Capital City Bank Group, Inc.
Reports Second Quarter 2010 Results
 
TALLAHASSEE, Fla. (July 20, 2010) – Capital City Bank Group, Inc. (NASDAQ: CCBG) today reported net income for the second quarter of 2010 totaling $0.7 million ($0.04 per diluted share) compared to a net loss of $3.5 million ($0.20 per diluted share) for the first quarter of 2010 and net income of $0.8 million ($0.04 per diluted share) for the second quarter of 2009.  For the first six months of 2010, the Company reported a net loss of $2.7 million ($0.16 per diluted share) compared to net income of $1.4 million ($0.08 per diluted share) for the same period in 2009.

Net income for the second quarter reflects a loan loss provision of $3.6 million compared to $10.7 million for the first quarter of 2010 and $8.4 million for the second quarter of 2009.  The decline in the loan loss provision was the primary factor driving earnings improvement over the first quarter.  Operating revenues (net interest income plus noninterest income) increased $1.1 million, or 2.8%, over the first quarter due to higher fee income and an improved net interest margin, but were offset by higher noninterest expense of $1.2 million, or 3.7%.  Compared to the second quarter of 2009, a $4.8 million reduction in the loan loss provision was offset by a decline in net interest income of $2.7 million, or 10.1%, and higher noninterest expense of $1.7 million, or 5.1%.
 
The decline in earnings for the first half of 2010 is attributable to lower net interest income of $5.7 million, or 10.5%, as well as higher noninterest expense of $2.8 million, or 4.3%.  For the first six months of 2010, the Company recorded a loan loss provision of $14.4 million compared to $16.8 million for the same period of 2009.

“Improvement in our credit quality metrics was an encouraging sign during the second quarter,” said William G. Smith, Jr., Chairman, President and Chief Executive Officer.  While we continue to anticipate the road to recovery will be bumpy, we are encouraged by our return to profitability and overall performance in the second quarter.”

 “Other positive aspects of the quarter include healthy capital ratios, which were essentially unchanged quarter over quarter, ample liquidity affording us flexibility in an uncertain market and a very stable, low cost core deposit base.  Although we have worked hard to continue to originate loans throughout this prolonged cycle, the availability of quality new credits remains limited and has resulted in a net reduction in our loan portfolio over the last three quarters,” Smith stated.

The Return on Average Assets was .11% and the Return on Average Equity was 1.11% for the second quarter of 2010.  These metrics were -.52% and -5.23% for the first quarter of 2010, and .12% and 1.12% for the second quarter of 2009, respectively.

For the first half of 2010, the Return on Average Assets was -.20% and the Return on Average Equity was -2.07% compared to .12% and 1.03%, respectively, for the first half of 2009.

Discussion of Financial Condition

Average earning assets were $2.329 billion for the second quarter of 2010, a decrease of $28.9 million, or 1.2%, from the first quarter of 2010, and an increase of $91.8 million, or 4.1%, from the fourth quarter of 2009.  The decrease from the first quarter is primarily attributable to a reduction in the funds position of $35.7 million and a decline in the loan portfolio of $45.0 million, partially offset by an increase to the investment portfolio of $51.8 million.  Growth over the fourth quarter is primarily attributable to an increase in the overnight funds position of $154.8 million and a higher investment portfolio of $40.5 million, partially offset by a $103.5 million decline in the loan portfolio.  Average loans have declined throughout the portfolio, driven primarily by reductions in the commercial real estate and construction loan categories.  The portfolio continues to be impacted by diminished loan demand, attributable to the weak economy, as we have experienced lower production levels in recent quarters.  In addition to lower production and normal amortization and payoffs, the reduction in the portfolio is also attributable to charge-offs and the transfer of loans to the Other Real Estate Owned category, which collectively, accounted for $43.7 million, or 42%, of the net reduction during the first half of 2010.
 
At the end of the second quarter, nonperforming assets (including nonaccrual loans, restructured loans and other real estate owned) totaled $149.8 million, a decrease of $3.9 million from the first quarter of 2010, driven primarily by a decrease in restructured loans of $3.6 million.  Nonaccrual loans decreased $1.9 million in the current quarter reflecting the continued slowing of loans migrating into our problem loan pool and the transfer of loans to the other real estate owned category, which increased $1.7 million.  Quarter over quarter, gross additions to our problem loan pool fell by more than 50%.  Nonperforming assets represented 8.01% of loans and other real estate at the end of the second quarter compared to 8.10% at the prior quarter-end and 7.38% at year-end 2009.

Average total deposits were $2.234 billion for the second quarter, a decrease of $14.6 million, or 0.7%, from the first quarter of 2010 and an increase of $144.2 million, or 6.9%, from the fourth quarter of 2009.  Deposit levels remain strong but down slightly from the first quarter level, primarily attributable to lower money market balances and public funds.  Our money market account promotion, which was launched during the third quarter of 2009 and concluded in the fourth quarter, has experienced runoff as rates were eased during the current quarter, but has generated in excess of $50.0 million in new deposit balances and served to support our core deposit growth initiatives and to further strengthen the bank’s overall liquidity position.  Public funds balances have declined slightly from the linked quarter reflecting anticipated seasonality within this deposit category.  Our Absolutely Free Checking (“AFC”) products continue to be successful as both balances and the number of accounts continue to post growth quarter over quarter.  We continue to pursue prudent pricing discipline and to manage the mix of our deposits.  Therefore, we are not attempting to compete with higher rate paying competitors for deposits.  The improvement from the fourth quarter reflects higher public funds of $80.2 million and core deposits of $58.6 million fueled primarily by the success of the AFC products.

We maintained an average net overnight funds (deposits with banks plus Fed funds sold less Fed funds purchased) sold position of $262.2 million during the second quarter of 2010 compared to an average net overnight funds sold position of $112.8 million in the fourth quarter of 2009 and an average overnight funds sold position of $297.0 million in the prior quarter.  The favorable variance as compared to year-end is primarily attributable to the growth in deposits and net reductions in the loan portfolios, partially offset by higher balance in the investment portfolio.  The lower balance when compared to the linked quarter primarily reflects the purchase of investment securities.  If appropriate, we will continue to look to deploy a portion of the funds sold position in the investment portfolio during the second half of 2010.
 
Equity capital was $261.7 million as of June 30, 2010, compared to $262.0 million as of March 31, 2010 and $267.9 million as of December 31, 2009.  Our leverage ratio was 9.58%, 9.64%, and 10.39%, respectively, for the comparable periods.  Further, our risk-adjusted capital ratio of 14.14% at June 30, 2010 exceeds the 10.0% threshold to be designated as “well-capitalized” under the risk-based regulatory guidelines.  At June 30, 2010, our tangible common equity ratio was 6.80%, compared to 6.62% at March 31, 2010 and 6.84% at December 31, 2009.

 
 
 
Discussion of Operating Results

Tax equivalent net interest income for the second quarter of 2010 was $24.7 million compared to $24.5 million for the first quarter of 2010 and $27.7 million for the second quarter of 2009.  For the first half of 2010, tax equivalent net interest income totaled $49.2 million compared to $55.3 million in 2009.

The increase of $0.2 million in tax equivalent net interest income on a linked quarter basis was due to one additional calendar day, a decrease in foregone interest on nonaccrual loans and lower interest expense, partially offset by a reduction in loan income, attributable to declining loan balances, and  continued unfavorable asset repricing.  Lower interest expense reflects a reduction in deposit rates primarily in the categories of money market accounts and certificates of deposit.

The decrease of $6.1 million in tax equivalent net interest income for the first half of 2010, as compared to the same period in 2009, resulted from a reduction in loans outstanding, lower earning assets yields reflecting unfavorable asset repricing, higher foregone interest and lower loan fees, partially offset by a reduction in interest expense.
 
The net interest margin in the second quarter of 2010 was 4.26%, an increase of five basis points over the linked quarter and a decline of 85 basis points from the second quarter of 2009.  The increase in the margin when compared to the linked quarter was a result of a 10 basis point reduction in the cost of funds, partially offset by a lower yield on earning assets of five basis points.  The lower cost of funds was a result of a reduction in the rates on the money market promotional accounts and certificates of deposit.  The decline from the second quarter of 2009 is attributable to the shift in our earning asset mix and unfavorable asset repricing, partially offset by a favorable variance in our average cost of funds.  Strong deposit growth in recent quarters has improved our liquidity position, but has adversely impacted our margin in the short term as a significant portion of this growth is currently invested in overnight funds.  As we determine what portion of this growth is permanent, if appropriate, we will begin deploying the overnight funds into the investment portfolio.
 
The provision for loan losses for the second quarter of 2010 was $3.6 million compared to $10.7 million in the first quarter of 2010 and $8.4 million for the second quarter of 2009.  For the first six months of 2010, the loan loss provision totaled $14.4 million compared to $16.8 million for the same period in 2009.  The lower provision for the current quarter and first half of the year primarily reflects a significant reduction in the level of loans migrating into our problem loan pool.   A lower level of inherent losses for the non-impaired portion of our loan portfolio, driven by improving risk factors, also favorably impacted the provision for the current quarter.  Net charge-offs in the second quarter totaled $6.4 million, or .55% of average loans, compared to $13.5 million, or 2.91%, in the first quarter of 2010.  The reduction in net charge-offs compared to the first quarter primarily reflects charge-offs realized in the prior quarter for three large real estate loans that were migrating to the other real estate category.  At quarter-end, the allowance for loan losses was 2.11% of outstanding loans (net of overdrafts) and provided coverage of 38% of nonperforming loans compared to 2.23% and 38%, respectively, at the end of the prior quarter.

Noninterest income for the second quarter of 2010 increased $707,000, or 5.1%, from the first quarter of 2010 attributable to higher deposit fees of $411,000 and retail brokerage fees of $281,000.  The improvement in deposit fees reflects a favorable one-day calendar variance and higher activity levels.  The increase in retail brokerage fees was primarily driven by higher trading volume.  For the first six months of 2010, we realized a $34,000, or 0.1%, decline in noninterest income, primarily reflecting lower deposit and mortgage banking fees, partially offset by an increase in retail brokerage fees and debit card fees.

Noninterest expense increased $1.2 million, or 3.7%, from the first quarter of 2010 driven by higher expense for other real estate properties of $1.3 million, which includes holding costs as well as valuation adjustments due to property devaluation, and increased FDIC insurance premiums of $795,000.  Lower expense for cash and stock incentives of $800,000, attributable to lower than expected associate and company performance, partially offset the aforementioned increases.  For the first six months of 2010, as compared to the same period in 2009, noninterest expense increased $2.8 million, or 4.3%, due primarily to higher expense for other real estate properties of $4.8 million, partially offset by lower pension expense of $1.2 million and intangible amortization of $0.6 million.

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 70 banking offices and 79 ATMs in Florida, Georgia and Alabama.  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, 2009, 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, 2010
    
Mar 31, 2010
    
Jun 30, 2009
    
Jun 30, 2010
    
Jun 30, 2009
  
EARNINGS
                              
Net Income(Loss)
   $ 731     $ (3,463 )   $ 774     $ (2,732 )   $ 1,424  
Net Income(Loss) Per Common Share
   $ 0.04     $ (0.20 )   $ 0.04     $ (0.16 )   $ 0.08  
PERFORMANCE
                                        
Return on Average Equity
     1.11 %     -5.23 %     1.12 %     -2.07 %     1.03 %
Return on Average Assets
     0.11 %     -0.52 %     0.12 %     -0.20 %     0.12 %
Net Interest Margin
     4.26 %     4.21 %     5.11 %     4.24 %     5.13 %
Noninterest Income as % of Operating Revenue
     37.58 %     36.77 %     35.07 %     37.18 %     34.65 %
Efficiency Ratio
     86.06 %     85.00 %     75.44 %     85.54 %     75.26 %
CAPITAL ADEQUACY
                                        
Tier 1 Capital Ratio
     12.78 %     12.81 %     12.85 %     12.78 %     12.85 %
Total Capital Ratio
     14.14 %     14.16 %     14.20 %     14.14 %     14.20 %
Tangible Capital Ratio
     6.80 %     6.62 %     7.47 %     6.80 %     7.47 %
Leverage Ratio
     9.58 %     9.64 %     11.07 %     9.58 %     11.07 %
Equity to Assets
     9.87 %     9.65 %     10.80 %     9.87 %     10.80 %
ASSET QUALITY
                                        
Allowance as % of Non-Performing Loans
     37.80 %     38.42 %     33.71 %     37.80 %     33.71 %
Allowance as a % of Loans
     2.11 %     2.23 %     2.12 %     2.11 %     2.12 %
Net Charge-Offs as % of Average Loans
     1.39 %     2.91 %     1.39 %     2.16 %     1.23 %
Nonperforming Assets as % of Loans and ORE
     8.01 %     8.10 %     7.19 %     8.01 %     7.19 %
STOCK PERFORMANCE
                                        
High
   $ 18.25     $ 14.61     $ 17.35     $ 18.25     $ 27.31  
Low
   $ 12.36     $ 11.57     $ 11.01     $ 11.57     $ 9.50  
Close
   $ 12.38     $ 14.25     $ 16.85     $ 12.38     $ 16.85  
Average Daily Trading Volume
     46,507       26,854       40,130       36,917       57,342  
                                         
 
 
 
 
 
 
CAPITAL CITY BANK GROUP, INC.
                                      
CONSOLIDATED STATEMENT OF INCOME
                                      
Unaudited
                                          
                                           
                                 
Six Months Ended
  
                                 
June 30
  
(Dollars in thousands, except per share data)
  
2010
Second Quarter
    
2010
First Quarter
    
2009
Fourth Quarter
    
2009
Third Quarter
    
2009
Second Quarter
    
2010
    
2009
  
                                           
INTEREST INCOME
                                          
Interest and Fees on Loans
   $ 26,644     $ 26,992     $ 28,582     $ 29,463     $ 29,742     $ 53,636     $ 59,279  
Investment Securities
     1,114       990       1,097       1,323       1,437       2,104       2,950  
Funds Sold
     176       172       77       1       1       348       4  
Total Interest Income
     27,934       28,154       29,756       30,787       31,180       56,088       62,233  
                                                         
INTEREST EXPENSE
                                                        
Deposits
     2,363       2,938       2,964       2,626       2,500       5,301       4,995  
Short-Term Borrowings
     12       17       22       113       88       29       156  
Subordinated Notes Payable
     639       651       936       936       931       1,290       1,858  
Other Long-Term Borrowings
     551       526       542       560       566       1,077       1,134  
Total Interest Expense
     3,565       4,132       4,464       4,235       4,085       7,697       8,143  
Net Interest Income
     24,369       24,022       25,292       26,552       27,095       48,391       54,090  
Provision for Loan Losses
     3,633       10,740       10,834       12,347       8,426       14,373       16,836  
Net Interest Income after Provision for Loan Losses
     20,736       13,282       14,458       14,205       18,669       34,018       37,254  
                                                         
NONINTEREST INCOME
                                                        
Service Charges on Deposit Accounts
     7,039       6,628       7,183       7,099       7,162       13,667       13,860  
Data Processing Fees
     919       900       948       914       896       1,819       1,766  
Asset Management Fees
     1,080       1,020       1,065       960       930       2,100       1,900  
Retail Brokerage Fees
     846       565       772       765       625       1,411       1,118  
Gain on Sale of Investment Securities
     -       5       -       4       6       5       6  
Mortgage Banking Revenues
     641       508       550       663       902       1,149       1,486  
Merchant Fees
     384       665       345       393       663       1,049       1,621  
Interchange Fees
     1,289       1,212       1,129       1,129       1,118       2,501       2,174  
ATM/Debit Card Fees
     1,073       963       892       876       884       2,036       1,747  
Other
     1,403       1,501       1,527       1,501       1,448       2,904       2,998  
Total Noninterest Income
     14,674       13,967       14,411       14,304       14,634       28,641       28,676  
                                                         
NONINTEREST EXPENSE
                                                        
Salaries and Associate Benefits
     15,584       16,779       16,121       15,660       16,049       32,363       33,286  
Occupancy, Net
     2,585       2,408       2,458       2,455       2,540       4,993       4,885  
Furniture and Equipment
     2,192       2,181       2,261       2,193       2,304       4,373       4,642  
Intangible Amortization
     710       710       1,010       1,011       1,010       1,420       2,021  
Other
     13,558       11,306       13,463       10,296       11,027       24,864       20,353  
Total Noninterest Expense
     34,629       33,384       35,313       31,615       32,930       68,013       65,187  
                                                         
OPERATING PROFIT(LOSS)
     781       (6,135 )     (6,444 )     (3,106 )     373       (5,354 )     743  
Provision for Income Taxes
     50       (2,672 )     (3,037 )     (1,618 )     (401 )     (2,622 )     (681 )
NET INCOME(LOSS)
   $ 731     $ (3,463 )   $ (3,407 )   $ (1,488 )   $ 774     $ (2,732 )   $ 1,424  
                                                         
PER SHARE DATA
                                                        
Basic Earnings
   $ 0.04     $ (0.20 )   $ (0.20 )   $ (0.08 )   $ 0.04     $ (0.16 )   $ 0.08  
Diluted Earnings
   $ 0.04     $ (0.20 )   $ (0.20 )   $ (0.08 )   $ 0.04     $ (0.16 )   $ 0.08  
Cash Dividends
     0.100       0.190       0.190       0.190       0.190       0.290       0.380  
AVERAGE SHARES
                                                        
Basic
     17,063       17,057       17,034       17,024       17,010       17,060       17,059  
Diluted
     17,074       17,070       17,035       17,025       17,010       17,071       17,060  
                                                         
 
 
 
 
 
 
 
 
CAPITAL CITY BANK GROUP, INC.
                              
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
                    
Unaudited
                              
                               
(Dollars in thousands, except per share data)
  
2010
Second Quarter
    
2010
First Quarter
    
2009
Fourth Quarter
    
2009
Third Quarter
    
2009
Second Quarter
  
                               
ASSETS
                              
Cash and Due From Banks
   $ 52,380     $ 52,615     $ 57,877     $ 79,275     $ 92,394  
Funds Sold and Interest Bearing Deposits
     250,508       293,413       276,416       828       2,016  
Total Cash and Cash Equivalents
     302,888       346,028       334,293       80,103       94,410  
                                         
Investment Securities, Available-for-Sale
     218,785       217,606       176,673       183,944       194,002  
                                         
Loans, Net of Unearned Interest
                                        
Commercial, Financial, & Agricultural
     161,268       169,766       189,061       203,813       201,589  
Real Estate - Construction
     56,910       79,145       111,249       128,476       153,507  
Real Estate - Commercial
     676,516       729,011       716,791       704,595       686,420  
Real Estate - Residential
     450,997       394,132       406,262       424,715       447,652  
Real Estate - Home Equity
     247,726       245,185       246,722       243,808       235,473  
Consumer
     215,723       224,793       233,524       241,672       241,467  
Other Loans
     9,498       6,888       10,207       7,790       7,933  
Overdrafts
     3,144       2,701       2,124       3,163       3,022  
Total Loans, Net of Unearned Interest
     1,821,782       1,851,621       1,915,940       1,958,032       1,977,063  
Allowance for Loan Losses
     (38,442 )     (41,198 )     (43,999 )     (45,401 )     (41,782 )
Loans, Net
     1,783,340       1,810,423       1,871,941       1,912,631       1,935,281  
                                         
Premises and Equipment, Net
     116,802       117,055       115,439       111,797       109,050  
Intangible Assets
     87,421       88,131       88,841       89,851       90,862  
Other Real Estate Owned
     48,110       46,444       36,134       33,371       19,671  
Other Assets
     93,398       89,416       85,003       80,240       82,563  
Total Other Assets
     345,731       341,046       325,417       315,259       302,146  
                                         
Total Assets
   $ 2,650,744     $ 2,715,103     $ 2,708,324     $ 2,491,937     $ 2,525,839  
                                         
LIABILITIES
                                        
Deposits:
                                        
Noninterest Bearing Deposits
   $ 460,168     $ 446,855     $ 427,791     $ 397,943     $ 424,125  
NOW Accounts
     891,636       890,570       899,649       687,679       733,526  
Money Market Accounts
     303,369       376,091       373,105       301,662       300,683  
Regular Savings Accounts
     132,174       130,936       122,370       122,040       123,257  
Certificates of Deposit
     412,964       438,488       435,319       440,666       424,339  
Total Deposits
     2,200,311       2,282,940       2,258,234       1,949,990       2,005,930  
                                         
Short-Term Borrowings
     21,376       18,900       35,841       103,711       73,989  
Subordinated Notes Payable
     62,887       62,887       62,887       62,887       62,887  
Other Long-Term Borrowings
     55,605       50,679       49,380       50,665       52,354  
Other Liabilities
     48,885       37,738       34,083       56,269       57,973  
                                         
Total Liabilities
     2,389,064       2,453,144       2,440,425       2,223,522       2,253,133  
                                         
SHAREOWNERS' EQUITY
                                        
Common Stock
     171       171       170       170       170  
Additional Paid-In Capital
     36,633       36,816       36,099       36,065       35,698  
Retained Earnings
     238,779       239,755       246,460       253,104       257,828  
Accumulated Other Comprehensive Loss, Net of Tax
     (13,903 )     (14,783 )     (14,830 )     (20,924 )     (20,990 )
                                         
Total Shareowners' Equity
     261,680       261,959       267,899       268,415       272,706  
                                         
Total Liabilities and Shareowners' Equity
   $ 2,650,744     $ 2,715,103     $ 2,708,324     $ 2,491,937     $ 2,525,839  
                                         
OTHER BALANCE SHEET DATA
                                        
Earning Assets
   $ 2,291,075     $ 2,362,640     $ 2,369,029     $ 2,142,804     $ 2,173,081  
Intangible Assets
                                        
Goodwill
     84,811       84,811       84,811       84,811       84,811  
Core Deposits
     1,910       2,572       3,233       4,196       5,159  
Other
     700       748       797       844       892  
Interest Bearing Liabilities
     1,880,011       1,968,551       1,978,551       1,769,310       1,771,035  
                                         
Book Value Per Diluted Share
   $ 15.32     $ 15.34     $ 15.72     $ 15.76     $ 16.03  
Tangible Book Value Per Diluted Share
     10.21       10.18       10.51       10.48       10.70  
                                         
Actual Basic Shares Outstanding
     17,067       17,063       17,036       17,032       17,010  
Actual Diluted Shares Outstanding
     17,078       17,076       17,037       17,033       17,010  
                                         
 
 
 
 
 
 
                               
CAPITAL CITY BANK GROUP, INC.
                              
ALLOWANCE FOR LOAN LOSSES
                              
AND NONPERFORMING ASSETS
                              
Unaudited
                              
   
2010
    
2010
    
2009
    
2009
    
2009
  
(Dollars in thousands)
  
Second Quarter
    
First Quarter
    
Fourth Quarter
    
Third Quarter
    
Second Quarter
  
                               
ALLOWANCE FOR LOAN LOSSES
                              
Balance at Beginning of Period
   $ 41,199     $ 43,999     $ 45,401     $ 41,782     $ 40,172  
Provision for Loan Losses
     3,633       10,740       10,834       12,347       8,426  
Transfer of Unfunded Reserve to Other Liability
     -       -       392       -       -  
Net Charge-Offs
     6,390       13,540       11,844       8,728       6,816  
                                         
Balance at End of Period
   $ 38,442     $ 41,199     $ 43,999     $ 45,401     $ 41,782  
As a % of Loans
     2.11 %     2.23 %     2.30 %     2.32 %     2.12 %
As a % of Nonperforming Loans
     37.80 %     38.42 %     40.77 %     40.90 %     33.71 %
As a % of Nonperforming Assets
     25.66 %     26.81 %     30.54 %     31.45 %     29.09 %
                                         
CHARGE-OFFS
                                        
Commercial, Financial and Agricultural
   $ 405     $ 842     $ 712     $ 633     $ 388  
Real Estate - Construction
     1,220       3,722       2,040       2,315       3,356  
Real Estate - Commercial
     920       4,631       1,584       1,707       123  
Real Estate - Residential
     4,725       3,727       7,377       3,394       2,379  
Consumer
     360       1,507       1,324       1,324       1,145  
                                         
Total Charge-Offs
   $ 7,630     $ 14,429     $ 13,037     $ 9,373     $ 7,391  
                                         
RECOVERIES
                                        
Commercial, Financial and Agricultural
   $ 181     $ 77     $ 343     $ 64     $ 84  
Real Estate - Construction
     8       -       5       150       -  
Real Estate - Commercial
     43       157       43       8       1  
Real Estate - Residential
     638       114       331       92       51  
Consumer
     370       541       471       331       439  
                                         
Total Recoveries
   $ 1,240     $ 889     $ 1,193     $ 645     $ 575  
                                         
NET CHARGE-OFFS
   $ 6,390     $ 13,540     $ 11,844     $ 8,728     $ 6,816  
                                         
Net Charge-Offs as a % of Average Loans(1)
     1.39 %     2.91 %     2.42 %     1.76 %     1.39 %
                                         
RISK ELEMENT ASSETS
                                        
Nonaccruing Loans
   $ 74,504     $ 76,382     $ 86,274     $ 91,880     $ 111,039  
Restructured Loans
     27,200       30,843       21,644       19,121       12,916  
Total Nonperforming Loans
     101,704       107,225       107,918       111,001       123,955  
Other Real Estate
     48,110       46,444       36,134       33,371       19,671  
Total Nonperforming Assets
   $ 149,814     $ 153,669     $ 144,052     $ 144,372     $ 143,626  
                                         
Past Due Loans 90 Days or More
   $ -     $ -     $ -     $ 486     $ -  
                                         
Nonperforming Loans as a % of Loans
     5.58 %     5.79 %     5.63 %     5.67 %     6.27 %
Nonperforming Assets as a % of
                                        
Loans and Other Real Estate
     8.01 %     8.10 %     7.38 %     7.25 %     7.19 %
Nonperforming Assets as a % of Capital(2)
     49.92 %     50.69 %     46.19 %     46.01 %     45.67 %
                                         
                                         
(1) Annualized
                                        
(2) Capital includes allowance for loan losses.
                                  
                                         
 
 
 
 
 
 
                                                                                                                               
AVERAGE BALANCE AND INTEREST RATES(1)
                                                                                                                          
Unaudited
                                                                                                                              
                                                                                                                               
                                                                                                                               
   
Second Quarter 2010
    
First Quarter 2010
    
Fourth Quarter 2009
    
Third Quarter 2009
    
Second Quarter 2009
    
June 2010 YTD
    
June 2009 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
   $ 1,841,379       26,795       5.84 %   $ 1,886,367       27,180       5.84 %   $ 1,944,873       28,813       5.88 %   $ 1,964,984       29,695       6.00 %   $ 1,974,197       29,954       6.09 %   $ 1,863,749       53,975       5.84 %   $ 1,969,169       59,678       6.11 %
                                                                                                                                                                         
Investment Securities
                                                                                                                                                                        
Taxable Investment Securities
     128,268       708       2.21 %     71,325       500       2.81 %     72,537       498       2.74 %     81,777       682       3.32 %     89,574       742       3.31 %     99,954       1,208       2.42 %     90,248       1,518       3.37 %
Tax-Exempt Investment Securities
     92,140       624       2.71 %     97,316       753       3.10 %     107,361       921       3.43 %     107,307       985       3.67 %     106,869       1,067       4.00 %     94,713       1,377       2.91 %     104,005       2,200       4.23 %
                                                                                                                                                                         
Total Investment Securities
     220,408       1,332       2.42 %     168,641       1,253       2.98 %     179,898       1,419       3.15 %     189,084       1,667       3.52 %     196,443       1,809       3.68 %     194,667       2,585       2.66 %     194,253       3,718       3.83 %
                                                                                                                                                                         
Funds Sold
     267,578       176       0.26 %     303,280       172       0.23 %     112,790       77       0.27 %     3,294       1       0.11 %     4,641       1       0.10 %     285,331       348       0.24 %     7,363       4       0.12 %
                                                                                                                                                                         
Total Earning Assets
     2,329,365     $ 28,303       4.87 %     2,358,288     $ 28,605       4.92 %     2,237,561     $ 30,309       5.38 %     2,157,362     $ 31,363       5.77 %     2,175,281     $ 31,764       5.86 %     2,343,747     $ 56,908       4.90 %     2,170,785     $ 63,400       5.89 %
                                                                                                                                                                         
Cash and Due From Banks
     50,739                       54,873                       69,687                       76,622                       81,368                       52,795                       79,109                  
Allowance for Loan Losses
     (41,074 )                     (44,584 )                     (46,468 )                     (42,774 )                     (41,978 )                     (42,820 )                     (40,003 )                
Other Assets
     339,458                       329,842                       314,470                       306,759                       291,681                       334,677                       286,801                  
                                                                                                                                                                         
Total Assets
   $ 2,678,488                     $ 2,698,419                     $ 2,575,250                     $ 2,497,969                     $ 2,506,352                     $ 2,688,399                     $ 2,496,692                  
                                                                                                                                                                         
LIABILITIES:
                                                                                                                                                                        
Interest Bearing Deposits
                                                                                                                                                                        
NOW Accounts
   $ 879,329     $ 400       0.18 %   $ 867,004     $ 384       0.18 %   $ 740,550     $ 308       0.17 %   $ 678,292     $ 257       0.15 %   $ 709,039     $ 249       0.14 %   $ 873,200     $ 784       0.18 %   $ 714,123     $ 474       0.13 %
Money Market Accounts
     333,976       331       0.40 %     374,161       689       0.75 %     361,104       625       0.69 %     301,230       281       0.37 %     298,007       192       0.26 %     353,958       1,020       0.58 %     309,719       382       0.25 %
Savings Accounts
     131,333       17       0.05 %     126,352       15       0.05 %     122,158       16       0.05 %     122,934       15       0.05 %     123,034       15       0.05 %     128,856       32       0.05 %     120,601       29       0.05 %
Time Deposits
     430,571       1,615       1.50 %     438,112       1,850       1.71 %     439,654       2,015       1.82 %     430,944       2,073       1.91 %     417,545       2,044       1.96 %     434,321       3,465       1.61 %     404,847       4,110       2.05 %
Total Interest Bearing Deposits
     1,775,209       2,363       0.53 %     1,805,629       2,938       0.66 %     1,663,466       2,964       0.71 %     1,533,400       2,626       0.68 %     1,547,625       2,500       0.65 %     1,790,335       5,301       0.60 %     1,549,290       4,995       0.65 %
                                                                                                                                                                         
Short-Term Borrowings
     22,694       12       0.20 %     30,673       17       0.22 %     47,114       22       0.18 %     97,305       113       0.45 %     87,768       88       0.40 %     26,662       29       0.21 %     86,550       156       0.36 %
Subordinated Notes Payable
     62,887       639       4.02 %     62,887       651       4.14 %     62,887       936       5.83 %     62,887       936       5.83 %     62,887       931       5.86 %     62,887       1,290       4.08 %     62,887       1,858       5.88 %
Other Long-Term Borrowings
     52,704       551       4.20 %     49,981       526       4.27 %     50,026       542       4.30 %     51,906       560       4.28 %     52,775       566       4.30 %     51,350       1,077       4.23 %     52,997       1,134       4.31 %
                                                                                                                                                                         
Total Interest Bearing Liabilities
     1,913,494     $ 3,565       0.75 %     1,949,170     $ 4,132       0.86 %     1,823,493     $ 4,464       0.97 %     1,745,498     $ 4,235       0.96 %     1,751,055     $ 4,085       0.94 %     1,931,234     $ 7,697       0.80 %     1,751,724     $ 8,143       0.94 %
                                                                                                                                                                         
Noninterest Bearing Deposits
     458,969                       443,131                       426,542                       416,770                       423,566                       451,094                       415,020                  
Other Liabilities
     42,152                       37,563                       56,659                       60,674                       54,617                       39,870                       50,586                  
                                                                                                                                                                         
Total Liabilities
     2,414,615                       2,429,864                       2,306,694                       2,222,942                       2,229,238                       2,422,198                       2,217,330                  
                                                                                                                                                                         
SHAREOWNERS' EQUITY:
   $ 263,873                     $ 268,555                     $ 268,556                     $ 275,027                     $ 277,114                     $ 266,201                     $ 279,362                  
                                                                                                                                                                         
Total Liabilities and Shareowners' Equity
   $ 2,678,488                     $ 2,698,419                     $ 2,575,250                     $ 2,497,969                     $ 2,506,352                     $ 2,688,399                     $ 2,496,692                  
                                                                                                                                                                         
Interest Rate Spread
           $ 24,738       4.12 %           $ 24,473       4.06 %           $ 25,845       4.41 %           $ 27,128       4.81 %           $ 27,679       4.92 %           $ 49,211       4.10 %           $ 55,257       4.95 %
                                                                                                                                                                         
Interest Income and Rate Earned(1)
     $ 28,303       4.87 %           $ 28,605       4.92 %           $ 30,309       5.38 %           $ 31,363       5.77 %           $ 31,764       5.86 %           $ 56,908       4.90 %           $ 63,400       5.89 %
Interest Expense and Rate Paid(2)
             3,565       0.61 %             4,132       0.71 %             4,464       0.79 %             4,235       0.78 %             4,085       0.75 %             7,697       0.66 %             8,143       0.76 %
                                                                                                                                                                         
Net Interest Margin
           $ 24,738       4.26 %           $ 24,473       4.21 %           $ 25,845       4.59 %           $ 27,128       4.99 %           $ 27,679       5.11 %           $ 49,211       4.24 %           $ 55,257       5.13 %
                                                                                                                                                                         
                                                                                                                                                                         
                                                                                                                                                                         
                                                                                                                                                                         
(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.