Capital City Bank Group, Inc.
Reports Fourth Quarter and Full Year 2007 Results

Tallahassee, FL. – Capital City Bank Group, Inc. (NASDAQ: CCBG) today reported net income for the fourth quarter of 2007 totaling $7.7 million ($0.44 per diluted share) compared to $8.9 million ($0.48 per diluted share) in the fourth quarter of 2006 and $7.2 million ($0.41 per diluted share) for the third quarter of 2007.  Net income for the year ended 2007 totaled $29.7 million ($1.66 per diluted share) compared to $33.3 million ($1.79 per diluted share) for 2006.  Earnings per share reflect the company’s repurchase of 447,823 common shares during the fourth quarter and a total of 1,404,364 common shares for the full-year 2007.

“Net income for the final quarter and the full year were lower in 2007 than for the comparable periods of 2006 as a result of margin compression and a higher loan loss provision,” said William G. Smith, Jr., Chairman, President, and CEO of Capital City Bank Group, Inc.  “Consistent with the trends throughout the banking industry, our funding costs increased over the course of the year, but began to decline as the Fed lowered rates during the fourth quarter.”

“Credit quality and risk assessment are clearly the most important issues we are focused upon as we move into 2008.  Accordingly, during the fourth quarter we recognized a higher provision for loan losses putting coverage at .95% of total loans, or 72% of nonperforming loans.  We remain confident that the overall credit quality throughout our loan portfolio is sound and there are no significant concentrations in any particular borrower segment.”

“Noninterest income growth was favorable throughout the year and we were successful in reducing our total expenses year over year.  Due to our strong capital position and the current economic environment we had opportunities to repurchase a significant amount of our common stock.  We expect these factors to continue to benefit the company during 2008,” said Smith.

The Return on Average Assets was 1.18% and the Return on Average Equity was 9.68% for 2007 compared to 1.29% and 10.48%, respectively, for 2006.  For the fourth quarter of 2007, the aforementioned metrics were 1.21% and 10.16% compared to 1.37% and 10.84% for the comparable quarter in 2006 and 1.15% and 9.44% for the third quarter of 2007.




Discussion of Financial Condition

Average earning assets were $2.191 billion for the fourth quarter, a decrease of $46.8 million, or 2.1%, from the fourth quarter of 2006 due to share repurchase activity, which approximated $43.2 million for 2007, and investment in office expansion.  Average loans decreased $95.7 million, or 4.8% during the same period reflecting of a high level of principal pay-downs and loan pay-offs, including the pay-off of several larger commercial loans, and a slowing of lending activity.  On a linked quarter basis, however, average loans were up slightly.  Compared to the third quarter of 2007, average earning assets increased $46.5 million, or 2.2%, due to an increase in deposits, which is discussed in more detail below.

Nonperforming assets of $28.2 million increased from the prior year-end by $19.4 million and from the linked third quarter by $14.1 million.  Nonaccrual loans increased $17.1 million and $12.7 million, respectively, from the same prior-year periods.  The increase in nonaccrual loans in the fourth quarter primarily reflects the addition of three large loan relationships totaling $10.7 million, which had been internally identified as problem loans as of the end of the third quarter.  Two of the aforementioned loans totaling $4.8 million are to borrowers employed in the real estate market and the other loan relationship totaling $5.9 million consists of loans to a commercial business.  Other real estate owned totaled $3.0 million at year-end compared to $1.7 million at the end of the prior quarter and $0.7 million at year-end 2006.  Nonperforming assets represented 1.47% of loans and other real estate at the end of the fourth quarter compared to .74% at the end of the third quarter and .44% at year-end 2006.

Average total deposits were $2.017 billion for the fourth quarter, a decrease of $11.7 million, or .58% from the fourth quarter of 2006 due primarily to a decline in savings ($14.5 million) and certificates of deposit ($13.4 million) balances.  NOW and money market deposits, combined, experienced a net increase of $78.6 million for the same period driven by strong growth in public funds deposits during the fourth quarter of 2007, most of which are negotiated NOW accounts, while noninterest bearing deposits declined $62.5 million.  Compared to the linked third quarter of 2007, average deposits increased $62.6 million, or 3.2% due to a significant increase in the level of public funds, a portion of which is attributable to normal seasonal activity, while the balance is due to changing market conditions.  During the fourth quarter several local government entities, which are clients, transferred significant balances from the State Board of Administration’s Local Government Investment Pool to Capital City Bank.  These balances are reflected in our NOW account deposits, which increased, based on monthly averages, from $521 million in September to $719 million in December.  While this growth added to our net interest income, public funds are generally higher cost deposits, which drove our average cost of funds up and thereby lowered our net interest margin percentage for the quarter.  This is addressed in greater detail under “Discussion of Operating Results” below.  As is normal with seasonal deposits, management expects deposit levels to decline during the first quarter of 2008.

The Company had approximately $84.0 million in average net overnight funds sold for the fourth quarter of 2007 as compared to $31.9 million in average net overnight funds sold in the third quarter of 2007 and $26.1 million in the fourth quarter of 2006.  Loan balances, which declined through the first nine months of 2007, and the recent influx of public deposits contributed to the growth in overnight funds, which was partially offset by the repurchase of $43 million in CCBG common stock during 2007.




Discussion of Operating Results

Tax equivalent net interest income for the three and twelve months ended December 31, 2007, was $28.2 million and $114.7 million, respectively, compared to $30.2 million and $120.9 million for the comparable periods in 2006.  Year-over-year, the decline in net interest income was due to an increase in interest expense driven by higher average rates, an unfavorable shift in our deposit mix as clients sought higher yielding deposit products, and a $75 million reduction in the level of average earning assets.  The full year net interest margin of 5.25% decreased 10 basis points from 2006 attributable to a 36 basis point increase in our cost of funds, partially offset by a 26 basis point increase in the earning asset yield.  The net interest margin declined 25 basis points between the fourth quarters of 2007 and 2006, reflecting a 15 basis point reduction in the yield on earning assets and a 10 basis point increase in the cost of funds.  While management believes it has been successful in neutralizing the impact of the Fed rate reductions during the fourth quarter of 2007, the influx of higher cost public funds (primarily negotiated NOW accounts – See “Discussion of Financial Condition” for additional information) and a higher average rate on certificates of deposit drove cost of funds up relative to the fourth quarter of 2006.  On a linked quarter basis, fourth quarter tax equivalent net interest income decreased $321,000, or 1.1%, and the net interest margin declined 17 basis points.  The yield on earning assets declined 25 basis points attributable to a 100 basis point reduction in the Fed’s target rate, a $14.1 million increase in nonperforming assets and a slightly unfavorable shift in asset mix.  The average cost of funds declined eight basis points reflecting a reduction of average rates paid in response to the Fed’s rate cuts; however, a significant portion of this benefit was offset by the influx of higher costs public funds as noted above.  Further, it should be noted that net interest income in all comparative periods has been impacted by the rising level of nonperforming assets, which has increased from $8.7 million at December 31, 2006 to $28.2 million at December 31. 2007; and the lower level of noninterest bearing deposits, which have declined throughout 2006 and 2007 reflecting the disintermediation of noninterest bearing funds in a higher interest rate environment.

The provision for loan losses for the current quarter and full year was $1.7 million and $6.2 million, respectively, compared to $0.5 million and $2.0 million for the same periods in 2006.  The increase in both periods is attributable an increase in charge-offs and a higher level of required reserves reflective of the current credit environment that has been impacted by a slowdown in housing and real estate markets.  For the full year, net charge-offs totaled $5.3 million, or .27%, of average loans compared to $2.2 million, or .11% in 2006.  For the fourth quarter, net charge-offs totaled $1.6 million, or .34% of average loans compared to $1.0 million, or .21% in the linked third quarter and $0.6 million, or .11% for the fourth quarter of 2006.  At quarter-end, the allowance for loan losses was .95% of outstanding loans (net of overdrafts) and provided coverage of 72% of nonperforming loans.

Noninterest income for the three and twelve months ended December 31, 2007, was $15.8 million and $59.3 million, respectively, compared to $14.4 million and $55.6 million for the comparable periods in 2006.  Higher deposit fees ($862,000), data processing fees ($144,000), card processing fees ($166,000), and other income ($621,000) drove the improvement for the three month period.  Increases in deposit fees ($1.5 million), retail brokerage fees ($419,000), card processing fees ($931,000), and other income ($801,000) were the primary reasons for the improvement for the twelve month period.  Compared to the linked third quarter, noninterest income rose $1.4 million or 9.6% due to higher deposit fees and other income, which included a one-time gain ($540,000 before-tax) on the sale of a banking office.  The increase in deposit fees across all periods reflects higher activity levels and improved collection.




Noninterest expense continues to be very well controlled as evidenced by a nominal increase of $1.6 million, or 5.4% for the three month period and $424,000, or .35% for the twelve month period, as compared to the same periods in 2006.  The increase in each period is attributable to a one-time, pre-tax charge of $1.9 million, which was recorded in the fourth quarter of 2007 to establish a litigation reserve1.  Capital City Bank is a member of Visa, U.S.A. and this reserve was established in connection with lawsuits filed against Visa, U.S.A., i.e. the “Covered” litigation.  CCBG currently anticipates that its proportional share of the proceeds of Visa’s planned initial public offering will more than offset any liabilities related to its pro-rata share of the “Covered” litigation.  Compensation expense for both periods reflects reduced expense levels for performance based incentive plans and lower pension expense.  Lower expense for courier services also contributed positively to both periods reflective of management’s implementation during the first half of 2007 of a new process whereby the daily work from the offices is transmitted electronically rather than by courier.

Income tax expense for the three and twelve months was $2.4 million and $13.7 million, respectively, compared to $4.7 million and $17.9 million for the same periods in 2006.  During the fourth quarter of 2007, the company trued-up its deferred tax liabilities.  As a result, income tax expense was reduced by $937,000 in the current quarter.

About Capital City Bank Group, Inc.

Capital City Bank Group, Inc. (NASDAQ: CCBG) is one of the largest publicly traded financial services companies headquartered in Florida and has approximately $2.6 billion in assets. The Company provides a full range of banking services, including traditional deposit and credit services, asset management, trust, mortgage banking, merchant services, bankcards, data processing and securities brokerage services. The Company's bank subsidiary, Capital City Bank, was founded in 1895 and now has 71 banking offices, three mortgage lending offices, and 79 ATMs in Florida, Georgia and Alabama.  In 2006, Mergent, Inc., a leading provider of information on publicly traded companies, named the Company as a Dividend Achiever.  To be named a Dividend Achiever, a public company must have increased its regular cash dividends for at least 10 consecutive years.  Of all publicly traded U.S. companies that pay dividends, less than three percent made this list.  Capital City Bank Group, Inc. was also named to this list in 2005.  For more information about Capital City Bank Group, Inc., visit www.ccbg.com.

FORWARD-LOOKING STATEMENTS

Forward-looking statements in this press release are based on current plans and expectations that are subject to uncertainties and risks, which could cause our future results to differ materially.  The following factors, among others, could cause our actual results to differ: our ability to integrate acquisitions; the strength of the U.S. economy and the local economies where we conduct operations; harsh weather conditions; fluctuations in inflation, interest rates, or monetary policies; changes in the stock market and other capital and real estate markets; legislative or regulatory changes; customer acceptance of third-party products and services; increased competition and its effect on pricing; technological changes; changes in consumer spending and savings habits; our growth and profitability; changes in accounting; and our ability to manage the risks involved in the foregoing.  Additional factors can be found in our Annual Report on Form 10-K for the fiscal year ended December 31, 2006, and our other filings with the SEC, which are available at the SEC’s internet site (http://www.sec.gov).  Forward-looking statements in this press release speak only as of the date of the press release, and we assume no obligation to update forward-looking statements or the reasons why actual results could differ.

1 The nature and circumstances surrounding this one-time charge, which is expected to be reversed upon consummation of Visa, Inc.’s planned initial public offering, is fully explained in Form 8-Ks filed with the SEC by the Company
   on 1/10/08 and 1/22/08.


EARNINGS HIGHLIGHTS
  
   
Three Months Ended
    
Twelve Months Ended
  
   
Dec 31,
    
Sept 30,
    
Dec 31,
    
Dec 31,
    
Dec 31,
  
(Dollars in thousands, except per share data)
  
2007
    
2007
    
2006
    
2007
    
2006
  
EARNINGS
                            
Net Income
   $ 7,664     7,171     8,850     29,683     33,265  
Diluted Earnings Per Common Share
     0.44     0.41     0.48     1.66     1.79  
PERFORMANCE
                                
Return on Average Equity
     10.16 %   9.44 %   10.84 %   9.68 %   10.48 %
Return on Average Assets
     1.21     1.15     1.37     1.18     1.29  
Net Interest Margin
     5.10     5.27     5.35     5.25     5.35  
Noninterest Income as % of Operating Revenue
     36.49     34.08     32.71     34.57     31.81  
Efficiency Ratio
     68.51     66.27     63.99     66.77     65.42  
CAPITAL ADEQUACY
                                
Tier 1 Capital Ratio
     13.05 %   13.74 %   14.00 %   13.05 %   14.00 %
Total Capital Ratio
     14.05     14.76     14.95     14.05     14.95  
Leverage Ratio
     10.41     11.49     11.30     10.41     11.30  
Equity to Assets
     11.19     12.26     12.15     11.19     12.15  
ASSET QUALITY
                                
Allowance as % of Non-Performing Loans
     71.92 %   145.49 %   214.09 %   71.92 %   214.09 %
Allowance as a % of Loans
     0.95     0.95     0.86     0.95     0.86  
Net Charge-Offs as % of Average Loans
     0.34     0.21     0.11     0.27     0.11  
Nonperforming Assets as % of Loans and ORE
     1.47     0.74     0.44     1.47     0.44  
STOCK PERFORMANCE
                                
High
   $ 34.00     36.40     35.98     36.40     37.97  
Low
     24.60     27.69     30.14     24.60     29.51  
Close
     28.22     31.20     35.30     28.22     35.30  
Average Daily Trading Volume
     52,489     40,247     19,826     39,385     20,449  

 
CAPITAL CITY BANK GROUP, INC.
CONSOLIDATED STATEMENT OF INCOME
Unaudited
  
   
2007
    
2006
    
Twelve Months Ended December 31,
  
(Dollars in thousands, except per share data)
  
Fourth
Quarter
    
Third
Quarter
    
Second
Quarter
    
First
Quarter
    
Fourth
Quarter
    
2007
    
2006
  
                                           
INTEREST INCOME
                                          
Interest and Fees on Loans
   $ 37,730       38,692       39,092       39,053       40,096       154,567       156,666  
Investment Securities
     1,992       1,968       1,943       1,940       1,928       7,843       7,188  
Funds Sold
     1,064       639       689       521       576       2,913       2,039  
     Total Interest Income
     40,786       41,299       41,724       41,514       42,600       165,323       165,893  
                                                         
INTEREST EXPENSE
                                                        
Deposits
     11,323       11,266       11,098       11,000       10,830       44,687       37,253  
Short-Term Borrowings
     639       734       737       761       722       2,871       3,075  
Subordinated Notes Payable
     936       936       932       926       936       3,730       3,725  
Other Long-Term Borrowings
     343       453       496       502       515       1,794       2,704  
     Total Interest Expense
     13,241       13,389       13,263       13,189       13,003       53,082       46,757  
Net Interest Income
     27,545       27,910       28,461       28,325       29,597       112,241       119,136  
Provision for Loan Losses
     1,699       1,552       1,675       1,237       460       6,163       1,959  
Net Interest Income after Provision for Loan Losses
     25,846       26,358       26,786       27,088       29,137       106,078       117,177  
                                                         
NONINTEREST INCOME
                                                        
Service Charges on Deposit Accounts
     7,256       6,387       6,442       6,045       6,394       26,130       24,620  
Data Processing
     853       775       790       715       709       3,133       2,723  
Asset Management Fees
     1,100       1,200       1,175       1,225       1,180       4,700       4,600  
Retail Brokerage Fees
     619       625       804       462       586       2,510       2,091  
Gain on Sale of Investment Securities
     7       -       -       7       -       14       (4 )
Mortgage Banking Revenues
     425       642       850       679       787       2,596       3,235  
Merchant Fees
     1,743       1,686       1,892       1,936       1,694       7,257       6,978  
Interchange Fees
     962       934       951       910       845       3,757       3,105  
ATM/Debit Card Fees
     705       685       661       641       658       2,692       2,519  
Other
     2,153       1,497       1,519       1,342       1,532       6,511       5,710  
     Total Noninterest Income
     15,823       14,431       15,084       13,962       14,385       59,300       55,577  
                                                         
NONINTEREST EXPENSE
                                                        
Salaries and Associate Benefits
     14,472       15,096       14,992       15,719       14,943       60,279       60,855  
Occupancy, Net
     2,378       2,409       2,324       2,236       2,460       9,347       9,395  
Furniture and Equipment
     2,534       2,513       2,494       2,349       2,259       9,890       9,911  
Intangible Amortization
     1,458       1,459       1,458       1,459       1,484       5,834       6,085  
Other
     10,772       8,442       8,629       8,799       8,838       36,642       35,322  
     Total Noninterest Expense
     31,614       29,919       29,897       30,562       29,984       121,992       121,568  
                                                         
OPERATING PROFIT
     10,055       10,870       11,973       10,488       13,538       43,386       51,186  
Provision for Income Taxes
     2,391       3,699       4,082       3,531       4,688       13,703       17,921  
NET INCOME
   $ 7,664       7,171       7,891       6,957       8,850       29,683       33,265  
                                                         
PER SHARE DATA
                                                        
Basic Earnings
   $ 0.44       0.41       0.43       0.38       0.48       1.66       1.79  
Diluted Earnings
     0.44       0.41       0.43       0.38       0.48       1.66       1.79  
Cash Dividends
     0.185       0.175       0.175       0.175       0.175       0.710       0.663  
AVERAGE SHARES
                                                        
Basic
     17,444       17,709       18,089       18,409       18,525       17,909       18,585  
Diluted
     17,445       17,719       18,089       18,420       18,569       17,912       18,610  



CAPITAL CITY BANK GROUP, INC.
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
Unaudited
  
   
2007
    
2006
  
   
Fourth
    
Third
    
Second
    
First
    
Fourth
  
(Dollars in thousands, except per share data)
  
Quarter
    
Quarter
    
Quarter
    
Quarter
    
Quarter
  
                               
ASSETS
                              
Cash and Due From Banks
   $ 93,437       91,378       95,573       92,233       98,769  
Funds Sold and Interest Bearing Deposits
     166,260       19,599       77,297       93,832       78,795  
     Total Cash and Cash Equivalents
     259,697       110,977       172,870       186,065       177,564  
                                         
Investment Securities, Available-for-Sale
     190,719       184,609       189,680       191,446       191,894  
                                         
Loans, Net of Unearned Interest
                                        
  Commercial, Financial, & Agricultural
     208,864       205,628       203,555       205,048       229,327  
  Real Estate - Construction
     142,248       145,343       159,751       180,549       179,072  
  Real Estate - Commercial
     634,920       631,418       640,172       643,272       643,885  
  Real Estate - Residential
     481,150       480,488       493,783       509,040       524,301  
  Real Estate - Home Equity
     192,428       183,620       175,781       172,283       173,597  
  Consumer
     243,415       246,137       240,110       235,175       234,596  
  Credit Card
     -       -       -       -       -  
  Other Loans
     7,222       8,739       14,715       14,899       11,837  
  Overdrafts
     5,603       2,515       2,844       5,575       3,106  
     Total Loans, Net of Unearned Interest
     1,915,850       1,903,888       1,930,711       1,965,841       1,999,721  
  Allowance for Loan Losses
     (18,066 )     (18,001 )     (17,469 )     (17,108 )     (17,217 )
     Loans, Net
     1,897,784       1,885,887       1,913,242       1,948,733       1,982,504  
                                         
Premises and Equipment, Net
     98,612       95,816       92,656       88,812       86,538  
Intangible Assets
     98,568       100,026       101,485       102,944       104,402  
Other Assets
     70,947       62,611       60,815       60,117       55,008  
     Total Other Assets
     268,127       258,453       254,956       251,873       245,948  
                                         
Total Assets
   $ 2,616,327       2,439,926       2,530,748       2,578,117       2,597,910  
                                         
LIABILITIES
                                        
Deposits:
                                        
  Noninterest Bearing Deposits
   $ 432,659       419,242       456,986       467,875       490,014  
  NOW Accounts
     744,093       530,619       559,050       575,740       599,433  
  Money Market Accounts
     386,619       399,578       401,415       396,150       384,568  
  Regular Savings Accounts
     111,600       115,955       119,585       124,970       125,500  
  Certificates of Deposit
     467,373       472,019       472,554       477,327       482,139  
     Total Deposits
     2,142,344       1,937,413       2,009,590       2,042,062       2,081,654  
                                         
Short-Term Borrowings
     53,131       63,817       74,307       77,936       65,023  
Subordinated Notes Payable
     62,887       62,887       62,887       62,887       62,887  
Other Long-Term Borrowings
     26,731       29,725       41,276       42,879       43,083  
Other Liabilities
     38,559       47,031       41,251       41,841       29,493  
                                         
Total Liabilities
     2,323,652       2,140,873       2,229,311       2,267,605       2,282,140  
                                         
SHAREOWNERS' EQUITY
                                        
Common Stock
     172       176       179       183       185  
Additional Paid-In Capital
     38,243       50,789       58,001       71,366       80,654  
Retained Earnings
     260,325       255,876       251,838       246,959       243,242  
Accumulated Other Comprehensive Loss, Net of Tax
     (6,065 )     (7,788 )     (8,581 )     (7,996 )     (8,311 )
                                         
Total Shareowners' Equity
     292,675       299,053       301,437       310,512       315,770  
                                         
Total Liabilities and Shareowners' Equity
   $ 2,616,327       2,439,926       2,530,748       2,578,117       2,597,910  
                                         
OTHER BALANCE SHEET DATA
                                        
Earning Assets
   $ 2,272,829       2,108,096       2,197,688       2,251,119       2,270,410  
Intangible Assets
                                        
  Goodwill
     84,811       84,811       84,811       84,811       84,811  
  Deposit Base
     12,578       13,988       15,399       16,810       18,221  
  Other
     1,179       1,227       1,275       1,323       1,370  
Interest Bearing Liabilities
     1,852,434       1,674,600       1,731,074       1,757,889       1,762,633  
                                         
Book Value Per Diluted Share
   $ 17.03       16.95       16.87       16.97       17.01  
Tangible Book Value Per Diluted Share
     11.30       11.28       11.19       11.34       11.39  
                                         
Actual Basic Shares Outstanding
     17,183       17,628       17,869       18,287       18,518  
Actual Diluted Shares Outstanding
     17,184       17,639       17,869       18,297       18,562  



CAPITAL CITY BANK GROUP, INC.
ALLOWANCE FOR LOAN LOSSES
AND NONPERFORMING ASSETS
Unaudited
  
   
2007
    
2006
  
   
Fourth
    
Third
    
Second
    
First
    
Fourth
  
(Dollars in thousands)
  
Quarter
    
Quarter
    
Quarter
    
Quarter
    
Quarter
  
                               
ALLOWANCE FOR LOAN LOSSES
                              
Balance at Beginning of Period
   $ 18,001       17,469       17,108       17,217       17,311  
Provision for Loan Losses
     1,699       1,552       1,675       1,237       460  
Net Charge-Offs
     1,634       1,020       1,314       1,346       554  
                                         
Balance at End of Period
   $ 18,066       18,001       17,469       17,108       17,217  
As a % of Loans
     0.95       0.95       0.91       0.87       0.86  
As a % of Nonperforming Loans
     71.92       145.49       193.69       207.67       214.09  
As a % of Nonperforming Assets
     64.15       128.05       172.60       181.23       197.19  
                                         
CHARGE-OFFS
                                        
Commercial, Financial and Agricultural
   $ 370       279       253       560       81  
Real Estate - Construction
     58       -       -       108       -  
Real Estate - Commercial
     133       245       5       326       54  
Real Estate - Residential
     209       161       992       67       154  
Consumer
     1,302       854       534       761       787  
                                         
Total Charge-Offs
   $ 2,072       1,539       1,784       1,822       1,076  
                                         
RECOVERIES
                                        
Commercial, Financial and Agricultural
   $ 47       44       47       36       77  
Real Estate - Construction
     -       -       -       -       -  
Real Estate - Commercial
     2       2       5       5       9  
Real Estate - Residential
     5       2       26       3       1  
Consumer
     384       471       392       432       435  
                                         
Total Recoveries
   $ 438       519       470       476       522  
                                         
NET CHARGE-OFFS
   $ 1,634       1,020       1,314       1,346       554  
                                         
Net Charge-Offs as a % of Average Loans (1)
     0.34       0.21       0.27       0.28       0.11  
                                         
RISK ELEMENT ASSETS
                                        
Nonaccruing Loans
   $ 25,120       12,373       9,019       8,238       8,042  
Restructured
     -       -       -       -       -  
  Total Nonperforming Loans
     25,120       12,373       9,019       8,238       8,042  
Other Real Estate
     3,043       1,685       1,102       1,202       689  
  Total Nonperforming Assets
   $ 28,163       14,058       10,121       9,440       8,731  
                                         
Past Due Loans 90 Days or More
   $ 416       874       332       860       135  
                                         
Nonperforming Loans as a % of Loans
     1.31       0.65       0.47       0.42       0.40  
Nonperforming Assets as a % of
                                        
   Loans and Other Real Estate
     1.47       0.74       0.52       0.48       0.44  
Nonperforming Assets as a % of Capital (2)
     9.06       4.43       3.17       2.88       2.62  
                                         
                                         
(1)  Annualized
                                        
                                         
(2)  Capital includes allowance for loan losses.
                                        


Unaudited
  
   
Fourth Quarter 2007
      
Third Quarter 2007
    
Second Quarter 2007
    
First Quarter 2007
      
Fourth Quarter 2006
    
Twelve Months Ended December 2007
      
Twelve Months Ended December 2006
  
(Dollars in thousands)
  
Average Balance
    
Interest
    
Average
Rate
      
Average Balance
    
Interest
    
Averate Rate
    
Average Balance
    
Interest
    
Average Rate
    
Average Balance
    
Interest
    
Average Rate
      
Average Balance
    
Interest
    
Average Rate
    
Average Balance
    
Interest
    
Average Rate
      
Average Balance
    
Interest
    
Average Rate
  
                                                                                                                                     
ASSETS:
                                                                                                                                    
Loans, Net of Unearned Interest
   $ 1,908,069     $ 37,969       7.89  
%
     1,907,235       38,901       8.09       1,944,969       39,300       8.10     $ 1,980,224     $ 39,264       8.04  
%
     2,003,719       40,296       7.98     $ 1,934,850     $ 155,434       8.03  
%
     2,029,397       157,227       7.75  
                                                                                                                                                                               
Investment Securities
                                                                                                                                                                              
  Taxable Investment Securities
     99,055       1,226       4.93         102,618       1,224       4.75       105,425       1,236       4.68       108,377       1,263       4.67         108,041       1,263       4.66       103,840       4,949       4.76         112,392       4,851       4.31  
  Tax-Exempt Investment Securities
     87,358       1,178       5.39         85,446       1,142       5.35       83,907       1,088       5.19       82,627       1,039       5.03         82,568       1,020       4.94       84,849       4,447       5.24         74,634       3,588       4.81  
                                                                                                                                                                               
Total Investment Securities
     186,413       2,404       5.15         188,064       2,366       5.02       189,332       2,324       4.91       191,004       2,302       4.82         190,609       2,283       4.78       188,689       9,396       4.97         187,026       8,439       4.51  
                                                                                                                                                                               
Funds Sold
     96,748       1,064       4.31         49,438       639       5.06       52,935       689       5.15       40,332       521       5.17         43,738       576       5.15       59,989       2,913       4.79         41,854       2,039       4.81  
                                                                                                                                                                               
Total Earning Assets
     2,191,230     $ 41,437       7.50 %       2,144,737       41,906       7.75       2,187,236       42,313       7.76       2,211,560     $ 42,087       7.71 %       2,238,066       43,155       7.65       2,183,528     $ 167,743       7.68 %       2,258,277       167,705       7.42  
                                                                                                                                                                               
Cash and Due From Banks
     85,598                         84,477                       88,075                       88,679                         94,449                       86,692                         100,237                  
Allowance For Loan Losses
     (18,127 )                       (17,664 )                     (17,263 )                     (17,073 )                       (17,503 )                     (17,535 )                       (17,486 )                
Other Assets
     260,981                         256,153                       253,204                       247,624                         242,345                       254,532                         240,050                  
                                                                                                                                                                               
Total Assets
   $ 2,519,682                         2,467,703                       2,511,252                     $ 2,530,790                       $ 2,557,357                     $ 2,507,217                         2,581,078                  
                                                                                                                                                                               
LIABILITIES:
                                                                                                                                                                              
Interest Bearing Deposits
                                                                                                                                                                              
  NOW Accounts
   $ 608,347     $ 2,980       1.94  
%
     525,795       2,531       1.91       541,525       2,611       1.93     $ 552,303     $ 2,626       1.93  
%
     542,751       2,522       1.84     $ 557,060     $ 10,748       1.93  
%
     518,671       7,658       1.48  
  Money Market Accounts
     404,406       3,217       3.16         403,957       3,565       3.50       393,403       3,458       3.53       386,736       3,427       3.59         391,346       3,488       3.54       397,193       13,667       3.44         370,257       11,687       3.16  
  Savings Accounts
     113,527       57       0.20         117,451       70       0.24       122,560       74       0.24       125,419       78       0.25         128,027       76       0.24       119,700       279       0.23         134,033       278       0.21  
  Time Deposits
     471,454       5,069       4.27         471,868       5,100       4.29       474,761       4,955       4.19       480,964       4,869       4.11         484,807       4,744       3.88       474,728       19,993       4.21         507,283       17,630       3.48  
Total Interest Bearing Deposits
     1,597,734       11,323       2.81         1,519,071       11,266       2.94       1,532,249       11,098       2.91       1,545,422       11,000       2.89         1,546,931       10,830       2.78       1,548,681       44,687       2.89         1,530,244       37,253       2.43  
                                                                                                                                                                               
Short-Term Borrowings
     64,842       639       3.89         65,130       734       4.45       66,764       737       4.41       68,911       761       4.46         65,385       722       4.36       66,397       2,871       4.31         78,700       3,075       3.89  
Subordinated Notes Payable
     62,887       936       5.91         62,887       936       5.91       62,887       932       5.94       62,887       926       5.97         62,887       936       5.91       62,887       3,730       5.93         62,887       3,724       5.92  
Other Long-Term Borrowings
     28,215       343       4.83         38,269       453       4.70       42,284       496       4.71       43,137       502       4.72         43,453       515       4.71       37,936       1,794       4.73         57,260       2,704       4.72  
                                                                                                                                                                               
Total Interest Bearing Liabilities
     1,753,678     $ 13,241       3.00 %       1,685,357       13,389       3.15       1,704,184       13,263       3.12       1,720,357     $ 13,189       3.11 %       1,718,656       13,003       3.00       1,715,901     $ 53,082       3.09 %       1,729,091       46,756       2.70  
                                                                                                                                                                               
Noninterest Bearing Deposits
     419,002                         435,089                       455,169                       458,304                         481,522                       441,765                         504,687                  
Other Liabilities
     47,660                         45,721                       42,547                       35,645                         33,276                       42,934                         29,964                  
                                                                                                                                                                               
Total Liabilities
     2,220,340                         2,166,167                       2,201,900                       2,214,306                         2,233,454                       2,200,600                         2,263,742                  
                                                                                                                                                                               
SHAREOWNERS' EQUITY:
   $ 299,342                         301,536                       309,352                     $ 316,484                         323,903                     $ 306,617                         317,336                  
                                                                                                                                                                               
Total Liabilities and Shareowners' Equity
   $ 2,519,682                         2,467,703                       2,511,252                     $ 2,530,790                         2,557,357                     $ 2,507,217                         2,581,078                  
                                                                                                                                                                               
Interest Rate Spread
           $ 28,196       4.50 %               28,517       4.60               29,050       4.64             $ 28,898       4.60 %               30,152       4.65             $ 114,661       4.59 %               120,949       4.72  
                                                                                                                                                                               
Interest Income and Rate Earned (2)
           $ 41,437       7.50                 41,906       7.75               42,313       7.76             $ 42,087       7.71                 43,155       7.65             $ 167,743       7.68                 167,705       7.42  
Interest Expense and Rate Paid (2)
             13,241       2.40                 13,389       2.48               13,263       2.43               13,189       2.42                 13,003       2.30               53,082       2.43                 46,756       2.07  
                                                                                                                                                                               
Net Interest Margin
           $ 28,196       5.10 %               28,517       5.27               29,050       5.33             $ 28,898       5.29 %               30,152       5.35             $ 114,661       5.25 %               120,949       5.35  
                                                                                                                                                                               
 
(1) Interest and average rates are calculated on a tax-equivalent basis
      using the 35% Federal tax rate.
 
(2) Rate calculated based on average earning assests.