Exhibit 99.1
Capital City Bank Group, Inc.
Reports Second Quarter 2008 Results

TALLAHASSEE, Fla. (July 22, 2008) – Capital City Bank Group, Inc. (NASDAQ: CCBG) today reported net income for the second quarter of 2008 totaling $4.8 million ($0.28 per diluted share) compared to $7.3 million ($0.42 per diluted share) in the first quarter of 2008 and $7.9 million ($0.43 per diluted share) for the second quarter of 2007.  Earnings for the second quarter of 2008 include a loan loss provision of $5.4 million ($.20 per diluted share) versus $4.1 million ($.15 per diluted share) in the first quarter of 2008 and $1.7 million ($.06 per diluted share) in the second quarter of 2007.

Earnings for the first half of 2008 totaled $12.1 million ($0.70 per diluted share) compared to $14.8 million ($0.81 per diluted share) for the first half of 2007.  Year-to-date earnings include a loan loss provision of $9.6 million ($0.34 per diluted share).  Earnings also include a $2.4 million pre-tax gain from the redemption of Visa, Inc. shares related to its initial public offering, the reversal of $1.1 million (pre-tax) in Visa related litigation reserves, the reversal of $577,000 (pre-tax) in accrued expense for our 2011 Incentive Plan, and the reversal of a $425,000 tax reserve related to the resolution of a tax contingency, all four of which were recorded in the prior quarter.

“Overall, our underlying business is fundamentally sound -- after adjusting for the gain on redemption of Visa shares, operating revenues grew quarter over quarter and our expenses are in check.  In Florida, we are managing through a challenging credit cycle and we have responded appropriately by increasing our provision and reserve in both the first and second quarters of this year,” said William G. Smith, Jr., chairman, president & CEO.  “Because our housing markets did not experience the rapid price appreciation as evidenced in other areas of the state, we believe credit-related problems across our markets may be less severe over an extended economic slowdown.  Additionally, our portfolios are well-diversified by loan type and we think our higher-risk loan relationships tend to be smaller in size than most of our Florida-based peers due to our relatively low in-house lending limit and overall lending authorities.”

“We are taking a prudent approach in monitoring collateral values for our problem real estate loans, allocating more resources to the review of updated valuations as market conditions change and, where appropriate, recognizing losses prior to final resolution of the problem asset.

“Our capital position is quite strong.  Our total shareowners’ equity currently stands at $297 million, or 11.2% of total assets and our total risk-based capital ratio equals 14.35%.  These measures are well in excess of regulatory minimums for an institution to be considered well-capitalized and are after the repurchase of $45.6 million of our common stock over the last eighteen months.  We believe the strength of our balance sheet will allow us to participate in opportunities that naturally arise during periods of economic stress and disruption,” said Smith.

The Return on Average Assets was .73% and the Return on Average Equity was 6.43% for the second quarter of 2008.  These metrics were 1.11% and 9.87% for the first quarter of 2008 and 1.26% and 10.23% for the second quarter of 2007, respectively.

For the first half of 2008, the Return on Average Assets was .92% and the Return on Average Equity was 8.14% compared to 1.19% and 9.57%, respectively, for the first half of 2007.






Discussion of Financial Condition

Average earning assets were $2.304 billion for the second quarter, an increase of $2.5 million, or .11% from the first quarter of 2008, and $112.7 million, or 5.2% from the fourth quarter of 2007.  The increase over the linked quarter is primarily attributable to a $2.6 million increase in investment securities.  Compared to the fourth quarter of 2007, the increase primarily reflects a $110.2 million increase in short-term investments which was driven primarily by an increase in our client deposit balances (see discussion below).  Average loans were down slightly from both the prior quarter and fourth quarter of 2007 by $.8 million and $.7 million, respectively, as production essentially matched pay-downs and pay-offs.  Given our risk management practices, the lack of loan growth in this current economic environment is not unexpected.

Nonperforming assets of $47.8 million increased from the first quarter by $6.7 million and from the fourth quarter of 2007 by $19.6 million.  For the same periods, nonaccrual loans totaling $41.7 million increased $6.4 million and $16.6 million, respectively.  The increase from the first quarter primarily reflects the migration of smaller balance residential real estate loans to builders and investors to nonaccrual status.  Restructured loans totaled $1.7 million at the end of the quarter.  Other real estate owned totaled $4.3 million at the end of the second quarter compared to $3.8 million at the end of the first quarter and $3.0 million at year-end 2007.  Nonperforming assets represented 2.49% of loans and other real estate at the end of the second quarter compared to 2.14% and 1.47% at the end of the prior quarter and year-end 2007, respectively.

Average total deposits were $2.141 billion for the second quarter, a decrease of $8.3 million, or 0.39%, from the first quarter and an increase of $123.8 million, or 6.1%, over the fourth quarter of 2007.  Compared to the first quarter, non-maturity deposits increased primarily as a result of growth in noninterest bearing and negotiated rate NOW accounts, but this increase was more than offset by a decline in the money market accounts and certificates of deposit.  Strong growth in public funds deposits is primarily attributable to a migration of deposits from the Florida State Board of Administration’s Local Government Investment Pool, which began in the fourth quarter and has continued through the second quarter.  Declines in money market accounts and certificates of deposit reflect management’s strategy not to compete with higher rate paying competitors.  Compared to the fourth quarter of 2007, a majority of the increase in deposits has come in the NOW account category reflecting the aforementioned trend in negotiated rate NOW accounts.

The Company had approximately $195.5 million in average net overnight funds sold for the second quarter of 2008 as compared to $186.8 million in the first quarter of 2008 and $84.1 million in the fourth quarter of 2007.  The influx of public deposits generated in the first half of 2008 was the primary factor driving the growth of overnight funds for both periods.

Discussion of Operating Results

Tax equivalent net interest income for the second quarter of 2008 was $28.1 million compared to $27.1 million for the first quarter and $29.0 million for the second quarter of 2007.  For the first six months of 2008, tax equivalent net interest income totaled $55.2 million compared to $57.9 million for the comparable period in 2007.

The increase in the net interest income on a linked quarter basis reflects lower interest costs as management has responded aggressively to the Federal Reserve’s 225 basis point rate reduction during 2008.  The lower interest cost was partially offset by declines in earning asset yields and a slight increase in foregone interest on nonaccrual loans.  During this same period, the net interest margin expanded by 17 basis points to 4.90%, attributable to lower deposit rates.
 
 

 
 
The decline in net interest income for the three and six months ended June 30, 2008, as compared to the same periods of 2007 was primarily the result of a higher level of foregone interest associated with the increased level of nonperforming assets and an unfavorable shift in the mix of earning assets as the loan balances declined throughout the first nine months of 2007.  These factors, coupled with the influx of higher cost municipal deposits in 2008, led to compression in our net interest margin of 43 and 50 basis points, respectively.  We continue to believe we have been successful in neutralizing the impact of reductions in the Federal Reserve’s target rate over the last three quarters.

Average negotiated deposits, which include municipal deposits, have grown from $287 million in the second 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 the municipal deposits.  See “Discussion of Financial Condition” for a more detailed analysis of nonperforming assets and deposit growth.

The provision for loan losses for the current quarter was $5.4 million compared to $4.1 million in the first quarter of 2008 and $1.7 million for the second quarter of 2007.  The provision for the first six months of 2008 totaled $9.6 million compared to $2.9 million for the same period in 2007.  The increase in the provision for the current quarter and for the first six months of the year generally reflects the current economic slowdown and the impact of the stressed housing and real estate markets.  Compared to the prior quarter, the increase in the provision reflects a higher level of reserves allocated to our commercial loan and residential real estate loan portfolios.  The increase in the provision for the first half of 2008 compared to the same period in 2007 reflects the aforementioned trends as well as stress on our consumer loan portfolios, primarily indirect auto lending.  For the quarter, net charge-offs totaled $3.2 million, or .67%, of average loans compared to $1.9 million, or .41%, in the first quarter of 2008 and $1.3 million, or .27%, in the second quarter of 2007.  The increase in net charge offs for the current quarter primarily reflects a higher level of consumer (indirect auto), residential real estate, and commercial real estate loan charge-offs.  Management performs a detailed review and valuation assessment of impaired loans on a quarterly basis and, in accordance with its current charge-off procedures, writes existing nonaccrual loans down to fair value when principal is deemed uncollectible.  Increased resources have been allocated to the aforementioned process to review impaired loans migrating through the foreclosure process and record write-downs on these loans as market conditions change.  Due to elevated case loads, it is taking longer for cases to move through the court system and, therefore, where appropriate, we are recognizing losses prior to final resolution of the problem asset.  At quarter-end, the allowance for loan losses was 1.18% of outstanding loans (net of overdrafts) and provided coverage of 52% of nonperforming loans.

Noninterest income for the second quarter decreased $2.1 million, or 11.7%, from the first quarter of 2008 attributable to a pre-tax gain of $2.4 million realized in the first quarter of 2008 from the redemption of Visa, Inc. shares.  Compared to the second quarter of 2007, noninterest income increased $634,000, or 4.0%, due to increases in deposit fees and retail brokerage fees.  For the first six months of 2008, noninterest income grew $4.5 million, or 15.4%, from the comparable period in 2007 due to the aforementioned gain on redemption of Visa, Inc. shares, and strong gains in deposit fees and bank card fees.







Noninterest expense for the second quarter increased $958,000, or 3.2%, from the first quarter of 2008 attributable to a one-time entry of $1.1 million realized in the first quarter of 2008 to reverse a portion of our Visa, Inc. litigation accrual.  In addition, we reversed $577,000 in accrued expense in the first quarter of 2008 related to the termination of our 2011 Incentive Plan.  Compared to the second quarter of 2007, noninterest expense increased $859,000, or 2.9%, due primarily to an increase in compensation and occupancy costs.  The increase in compensation is attributable to higher associate base salaries reflective of annual merit/market based raises and the opening of three new banking offices in 2007.  The increase in occupancy is primarily due to higher depreciation expense also attributable to the aforementioned new banking offices and the implementation of a new telephone system in early 2008.  For the first six months of 2008, noninterest expense grew $95,000, or .16%, from the comparable period in 2007 primarily due to the aforementioned higher compensation and occupancy expense, with the one-time reversal of our Visa, Inc. litigation accrual partially offsetting those increases.  Higher expense for commission fees related to processing cost for our accounts receivable financing product also increased over this period.  Management continues to work on expense reduction opportunities and improvement in cost controls as a core strategic objective.

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, one mortgage lending office, and 82 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 Press Release 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 Press Release speak only as of the date of the Press Release, and the Company assumes no obligation to update forward-looking statements or the reasons why actual results could differ.
 
 
 
 

 
 
 

                             
EARNINGS HIGHLIGHTS
                            
 
Three Months Ended
    
Six Months Ended
  
(Dollars in thousands, except per share data)
Jun 30, 2008
    
Mar 31, 2008
    
Jun 30, 2007
    
Jun 30, 2008
    
Jun 30, 2007
  
EARNINGS
                            
Net Income
 $ 4,810     $ 7,280     $ 7,891     $ 12,090     $ 14,848  
Diluted Earnings Per Common Share
 $ 0.28     $ 0.42     $ 0.43     $ 0.70     $ 0.81  
PERFORMANCE
                                      
Return on Average Equity
   6.43 %     9.87 %     10.23 %     8.14 %     9.57 %
Return on Average Assets
   0.73 %     1.11 %     1.26 %     0.92 %     1.19 %
Net Interest Margin
   4.90 %     4.73 %     5.33 %     4.81 %     5.31 %
Noninterest Income as % of Operating Revenue
   36.39 %     40.22 %     34.64 %     38.33 %     33.84 %
Efficiency Ratio
   66.89 %     63.15 %     64.44 %     65.00 %     66.15 %
CAPITAL ADEQUACY
                                      
Tier 1 Capital Ratio
   13.15 %     12.94 %     13.67 %     13.15 %     13.67 %
Total Capital Ratio
   14.35 %     14.01 %     14.66 %     14.35 %     14.66 %
Leverage Ratio
   10.54 %     10.32 %     11.14 %     10.54 %     11.14 %
Equity to Assets
   11.19 %     11.06 %     11.91 %     11.19 %     11.91 %
ASSET QUALITY
                                      
Allowance as % of Non-Performing Loans
   51.80 %     54.32 %     193.69 %     51.80 %     193.69 %
Allowance as a % of Loans
   1.18 %     1.06 %     0.91 %     1.18 %     0.90 %
Net Charge-Offs as % of Average Loans
   0.67 %     0.41 %     0.27 %     0.54 %     0.27 %
Nonperforming Assets as % of Loans and ORE
   2.49 %     2.14 %     0.52 %     2.49 %     0.52 %
STOCK PERFORMANCE
                                      
High
 $ 30.19     $ 29.99     $ 33.69     $ 30.19     $ 35.91  
Low
 $ 21.76     $ 24.76     $ 29.12     $ 21.76     $ 29.12  
Close
 $ 21.76     $ 29.00     $ 31.34     $ 21.76     $ 31.34  
Average Daily Trading Volume
   36,196       31,827       40,051       34,064       32,338  
 
 

 
 
 

CAPITAL CITY BANK GROUP, INC.
                                          
CONSOLIDATED STATEMENT OF INCOME
                                      
Unaudited
                                          
                                           
                                 
Six Months Ended
  
                                 
June 30
  
(Dollars in thousands, except per share data)
  
2008
Second Quarter
    
2008
First Quarter
    
2007
Fourth Quarter
    
2007
Third Quarter
    
2007
Second Quarter
    
2008
    
2007
  
                                           
INTEREST INCOME
                                          
Interest and Fees on Loans
   $ 33,422     $ 35,255     $ 37,730     $ 38,692     $ 39,092     $ 68,677     $ 78,145  
Investment Securities
     1,810       1,893       1,992       1,968       1,943       3,703       3,883  
Funds Sold
     1,028       1,575       1,064       639       689       2,603       1,210  
Total Interest Income
     36,260       38,723       40,786       41,299       41,724       74,983       83,238  
                                                         
INTEREST EXPENSE
                                                        
Deposits
     7,162       10,481       11,323       11,266       11,098       17,643       22,098  
Short-Term Borrowings
     296       521       639       734       737       817       1,498  
Subordinated Notes Payable
     931       931       936       936       932       1,862       1,858  
Other Long-Term Borrowings
     396       331       343       453       496       727       998  
Total Interest Expense
     8,785       12,264       13,241       13,389       13,263       21,049       26,452  
Net Interest Income
     27,475       26,459       27,545       27,910       28,461       53,934       56,786  
Provision for Loan Losses
     5,432       4,142       1,699       1,552       1,675       9,574       2,912  
Net Interest Income after Provision for Loan Losses
     22,043       22,317       25,846       26,358       26,786       44,360       53,874  
                                                         
NONINTEREST INCOME
                                                        
Service Charges on Deposit Accounts
     7,060       6,765       7,256       6,387       6,442       13,825       12,487  
Data Processing
     812       813       853       775       790       1,625       1,505  
Asset Management Fees
     1,125       1,150       1,100       1,200       1,175       2,275       2,400  
Retail Brokerage Fees
     735       469       619       625       804       1,204       1,266  
Gain on Sale of Investment Securities
     30       65       7       -       -       95       7  
Mortgage Banking Revenues
     506       494       425       642       850       1,000       1,529  
Merchant Fees
     2,074       2,208       1,743       1,686       1,892       4,282       3,828  
Interchange Fees
     1,076       1,009       962       934       951       2,085       1,861  
ATM/Debit Card Fees
     758       744       705       685       661       1,502       1,302  
Other
     1,542       4,082       2,153       1,497       1,519       5,624       2,861  
Total Noninterest Income
     15,718       17,799       15,823       14,431       15,084       33,517       29,046  
                                                         
NONINTEREST EXPENSE
                                                        
Salaries and Associate Benefits
     15,318       15,604       14,472       15,096       14,992       30,922       30,711  
Occupancy, Net
     2,491       2,362       2,378       2,409       2,324       4,853       4,560  
Furniture and Equipment
     2,583       2,582       2,534       2,513       2,494       5,165       4,843  
Intangible Amortization
     1,459       1,459       1,458       1,459       1,458       2,918       2,917  
Other
     8,905       7,791       10,772       8,442       8,629       16,696       17,428  
Total Noninterest Expense
     30,756       29,798       31,614       29,919       29,897       60,554       60,459  
                                                         
OPERATING PROFIT
     7,005       10,318       10,055       10,870       11,973       17,323       22,461  
Provision for Income Taxes
     2,195       3,038       2,391       3,699       4,082       5,233       7,613  
NET INCOME
   $ 4,810     $ 7,280     $ 7,664     $ 7,171     $ 7,891     $ 12,090     $ 14,848  
                                                         
PER SHARE DATA
                                                        
Basic Earnings
   $ 0.28     $ 0.42     $ 0.44     $ 0.41     $ 0.43     $ 0.70     $ 0.81  
Diluted Earnings
   $ 0.28     $ 0.42     $ 0.44     $ 0.41     $ 0.43     $ 0.70     $ 0.81  
Cash Dividends
     0.185       0.185       0.185       0.175       0.175       0.370       0.350  
AVERAGE SHARES
                                                        
Basic
     17,146       17,170       17,444       17,709       18,089       17,158       18,248  
Diluted
     17,147       17,178       17,445       17,719       18,089       17,159       18,248  

 
 
 
 
CAPITAL CITY BANK GROUP, INC.
                              
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
                          
Unaudited
                              
                               
(Dollars in thousands, except per share data)
  
2008
Second Quarter
    
2008
First Quarter
    
2007
Fourth Quarter
    
2007
Third Quarter
    
2007
Second Quarter
  
                               
ASSETS
                              
Cash and Due From Banks
   $ 108,672     $ 97,525     $ 93,437     $ 91,378     $ 95,573  
Funds Sold and Interest Bearing Deposits
     192,786       241,202       166,260       19,599       77,297  
Total Cash and Cash Equivalents
     301,458       338,727       259,697       110,977       172,870  
                                         
Investment Securities, Available-for-Sale
     185,971       186,944       190,719       184,609       189,680  
                                         
Loans, Net of Unearned Interest
                                        
Commercial, Financial, & Agricultural
     196,075       202,238       208,864       205,628       203,555  
Real Estate - Construction
     150,907       152,060       142,248       145,343       159,751  
Real Estate - Commercial
     622,282       624,826       634,920       631,418       640,172  
Real Estate - Residential
     481,397       482,058       481,150       480,488       493,783  
Real Estate - Home Equity
     205,536       197,093       192,428       183,620       175,781  
Consumer
     244,071       238,663       243,415       246,137       240,110  
Other Loans
     9,436       10,506       7,222       8,739       14,715  
Overdrafts
     7,111       7,014       5,603       2,515       2,844  
Total Loans, Net of Unearned Interest
     1,916,815       1,914,458       1,915,850       1,903,888       1,930,711  
Allowance for Loan Losses
     (22,518 )     (20,277 )     (18,066 )     (18,001 )     (17,469 )
Loans, Net
     1,894,297       1,894,181       1,897,784       1,885,887       1,913,242  
                                         
Premises and Equipment, Net
     102,559       100,145       98,612       95,816       92,656  
Intangible Assets
     95,651       97,109       98,568       100,026       101,485  
Other Assets
     69,479       75,406       70,947       62,611       60,815  
Total Other Assets
     267,689       272,660       268,127       258,453       254,956  
                                         
Total Assets
   $ 2,649,415     $ 2,692,512     $ 2,616,327     $ 2,439,926     $ 2,530,748  
                                         
LIABILITIES
                                        
Deposits:
                                        
Noninterest Bearing Deposits
   $ 416,992     $ 432,904     $ 432,659     $ 419,242     $ 456,986  
NOW Accounts
     814,380       800,128       744,093       530,619       559,050  
Money Market Accounts
     387,011       381,474       386,619       399,578       401,415  
Regular Savings Accounts
     118,307       116,018       111,600       115,955       119,585  
Certificates of Deposit
     426,236       462,081       467,373       472,019       472,554  
Total Deposits
     2,162,926       2,192,605       2,142,344       1,937,413       2,009,590  
                                         
Short-Term Borrowings
     51,783       61,781       53,131       63,817       74,307  
Subordinated Notes Payable
     62,887       62,887       62,887       62,887       62,887  
Other Long-Term Borrowings
     36,857       29,843       26,731       29,725       41,276  
Other Liabilities
     38,382       47,723       38,559       47,031       41,251  
                                         
Total Liabilities
     2,352,835       2,394,839       2,323,652       2,140,873       2,229,311  
                                         
SHAREOWNERS' EQUITY
                                        
Common Stock
     171       172       172       176       179  
Additional Paid-In Capital
     36,382       38,042       38,243       50,789       58,001  
Retained Earnings
     266,171       264,538       260,325       255,876       251,838  
Accumulated Other Comprehensive Loss, Net of Tax
     (6,144 )     (5,079 )     (6,065 )     (7,788 )     (8,581 )
                                         
Total Shareowners' Equity
     296,580       297,673       292,675       299,053       301,437  
                                         
Total Liabilities and Shareowners' Equity
   $ 2,649,415     $ 2,692,512     $ 2,616,327     $ 2,439,926     $ 2,530,748  
                                         
OTHER BALANCE SHEET DATA
                                        
Earning Assets
   $ 2,295,572     $ 2,342,604     $ 2,272,829     $ 2,108,096     $ 2,197,688  
Intangible Assets
                                        
Goodwill
     84,811       84,811       84,811       84,811       84,811  
Deposit Base
     9,756       11,167       12,578       13,988       15,399  
Other
     1,084       1,131       1,179       1,227       1,275  
Interest Bearing Liabilities
     1,897,461       1,914,212       1,852,434       1,674,600       1,731,074  
                                         
Book Value Per Diluted Share
   $ 17.33     $ 17.33     $ 17.03     $ 16.95     $ 16.87  
Tangible Book Value Per Diluted Share
     11.74       11.67       11.30       11.28       11.19  
                                         
Actual Basic Shares Outstanding
     17,111       17,175       17,183       17,628       17,869  
Actual Diluted Shares Outstanding
     17,112       17,183       17,184       17,639       17,869  
 

 
 
 

CAPITAL CITY BANK GROUP, INC.
                
ALLOWANCE FOR LOAN LOSSES
                
AND NONPERFORMING ASSETS
                
Unaudited
                
     
2008
  
2008
2007
2007
2007
(Dollars in thousands)
    
Second Quarter
First Quarter
Fourth Quarter
Third Quarter
Second Quarter
                 
ALLOWANCE FOR LOAN LOSSES
                
Balance at Beginning of Period
   $
20,277
  
 $                    18,066
 $               18,001
 $                  17,469
 $                17,108
Provision for Loan Losses
    
                    5,432
  
                         4,142
                    1,699
                       1,552
                     1,675
Net Charge-Offs
    
                    3,191
  
                         1,931
                    1,634
                       1,020
                     1,314
                 
Balance at End of Period
   $
22,518
  
 $                    20,277
 $               18,066
 $                  18,001
 $                17,469
As a % of Loans
    
1.18%
  
1.06%
0.95%
0.95%
0.91%
As a % of Nonperforming Loans
    
51.80%
  
54.32%
71.92%
145.49%
193.68%
As a % of Nonperforming Assets
    
47.12%
  
49.34%
64.15%
128.05%
172.62%
                 
CHARGE-OFFS
                
Commercial, Financial and Agricultural
   $
407
  
 $                         636
 $                    370
 $                       279
 $                     253
Real Estate - Construction
    
                       158
  
                            572
                         58
                               -
                            -
Real Estate - Commercial
    
                    1,115
  
                            126
                       133
                          245
                            5
Real Estate - Residential
    
                       817
  
                            176
                       209
                          161
                        992
Consumer
    
                    1,232
  
                         1,170
                    1,302
                          854
                        534
                 
Total Charge-Offs
   $
3,729
  
 $                      2,680
 $                 2,072
 $                    1,539
 $                  1,784
                 
RECOVERIES
                
Commercial, Financial and Agricultural
   $
55
  
 $                         139
 $                      47
 $                         44
 $                       47
Real Estate - Construction
    
                            -
  
                                 -
                           -
                               -
                            -
Real Estate - Commercial
    
                         13
  
                                1
                           2
                              2
                            5
Real Estate - Residential
    
                         24
  
                                3
                           5
                              2
                          26
Consumer
    
                       446
  
                            606
                       384
                          471
                        392
                 
Total Recoveries
   $
538
  
 $                         749
 $                    438
 $                       519
 $                     470
                 
NET CHARGE-OFFS
   $
3,191
  
 $                      1,931
 $                 1,634
 $                    1,020
 $                  1,314
Net Charge-Offs as a % of Average Loans(1)
0.67%
  
0.41%
0.34%
0.21%
0.27%
                 
RISK ELEMENT ASSETS
                
Nonaccruing Loans
   $
41,738
  
 $                    35,352
 $               25,120
 $                  12,373
 $                  9,019
Restructured Loans
    
                    1,733
  
                         1,980
                           -
                               -
                            -
Total Nonperforming Loans
    
                  43,471
  
                       37,332
                  25,120
                     12,373
                     9,019
Other Real Estate
    
                    4,322
  
                         3,768
                    3,043
                       1,685
                     1,102
Total Nonperforming Assets
   $
47,793
  
 $                    41,100
 $               28,163
 $                  14,058
 $                10,121
Past Due Loans 90 Days or More
   $
896
  
 $                         842
 $                    416
 $                       874
 $                     332
Nonperforming Loans as a % of Loans
    
2.27%
  
1.95%
1.31%
0.65%
0.47%
Nonperforming Assets as a % of
                
Loans and Other Real Estate
    
2.49%
  
2.14%
1.47%
0.74%
0.52%
Nonperforming Assets as a % of Capital(2)
  
14.98%
  
12.93%
9.06%
4.43%
3.17%
                 
                 
(1) Annualized
                
(2) Capital includes allowance for loan losses.
            


 
 
 

AVERAGE BALANCE AND INTEREST RATES(1)
                                                                                                                          
Unaudited
                                                                                                                              
                                                                                                                               
                                                                                                                               
   
Second Quarter 2008
    
First Quarter 2008
    
Fourth Quarter 2007
    
Third Quarter 2007
    
Second Quarter 2007
    
June 2008 YTD
    
June 2007 YTD
  
(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
    
Average
Balance
    
Interest
    
Average
Rate
    
Average
Balance
    
Interest
    
Average
Rate
  
                                                                                                                               
ASSETS:
                                                                                                                              
Loans, Net of Unearned Interest
   $ 1,908,802       33,610       7.08 %   $ 1,909,574       35,453       7.47 %   $ 1,908,069       37,969       7.89 %   $ 1,907,235       38,901       8.09 %   $ 1,944,969       39,300       8.10 %   $ 1,909,187       69,063       7.27 %   $ 1,962,499       78,564       8.07 %
                                                                                                                                                                         
Investment Securities
                                                                                                                                                                        
Taxable Investment Securities
     93,814       1,028       4.38 %     94,786       1,108       4.67 %     99,055       1,226       4.93 %     102,618       1,224       4.75 %     105,425       1,236       4.68 %     94,300       2,136       4.52 %     106,894       2,499       4.68 %
Tax-Exempt Investment Securities
     94,371       1,200       5.09 %     90,790       1,207       5.32 %     87,358       1,178       5.39 %     85,446       1,142       5.35 %     83,907       1,088       5.19 %     92,581       2,407       5.20 %     83,270       2,127       5.11 %
                                                                                                                                                                         
Total Investment Securities
     188,185       2,228       4.73 %     185,576       2,315       4.99 %     186,413       2,404       5.15 %     188,064       2,366       5.02 %     189,332       2,324       4.91 %     186,881       4,543       4.86 %     190,164       4,626       4.87 %
                                                                                                                                                                         
Funds Sold
     206,984       1,028       1.96 %     206,313       1,574       3.02 %     96,748       1,064       4.31 %     49,438       639       5.06 %     52,935       689       5.15 %     206,649       2,602       2.49 %     46,669       1,210       5.16 %
                                                                                                                                                                         
Total Earning Assets
     2,303,971     $ 36,866       6.43 %     2,301,463     $ 39,342       6.87 %     2,191,230     $ 41,437       7.50 %     2,144,737     $ 41,906       7.75 %     2,187,236     $ 42,313       7.76 %     2,302,717     $ 76,208       6.65 %     2,199,332     $ 84,400       7.73 %
                                                                                                                                                                         
Cash and Due From Banks
     82,182                       94,247                       85,598                       84,477                       88,075                       88,214                       88,376                  
Allowance for Loan Losses
     (20,558 )                     (18,227 )                     (18,127 )                     (17,664 )                     (17,263 )                     (19,392 )                     (17,169 )                
Other Assets
     269,176                       268,991                       260,981                       256,153                       253,204                       269,083                       250,428                  
                                                                                                                                                                         
Total Assets
   $ 2,634,771                     $ 2,646,474                     $ 2,519,682                     $ 2,467,703                     $ 2,511,252                     $ 2,640,622                     $ 2,520,967                  
                                                                                                                                                                         
LIABILITIES:
                                                                                                                                                                        
Interest Bearing Deposits
                                                                                                                                                                        
NOW Accounts
   $ 788,237     $ 1,935       0.99 %   $ 773,891     $ 3,440       1.79 %   $ 608,347     $ 2,980       1.94 %   $ 525,795     $ 2,531       1.91 %   $ 541,525     $ 2,611       1.93 %   $ 781,064     $ 5,375       1.38 %   $ 546,884     $ 5,237       1.93 %
Money Market Accounts
     376,996       1,210       1.29 %     389,828       2,198       2.27 %     404,406       3,217       3.16 %     403,957       3,565       3.50 %     393,403       3,458       3.53 %     383,412       3,408       1.79 %     390,088       6,885       3.56 %
Savings Accounts
     117,182       29       0.10 %     113,163       34       0.12 %     113,527       57       0.20 %     117,451       70       0.24 %     122,560       74       0.24 %     115,172       63       0.11 %     123,982       152       0.25 %
Time Deposits
     443,006       3,988       3.62 %     467,280       4,809       4.14 %     471,454       5,069       4.27 %     471,868       5,100       4.29 %     474,761       4,955       4.19 %     455,143       8,797       3.89 %     477,845       9,824       4.15 %
Total Interest Bearing Deposits
     1,725,421       7,162       1.67 %     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 %     1,734,791       17,643       2.05 %     1,538,799       22,098       2.90 %
                                                                                                                                                                         
Short-Term Borrowings
     55,830       296       2.13 %     68,095       521       3.06 %     64,842       639       3.89 %     65,130       734       4.45 %     66,764       737       4.41 %     61,963       817       2.64 %     67,832       1,498       4.44 %
Subordinated Notes Payable
     62,887       931       5.86 %     62,887       931       5.96 %     62,887       936       5.91 %     62,887       936       5.91 %     62,887       932       5.94 %     62,887       1,862       5.86 %     62,887       1,858       5.96 %
Other Long-Term Borrowings
     34,612       396       4.60 %     27,644       331       4.82 %     28,215       343       4.83 %     38,269       453       4.70 %     42,284       496       4.71 %     31,128       727       4.70 %     42,708       998       4.71 %
                                                                                                                                                                         
Total Interest Bearing Liabilities
     1,878,750     $ 8,785       1.88 %     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 %     1,890,769     $ 21,049       2.24 %     1,712,226     $ 26,452       3.11 %
                                                                                                                                                                         
Noninterest Bearing Deposits
     415,125                       404,712                       419,002                       435,089                       455,169                       409,918                       456,728                  
Other Liabilities
     40,006                       42,170                       47,660                       45,721                       42,547                       41,088                       39,115                  
                                                                                                                                                                         
Total Liabilities
     2,333,881                       2,349,670                       2,220,340                       2,166,167                       2,201,900                       2,341,775                       2,208,069                  
                                                                                                                                                                         
SHAREOWNERS' EQUITY:
   $ 300,890                     $ 296,804                     $ 299,342                     $ 301,536                     $ 309,352                     $ 298,847                     $ 312,898                  
                                                                                                                                                                         
Total Liabilities and Shareowners' Equity
   $ 2,634,771                     $ 2,646,474                     $ 2,519,682                     $ 2,467,703                     $ 2,511,252                     $ 2,640,622                     $ 2,520,967                  
                                                                                                                                                                         
Interest Rate Spread
           $ 28,081       4.55 %           $ 27,078       4.28 %           $ 28,196       4.50 %           $ 28,517       4.60 %           $ 29,050       4.64 %           $ 55,159       4.41 %           $ 57,948       4.62 %
                                                                                                                                                                         
Interest Income and Rate Earned(1)
     $ 36,866       6.43 %           $ 39,342       6.87 %           $ 41,437       7.50 %           $ 41,906       7.75 %           $ 42,313       7.76 %           $ 76,208       6.65 %           $ 84,400       7.73 %
Interest Expense and Rate Paid(2)
             8,785       1.53 %             12,264       2.14 %             13,241       2.40 %             13,389       2.48 %             13,263       2.43 %             21,049       1.84 %             26,452       2.42 %
                                                                                                                                                                         
Net Interest Margin
           $ 28,081       4.90 %           $ 27,078       4.73 %           $ 28,196       5.10 %           $ 28,517       5.27 %           $ 29,050       5.33 %           $ 55,159       4.81 %           $ 57,948       5.31 %
                                                                                                                                                                         

(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