compensation and Benefit Plan has been
operated and administered in all material respects in
accordance with its terms and with applicable law, including,
but not limited to, ERISA, the Code, the Securities Act, the
Exchange Act, the Age Discrimination in Employment Act, or any
regulations or rules promulgated thereunder, and all material
filings, disclosures and notices required by ERISA, the Code,
the Securities Act, the Exchange Act, the Age Discrimination
in Employment Act and any other applicable law have been
timely made. Each Compensation and Benefit Plan which is an
"employee pension benefit plan" within the meaning of Section
3(2) of ERISA (a "PENSION PLAN") and which is intended to be
qualified under Section 401(a) of the Code has received a
favorable determination letter from the IRS, and St. Paul is
not aware of any circumstances which are reasonably likely to
result in revocation of any such favorable determination
letter. There is no material pending or, to the knowledge of
St. Paul, threatened legal action, suit or claim relating to
the Compensation and Benefit Plans (other than routine claims
for benefits). Neither St. Paul nor any of its Subsidiaries
has engaged in a transaction, or omitted to take any action,
with respect to any Compensation and Benefit Plan that would
reasonably be expected to subject St. Paul or any of its

<PAGE> 114

Subsidiaries to a material tax or penalty imposed by either
Section 4975 of the Code or Section 502 of ERISA, assuming for
purposes of Section 4975 of the Code that the taxable period
of any such transaction expired as of the date hereof.

(iii) No material liability (other than for payment
of premiums to the PBGC which have been made or will be made
on a timely basis) under Title IV of ERISA has been or is
expected to be incurred by St. Paul or any of its Subsidiaries
with respect to any ongoing, frozen or terminated
"single-employer plan", within the meaning of Section
4001(a)(15) of ERISA, currently or formerly maintained by any
of them, or any single-employer plan of any entity (an "ERISA
AFFILIATE") which is considered one employer with St. Paul
under Section 4001(a)(14) of ERISA or Section 414(b) or (c) of
the Code (an "ERISA AFFILIATE PLAN"). None of St. Paul, any of
its Subsidiaries or any ERISA Affiliate has contributed, or
has been obligated to contribute, to a multiemployer plan
under Subtitle E of Title IV of ERISA at any time since
September 26, 1980. No notice of a "reportable event", within
the meaning of Section 4043 of ERISA for which the 30-day
reporting requirement has not been waived, has been required
to be filed for any Compensation and Benefit Plan or by any
ERISA Affiliate Plan within the 12-month period ending on the
date hereof. The PBGC has not instituted proceedings to
terminate any Pension Plan or ERISA Affiliate Plan and, to St.
Paul's knowledge, no condition exists that presents a material
risk that such proceedings will be instituted by the PBGC. To
the knowledge of St. Paul, there is no pending investigation
or enforcement action by the PBGC, DOL or IRS or any other
Governmental Authority with respect to any Compensation and
Benefit Plan. Under each Pension Plan and ERISA Affiliate
Plan, as of the date of the most recent actuarial valuation
performed prior to the date of this Agreement, the actuarially
determined present value of all "benefit liabilities", within
the meaning of Section 4001(a)(16) of ERISA (as determined on
the basis of the actuarial assumptions contained in such
actuarial valuation of such Pension Plan or ERISA Affiliate
Plan), did not exceed the then current value of the assets of
such Pension Plan or ERISA Affiliate Plan and since such date
there has been neither a material adverse change in the
financial condition of such Pension Plan or ERISA Affiliate
Plan nor any amendment or other change to such Pension Plan or
ERISA Affiliate Plan that would increase the amount of
benefits thereunder which reasonably could be expected to
change such result.

(iv) All material contributions required to be made
under the terms of any Compensation and Benefit Plan or ERISA
Affiliate Plan or any employee benefit arrangements under any
collective bargaining agreement to which St. Paul or any of
its Subsidiaries is a party have been timely made or have been
reflected on St. Paul's financial statements. Neither any
Pension Plan nor any ERISA Affiliate Plan has an "accumulated
funding deficiency" (whether or not waived) within the meaning
of Section 412 of the Code or Section 302 of ERISA. None of
St. Paul, any of its Subsidiaries or any ERISA Affiliate (x)
has provided, or would reasonably be expected to be required
to provide, security to any Pension Plan or to any ERISA
Affiliate Plan pursuant to Section 401(a)(29) of the Code, and

<PAGE> 115

(y) has taken any action, or omitted to take any action, that
has resulted, or would reasonably be expected to result, in
the imposition of a lien under Section 412(n) of the Code or
pursuant to ERISA.

(v) Neither St. Paul nor any of its Subsidiaries has
any obligations to provide retiree health and life insurance
or other retiree death benefits under any Compensation and
Benefit Plan, other than benefits mandated by Section 4980B of
the Code. There has been no communication to employees by St.
Paul or any of its Subsidiaries that would reasonably be
expected to promise or guarantee such employees retiree health
or life insurance or other retiree death benefits on a
permanent basis.

(vi) St. Paul and its Subsidiaries do not maintain
any Compensation and Benefit Plans covering foreign employees.

(vii) Except as expressly contemplated by a separate
agreement entered into by St. Paul and COFI on the date
hereof, the consummation of the transactions contemplated by
this Agreement would not, directly or indirectly (including,
without limitation, as a result of any termination of
employment prior to or following the Effective Time)
reasonably be expected to (A) entitle any employee, consultant
or director to any payment (including severance pay or similar
compensation) or any increase in compensation, (B) result in
the vesting or acceleration of any benefits under any
Compensation and Benefit Plan or (C) result in any material
increase in benefits payable under any Compensation and
Benefit Plan.

(viii) Neither St. Paul nor any of its Subsidiaries
maintains any compensation plans, programs or arrangements the
payments under which would not reasonably be expected to be
deductible as a result of the limitations under Section 162(m)
of the Code and the regulations issued thereunder.

(ix) To the knowledge of St. Paul, as a result,
directly or indirectly, of the transactions contemplated by
this Agreement (including, without limitation, as a result of
any termination of employment prior to or following the
Effective Time), none of COFI, St. Paul or the Surviving
Corporation, or any of their respective Subsidiaries will be
obligated to make a payment that would be characterized as an
"excess parachute payment" to an individual who is a
"disqualified individual" (as such terms are defined in
Section 280G of the Code), without regard to whether such
payment is reasonable compensation for personal services
performed or to be performed in the future.

(x) There are no SARs, LSARs, shares of restricted
stock, performance shares or performance units (as such terms
are defined in the St. Paul 1995 Incentive Plan) outstanding
under the St. Paul Stock Plans and neither St. Paul nor any
St. Paul Subsidiary has any commitment or obligation to make
any awards thereof.

<PAGE> 116

(xi) There are no phantom stock shares or awards
outstanding.

(n) LABOR MATTERS. Neither St. Paul nor any of its
Subsidiaries is a party to or is bound by any collective bargaining
agreement, contract or other agreement or understanding with a labor
union or labor organization, nor is St. Paul or any of its Subsidiaries
the subject of a proceeding asserting that it or any such Subsidiary
has committed an unfair labor practice (within the meaning of the
National Labor Relations Act) or seeking to compel St. Paul or any such
Subsidiary to bargain with any labor organization as to wages or
conditions of employment, nor is there any strike or other labor
dispute involving it or any of its Subsidiaries pending or, to St.
Paul's knowledge, threatened, nor is St. Paul aware of any activity
involving its or any of its Subsidiaries' employees seeking to certify
a collective bargaining unit or engaging in other organizational
activity.

(o) TAKEOVER LAWS; ST. PAUL RIGHTS AGREEMENT; DISSENTERS
RIGHTS. This Agreement, the Stock Option Agreement and the transactions
contemplated hereby and thereby are not subject to the requirements of
any "moratorium," "control share", "fair price", "affiliate
transactions", "business combination" or other antitakeover laws and
regulations of any state, including the provisions of Section 203 of
the DGCL ("TAKEOVER LAWS") applicable to St. Paul or any St. Paul
Subsidiary. The provisions of Article 12 of the St. Paul Certificate do
not apply to the entering into of this Agreement, the Stock Option
Agreement and the transactions contemplated hereby and thereby,
including the Company Merger. It has (i) duly approved an appropriate
amendment to the St. Paul Rights Agreement and (ii) taken all other
action necessary or appropriate so that the entering into of this
Agreement and the Stock Option Agreement and the consummation of the
transactions contemplated hereby and thereby do not and will not result
in the ability of any Person to exercise any Rights, as defined in the
St. Paul Rights Agreement (the "ST. PAUL RIGHTS"), or enable or require
the St. Paul Rights to separate from the shares of St. Paul Common
Stock to which they are attached or to be triggered or become
exercisable. No "DISTRIBUTION DATE" or "SHARES ACQUISITION DATE" (as
such terms are defined in the St. Paul Rights Agreement) has occurred
or will occur in connection with the entering into of this Agreement,
the Stock Option Agreement and the transactions contemplated hereby and
thereby. The holders of St. Paul Common Stock will not have dissenters'
rights in connection with the Company Merger.

(p) ENVIRONMENTAL MATTERS. To St. Paul's knowledge, neither
the conduct nor operation of St. Paul or its Subsidiaries nor any
condition of any property currently or previously owned or operated by
any of them (including, without limitation, in a fiduciary or agency
capacity), or on which any of them holds a Lien, results or resulted in
a violation of any Environmental Laws and to St. Paul's knowledge, no
condition has existed or event has occurred with respect to any of them
or any such property that, with notice or the passage of time, or both,
is reasonably likely to result in any liability to St. Paul or any St.
Paul Subsidiary under or by reason of any Environmental Laws or
Materials of Environmental Concern. To St. Paul's knowledge, except for
any notice for which, in St. Paul's reasonable judgment, there is no

<PAGE> 117

reasonable basis, neither St. Paul nor any of its Subsidiaries has
received any notice from any person or entity that St. Paul or its
Subsidiaries or the operation or condition of any property ever owned,
operated, or held as collateral or in a fiduciary capacity by any of
them are or were in violation of or otherwise are alleged to have
liability under any Environmental Law or relating to Materials of
Environmental Concern, including, but not limited to, responsibility
(or potential responsibility) for the cleanup or other remediation of
Materials of Environmental Concern at, on, beneath, or originating from
any such property.

(q) TAX MATTERS. (i) (a) All Tax Returns that are required to
be filed by or with respect to St. Paul or its Subsidiaries have been
duly filed, or requests for extensions have been timely filed (or an
extension is automatic) and any such extension has been granted and has
not been rescinded, (b) all Taxes shown to be due on Tax Returns
referred to in clause (a), if filed, and all Taxes required to be shown
on the Tax Returns for which extensions have been granted have been
paid in full or adequate provision has been made for such Taxes on St.
Paul's most recent balance sheet provided to COFI, (c) the Tax Returns
referred to in clause (a) that have been filed have been examined by
the IRS or the appropriate state, local or foreign taxing authority or
the period for assessment of the Taxes in respect of which such Tax
Returns were required to be filed has expired, (d) all deficiencies
asserted or assessments made as a result of such examinations have been
paid in full or non-material amounts are being contested in good faith,
(e) no material issues that have been raised by the relevant taxing
authority in connection with the examination of any of the Tax Returns
referred to in clause (a) are currently pending, and (f) no waivers of
statutes of limitation have been given by or requested with respect to
any Taxes of St. Paul or its Subsidiaries. St. Paul has made available
to COFI true and correct copies of the United States federal income Tax
Returns filed by St. Paul and its Subsidiaries for each of the three
most recent fiscal years ended on or before December 31, 1998. Neither
St. Paul nor any of its Subsidiaries has any material liability with
respect to income, franchise or similar Taxes that accrued on or before
the end of the most recent period covered by St. Paul's SEC Documents
filed prior to the date hereof in excess of the amounts accrued with
respect thereto that are reflected in the financial statements included
in St. Paul's SEC Documents filed on or prior to the date hereof. As of
the date hereof, neither St. Paul nor any of its Subsidiaries has any
reason to believe that any conditions exist that might prevent or
impede the Company Merger or the Bank Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code.

(ii) No Tax is required to be withheld pursuant to
Section 1445 of the Code as a result of the transfer
contemplated by this Agreement.

(iii) St. Paul and its Subsidiaries will not be
liable for any taxes as a result of the Company Merger.

<PAGE> 118

practices and in all material respects in compliance with all
applicable laws, rules, regulations and regulatory policies and (ii)
with counterparties believed to be financially responsible at the time;
and each of them constitutes the valid and legally binding obligation
of St. Paul or one of its Subsidiaries, enforceable in accordance with
its terms (except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer
and similar laws of general applicability relating to or affecting
creditors' rights or by general equity principles), and is in full
force and effect. Neither St. Paul nor its Subsidiaries, nor to St.
Paul's knowledge any other party thereto, is in breach of any of its
obligations under any such agreement or arrangement in any material
respect.

(s) INSURANCE. St. Paul has Previously Disclosed all of the
material insurance policies, binders, or bonds maintained by St. Paul
or its Subsidiaries. St. Paul and its Subsidiaries are insured with
reputable insurers against such risks and in such amounts as the
management of St. Paul reasonably has determined to be prudent in
accordance with industry practices and in accordance in all material
respects with all contractual obligations. All such insurance policies
are in full force and effect; St. Paul and its Subsidiaries are not in
material default thereunder; and all material claims thereunder have
been filed in due and timely fashion.

(t) ACCOUNTING TREATMENT. As of the date hereof, St. Paul is
aware of no reason why the Company Merger will fail to qualify for
"pooling-of-interests" accounting treatment.

(u) YEAR 2000 COMPLIANT. Neither St. Paul nor any of its
Subsidiaries has received, or has reason to believe that it will
receive, a rating of less than (redacted) on any OTS Year 2000
Report of Examination. St. Paul has Previously Disclosed a complete and
accurate copy of its plan for addressing the issues set forth in the
statements of the FFIEC dated May 5, 1997, entitled "Year 2000 Project
Management Awareness," and December 17, 1997, entitled "Safety and
Soundness Guidelines Concerning the Year 2000 Business Risk," as such
issues affect it and its Subsidiaries, and such plan is in material
compliance with the schedule set forth in the FFIEC statements. Neither
St. Paul nor any of its Subsidiaries, to the extent applicable, has
received, or has reason to believe that it will receive, a rating of
less than (redacted) on any Year 2000 examination by the Commissioner
or any other applicable Governmental Authority of the State of
Illinois. St. Paul and its Subsidiaries shall complete Year 2000
testing and certification in accordance with the requirements set forth
in a separate letter from St. Paul to COFI of even date herewith.

(v) GOVERNMENTAL REVIEWS. No investigation or review by any
Governmental Authority with respect to St. Paul or any St. Paul
Subsidiary is pending or, to the knowledge of St. Paul, threatened, nor
has any Governmental Authority indicated to St. Paul or any St. Paul
Subsidiary an intention to conduct the same, other than normal or
routine regulatory examinations.

<PAGE> 119

(w) FAIRNESS OPINION. On the date of this Agreement, Merrill
Lynch & Co. has provided to the St. Paul Board a written fairness
opinion to the effect that the Exchange Ratio is fair to the
stockholders of St. Paul from a financial point of view.

(x) COMPLIANCE WITH SERVICING OBLIGATIONS. St. Paul and the
St. Paul Subsidiaries are in compliance in all material respects with
all contract, agency and investor requirements and guidelines, and all
applicable laws, rules and regulations of Governmental Authorities,
relating to the servicing and administration of loans by them, or any
of them, including but not limited to, properly and timely making
interest rate adjustments to adjustable rate loans.

5.04 REPRESENTATIONS AND WARRANTIES OF COFI. Subject to Sections 5.01
and 5.02 and except as Previously Disclosed (with COFI using its reasonable best
efforts to disclose information in its Disclosure Schedule corresponding to the
relevant paragraph below), COFI hereby represents and warrants to St. Paul as
follows:

(a) ORGANIZATION, STANDING AND AUTHORITY. COFI is a
corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware. COFI is duly qualified to do
business and is in good standing in the states of the United States and
foreign jurisdictions where its ownership or leasing of property or
assets or the conduct of its business requires it to be so qualified.

(b) COFI STOCK. (i) As of the date hereof, the authorized
capital stock of COFI consists solely of (A) 360,000,000 shares of COFI
Common Stock, of which no more than 166,401,568 shares were
outstanding, and zero shares were held in treasury, as of the day prior
to the date hereof and (B) 20,000,000 shares of preferred stock, $0.01
par value per share, of which none were issued and outstanding on the
date hereof. As of the date hereof, COFI does not have any Rights
issued or outstanding with respect to COFI Common Stock and COFI does
not have any commitment to authorize, issue or sell any COFI Common
Stock or Rights, other than pursuant to (A) this Agreement, (B)
outstanding stock options (and any mandatory future awards under stock
option plans) that have been Previously Disclosed, (C) its dividend
reinvestment plan on terms Previously Disclosed, and (D) the COFI
Rights Agreement. The outstanding shares of COFI Common Stock have been
duly authorized and are validly issued and outstanding, fully paid and
nonassessable, and subject to no preemptive rights (and were not issued
in violation of any preemptive rights).

(ii) The shares of COFI Common Stock to be issued in
exchange for shares of St. Paul Common Stock in the Company
Merger, when issued in accordance with the terms of this
Agreement, will be duly authorized, validly issued, fully paid
and nonassessable and subject to no preemptive rights.

(c) SUBSIDIARIES. Each of COFI's Subsidiaries has been duly
organized and is validly existing in good standing under the laws of
the jurisdiction of its organization, and is duly qualified to do
business and is in good standing in the jurisdictions where its
ownership or leasing of property or the conduct of its business

<PAGE> 120

requires it to be so qualified and COFI owns, directly or indirectly,
all the issued and outstanding equity securities of each of its
Subsidiaries.

(d) CORPORATE POWER. Each of COFI and its Subsidiaries has the
corporate power and authority to carry on its business as it is now
being conducted and to own all its properties and assets; and each of
COFI and Charter Michigan has the corporate power and authority to
execute, deliver and perform its obligations under this Agreement and,
in the case of COFI, the Stock Option Agreement, and to consummate the
transactions contemplated hereby and thereby.

(e) CORPORATE AUTHORITY. Subject to the approval of the
issuance of COFI Common Stock to be issued in the Company Merger by the
holders of a majority of the outstanding COFI Common Stock voted (cast)
at the COFI Meeting in accordance with the NASDAQ or NYSE rules,
whichever is applicable (which is the only COFI stockholder vote
required thereon), this Agreement, the Stock Option Agreement and the
transactions contemplated hereby and thereby have been authorized,
deemed advisable and approved by all necessary corporate action of COFI
and Charter Michigan and the COFI Board and the Charter Michigan Board
on or prior to the date hereof. This Agreement is a valid and legally
binding agreement of COFI and Charter Michigan, enforceable in
accordance with its terms (except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and similar laws of general applicability relating
to or affecting creditors' rights or by general equity principles).

(f) REGULATORY FILINGS; NO DEFAULTS. (i) No consents or
approvals of, or filings or registrations with, any Governmental
Authority or with any third party are required to be made or obtained
by COFI or any of its Subsidiaries in connection with the execution,
delivery or performance by COFI or Charter Michigan of this Agreement
or the consummation of the Company Merger or the Bank Merger except for
(A) the filings referred to in Section 5.03(f)(i); (B) such filings as
are required to be made or approvals as are required to be obtained
under the securities or "Blue Sky" laws of various states in connection
with the issuance of COFI Common Stock in the Company Merger; and (C)
receipt of the approvals set forth in Section 7.01(b). As of the date
hereof, COFI is not aware of any reason why the approvals set forth in
Section 7.01(b) will not be received in a timely manner without the
imposition of a condition, restriction or requirement of the type
described in Section 7.01(b).

(ii) Subject to the satisfaction of the requirements
referred to in the preceding paragraph, and expiration of the
related waiting periods, and required filings under federal
and state securities laws, the execution, delivery and
performance of this Agreement and the consummation of the
Company Merger do not and will not (A) constitute a breach or
violation of, or a default under, or give rise to any Lien,
any acceleration of remedies or any right of termination
under, any law, rule or regulation or any judgment, decree,
order, governmental permit or license, or agreement, license,
indenture or instrument of COFI or of any of its Subsidiaries
or to which COFI or any of its Subsidiaries or properties is

<PAGE> 121

subject or bound, (B) constitute a breach or violation of, or a
default under, the certificate of incorporation or by-laws (or
similar governing documents) of COFI or any of its
Subsidiaries, or (C) require any consent or approval under any
such law, rule, regulation, judgment, decree, order,
governmental permit or license, agreement, license, indenture
or instrument.

(g) FINANCIAL REPORTS, SEC DOCUMENTS; MATERIAL ADVERSE EFFECT,
AND OTHER MATTERS. (i) COFI's SEC Documents, as of the date filed, (A)
complied or will comply in all material respects with the applicable
requirements under the Securities Act or the Exchange Act, as the case
may be, and (B) did not and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; and each of
the balance sheets or statements of condition contained in or
incorporated by reference into any such SEC Document (including the
related notes and schedules thereto) fairly presents, or will fairly
present, the financial position of COFI and its Subsidiaries as of its
date, and each of the statements of income or results of operations and
changes in stockholders' equity and cash flows or equivalent statements
in such SEC Documents (including any related notes and schedules
thereto) fairly presents, or will fairly present, in all material
respects, the results of operations, changes in stockholders' equity
and cash flows, as the case may be, of COFI and its Subsidiaries for
the periods to which they relate, in each case in accordance with
generally accepted accounting principles consistently applied during
the periods involved, except in each case as may be noted therein,
subject to normal year-end audit adjustments in the case of unaudited
financial statements.

(ii) Since December 31, 1998, (A) COFI and its
Subsidiaries have to the date hereof conducted their
respective businesses and incurred their respective material
liabilities in the ordinary and usual course consistent with
past practice (excluding branch and deposit purchases and
matters related to this Agreement and the transactions
contemplated hereby) and (B) there has not occurred any event
or circumstance that, individually or taken together with all
other facts, circumstances and events (described in any
paragraph of Section 5.04 or otherwise), would constitute a
Material Adverse Effect with respect to COFI.

(iii) As of the date of this Agreement, neither COFI
nor any of its Subsidiaries is in default in any material
respect under any material contract (as defined in Section
5.03(k)) to which it is a party, by which its respective
assets, business or operations may be bound or affected, or
under which it or its respective assets, business or
operations receive benefits, and there has not occurred any
event that, with the lapse of time or the giving of notice or
both, would constitute such a default.

(h) LITIGATION; REGULATORY ACTION. (i) No material litigation,
claim or other proceeding before any Governmental Authority is pending

<PAGE> 122

against COFI or any of its Subsidiaries and, to COFI's knowledge, no
such litigation, claim or other proceeding has been threatened.

(ii) Neither COFI nor any of its Subsidiaries or
properties is a party to or is subject to any order, decree,
agreement, memorandum of understanding or similar arrangement
with, or a commitment letter to, or extraordinary supervisory
letter from a Regulatory Authority, nor has COFI or any of its
Subsidiaries been advised by a Regulatory Authority that such
agency is contemplating issuing or requesting (or is
considering the appropriateness of issuing or requesting) any
such order, decree, agreement, memorandum of understanding,
commitment letter or extraordinary, supervisory letter.

(i) COMPLIANCE WITH LAWS. Except for violations and acts of
noncompliance that are not material to the business, assets,
properties, operations or financial performance or condition of COFI or
any of its Subsidiaries, each of COFI and its Subsidiaries:

(ii) has all permits, licenses, authorizations,
orders and approvals of, and has made all filings,
applications and registrations with, all Governmental
Authorities that are required in order to permit them to
conduct their businesses substantially as presently conducted;
all such permits, licenses, certificates of authority, orders
and approvals are in full force and effect and, to the best of
its knowledge, no suspension or cancellation of any such
permit, license, certificate, order or approval is threatened
or will result from the consummation of the transactions
contemplated by this Agreement; and

(iii) has received, since December 31, 1998, no
notification or communication from any Governmental Authority
(A) asserting that COFI or any of its Subsidiaries is not in
compliance in any material respect with any of the statutes,
regulations, or ordinances which such Governmental Authority
enforces or (B) threatening to revoke any material license,
franchise, permit, or governmental authorization (nor, to
COFI's knowledge, do any grounds for any of the foregoing
exist).

(j) BROKERS. No action has been taken by COFI that would give
rise to any valid claim against any party hereto for a brokerage
commission, finder's fee or other like payment with respect to the

<PAGE> 123

transactions contemplated by this Agreement, except for a fee to be
paid by COFI to Salomon Smith Barney.

(k) TAKEOVER LAWS. COFI has taken all action required to be
taken by it in order to exempt this Agreement, the Stock Option
Agreement and the transactions contemplated hereby and thereby from,
and this Agreement, the Stock Option Agreement and the transactions
contemplated hereby and thereby are exempt from, the requirements of
any Takeover Laws applicable to COFI or Charter Michigan or their
Subsidiaries.

(l) ENVIRONMENTAL MATTERS. To COFI's knowledge, neither the
conduct nor operation of COFI or its Subsidiaries nor any condition of
any property currently or previously owned or operated by any of them
(including, without limitation, in a fiduciary or agency capacity), or
on which any of them holds a Lien, results or resulted in a violation
of any Environmental Laws and to COFI's knowledge no condition has
existed or event has occurred with respect to any of them or any such
property that, with notice or the passage of time, or both, is
reasonably likely to result in any liability to COFI or any COFI
Subsidiary under or by reason of Environmental Laws or Materials of
Environmental Concern. To COFI's knowledge, except for any notice for
which, in COFI's reasonable judgment, there is no reasonable basis,
neither COFI nor any of its Subsidiaries has received any notice from
any person or entity that COFI or its Subsidiaries or the operation or
condition of any property ever owned, operated, or held as collateral
or in a fiduciary capacity by any of them are or were in violation of
or otherwise are alleged to have liability under any Environmental Law
or relating to Materials of Environmental Concern, including, but not
limited to, responsibility (or potential responsibility) for the
cleanup or other remediation of any Materials of Environmental Concern
at, on, beneath, or originating from any such property.

(m) TAX MATTERS. (i) All Tax Returns that are required to be
filed by or with respect to COFI or its Subsidiaries have been duly
filed, or requests for extensions have been timely filed (or an
extension is automatic) and any such extension has been granted and has
not been rescinded, (ii) all Taxes shown to be due on Tax Returns
referred to in clause (i) , if filed, and all Taxes required to be
shown on the Tax Returns for which extensions have been granted have
been paid in full or adequate provision has been made for such Taxes on
COFI's most recent balance sheet provided to St. Paul, (iii) the Tax
Returns referred to in clause (i) that have been filed have been
examined by the IRS or the appropriate state, local or foreign taxing
authority or the period for assessment of the Taxes in respect of which
such Tax Returns were required to be filed has expired, (iv) all
deficiencies asserted or assessments made as a result of such
examinations have been paid in full, or non-material amounts are being
contested in good faith, (v) no material issues that have been raised
by the relevant taxing authority in connection with the examination of
any of the Tax Returns referred to in clause (i) are currently pending,
and (vi) no waivers of statutes of limitation have been given by or
requested with respect to any Taxes of COFI or its Subsidiaries.
Neither COFI nor any of its Subsidiaries has any material liability
with respect to income, franchise or similar Taxes that accrued on or
before the end of the most recent period covered by COFI's SEC
Documents filed prior to the date hereof in excess of the amounts

<PAGE> 124

accrued with respect thereto that are reflected in the financial
statements included in COFI's SEC Documents filed on or prior to the
date hereof. As of the date hereof, neither COFI nor any of its
Subsidiaries has any reason to believe that any conditions exist that
might prevent or impede the Company Merger or the Bank Merger from
qualifying as a reorganization within the meaning of Section 368(a) of
the Code.

(n) ACCOUNTING TREATMENT. As of the date hereof, COFI is aware
of no reason why the Company Merger will fail to qualify for
"pooling-of-interests" accounting treatment.

(o) COFI OWNERSHIP OF ST. PAUL STOCK. Neither COFI nor any of
its Subsidiaries either beneficially owns any shares of St. Paul Common
Stock or, other than as contemplated by this Agreement and the Stock
Option Agreement, has any option, warrant or right of any kind to
acquire the beneficial ownership of any shares of St. Paul Common
Stock.

(p) YEAR 2000. Neither COFI nor any of its Subsidiaries has
received, or has reason to believe that it will receive, a rating of
less than (redacted) on any OTS Year 2000 Report of Examination.
COFI has Previously Disclosed a complete and accurate copy of its plan
for addressing the issues set forth in the statements of the FFIEC
dated May 5, 1997, entitled "Year 2000 Project Management Awareness,"
and December 17, 1997, entitled "Safety and Soundness Guidelines
Concerning the Year 2000 Business Risk," as such issues affect it and
its Subsidiaries, and such plan is in material compliance with the
schedule set forth in the FFIEC statements. COFI is in compliance with
FFIEC guidelines in all material respects.

(q) GOVERNMENTAL REVIEWS. No investigation or review by any
Governmental Authority with respect to COFI or any of its Subsidiary is
pending or, to the knowledge of COFI, threatened, nor has any
Governmental Authority indicated to COFI or any of its Subsidiary an
intention to conduct the same, other than normal or routine regulatory
examinations.

(r) RISK MANAGEMENT INSTRUMENTS. All material interest rate
swaps, caps, floors, option agreements, futures and forward contracts
and other similar risk management arrangements, whether entered into
for COFI's own account, or for the account of one or more of COFI's
Subsidiaries or their customers, were entered into (i) in accordance
with prudent business practices and in all material respects in
compliance with all applicable laws, rules, regulations and regulatory
policies and (ii) with counterparties believed to be financially
responsible at the time; and each of them constitutes the valid and
legally binding obligation of COFI or one of its Subsidiaries,
enforceable in accordance with its terms (except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors' rights or by general
equity principles), and is in full force and effect. Neither COFI nor
its Subsidiaries, nor to COFI's knowledge any other party thereto, is
in breach of any of its obligations under any such agreement or
arrangement in any material respect.

<PAGE> 125

(s) FAIRNESS OPINION. On the date of this Agreement, Salomon
Smith Barney has provided to the COFI Board a written fairness opinion
to the effect that the Exchange Ratio is fair to the stockholders of
COFI from a financial point of view.

(t) EMPLOYEE BENEFIT PLANS. Each employee benefit plan,
program, policy or arrangement (including, but not limited to employee
benefit plans (as defined in section 3(3) of ERISA) which COFI or any
of its Subsidiaries maintain or contribute to for the benefit of their
current or former employees complies and has been administered in form
and in operation in all material respects with all applicable
requirements of law and no notice has been issued by any Governmental
Authority questioning or challenging such compliance.

ARTICLE VI

COVENANTS

6.01 REASONABLE BEST EFFORTS. Subject to the terms and conditions of
this Agreement, each of St. Paul and COFI agrees to use its reasonable best
efforts in good faith to take, or cause to be taken, all actions, and to do, or
cause to be done, all things necessary, proper or desirable, or advisable under
applicable laws, so as to permit consummation of the Transaction as promptly as
practicable and otherwise to enable consummation of the Transaction and shall
cooperate fully with the other party hereto to that end. Such reasonable best
efforts shall include, without limitation, using reasonable best efforts to
obtain all necessary consents, approvals or waivers from Regulatory Authorities
necessary for the consummation of the Transaction and opposing vigorously any
litigation or administrative proceeding or directive relating to this Agreement
or the Transaction, including, promptly appealing any adverse court or agency
order. Without limiting the generality of the foregoing, each of St. Paul and
COFI agrees to use its reasonable best efforts to cause the Company Merger to be
consummated on or before October 31, 1999.

6.02 STOCKHOLDER APPROVALS. COFI and St. Paul agree to take, in
accordance with applicable law or NASDAQ or NYSE rules, whichever is applicable,
and their certificates of incorporation and by-laws, all action necessary to
convene an appropriate meeting of their stockholders to consider and vote upon,
in the case of St. Paul, the adoption of this Agreement and in the case of COFI
to approve the issuance of COFI Common Stock to be issued in the Company Merger,
and in each case any other matter required to be approved by such stockholders
for consummation of the Company Merger (including any adjournment or
postponement, the "COFI MEETING" or "ST. PAUL MEETING", whichever is
applicable), in each case as promptly as practicable after the Registration
Statement is declared effective. The COFI Board and the St. Paul Board shall
each recommend such adoption or approval, and COFI and St. Paul shall take all
reasonable, lawful action to solicit such adoption or approval by its
stockholders; provided if either the St. Paul Board or COFI Board concludes by
at least a two-thirds vote of its entire membership that such recommendation
would result in a violation of its fiduciary duties to stockholders under
applicable law (as determined in good faith after consultation with counsel)
arising by virtue of St. Paul's receipt of a St. Paul Proposal or COFI's receipt
of a COFI Proposal, whichever is applicable, then such Board will not be
required to make such recommendations.

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6.03 REGISTRATION STATEMENT. (a) COFI agrees to promptly prepare a
registration statement on Form S-4 (the "REGISTRATION STATEMENT") which, subject
to compliance by St. Paul with Sections 6.03(b) and (c), will comply in all
material respects with applicable federal securities laws to be filed by COFI
with the SEC in connection with the issuance of COFI Common Stock in the Company
Merger (including the joint proxy statement and prospectus and other proxy
solicitation materials of COFI and St. Paul constituting a part thereof (the
"PROXY STATEMENT") and all related documents). St. Paul agrees to cooperate, and
to cause its Subsidiaries to cooperate, with COFI, its counsel and its
accountants, in preparation of the Registration Statement and the Proxy
Statement; and PROVIDED that St. Paul and its Subsidiaries have cooperated as
required above, COFI agrees to file the Registration Statement (or the form of
the Proxy Statement) in preliminary form with the SEC as promptly as reasonably
practicable and shall use reasonable best efforts to cause such filing to occur
within 45 days after execution of this Agreement. If COFI files the Proxy
Statement in preliminary form, it agrees to file the Registration Statement with
the SEC as soon as reasonably practicable after any SEC comments with respect to
the preliminary Proxy Statement are resolved. Each of St. Paul and COFI agrees
to use all reasonable efforts to cause the Registration Statement to be declared
effective under the Securities Act as promptly as reasonably practicable after
filing thereof. COFI also agrees to use all reasonable efforts to obtain, prior
to the effective date of the Registration Statement, all necessary state
securities law or "Blue Sky" permits and approvals required to carry out the
transactions contemplated by this Agreement. St. Paul agrees to furnish to COFI
all information concerning St. Paul, its Subsidiaries, officers, directors and
stockholders as may be reasonably requested in connection with the foregoing.

(b) Each of St. Paul and COFI agrees, as to itself and its
Subsidiaries, that none of the information supplied or to be supplied
by it for inclusion or incorporation by reference in (i) the
Registration Statement will, at the time the Registration Statement and
each amendment or supplement thereto, if any, becomes effective under
the Securities Act, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and (ii) the
Proxy Statement and any amendment or supplement thereto will, at the
date of mailing to stockholders and at the time of the COFI Meeting or
the St. Paul Meeting, as the case may be, contain any untrue statement
of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading or any statement which, in the light of the circumstances
under which such statement is made, will be false or misleading with
respect to any material fact, or which will omit to state any material
fact necessary in order to make the statements therein not false or
misleading or necessary to correct any statement in any earlier
statement in the Proxy Statement or any amendment or supplement
thereto. Each of St. Paul and COFI further agrees that if it shall
become aware prior to the Effective Date of any information furnished
by it that would cause any of the statements in the Proxy Statement to
be false or misleading with respect to any material fact, or to omit to
state any material fact necessary to make the statements therein not
false or misleading, to promptly inform the other party thereof and to
take the necessary steps to correct the Proxy Statement.

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(c) COFI agrees to advise St. Paul, promptly after COFI
receives notice thereof, of the time when the Registration Statement
has become effective or any supplement or amendment has been filed, of
the issuance of any stop order or the suspension of the qualification
of COFI Common Stock for offering or sale in any jurisdiction, of the
initiation or threat of any proceeding for any such purpose, or of any
request by the SEC for the amendment or supplement of the Registration
Statement or for additional information.

(d) Each of COFI and St. Paul, in consultation with the other,
shall employ professional proxy solicitors to assist it in contacting
stockholders in connection with soliciting votes on the matters to be
considered and voted upon at the COFI Meeting and St. Paul Meeting.

6.04 PRESS RELEASES. Each of St. Paul and COFI agrees that it will not,
without the prior approval of the other party, issue any press release or
written statement for general circulation relating to the transactions
contemplated hereby, except as otherwise required by applicable law or
regulation or NASDAQ or NYSE rules, whichever is applicable, and then only after
making reasonable efforts to first consult with the other party.

6.05 ACCESS; INFORMATION. (a) Each of St. Paul and COFI agrees that
upon reasonable notice and subject to applicable laws relating to the exchange
of information, it shall afford the other party and the other party's
Representatives, such access during normal business hours throughout the period
prior to the Effective Time to the books, records (including, without
limitation, Tax Returns and work papers of independent auditors), properties,
personnel and to such other information as any party may reasonably request and,
during such period, it shall furnish promptly to such other party (i) a copy of
each material report, schedule and other document filed by it pursuant to the
requirements of federal or state securities or banking laws, and (ii) all other
information concerning the business, properties and personnel of it and its
Subsidiaries as the other may reasonably request. St. Paul shall also permit
COFI or its environmental consultant, at the sole expense of COFI, to conduct
environmental audits, studies and tests on real property currently owned, leased
or used by St. Paul or any of its Subsidiaries or upon which any of them have a
Lien; provided however COFI shall not conduct any subsurface or phase II
environmental assessments on any such property unless the phase I environmental
assessment (or in the absence thereof based upon the advise of COFI's
environmental consultant) indicates a reasonable basis for conducting further
assessments, studies or testing. In the event any subsurface or phase II site
assessments are conducted (which assessments shall be at COFI's sole expense),
COFI shall indemnify St. Paul for all costs and expenses associated with
returning the property to its previous condition. St. Paul shall provide copies
to COFI of any phase I site assessments or other environmental reports in its or
its Subsidiaries' possession or control with respect to any real property
previously or currently owned, leased or used by St. Paul or any of its
Subsidiaries or upon which any of them has a Lien. COFI shall not have the right
to conduct a phase I or phase II assessment with respect to any real property
upon which St. Paul or its Subsidiaries have a Lien.

(b) Each of St. Paul and COFI agrees that it will not, and
will cause its Representatives not to, use any information obtained
pursuant to this Section 6.05 (as well as any other information

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obtained prior to the date hereof in connection with the entering into
of this Agreement) for any purpose unrelated to the consummation of the
transactions contemplated by this Agreement. Subject to the
requirements of law, each party will keep confidential, and will cause
its Representatives to keep confidential, all information and documents
obtained pursuant to this Section 6.05 (as well as any other
information obtained prior to the date hereof in connection with the
entering into of this Agreement) unless such information (i) was
already known to such party, (ii) becomes available to such party from
other sources not known by such party to be bound by a confidentiality
obligation, (iii) is disclosed with the prior written approval of the
party to which such information pertains or (iv) is or becomes readily
ascertainable from published information or trade sources. In the event
that this Agreement is terminated or the transactions contemplated by
this Agreement shall otherwise fail to be consummated, each party shall
promptly cause all copies of documents, extracts thereof or notes,
analyses, compilations, studies or other documents containing
information and data as to another party hereto to be returned to the
party which furnished the same. No investigation by either party of the
business and affairs of the other shall affect or be deemed to modify
or waive any representation, warranty, covenant or agreement in this
Agreement, or the conditions to either party's obligation to consummate
the transactions contemplated by this Agreement.

(c) During the period from the date of this Agreement to the
Effective Time, each party shall promptly furnish the other with copies
of all monthly and other interim financial statements produced in the
ordinary course of business as the same shall become available.

6.06 ST. PAUL PROPOSAL. St. Paul agrees that it shall not, and shall
cause its Subsidiaries and its and its Subsidiaries' officers, directors,
agents, advisors and affiliates not to, solicit or encourage inquiries or
proposals with respect to, or engage in any negotiations concerning, or provide
any confidential information to, or have any discussions with, any person
relating to, any St. Paul Proposal. It shall immediately cease and cause to be
terminated any activities, discussions or negotiations conducted prior to the
date of this Agreement with any parties other than COFI with respect to any of
the foregoing and shall use its reasonable best efforts to enforce any
confidentiality or similar agreement relating to a St. Paul Proposal in
existence on the date hereof. St. Paul shall promptly (within 24 hours) advise
COFI following the receipt by St. Paul of any St. Paul Proposal and the
substance thereof (including the identity of the person making such St. Paul
Proposal), and advise COFI of any material developments with respect to such St.
Paul Proposal immediately upon the occurrence thereof. Notwithstanding the
foregoing, after receipt of a St. Paul Proposal and during the period prior to a
St. Paul Meeting, St. Paul may provide information at the request of or enter
into negotiations with a third party with respect thereto, if the fiduciary
duties of the St. Paul Board would so require (as determined in good faith after
consultation with legal counsel) under applicable law.

6.07 AFFILIATE AGREEMENTS. (a) Not later than the 15th day prior to the
mailing of the Proxy Statement, (i) COFI shall deliver to St. Paul a schedule of
each person that, to the best of its knowledge, is or is reasonably likely to
be, as of the date of the COFI Meeting, deemed to be an "affiliate" of COFI
(each, a "COFI AFFILIATE") as that term is used in SEC Accounting Series

<PAGE> 129

Releases 130 and 135; and (ii) St. Paul shall deliver to COFI a schedule of each
person that, to the best of its knowledge, is or is reasonably likely to be, as
of the date of the St. Paul Meeting, deemed to be an "affiliate" of St. Paul
(each, a "ST. PAUL AFFILIATE") as that term is used in Rule 145 under the
Securities Act or SEC Accounting Series Releases 130 and 135.

(b) Each of St. Paul and COFI shall use its respective
reasonable best efforts to cause each person who may be deemed to be a
St. Paul Affiliate or a COFI Affiliate, as the case may be, to execute
and deliver to St. Paul and COFI on or before the date of mailing of
the Proxy Statement an agreement in the form attached hereto as Exhibit
D or Exhibit E, respectively.

6.08 TAKEOVER LAWS. No party hereto shall take any action that would
cause the transactions contemplated by this Agreement or the Stock Option
Agreement to be subject to requirements imposed by any Takeover Law and each of
them shall take all necessary steps within its control to exempt (or ensure the
continued exemption of) the transactions contemplated by this Agreement and the
Stock Option Agreement from, or if necessary challenge the validity or
applicability of, any applicable Takeover Law, as now or hereafter in effect.

6.09 CERTAIN POLICIES. Prior to the Effective Date, St. Paul shall, and
shall cause its Subsidiaries, but only to the extent consistent with generally
accepted accounting principles and on a basis mutually satisfactory to it and
COFI, to modify and change its loan, litigation and real estate valuation
policies and practices (including loan classifications and levels of reserves)
so as to be applied on a basis that is consistent with that of COFI; PROVIDED,
HOWEVER, that St. Paul shall not be obligated to take any such action pursuant
to this Section 6.09 unless and until COFI acknowledges that all conditions to
its obligations to consummate the Company Merger have been satisfied or waived
and certifies to St. Paul that COFI's representations and warranties, subject to
Section 5.02, are true and correct as of such date and that COFI is otherwise in
material compliance with this Agreement and is prepared to consummate the
Company Merger. St. Paul's representations, warranties and covenants contained
in this Agreement shall not be deemed to be untrue or breached in any respect
for any purpose as a consequence of any modifications or changes undertaken
solely on account of this Section 6.09.

6.10 LISTING. COFI agrees to use its best efforts to list, prior to the
Effective Time, on the NASDAQ or NYSE, whichever is applicable, subject to
official notice of issuance, the shares of COFI Common Stock to be issued to the
holders of St. Paul Common Stock in the Company Merger.

6.11 REGULATORY APPLICATIONS. (a) COFI and St. Paul and their
respective Subsidiaries shall cooperate and use their respective reasonable best
efforts to promptly prepare all documentation, to effect all filings and to
obtain all permits, consents, approvals and authorizations of all third parties
and Governmental Authorities necessary to consummate the transactions
contemplated by this Agreement and shall use reasonable best efforts to file
within 45 days of the date hereof, the applications necessary to obtain the
permits, consents, approvals and authorizations of all Regulatory Authorities
necessary to consummate the Transaction. Each of COFI and St. Paul shall have
the right to review in advance, and to the extent practicable each will consult
with the other, in each case subject to applicable laws relating to the exchange

<PAGE> 130

of information, with respect to, all material written information submitted to
any third party or any Governmental Authority in connection with the
transactions contemplated by this Agreement. In exercising the foregoing right,
each of the parties hereto agrees to act reasonably and as promptly as
practicable. Each party hereto agrees that it will consult with the other party
hereto with respect to the obtaining of all material permits, consents,
approvals and authorizations of all third parties and Governmental Authorities
necessary or advisable to consummate the transactions contemplated by this
Agreement and each party will keep the other party apprised of the status of
material matters relating to completion of the transactions contemplated hereby.

(b) Each party agrees, upon request, to furnish the other
party with all information concerning itself, its Subsidiaries,
directors, officers and stockholders and such other matters as may be
reasonably necessary or advisable in connection with any filing, notice
or application made by or on behalf of such other party or any of its
Subsidiaries to any third party or Governmental Authority.

6.12 OFFICERS' AND DIRECTORS' INSURANCE; INDEMNIFICATION.

(a) For six years after the Effective Time COFI shall maintain
officers' and directors' liability insurance covering the persons who
are presently covered by St. Paul's current officers' and directors'
liability insurance policy with respect to actions, omissions, events,
matters or circumstances occurring at or prior to the Effective Time,
on terms which are at least as favorable as the terms of said current
policy, provided that it shall not be required to expend in the
aggregate during the coverage period more than an amount equal to 300%
of the annual premium most recently paid by St. Paul (the "INSURANCE
AMOUNT") to maintain or procure insurance coverage pursuant hereto, and
further provided that if COFI is unable to maintain or obtain the
insurance called for by this Section 6.12(a), COFI shall use its
reasonable best efforts to obtain as much comparable insurance as is
available for the Insurance Amount; provided, further, that officers
and directors of St. Paul or any of its Subsidiaries may be required to
make application and provide customary representations and warranties
to COFI's insurance carrier for the purpose of obtaining such
insurance.

(b) From and after the Effective Time, COFI shall, and shall
cause its Subsidiaries to, maintain and preserve the rights to
indemnification of officers and directors provided for in the
Certificate of Incorporation or other charter document (a "Charter")
and By-Laws of St. Paul and each of its Subsidiaries as in effect on
the date hereof with respect to indemnification for liabilities and
claims arising out of acts, omissions, events, matters or circumstances
occurring or existing prior to the Effective Time, including, without
limitation, the transactions contemplated by this Agreement, to the
extent such rights to indemnification are not in excess of that
permitted by applicable state or federal laws or Regulatory
Authorities.

(c) In addition to and without limitation of the rights set
forth in Section 6.12(b), from and after the Effective Time, COFI shall
to the fullest extent permitted under applicable law indemnify and hold

<PAGE> 131

harmless each present and former director and officer of St. Paul
(collectively, the "Indemnified Parties") against any and all costs,
expenses (including attorneys' fees), judgments, fines, losses, claims,
damages, liabilities and amounts paid in settlement in connection with
any pending, threatened or completed claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or
investigative, arising out of or pertaining to any act, omission,
event, matter or circumstance occurring or existing prior to or at the
Effective Time (including, without limitation, any claim, action, suit,
proceeding or investigation arising out of or pertaining to the
transactions contemplated by this Agreement), and in the event of any
such claim, action, suit, proceeding or investigation (whether arising
before or after the Effective Time) (i) COFI shall advance expenses to
each such Indemnified Party to the fullest extent permitted by law,
including the payment of the fees and expenses of one counsel with
respect to a matter, and one local counsel in each applicable
jurisdiction, if necessary or appropriate, selected by such Indemnified
Party or multiple Indemnified Parties, it being understood that they
collectively shall only be entitled to one counsel and one local
counsel in each applicable jurisdiction where necessary or appropriate
(unless a conflict shall exist between Indemnified Parties in which
case they may retain separate counsel), all such counsel shall be
reasonably satisfactory to COFI, promptly after statements therefor are
received and (ii) COFI will cooperate in the defense of any such
matter.

(d) Any determination required to be made with respect to
whether an Indemnified Party's conduct complies with the standards for
or prerequisites to indemnification set forth under the DGCL, or the
Charter and By-Law provisions referred to in Section 6.12(b), shall be
made by independent counsel selected by COFI (which shall not be
counsel that provides any services to COFI or any of its Subsidiaries)
and reasonably acceptable to the Indemnified Party, and COFI shall pay
such counsel's fees and expenses.

(e) This Section 6.12 shall survive the Effective Time, is
intended to benefit each of the Indemnified Parties (each of whom shall
be entitled to enforce this Section against COFI), and shall be binding
on all successors and assigns of COFI.

(f) In the event COFI or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or
merger, or (ii) transfers all or substantially all of its properties
and assets to one or more other Persons, then, and in each such case,
proper provision shall be made so that the successors and assigns of
COFI, assume, and are jointly and severally liable with COFI with
respect to, the obligations set forth in this Section 6.12.

(g) COFI shall pay all expenses (including attorneys' fees)
that may be reasonably incurred by any Indemnified Party in enforcing
the indemnity and other obligations provided for in this Section 6.12
if the Indemnified Party is successful in whole or any material part or
if any dispute relating thereto is settled or compromised.

<PAGE> 132

6.13 BENEFIT PLANS.

(a) At the Effective Time, COFI or a COFI Subsidiary shall be
substituted for St. Paul or a St. Paul Subsidiary as the sponsoring
employer under those employee benefit and welfare plans with respect to
which St. Paul or any of its Subsidiaries is a sponsoring employer, and
any other employee benefit programs, policies, agreements and
arrangements in each case as Previously Disclosed and in effect
immediately prior to the Effective Time (collectively, the "ST. PAUL
ARRANGEMENTS") subject to the terms of any separate agreement entered
into by COFI and St. Paul on the date hereof and shall assume and be
vested with all of the powers, rights, duties, obligations and
liabilities previously vested in St. Paul or the applicable St. Paul
Subsidiary with respect to each such St. Paul Arrangement. Except as
expressly contemplated by a separate agreement entered into by St. Paul
and COFI on the date hereof or as otherwise covered under the St. Paul
Arrangements, each such St. Paul Arrangement shall be continued in
effect by COFI or any applicable COFI Subsidiary after the Effective
Time without a termination or discontinuance thereof as a result of the
Company Merger or the Bank Merger, subject to the power reserved to
COFI or any applicable COFI Subsidiary under each such St. Paul
Arrangement to subsequently amend or terminate the St. Paul
Arrangement, which amendments or terminations shall comply with
applicable law. Notwithstanding the preceding sentence, COFI agrees
that, for periods prior to January 1, 2000, it shall not make any
adverse changes to the contribution formula as in effect on the date
hereof under the St. Paul Employees' Pension Plan. St. Paul, each St.
Paul Subsidiary, and COFI will use all reasonable efforts (i) to effect
said substitutions and assumptions, and such other actions contemplated
under this Agreement, and (ii) to amend such St. Paul Arrangements as
to the extent necessary to provide for said substitutions and
assumptions, and such other actions contemplated under this Agreement.

(b) Any separate agreement entered into by St. Paul and COFI
on the date hereof relating to employee or director benefits is
incorporated herein by reference and shall be deemed a part of this
Agreement.

6.14 NOTIFICATION OF CERTAIN MATTERS. Each of St. Paul and COFI shall
give prompt notice to the other of any fact, event or circumstance known to it
that (i) is reasonably likely, individually or taken together with all other
facts, events and circumstances known to it, to result in any Material Adverse
Effect with respect to it, (ii) would cause or constitute a breach of any of its
representations, warranties, covenants or agreements contained herein as of the
date of this Agreement or (iii) would cause or constitute a material breach of
any of its representations, warranties, covenants or agreements contained herein
arising from events or circumstances after the date of this Agreement or
otherwise.

6.15 DIRECTORS. (i) At the Effective Time, COFI agrees to cause Joseph
C. Scully and Patrick J. Agnew to be elected to the COFI Board, and to the Board
of Directors of Charter One Bank, in each case for a term expiring in April 2002
unless such individual does not qualify to serve under guidelines of applicable
Regulatory Authorities.

<PAGE> 133

6.16 ADVISORY BOARD MEMBERSHIP. At the Effective Time, each member of
the St. Paul Board (other than Joseph C. Scully and Patrick J. Agnew) shall be
offered the opportunity to become a member of the Illinois advisory board to be
established by COFI for a three year term, which advisory board shall advise
COFI with respect to the geographic areas in which St. Paul Bank operates as of
the date hereof; PROVIDED, HOWEVER, any person serving on such advisory board
who subsequently becomes a director of COFI or any COFI Subsidiary shall cease
to be a member of the advisory board on the date that he or she commences
serving as a director of COFI or any COFI Subsidiary.

6.17 COFI FEE. (a) If (i) the St. Paul Board shall have failed to
unanimously recommend adoption of this Agreement to the St. Paul stockholders,
withdrawn such recommendation or modified or changed such recommendation in a
manner adverse in any respect to the interests of COFI, (ii) St. Paul shall be
in material and willful breach of any of its covenants contained in this
Agreement such that COFI shall be entitled to terminate this Agreement pursuant
to Section 8.01(b), or (iii) the stockholders of St. Paul do not adopt this
Agreement at the St. Paul Meeting, in each case after there has been proposed by
a third party a St. Paul Acquisition Transaction (the "ST. PAUL PROPOSAL"), then
except as provided in Section 6.17(b), upon termination of this Agreement St.
Paul shall pay COFI a fee of $45 million. In addition, the $45 million fee shall
be payable by St. Paul to COFI upon a termination of this Agreement by St. Paul
pursuant to Section 8.01(g). No fee shall be payable pursuant to this Section
6.17(a) if either (x) COFI has acquired any shares pursuant to the exercise of
its Option (as defined in the Stock Option Agreement), St. Paul has repurchased
the Option pursuant to the Stock Option Agreement or St. Paul has paid COFI the
Surrender Price (as defined in the Stock Option Agreement) pursuant to the Stock
Option Agreement or (y) COFI refuses to execute and deliver a written release of
all of COFI's rights under the Stock Option Agreement against delivery and
payment of the $45 million fee set forth above. Any payment made pursuant to
this Section 6.17(a) shall be made in immediately available funds upon demand.

(b) The fee provided for in Section 6.17(a) shall not be
payable if St. Paul has terminated, or has the right to terminate, this
Agreement pursuant to Section 8.01(b), 8.01(d)(i), 8.01(d)(ii) as a
result of the COFI stockholders failing to approve the issuance of COFI
Common Stock to be issued in the Company Merger at the COFI Meeting or
8.01(e).

For purposes of the foregoing, "ST. PAUL ACQUISITION
TRANSACTION" shall have the same meaning as the term "ACQUISITION
TRANSACTION" in the Stock Option Agreement except that the percentage
referred to in clause (z) of the second sentence of Section 2(b)(i)
thereof shall be 25%.

6.18 ST. PAUL FEE. (a) If (i) the COFI Board shall have failed to
unanimously recommend to the COFI stockholders approval of the issuance of COFI
Common Stock to be issued in the Company Merger, withdrawn such recommendation
or modified or changed such recommendation in a manner adverse in any respect to
the interests of St. Paul, (ii) COFI shall be in material and willful breach of
any of its covenants contained in this Agreement such that St. Paul shall be
entitled to terminate this Agreement pursuant to Section 8.01(b), or (iii) the
stockholders of COFI do not approve the issuance of the COFI Common Stock to be

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issued in the Company Merger at the COFI Meeting, in each case after there has
been proposed by a third party a COFI Acquisition Transaction (the "COFI
PROPOSAL"), then except as provided in Section 6.18(b), upon termination of this
Agreement COFI shall pay St. Paul a fee of $45 million. Any payment made
pursuant to this Section 6.18(a) shall be made in immediately available funds
upon demand.

(b) The fee provided for in Section 6.18(a) shall not be
payable if COFI has terminated, or has the right to terminate, this
Agreement pursuant to Section 8.01(b), 8.01(d)(i), 8.01(d)(ii) as a
result of the St. Paul stockholders failing to adopt this Agreement at
the St. Paul Meeting or 8.01(e).

For purposes of the foregoing, "COFI ACQUISITION TRANSACTION" shall
have the same meaning as the term St. Paul Acquisition Transaction as such term
is defined for purposes of Section 6.17, except that COFI shall be substituted
for St. Paul as the target of such acquisition transaction.

ARTICLE VII

CONDITIONS TO CONSUMMATION OF THE COMPANY MERGER

7.01 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE COMPANY
MERGER. The respective obligation of each of COFI and St. Paul to consummate the
Company Merger is subject to the fulfillment or written waiver by COFI and St.
Paul prior to the Effective Time of each of the following conditions:

(a) STOCKHOLDER APPROVALS. This Agreement shall have been duly
adopted by the requisite vote of the stockholders of St. Paul under the
DGCL and the St. Paul Certificate and the issuance of COFI Common Stock
as contemplated by this Agreement shall have been approved by the
requisite vote of the COFI stockholders under NASDAQ or NYSE rules,
whichever is applicable.

(b) REGULATORY APPROVALS. All regulatory approvals required to
consummate the Company Merger shall have been obtained and shall remain
in full force and effect and all statutory waiting periods in respect
thereof shall have expired and no such approvals shall contain (i) any
conditions, restrictions or requirements which the COFI Board
reasonably determines would either before or after the Effective Time
have a Material Adverse Effect on COFI and its Subsidiaries taken as a
whole or (ii) any conditions, restrictions or requirements that are not
customary and usual for approvals of such type and which the COFI Board
reasonably determines would either before or after the Effective Time
be unduly burdensome.

(c) NO INJUNCTION. No Governmental Authority of competent
jurisdiction shall have enacted, issued, promulgated, enforced or
entered any statute, rule, regulation, judgment, decree, injunction or
other order (whether temporary, preliminary or permanent) which is in
effect and prohibits consummation of the Company Merger.

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(d) REGISTRATION STATEMENT. The Registration Statement shall
have become effective under the Securities Act and no stop order
suspending the effectiveness of the Registration Statement shall have
been issued and no proceedings for that purpose shall have been
initiated or threatened by the SEC.

(e) BLUE SKY APPROVALS. All permits and other authorizations
under state securities laws necessary to consummate the transactions
contemplated hereby and to issue the shares of COFI Common Stock to be
issued in the Company Merger shall have been received and be in full
force and effect.

(f) LISTING. The shares of COFI Common Stock to be issued in
the Company Merger shall have been approved for listing on the NASDAQ
or NYSE, whichever is applicable, subject to official notice of
issuance.

(g) PERMITS, AUTHORIZATIONS. Each of COFI and St. Paul shall
have obtained all permits, authorizations, waivers, approvals and
consents (other than the Beverly Leases) required for the lawful
consummation of the Company Merger, unless the failure to obtain such
permits, authorizations, waivers, approvals and consents is not
reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on COFI and its Subsidiaries or St. Paul and its
Subsidiaries.

7.02 CONDITIONS TO OBLIGATION OF ST. PAUL. The obligation of St. Paul
and its Subsidiaries to consummate the Company Merger is also subject to the
fulfillment or written waiver by St. Paul prior to the Effective Time of each of
the following conditions:

(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of COFI set forth in this Agreement shall be true and
correct in all material respects, subject in the case of Specified
Representations to the standard set forth in Section 5.02, as of the
date of this Agreement and as of the Effective Date as though made on
and as of the Effective Date (except that (i) representations and
warranties that by their terms speak as of the date of this Agreement
or some other date shall be true and correct as of such date and (ii)
with respect to any information provided by COFI pursuant to Section
6.14(iii) or discovered by St. Paul relating to (A) the Specified
Representations or (B) Section 5.04 (g)(i), (h)(i), (h)(ii) other than
relating to Year 2000 compliant matters or (i)(iii) other than relating
to Year 2000 compliant matters, in each case, on account of events
arising after the date of this Agreement, the representations and
warranties in (x) the Specified Representations and (y) Sections 5.04
(g)(i), (h)(i), (h)(ii) other than relating to Year 2000 compliant
matters and (i)(iii) other than relating to Year 2000 compliant matters
shall be deemed true and correct as of the Effective Date unless such
information individually or taken together with other facts, events and
circumstances has resulted in or is reasonably likely to result in a
Material Adverse Effect on COFI), and St. Paul shall have received a
certificate, dated the Effective Date, signed on behalf of COFI by the
Chief Executive Officer and the Chief Financial Officer of COFI to such
effect.

<PAGE> 136

(b) PERFORMANCE OF OBLIGATIONS OF COFI. COFI and its
Subsidiaries shall have performed in all material respects all
obligations required to be performed by them under this Agreement at or
prior to the Effective Time, and St. Paul shall have received a
certificate, dated the Effective Date, signed on behalf of COFI by the
Chief Executive Officer and the Chief Financial Officer of COFI to such
effect.

(c) OPINION OF ST. PAUL'S COUNSEL. St. Paul shall have
received an opinion of Mayer, Brown & Platt, counsel to St. Paul, dated
the date of or shortly prior to the first mailing of the Proxy
Statement and the Effective Date, to the effect that, on the basis of
facts, representations and assumptions set forth in such opinion, (i)
the Company Merger constitutes a "reorganization" within the meaning of
Section 368 of the Code and (ii) no gain or loss will be recognized by
stockholders of St. Paul who receive shares of COFI Common Stock in
exchange for shares of St. Paul Common Stock, except that gain or loss
may be recognized as to cash received in lieu of fractional share
interests. In rendering its opinion, Mayer, Brown & Platt may require
and rely upon representations contained in letters from St. Paul, COFI
and others.

7.03 CONDITIONS TO OBLIGATION OF COFI. The obligation of COFI and its
Subsidiaries to consummate the Company Merger is also subject to the fulfillment
or written waiver by COFI prior to the Effective Time of each of the following
conditions:

(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of St. Paul set forth in this Agreement shall be true and
correct in all material respects, subject in the case of Specified
Representations to the standard set forth in Section 5.02, as of the
date of this Agreement and as of the Effective Date as though made on
and as of the Effective Date (except that (i) representations and
warranties that by their terms speak as of the date of this Agreement
or some other date shall be true and correct as of such date and (ii)
with respect to any information provided by St. Paul pursuant to
Section 6.14(iii) or discovered by COFI relating to (A) the Specified
Representations or (B) Section 5.03(g)(i), (h), (i) other than relating
to Year 2000 compliant matters or (j)(iii) other than relating to Year
2000 compliant matters, in each case, on account of events arising
after the date of this Agreement, the representations and warranties in
(x) the Specified Representations and (y) Sections 5.03(g)(i), (h), (i)
other than relating to Year 2000 compliant matters and (j)(iii) other
than relating to Year 2000 compliant matters shall be deemed true and
correct as of the Effective Date unless such information individually
or taken together with other facts, events and circumstances has
resulted in or is reasonably likely to result in a Material Adverse
Effect on St. Paul) and COFI shall have received a certificate, dated
the Effective Date, signed on behalf of St. Paul by the Chief Executive
Officer and the Chief Financial Officer of St. Paul to such effect.

(b) PERFORMANCE OF OBLIGATIONS OF ST. PAUL. St. Paul and its
Subsidiaries shall have performed in all material respects all
obligations required to be performed by them under this Agreement at or
prior to the Effective Time, and COFI shall have received a

<PAGE> 137

certificate, dated the Effective Date, signed on behalf of St. Paul by
the Chief Executive Officer and the Chief Financial Officer of St. Paul
to such effect.

(c) OPINION OF COFI'S COUNSEL. COFI shall have received an
opinion of Silver, Freedman & Taff, special counsel to COFI, dated the
date of or shortly prior to the first mailing of the Proxy Statement
and the Effective Date, to the effect that, on the basis of facts,
representations and assumptions set forth in such opinion, the Company
Merger constitutes a reorganization under Section 368 of the Code. In
rendering its opinion, Silver, Freedman & Taff may require and rely
upon representations contained in letters from COFI, St. Paul and
others.

(d) ACCOUNTING TREATMENT. COFI shall have received from each
of Ernst & Young LLP, St. Paul's independent auditors, and Deloitte &
Touche, LLP, COFI's independent auditors, letters, dated the date of or
shortly prior to the Effective Time.

ARTICLE VIII

TERMINATION

8.01 TERMINATION. This Agreement may be terminated, and the
Transactions may be abandoned:

(a) MUTUAL CONSENT. At any time prior to the Effective Time,
by the mutual consent of COFI and St. Paul, if the Board of Directors
of each so determines by vote of a majority of the members of its
entire Board.

(b) BREACH. At any time prior to the Effective Time, by COFI
or St. Paul, if its Board of Directors so determines by vote of a
majority of the members of its entire Board, in the event of either:
(i) a breach by the other party of any representation or warranty
contained herein, which breach would cause the condition in Section
7.02(a) or 7.03(a), as applicable, to not be satisfied and which breach
cannot be or has not been cured within 30 days after the giving of
written notice to the breaching party of such breach; or (ii) a breach
by the other party in any material respect of any of the covenants or
agreements contained herein, which breach cannot be or has not been
cured within 30 days after the giving of written notice to the
breaching party of such breach.

(c) DELAY. At any time prior to the Effective Time, by COFI or
St. Paul, if its Board of Directors so determines by vote of a majority
of the members of its entire Board, in the event that the Company
Merger is not consummated by February 28, 2000, except to the extent
that the failure of the Company Merger then to be consummated arises
out of or results from the knowing action or inaction of the party
seeking to terminate pursuant to this Section 8.01(c).

<PAGE> 138

(d) NO APPROVAL. By St. Paul or COFI, if its Board of
Directors so determines by a vote of a majority of the members of its
entire Board, in the event (i) the approval of any Governmental
Authority required for consummation of the Company Merger shall have
been denied by final nonappealable action of such Governmental
Authority or (ii) any stockholder approval required by Section 7.01(a)
herein is not obtained at the St. Paul Meeting or the COFI Meeting.

(e) FAILURE TO RECOMMEND, ETC. At any time prior to the St.
Paul Meeting, by COFI if the St. Paul Board shall have failed to
unanimously recommend adoption of this Agreement to the St. Paul
stockholders, withdrawn such recommendation or modified or changed such
recommendation in a manner adverse in any respect to the interests of
COFI; or at any time prior to the COFI Meeting, by St. Paul, if the
COFI Board shall have failed to unanimously recommend to the COFI
stockholders approval of the issuance of COFI Common Stock to be issued
pursuant to the Company Merger, withdrawn such recommendation or
modified or changed such recommendation in a manner adverse in any
respect to the interests of St. Paul.

(f) POSSIBLE ADJUSTMENT. By St. Paul, if its Board of
Directors so determines by a vote of a majority of the members of its
entire Board, at any time during the ten-day period commencing two days
after the Determination Date (or such shorter period of time from the
Determination Date to the Effective Date as contemplated by Section
2.03(i)), if both of the following conditions are satisfied:

(i) the Average Closing Price shall be less than the
product of 0.825 and the Starting Price; and

(ii) (A) the number obtained by dividing the Average
Closing Price by the Starting Price (such number
being referred to herein as the "COFI Ratio") shall
be less than (B) the number obtained by dividing the
Index Price on the Determination Date by the Index
Price on the Starting Date and subtracting 0.175
from the quotient in this clause (ii)(B) (such
number being referred to herein as the "Index
Ratio");

subject, however, to the following three sentences. If St. Paul elects
to exercise its termination right pursuant to the immediately preceding
sentence, it shall give prompt written notice thereof to COFI;
provided, that such notice of election to terminate may be withdrawn at
any time within the above stated period. During the five-day period
commencing with its receipt of such notice, COFI shall have the option
of adjusting the Exchange Ratio to equal the lesser of (x) a number
equal to a quotient (rounded to the nearest one-ten-thousandth), the
numerator of which is the product of 0.825, the Starting Price and the
Exchange Ratio (as then in effect) and the denominator of which is the
Average Closing Price, and (y) a number equal to a quotient (rounded to
the nearest one-ten-thousandth), the numerator of which is the Index
Ratio multiplied by the Exchange Ratio (as then in effect) and the
denominator of which is the COFI Ratio. If COFI so elects, within such
five-day period, it shall give prompt written notice to St. Paul of

<PAGE> 139

such election and the revised Exchange Ratio, whereupon no termination
shall have occurred pursuant to this Section 8.01(f) and this Agreement
shall remain in full force and effect in accordance with its terms
(except as the Exchange Ratio shall have been so modified and except
that the Effective Date shall occur on the later of the Effective Date
as determined pursuant to Section 2.03(i) or (ii) or on the fifth
business day after COFI's election as provided in the immediately
preceding sentence, and any references in this Agreement to "Exchange
Ratio" shall thereafter be deemed to refer to the Exchange Ratio as
adjusted pursuant to this Section 8.01(f).

For purposes of this Section 8.01(f), the following terms shall have
the meanings indicated:

"Average Closing Price" means the average of the daily last sale
prices of COFI Common Stock as reported on NASDAQ or NYSE, whichever is
applicable (as reported in The Wall Street Journal or, if not reported
therein, in another mutually agreed upon authoritative source) for the
ten consecutive full trading days in which such shares are traded on
NASDAQ or NYSE, whichever is applicable, ending at the close of trading
on the Determination Date.

"Determination Date" means the day that is the latest of (i) the
day of expiration of the last waiting period with respect to any
approval of any Governmental Authority required for consummation of the
Company Merger, (ii) the day on which the last of such approvals is
obtained, and (iii) the day on which the last of the required
stockholder approvals has been received.

"Index Group" means the 16 financial institutions and financial
institution holding companies listed below, the common stock of all
which shall be publicly traded and as to which there shall not have
been, since the Starting Date and before the Determination Date, any
public announcement of a proposal for such company (a) to be acquired
or for such company to acquire another company or companies in a
transaction with a value exceeding 25% of the acquiror's market
capitalization as of the Starting Date or (b) to convert from a mutual
holding company to a stock form of organization. In the event that the
common stock of any such company ceases to be publicly traded or any
such announcement is made with respect to any such company, such
company will be removed from the Index Group and the weights (which
have been determined based on the number of outstanding shares of
common stock) redistributed proportionately for purposes of determining
the Index Price. The 16 financial institutions and financial
institution holding companies and the weights attributed to them are as
follows:

<PAGE> 140

<TABLE>
<CAPTION>
HOLDING COMPANY WEIGHTING
- --------------- ---------
<S> <C>
Huntington Bancshares Incorporated 14.56%
Summit Bancorp 11.97%
North Fork Bancorporation, Inc. 9.75%
Marshall & Ilsley Corporation 7.23%
Dime Bancorp, Incorporated 7.71%
Peoples Heritage Financial Group, Inc. 7.21%
Old Kent Financial Corporation 7.15%
GreenPoint Financial Corporation 7.55%
TCF Financial Corporation 5.83%
Commercial Federal Corporation 4.22%
Golden West Financial Corporation 3.90%
Washington Federal, Inc. 3.87%
Astoria Financial Corporation 3.83%
Webster Financial Corporation 2.49%
Bank United Corporation 2.19%
M&T Bank Corporation 0.54%
Total 100.00%
</TABLE>

"Index Price" on a given date means the weighted average (weighted in
accordance with the factors listed above) of the closing prices of the companies
comprising the Index Group.

"Starting Date" means May 14, 1999.

"Starting Price" shall mean $30.28.

If any company belonging to the Index Group or COFI declares or
effects a stock split, stock dividend, recapitalization, exchange of
shares or similar transaction between the Starting Date and the
Determination Date, the prices for the common stock of such company or
COFI shall be appropriately adjusted for the purposes of applying this
Section 8.01(f).

<PAGE> 141

(g) ST. PAUL PROPOSAL. Provided that St. Paul is not in breach of
Section 6.02 or 6.06 of this Agreement, by St. Paul, if its Board of
Directors so determines by at least a two-thirds vote of the members of
its entire Board, to allow St. Paul to enter into an agreement in
respect of a St. Paul Proposal which provides more favorable
consideration to St. Paul's stockholders from a financial point of view
than the consideration to be received by such stockholders in the
Company Merger.

8.02 EFFECT OF TERMINATION AND ABANDONMENT. In the event of termination
of this Agreement and the abandonment of the Company Merger pursuant to this
Article VIII, no party to this Agreement shall have any liability or further
obligation to any other party hereunder except (i) as set forth in Section 9.01
and (ii) that termination will not relieve a breaching party from liability for
any willful breach of this Agreement giving rise to such termination. Provided,
however, if a party pursues its rights under Section 6.17 or 6.18, whichever is
applicable, then such party shall not be entitled to any other relief.
Conversely, if a party pursues a remedy pursuant to this Section 8.02, then it
shall waive its rights under Section 6.17 or 6.18, whichever is applicable.
Provided, further, that nothing contained herein shall diminish the rights of
COFI under the Stock Option Agreement which may be separately exercised and
enforced pursuant to the terms and provisions thereof.

ARTICLE IX

MISCELLANEOUS

9.01 SURVIVAL. No representations, warranties, agreements and covenants
contained in this Agreement shall survive the Effective Time (other than the
agreements and covenants contained in Section 6.12, 6.13, 6.15, 6.16 and this
Article IX which shall survive the Effective Time) or the termination of this
Agreement if this Agreement is terminated prior to the Effective Time (other
than Sections 6.05(b), 6.17, 6.18, 8.02 and this Article IX which shall survive
such termination).

9.02 WAIVER; AMENDMENT. Prior to the Effective Time, any provision of
this Agreement may be (i) waived by the party benefitted by the provision, or
(ii) amended or modified at any time, by an agreement in writing between the
parties hereto executed in the same manner as this Agreement, except that after
the St. Paul Meeting, the consideration to be received by the St. Paul
stockholders for each share of St. Paul Common Stock shall not thereby be
decreased.

9.03 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original.

9.04 GOVERNING LAW. This Agreement shall be governed by, and
interpreted in accordance with, the laws of the State of Delaware applicable to
contracts made and to be performed entirely within such State (except to the
extent that mandatory provisions of Federal law or of the MBCA are applicable).

<PAGE> 142

9.05 EXPENSES. Each party hereto will bear all expenses incurred by it
in connection with this Agreement and the transactions contemplated hereby,
except that printing expenses and SEC fees shall be shared equally between St.
Paul and COFI.

9.06 NOTICES. All notices, requests and other communications hereunder
to a party shall be in writing and shall be deemed given if personally
delivered, telecopied (with confirmation) or mailed by registered or certified
mail (return receipt requested) to such party at its address set forth below or
such other address as such party may specify by notice to the parties hereto.

If to St. Paul, to:

St. Paul Bancorp, Inc.
6700 West North Avenue
Chicago, Illinois 60707

Attention: Joseph C. Scully, Chief Executive Officer
and
Clifford Sladnick, General Counsel

With a copy to:

Mayer, Brown & Platt
190 South LaSalle Street
Chicago, Illinois 60603

Attention: Stuart Litwin

If to COFI or Charter Michigan, to:

Charter One Financial, Inc.
1215 Superior Avenue
Cleveland, Ohio 44114

Attention: Charles J. Koch, Chief Executive Officer
and
Robert J. Vana, Chief Corporate Counsel

<PAGE> 143

With a copy to:

Silver, Freedman & Taff LLP
1100 New York Avenue, N.W.
7th Floor East
Washington, D.C. 20005

Attention: Barry Taff

9.07 ENTIRE UNDERSTANDING; NO THIRD PARTY BENEFICIARIES. This
Agreement, the Stock Option Agreement, the Confidentiality Agreement dated April
13, 1999 between St. Paul and COFI and any agreement entered into between St.
Paul and COFI on the date hereof represent the entire understanding of the
parties hereto with reference to the transactions contemplated hereby and
thereby and this Agreement supersedes any and all other oral or written
agreements heretofore made (other than the Stock Option Agreement and any
agreement entered into between St. Paul and COFI on the date hereof). Except for
Section 6.12, 6.13, 6.15 and 6.16, nothing in this Agreement expressed or
implied, is intended to confer upon any person, other than the parties hereto or
their respective successors, any rights, remedies, obligations or liabilities
under or by reason of this Agreement.

9.08 INTERPRETATION; EFFECT. When a reference is made in this Agreement
to Sections, Exhibits or Schedules, such reference shall be to a Section of, or
Exhibit or Schedule to, this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and are not part of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation." No provision of this Agreement shall
be construed to require St. Paul, COFI or any of their respective Subsidiaries,
affiliates or directors to take any action which would violate applicable law
(whether statutory or common law), rule or regulation.

<PAGE> 144

* * *

The parties hereto have caused this Agreement to be executed in
counterparts by their duly authorized officers, all as of the day and year first
above written.

ST. PAUL BANCORP, INC.

By /s/ Joseph C. Scully
---------------------------------------
Name: Joseph C. Scully
Title: Chairman of the Board
and Chief Executive Officer

CHARTER ONE FINANCIAL, INC.

By /s/ Charles J. Koch
---------------------------------------
Name: Charles J. Koch
Title: Chairman of the Board and
Chief Executive Officer

CHARTER MICHIGAN BANCORP, INC.

By /s/ Charles J. Koch
---------------------------------------
Name: Charles J. Koch
Title: Chairman of the Board and
Chief Executive Officer

<PAGE> 145

Appendix B

STOCK OPTION AGREEMENT

STOCK OPTION AGREEMENT, dated as of May 17, 1999, between Charter One
Financial, Inc., a Delaware corporation ("Grantee"), and St. Paul Bancorp, Inc.,
a Delaware corporation ("Issuer").

W I T N E S S E T H:

WHEREAS, Grantee, Charter Michigan Bancorp, Inc. and Issuer have entered
into an Agreement and Plan of Merger (the "Merger Agreement") on even date
herewith;

WHEREAS, as an inducement to the willingness of Grantee to enter into the
Merger Agreement, Issuer has agreed to grant Grantee the Option (as hereinafter
defined); and

WHEREAS, the Board of Directors of Issuer has approved the grant of the
Option and the Merger Agreement;

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements set forth herein and in the Merger Agreement, the parties hereto
agree as follows:

1. (a) Issuer hereby grants to Grantee an unconditional, irrevocable
option (the "Option") to purchase, subject to the terms hereof, up to an
aggregate of 4,384,730 fully paid and nonassessable shares of the common stock,
par value $0.01 per share, of Issuer ("Common Stock") at a price per share equal
to the average of last reported sale prices per share of Common Stock as
reported on the NASDAQ National Market on May 13 and 14, 1999; PROVIDED,
HOWEVER, that in the event Issuer issues or agrees to issue any shares of Common
Stock (other than shares of Common Stock issued pursuant to stock options
granted pursuant to any employee benefit plan prior to the date hereof) at a
price less than such average price per share (as adjusted pursuant to subsection
(b) of Section 5), such price shall be equal to such lesser price (such price,
as adjusted if applicable, the "Option Price"); PROVIDED, FURTHER, that in no
event shall the number of shares for which this Option is exercisable exceed 11%
of the issued and outstanding shares of Common Stock immediately prior to such
exercise without giving effect to any shares subject or issued pursuant to the
Option. The number of shares of Common Stock that may be received upon the
exercise of the Option and the Option Price are subject to adjustment as herein
set forth.

(b) In the event that any additional shares of Common Stock are issued or
otherwise become outstanding after the date of this Agreement (other than
pursuant to this Agreement and other than pursuant to an event described in
Section 5(a) hereof), the number of shares of Common Stock subject to the Option
shall be increased so that, after such issuance, such number together with any
shares of Common Stock previously issued pursuant hereto, equals 11% of the
number of shares of Common Stock then issued and outstanding without giving
effect to any shares subject or issued pursuant to the Option. Nothing contained
in this Section l(b) or elsewhere in this Agreement shall be deemed to authorize
Issuer to issue shares in breach of any provision of the Merger Agreement.

<PAGE> 146

2. (a) The Holder (as hereinafter defined) may exercise the Option, in
whole or part, if, but only if, both an Initial Triggering Event (as hereinafter
defined) and a Subsequent Triggering Event (as hereinafter defined) shall have
occurred prior to the occurrence of an Exercise Termination Event (as
hereinafter defined), PROVIDED that the Holder shall have sent the written
notice of such exercise (as provided in subsection (e) of this Section 2) within
six (6) months following such Subsequent Triggering Event (or such later period
as provided in Section 10). Each of the following shall be an Exercise
Termination Event: (i) the Effective Time of the Company Merger; (ii)
termination of the Merger Agreement in accordance with the provisions thereof if
such termination occurs prior to the occurrence of an Initial Triggering Event
except a termination by Grantee pursuant to Section 8.01(b) or Section 8.01(e)
of the Merger Agreement (each, a "Listed Termination"); (iii) the passage of
fifteen (15) months (or such longer period as provided in Section 10) after
termination of the Merger Agreement if such termination follows the occurrence
of an Initial Triggering Event or a Listed Termination or (iv) the date on which
the stockholders of the Grantee shall have voted and failed to approve the
issuance of Grantee common stock to be issued in the Company Merger (unless (A)
Issuer shall then be in material breach of its covenants or agreements contained
in the Merger Agreement or (B) on or prior to such date, the stockholders of
Issuer shall have also voted and failed to approve and adopt the Merger
Agreement). The term "Holder" shall mean the holder or holders of the Option.
Notwithstanding anything to the contrary contained herein, (i) the Option may
not be exercised at any time when Grantee shall be in material breach of any of
its covenants or agreements contained in the Merger Agreement such that Issuer
shall be entitled to terminate the Merger Agreement pursuant to Section 8.01(b)
thereof as a result of a material breach and (ii) this Agreement shall
automatically terminate upon (x) the proper termination of the Merger Agreement
by Issuer pursuant to Section 8.01(b)(ii) thereof as a result of the material
breach by Grantee of its covenants or agreements contained in the Merger
Agreement or by Issuer or Grantee pursuant to Section 8.01(d)(i) or (y) the
acceptance by the Grantee of the $45 million fee from Issuer pursuant to Section
6.17(a) of the Merger Agreement.

(b) The term "Initial Triggering Event" shall mean any of the following
events or transactions occurring on or after the date hereof:

(i) Issuer or any Significant Subsidiary (as defined in Rule 1-02 of
Regulation S-X promulgated by the Securities and Exchange Commission (the
"SEC")) (an "Issuer Subsidiary"), without having received Grantee's prior
written consent, shall have entered into an agreement to engage in an
Acquisition Transaction (as hereinafter defined) with any person (the term
"person" for purposes of this Agreement having the meaning assigned
thereto in Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of
1934, as amended (the "1934 Act"), and the rules and regulations
thereunder) other than Grantee or any of its Subsidiaries (each a "Grantee
Subsidiary") or the Board of Directors of Issuer (the "Issuer Board")
shall have recommended that the stockholders of Issuer approve or accept
any Acquisition Transaction other than the Company Merger. For purposes of
this Agreement, (a) "Acquisition Transaction" shall mean (x) a merger or
consolidation, or any similar transaction, involving Issuer or any Issuer
Subsidiary (other than mergers, consolidations or similar transactions (i)
involving solely Issuer and/or one or more wholly-owned (except for
directors' qualifying shares and a de minimis number of other shares)
Subsidiaries of the Issuer, PROVIDED, any such transaction is not entered
into in violation of the terms of the Merger Agreement or (ii) in which
the stockholders of Issuer immediately prior to the completion of such
transaction own at least 50% of the Common Stock of the Issuer (or the

-2-

<PAGE> 147

resulting or surviving entity in such transaction) immediately after
completion of such transaction, PROVIDED any such transaction is not
entered into in violation of the terms of the Merger Agreement), (y) a
purchase, lease or other acquisition of all or any substantial part of the
assets or deposits of Issuer or any Issuer Subsidiary, or (z) a purchase
or other acquisition (including by way of merger, consolidation, share
exchange or otherwise) of securities representing 10% or more of the
voting power of Issuer or any Issuer Subsidiary and (b) "Subsidiary" shall
have the meaning set forth in Rule 12b-2 under the 1934 Act;

(ii) Any person other than the Grantee or any Grantee Subsidiary
shall have acquired beneficial ownership or the right to acquire
beneficial ownership of 10% or more of the outstanding shares of Common
Stock (the term "beneficial ownership" for purposes of this Agreement
having the meaning assigned thereto in Section 13(d) of the 1934 Act, and
the rules and regulations thereunder);

(iii) The stockholders of Issuer shall have voted and failed to
adopt the Merger Agreement at a meeting which has been held for that
purpose or any adjournment or postponement thereof, or such meeting shall
not have been held or shall have been cancelled prior to termination of
the Merger Agreement if, prior to such meeting (or if such meeting shall
not have been held or shall have been cancelled, prior to such
termination), it shall have been publicly announced that any person (other
than Grantee or any of its Subsidiaries) shall have made, or publicly
disclosed an intention to make, a proposal to engage in an Acquisition
Transaction;

(iv) (x) The Issuer Board shall have withdrawn or modified (or
publicly announced its intention to withdraw or modify) in any manner
adverse in any respect to Grantee its recommendation that the stockholders
of Issuer approve the transactions contemplated by the Merger Agreement,
(y) Issuer or any Issuer Subsidiary, without having received Grantee's
prior written consent, shall have authorized, recommended, proposed (or
publicly announced its intention to authorize, recommend or propose) an
agreement to engage in an Acquisition Transaction with any person other
than Grantee or a Grantee Subsidiary, or (z) Issuer shall have provided
information to or engaged in negotiations or discussions with a third
party relating to a possible Acquisition Transaction.

(v) Any person other than Grantee or any Grantee Subsidiary shall
have made a proposal to Issuer or its stockholders to engage in an
Acquisition Transaction and such proposal shall have been publicly
announced;

(vi) Any person other than Grantee or any Grantee Subsidiary shall
have filed with the SEC a registration statement or tender offer materials
with respect to a potential exchange or tender offer that would constitute
an Acquisition Transaction (or filed a preliminary proxy statement with
the SEC with respect to a potential vote by its stockholders to approve
the issuance of shares to be offered in such an exchange offer);

-3-

<PAGE> 148

(vii) Issuer shall have willfully breached any covenant or
obligation contained in the Merger Agreement in anticipation of engaging
in an Acquisition Transaction, and following such breach Grantee would be
entitled to terminate the Merger Agreement (whether immediately or after
the giving of notice or passage of time or both); or

(viii) Any person other than Grantee or any Grantee Subsidiary other
than in connection with a transaction to which Grantee has given its prior
written consent shall have filed an application or notice with the Board
of Governors of the Federal Reserve System (the "Federal Reserve Board")
or other federal or state bank or thrift regulatory or antitrust
authority, which application or notice has been accepted for processing,
for approval to engage in an Acquisition Transaction.

(c) The term "Subsequent Triggering Event" shall mean any of the following
events or transactions occurring after the date hereof:

(i) The acquisition by any person (other than Grantee or any Grantee
Subsidiary) of beneficial ownership of 25% or more of the then outstanding
Common Stock; or

(ii) The occurrence of the Initial Triggering Event described in
clause (i) of subsection (b) of this Section 2, except that the percentage
referred to in clause (z) of the second sentence thereof shall be 25%.

(d) Issuer shall notify Grantee promptly in writing of the occurrence of
any Initial Triggering Event or Subsequent Triggering Event (together, a
"Triggering Event"), it being understood that the giving of such notice by
Issuer shall not be a condition to the right of the Holder to exercise the
Option.

(e) In the event the Holder is entitled to and wishes to exercise the
Option (or any portion thereof), it shall send to Issuer a written notice (the
date of which being herein referred to as the "Notice Date") specifying (i) the
total number of shares it will purchase pursuant to such exercise and (ii) a
place and date not earlier than three business days nor later than 60 business
days from the Notice Date for the closing of such purchase (the "Closing Date");
PROVIDED, that if prior notification to or approval of the Federal Reserve Board
or any other regulatory or antitrust agency is required in connection with such
purchase, the Holder shall promptly file the required notice or application for
approval, shall promptly notify Issuer of such filing, and shall expeditiously
process the same and the period of time that otherwise would run pursuant to
this sentence shall run instead from the date on which any required notification
periods have expired or been terminated or such approvals have been obtained and
any requisite waiting period or periods shall have passed. Any exercise of the
Option shall be deemed to occur on the Notice Date relating thereto.

(f) At the closing referred to in subsection (e) of this Section 2, the
Holder shall (i) pay to Issuer the aggregate purchase price for the shares of
Common Stock purchased pursuant to the exercise of the Option in immediately
available funds by wire transfer to a bank account designated by Issuer and (ii)
present and surrender this Agreement to Issuer at its principal executive
offices, PROVIDED that the failure or refusal of the Issuer to designate such a

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bank account or accept surrender of this Agreement shall not preclude the Holder
from exercising the Option.

(g) At such closing, simultaneously with the delivery of immediately
available funds as provided in subsection (f) of this Section 2, Issuer shall
deliver to the Holder a certificate or certificates representing the number of
shares of Common Stock purchased by the Holder and, if the Option should be
exercised in part only, a new Option evidencing the rights of the Holder thereof
to purchase the balance of the shares purchasable hereunder.

(h) Certificates for Common Stock delivered at a closing hereunder may be
endorsed with a restrictive legend that shall read substantially as follows:

"The transfer of the shares represented by this certificate is
subject to certain provisions of an agreement between the registered
holder hereof and Issuer and to resale restrictions arising under the
Securities Act of 1933, as amended. A copy of such agreement is on file at
the principal office of Issuer and will be provided to the holder hereof
without charge upon receipt by Issuer of a written request therefor."

It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act of 1933, as amended (the "1933 Act") in the above legend
shall be removed by delivery of substitute certificate(s) without such reference
if the Holder shall have delivered to Issuer a copy of a letter from the staff
of the SEC, or an opinion of counsel, in form and substance reasonably
satisfactory to Issuer, to the effect that such legend is not required for
purposes of the 1933 Act; (ii) the reference to the provisions of this Agreement
in the above legend shall be removed by delivery of substitute certificate(s)
without such reference if the shares have been sold or transferred in compliance
with the provisions of this Agreement and under circumstances that do not
require the retention of such reference in the opinion of counsel to the Holder;
and (iii) the legend shall be removed in its entirety if the conditions in the
preceding clauses (i) and (ii) are both satisfied. In addition, such
certificates shall bear any other legend as may be required by law.

(i) Upon the giving by the Holder to Issuer of the written notice of
exercise of the Option provided for under subsection (e) of this Section 2 and
the tender of the applicable purchase price in immediately available funds, the
Holder shall be deemed, subject to the receipt of any necessary regulatory
approvals, to be the holder of record of the shares of Common Stock issuable
upon such exercise, notwithstanding that the stock transfer books of Issuer
shall then be closed or that certificates representing such shares of Common
Stock shall not then be actually delivered to the Holder. Issuer shall pay all
expenses, and any and all United States federal, state and local taxes and other
charges that may be payable in connection with the preparation, issue and
delivery of stock certificates under this Section 2 in the name of the Holder or
its assignee, transferee or designee.

3. Issuer agrees: (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Common Stock; (ii)
that it will not, by charter amendment or through reorganization, consolidation,

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merger, dissolution or sale of assets, or by any other voluntary act, avoid or
seek to avoid the observance or performance of any of the covenants,
stipulations or conditions to be observed or performed hereunder by Issuer;
(iii) promptly to take all action as may from time to time be required
(including (x) complying with all applicable premerger notification, reporting
and waiting period requirements specified in 15 U.S.C. Section 18a and
regulations promulgated thereunder and (y) in the event, under the Bank Holding
Company Act of 1956, as amended (the "BHCA"), or the Change in Bank Control Act
of 1978, as amended, or any state or other federal thrift or banking law, prior
approval of or notice to the Federal Reserve Board or to any state or other
federal regulatory authority is necessary before the Option may be exercised,
cooperating fully with the Holder in preparing such applications or notices and
providing such information to the Federal Reserve Board or such state or other
federal regulatory authority as they may require) in order to permit the Holder
to exercise the Option and Issuer duly and effectively to issue shares of Common
Stock pursuant hereto; and (iv) promptly to take all action provided herein to
protect the rights of the Holder against dilution.

4. This Agreement (and the Option granted hereby) are exchangeable,
without expense, at the option of the Holder, upon presentation and surrender of
this Agreement at the principal office of Issuer, for other Agreements providing
for Options of different denominations entitling the holder thereof to purchase,
on the same terms and subject to the same conditions as are set forth herein, in
the aggregate the same number of shares of Common Stock purchasable hereunder.
The terms "Agreement" and "Option" as used herein include any Agreements and
related Options for which this Agreement (and the Option granted hereby) may be
exchanged. Upon receipt by Issuer of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of this Agreement, and (in the case
of loss, theft or destruction) of reasonably satisfactory indemnification, and
upon surrender and cancellation of this Agreement, if mutilated, Issuer will
execute and deliver a new Agreement of like tenor and date. Any such new
Agreement executed and delivered shall constitute an additional contractual
obligation on the part of Issuer, whether or not the Agreement so lost, stolen,
destroyed or mutilated shall at any time be enforceable by anyone.

5. In addition to the adjustment in the number of shares of Common Stock
that are purchasable upon exercise of the Option pursuant to Section 1 of this
Agreement, the number of shares of Common Stock purchasable upon the exercise of
the Option and the Option Price shall be subject to adjustment from time to time
as provided in this Section 5.

(a) In the event of any change in, or distributions in respect of, the
Common Stock by reason of stock dividends, split-ups, mergers,
recapitalizations, combinations, subdivisions, conversions, exchanges of shares
or the like, the type and number of shares of Common Stock purchasable upon
exercise hereof shall be appropriately adjusted and proper provision shall be
made so that, in the event that any additional shares of Common Stock are to be
issued or otherwise become outstanding as a result of any such change (other
than pursuant to an exercise of the Option), the number of shares of Common
Stock that remain subject to the Option shall be increased so that, after such
issuance and together with shares of Common Stock previously issued pursuant to

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the exercise of the Option (as adjusted on account of any of the foregoing
changes in the Common Stock), it equals 11% of the number of shares of Common
Stock issued and outstanding immediately prior to such issuance.

(b) Whenever the number of shares of Common Stock purchasable upon
exercise hereof is adjusted as provided in this Section 5, the Option Price
shall be adjusted by multiplying the Option Price by a fraction, the numerator
of which shall be equal to the number of shares of Common Stock purchasable
prior to the adjustment and the denominator of which shall be equal to the
number of shares of Common Stock purchasable after the adjustment.

6. Upon the occurrence of a Subsequent Triggering Event that occurs prior
to an Exercise Termination Event, Issuer shall, at the request of Grantee
delivered within twelve (12) months (or such later period as provided in Section
10) of such Subsequent Triggering Event (whether on its own behalf or on behalf
of any subsequent holder of this Option (or part thereof) or any of the shares
of Common Stock issued pursuant hereto), promptly prepare, file and keep current
a registration statement under the 1933 Act covering any shares issued and
issuable pursuant to this Option and shall use its reasonable best efforts to
cause such registration statement to become effective and remain current in
order to permit the sale or other disposition of any shares of Common Stock
issued upon total or partial exercise of this Option ("Option Shares") in
accordance with any plan of disposition requested by Grantee. Issuer will use
its reasonable best efforts to cause such registration statement promptly to
become effective and then to remain effective for such period not in excess of
180 days from the day such registration statement first becomes effective or
such shorter time as may be reasonably necessary to effect such sales or other
dispositions. Grantee shall have the right to demand two such registrations. The
Issuer shall bear the costs of such registrations (including, but not limited
to, Issuer's attorneys' fees, printing costs and filing fees, except for
underwriting discounts or commissions, brokers' fees and the fees and
disbursements of Grantee's counsel related thereto). The foregoing
notwithstanding, if, at the time of any request by Grantee for registration of
Option Shares as provided above, Issuer is in registration with respect to an
underwritten public offering by Issuer of shares of Common Stock, and if in the
good faith judgment of the managing underwriter or managing underwriters, or, if
none, the sole underwriter or underwriters, of such offering the offer and sale
of the Option Shares would interfere with the successful marketing of the shares
of Common Stock offered by Issuer, the number of Option Shares otherwise to be
covered in the registration statement contemplated hereby may be reduced;
PROVIDED, HOWEVER, that after any such required reduction the number of Option
Shares to be included in such offering for the account of the Holder shall
constitute at least 25% of the total number of shares to be sold by the Holder
and Issuer in the aggregate; and PROVIDED FURTHER, HOWEVER, that if such
reduction occurs, then Issuer shall file a registration statement for the
balance as promptly as practicable thereafter as to which no reduction pursuant
to this Section 6 shall be permitted or occur and the Holder shall thereafter be
entitled to one additional registration and the twelve (12) month period
referred to in the first sentence of this section shall be increased to
twenty-four (24) months. Each such Holder shall provide all information
reasonably requested by Issuer for inclusion in any registration statement to be
filed hereunder. If requested by any such Holder in connection with such
registration, Issuer shall become a party to any underwriting agreement relating
to the sale of such shares, but only to the extent of obligating itself in
respect of representations, warranties, indemnities and other agreements
customarily included in such underwriting agreements for Issuer. Upon receiving
any request under this Section 6 from any Holder, Issuer agrees to send a copy

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thereof to any other person known to Issuer to be entitled to registration
rights under this Section 6, in each case by promptly mailing the same, postage
prepaid, to the address of record of the persons entitled to receive such
copies. Notwithstanding anything to the contrary contained herein, in no event
shall the number of registrations that Issuer is obligated to effect be
increased by reason of the fact that there shall be more than one Holder as a
result of any assignment or division of this Agreement.

7. (a) At any time after the occurrence of a Repurchase Event (as defined
below) (i) at the request of the Holder, delivered prior to an Exercise
Termination Event (or such later period as provided in Section 10), Issuer (or
any successor thereto) shall repurchase the Option from the Holder at a price
(the "Option Repurchase Price") equal to the amount by which (A) the
market/offer price (as defined below) exceeds (B) the Option Price, multiplied
by the number of shares for which this Option may then be exercised and (ii) at
the request of the owner of Option Shares from time to time (the "Owner"),
delivered prior to an Exercise Termination Event (or such later period as
provided in Section 10), Issuer (or any successor thereto) shall repurchase such
number of the Option Shares from the Owner as the Owner shall designate at a
price (the "Option Share Repurchase Price") equal to the market/offer price
multiplied by the number of Option Shares so designated. The term "market/offer
price" shall mean the highest of (i) the price per share of Common Stock at
which a tender or exchange offer therefor has been made, (ii) the price per
share of Common Stock to be paid by any third party pursuant to an agreement
with Issuer, (iii) the highest closing price for shares of Common Stock within
the six-month period immediately preceding the date the Holder gives notice of
the required repurchase of this Option or the Owner gives notice of the required
repurchase of Option Shares, as the case may be, or (iv) in the event of a sale
of all or any substantial part of Issuer's assets or deposits, the sum of the
net price paid in such sale for such assets or deposits and the current market
value of the remaining net assets of Issuer as determined by a nationally
recognized investment banking firm selected by the Holder or the Owner, as the
case may be, and reasonably acceptable to Issuer, divided by the number of
shares of Common Stock of Issuer outstanding at the time of such sale. In
determining the market/offer price, the value of consideration other than cash
shall be determined by a nationally recognized investment banking firm selected
by the Holder or Owner, as the case may be, and reasonably acceptable to Issuer.

(b) The Holder and the Owner, as the case may be, may exercise its right
to require Issuer to repurchase the Option and any Option Shares pursuant to
this Section 7 by surrendering for such purpose to Issuer, at its principal
office, a copy of this Agreement or certificates for Option Shares, as
applicable, accompanied by a written notice or notices stating that the Holder
or the Owner, as the case may be, elects to require Issuer to repurchase this
Option and/or the Option Shares in accordance with the provisions of this
Section 7. As promptly as practicable, and in any event within five business
days after the surrender of the Option and/or certificates representing Option
Shares and the receipt of such notice or notices relating thereto, Issuer shall
deliver or cause to be delivered to the Holder the Option Repurchase Price
and/or to the Owner the Option Share Repurchase Price therefor or the portion
thereof that Issuer is not then prohibited under applicable law and regulation
from so delivering.

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(c) To the extent that Issuer is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from repurchasing the
Option and/or the Option Shares in full, Issuer shall immediately so notify the
Holder and/or the Owner and thereafter deliver or cause to be delivered, from
time to time, to the Holder and/or the Owner, as appropriate, the portion of the
Option Repurchase Price and the Option Share Repurchase Price, respectively,
that it is no longer prohibited from delivering, within five business days after
the date on which Issuer is no longer so prohibited; PROVIDED, HOWEVER, that if
Issuer at any time after delivery of a notice of repurchase pursuant to
paragraph (b) of this Section 7 is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from delivering to the
Holder and/or the Owner, as appropriate, the Option Repurchase Price and the
Option Share Repurchase Price, respectively, in full (and Issuer hereby
undertakes to use its reasonable best efforts to obtain all required regulatory
and legal approvals and to file any required notices as promptly as practicable
in order to accomplish such repurchase), the Holder or Owner may revoke its
notice of repurchase of the Option and/or the Option Shares whether in whole or
to the extent of the prohibition, whereupon, in the latter case, Issuer shall
promptly (i) deliver to the Holder and/or the Owner, as appropriate, that
portion of the Option Repurchase Price and/or the Option Share Repurchase Price
that Issuer is not prohibited from delivering; and (ii) deliver, as appropriate,
either (A) to the Holder, a new Agreement evidencing the right of the Holder to
purchase that number of shares of Common Stock obtained by multiplying the
number of shares of Common Stock for which the surrendered Agreement was
exercisable at the time of delivery of the notice of repurchase by a fraction,
the numerator of which is the Option Repurchase Price less the portion thereof
theretofore delivered to the Holder and the denominator of which is the Option
Repurchase Price, and/or (B) to the Owner, a certificate for the Option Shares
it is then so prohibited from repurchasing. If an Exercise Termination Event
shall have occurred prior to the date of the notice by Issuer described in the
first sentence of this subsection (c), or shall be scheduled to occur at any
time before the expiration of a period ending on the thirtieth day after such
date, the Holder shall nonetheless have the right to exercise the Option until
the expiration of such 30-day period.

(d) For purposes of this Section 7, a "Repurchase Event" shall be deemed
to have occurred upon the occurrence of any of the following events or
transactions after the date hereof:

(i) the acquisition by any person (other than Grantee or any Grantee
Subsidiary) of beneficial ownership of 50% or more of the then outstanding
Common Stock; or

(ii) the consummation of any Acquisition Transaction described in
Section 2(b)(i) hereof, except that the percentage referred to in clause
(z) shall be 50%.

8. (a) In the event that prior to an Exercise Termination Event, Issuer
shall enter into an agreement (i) to consolidate with or merge into any person,
other than Grantee or a Grantee Subsidiary, or engage in a plan of exchange with
any person, other than Grantee or a Grantee Subsidiary and Issuer shall not be
the continuing or surviving corporation of such consolidation or merger or the
acquirer in such plan of exchange, (ii) to permit any person, other than Grantee
or a Grantee Subsidiary, to merge into Issuer or be acquired by Issuer in a plan
of exchange and Issuer shall be the continuing or surviving or acquiring
corporation, but, in connection with such merger or plan of exchange, the then

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outstanding shares of Common Stock shall be changed into or exchanged for stock
or other securities of any other person or cash or any other property or the
then outstanding shares of Common Stock shall after such merger or plan of
exchange represent less than 50% of the outstanding shares and share equivalents
of the merged or acquiring company, or (iii) to sell or otherwise transfer all
or a substantial part of its or the Issuer Subsidiary's assets or deposits to
any person, other than Grantee or a Grantee Subsidiary, then, and in each such
case, the agreement governing such transaction shall make proper provision so
that the Option shall, upon the consummation of any such transaction and upon
the terms and conditions set forth herein, be converted into, or exchanged for,
an option (the "Substitute Option"), at the election of the Holder, of either
(x) the Acquiring Corporation (as hereinafter defined) or (y) any person that
controls the Acquiring Corporation.

(b) The following terms have the meanings indicated:

(i) "Acquiring Corporation" shall mean (i) the continuing or
surviving person of a consolidation or merger with Issuer (if other than
Issuer), (ii) the acquiring person in a plan of exchange in which Issuer
is acquired, (iii) the Issuer in a merger or plan of exchange in which
Issuer is the continuing or surviving or acquiring person, and (iv) the
transferee of all or a substantial part of Issuer's assets or deposits (or
the assets or deposits of the Issuer Subsidiary).

(ii) "Substitute Common Stock" shall mean the common stock issued by
the issuer of the Substitute Option upon exercise of the Substitute
Option.

(iii) "Assigned Value" shall mean the market/offer price, as defined
in Section 7.

(iv) "Average Price" shall mean the average closing price of a share
of the Substitute Common Stock for one year immediately preceding the
consolidation, merger or sale in question, but in no event higher than the
closing price of the shares of Substitute Common Stock on the day
preceding such consolidation, merger or sale; PROVIDED that if Issuer is
the issuer of the Substitute Option, the Average Price shall be computed
with respect to a share of common stock issued by the person merging into
Issuer or by any company which controls or is controlled by such person,
as the Holder may elect.

(c) The Substitute Option shall have the same terms as the Option,
PROVIDED that if the terms of the Substitute Option cannot, for legal reasons,
be the same as the Option, such terms shall be as similar as possible and in no
event less advantageous to the Holder. The issuer of the Substitute Option shall
also enter into an agreement with the then Holder or Holders of the Substitute
Option in substantially the same form as this Agreement (after giving effect for
such purpose to the provisions of Section 9), which agreement shall be
applicable to the Substitute Option.

(d) The Substitute Option shall be exercisable for such number of shares
of Substitute Common Stock as is equal to the Assigned Value multiplied by the
number of shares of Common Stock for which the Option was exercisable
immediately prior to the event described in the first sentence of Section 8(a),
divided by the Average Price. The exercise price of the Substitute Option per

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share of Substitute Common Stock shall then be equal to the Option Price
multiplied by a fraction, the numerator of which shall be the number of shares
of Common Stock for which the Option was exercisable immediately prior to the
event described in the first sentence of Section 8(a) and the denominator of
which shall be the number of shares of Substitute Common Stock for which the
Substitute Option is exercisable.

(e) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 11% of the shares of Substitute
Common Stock outstanding immediately prior to exercise of the Substitute Option.
In the event that the Substitute Option would be exercisable for more than 11%
of the shares of Substitute Common Stock outstanding immediately prior to
exercise but for this clause (e), the issuer of the Substitute Option (the
"Substitute Option Issuer") shall make a cash payment to Holder equal to the
excess of (i) the value of the Substitute Option without giving effect to the
limitation in this clause (e) over (ii) the value of the Substitute Option after
giving effect to the limitation in this clause (e). This difference in value
shall be determined by a nationally recognized investment banking firm selected
by the Holder.

(f) Issuer shall not enter into any transaction described in subsection
(a) of this Section 8 unless the Acquiring Corporation and any person that
controls the Acquiring Corporation assume in writing all the obligations of
Issuer hereunder.

9. (a) At the request of the holder of the Substitute Option (the
"Substitute Option Holder"), the issuer of the Substitute Option (the
"Substitute Option Issuer") shall repurchase the Substitute Option from the
Substitute Option Holder at a price (the "Substitute Option Repurchase Price")
equal to the amount by which (i) the Highest Closing Price (as hereinafter
defined) exceeds (ii) the exercise price of the Substitute Option, multiplied by
the number of shares of Substitute Common Stock for which the Substitute Option
may then be exercised, and at the request of the owner (the "Substitute Share
Owner") of shares of Substitute Common Stock (the "Substitute Shares"), the
Substitute Option Issuer shall repurchase the Substitute Shares at a price (the
"Substitute Share Repurchase Price") equal to the Highest Closing Price
multiplied by the number of Substitute Shares so designated. The term "Highest
Closing Price" shall mean the highest closing price for shares of Substitute
Common Stock within the six-month period immediately preceding the date the
Substitute Option Holder gives notice of the required repurchase of the
Substitute Option or the Substitute Share Owner gives notice of the required
repurchase of the Substitute Shares, as applicable.

(b) The Substitute Option Holder and the Substitute Share Owner, as the
case may be, may exercise its respective rights to require the Substitute Option
Issuer to repurchase the Substitute Option and the Substitute Shares pursuant to
this Section 9 by surrendering for such purpose to the Substitute Option Issuer,
at its principal office, the agreement for such Substitute Option (or, in the
absence of such an agreement, a copy of this Agreement) and/or certificates for
Substitute Shares accompanied by a written notice or notices stating that the
Substitute Option Holder or the Substitute Share Owner, as the case may be,
elects to require the Substitute Option Issuer to repurchase the Substitute
Option and/or the Substitute Shares in accordance with the provisions of this
Section 9. As promptly as practicable and in any event within five business days
after the surrender of the Substitute Option and/or certificates representing
Substitute Shares and the receipt of such notice or notices relating thereto,

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the Substitute Option Issuer shall deliver or cause to be delivered to the
Substitute Option Holder the Substitute Option Repurchase Price and/or to the
Substitute Share Owner the Substitute Share Repurchase Price therefor or the
portion thereof which the Substitute Option Issuer is not then prohibited under
applicable law and regulation from so delivering.

(c) To the extent that the Substitute Option Issuer is prohibited under
applicable law or regulation, or as a consequence of administrative policy, from
repurchasing the Substitute Option and/or the Substitute Shares in part or in
full, the Substitute Option Issuer shall immediately so notify the Substitute
Option Holder and/or the Substitute Share Owner and thereafter deliver or cause
to be delivered, from time to time, to the Substitute Option Holder and/or the
Substitute Share Owner, as appropriate, the portion of the Substitute Option
Repurchase Price and/or the Substitute Share Repurchase Price, respectively,
which it is no longer prohibited from delivering, within five (5) business days
after the date on which the Substitute Option Issuer is no longer so prohibited;
PROVIDED, HOWEVER, that if the Substitute Option Issuer is at any time after
delivery of a notice of repurchase pursuant to subsection (b) of this Section 9
prohibited under applicable law or regulation, or as a consequence of
administrative policy, from delivering to the Substitute Option Holder and/or
the Substitute Share Owner, as appropriate, the Substitute Option Repurchase
Price and the Substitute Share Repurchase Price, respectively, in full (and the
Substitute Option Issuer shall use its reasonable best efforts to receive all
required regulatory and legal approvals as promptly as practicable in order to
accomplish such repurchase), the Substitute Option Holder and/or Substitute
Share Owner may revoke its notice of repurchase of the Substitute Option or the
Substitute Shares either in whole or to the extent of prohibition, whereupon, in
the latter case, the Substitute Option Issuer shall promptly (i) deliver to the
Substitute Option Holder or Substitute Share Owner, as appropriate, that portion
of the Substitute Option Repurchase Price or the Substitute Share Repurchase
Price that the Substitute Option Issuer is not prohibited from delivering; and
(ii) deliver, as appropriate, either (A) to the Substitute Option Holder, a new
Substitute Option evidencing the right of the Substitute Option Holder to
purchase that number of shares of the Substitute Common Stock obtained by
multiplying the number of shares of the Substitute Common Stock for which the
surrendered Substitute Option was exercisable at the time of delivery of the
notice of repurchase by a fraction, the numerator of which is the Substitute
Option Repurchase Price less the portion thereof theretofore delivered to the
Substitute Option Holder and the denominator of which is the Substitute Option
Repurchase Price, and/or (B) to the Substitute Share Owner, a certificate for
the Substitute Option Shares it is then so prohibited from repurchasing. If an
Exercise Termination Event shall have occurred prior to the date of the notice
by the Substitute Option Issuer described in the first sentence of this
subsection (c), or shall be scheduled to occur at any time before the expiration
of a period ending on the thirtieth day after such date, the Substitute Option
Holder shall nevertheless have the right to exercise the Substitute Option until
the expiration of such 30-day period.

10. The 30-day, 6-month, 12-month, 18-month or 24-month periods for
exercise of certain rights under Sections 2, 6, 7, 9, 12 and 15 shall be
extended: (i) to the extent necessary to obtain all regulatory approvals for the
exercise of such rights (for so long as the Holder, Owner, Substitute Option
Holder or Substitute Share Owner, as the case may be, is using commercially
reasonable efforts to obtain such regulatory approvals), and for the expiration

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of all statutory waiting periods; and (ii) to the extent necessary to avoid
liability under Section 16(b) of the 1934 Act by reason of such exercise.

11. Issuer hereby represents and warrants to Grantee as follows:

(a) Issuer has full corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Issuer Board prior to the date hereof and no other corporate proceedings on the
part of Issuer are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly and validly executed
and delivered by Issuer.

(b) This Agreement, and the transactions contemplated hereby are not
subject to the requirements of any "moratorium," "control share", "fair price",
"affiliate transactions", "business combination" or other antitakeover laws and
regulations of any state. applicable to Issuer. The provisions of Article 12 of
Issuer's certificate of incorporation do not apply to the entering into of this
Agreement and the transactions contemplated hereby. Issuer has (i) duly approved
an appropriate amendment to its Rights Agreement and (ii) taken all other action
necessary or appropriate so that the entering into of this Agreement and the
consummation of the transactions contemplated hereby do not and will not result
in the ability of any Person to exercise any Rights, as defined in its Rights
Agreement, or enable or require any such Rights to separate from the shares of
Common Stock to which they are attached or to be triggered or become
exercisable.

(c) Issuer has taken all necessary corporate action to authorize and
reserve and to permit it to issue, and at all times from the date hereof through
the termination of this Agreement in accordance with its terms will have
reserved for issuance upon the exercise of the Option, that number of shares of
Common Stock equal to the maximum number of shares of Common Stock at any time
and from time to time issuable hereunder, and all such shares, upon issuance
pursuant thereto, will be duly authorized, validly issued, fully paid,
nonassessable, and will be delivered free and clear of all claims, liens,
encumbrance and security interests and not subject to any preemptive rights.

12. Neither of the parties hereto may assign any of its rights or
obligations under this Agreement or the Option created hereunder to any other
person, without the express written consent of the other party, except that in
the event a Subsequent Triggering Event shall have occurred prior to an Exercise
Termination Event, Grantee, subject to the express provisions hereof, may assign
in whole or in part its rights and obligations hereunder; PROVIDED, HOWEVER,
that until the date 15 days following the date on which the Federal Reserve
Board or other applicable regulatory authority has approved an application by
Grantee to acquire the shares of Common Stock subject to the Option, Grantee may
not assign its rights under the Option except in (i) a widely dispersed public
distribution, (ii) a private placement in which no one party acquires the right
to purchase in excess of 2% of the voting shares of Issuer, (iii) an assignment
to a single party (E.G., a broker or investment banker) for the purpose of
conducting a widely dispersed public distribution on Grantee's behalf or (iv)
any other manner approved by the Federal Reserve Board or other applicable
regulatory authority.

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<PAGE> 158

13. Each of Grantee and Issuer will use its reasonable best efforts to
make all filings with, and to obtain consents of, all third parties and
governmental authorities necessary to the consummation of the transactions
contemplated by this Agreement, including, without limitation, applying to the
Federal Reserve Board under the BHCA, to the extent required, for approval to
acquire the shares issuable hereunder, but Grantee shall not be obligated to
apply to state banking authorities for approval to acquire the shares of Common
Stock issuable hereunder until such time, if ever, as it deems appropriate to do
so.

14. (a) Notwithstanding any other provision of this Agreement, in no event
shall the Grantee's Total Profit (as hereinafter defined) exceed $45 million
and, if it otherwise would exceed such amount, the Grantee, at its sole
election, shall either (a) reduce the number of shares of Common Stock subject
to this Option, (b) deliver to Issuer for cancellation Option Shares previously
purchased by Grantee, (c) pay cash to Issuer, or (d) any combination thereof, so
that Grantee's actually realized Total Profit shall not exceed $45 million after
taking into account the foregoing actions.

(b) Notwithstanding any other provision of this Agreement, this Option may
not be exercised for a number of shares as would, as of the date of exercise,
result in a Notional Total Profit (as defined below) of more than $45 million;
PROVIDED that nothing in this sentence shall restrict any exercise of the Option
permitted hereby on any subsequent date.

(c) As used herein, the term "Total Profit" shall mean the aggregate
amount (before taxes) of the following: (i) the amount received by Grantee
pursuant to Issuer's repurchase of the Option (or any portion thereof) pursuant
to Section 7, (ii) (x) the amount received by Grantee pursuant to Issuer's
repurchase of Option Shares pursuant to Section 7, less (y) Grantee's purchase
price for such Option Shares, (iii) (x) the net cash amounts received by Grantee
pursuant to the sale of Option Shares (or any other securities into which such
Option Shares are converted or exchanged) to any unaffiliated party, less (y)
the Grantee's purchase price of such Option Shares, (iv) any amounts received by
Grantee on the transfer of the Option (or any portion thereof) to any
unaffiliated party, and (v) any amount equivalent to the foregoing with respect
to the Substitute Option.

(d) As used herein, the term 'Notional Total Profit" with respect to any
number of shares as to which Grantee may propose to exercise this Option shall
be the Total Profit determined as of the date of such proposed exercise assuming
that this Option were exercised on such date for such number of shares and
assuming that such shares, together with all other Option Shares held by Grantee
and its affiliates as of such date, were sold for cash at the closing market
price for the Common Stock as of the close of business on the preceding trading
day (less customary brokerage commissions).

15. (a) Grantee may, at any time following a Repurchase Event and prior to
the occurrence of an Exercise Termination Event (or such later period as
provided in Section 10), relinquish the Option (together with any Option Shares
issued to and then owned by Grantee) to Issuer in exchange for a cash fee equal
to the Surrender Price; PROVIDED, HOWEVER, that Grantee may not exercise its
rights pursuant to this Section 15 if Issuer has repurchased the Option (or any
portion thereof) or any Option Shares pursuant to Section 7. The "Surrender

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<PAGE> 159

Price" shall be equal to $45 million (i) plus, if applicable, Grantee's purchase
price with respect to any Option Shares and (ii) minus, if applicable, the
excess of (A) the net cash amounts, if any, received by Grantee pursuant to the
arms' length sale of Option Shares (or any other securities into which such
Option Shares were converted or exchanged) to any unaffiliated party, over (B)
Grantee's purchase price of such Option Shares.

(b) Grantee may exercise its right to relinquish the Option and any Option
Shares pursuant to this Section 15 by surrendering to Issuer, at its principal
office, a copy of this Agreement together with certificates for Option Shares,
if any, accompanied by a written notice stating (i) that Grantee elects to
relinquish the Option and Option Shares, if any, in accordance with the
provisions of this Section 15 and (ii) accept the Surrender Price. The Surrender
Price shall be payable in immediately available funds on or before the second
business day following receipt of such notice by Issuer.

(c) To the extent that Issuer is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from paying the
Surrender Price to Grantee in full, Issuer shall immediately so notify Grantee
and thereafter deliver or cause to be delivered, from time to time, to Grantee,
the portion of the Surrender Price that it is no longer prohibited from paying,
within five business days after the date on which Issuer is no longer so
prohibited; PROVIDED, HOWEVER, that if Issuer at any time after delivery of a
notice of surrender pursuant to paragraph (b) of this Section 15 is prohibited
under applicable law or regulation, or as a consequence of administrative
policy, from paying to Grantee the Surrender Price in full, (i) Issuer shall (A)
use its reasonable best efforts to obtain all required regulatory and legal
approvals and to file any required notices as promptly as practicable in order
to make such payments, (B) within five days of the submission or receipt of any
documents relating to any such regulatory and legal approvals, provide Grantee
with copies of the same, and (c) keep Grantee advised of both the status of any
such request for regulatory and legal approvals, as well as any discussions with
any relevant regulatory or other third party reasonably related to the same and
(ii) Grantee may revoke such notice of surrender by delivery of a notice of
revocation to Issuer and, upon delivery of such notice of revocation, the
Exercise Termination Event shall be extended to a date six months from the date
on which the Exercise Termination Event would have occurred if not for the
provisions of this Section 15(c) (during which period Grantee may exercise any
of its rights hereunder, including any and all rights pursuant to this Section
15).

16. The parties hereto acknowledge that damages would be an inadequate
remedy for a breach of this Agreement by either party hereto and that the
obligations of the parties hereto shall be enforceable by either party hereto
through injunctive or other equitable relief. In connection therewith both
parties waive the posting of any bond or similar requirement.

17. If any term, provision, covenant or restriction contained in this
Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this Agreement
shall remain in full force and effect, and shall in no way be affected, impaired
or invalidated. If for any reason such court or regulatory agency determines
that the Holder is not permitted to acquire, or Issuer is not permitted to
repurchase pursuant to Section 7, the full number of shares of Common Stock

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<PAGE> 160

provided in Section l(a) hereof (as adjusted pursuant to Section l(b) or Section
5 hereof), it is the express intention of Issuer to allow the Holder to acquire
or to require Issuer to repurchase such lesser number of shares as may be
permissible, without any amendment or modification hereof.

18. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person, by
fax, telecopy, or by registered or certified mail (postage prepaid, return
receipt requested) at the respective addresses of the parties set forth in the
Merger Agreement.

19. This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware, without regard to the conflict of law
principles thereof (except to the extent that mandatory provisions of Federal
law are applicable).

20. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same agreement.

21. Except as otherwise expressly provided herein, each of the parties
hereto shall bear and pay all costs and expenses incurred by it or on its behalf
in connection with the transactions contemplated hereunder, including fees and
expenses of its own financial consultants, investment bankers, accountants and
counsel.

22. Except as otherwise expressly provided herein or in the Merger
Agreement, this Agreement contains the entire agreement between the parties with
respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereof, written or oral. The terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and permitted assignees.
Nothing in this Agreement, expressed or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors except as
assignees, any rights, remedies, obligations or liabilities under or by reason
of this Agreement, except as expressly provided herein.

23. Capitalized terms used in this Agreement and not defined herein shall
have the meanings assigned thereto in the Merger Agreement.

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<PAGE> 161

Each of the parties has caused this Agreement to be executed on its behalf
by its officer thereunto duly authorized, all as of the date first above
written.

ST. PAUL BANCORP, INC.

By /s/ Joseph C. Scully
----------------------------------
Name: Joseph C. Scully
Title: Chief Executive Officer

CHARTER ONE FINANCIAL, INC.

By /s/ Charles J. Koch
----------------------------------
Name: Charles J. Koch
Title: Chief Executive Officer

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<PAGE> 162
Appendix C

May 17, 1999

Board of Directors
Charter One Financial, Inc.
1215 Superior Avenue
Cleveland, Ohio 44114

Ladies and Gentlemen:

You have requested our opinion as investment bankers as to the
fairness, from a financial point of view, to the holders of the common stock,
par value $0.01 per share (the "Charter One Common Stock"), of Charter One
Financial, Inc. ("Charter One"), of the Exchange Ratio (as defined below) in
connection with the proposed merger (the "Proposed Merger") of St. Paul Bancorp,
Inc. (the "Company") with and into Charter Michigan Bancorp, Inc., a wholly
owned subsidiary of Charter One ("Sub"), pursuant to the Agreement and Plan of
Merger, dated as of May 17, 1999 (the "Agreement"), by and among Charter One,
Sub and the Company.

As more specifically set forth in the Agreement, and subject to the
terms and conditions thereof, the Company will merge with and into Sub, and each
issued and outstanding share of common stock, par value $0.01 per share, of the
Company, together with the related Preferred Stock Purchase Rights
(collectively, the "Company Common Stock"), except Treasury Stock (as defined in
the Agreement), will be converted in the Proposed Merger into the right to
receive 0.945 (the "Exchange Ratio") of a share of Charter One Common Stock,
subject to adjustment as set forth in the Agreement.

In connection with rendering our opinion, we have reviewed and
analyzed, among other things, the following: (i) the Agreement; (ii) certain
publicly available information concerning Charter One, including the Annual
Reports on Form 10-K of Charter One for each of the fiscal years in the
three-year period ended December 31, 1998; (iii) certain other internal
information, primarily financial in nature, concerning the business, assets and
operations of Charter One, including estimates of cost savings and other
synergies forecasted to result from the Proposed Merger, furnished to us by
Charter One for purposes of our analysis; (iv) certain publicly available
information concerning the trading of, and the trading market for, Charter One
Common Stock; (v) certain publicly available information concerning the Company,
including the Annual Reports on Form 10-K of the Company for each of the fiscal
years in the three-year period ended December 31, 1998 and the Quarterly Report
on Form 10-Q of the Company for the quarter ended March 31, 1999; (vi) certain
other internal information, primarily financial in nature, concerning the
business, assets and operations of the Company, furnished to us by the Company
for the purposes of our analysis; (vii) certain publicly available information
concerning the trading of, and the trading market for, Company Common Stock;
(viii) certain publicly available information with respect to certain other
companies that we believe to be comparable to Charter One or the Company and the
trading markets for certain of such other companies' securities; and (ix)
certain publicly available information concerning the nature and terms of
certain other transactions that we consider relevant to our inquiry. We also
have considered such other information, financial studies, analyses,
investigations and financial, economic and market criteria that we deemed
relevant. We also have met with certain officers and employees of Charter One
and the Company to discuss the foregoing, as well as other matters we believe
relevant to our inquiry.

In our review and analysis and in arriving at our opinion, we have
assumed and relied upon the accuracy and completeness of all of the financial
and other information provided to us or publicly available and have neither
attempted independently to verify nor assumed responsibility for verifying any
of such information. We have not made an independent evaluation of the adequacy
of the allowance for loan losses of Charter One or the Company, and we have
assumed that the aggregate allowances for loan losses are adequate to cover such
losses of each individual company and of the combined entity following
completion of the Proposed Merger. We have not reviewed any individual loan
files of Charter One or the Company. We have not conducted a physical inspection
of any of the properties or facilities of Charter One or the Company, nor have
we made or obtained, or assumed any

<PAGE> 163

responsibility for making or obtaining, any independent evaluations or
appraisals of any assets (including properties and facilities) or liabilities of
Charter One or the Company. With respect to financial forecasts regarding
Charter One and the Company, at your direction, we have relied on publicly
available third-party equity research forecasts, and we express no view with
respect to such forecasts or the assumptions on which they were based. We also
have relied on forecasts provided to us by management of Charter One regarding
cost savings and other synergies expected to result from the Proposed Merger. We
have assumed that such forecasts have been reasonably prepared and reflect the
best currently available estimates and judgment of the management of Charter One
as to the future financial performance of the combined entity following
completion of the Proposed Merger, and we express no view with respect to such
forecasts or the assumptions on which they were based. We also have assumed that
the Proposed Merger will be consummated in a timely manner and in accordance
with the terms of the Agreement, without waiver of any of the conditions
precedent to the Proposed Merger contained in the Agreement. We understand, and
have assumed, that the Proposed Merger will qualify as a tax-free reorganization
under the provisions of the Internal Revenue Code of 1986, as amended, and that
the Proposed Merger will be accounted for as a pooling-of-interests for
financial reporting purposes. In rendering our opinion, we have assumed that in
the course of obtaining the necessary regulatory approvals for the Proposed
Merger and the Bank Merger (as defined in the Agreement) no restrictions will be
imposed that would have a material adverse effect on the contemplated benefits
of the Proposed Merger.

In conducting our analysis and arriving at our opinion as expressed
herein, we have considered such financial and other factors as we have deemed
appropriate under the circumstances including, among others, the following: (i)
the historical and current financial position and results of operations of
Charter One and the Company; (ii) the business prospects of Charter One and the
Company; (iii) the historical and current market for Charter One Common Stock,
Company Common Stock and for the equity securities of certain other companies
that we believe to be comparable to Charter One or the Company; and (iv) the
nature and terms of certain other transactions that we believe to be relevant.
We have not been asked to consider, and our opinion does not address, the
relative merits of the Proposed Merger as compared to any alternative business
strategy that might exist for Charter One. Our opinion necessarily is based upon
conditions as they exist and can be evaluated on the date hereof, and we assume
no responsibility to update or revise our opinion based upon circumstances or
events occurring after the date hereof. Our opinion is, in any event, limited to
the fairness, from a financial point of view, of the Exchange Ratio to Charter
One and does not address Charter One's underlying business decision to effect
the Proposed Merger. Nor does this opinion constitute a recommendation of the
Proposed Merger to Charter One or a recommendation to any holder of Charter One
Common Stock as to how such holder should vote with respect to the Proposed
Merger. Nor does our opinion constitute an opinion or imply any conclusion as to
the likely trading range for Charter One Common Stock following consummation of
the Proposed Merger.

As you are aware, Salomon Smith Barney Inc. ("Salomon Smith Barney")
has been asked to render its opinion to Charter One regarding the Proposed
Merger and will receive certain fees for our services, a substantial portion of
which fees is contingent on consummation of the Proposed Merger. In addition, in
the ordinary course of business, Salomon Smith Barney and its affiliates may
actively trade the securities of Charter One and the Company for their own
accounts and for the accounts of customers and, accordingly, may at any time
hold a long or short position in such securities. We or our predecessors or
affiliates previously have rendered certain investment banking and financial
advisory services to Charter One, for which we or such predecessors or
affiliates received customary compensation. Salomon Smith Barney and its
affiliates (including Citigroup Inc. and its affiliates) may have other business
and financial relationships with Charter One and the Company.

This opinion is intended for the benefit and use of Charter One
(including its management and directors) in considering the transaction to which
it relates and may not be used by Charter One for any other purpose or
reproduced, disseminated, quoted or referred to by Charter One at any time, in
any manner or for any purpose, without the prior written consent of Salomon
Smith Barney, except that this opinion may be reproduced in full in, and
references to the opinion and to Salomon Smith Barney and its relationship with
Charter One (in each case in such form as Salomon Smith Barney may approve) may
be included in any proxy statement or prospectus relating to the Proposed Merger
that Charter One files with the U.S. Securities and Exchange Commission and
distributes to holders of Charter One Common Stock in connection with the
Proposed Merger.

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<PAGE> 164

Based upon and subject to the foregoing, we are of the opinion as
investment bankers that, as of the date hereof, the Exchange Ratio is fair, from
a financial point of view, to the holders of Charter One Common Stock.

Very truly yours,

/s/ SALOMON SMITH BARNEY INC.

<PAGE> 165
Appendix D

Board of Directors
St. Paul Bancorp, Inc.
6700 W. North Avenue
Chicago, IL 60638

Members of the Board:

We understand that St. Paul Bancorp, Inc. ("St. Paul"), Charter One
Financial, Inc. ("Charter One"), and an affiliate of Charter One (collectively,
Charter One and its affiliate being referred to herein as "Charter One") have
entered into an Agreement and Plan of Merger, dated as of May 17, 1999 (the
"Agreement"), pursuant to which St. Paul is to be merged with and into Charter
One with Charter One being the surviving corporation in the transaction (the
"Merger") . Pursuant to the Merger, and as set forth more fully in the
Agreement, upon the merger of St. Paul and Charter One, each outstanding share
of St. Paul common stock, par value $0.01 per share (the "St. Paul Shares"),
will be converted into the right to receive 0.945 shares (the "Exchange Ratio")
of the common stock, par value $0.01 per share, of Charter One (the "Charter One
Shares").

You have asked us whether, in our opinion, the Exchange Ratio is fair, from
a financial point of view, to the shareholders of St. Paul.

In arriving at the opinion set forth below, we have, among other things:

(1) Reviewed certain publicly available business and financial information
relating to St. Paul and Charter One that we deemed to be relevant;

(2) Reviewed certain information, including financial forecasts, relating
to the respective businesses, earnings, assets, liabilities and
prospects of St. Paul and Charter One furnished to us by senior
management of St. Paul and Charter One, as well as the amount and
timing of the cost savings, revenue enhancements and related expenses
expected to result from the Merger (the "Expected Synergies")
furnished to us by senior management of Charter One;

(3) Conducted discussions with members of senior management and
representatives of St. Paul and Charter One concerning the matters
described in clauses (1) and (2) above, as well as their respective
businesses and prospects before and after giving effect to the Merger
and the Expected Synergies;

(4) Reviewed the market prices and valuation multiples for the St. Paul
Shares and the Charter One Shares and compared them with those of
certain publicly traded companies that we deemed to be relevant;

(5) Reviewed the respective publicly reported financial conditions and
results of operations of St. Paul and Charter One and compared them
with those of certain publicly traded companies that we deemed to be
relevant;

<PAGE> 166

(6) Compared the proposed financial terms of the Merger with the financial
terms of certain other transactions that we deemed to be relevant;

(7) Participated in certain discussions and negotiations among
representatives of St. Paul and Charter One and their financial and
legal advisors with respect to the Merger;

(8) Reviewed the potential pro forma impact of the Merger;

(9) Reviewed the Agreement and the related stock option agreement; and

(10) Reviewed such other financial studies and analyses and took into
account such other matters as we deemed necessary, including our
assessment of general economic, market and monetary conditions.

In preparing our opinion, we have assumed and relied on the accuracy and
completeness of all information supplied or otherwise made available to us,
discussed with or reviewed by or for us, or publicly available, and we have not
assumed any responsibility for independently verifying such information or
undertaken an independent evaluation or appraisal of the assets or liabilities
of St. Paul or Charter One or been furnished with any such evaluation or
appraisal. We are not experts in the evaluation of allowances for loan losses,
and we have neither made an independent evaluation of the adequacy of the
allowances for loan losses of St. Paul or Charter One, nor have we reviewed any
individual credit files of St. Paul or Charter One or been requested to conduct
such a review, and, as a result, we have assumed that the respective allowances
for loan losses for St. Paul and Charter One are adequate to cover such losses
and will be adequate on a pro forma basis for the combined entity. In addition,
we have not assumed any obligation to conduct, nor have we conducted, any
physical inspection of the properties or facilities of St. Paul or Charter One.
With respect to the financial and operating forecast information and the
Expected Synergies furnished to or discussed with us by St. Paul and Charter
One, we have assumed that they have been reasonably prepared and reflect the
best currently available estimates and judgments of the senior management of St.
Paul and Charter One as to the future financial and operating performance of St.
Paul, Charter One or the combined entity, as the case may be, and the Expected
Synergies. We have further assumed that the Merger will be accounted for as a
pooling-of-interests under generally accepted accounting principles and that it
will qualify as a tax-free reorganization for U.S. federal income tax purposes.

Our opinion is necessarily based upon market, economic and other conditions
as in effect, and on the information made available to us as of the date hereof.
For the purposes of rendering this opinion, we have assumed that the Merger will
be consummated substantially in accordance with the terms set forth in the
Agreement, including in all respects material to our analysis, that the
representations and warranties of each party in the Agreement and in all related
documents and instruments (collectively, the "Documents") that are referred to
therein are true and correct, that each party to the Documents will perform all
of the covenants and agreements required to be performed by such party under
such Documents, and that all conditions to the consummation of the Merger will
be satisfied without waiver thereof, and that the Merger is in fact consummated
pursuant to the terms of the Agreement. We have also assumed that, in the course
of obtaining the necessary regulatory or other consents or approvals
(contractual or otherwise) for the Merger, no restrictions, including any
divestiture requirements or amendment or modifications, will be imposed that
will have a material adverse effect on the future results of operations or
financial condition of the combined entity or on the contemplated benefits of
the Merger, including the Expected Synergies.

We have been retained by the Board of Directors of St. Paul to act as
financial advisor to St. Paul in connection with the Merger and will receive a
fee for our services, a significant portion of which is contingent upon the
consummation of the Merger. In addition, St. Paul has agreed to indemnify us for
certain liabilities arising out of our engagement. We have in the past two years
provided financial advisory, investment banking and other services to St. Paul
and Charter One and have received fees for the rendering of such services and
may continue to provide such services in the future. In addition, in the
ordinary course of our business, we may actively trade the St. Paul Shares and
other securities of St. Paul and its affiliates and the Charter One Shares and
other

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<PAGE> 167

securities of Charter One and its affiliates for our own account and for
the accounts of our customers, and, accordingly, may at any time hold a long or
short position in such securities.

This opinion is for the sole and exclusive use and benefit of the Board of
Directors of St. Paul. It is further understood that this opinion will not be
reproduced, summarized, described or referred to or given to any person without
Merrill Lynch's prior written consent. Our opinion does not address the merits
of the underlying decision by St. Paul to engage in the Merger and does not
constitute a recommendation to any shareholder of St. Paul as to how such
shareholder should vote on the proposed Merger or any other matter related
thereto.

We have not considered, nor are we expressing any opinion herein with
respect to, the prices at which St. Paul Shares or Charter One Shares will trade
following the announcement of the Merger or the price at which Charter One
Shares will trade following the consummation of the Merger.

On the basis of and subject to the foregoing, we are of the opinion that,
as of the date hereof, the Exchange Ratio is fair, from a financial point of
view, to the shareholders of St. Paul.

Very truly yours,

/s/ MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED

<PAGE> 168
PART II

INFORMATION NOT REQUIRED IN THE PROSPECTUS

ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 145 of the Delaware General Corporation Law sets forth
circumstances under which directors, officers, employees and agents of Charter
One may be insured or indemnified against liability which they may incur in
their capacities as such:

SECTION 145. INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS;
INSURANCE. (a) A corporation may indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by the person in connection with such action, suit or proceeding if the
person acted in good faith and in a manner the person reasonably believed to be
in or not opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which the person reasonably believed to be
in or not opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, had reasonable cause to believe that his
conduct was unlawful.

(b) A corporation shall have power to indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation and except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable to the corporation unless and only to the extent that
the Court of Chancery or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Court of Chancery
or such other court shall deem proper.

(c) To the extent that a present or former director or officer of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b) of this
section, or in defense of any claim, issue or matter therein, such person he
shall be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection therewith.

(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the present or
former director, officer, employee or agent is proper in the circumstances
because he has met the applicable standard of conduct set forth in subsections
(a) and (b) of this section. Such determination shall be made, with respect to a
person who is a director or officer at the time of such determination, (1) by a
majority vote of the directors who are not parties to such action, suit or
proceeding, even though less than a quorum, or (2) by a committee of such
directors designated by majority vote of such directors even though less than a
quorum, or (3) if there are no such directors, or if such directors so direct,
by independent legal counsel in a written opinion, or (4) by the stockholders.

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<PAGE> 169

(e) Expenses (including attorneys' fees) incurred by an officer or director
in defending any civil, criminal, administrative or investigative action, suit
or proceeding may be paid by the corporation in advance of the final disposition
of such action, suit or proceeding upon receipt of an undertaking by or on
behalf of such director or officer to repay such amount if it shall ultimately
be determined that such person is not entitled to be indemnified by the
corporation as authorized in this section. Such expenses (including attorneys'
fees) incurred by former directors and officers or other employees and agents
may be so paid upon such terms and conditions, if any, as the corporation deems
appropriate.

(f) The indemnification and advancement of expenses provided by, or granted
pursuant to, the other subsections of this section shall not be deemed exclusive
of any other rights to which those seeking indemnification or advancement of
expenses may be entitled under any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in such person's
official capacity and as to action in another capacity while holding such
office.

(g) A corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against such
person and incurred by such person in any such capacity, or arising out of such
person status as such, whether or not the corporation would have the power to
indemnify such person against such liability under this section.

(h) For purposes of this section, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so that
any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under this section with respect to the resulting or surviving
corporation as such person would have with respect to such constituent
corporation if its separate existence had continued.

(i) For purposes of this section, references to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any excise
taxes assessed on a person with respect to any employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee, or
agent with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner such person
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this
section.

(j) The indemnification and advancement of expense provided by, or granted
pursuant to, this section shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a director, officer
employee or agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.

(k) The Court of Chancery is hereby vested with exclusive jurisdiction to
hear and determine all actions for advancement of expenses or indemnification
brought under this section or under any bylaw, agreement, vote of stockholders
or disinterested directors, or otherwise. The Court of Chancery may summarily
determine a corporation's obligation to advance expenses (including attorneys'
fees).

Article TWELFTH of Charter One's certificate of incorporation further
provides as follows:

TWELFTH: Indemnification.

A. Actions, Suits or Proceedings Other than by or in the Right of the
Corporation. The Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to or is involved in any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal,

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<PAGE> 170

administrative or investigative (other than an action by or in the right of
the Corporation) by reason of the fact that he or she, or a person of whom
he or she is the legal representative, is or was or has agreed to become a
director or officer of the Corporation, or is or was serving or has agreed
to serve at the request of the Corporation as a director, officer, partner,
member or trustee of another corporation, including, without limitation,
any Subsidiary of the Corporation, partnership, joint venture, trust or
other enterprise, including service with respect to employee benefit plans,
or by reason of any action alleged to have been taken or omitted in such
capacity, against costs, charges, expenses (including attorneys' fees and
related disbursements), judgments, fines (including, without limitation,
ERISA excise taxes and penalties) and amounts paid in settlement actually
and reasonably incurred by such person or on such person's behalf in
connection with such action, suit or proceeding and any appeal therefrom,
if such person acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interests of the Corporation,
and with respect to any criminal action or proceeding, had no reasonable
cause to believe his or her conduct was unlawful; provided, however, that,
except as provided in paragraph F hereof with respect to proceedings
seeking to enforce rights of indemnification, the Corporation shall
indemnify such person seeking indemnification with respect to a proceeding
(or part thereof) initiated by such person only if such proceeding or part
thereof was authorized by a majority of the Continuing Directors. The
termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he or she reasonably believed
to be in or not opposed to the best interests of the Corporation, and, with
respect to any criminal action or proceeding, had reasonable cause to
believe that his or her conduct was unlawful.

B. Actions or Suits by or in the Right of the Corporation. The
Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to or is involved in any threatened, pending
or completed action or suit by or in the right of the Corporation to
procure a judgment in its favor by reason of the fact that he or she, or a
person of whom he or she is the legal representative, is or was or has
agreed to become a director or officer of the Corporation, or is or was
serving or has agreed to serve at the request of the Corporation as a
director, officer, partner, member or trustee of another corporation,
including, without limitation, any Subsidiary of the Corporation,
partnership, joint venture, trust or other enterprise, including service
with respect to employee benefit plans, or by reason of any action alleged
to have been taken or omitted in such capacity, against costs, charges and
expenses (including attorneys' fees and related disbursements) actually and
reasonably incurred by such person or on such person's behalf in connection
with the defense or settlement of such action or suit and any appeal
therefrom, if such person acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
Corporation, except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to
be liable to the Corporation unless and only to the extent that the Court
of Chancery of Delaware or the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
such liability but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such costs,
charges and expenses which the Court of Chancery or such other court shall
deem proper. Notwithstanding the provisions of this paragraph B, the
Corporation shall indemnify any such person seeking indemnification in
connection with a proceeding (or part thereof) initiated by such person
(except with respect to proceedings seeking to enforce rights to
indemnification pursuant to paragraph F), only if such proceeding (or part
thereof) was authorized by a majority of the Continuing Directors.

C. Indemnification for Costs, Charges and Expenses of Successful
Party. Notwithstanding the other provisions of this Article TWELFTH, to the
extent that a director, officer, employee or agent of the Corporation has
been successful on the merits or otherwise, including, without limitation,
the dismissal of an action without prejudice, in defense of any action,
suit or proceeding referred to in paragraphs A and B of this Article
TWELFTH, or in defense of any claim, issue or matter therein, such person
shall be indemnified against all costs, charges and expenses (including
attorneys' fees) actually and reasonably incurred by such person or on such
person's behalf in connection therewith.

D. Determination of Right to Indemnification. Any indemnification
under paragraphs A and B of this Article TWELFTH shall be made by the
Corporation as authorized in the specific case upon a determination (i) by
the Board of Directors by a majority vote of a quorum of the directors who
were not

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<PAGE> 171

parties to such action, suit or proceeding, or (ii) if such a quorum is not
obtainable, or, even if obtainable, if a majority of a quorum of
disinterested directors so directs, by independent legal counsel in a
written opinion that indemnification of the person seeking indemnification
is proper in the circumstances because he or she has met the applicable
standard of conduct set forth in paragraphs A and B of this Article
TWELFTH. Should a determination be made by the Corporation hereunder that
indemnification is not proper under the circumstances, a court may order
the Corporation to make indemnification pursuant to paragraphs A or B of
this Article TWELFTH.

E. Advance of Costs, Charges and Expenses. Costs, charges and expenses
(including attorneys' fees and related disbursements) incurred by a person
referred to in paragraphs A or B of the Article TWELFTH in defending a
civil or criminal action, suit or proceeding shall be paid by the
Corporation in advance of the final disposition of such action, suit or
proceeding, provided, however, that, if the Delaware Corporation Law so
requires, the payment of such expenses incurred by an officer or director
of the Corporation in his or her capacity as a director or officer (and not
in any other capacity in which service was or is rendered by such person
while a director or officer, including without limitation, service to an
employee benefit plan) in advance of the final disposition of such action,
suit or proceeding shall be made only upon receipt of an undertaking by or
on behalf of the director or officer to repay all amounts so advanced if it
shall ultimately be determined that such director or officer is not
entitled to be indemnified by the Corporation as authorized in this Article
TWELFTH. A majority of the Continuing Directors may, upon approval of an
indemnified person, authorize the Corporation's counsel to represent such
person, in any action, suit or proceeding, whether or not the Corporation
is a party to such action, suit or proceeding.

F. Procedure for Indemnification; Right of Claimant to Bring Suit. Any
indemnification under paragraphs A, B and C, or advance of costs, charges
and expenses under paragraph E of this Article TWELFTH, shall be made
promptly, and in any event within 60 days (or in the case of any advance of
costs, charges and expenses under paragraph E, within 20 days), upon the
written request of the person referred to in such paragraphs. The right to
indemnification or advances as granted by this Article TWELFTH shall be
enforceable by the persons referred to in paragraphs A, B, C and E in any
court of competent jurisdiction, if the Corporation denies such request, in
whole or in part, or if no disposition thereof is made within the
applicable time period specified in the preceding sentence hereof. The
costs, charges and expenses incurred by a person referred to in paragraph A
or B of this Article TWELFTH in connection with successfully establishing
his or her right to indemnification, in whole or in part, in any such
action shall also be indemnified by the Corporation. It shall be a defense
to any such action (other than an action brought to enforce a claim for the
advance of costs, charges and expenses under paragraph E of this Article
TWELFTH, where the required undertaking, if any, has been received by the
Corporation) that the claimant has not met the standard of conduct set
forth in paragraphs A or B of this Article TWELFTH, but the burden of
proving such defense shall be on the Corporation. Neither the failure of
the Corporation (including its Board of Directors, its independent legal
counsel, and its stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper
in the circumstances because the claimant has met the applicable standard
of conduct set forth in paragraphs A or B of this Article TWELFTH, nor the
fact that there has been an actual determination by the Corporation
(including its Board of Directors or its independent legal counsel) that
the claimant has not met such applicable standard of conduct, shall be a
defense to the action or create a presumption that the claimant has not met
the applicable standard of conduct.

G. Other Rights: Continuation of Right to Indemnification. The
indemnification and advancement of expenses provided by this Article
TWELFTH shall not be deemed exclusive of any other rights to which a person
seeking indemnification or advancement of expenses may be entitled under
any law (common or statutory), bylaw, agreement, vote of stockholder or
disinterested directors or otherwise, both as to action in such person's
official capacity and as to action in another capacity while holding office
or while employed by or acting as agent for the Corporation, and the
indemnification and advancement of expenses provided by this Article
TWELFTH shall continue as to a person who has ceased to serve in a capacity
referred to in paragraph A or B and shall inure to the benefit of the
estate, heirs, executors and administrators of such person. Nothing
contained in this Article TWELFTH shall be deemed to prohibit, and the
Corporation is specifically authorized to enter into, agreements between
the Corporation and

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<PAGE> 172

directors, officers, employees or agents providing indemnification rights
and procedures different from those set forth herein. All rights to
indemnification and advancement of expenses under this Article TWELFTH
shall be deemed to be a contract between the Corporation and each person
referred to in paragraph A or B of this Article TWELFTH who serves or
served in such capacity at any time while this Article TWELFTH is in
effect. Any repeal or modification of this Article TWELFTH or any repeal or
modification of relevant provisions of the Delaware Corporation Law or any
other applicable laws shall not in any way diminish any rights to
indemnification of any person referred to in paragraph A or B of this
Article TWELFTH or the obligations of the Corporation arising hereunder
with respect to any action, suit or proceeding arising out of, or relating
to, any actions, transactions or facts occurring prior to the final
adoption of such modification or repeal.

H. Indemnification of Employees and Agents of the Corporation. The
Corporation may, to the extent authorized from time to time by a majority
vote of the disinterested directors, indemnify any employee or agent of the
Corporation or any person who is or was serving or has agreed to serve at
the request of the Corporation as an employee or agent of any corporation,
including, without limitation, any Subsidiary of the Corporation,
partnership, joint venture, trust or other enterprise and pay the expenses
incurred by any such person in defending any proceeding in advance of its
final disposition, to the fullest extent of the provisions of this Article
TWELFTH.

I. Insurance. The Corporation may purchase and maintain insurance on
behalf of any person who is or was or has agreed to become a director,
officer, employee or agent of the Corporation, or is or was serving or has
agreed to serve at the request of the Corporation as a director, officer,
partner, member, trustee, employee or agent of another corporation,
including, without limitation, any Subsidiary of the Corporation,
partnership, joint venture, trust or other enterprise, including service
with respect to employee benefit plans, against any liability asserted
against such person and incurred by such person or on his or her behalf in
any such capacity, or arising out of such person's status as such, whether
or not the Corporation would have the power to indemnify such person
against such liability under the provisions of this Article TWELFTH.

J. Savings Clause. If this Article TWELFTH or any portion hereof shall
be invalidated on any ground by any court of competent jurisdiction, then
the Corporation shall nevertheless indemnify each person referred to
paragraph A or B of this Article TWELFTH as to any cost, charge and expense
(including attorneys' fees and related disbursements), judgment, fine
(including, without limitation, ERISA excise taxes and penalties) and
amount paid in settlement with respect to any action, suit or proceeding;
whether civil, criminal, administrative or investigative, including an
action by or in the right of the Corporation, to the full extent permitted
by any applicable portion of this Article TWELFTH that shall not have been
invalidated and to the full extent permitted by applicable law.

K. Subsequent Legislation. If the Delaware Corporation Law is
hereafter amended to further expand the indemnification permitted to
persons referred to in paragraphs A and B of this Article TWELFTH then the
Corporation shall indemnify such persons to the fullest extent permitted by
the Delaware Corporation Law, as so amended.

Charter One has purchased director and officer liability insurance that
insures directors and officers against certain liabilities in connection with
the performance of their duties as directors and officers, and that provides for
payment to Charter One of costs incurred by it in indemnifying its directors and
officers.

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<PAGE> 173

ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) EXHIBITS. See Exhibit Index

(b) FINANCIAL STATEMENT SCHEDULES. Not applicable.

ITEM 22. UNDERTAKINGS.

(a) The undersigned Registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:

(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) (SECTION 230.424(b) of this chapter) if, in the
aggregate, the changes in volume and price represent no more than a 20%
change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement;

(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;

(2) That for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.

(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at the time shall be deemed to be the initial bona fide offering thereof.

(c) The undersigned Registrant hereby undertakes as follows: that prior to
any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other Items of the applicable form.

(d) The undersigned Registrant undertakes that every prospectus (i) that is
filed pursuant to paragraph (c) immediately preceding, or (ii) that purports to
meet the requirements of section 10(a)(3) of the Act and is used in connection
with an offering of securities subject to Rule 415, will be filed as a part of
an amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability

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<PAGE> 174

under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.

(e) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suite or proceeding) is asserted by
such director, officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.

(f) The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.

(g) The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.

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<PAGE> 175

SIGNATURES
----------

Pursuant to the requirements of the Securities Act of 1933,
the registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Cleveland,
State of Ohio, on August 13, 1999.

CHARTER ONE FINANCIAL, INC.

By: /S/ Charles John Koch
-----------------------------------
Charles John Koch
Chairman of the Board, President
and Chief Executive Officer
(Duly Authorized Officer)

KNOWN BY ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Charles John Koch and Richard W. Neu, and
each of them, his true and lawful attorney-in-fact and agent, with full power of
substitution and re-substitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this registration statement, and to file the same, with all
exhibits thereto, and all other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-facts and
agents full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all said
attorney-in-facts and agents or their substitutes or substitute may lawfully do
or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.

Signature
- ---------
<S> <C>
/S/ Charles John Koch Date: August 13, 1999
- -----------------------------------------
Charles John Koch
Chairman of the Board, President and
Chief Executive Officer
(Principal Executive Officer)

/S/ Richard W. Neu Date: August 13, 1999
- -----------------------------------------
Richard W. Neu
Director, Executive Vice President and
Chief Financial Officer
(Principal Financial and Accounting Officer)

/S/ Eugene B. Carroll, Sr. Date: August 13, 1999
- -----------------------------------------
Eugene B. Carroll, Sr.
Director

/S/ Herbert G. Chorbajian Date: August 13, 1999
- -----------------------------------------
Herbert G. Chorbajian
Director
</TABLE>

<PAGE> 176

<TABLE>
<CAPTION>
<S> <C>
/S/ Phillip Wm. Fisher Date: August 13, 1999
- -----------------------------------------
Phillip Wm. Fisher
Director

/S/ Denise M. Fugo Date: August 13, 1999
- -----------------------------------------
Denise M. Fugo
Director

/S/ Mark D. Grossi Date: August 13, 1999
- -----------------------------------------
Mark D. Grossi
Director

/S/ Charles M. Heidel Date: August 13, 1999
- -----------------------------------------
Charles M. Heidel
Director

/S/ Karen R. Hitchcock Date: August 13, 1999
- -----------------------------------------
Karen R. Hitchcock
Director

/S/ John D. Koch Date: August 13, 1999
- -----------------------------------------
John D. Koch
Director

/S/ Michael P. Morley Date: August 13, 1999
- -----------------------------------------
Michael P. Morley
Director

/S/ Henry R. Nolte, Jr. Date: August 13, 1999
- -----------------------------------------
Henry R. Nolte, Jr.
Director

/S/ Ronald F. Poe Date: August 13, 1999
- -----------------------------------------
Ronald F. Poe
Director

/S/ Victor A. Ptak Date: August 13, 1999
- -----------------------------------------
Victor A. Ptak
Director

/S/ Melvin J. Rachal Date: August 13, 1999
- -----------------------------------------
Melvin J. Rachal
Director

/S/ Jerome L. Schostak Date: August 13, 1999
- -----------------------------------------
Jerome L. Schostak
Director
</TABLE>

<PAGE> 177

<TABLE>
<CAPTION>
<S> <C>
/S/ Mark Shaevsky Date: August 13, 1999
- -----------------------------------------
Mark Shaevsky
Director

/S/ Leonard S. Simon Date: August 13, 1999
- -----------------------------------------
Leonard S. Simon
Director

Date:
- -----------------------------------------
John P. Tierney
Director

/S/ Eresteen R. Williams Date: August 13, 1999
- -----------------------------------------
Eresteen R. Williams
Director
</TABLE>
<PAGE> 178

INDEX TO EXHIBITS

EXHIBIT
NUMBER DESCRIPTION
- ------ -----------

2.1 Agreement and Plan of Merger by and among Charter One, Charter Michigan
and St. Paul, included as Appendix A to the accompanying Proxy
Statement/Prospectus.

3.1 Registrant's Second Restated Certificate of Incorporation, as amended
and currently in effect, filed as Exhibit 4.2 to Post-Effective
Amendment Number One on Form S-8 to Form S-4 (File No. 333-33169), is
incorporated herein by reference.

3.2 Registrant's Bylaws, as amended and currently in effect, filed on August
8, 1997 as Exhibit 3.2 to Registrant's Registration Statement on Form
S-4 (File No. 333-33169), is incorporated herein by reference.

4.1 Form of Certificate of Common Stock, filed on January 22, 1988 as
Exhibit 4.2 to Registrant's Registration Statement on Form S-1 (File No.
33-16207), is incorporated herein by reference.

4.2 Shareholder Rights Agreement dated November 20, 1989, between Charter
One and First National Bank of Boston, as amended on May 26, 1995, filed
as Exhibit 4.2 to Registrant's Report on Form 10-K for the fiscal year
ended December 31, 1994 and December 31, 1995, respectively, is
incorporated herein by reference.

5 Opinion and Consent of Silver, Freedman & Taff, L.L.P.

8.1 Tax Opinion of Silver, Freedman & Taff, L.L.P.

8.2 Tax Opinion of Mayer, Brown & Platt.

10.1 Registrant's Long-Term Stock Incentive Plan, filed on January 22, 1988
as Exhibit 10.1 to Registrant's Registration Statement on Form S-1 (File
No. 33-16207), is incorporated herein by reference.

10.2 Registrant's Directors' Stock Option Plan, filed on January 22, 1988 as
Exhibit 10.2 to Registrant's Registration Statement on Form S-1 (File
No. 33-16207), is incorporated herein by reference.

10.3 Charter One Bank, F.S.B. Executive Incentive Goal Achievement Plan,
filed as Exhibit 10.8 to Registrant's Report on Form 10-K for the fiscal
year ended December 31, 1994 (File No. 0-16311), is incorporated herein
by reference.

10.4 First American Savings Bank, F.S.B. Nonqualified Retirement Plan and
First Amendment thereto, filed as Exhibit 10.17 to Registrant's Report
on Form 10-K for the fiscal year ended December 31, 1993 (File No.
0-16311), are incorporated herein by reference.

10.5 FirstFed Michigan Corporation 1983 Stock Option Plan, filed on November
1, 1995 as an exhibit to Registrant's Registration Statement on Form S-8
(File No. 33-61273), is incorporated herein by reference.

10.6 FirstFed Michigan Corporation 1991 Stock Option Plan, filed on November
1, 1995 as an exhibit to Registrant's Registration Statement on Form S-8
(File No. 33-61273), is incorporated herein by reference.

10.7 Forms of Supplemental Retirement Agreements between Charter One and
Charles John Koch, Richard W. Neu, John David Koch, Mark D. Grossi, and
Robert J. Vana filed on July 25, 1995 as Exhibits 10.4 and 10.5 to
Registrant's Registration Statement on Form S-4 (File No. 33-61273), and
Amendment 1 thereto, filed as Exhibit 10.7 to Charter One's Annual
Report on Form 10-K for the year ending December 31, 1998, are
incorporated herein by reference.

<PAGE> 179

EXHIBIT
NUMBER DESCRIPTION
- ------ -----------

10.8 Forms of Employment Agreements between Charter One and Charles John
Koch, Richard W. Neu, John David Koch, Mark D. Grossi, and Robert J.
Vana filed on July 25, 1995 as Exhibits 10.1, 10.2 and 10.3 to
Registrant's Registration Statement on Form S-4 (File No. 33-61273), and
Amendment 1 thereto, filed as Exhibit 10.8 to Charter One's Annual
Report on Form 10-K for the year ending December 31, 1998, are
incorporated herein by reference.

10.9 Employment Agreement, dated April 22, 1997, between Charter One
Investment, Inc. and William A. Valerian, filed on August 8, 1997 as
Exhibit 10.13 to Registrant's Registration Statement on Form S- 4 (File
No. 333-33169), is incorporated herein by reference.

10.10 Forms of Employment Agreements between Charter One and Leonard S. Simon,
and Edward J. Pettinella, filed on August 8, 1997 as Exhibits 10.14 and
10.15 to Registrant's Registration Statement on Form S-4 (File No.
333-33259), are incorporated herein by reference.

10.11 Charter One Financial, Inc. 1997 Stock Option and Incentive Plan, filed
on December 19, 1997, as an exhibit to Registrant's Registration
Statement on Form S-8 (File No. 333-42823), is incorporated herein by
reference.

10.12 1986 Stock Option Plan of RCSB Financial, Inc., filed on October 8,
1997, as an exhibit to Post- Effective Amendment Number One on Form S-8
to Form S-4 (File No. 333-33259), is incorporated herein by reference.

10.13 1992 Stock-Based Compensation Plan of RCSB Financial, Inc., filed on
October 8, 1997, as an exhibit to Post-Effective Amendment Number One on
Form S-8 to Form S-4 (File No. 333-33259), is incorporated herein by
reference.

10.14 Home Federal Savings Bank Stock Compensation Program, filed on September
29, 1997 as an exhibit to Post-Effective Amendment Number One on Form
S-8 to Form S-4 (File No. 333-33169), is incorporated herein by
reference.

10.15 Haverfield 1995 Stock Option Plan, filed on September 29, 1997 as an
exhibit to Post-Effective Amendment Number One on Form S-8 to Form S-4
(File No. 333-33169), is incorporated herein by reference.

10.16 The RCSB Financial, Inc. Non-Employee Director Deferred Compensation
Plan, filed as Exhibit 10.16 to Charter One's Annual Report on Form 10-K
for the year ending December 31, 1998, is incorporated herein by
reference.

10.17 ALBANK Financial Corporation 1992 Stock Incentive Plan for Key
Employees, as amended and restated as of December 18, 1995, filed as
Exhibit 10.11 to ALBANK's Annual Report on Form 10-K for the year ended
December 31, 1995 (File No. 0-19843), is incorporated herein by
reference.

10.18 ALBANK Financial Corporation 1995 Stock Incentive Plan for Outside
Directors, filed as Exhibit 10.12.1 to ALBANK's Annual Report on Form
10-K for the year ended December 31, 1995 (File No. 0-19843), is
incorporated herein by reference.

10.19 ALBANK Financial Corporation 1992 Stock Incentive Plan for Outside
Directors, filed as an appendix to the Proxy Statement for the 1992
Annual Meeting of the Stockholders of ALBANK held on October 26, 1992,
is incorporated herein by reference.

10.20 Employment Agreement, dated November 30, 1998, between Charter One
Financial, Inc. and Herbert G. Chorbajian, filed as Exhibit 10.20 to
Charter One's Annual Report on Form 10-K for the year ended December 31,
1998, is incorporated herein by reference.

<PAGE> 180

EXHIBIT
NUMBER DESCRIPTION
- ------ -----------

10.21 Charter One Financial, Inc. Top Executive Incentive Goal Achievement
Plan, filed on October 1, 1998 as Annex E to the Prospectus contained in
the Registrant's Registration Statement on Form S-4 (File No.
333-65137), in incorporated herein by reference.

23.1 Consent of Silver, Freedman & Taff, L.L.P. (Included in Exhibits 5 and
8.1)

23.2 Consent of Mayer, Brown & Platt (included in Exhibit 8.2)

23.3 Consent of Deloitte & Touche LLP (as accountants for the Registrant)

23.4 Consent of Ernst & Young LLP (as accountants for St. Paul)

23.5 Consent of KPMG Peat Marwick L.L.P. (as accountants for ALBANK Financial
Corporation)

23.6 Consent of KPMG Peat Marwick L.L.P. (as accountants for RCSB Financial,
Inc.)

23.7 Consent of Grant Thornton LLP (as accountants for Beverly
Bancorporation, Inc.).

99.1 Consents of Certain Persons Named as Directors in the Proxy
Statement/Prospectus contained herein.

99.2 Form of Proxy Cards of Charter One.

99.3 Form of Proxy Cards of St. Paul.

99.4 Consent of Salomon Smith Barney Inc.

99.5 Consent of Merrill Lynch, Pierce, Fenner & Smith Incorporated

<PAGE> 1

EXHIBIT 5

[LETTERHEAD OF SILVER, FREEDMAN & TAFF, L.L.P.]

August 11, 1999

Board of Directors
Charter One Financial, Inc.
1215 Superior Avenue
Cleveland, Ohio 44114

Members of the Board of Directors:

We have examined (i) the Registration Statement on Form S-4 (the
"Registration Statement") filed by Charter One Financial, Inc. (the "Company")
with the Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "Securities Act"), and the public
offering prospectus (the "Prospectus"), relating to the issuance by the Company
of up to 43,973,909 shares of common stock, par value $.01 per share (the
"Common Stock"), in the manner set forth in the Registration Statement and the
Prospectus, (ii) the Company's Second Restated Certificate of Incorporation and
Bylaws (as amended) and (iii) records of the Company's corporate proceedings
relative to the issuance of the Common Stock.

In our examination, we have assumed and have not verified (i) the
genuineness of all signatures, (ii) the authenticity of all documents submitted
to us as originals, (iii) the conformity with the originals of all documents
supplied to us as copies, and (iv) the accuracy and completeness of all
corporate records and documents and all certificates and statements of fact, in
each case given or made available to us by the Company. We have relied upon
certificates and other written documents from public officials and government
agencies and departments and we have assumed the accuracy and authenticity of
such certificates and documents.

Based upon the foregoing, and having a regard for such legal
considerations as we deem relevant, we are of the opinion that the Common Stock
will be, upon issuance by Charter One in the manner set forth in the
Registration Statement and Prospectus, legally issued, fully paid and
non-assessable.

<PAGE> 2
Board of Directors
Charter One Financial, Inc.
Page 2

We consent to the use of this opinion and of our opinion regarding federal
income tax consequences, to the incorporation by reference of such opinions as
exhibits to the Registration Statement and to the reference to our firm and our
opinions under the heading "Legal Matters" in the Registration Statement filed
by the Company, and all amendments thereto. In giving this consent, we do not
admit that we are within the category of persons whose consent is required under
Section 7 of the Securities Act or the rules and regulations of the Commission
thereunder.

Very truly yours,

/S/ Silver, Freedman & Taff, L.L.P.
-----------------------------------
Silver, Freedman & Taff, L.L.P.

<PAGE> 1

EXHIBIT 8.1

August 13, 1999

Board of Directors
Charter One Financial, Inc.
1215 Superior Avenue
Cleveland, Ohio 44114

Re: Certain Federal Income Tax Consequences of the Merger

Ladies and Gentlemen:

We have acted as counsel to Charter One Financial, Inc. ("COFI") in
connection with the merger (the "Merger") of St. Paul Bancorp, Inc. ("St. Paul")
with and into Charter Michigan Bancorp Inc. ("Charter Michigan"), a wholly owned
subsidiary of COFI, pursuant to the Agreement and Plan of Merger dated as of May
17, 1999 (the "Merger Agreement") by and among COFI, Charter Michigan and St.
Paul. You have requested that we provide an opinion regarding the treatment of
the Merger under the Internal Revenue Code of 1986, as amended (the "Code"), and
the accuracy of the tax disclosures in the joint proxy statement/prospectus (the
"Joint Proxy Statement/Prospectus").

In providing this opinion, we have relied on (i) the description of the
transaction as set forth in the Merger Agreement and the exhibits thereto, (ii)
the description of the transaction as set forth in the Joint Proxy
Statement/Prospectus and the exhibits thereto, and (iii) representations
provided by St. Paul and COFI concerning certain facts relating to the Merger.

Based upon and subject to the foregoing, it is our opinion that:

(i) the summaries of Federal income tax consequences set forth in the
Joint Proxy Statement/Prospectus under the heading "Summary-Material
Federal Income Tax Consequences of the Merger" and "The Merger -
Federal Income Tax Consequences of the Merger" are accurate in all
material respects as to matters of law and legal conclusions,

(ii) the Merger will be treated for federal income tax purposes as a
reorganization within the meaning of Sections 368(a)(1)(A) and
368(a)(2)(D) of the Code, and

(iii) as a result of the Merger, no gain or loss will be recognized by a
holder of St.

<PAGE> 2

Page 2

Paul common stock who receives solely COFI common stock (except for
cash received in lieu of fractional shares) in exchange for all of
his or her shares of St. Paul common stock.

This opinion is based on current provisions of the Code, the Treasury
regulations promulgated thereunder, and the interpretation of the Code and such
regulations by the courts and the Internal Revenue Service, as they are in
effect and exist at the date of this opinion. It should be noted that statutes,
regulations, judicial decisions and administrative interpretations are subject
to change at any time and, in some circumstances, with retroactive effect. A
material change that is made after the date hereof in any of the foregoing bases
for our opinion could adversely affect our conclusion.

We hereby consent to the filing of this opinion as an exhibit of the Joint
Proxy Statement/Prospectus and to all references to this firm under the headings
"Summary - Material Federal Income Tax Consequences of the Merger" and "The
Merger - Federal Income Tax Consequences of the Merger" in the Joint Proxy
Statement/Prospectus.

Sincerely,

/s/ Silver, Freedman & Taff, LLP
--------------------------------
Silver, Freedman & Taff, LLP

<PAGE> 1

EXHIBIT 8.2

[LETTERHEAD OF MAYER, BROWN & PLATT]

August 13, 1999

St. Paul Bancorp, Inc.
6700 West North Avenue
Chicago, Illinois 60707

Re: Certain Federal Income Tax Consequences of the Merger

Ladies and Gentlemen:

We have acted as counsel to St. Paul Bancorp, Inc. ("St. Paul") in
connection with the merger (the "Merger") of St. Paul with and into Charter
Michigan Bancorp Inc. ("Charter Michigan"), a wholly owned subsidiary of Charter
One Financial, Inc. ("COFI"), pursuant to the Agreement and Plan of Merger dated
as of May 17, 1999 (the "Merger Agreement") by and among COFI, Charter Michigan
and St. Paul. You have requested that we provide an opinion regarding the
treatment of the Merger under the Internal Revenue Code of 1986, as amended (the
"Code"), and the accuracy of the tax disclosures in the proxy
statement/prospectus (the "Proxy Statement/Prospectus").

In providing this opinion, we have relied on (i) the description of the
transaction as set forth in the Merger Agreement and the exhibits thereto, (ii)
the description of the transaction as set forth in the Proxy
Statement/Prospectus and the exhibits thereto, (iii) covenants made by St. Paul
in the Merger Agreement, and (iv) representations provided by St. Paul and COFI
concerning certain facts underlying and relating to the Merger.

Based upon and subject to the foregoing, it is our opinion that:

(i) the summaries of Federal income tax consequences set forth in the
Proxy Statement/Prospectus under the headings "Summary -- Certain
Federal Income Tax Consequences" and "The Merger -- Certain Federal
Income Tax Consequences" are accurate in all material respects as to
matters of law and legal conclusions,

(ii) the Merger will be treated for federal income tax purposes as a
reorganization within the meaning of Sections 368(a)(1)(A) and
368(a)(2)(D) of the Code, and

(iii) as a result of the Merger, no gain or loss will be recognized by a
holder who receives solely COFI Common Stock (except for cash received
in lieu of fractional shares) in exchange for all of his or her shares
of St. Paul Common Stock.

- 1 -

<PAGE> 2

We hereby consent to the filing of this opinion as an exhibit to the Proxy
Statement/Prospectus and to all references to this firm under the headings
"Summary -- Certain Federal Income Tax Consequences" and "The Merger -- Certain
Federal Income Tax Consequences" in the Proxy Statement/Prospectus.

Sincerely,

/s/ Mayer, Brown & Platt
------------------------
MAYER, BROWN & PLATT

<PAGE> 1
EXHIBIT 23.3

INDEPENDENT AUDITORS' CONSENT

Charter One Financial, Inc.

We consent to the incorporation by reference in this Registration Statement of
Charter One Financial, Inc. on Form S-4 of our report dated January 26, 1999
(which expresses an unqualified opinion and refers to the reports of other
auditors on the consolidated financial statements of ALBANK Financial
Corporation and RCSB Financial, Inc., each of which were merged with Charter One
Financial, Inc.), appearing in the Annual Report on Form 10-K of Charter One
Financial, Inc. for the year ended December 31, 1998 and to the reference to us
under the heading "Experts" in the Joint Proxy Statement/Prospectus, which is
part of this Registration Statement.

/s/ Deloitte & Touche LLP

Cleveland, Ohio

August 11, 1999

<PAGE> 1
EXHIBIT 23.4

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Experts" in the Joint
Proxy Statement of Charter One Financial, Inc. and St. Paul Bancorp, Inc. that
is referred to and made a part of the Prospectus and Registration Statement
(Form S-4) of Charter One Financial, Inc. for the registration of 43,973,909
shares of its common stock and to the incorporation by reference therein of our
report dated January 28, 1999, with respect to the consolidated financial
statements of St. Paul Bancorp, Inc. incorporated by reference in its Annual
Report (Form 10-K) for the year ended December 31, 1998, filed with the
Securities and Exchange Commission.

/s/ Ernst & Young LLP
---------------------
Ernst & Young LLP

Chicago, Illinois
August 10, 1999

<PAGE> 1
EXHIBIT 23.5

ACCOUNTANTS' CONSENT

The Board of Directors
Charter One Financial, Inc.

We consent to the incorporation by reference in the registration statement on
Form S-4 of Charter One Financial, Inc. (relating to the merger of Charter One
Financial, Inc. and St. Paul Bancorp, Inc.) of our report dated January 30,
1998, relating to the consolidated statement of financial condition of ALBANK
Financial Corporation and subsidiaries as of December 31, 1997 and the related
consolidated statements of earnings, changes in stockholders' equity, and cash
flows for each of the years in the two-year period ended December 31, 1997,
which report has been incorporated by reference in the December 31, 1998 annual
report on Form 10-K of Charter One Financial, Inc.

We also consent to the reference to our firm under the heading "Experts" in the
joint proxy statement/prospectus.

/s/ KPMG LLP
- ------------
KPMG LLP

Albany, New York
August 11, 1999

<PAGE> 1
EXHIBIT 23.6

INDEPENDENT AUDITORS' CONSENT

The Board of Directors
Charter One Financial, Inc.:

We consent to incorporation by reference in the Registration Statement on Form
S-4 of Charter One Financial, Inc. (relating to the merger of Charter One
Financial, Inc. and St. Paul Bancorp, Inc.) of our report dated December 13,
1996, relating to the consolidated statements of income, changes in
shareholders' equity and cash flows of RCSB Financial, Inc. and subsidiaries for
the year ended November 30, 1996, which report has been incorporated by
reference in the December 31, 1998 annual report on Form 10-K of Charter One
Financial, Inc.

We also consent to the reference to our firm under the heading "Experts" in the
joint proxy statement/prospectus.

/s/ KPMG LLP
- ------------
KPMG LLP

Rochester, New York
August 11, 1999

<PAGE> 1
EXHIBIT 23.7

CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

We have issued our report dated January 23, 1998, except for Note 18 as to which
the date is March 15, 1998, on the consolidated financial statements of Beverly
Bancorporation, Inc. and Subsidiaries (not presented separately) as of December
31, 1997 and for each of the two years in the period ended December 31, 1997,
included in the Annual Report on Form 10-K of St. Paul Bancorp, Inc. for the
year ended December 31, 1998. We hereby consent to the incorporation by
reference of the aforementioned report in the Registration Statement on Form S-4
of Charter One Financial, Inc. (relating to the merger of Charter One Financial,
Inc., and St. Paul Bancorp, Inc.) and to the use of our name as it appears
under the caption "Experts" in the joint proxy statement/prospectus.

/s/ Grant Thornton LLP
----------------------
GRANT THORNTON LLP

Chicago, Illinois
August 10, 1999

<PAGE> 1
EXHIBIT 99.1

CONSENT

Pursuant to Rule 438 of the General Rules and Regulations under the
Securities Act of 1933, I hereby consent to being named in the joint proxy
statement/prospectus included in the Registration Statement on Form S-4 to which
this consent is an exhibit and confirm my consent to serve in such capacity.

By: /s/ Joseph C. Scully Dated: August 11, 1999
--------------------
Joseph C. Scully

By: /s/ Patrick J Agnew Dated: August 11, 1999
-------------------
Patrick J Agnew

<PAGE> 1
Exhibit 99.2

REVOCABLE PROXY

CHARTER ONE FINANCIAL, INC.

SPECIAL MEETING - SEPTEMBER 30, 1999

PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints the Board of Directors of Charter One Financial,
Inc. ("Charter One") and its survivor, with full power of substitution, to act
as attorneys and proxies for the undersigned to vote all shares of common stock
of Charter One which the undersigned is entitled to vote at Charter One's
special meeting of shareholders to be held on Thursday, September 30, 1999, at
the Forum Conference and Education Center, One Cleveland Center, 1375 East Ninth
Street, Cleveland, Ohio, at 10:00 a.m., local time, and at any and all
adjournments and postponements thereof, as set forth on the reverse side hereof.

THE SHARES REPRESENTED BY THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS
SPECIFIED ON THE REVERSE SIDE HEREOF. IF NO SPECIFICATION IS MADE, THIS PROXY
WILL BE VOTED FOR THE PROPOSAL TO ISSUE SHARES OF CHARTER ONE COMMON STOCK IN
CONNECTION WITH THE MERGER. THE PROXIES MAY VOTE IN THEIR DISCRETION AS TO OTHER
MATTERS WHICH MAY COME BEFORE THE SPECIAL MEETING OR ANY ADJOURNMENTS OR
POSTPONEMENTS THEREOF.

THE UNDERSIGNED ACKNOWLEDGES RECEIPT FROM CHARTER ONE FINANCIAL, INC., PRIOR TO
THE EXECUTION OF THIS PROXY, OF NOTICE OF THE SPECIAL MEETING, AND A JOINT PROXY
STATEMENT/PROSPECTUS.

- --------------- ---------------
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
- --------------- ---------------
<PAGE> 2

- --------- Please mark
X votes as in
- --------- this example.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING PROPOSAL.

<TABLE>

FOR AGAINST ABSTAIN
<S> <C> <C> <C>
1 To approve the proposal to issue shares of Charter One Common Stock in
connection with the Agreement and Plan of Merger, dated as of May 17, [_] [_] [_]
1999, by and between Charter One, Charter Michigan Bancorp, Inc. and St.
Paul Bancorp, Inc.
</TABLE>

This proxy may be revoked at any time before it is voted by (i) filing
with the Secretary of Charter One or before the special meeting a written
notice of revocation bearing a later date than this proxy; (ii) duly
executing a subsequent proxy relating to the same shares and delivering it
to the Secretary of Charter One at or before the special meeting; or (iii)
attending the special meeting and voting in person. Attendance at the
special meeting will not in and of itself constitute revocation of this
proxy. If this proxy is properly revoked as described above, then the
power of such attorneys and proxies shall be deemed terminated and of no
further force and effect.

MARK HERE FOR ADDRESS CHANGE AND NOTE CHANGE AT [_]
LEFT

PLEASE PROMPTLY COMPLETE, DATE, SIGN AND MAIL THIS
PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.

Please date and sign as your name is imprinted
hereon. Each executor, administrator, trustee,
guardian, attorney-in-fact and other fiduciary
should sign and indicate his or her full title. If
shares are held jointly, each holder should sign.

Signature: ________________ Date: ____ Signature: _________________ Date: _____

<PAGE> 3
DETACH HERE

CHARTER ONE FINANCIAL, INC.

SPECIAL MEETING - SEPTEMBER 30, 1999

CONFIDENTIAL VOTING AUTHORIZATION CARD

As a participant in the Charter One Bank Retirement Savings Plan (the "Plan"),
I hereby direct the trustee of the Plan in which I participate to vote all
vested shares of Charter One Financial, Inc. ("Charter One") common stock
allocated or credited to my account under such Plan as of August 16, 1999, in
accordance with the instructions on the reverse side of this card, at the
special meeting of shareholders to be held on September 30, 1999, or any
adjournment or postponement thereof. I understand that the Plan trustee will
vote all unallocated shares of Charter One common stock in the same proportion
as Plan participant's vote their allocated shares. The Plan trustee is
authorized to vote upon such other matters as may properly come before the
special meeting or any adjournment or postponement thereof, in accordance with
the determination of the majority of Charter One's Board of Directors. I
understand my vote shall be confidential and will be seen only by BankBoston,
N.A. in the tabulation of the vote.

IF THIS VOTING AUTHORIZATION CARD IS EXECUTED AND RETURNED BY THE UNDERSIGNED
SHAREHOLDER WITHOUT SPECIFYING A VOTE ON THE REVERSE SIDE HEREOF, THE PLAN
TRUSTEE WILL VOTE THE SHARES VESTED OR CREDITED TO SUCH SHAREHOLDER'S ACCOUNT
UNDER THE PLAN AS OF AUGUST 16, 1999 "FOR" THE PROPOSAL TO ISSUE SHARES OF
CHARTER ONE COMMON STOCK IN CONNECTION WITH THE MERGER. IF THIS VOTING
AUTHORIZATION CARD IS NOT EXECUTED AND RETURNED PRIOR TO THE SPECIAL MEETING,
THE TRUSTEE WILL VOTE YOUR SHARES HELD UNDER THE PLAN IN ITS SOLE DISCRETION.

THE UNDERSIGNED ACKNOWLEDGES RECEIPT FROM CHARTER ONE, PRIOR TO THE EXECUTION
OF THIS VOTING AUTHORIZATION CARD, OF NOTICE OF THE SPECIAL MEETING AND A JOINT
PROXY STATEMENT/PROSPECTUS.

SEE REVERSE SEE REVERSE
SIDE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
<PAGE> 4
DETACH HERE

[X] PLEASE MARK
VOTES AS IN
THIS EXAMPLE.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING PROPOSAL.
FOR AGAINST ABSTAIN
/ / / / / /
1. To approve the proposal to issue shares of
Charter One common stock in connection with
the Agreement and Plan of Merger, dated as
of May 17, 1999, by and between Charter
One, Charter Michigan Bancorp, Inc. and
St. Paul Bancorp, Inc.

MARK HERE FOR ADDRESS CHANGE AND
NOTE CHANGE AT LEFT / /

Please date and sign as your name is
imprinted hereon. Each executor,
administrator, trustee, guardian,
attorney-in-fact and other fiduciary
should sign and indicate his or her
full title. If shares are held jointly,
each holder should sign.

Signature:________________ Date: _____ Signature:________________ Date: ______
<PAGE> 5
DETACH HERE

CHARTER ONE FINANCIAL, INC.

SPECIAL MEETING - SEPTEMBER 30, 1999

CONFIDENTIAL VOTING AUTHORIZATION CARD

As a participant in the Albany Savings Bank, F.S.B., Incentive Savings and
Employee Stock Ownership Plan (the "Plan"), I hereby direct the trustee of the
Plan in which I participate to vote all vested shares of Charter One Financial,
Inc. ("Charter One") common stock allocated or credited to my account under such
Plan as of August 16, 1999, in accordance with the instructions on the reverse
side of this card, at the special meeting of shareholders to be held on
September 30, 1999, or any adjournment or postponement thereof. I understand
that the Plan trustee will vote all unallocated shares of Charter One common
stock in the same proportion as Plan participant's vote their allocated shares.
The Plan trustee is authorized to vote upon such other matters as may properly
come before the special meeting or any adjournment or postponement thereof, in
accordance with the determination of the majority of Charter One's Board of
Directors. I understand my vote shall be confidential and will be seen only by
BankBoston, N.A. in the tabulation of the vote.

THE UNDERSIGNED ACKNOWLEDGES RECEIPT FROM CHARTER ONE, PRIOR TO THE EXECUTION
OF THIS VOTING AUTHORIZATION CARD, OF NOTICE OF THE SPECIAL MEETING AND A JOINT
PROXY STATEMENT/PROSPECTUS.

SEE REVERSE SEE REVERSE
SIDE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
<PAGE> 6
DETACH HERE

[X] PLEASE MARK
VOTES AS IN
THIS EXAMPLE.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING PROPOSAL.

FOR AGAINST ABSTAIN
/ / / / / /
1. To approve the proposal to issue shares of
Charter One common stock in connection with
the Agreement and Plan of Merger, dated as
of May 17, 1999, by and between Charter
One, Charter Michigan Bancorp, Inc. and
St. Paul Bancorp, Inc.

MARK HERE FOR ADDRESS CHANGE AND
NOTE CHANGE AT LEFT / /

Please date and sign as your name is
imprinted hereon. Each executor,
administrator, trustee, guardian,
attorney-in-fact and other fiduciary
should sign and indicate his or her
full title. If shares are held jointly,
each holder should sign.

Signature:________________ Date: _____ Signature:________________ Date: ______
<PAGE> 7
DETACH HERE

CHARTER ONE FINANCIAL, INC.

SPECIAL MEETING - SEPTEMBER 30, 1999

CONFIDENTIAL VOTING AUTHORIZATION CARD

As a participant in the Haverfield Corporation Employee Stock Ownership Plan
(the "Plan"), I hereby direct the trustee of the Plan in which I participate to
vote all vested shares of Charter One Financial, Inc. ("Charter One") common
stock allocated or credited to my account under such Plan as of August 16, 1999,
in accordance with the instructions on the reverse side of this card, at the
special meeting of shareholders to be held on September 30, 1999, or any
adjournment or postponement thereof. I understand that the Plan trustee will
vote all unallocated shares of Charter One common stock in the same proportion
as Plan participant's vote their allocated shares. The Plan trustee is
authorized to vote upon such other matters as may properly come before the
special meeting or any adjournment or postponement thereof, in accordance with
the determination of the majority of Charter One's Board of Directors. I
understand my vote shall be confidential and will be seen only by BankBoston,
N.A. in the tabulation of the vote.

THE UNDERSIGNED ACKNOWLEDGES RECEIPT FROM CHARTER ONE, PRIOR TO THE EXECUTION
OF THIS VOTING AUTHORIZATION CARD, OF NOTICE OF THE SPECIAL MEETING AND A JOINT
PROXY STATEMENT/PROSPECTUS.

SEE REVERSE SEE REVERSE
SIDE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
<PAGE> 8
DETACH HERE

[X] PLEASE MARK
VOTES AS IN
THIS EXAMPLE.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING PROPOSAL.

MARK HERE FOR ADDRESS CHANGE AND
NOTE CHANGE AT LEFT / /

Please date and sign as your name is
imprinted hereon. Each executor,
administrator, trustee, guardian,
attorney-in-fact and other fiduciary
should sign and indicate his or her
full title. If shares are held jointly,
each holder should sign.

Signature:________________ Date: _____ Signature:________________ Date: ______

<PAGE> 1
EXHIBIT 99.3

[St. Paul Bancorp Logo]

Special Meeting of Shareholders
Thursday, September 30, 1999, at 10:00 a.m.
Hyatt Regency Oak Brook
Essex Ballroom, Lower Level
1909 Spring Road, Oak Brook, Illinois

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

REVOCABLE PROXY ST. PAUL BANCORP, INC. REVOCABLE PROXY

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned shareholder of St. Paul Bancorp, Inc. hereby appoints
Joseph C. Scully and Patrick J. Agnew, or either of them, with full power of
substitution in each, as proxies to cast all votes which the undersigned
shareholder is entitled to cast at the special meeting of shareholders to be
held at 10:00 a.m. on September 30, 1999, at the Hyatt Regency Oak Brook, 1909
Spring Road, Oak Brook, Illinois, and at any adjournments and postponements
thereof, upon the matters set forth on the reverse side hereof. The undersigned
shareholder hereby revokes any proxy or proxies heretofore given.

THIS PROXY WILL BE VOTED AS DIRECTED BY THE UNDERSIGNED SHAREHOLDER.
UNLESS CONTRARY DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR ADOPTION OF THE
MERGER AGREEMENT AND IN ACCORDANCE WITH THE DETERMINATION OF A MAJORITY OF THE
BOARD OF DIRECTORS AS TO ANY OTHER MATTERS. THE UNDERSIGNED SHAREHOLDER MAY
REVOKE THIS PROXY AT ANY TIME BEFORE IT IS VOTED BY DELIVERING TO THE SECRETARY
OF ST. PAUL BANCORP, INC. EITHER A WRITTEN REVOCATION OF THE PROXY OR A DULY
EXECUTED PROXY BEARING A LATER DATE, OR BY APPEARING AT THE SPECIAL MEETING AND
VOTING IN PERSON. THE UNDERSIGNED SHAREHOLDER HEREBY ACKNOWLEDGES RECEIPT OF THE
NOTICE OF SPECIAL MEETING AND A JOINT PROXY STATEMENT/PROSPECTUS FOR THE
MEETING.

SEE REVERSE SIDE (CONTINUED AND TO BE MARKED, SIGNED AND DATED ON REVERSE SIDE)
SEE REVERSE SIDE

<PAGE> 2

[St. Paul Bancorp Logo]
THIS IS YOUR PROXY

You can be sure your shares are represented at the
meeting by returning your proxy in the enclosed envelope
as soon as possible.

YOUR VOTE IS IMPORTANT

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

[X] PLEASE MARK
VOTE AS IN
THIS EXAMPLE.

IF YOU RECEIVE MORE THAN ONE PROXY CARD, PLEASE SIGN AND MAIL ALL CARDS.

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

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOLLOWING PROPOSAL

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

1. Adoption of the Agreement and Plan of Merger, dated as of May 17, 1999,
by and between Charter One Financial, Inc., Charter Michigan Bancorp,
Inc. and St. Paul Bancorp, Inc.

FOR AGAINST ABSTAIN

[ ] [ ] [ ]

[ ] MARK HERE FOR ADDRESS
CHANGE AND NOTE AT LEFT

THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME
BEFORE THE SPECIAL MEETING, OR ANY ADJOURNMENTS OR POSTPONEMENTS THEREOF, IN
ACCORDANCE WITH THE DETERMINATION OF A MAJORITY OF ST. PAUL BANCORP, INC.'S
BOARD OF DIRECTORS.

PLEASE SIGN AND DATE EXACTLY AS NAME APPEARS HEREIN. EACH EXECUTOR,
ADMINISTRATOR, TRUSTEE, GUARDIAN, ATTORNEY-IN-FACT AND OTHER FIDUCIARY SHOULD
SIGN AND INDICATE HIS OR HER FULL TITLE. WHEN STOCK HAS BEEN ISSUED IN THE NAME
OF TWO OR MORE PERSONS, ALL SHOULD SIGN.

SIGNATURE:_______________ DATE:________ SIGNATURE:_____________ DATE: ________

<PAGE> 3

[St. Paul Bancorp Logo]

Special Meeting of Shareholders
Thursday, September 30, 1999, at 10:00 a.m.
Hyatt Regency Oak Brook
Essex Ballroom, Lower Level
1909 Spring Road, Oak Brook, Illinois

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

ST. PAUL BANCORP, INC.

VOTING AUTHORIZATION TO THE TRUSTEES OF THE PLANS SPECIFIED BELOW

The trustees of the St. Paul Federal Bank For Savings Employee Stock
Ownership Plan and Trust (the "ESOP") and the St. Paul Federal Bank For Savings
Profit Sharing & Savings Plan (the "Savings Plan"), respectively, are hereby
authorized to represent and vote as designated on the reverse side of this card
the shares of St. Paul common stock the undersigned held under the ESOP and the
Savings Plan, at the special meeting of shareholders to be held at 10:00 a.m. on
September 30, 1999, at the Hyatt Regency Oak Brook, 1909 Spring Road, Oak Brook,
Illinois, and at any adjournments and postponements thereof.

IF A VOTE IS NOT SPECIFIED ON THE REVERSE SIDE, THE TRUSTEE WILL NOT
VOTE THE SHARES OF ST. PAUL COMMON STOCK THE UNDERSIGNED HELD UNDER THE ESOP OR
THE SAVINGS PLAN. YOU MUST MARK YOUR CARD FOR YOUR VOTE TO COUNT.

SEE REVERSE SIDE (CONTINUED AND TO BE MARKED, SIGNED AND DATED ON REVERSE SIDE)
SEE REVERSE SIDE

<PAGE> 4

[St. Paul Bancorp Logo]
THIS IS YOUR PROXY

You can be sure your shares are represented at the
meeting by returning your proxy in the enclosed envelope
as soon as possible.

YOUR VOTE IS IMPORTANT

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

[X] PLEASE MARK
VOTE AS IN
THIS EXAMPLE.

IF YOU RECEIVE MORE THAN ONE PROXY CARD, PLEASE SIGN AND MAIL ALL CARDS.

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

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOLLOWING PROPOSAL

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

1. Adoption of the Agreement and Plan of Merger, dated as of May 17, 1999,
by and between Charter One Financial, Inc., Charter Michigan Bancorp,
Inc. and St. Paul Bancorp, Inc.

FOR AGAINST ABSTAIN

[ ] [ ] [ ]

[ ] MARK HERE FOR ADDRESS
CHANGE AND NOTE AT LEFT

EACH TRUSTEE IS AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME
BEFORE THE SPECIAL MEETING, OR ANY ADJOURNMENTS OR POSTPONEMENTS THEREOF, IN
ACCORDANCE WITH THE DETERMINATION OF A MAJORITY OF ST. PAUL BANCORP, INC.'S
BOARD OF DIRECTORS.

PLEASE SIGN AND DATE EXACTLY AS NAME APPEARS HEREIN. EACH EXECUTOR,
ADMINISTRATOR, TRUSTEE, GUARDIAN, ATTORNEY-IN-FACT AND OTHER FIDUCIARY SHOULD
SIGN AND INDICATE HIS OR HER FULL TITLE.

SIGNATURE:_______________ DATE:________ SIGNATURE:______________ DATE: ________

<PAGE> 1
EXHIBIT 99.4

We hereby consent to the inclusion of our opinion letter to the Board of
Directors of Charter One Financial, Inc. dated May 17, 1999 and attached as
Appendix C to the joint proxy statement/prospectus which forms a part of the
Registration on Form S-4 relating to the proposed merger of St. Paul Bancorp,
Inc. with and into Charter Michigan Bancorp, Inc. and to the references to such
opinion in such joint proxy statement/prospectus. In giving such consent, we do
not admit that we come within the category of persons whose consent is required
under Section 7 of the Securities Act of 1933, as amended, or the rules and
regulations of the Securities and Exchange Commission thereunder, nor do we
thereby admit that we are experts with respect to any part of such Registration
Statement within the meaning of the term "experts" as used in the Securities
Act, as amended, or the rules and regulations of the Securities and Exchange
Commission thereunder.

Dated: August 10, 1999

SALOMON SMITH BARNEY INC.

By: /s/ JAMES HARASIMOWICZ
----------------------
James Harasimowicz

<PAGE> 1

EXHIBIT 99.5

CONSENT OF MERRILL LYNCH

We hereby consent to the inclusion of our opinion letter to the Board
of Directors of St. Paul Bancorp, Inc. ("St. Paul"), to be dated the date of
the Joint Proxy Statement/Prospectus which forms a part of the Registration
Statement on Form S-4 relating to the proposed merger of St. Paul with Charter
One Financial, Inc., as Appendix D to the Joint Proxy Statement/Prospectus, and
to the references to such opinion in such Joint Proxy Statement/Prospectus
under the captions "SUMMARY -- Opinions of Financial Advisors," and "THE MERGER
- -- Background of the Merger," "-- St. Paul's Reasons for the Merger," and --
"Opinion of St. Paul's Financial Advisor." In giving such consent, we do not
admit that we come within the category of persons whose consent is required
under Section 7 of the Securities Act of 1933, as amended, or the rules and
regulations of the Securities and Exchange Commission thereunder, nor do we
thereby admit that we are experts with respect to any part of such Registration
Statement within the meaning of the term "experts" as used in the Securities
Act of 1933, as amended, or the rules and regulations of the Securities and
Exchange Commission thereunder.

MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED

By: /s/ Eric Heaton
-------------------

August 11, 1999