Capital City Bank Group, Inc.
Reports First Quarter 2008 Results

TALLAHASSEE, Fla. (April 22, 2008) – Capital City Bank Group, Inc. (NASDAQ: CCBG) today reported net income for the first quarter of 2008 totaling $7.3 million ($0.42 per diluted share) compared to $7.7 million ($0.44 per diluted share) in the fourth quarter of 2007 and $7.0 million ($0.38 per diluted share) for the first quarter of 2007.  Earnings for the first quarter include a $2.4 million pre-tax gain from the redemption of Visa, Inc. shares related to their initial public offering, the reversal of $1.1 million (pre-tax) in litigation reserves recorded in the previous quarter related to certain Visa litigation, which are referred to as “Covered” litigation, and an increase to the reserve for loan losses of $2.2 million.

“Given the current operating environment and economic conditions, our earnings have held up well over the past few quarters as we work our way through this economic cycle,” said William G. Smith, Jr., Chairman, President, and CEO of Capital City Bank Group, Inc. “Our markets have not been hit as hard as other areas of Florida, nor have our markets experienced as steep and rapid a decline in the leading local economic indicators, but nevertheless, the economic activity in our markets has softened and we anticipate this will persist through 2008.

“As evidenced by our increased nonperforming assets and provisioning for credit losses, we continue to recognize that credit quality and risk assessment are the most important issues to focus upon. Higher levels of impaired loans clearly impede revenue production and ultimately have an adverse impact on the net interest margin, although underlying credit quality across the various loan portfolios is fundamentally sound.  Our main challenge will be to intensively manage our problem loans towards resolution as quickly as the market will allow.

“While new loan growth has not been exceptional, business is steady, and our markets offer a variety of quality lending opportunities and pipelines remain reasonably full.

“On the deposit side, during the quarter there was a noteworthy influx of over $155 million in average negotiated deposits, primarily public funds.  These new deposits are a testament to our financial strength and stability in a market where there are few safe harbors elsewhere, but the relatively thin spreads on these negotiated deposits put pressure on our net interest margin, which fell to 4.73% for the quarter.

“Capital City continued to enjoy growth in core noninterest income and has contained its operating expenses.  We expect to sustain our efforts in these areas. And finally, our capital levels remain quite strong and should enable us to take advantage of opportunities that naturally arise in a difficult economy,” said Smith.

The Return on Average Assets was 1.11% and the Return on Average Equity was 9.87% for the first quarter of 2008.  These metrics were 1.11% and 8.91% for the comparable quarter in 2007 and 1.21% and 10.16% for the fourth quarter of 2007, respectively.








 
 
 

Discussion of Financial Condition

Average earning assets were $2.301 billion for the first quarter, an increase of $110.2 million, or 5.0% from the fourth quarter of 2007, and $89.9 million, or 4.1% from the first quarter of 2007.  The increase over both prior periods was due to an increase in short-term investments reflective of an increase in our client deposit balances (see discussion below).  Average loans increased $1.5 million, or .08% from the fourth quarter due to a steady pace of new loan production and a slowdown in the level of loan payoffs/pay-downs.  Compared to the first quarter of 2007, average loans decreased $70.7 million, or 3.6% due to a high level of loan pay-offs/pay-downs many of which were tied to larger construction and permanent commercial real estate loans.

Nonperforming assets of $41.1 million increased from the linked fourth quarter by $12.9 million and from the first quarter of 2007 by $31.7 million.  Nonaccrual loans increased $10.2 million and $27.1 million, respectively, from the same prior-year periods.  The increase in nonaccrual loans in the first quarter primarily reflects the addition of three large real estate loan relationships totaling $9.8 million, which management believes have been adequately reserved for at quarter-end.   These new nonaccrual loans are related to non-coastal residential real estate developments.  Restructured loans totaled $2.0 million at the end of the first quarter.  Other real estate owned totaled $3.8 million at the end of the quarter compared to $3.0 million at year-end 2007 and $1.2 million at the end of the first quarter of 2007.  Nonperforming assets represented 2.14% of loans and other real estate at the end of the first quarter compared to 1.47% at year-end 2007 and ..48% at the end of the first quarter of 2007.

Average total deposits were $2.149 billion for the first quarter, an increase of $132.1 million, or 6.6%, over the fourth quarter and $145.1 million, or 7.2%, over the first quarter of 2007.  The increase over both comparable periods was driven by strong growth in negotiated NOW accounts, primarily public funds deposits which began migrating late in the fourth quarter from the Florida State Board of Administration’s Local Government Investment Pool to Capital City Bank.  Partially offsetting this increase were declines in noninterest bearing accounts, money market accounts, and certificates of deposit.

The Company had approximately $186.8 million in average net overnight funds sold for the first quarter of 2008 as compared to $84.1 million in average net overnight funds sold in the fourth quarter of 2007 and $21.9 million in the first quarter of 2007.  The recent influx of public deposits contributed to the growth in overnight funds for the current quarter over both prior periods.  Share repurchase activity throughout 2007, which totaled $43 million, also had an impact when compared to the first quarter of 2007.















 
 
 

Discussion of Operating Results

Tax equivalent net interest income for the first quarter of 2008 was $27.1 million compared to $28.2 million for the fourth quarter of 2007 and $28.9 million for the first quarter of 2007.  The decline in net interest income for each respective period is attributable to compression of our net interest margin.  While we believe we have been successful in neutralizing the impact of reductions in the Federal Reserve’s target rate over the last two quarters, a rising level of foregone interest income associated with higher levels of nonperforming assets and the recent influx of higher cost negotiated deposits (primarily public funds) are the two primary factors producing a decline in the net interest margin of 37 basis points over fourth quarter 2007 and 56 basis points over first quarter 2007.   Average negotiated deposits have grown from $275 million in the first quarter of 2007 to $538 million in the current quarter.  Although this growth in deposits has had a positive impact on net interest income, it has had an adverse impact on our margin due to the relatively thin spreads on these deposits.  See “Discussion of Financial Condition” for a more detailed analysis of nonperforming assets and deposit growth.

On a linked quarter basis, the average yield on earning assets declined 63 basis points and the average cost of funds fell 26 basis points producing a net reduction in the margin of 37 basis points from 5.10% to 4.73%.  Year over year, the average yield on earning assets declined 84 basis points and the average cost of funds fell 28 basis points producing a net reduction in the margin of 56 basis points from 5.29% to 4.73%. Since September 2007, we have aggressively reduced our deposit rates in response to the rate reductions initiated by the Federal Reserve and believe we have been successful in neutralizing these rate reductions.  However, the rapid growth in the higher cost negotiated deposits mitigated the full impact of lowering our deposit rates and, therefore, the decline in our average cost of funds was not commensurate with the decline in our average yield on earning assets.

The provision for loan losses for the current quarter was $4.1 million compared to $1.7 million in the fourth quarter of 2007 and $1.2 million for the first quarter of 2007.  The increase in the provision for the current quarter is due to credit deterioration reflective of a higher level of impaired loan reserves and an increase in reserves allocated to consumer loans.  These increases reflect the impact of the housing and real estate market slowdown, and the related stress on the consumer.  For the quarter, net charge-offs totaled $1.9 million, or .41%, of average loans compared to $1.6 million, or .34% in the fourth quarter and $1.3 million, or ..28% in the first quarter of 2007.  At quarter-end, the allowance for loan losses was 1.06% of outstanding loans (net of overdrafts) and provided coverage of 54% of nonperforming loans.

Noninterest income for the first quarter increased $2.0 million, or 12.5%, over the fourth quarter of 2007 and $3.8 million, or 27.5%, over the first quarter of 2007.  Compared to the fourth quarter, the increase is attributable to a pre-tax gain of $2.4 million from the redemption of Visa, Inc. shares.  An expected seasonal decline in deposit fees ($491,000) partially offset the aforementioned gain.  Compared to the first quarter of 2007, the increase is also due to the Visa, Inc. share redemption gain, as well as higher deposit and bank card fees of $720,000 and $474,000, respectively.

Noninterest expense decreased $1.8 million, or 5.7%, from the fourth quarter and $764,000, or 2.5%, from the first quarter of 2007.  A one-time entry of $1.1 million to reverse a portion of the Visa, Inc. litigation accrual was the primary reason for the decline.  In addition, we reversed $577,000 in accrued expense for our 2011 Incentive Plan, which was terminated during the first 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 $2.7 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 69 banking offices, two mortgage lending offices, and 80 ATMs in Florida, Georgia and Alabama.  Since 2005, the Company has been named as a Dividend Achiever by Mergent, Inc., a leading provider of information on publicly traded companies.  To be named a Dividend Achiever, a public company must have increased its regular cash dividends for at least 10 consecutive years.  For more information about Capital City Bank Group, Inc., visit www.ccbg.com.

FORWARD-LOOKING STATEMENTS

Forward-looking statements in this Form 8-K are based on current plans and expectations that are subject to uncertainties and risks, which could cause the Company’s future results to differ materially.  The following factors, among others, could cause the Company’s actual results to differ: the frequency and magnitude of foreclosure of the Company’s loans; the effects of the Company’s lack of a diversified loan portfolio, including the risks of geographic and industry concentrations; the accuracy of the Company’s financial statement estimates and assumptions, including the estimate for the Company’s loan loss provision; the Company’s ability to integrate acquisitions; the strength of the U.S. economy and the local economies where the Company conducts 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; the effects of security breaches and computer viruses that may affect the Company’s computer systems; changes in consumer spending and savings habits; the Company’s growth and profitability; changes in accounting; and the Company’s ability to manage the risks involved in the foregoing.  Additional factors can be found in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007, and the Company’s other filings with the SEC, which are available at the SEC’s internet site (http://www.sec.gov).  Forward-looking statements in this Form 8-K speak only as of the date of the Form 8-K, and the Company assumes no obligation to update forward-looking statements or the reasons why actual results could differ.

 
 
 

 
EARNINGS HIGHLIGHTS
                  
   
Three Months Ended
  
(Dollars in thousands, except per share data.)
  
Mar 31, 2008
    
Dec 31, 2007
    
Mar 31, 2007
  
EARNINGS
                  
Net Income
   $ 7,280     $ 7,664     $ 6,957  
Diluted Earnings Per Common Share
   $ 0.42     $ 0.44     $ 0.38  
PERFORMANCE
                        
Return on Average Equity
     9.87 %     10.16 %     8.91 %
Return on Average Assets
     1.11 %     1.21 %     1.11 %
Net Interest Margin
     4.73 %     5.10 %     5.29 %
Noninterest Income as % of Operating Revenue
     40.22 %     36.49 %     33.02 %
Efficiency Ratio
     63.15 %     68.51 %     67.90 %
CAPITAL ADEQUACY
                        
Tier 1 Capital Ratio
     12.94 %     13.05 %     13.88 %
Total Capital Ratio
     14.01 %     14.05 %     14.83 %
Leverage Ratio
     10.32 %     10.41 %     11.22 %
Equity to Assets
     11.06 %     11.19 %     12.04 %
ASSET QUALITY
                        
Allowance as % of Non-Performing Loans
     54.32 %     71.92 %     207.67 %
Allowance as a % of Loans
     1.06 %     0.95 %     0.87 %
Net Charge-Offs as % of Average Loans
     0.41 %     0.34 %     0.28 %
Nonperforming Assets as % of Loans and ORE
     2.14 %     1.47 %     0.48 %
STOCK PERFORMANCE
                        
High
   $ 29.99     $ 34.00     $ 35.91  
Low
   $ 24.76     $ 24.60     $ 29.79  
Close
   $ 29.00     $ 28.22     $ 33.30  
Average Daily Trading Volume
     31,827       52,489       24,499  

 
 
 


CAPITAL CITY BANK GROUP, INC.
                      
CONSOLIDATED STATEMENT OF INCOME
                      
Unaudited
                      
                       
(Dollars in thousands, except per share data)
  
2008
First Quarter
  
2007
Fourth Quarter
  
2007
Third Quarter
  
2007
Second Quarter
  
2007
First Quarter
  
                       
INTEREST INCOME
                      
Interest and Fees on Loans
   $ 35,255   $ 37,730   $ 38,692   $ 39,092   $ 39,053  
Investment Securities
     1,893     1,992     1,968     1,943     1,940  
Funds Sold
     1,575     1,064     639     689     521  
Total Interest Income
     38,723     40,786     41,299     41,724     41,514  
                                 
INTEREST EXPENSE
                                
Deposits
     10,481     11,323     11,266     11,098     11,000  
Short-Term Borrowings
     521     639     734     737     761  
Subordinated Notes Payable
     931     936     936     932     926  
Other Long-Term Borrowings
     331     343     453     496     502  
Total Interest Expense
     12,264     13,241     13,389     13,263     13,189  
Net Interest Income
     26,459     27,545     27,910     28,461     28,325  
Provision for Loan Losses
     4,142     1,699     1,552     1,675     1,237  
Net Interest Income after Provision for Loan Losses
     22,317     25,846     26,358     26,786     27,088  
                                 
NONINTEREST INCOME
                                
Service Charges on Deposit Accounts
     6,765     7,256     6,387     6,442     6,045  
Data Processing
     813     853     775     790     715  
Asset Management Fees
     1,150     1,100     1,200     1,175     1,225  
Retail Brokerage Fees
     469     619     625     804     462  
Gain on Sale of Investment Securities
     65     7     -     -     7  
Mortgage Banking Revenues
     494     425     642     850     679  
Merchant Fees
     2,208     1,743     1,686     1,892     1,936  
Interchange Fees
     1,009     962     934     951     910  
ATM/Debit Card Fees
     744     705     685     661     641  
Other
     4,082     2,153     1,497     1,519     1,342  
Total Noninterest Income
     17,799     15,823     14,431     15,084     13,962  
                                 
NONINTEREST EXPENSE
                                
Salaries and Associate Benefits
     15,604     14,472     15,096     14,992     15,719  
Occupancy, Net
     2,362     2,378     2,409     2,324     2,236  
Furniture and Equipment
     2,582     2,534     2,513     2,494     2,349  
Intangible Amortization
     1,459     1,458     1,459     1,458     1,459  
Other
     7,791     10,772     8,442     8,629     8,799  
Total Noninterest Expense
     29,798     31,614     29,919     29,897     30,562  
                                 
OPERATING PROFIT
     10,318     10,055     10,870     11,973     10,488  
Provision for Income Taxes
     3,038     2,391     3,699     4,082     3,531  
NET INCOME
   $ 7,280   $ 7,664   $ 7,171   $ 7,891   $ 6,957  
                                 
PER SHARE DATA
                                
Basic Earnings
   $ 0.42   $ 0.44   $ 0.41   $ 0.43   $ 0.38  
Diluted Earnings
   $ 0.42   $ 0.44   $ 0.41   $ 0.43   $ 0.38  
Cash Dividends
     0.185     0.185     0.175     0.175     0.175  
AVERAGE SHARES
                                
Basic
     17,170     17,444     17,709     18,089     18,409  
Diluted
     17,178     17,445     17,719     18,089     18,420  

 
 
 


CAPITAL CITY BANK GROUP, INC.
                              
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
                          
Unaudited
                              
                               
(Dollars in thousands, except per share data)
  
2008
First Quarter
    
2007
Fourth Quarter
    
2007
Third Quarter
    
2007
Second Quarter
    
2007
First Quarter
  
                               
ASSETS
                              
Cash and Due From Banks
   $ 97,525     $ 93,437     $ 91,378     $ 95,573     $ 92,233  
Funds Sold and Interest Bearing Deposits
     241,202       166,260       19,599       77,297       93,832  
Total Cash and Cash Equivalents
     338,727       259,697       110,977       172,870       186,065  
                                         
Investment Securities, Available-for-Sale
     186,944       190,719       184,609       189,680       191,446  
                                         
Loans, Net of Unearned Interest
                                        
Commercial, Financial, & Agricultural
     202,238       208,864       205,628       203,555       205,048  
Real Estate - Construction
     152,060       142,248       145,343       159,751       180,549  
Real Estate - Commercial
     624,826       634,920       631,418       640,172       643,272  
Real Estate - Residential
     482,058       481,150       480,488       493,783       509,040  
Real Estate - Home Equity
     197,093       192,428       183,620       175,781       172,283  
Consumer
     238,663       243,415       246,137       240,110       235,175  
Other Loans
     10,506       7,222       8,739       14,715       14,899  
Overdrafts
     7,014       5,603       2,515       2,844       5,575  
Total Loans, Net of Unearned Interest
     1,914,458       1,915,850       1,903,888       1,930,711       1,965,841  
Allowance for Loan Losses
     (20,277 )     (18,066 )     (18,001 )     (17,469 )     (17,108 )
Loans, Net
     1,894,181       1,897,784       1,885,887       1,913,242       1,948,733  
                                         
Premises and Equipment, Net
     100,145       98,612       95,816       92,656       88,812  
Intangible Assets
     97,109       98,568       100,026       101,485       102,944  
Other Assets
     75,406       70,947       62,611       60,815       60,117  
Total Other Assets
     272,660       268,127       258,453       254,956       251,873  
                                         
Total Assets
   $ 2,692,512     $ 2,616,327     $ 2,439,926     $ 2,530,748     $ 2,578,117  
                                         
LIABILITIES
                                        
Deposits:
                                        
Noninterest Bearing Deposits
   $ 432,904     $ 432,659     $ 419,242     $ 456,986     $ 467,875  
NOW Accounts
     800,128       744,093       530,619       559,050       575,740  
Money Market Accounts
     381,474       386,619       399,578       401,415       396,150  
Regular Savings Accounts
     116,018       111,600       115,955       119,585       124,970  
Certificates of Deposit
     462,081       467,373       472,019       472,554       477,327  
Total Deposits
     2,192,605       2,142,344       1,937,413       2,009,590       2,042,062  
                                         
Short-Term Borrowings
     61,781       53,131       63,817       74,307       77,936  
Subordinated Notes Payable
     62,887       62,887       62,887       62,887       62,887  
Other Long-Term Borrowings
     29,843       26,731       29,725       41,276       42,879  
Other Liabilities
     47,723       38,559       47,031       41,251       41,841  
                                         
Total Liabilities
     2,394,839       2,323,652       2,140,873       2,229,311       2,267,605  
                                         
SHAREOWNERS' EQUITY
                                        
Common Stock
     172       172       176       179       183  
Additional Paid-In Capital
     38,042       38,243       50,789       58,001       71,366  
Retained Earnings
     264,538       260,325       255,876       251,838       246,959  
Accumulated Other Comprehensive Loss, Net of Tax
     (5,079 )     (6,065 )     (7,788 )     (8,581 )     (7,996 )
                                         
Total Shareowners' Equity
     297,673       292,675       299,053       301,437       310,512  
                                         
Total Liabilities and Shareowners' Equity
   $ 2,692,512     $ 2,616,327     $ 2,439,926     $ 2,530,748     $ 2,578,117  
                                         
OTHER BALANCE SHEET DATA
                                        
Earning Assets
   $ 2,342,604     $ 2,272,829     $ 2,108,096     $ 2,197,688     $ 2,251,119  
Intangible Assets
                                        
Goodwill
     84,811       84,811       84,811       84,811       84,811  
Deposit Base
     11,167       12,578       13,988       15,399       16,810  
Other
     1,131       1,179       1,227       1,275       1,323  
Interest Bearing Liabilities
     1,914,212       1,852,434       1,674,600       1,731,074       1,757,889  
                                         
Book Value Per Diluted Share
   $ 17.33     $ 17.03     $ 16.95     $ 16.87     $ 16.97  
Tangible Book Value Per Diluted Share
     11.67       11.30       11.28       11.19       11.34  
                                         
Actual Basic Shares Outstanding
     17,175       17,183       17,628       17,869       18,287  
Actual Diluted Shares Outstanding
     17,183       17,184       17,639       17,869       18,297  

 
 
 


CAPITAL CITY BANK GROUP, INC.
                              
ALLOWANCE FOR LOAN LOSSES
                              
AND NONPERFORMING ASSETS
                              
Unaudited
                              
   
2008
    
2007
    
2007
    
2007
    
2007
  
(Dollars in thousands)
  
First Quarter
    
Fourth Quarter
    
Third Quarter
    
Second Quarter
    
First Quarter
  
                               
ALLOWANCE FOR LOAN LOSSES
                              
Balance at Beginning of Period
   $ 18,066     $ 18,001     $ 17,469     $ 17,108     $ 17,217  
Provision for Loan Losses
     4,142       1,699       1,552       1,675       1,237  
Net Charge-Offs
     1,931       1,634       1,020       1,314       1,346  
                                         
Balance at End of Period
   $ 20,277     $ 18,066     $ 18,001     $ 17,469     $ 17,108  
As a % of Loans
     1.06 %     0.95 %     0.95 %     0.91 %     0.87 %
As a % of Nonperforming Loans
     54.32 %     71.92 %     145.49 %     193.69 %     207.67 %
As a % of Nonperforming Assets
     49.34 %     64.15 %     128.05 %     172.61 %     181.23 %
                                         
CHARGE-OFFS
                                        
Commercial, Financial and Agricultural
   $ 636     $ 370     $ 279     $ 253     $ 560  
Real Estate - Construction
     572       58       -       -       108  
Real Estate - Commercial
     126       133       245       5       326  
Real Estate - Residential
     176       209       161       992       67  
Consumer
     1,170       1,302       854       534       761  
                                         
Total Charge-Offs
   $ 2,680     $ 2,072     $ 1,539     $ 1,784     $ 1,822  
                                         
RECOVERIES
                                        
Commercial, Financial and Agricultural
   $ 139     $ 47     $ 44     $ 47     $ 36  
Real Estate - Construction
     -       -       -       -       -  
Real Estate - Commercial
     1       2       2       5       5  
Real Estate - Residential
     3       5       2       26       3  
Consumer
     606       384       471       392       432  
                                         
Total Recoveries
   $ 749     $ 438     $ 519     $ 470     $ 476  
                                         
NET CHARGE-OFFS
   $ 1,931     $ 1,634     $ 1,020     $ 1,314     $ 1,346  
QTD Average Loans
     1,909,573       1,908,069       1,907,235       1,944,969       1,980,224  
Net Charge-Offs as a % of Average Loans(1)
     0.41 %     0.34 %     0.21 %     0.27 %     0.28 %
                                         
RISK ELEMENT ASSETS
                                        
Nonaccruing Loans
   $ 35,352     $ 25,120     $ 12,373     $ 9,019     $ 8,238  
Restructured Loans
     1,980       -       -       -       -  
Total Nonperforming Loans
     37,332       25,120       12,373       9,019       8,238  
Other Real Estate
     3,768       3,043       1,685       1,102       1,202  
Total Nonperforming Assets
   $ 41,100     $ 28,163     $ 14,058     $ 10,121     $ 9,440  
Capital
     317,949       310,741       317,054       318,906       327,620  
Past Due Loans 90 Days or More
   $ 842     $ 416     $ 874     $ 332     $ 860  
EOM Loans
     1,914,458       1,915,850       1,903,888       1,930,711       1,965,841  
Nonperforming Loans as a % of Loans
     1.95 %     1.31 %     0.65 %     0.47 %     0.42 %
Nonperforming Assets as a % of
                                        
Loans and Other Real Estate
     2.14 %     1.47 %     0.74 %     0.52 %     0.48 %
Nonperforming Assets as a % of Capital(2)
     12.93 %     9.06 %     4.43 %     3.17 %     2.88 %
                                         
                                         
(1) Annualized
                                        
(2) Capital includes allowance for loan losses.
                                        

 
 
 

AVERAGE BALANCE AND INTEREST RATES(1)
                                                                  
Unaudited
                                                                      
                                                                       
                                                                       
   
First Quarter 2008
    
Fourth Quarter 2007
    
Third Quarter 2007
    
Second Quarter 2007
    
First Quarter 2007
  
(Dollars in thousands)
  
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
   $ 1,909,574     35,452     7.47 %   $ 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 %
                                                                                                     
Investment Securities
                                                                                                    
Taxable Investment Securities
     94,786     1,108     4.67 %     99,055     1,226     4.93 %     102,618     1,224     4.75 %     105,425     1,236     4.68 %     108,377     1,263     4.67 %
Tax-Exempt Investment Securities
     90,790     1,207     5.32 %     87,358     1,178     5.39 %     85,446     1,142     5.35 %     83,907     1,088     5.19 %     82,627     1,039     5.03 %
                                                                                                     
Total Investment Securities
     185,576     2,315     4.99 %     186,413     2,404     5.15 %     188,064     2,366     5.02 %     189,332     2,324     4.91 %     191,004     2,302     4.82 %
                                                                                                     
Funds Sold
     206,313     1,574     3.02 %     96,748     1,064     4.31 %     49,438     639     5.06 %     52,935     689     5.15 %     40,332     521     5.17 %
                                                                                                     
Total Earning Assets
     2,301,463   $ 39,341     6.87 %     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 %
                                                                                                     
Cash and Due From Banks
     94,247                   85,598                   84,477                   88,075                   88,679              
Allowance for Loan Losses
     (18,227 )                 (18,127 )                 (17,664 )                 (17,263 )                 (17,073 )            
Other Assets
     268,991                   260,981                   256,153                   253,204                   247,624              
                                                                                                     
Total Assets
   $ 2,646,474                 $ 2,519,682                 $ 2,467,703                 $ 2,511,252                 $ 2,530,790              
                                                                                                     
LIABILITIES:
                                                                                                    
Interest Bearing Deposits
                                                                                                    
NOW Accounts
   $ 773,891   $ 3,440     1.79 %   $ 608,347   $ 2,980     1.94 %   $ 525,795   $ 2,531     1.91 %   $ 541,525   $ 2,611     1.93 %   $ 552,303   $ 2,626     1.93 %
Money Market Accounts
     389,828     2,198     2.27 %     404,406     3,217     3.16 %     403,957     3,565     3.50 %     393,403     3,458     3.53 %     386,736     3,427     3.59 %
Savings Accounts
     113,163     34     0.12 %     113,527     57     0.20 %     117,451     70     0.24 %     122,560     74     0.24 %     125,419     78     0.25 %
Time Deposits
     467,280     4,809     4.14 %     471,454     5,069     4.27 %     471,868     5,100     4.29 %     474,761     4,955     4.19 %     480,964     4,869     4.11 %
Total Interest Bearing Deposits
     1,744,162     10,481     2.42 %     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 %
                                                                                                     
Short-Term Borrowings
     68,095     521     3.06 %     64,842     639     3.89 %     65,130     734     4.45 %     66,764     737     4.41 %     68,911     761     4.46 %
Subordinated Notes Payable
     62,887     931     5.96 %     62,887     936     5.91 %     62,887     936     5.91 %     62,887     932     5.94 %     62,887     926     5.97 %
Other Long-Term Borrowings
     27,644     331     4.82 %     28,215     343     4.83 %     38,269     453     4.70 %     42,284     496     4.71 %     43,137     502     4.72 %
                                                                                                     
Total Interest Bearing Liabilities
     1,902,788   $ 12,264     2.59 %     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 %
                                                                                                     
Noninterest Bearing Deposits
     404,712                   419,002                   435,089                   455,169                   458,304              
Other Liabilities
     42,170                   47,660                   45,721                   42,547                   35,645              
                                                                                                     
Total Liabilities
     2,349,670                   2,220,340                   2,166,167                   2,201,900                   2,214,306              
                                                                                                     
SHAREOWNERS' EQUITY:
   $ 296,804                 $ 299,342                 $ 301,536                 $ 309,352                 $ 316,484              
                                                                                                     
Total Liabilities and Shareowners' Equity
   $ 2,646,474                 $ 2,519,682                 $ 2,467,703                 $ 2,511,252                 $ 2,530,790              
                                                                                                     
Interest Rate Spread
         $ 27,077     4.28 %         $ 28,195     4.50 %         $ 28,517     4.60 %         $ 29,050     4.64 %         $ 28,898     4.60 %
                                                                                                     
Interest Income and Rate Earned(1)
   $ 39,341     6.87 %         $ 41,437     7.50 %         $ 41,906     7.75 %         $ 42,313     7.76 %         $ 42,087     7.71 %
Interest Expense and Rate Paid(2)
           12,264     2.14 %           13,242     2.40 %           13,389     2.48 %           13,263     2.43 %           13,189     2.42 %
                                                                                                     
Net Interest Margin
         $ 27,077     4.73 %         $ 28,195     5.10 %         $ 28,517     5.27 %         $ 29,050     5.33 %         $ 28,898     5.29 %
 
(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 assets.