Capital City Bank Group, Inc.
Reports First Quarter 2009 Results

TALLAHASSEE, Fla. (April 20, 2009) – Capital City Bank Group, Inc. (NASDAQ: CCBG) today reported net income for the first quarter of 2009 totaling $.7 million ($0.04 per diluted share) compared to a net loss of $1.7 million ($0.10 per diluted share) in the fourth quarter of 2008 and net income of $7.3 million ($0.42 per diluted share) for the first quarter of 2008.  Earnings for the first quarter of 2008 included a $2.4 million pre-tax gain from the redemption of Visa shares related to their initial public offering and the reversal of $1.1 million (pre-tax) in litigation reserves related to certain Visa litigation.

”In a continuing tough operating environment, we grew our loan portfolio by $24 million or 1.2% and maintained our focus on prudently managing the net interest margin, despite historically low interest rates.  Our margin at 5.16% was 43 basis points higher than a year ago, and better than the linked fourth quarter after adjusting for the recovery of interest income on the resolution of a problem loan late last year,” said William G. Smith, Jr., Chairman, President and Chief Executive Officer of Capital City Bank Group.

“During the first quarter, the principal measures of our capital adequacy remained strong and better than a year ago.  Even though we declined participation in TARP, our total capital ratio ranks in the top quartile of our peer group1.  At March 31, 2009, our risk based and tangible capital ratios were 14.40% and 7.63%, respectively.

“Nonperforming assets amounted to 6.39% of loans and other real estate at the end of the first quarter, compared to 5.48% at year-end 2008 and 2.14% at the end of the first quarter of 2008, which is indicative of the severity and persistence of economic weakness across our markets. Nonaccrual loans were up $13.3 million over year-end levels, mostly due to the addition of three large real estate loan relationships, including a student housing development and two single-family residential projects.

“We believe we are currently dedicating sufficient resources and talent to understand, monitor and eventually resolve our problem assets. Certainly we are in the grip of prolonged adverse economic conditions that have elevated credit quality and the resolution of problem loans to top-of-mind status among investors. But our execution of the fundamentals of profitable community banking – basic lending, rational deposit gathering and good expense management -- continues to be both prudent and consistent,” said Smith.

The Return on Average Assets was .11% and the Return on Average Equity was .94% for the first quarter of 2009.  These metrics were 1.11% and 9.87% for the comparable quarter in 2008 and -.28% and -2.24% for the fourth quarter of 2008, respectively.
 
1 Publicly traded $1-$5 billion Banks (Source: SNL-Southeastern Commercial Banks – 12/31/2008)
 
Discussion of Financial Condition

Average earning assets were $2.166 billion for the first quarter of 2009, an increase of $15.4 million, or 0.71% from the fourth quarter of 2008, and a decrease of $135.2 million, or 5.88% from the first quarter of 2008.  The increase from the fourth quarter is primarily attributable to a $24.0 million increase in the loan portfolio, which was partially funded by a reduction of $6.4 million in short-term investments.  Compared to the first quarter of 2008, the decrease in earning assets primarily reflects a reduction in short-term investments driven by the decline in client deposits (see discussion below), partially offset by a $54.5 million increase in average loans and a $6.5 million increase in investment securities.  Our loan production began increasing during the second half of 2008 and this trend continues through the recent quarter due to the efforts of our bankers to reach clients who are interested in moving or expanding their banking relationships.  Year over year, growth was primarily attributable to commercial real estate mortgages and home equity loans.

Nonperforming assets of $126.8 million increased from the linked fourth quarter by $18.9 million and from the first quarter of 2008 by $85.7 million.  Nonaccrual loans increased $13.3 million and $74.8 million, respectively, from the same prior-year periods.  A large portion of the increase in nonaccrual loans in the first quarter is due to the addition of three large real estate loan relationships, including a student housing development ($5.5 million) and two residential single-family developments ($5.8 million).  Vacant residential land loans represented 48% of our nonaccrual balance at quarter end.  In aggregate, a reserve equal to approximately 29% has been allocated to these land loans.  Restructured loans totaled $5.2 million at the end of the first quarter reflecting an increase of $3.5 million over year-end and $3.2 million over first quarter 2008.  Other real estate owned totaled $11.4 million at the end of the quarter compared to $9.2 million at year-end 2008 and $3.8 million at the end of the first quarter of 2008.  Nonperforming assets represented 6.39% of loans and other real estate at the end of the first quarter compared to 5.48% at year-end 2008 and 2.14% at the end of the first quarter of 2008.

Average total deposits were $1.946 billion for the first quarter, an increase of $11.5 million, or 0.6%, from the fourth quarter and a decrease of $191.5 million, or 8.9%, from the first quarter of 2008.   On a linked quarter basis, the increase in deposits reflects higher public funds accounts, primarily in negotiated accounts and certificates of deposit, which have been partially offset by declining money market balances.  The decline from the first quarter of 2008 reflects a lower level of NOW account balances (primarily public funds and legal settlement accounts), money market account balances and certificates of deposit balances.

We believe the decline in the public funds is partially attributable to certain public entity clients seeking higher yield.  Compared to the first quarter of 2008, a majority of the decrease in deposits has been realized in the money market and certificates of deposit categories.  The decrease in the money market accounts is due to lower balances maintained by both businesses and individuals, which we believe is attributable to lower rates and distressed economic conditions.  We believe the decline in the certificate of deposit category reflects a combination of proceeds migrating to other deposit categories, as well as transferring to higher rate paying competitors.  Despite the disruption in the market, we continue to pursue prudent pricing discipline and have chosen not to compete with higher rate paying competitors for these deposits.
 
We maintained an average net overnight funds (deposits with banks plus Fed funds sold less Fed funds purchased) purchased position of $33.9 million during the first quarter of 2009 compared to an average net overnight funds purchased position of $18.0 million in the fourth quarter of 2008 and an average overnight funds sold position of $186.8 million in the first quarter of 2008.  The unfavorable variance in the funds position primarily reflects a decline in deposit balances as discussed above, coupled with growth in the loan portfolio.  During the first quarter of 2009, we repurchased approximately 146,000 shares of our common stock at a weighted average stock price of $10.65.

Discussion of Operating Results

Tax equivalent net interest income for the first quarter of 2009 was $27.6 million compared to $28.4 million for the fourth quarter of 2008 and $27.1 million for the first quarter of 2008.  The decrease in the net interest income on a linked quarter basis is partially due to two less calendar days in the first quarter.  Additionally, the fourth quarter of 2008 was favorably impacted by a $784,000 interest recovery attributable to the resolution of a problem loan, which we acquired in one of our bank acquisitions several years ago.  Lower foregone interest on nonaccrual loans and an increase in loan fees partially offset the decline in net interest income.

The increase in the net interest margin compared to the first quarter of 2008 primarily reflects aggressive deposit repricing in response to the rate reductions initiated by the Federal Reserve, partially offset by higher foregone interest on nonaccrual loans, a reduction in loan fees and one less calendar day in the first quarter of 2009.

The net interest margin of 5.16% declined by 10 basis points over the linked quarter and improved 43 basis points over the first quarter of 2008.  The interest recovery recorded on the resolution of a problem loan added 15 basis points to the margin in the fourth quarter of 2008.   The improvement in the margin over the linked quarter (after adjusting for the interest recovery in the fourth quarter) is attributable to the aggressive deposit repricing and, relative to the first quarter of 2008, the improvement is primarily attributable to both deposit repricing and a favorable shift in the mix of deposits.

The provision for loan losses for the current quarter was $8.4 million compared to $12.5 million in the fourth quarter of 2008 and $4.1 million for the first quarter of 2008.  The provision for the current quarter reflects a higher level of required reserves for impaired loans, primarily related to newly identified nonaccrual loans.  An increase in loan loss factors and a higher level of internally identified problem loans also impacted the level of loan loss provision for the quarter.  Net charge-offs in the first quarter totaled $5.2 million, or 1.08%, of average loans compared to $6.0 million, or 1.24% in the fourth quarter and $1.9 million, or .41% in the first quarter of 2008.  At quarter-end, the allowance for loan losses was 2.04% of outstanding loans (net of overdrafts) and provided coverage of 35% of nonperforming loans.

Noninterest income for the first quarter increased $731,000, or 5.5%, over the fourth quarter of 2008 and declined $3.8 million, or 21.1%, from the first quarter of 2008.  Compared to the fourth quarter, the increase is primarily due to higher mortgage banking fees and bank card fees.  The increase in mortgage banking fees reflects an 82% increase in secondary market loan production over the prior quarter, primarily driven by homeowner refinancings.  The higher level of bank card fees is primarily due to fee adjustments implemented during the first quarter of 2009.  Compared to the first quarter of 2008, the decline is due to a $2.4 million gain from the redemption of Visa shares, which was recognized in the first quarter of 2008, and a lower level of merchant fees attributable to the sale of a portion of the merchant services portfolio, which occurred in third quarter of 2008.
Noninterest expense increased $1.3 million, or 4.0%, from the fourth quarter of 2008 and $2.5 million, or 8.3%, from the first quarter of 2008.  Compared to the fourth quarter, the increase was due to higher compensation expense of $1.7 million, primarily reflective of an increase in pension plan expense ($904,000) and associate salary expense ($649,000).  The increase in pension cost is primarily due to a decline in the value of pension assets during 2008.  The increase in associate salary expense reflects annual merit raises, but more significantly a higher accrual for performance incentives, which is typical in the first quarter as incentive plan expense is reset to its par level and then subsequently adjusted throughout the year based on actual performance.  Compared to the first quarter of 2008, the impact of a one-time entry of $1.1 million to reverse a portion of our Visa litigation accrual, the reversal of $577,000 in accrued expense for our 2011 Incentive Plan (terminated in the first quarter of 2008), and higher FDIC insurance premiums of approximately $700,000 drove the increase.  Higher pension plan expense of $1.0 million also contributed to the year over year variance.

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 $2.5 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 68 banking 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 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, 2008, 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
  
(Dollars in thousands, except per share data)
  
Mar 31, 2009
    
Dec 31, 2008
    
Mar 31, 2008
  
EARNINGS
                  
Net Income
   $ 650     $ (1,703 )     7,280  
Diluted Earnings Per Common Share
   $ 0.04     $ (0.10 )     0.42  
PERFORMANCE
                        
Return on Average Equity
     0.94 %     -2.24 %     9.87 %
Return on Average Assets
     0.11 %     -0.28 %     1.11 %
Net Interest Margin
     5.16 %     5.26 %     4.73 %
Noninterest Income as % of Operating Revenue
     34.22 %     32.42 %     40.22 %
Efficiency Ratio
     75.07 %     71.21 %     63.15 %
CAPITAL ADEQUACY
                        
Tier 1 Capital Ratio
     13.09 %     13.34 %     12.94 %
Total Capital Ratio
     14.40 %     14.69 %     14.01 %
Tangible Capital Ratio
     7.63 %     7.76 %     7.73 %
Leverage Ratio
     11.25 %     11.51 %     10.50 %
Equity to Assets
     11.02 %     11.20 %     11.06 %
ASSET QUALITY
                        
Allowance as % of Non-Performing Loans
     34.82 %     37.52 %     54.32 %
Allowance as a % of Loans
     2.04 %     1.89 %     1.06 %
Net Charge-Offs as % of Average Loans
     1.08 %     1.24 %     0.41 %
Nonperforming Assets as % of Loans and ORE
     6.39 %     5.48 %     2.14 %
STOCK PERFORMANCE
                        
High
   $ 27.31     $ 33.32     $ 29.99  
Low
   $ 9.50     $ 21.06     $ 24.76  
Close
   $ 11.46     $ 27.24     $ 29.00  
Average Daily Trading Volume
     75,117       43,379       31,827  

 
 
 

CAPITAL CITY BANK GROUP, INC.
                              
CONSOLIDATED STATEMENT OF INCOME
                              
Unaudited
                              
                               
                               
(Dollars in thousands, except per share data)
  
2009
First Quarter
    
2008
Fourth Quarter
    
2008
Third Quarter
    
2008
Second Quarter
    
2008
First Quarter
  
                               
INTEREST INCOME
                              
Interest and Fees on Loans
   $ 29,537     $ 31,570     $ 32,435     $ 33,422     $ 35,255  
Investment Securities
     1,513       1,627       1,744       1,810       1,894  
Funds Sold
     3       32       475       1,028       1,574  
Total Interest Income
     31,053       33,229       34,654       36,260       38,723  
                                         
INTEREST EXPENSE
                                        
Deposits
     2,495       3,848       5,815       7,162       10,481  
Short-Term Borrowings
     68       110       230       296       521  
Subordinated Notes Payable
     927       937       936       931       931  
Other Long-Term Borrowings
     568       587       488       396       331  
Total Interest Expense
     4,058       5,482       7,469       8,785       12,264  
Net Interest Income
     26,995       27,747       27,185       27,475       26,459  
Provision for Loan Losses
     8,410       12,497       10,425       5,432       4,142  
Net Interest Income after Provision for Loan Losses
     18,585       15,250       16,760       22,043       22,317  
                                         
NONINTEREST INCOME
                                        
Service Charges on Deposit Accounts
     6,698       6,807       7,110       7,060       6,765  
Data Processing Fees
     870       937       873       812       813  
Asset Management Fees
     970       935       1,025       1,125       1,150  
Retail Brokerage Fees
     493       630       565       735       469  
Gain on Sale of Investment Securities
     -       3       27       30       65  
Mortgage Banking Revenues
     584       292       331       506       494  
Merchant Fees
     958       650       616       2,074       2,208  
Interchange Fees
     1,056       1,007       1,073       1,076       1,009  
Gain on Sale of Portion of Merchant Services Portfolio
     -       -       6,250       -       -  
ATM/Debit Card Fees
     863       744       742       758       744  
Other
     1,550       1,306       1,600       1,542       4,082  
Total Noninterest Income
     14,042       13,311       20,212       15,718       17,799  
                                         
NONINTEREST EXPENSE
                                        
Salaries and Associate Benefits
     17,237       15,492       15,417       15,318       15,604  
Occupancy, Net
     2,345       2,503       2,373       2,491       2,362  
Furniture and Equipment
     2,338       2,368       2,369       2,583       2,582  
Intangible Amortization
     1,011       1,308       1,459       1,459       1,459  
Other
     9,326       9,331       8,298       8,905       7,791  
Total Noninterest Expense
     32,257       31,002       29,916       30,756       29,798  
                                         
OPERATING PROFIT
     370       (2,441 )     7,056       7,005       10,318  
Provision for Income Taxes
     (280 )     (738 )     2,218       2,195       3,038  
NET INCOME
   $ 650     $ (1,703 )   $ 4,838     $ 4,810     $ 7,280  
                                         
PER SHARE DATA
                                        
Basic Earnings
   $ 0.04     $ (0.10 )   $ 0.29     $ 0.28     $ 0.42  
Diluted Earnings
   $ 0.04     $ (0.10 )   $ 0.29     $ 0.28     $ 0.42  
Cash Dividends
     0.190       0.190       0.185       0.185       0.185  
AVERAGE SHARES
                                        
Basic
     17,109       17,126       17,124       17,146       17,170  
Diluted
     17,131       17,135       17,128       17,147       17,178  

 
 
 

CAPITAL CITY BANK GROUP, INC.
                              
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
                          
Unaudited
                              
                               
(Dollars in thousands, except per share data)
  
2009
First Quarter
    
2008
Fourth Quarter
    
2008
Third Quarter
    
2008
Second Quarter
    
2008
First Quarter
  
                               
ASSETS
                              
Cash and Due From Banks
   $ 81,317     $ 88,143     $ 71,062     $ 108,672     $ 97,525  
Funds Sold and Interest Bearing Deposits
     4,241       6,806       27,419       192,786       241,202  
Total Cash and Cash Equivalents
     85,558       94,949       98,481       301,458       338,727  
                                         
Investment Securities, Available-for-Sale
     195,767       191,569       193,978       185,971       186,944  
                                         
Loans, Net of Unearned Interest
                                        
Commercial, Financial, & Agricultural
     202,038       206,230       189,676       196,075       202,238  
Real Estate - Construction
     154,102       141,973       148,160       150,907       152,060  
Real Estate - Commercial
     673,066       656,959       639,443       622,282       624,826  
Real Estate - Residential
     464,358       468,399       473,962       481,397       482,058  
Real Estate - Home Equity
     223,505       218,500       212,118       205,536       197,093  
Consumer
     243,280       246,973       252,743       244,071       238,663  
Other Loans
     8,068       15,838       7,378       9,436       10,506  
Overdrafts
     3,195       2,925       3,749       7,111       7,014  
Total Loans, Net of Unearned Interest
     1,971,612       1,957,797       1,927,229       1,916,815       1,914,458  
Allowance for Loan Losses
     (40,172 )     (37,004 )     (30,544 )     (22,518 )     (20,277 )
Loans, Net
     1,931,440       1,920,793       1,896,685       1,894,297       1,894,181  
                                         
Premises and Equipment, Net
     107,259       106,433       104,806       102,559       100,145  
Intangible Assets
     91,872       92,883       94,192       95,651       97,109  
Other Assets
     87,483       82,072       66,308       69,479       75,406  
Total Other Assets
     286,614       281,388       265,306       267,689       272,660  
                                         
Total Assets
   $ 2,499,379     $ 2,488,699     $ 2,454,450     $ 2,649,415     $ 2,692,512  
                                         
LIABILITIES
                                        
Deposits:
                                        
Noninterest Bearing Deposits
   $ 413,608     $ 419,696     $ 382,878     $ 416,992     $ 432,904  
NOW Accounts
     726,069       758,976       698,509       814,380       800,128  
Money Market Accounts
     312,541       324,646       368,453       387,011       381,474  
Regular Savings Accounts
     121,245       115,261       116,858       118,307       116,018  
Certificates of Deposit
     416,326       373,595       396,086       426,236       462,081  
Total Deposits
     1,989,789       1,992,174       1,962,784       2,162,926       2,192,605  
                                         
Short-Term Borrowings
     68,193       62,044       47,069       51,783       61,781  
Subordinated Notes Payable
     62,887       62,887       62,887       62,887       62,887  
Other Long-Term Borrowings
     53,448       51,470       53,074       36,857       29,843  
Other Liabilities
     49,518       41,294       29,841       38,382       47,723  
                                         
Total Liabilities
     2,223,835       2,209,869       2,155,655       2,352,835       2,394,839  
                                         
SHAREOWNERS' EQUITY
                                        
Common Stock
     170       171       171       171       172  
Additional Paid-In Capital
     35,841       36,783       36,681       36,382       38,042  
Retained Earnings
     260,287       262,890       267,853       266,171       264,538  
Accumulated Other Comprehensive Loss, Net of Tax
     (20,754 )     (21,014 )     (5,910 )     (6,144 )     (5,079 )
                                         
Total Shareowners' Equity
     275,544       278,830       298,795       296,580       297,673  
                                         
Total Liabilities and Shareowners' Equity
   $ 2,499,379     $ 2,488,699     $ 2,454,450     $ 2,649,415     $ 2,692,512  
                                         
OTHER BALANCE SHEET DATA
                                        
Earning Assets
   $ 2,171,620     $ 2,156,172     $ 2,148,626     $ 2,295,572     $ 2,342,604  
Intangible Assets
                                        
Goodwill
     84,811       84,811       84,811       84,811       84,811  
Deposit Base
     6,121       7,084       8,345       9,756       11,167  
Other
     940       988       1,036       1,084       1,131  
Interest Bearing Liabilities
     1,760,709       1,748,879       1,742,936       1,897,461       1,914,212  
                                         
Book Value Per Diluted Share
   $ 16.18     $ 16.27     $ 17.45     $ 17.33     $ 17.33  
Tangible Book Value Per Diluted Share
     10.80       10.85       11.94       11.74       11.67  
                                         
Actual Basic Shares Outstanding
     17,010       17,127       17,125       17,111       17,175  
Actual Diluted Shares Outstanding
     17,031       17,136       17,129       17,112       17,183  

 
 
 

                               
CAPITAL CITY BANK GROUP, INC.
                              
ALLOWANCE FOR LOAN LOSSES
                              
AND NONPERFORMING ASSETS
                              
Unaudited
                              
                               
   
2009
    
2008
    
2008
    
2008
    
2008
  
(Dollars in thousands)
  
First Quarter
    
Fourth Quarter
    
Third Quarter
    
Second Quarter
    
First Quarter
  
                               
ALLOWANCE FOR LOAN LOSSES
                              
Balance at Beginning of Period
   $ 37,004     $ 30,544     $ 22,518     $ 20,277     $ 18,066  
Provision for Loan Losses
     8,410       12,497       10,425       5,432       4,142  
Net Charge-Offs
     5,242       6,037       2,399       3,191       1,931  
                                         
Balance at End of Period
   $ 40,172     $ 37,004     $ 30,544     $ 22,518     $ 20,277  
As a % of Loans
     2.04 %     1.89 %     1.59 %     1.18 %     1.06 %
As a % of Nonperforming Loans
     34.82 %     37.52 %     48.55 %     51.80 %     54.32 %
As a % of Nonperforming Assets
     31.69 %     34.31 %     45.10 %     47.12 %     49.34 %
                                         
CHARGE-OFFS
                                        
Commercial, Financial and Agricultural
   $ 857     $ 331     $ 275     $ 407     $ 636  
Real Estate - Construction
     320       1,774       77       158     $ 572  
Real Estate - Commercial
     1,002       293       (35 )     1,115       126  
Real Estate - Residential
     1,975       2,264       797       817       176  
Consumer
     2,117       1,993       1,797       1,232       1,170  
                                         
Total Charge-Offs
   $ 6,271     $ 6,655     $ 2,911     $ 3,729     $ 2,680  
                                         
RECOVERIES
                                        
Commercial, Financial and Agricultural
   $ 74     $ 68     $ 68     $ 55     $ 139  
Real Estate - Construction
     385       -       4       -       -  
Real Estate - Commercial
     -       -       1       13       1  
Real Estate - Residential
     58       128       6       24       3  
Consumer
     512       422       433       446       606  
                                         
Total Recoveries
   $ 1,029     $ 618     $ 512     $ 538     $ 749  
                                         
NET CHARGE-OFFS
   $ 5,242     $ 6,037     $ 2,399     $ 3,191     $ 1,931  
                                         
Net Charge-Offs as a % of Average Loans(1)
     1.08 %     1.24 %     0.50 %     0.67 %     0.41 %
                                         
RISK ELEMENT ASSETS
                                        
Nonaccruing Loans
   $ 110,200     $ 96,876     $ 61,509     $ 41,738     $ 35,352  
Restructured Loans
     5,157       1,744       1,403       1,733       1,980  
Total Nonperforming Loans
     115,357       98,620       62,912       43,471       37,332  
Other Real Estate
     11,425       9,222       4,813       4,322       3,768  
Total Nonperforming Assets
   $ 126,782     $ 107,842     $ 67,725     $ 47,793     $ 41,100  
                                         
Past Due Loans 90 Days or More
   $ -     $ 88     $ 50     $ 896     $ 842  
                                         
Nonperforming Loans as a % of Loans
     5.85 %     5.04 %     3.26 %     2.27 %     1.95 %
Nonperforming Assets as a % of
                                        
Loans and Other Real Estate
     6.39 %     5.48 %     3.51 %     2.49 %     2.14 %
Nonperforming Assets as a % of Capital(2)
     40.16 %     34.15 %     20.56 %     14.98 %     12.93 %
                                         
                                         
(1) Annualized
                                        
(2) Capital includes allowance for loan losses.
                                        
                                         

 
 
 

AVERAGE BALANCE AND INTEREST RATES(1)
                                                                                      
Unaudited
                                                                                          
                                                                                           
                                                                                           
   
First Quarter 2009
    
Fourth Quarter 2008
    
Third Quarter 2008
    
Second Quarter 2008
    
First Quarter 2008
  
(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
   $ 1,964,086       29,724       6.14 %   $ 1,940,083       31,772       6.52 %   $ 1,915,008       32,622       6.78 %   $ 1,908,802       33,610       7.08 %   $ 1,909,574       35,453       7.47 %
                                                                                                                         
Investment Securities
                                                                                                                        
Taxable Investment Securities
     90,927       776       3.43 %     90,296       813       3.59 %     93,723       940       3.99 %     93,814       1,028       4.38 %     94,786       1,108       4.67 %
Tax-Exempt Investment Securities
     101,108       1,133       4.48 %     103,817       1,252       4.82 %     98,966       1,234       4.99 %     94,371       1,200       5.09 %     90,790       1,207       5.32 %
                                                                                                                         
Total Investment Securities
     192,035       1,909       3.98 %     194,113       2,065       4.25 %     192,689       2,174       4.50 %     188,185       2,228       4.73 %     185,576       2,315       4.99 %
                                                                                                                         
Funds Sold
     10,116       3       0.13 %     16,645       32       0.74 %     99,973       475       1.86 %     206,984       1,028       1.96 %     206,313       1,574       3.02 %
                                                                                                                         
Total Earning Assets
     2,166,237     $ 31,636       5.92 %     2,150,841     $ 33,869       6.27 %     2,207,670     $ 35,271       6.36 %     2,303,971     $ 36,866       6.43 %     2,301,463     $ 39,342       6.87 %
                                                                                                                         
Cash and Due From Banks
     76,826                       76,027                       77,309                       82,182                       94,247                  
Allowance for Loan Losses
     (38,007 )                     (30,347 )                     (22,851 )                     (20,558 )                     (18,227 )                
Other Assets
     281,869                       266,797                       266,510                       269,176                       268,991                  
                                                                                                                         
Total Assets
   $ 2,486,925                     $ 2,463,318                     $ 2,528,638                     $ 2,634,771                     $ 2,646,474                  
                                                                                                                         
LIABILITIES:
                                                                                                                        
Interest Bearing Deposits
                                                                                                                        
NOW Accounts
   $ 719,265     $ 225       0.13 %   $ 684,246     $ 636       0.37 %   $ 727,754     $ 1,443       0.79 %   $ 788,237     $ 1,935       0.99 %   $ 773,891     $ 3,440       1.79 %
Money Market Accounts
     321,562       190       0.24 %     360,940       716       0.79 %     369,544       1,118       1.20 %     376,996       1,210       1.29 %     389,828       2,198       2.27 %
Savings Accounts
     118,142       14       0.05 %     117,311       28       0.09 %     117,970       30       0.10 %     117,182       29       0.10 %     113,163       34       0.12 %
Time Deposits
     392,006       2,066       2.14 %     379,266       2,468       2.59 %     410,101       3,224       3.13 %     443,006       3,988       3.62 %     467,280       4,809       4.14 %
Total Interest Bearing Deposits
     1,550,975       2,495       0.65 %     1,541,763       3,848       0.99 %     1,625,369       5,815       1.42 %     1,725,421       7,162       1.67 %     1,744,162       10,481       2.42 %
                                                                                                                         
Short-Term Borrowings
     85,318       68       0.32 %     69,079       110       0.62 %     51,738       230       1.76 %     55,830       296       2.13 %     68,095       521       3.06 %
Subordinated Notes Payable
     62,887       927       5.89 %     62,887       937       5.83 %     62,887       936       5.83 %     62,887       931       5.86 %     62,887       931       5.96 %
Other Long-Term Borrowings
     53,221       568       4.33 %     53,261       587       4.39 %     43,237       488       4.48 %     34,612       396       4.60 %     27,644       331       4.82 %
                                                                                                                         
Total Interest Bearing Liabilities
     1,752,401     $ 4,058       0.94 %     1,726,990     $ 5,482       1.26 %     1,783,231     $ 7,469       1.67 %     1,878,750     $ 8,785       1.88 %     1,902,788     $ 12,264       2.59 %
                                                                                                                         
Noninterest Bearing Deposits
     406,380                       404,103                       405,314                       415,125                       404,712                  
Other Liabilities
     46,510                       29,998                       36,498                       40,006                       42,170                  
                                                                                                                         
Total Liabilities
     2,205,291                       2,161,091                       2,225,043                       2,333,881                       2,349,670                  
                                                                                                                         
SHAREOWNERS' EQUITY:
   $ 281,634                     $ 302,227                     $ 303,595                     $ 300,890                     $ 296,804                  
                                                                                                                         
Total Liabilities and Shareowners' Equity
   $ 2,486,925                     $ 2,463,318                     $ 2,528,638                     $ 2,634,771                     $ 2,646,474                  
                                                                                                                         
Interest Rate Spread
           $ 27,578       4.98 %           $ 28,387       5.01 %           $ 27,802       4.69 %           $ 28,081       4.55 %           $ 27,078       4.28 %
                                                                                                                         
Interest Income and Rate Earned(1)
     $ 31,636       5.92 %           $ 33,869       6.27 %           $ 35,271       6.36 %           $ 36,866       6.43 %           $ 39,342       6.87 %
Interest Expense and Rate Paid(2)
             4,058       0.76 %             5,482       1.01 %             7,469       1.35 %             8,785       1.53 %             12,264       2.14 %
                                                                                                                         
Net Interest Margin
           $ 27,578       5.16 %           $ 28,387       5.26 %           $ 27,802       5.01 %           $ 28,081       4.90 %           $ 27,078       4.73 %


(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.