updated 4/25/2011 7:15:51 AM ET 2011-04-25T11:15:51

TALLAHASSEE, Fla., April 25, 2011 (GLOBE NEWSWIRE) -- Capital City Bank Group, Inc. (Nasdaq:CCBG) today reported net income of $1.3 million, or $0.08 per diluted share for the first quarter of 2011 compared to net income of $1.9 million, or $0.12 per diluted share in the fourth quarter of 2010 ("linked quarter") and a net loss of $3.5 million, or $0.20 per diluted share for the first quarter of 2010.

Compared to the fourth quarter of 2010, net income reflects lower net interest income of $1.4 million, an increase in the loan loss provision of $0.3 million, and higher income tax expense of $0.7 million, partially offset by higher noninterest income of $1.6 million, and lower noninterest expense of $0.2 million. During the first quarter of 2011, we sold all of our Visa Class B shares of stock, which resulted in a $3.2 million pre-tax gain reflected in noninterest income and a swap liability of $0.6 million reflected in noninterest expense.

The increase in net income over the first quarter of 2010 was driven by a lower loan loss provision of $6.6 million and higher noninterest income of $2.4 million, partially offset by a reduction in net interest income of $1.0 million and higher income tax expense of $3.2 million.

"Given the current state of our economy, I am pleased to report Capital City earned a profit during the first quarter, but weak loan demand, historically low interest rates and general economic conditions within our markets continue to put pressure on earnings," said William G. Smith, Jr., Chairman, President and Chief Executive Officer. Although our nonperforming assets remain elevated, many credit metrics are showing improved trends. As expected, total credit costs remain elevated as we work loans through the collection cycle and dispose of OREO properties, both of which gained momentum during the quarter. We operate from a position of strength with strong liquidity and capital base; and we continue to focus on core deposits as we believe this is the foundation of our long-term franchise value. While we believe the worst is behind us, early on we suggested the road to recovery would be choppy and this is now playing out as we continue to experience volatility in our quarter to quarter performance."

The Return on Average Assets was 0.20% and the Return on Average Equity was 2.03% for the first quarter of 2011, compared to 0.30% and 2.90%, respectively for the fourth quarter of 2010, and -0.52% and -5.23%, respectively for the comparable quarter in 2010.

Discussion of Financial Condition

Average earning assets were $2.279 billion for the first quarter of 2011, an increase of $60.6 million, or 2.7% from the fourth quarter of 2010, and a decline of $79.7 million, or 3.4%, from the first quarter of 2010. The higher level of earning assets over the linked quarter was funded by growth in both deposits and short-term borrowings. Quarter over quarter, average overnight funds grew by $70.2 million, the investment portfolio grew $43.0 million and loans declined $52.6 million, partially attributable to the resolution of problem loans during the quarter.

As compared to the first quarter of 2010, earning assets declined $79.7 million. A $123.4 million reduction in deposits, partially offset by a $56.6 million increase in short-term borrowings drove the overall reduction in earning assets. The increase in short-term borrowings is attributable to the expiration of our Guarantee NOW Account ("GNA") program and clients shifting deposits from the GNA to retail repurchase agreements, which is explained in greater detail below. Average loans and overnight funds declined $156.0 million and $60.4 million, respectively, while investment securities increased $136.7 million.  Average loans have declined throughout the portfolio, driven primarily by reduction in the commercial real estate and construction loan categories.

The loan portfolio continues to be impacted by weak loan demand attributable to the lack of consumer confidence and a sluggish economy. In addition to lower production, normal amortization and payoffs, the resolution of problem loans has the effect of lowering the loan portfolio as loans are either charged off or transferred to the other real estate owned category. During the first quarter, problem loan resolutions accounted for $15.3 million, or 35% of a net reduction in total loans of $43.9 million, and on a year over year basis, problem loan resolutions accounted for $70.4 million, or 51% of the net reduction of $136.8 million1.

Nonperforming assets (including nonaccrual loans, restructured loans ("TDRs"), and other real estate owned ("OREO")) totaled $153.3 million at the end of the first quarter of 2011, an increase of $8.1 million over the fourth quarter of 2010 and a reduction of $0.3 million from the first quarter of 2010. Compared to the linked quarter, nonaccrual loans  increased $8.3 million due to a higher level of defaults within our problem loan pool, a significant portion of which was related to one borrowing relationship totaling $6.0 million. TDRs totaled $24.0 million at the end of the first quarter, a $2.4 million increase over the linked quarter. The balance of OREO decreased $2.6 million from the linked quarter reflective of an increased pace of property dispositions. Compared to the first quarter of 2010, the slight decline in nonperforming assets reflects a $2.4 million reduction in the nonaccrual loan balance and a $6.8 million decline in TDRs, partially offset by an $8.9 million increase in the OREO balance. Nonperforming assets represented 5.76% of total assets at March 31, 2011 compared to 5.54% at December 31, 2010 and 5.66% at March 31, 2010. 

Average total deposits were $2.125 billion for the first quarter, an increase of $9.5 million, or 0.5%, from the fourth quarter of 2010 and a decrease of $123.4 million, or 5.5%, from the first quarter of 2010. Deposit levels improved slightly from the linked quarter primarily as a result of growth in public funds, partially offset by declines in certificates of deposit and existing clients moving from our GNA product to repurchase agreements. Public funds balances have increased as anticipated from the linked quarter reflecting seasonality within this deposit category. Pursuant to changes in the FDIC's Temporary Liquidity Guarantee Program, our government guaranteed NOW product was discontinued during the fourth quarter. As of December 31, 2010, approximately $95 million in balances from this product remained in the NOW category, $95 million migrated to the noninterest bearing DDA category, and $60 million moved into Repurchase Agreements.

We continue to pursue prudent pricing discipline to manage the mix of our deposits. Therefore, we are not attempting to compete with higher rate paying competitors for deposits. The decrease from the first quarter of 2010 reflects a reduction in money market accounts (primarily promotional deposits), deposits transferring from GNA to repurchase agreements and lower certificates of deposit balances, partially offset by higher public funds. 

We maintained an average net overnight funds (deposits with banks plus fed funds sold less fed funds purchased) sold position of $238.1 million during the first quarter of 2011 compared to an average net overnight funds sold position of $164.9 million in the prior quarter and an average overnight funds sold position of $297.0 million in the first quarter of 2010. The higher balance when compared to the linked quarter primarily reflects the increase in deposits mentioned above, growth in short-term borrowings and declines in the loan portfolio, partially offset by a higher level of investment securities. The unfavorable variance as compared to first quarter of 2010 is primarily attributable to declines in deposits and the deployment of funds to the investment portfolio, partially offset by a net reduction in loans.

Equity capital was $259.3 million as of March 31, 2011, compared to $259.0 million as of December 31, 2010 and $262.0 million as of March 31, 2010. Our leverage ratio was 9.74%, 10.10%, and 9.64%, respectively, for the comparable periods. Further, our risk-adjusted capital ratio of 14.82% at March 31, 2011 exceeds the 10.0% threshold to be designated as "well-capitalized" under the risk-based regulatory guidelines and reflects an improvement of 23 basis points over the linked quarter. At March 31, 2011, our tangible common equity ratio was 6.73%, compared to 6.82% at December 31, 2010 and 6.62% at March 31, 2010.   

Discussion of Operating Results

Tax equivalent net interest income for the first quarter of 2011 was $23.3 million compared to $24.6 million for the fourth quarter of 2010 and $24.5 million for the first quarter of 2010.

The decrease of $1.3 million in tax equivalent net interest income as compared to the linked quarter was due to two less calendar days; a reduction in loan income attributable to declining loan balances and continued unfavorable asset repricing. This was partially offset by lower interest expense and a slight decrease in foregone interest on nonaccrual loans. Lower interest expense reflects a reduction in deposit rates primarily in certificates of deposit.   With the exception of calendar days, the explanation for the $1.2 million decline from the prior year quarter essentially mirrors the explanation for the linked quarter.

The net interest margin in the first quarter of 2011 was 4.14%, a decrease of 27 basis points over the linked quarter and a decline of 7 basis points from the first quarter of 2010. The decrease in the margin when compared to both periods was a reduction in the earning asset yield attributable to a shift in the mix of earning assets and continued unfavorable asset repricing. Partially offsetting the unfavorable variances was a reduction in the cost of funds, primarily the average rate paid on certificates of deposit.

The provision for loan losses for the first quarter of 2011 was $4.1 million compared to $3.8 million in the fourth quarter of 2010 and $10.7 million for the first quarter of 2010. The increase in the loan loss provision compared to the linked quarter primarily reflects reserves for newly identified impaired loans. A reduction in general reserves had a favorable impact on the loan loss provision and reflects a decline in our classified loan balance, partially due to loan upgrades during the quarter, a lower historical loss ratio and a reduction in past dues. Compared to the first quarter of 2010, a reduction in impaired loans was the primary factor driving the decline in the loan loss provision. Net charge-offs for the first quarter of 2011 totaled $5.7 million, or 1.33%, of average loans compared to $6.1 million, or 1.35% for the fourth quarter of 2010 and $13.5 million, or 2.91% in the first quarter of 2010. At quarter-end, the allowance for loan losses of $33.9 million was 1.98% of outstanding loans (net of overdrafts) and provided coverage of 35% of nonperforming loans compared to 2.01% and 41%, respectively, at December 31, 2010, and 2.23% and 38%, respectively, at March 31, 2010.

Noninterest income for the first quarter of 2011 totaled $16.3 million, an increase of $1.6 million, or 10.9% over the fourth quarter of 2010 and $2.4 million, or 16.9% over the first quarter of 2010. The increase for both periods was due to a $3.2 million gain (reflected in other income) from the sale of all the Class B shares of Visa stock that were obtained from the initial public offering of Visa, Inc. Compared to the linked quarter, a lower level of deposit fees of $0.5 million and mortgage banking fees of $0.4 million partially offset the gain realized from the sale of Visa stock. The decline in deposit fees reflects a two-day calendar variance and a seasonal variance in the use of our overdraft product. Mortgage banking fees declined primarily due to lower new loan production reflective of a slowdown in new home purchase activity in our Tallahassee market. Additionally, gains from the sale of OREO properties and miscellaneous recoveries, both of which are reflected as other income, also declined from the linked quarter by $0.3 million and $0.4 million, respectively. Compared to the first quarter of 2010, noninterest income increased $2.4 million reflecting the $3.2 million gain on the sale of Visa shares, a $0.3 million increase in bank card fees, and higher retail brokerage fees of $0.2 million, partially offset by a $0.6 million decline in deposit fees and a $0.7 million decline in merchant fees which is included in other income. The decline in deposit fees compared to the first quarter of 2010 reflects a lower level of overdraft fees due to reduced activity reflective of current economic conditions, a higher level of consumer awareness that has both impacted consumer and business spending habits, as well as the implementation of new rules under Regulation E, which regulate our ability to post one-time debit card/ATM transactions for clients who have not opted in to our overdraft protection service. The reduction in merchant fees reflects the migration of our last remaining merchant to another processor – the decline in these revenues are substantially offset by a reduction in processing costs, which are reflected as interchange fees in noninterest expense.   

Noninterest expense for the first quarter of 2011 totaled $33.3 million, a decrease of $0.2 million, or 0.62%, from the fourth quarter of 2010 and $0.1 million, or 0.16%, from the first quarter of 2010. The decline compared to the linked quarter was primarily due to a reduction in other expense of $1.1 million and intangible amortization expense of $0.2 million, partially offset by higher salary/benefit expense of $1.2 million. Other expense declined due to lower OREO expense of $1.0 million, advertising expense of $0.4 million, professional fees of $0.3 million, and a decline in other losses of $0.6 million. Unfavorable variances related to the recognition of a $0.6 million swap liability related to the sale of our Visa stock and the prior quarter reversal of our $0.8 million Visa litigation reserve partially offset the aforementioned reductions. Lower carrying costs of $0.5 million and valuation adjustments/losses of $0.5 million were the primary reason for the decline in OREO expense. A lower level of advertising and public relations activity drove the decline in advertising expense. Professional fees were lower primarily due to nonrecurring expenses in the fourth quarter of 2010 for consulting engagements. Intangible amortization expense declined due to the full amortization of core deposit intangibles related to several past acquisitions. The increase in salary/benefit expense was due to higher incentive expense (cash and stock), the resetting of payroll/unemployment taxes and pension expense. Incentive expense increased due to the resetting to par of several performance incentive programs. The increase in pension expense reflects utilization of a lower discount rate in 2011 reflective of lower long-term bond interest rates. Compared to the first quarter of 2010, the slight decrease in noninterest expense was attributable to lower salary/benefit expense of $0.2 million and intangible amortization of $0.4 million, partially offset by an unfavorable variance of $0.5 million in other expense. The unfavorable variance for other expense was due to higher OREO expense of $0.8 million and recognition of a $0.6 million swap liability, partially offset by a decline in interchange fees of $0.6 million and professional fees of $0.2 million.

Income tax expense for the first quarter of 2011 totaled $0.5 million, an increase of $0.7 million over the fourth quarter of 2010, and $3.2 million over the first quarter of 2010. A higher level of book operating profit at our bank subsidiary due to the gain on sale of Visa stock drove the higher level of tax expense compared to both periods. Reversal of a tax contingency during the fourth quarter of 2010 also contributed to the variance.

About Capital City Bank Group, Inc.

Capital City Bank Group, Inc. ("The Company") (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: legislative or regulatory changes, including the Dodd-Frank Act; the strength of the U.S. economy and the local economies where the Company conducts operations; the accuracy of the Company's financial statement estimates and assumptions, including the estimate for the Company's loan loss provision; the frequency and magnitude of foreclosure of the Company's loans; continued depression of the market value of the Company that could result in an impairment of goodwill; restrictions on our operations, including the inability to pay dividends without our regulators' consent; the effects of the health and soundness of other financial institutions, including the FDIC's need to increase Deposit Insurance Fund assessments; our ability to declare and pay dividends; the effects of the Company's lack of a diversified loan portfolio, including the risks of geographic and industry concentrations; harsh weather conditions and man-made disasters; fluctuations in inflation, interest rates, or monetary policies; changes in the stock market and other capital and real estate markets; 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; the Company's ability to integrate acquisitions; 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, 2010, 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. 

1The problem loan resolutions and reductions in portfolio balances stated in this paragraph are based on "as of" balances, not averages.

       
EARNINGS HIGHLIGHTS
  Three Months Ended
(Dollars in thousands, except per share data) Mar 31, 2011 Dec 31, 2010 Mar 31, 2010
EARNINGS      
Net Income(Loss) $1,310 $1,918 $(3,463)
Net Income(Loss) Per Common Share $0.08 $0.12 $(0.20)
PERFORMANCE      
Return on Average Equity 2.03% 2.90% -5.23%
Return on Average Assets 0.20% 0.30% -0.52%
Net Interest Margin 4.14% 4.41% 4.21%
Noninterest Income as % of Operating Revenue 41.54% 37.69% 36.77%
Efficiency Ratio 83.30% 83.75% 85.00%
CAPITAL ADEQUACY      
Tier 1 Capital Ratio 13.46% 13.24% 12.81%
Total Capital Ratio 14.82% 14.59% 14.16%
Tangible Capital Ratio 6.73% 6.82% 6.62%
Leverage Ratio 9.74% 10.10% 9.64%
Equity to Assets 9.74% 9.88% 9.65%
ASSET QUALITY      
Allowance as % of Non-Performing Loans 34.57% 40.57% 38.42%
Allowance as a % of Loans 1.98% 2.01% 2.23%
Net Charge-Offs as % of Average Loans 1.33% 1.35% 2.91%
Nonperforming Assets as % of Loans and ORE 8.66% 8.00% 8.10%
Nonperforming Assets as % of Total Assets 5.76% 5.54% 5.66%
STOCK PERFORMANCE      
High   $13.80  $14.19  $14.61
Low  $11.87  $11.56  $11.57
Close  $12.68  $12.60  $14.25
Average Daily Trading Volume  21,740  21,385  26,854
       
CAPITAL CITY BANK GROUP, INC.          
CONSOLIDATED STATEMENT OF OPERATIONS          
Unaudited          
 
           
           
(Dollars in thousands, except per share data) 2011

First Quarter
2010

Fourth Quarter
2010

Third Quarter
2010

Second Quarter
2010

First Quarter
           
INTEREST INCOME          
Interest and Fees on Loans  $23,947  $25,656  $26,418  $26,644  $26,992
Investment Securities  1,071  1,080  1,014  1,114  990
Funds Sold  171  95  144  176  172
Total Interest Income  25,189  26,831  27,576  27,934  28,154
           
INTEREST EXPENSE          
Deposits  1,258  1,524  1,820  2,363  2,938
Short-Term Borrowings  111  99  31  12  17
Subordinated Notes Payable  340  342  376  639  651
Other Long-Term Borrowings  494  508  565  551  526
Total Interest Expense  2,203  2,473  2,792  3,565  4,132
Net Interest Income  22,986  24,358  24,784  24,369  24,022
Provision for Loan Losses  4,133  3,783  5,668  3,633  10,740
Net Interest Income after Provision for Loan Losses  18,853  20,575  19,116  20,736  13,282
           
NONINTEREST INCOME          
Service Charges on Deposit Accounts  5,983  6,434  6,399  7,039  6,628
Data Processing Fees  974  880  911  919  900
Asset Management Fees  1,080  1,095  1,040  1,080  1,020
Retail Brokerage Fees  729  738  671  846  565
Gain on Sale of Investment Securities  --  --  3  --  5
Mortgage Banking Fees  617  1,027  772  641  508
Interchange Fees (1)  1,360  1,285  1,291  1,289  1,212
ATM/Debit Card Fees (1)  1,136  1,051  1,036  1,073  963
Other   4,455  2,225  1,326  1,787  2,166
Total Noninterest Income  16,334  14,735  13,449  14,674  13,967
           
NONINTEREST EXPENSE          
Salaries and Associate Benefits  16,577  15,389  15,003  15,584  16,779
Occupancy, Net  2,396  2,406  2,611  2,585  2,408
Furniture and Equipment  2,226  2,268  2,288  2,192  2,181
Intangible Amortization  353  553  709  710  710
Other   11,779  12,924  11,752  13,558  11,306
Total Noninterest Expense  33,331  33,540  32,363  34,629  33,384
           
OPERATING PROFIT(LOSS)  1,856  1,770  202  781  (6,135)
Provision for Income Taxes  546  (148)  (199)  50  (2,672)
NET INCOME(LOSS) $1,310 $1,918 $401 $731 $(3,463)
           
PER SHARE DATA          
Basic Earnings  $0.08  $0.12  $0.02  $0.04  $(0.20)
Diluted Earnings  $0.08  $0.12  $0.02  $0.04  $(0.20)
Cash Dividends  0.100  0.100  0.100  0.100  0.190
AVERAGE SHARES          
Basic   17,122  17,095  17,087  17,063  17,057
Diluted   17,130  17,096  17,088  17,074  17,070
           
           
(1) Together referred to as "Bank Card Fees"          
           
CAPITAL CITY BANK GROUP, INC.          
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION        
Unaudited          
 
(Dollars in thousands, except per share data) 2011

First Quarter
2010

Fourth Quarter
2010

Third Quarter
2010

Second Quarter
2010

First Quarter
           
ASSETS          
Cash and Due From Banks  $ 52,000  $ 35,410  $ 48,701  $ 52,380  $ 52,615
Funds Sold and Interest Bearing Deposits  271,375  200,783  193,415  250,508  293,413
Total Cash and Cash Equivalents  323,375  236,193  242,116  302,888  346,028
           
Investment Securities, Available-for-Sale  311,356  309,731  231,303  218,785  217,606
           
Loans, Net of Unearned Interest          
Commercial, Financial, & Agricultural  153,960  157,394  156,049  161,268  169,766
Real Estate - Construction  35,614  43,239  45,346  56,910  79,145
Real Estate - Commercial  668,583  671,702  680,639  676,516  729,011
Real Estate - Residential  404,204  420,604  448,704  450,997  394,132
Real Estate - Home Equity  248,745  251,565  250,795  247,726  245,185
Consumer  196,205  200,727  207,207  215,723  224,793
Other Loans  5,098  9,937  9,828  9,498  6,888
Overdrafts  2,385  3,503  2,669  3,144  2,701
Total Loans, Net of Unearned Interest  1,714,794  1,758,671  1,801,237  1,821,782  1,851,621
Allowance for Loan Losses  (33,873)  (35,436)  (37,720)  (38,442)  (41,198)
Loans, Net  1,680,921  1,723,235  1,763,517  1,783,340  1,810,423
           
Premises and Equipment, Net  113,918  115,356  115,689  116,802  117,055
Intangible Assets  85,806  86,159  86,712  87,421  88,131
Other Real Estate Owned  55,364  57,937  51,208  48,110  46,444
Other Assets  91,754  93,442  89,451  93,398  89,416
Total Other Assets  346,842  352,894  343,060  345,731  341,046
           
Total Assets  $ 2,662,494  $ 2,622,053  $ 2,579,996  $ 2,650,744  $ 2,715,103
           
LIABILITIES          
Deposits:          
Noninterest Bearing Deposits  $ 540,184  $ 546,257  $ 479,887  $ 460,168  $ 446,855
NOW Accounts  818,512  770,149  830,297  891,636  890,570
Money Market Accounts  288,224  275,416  282,848  303,369  376,091
Regular Savings Accounts  150,051  139,888  135,143  132,174  130,936
Certificates of Deposit  350,076  372,266  393,268  412,964  438,488
Total Deposits  2,147,047  2,103,976  2,121,443  2,200,311  2,282,940
           
Short-Term Borrowings  86,650  92,928  38,138  21,376  18,900
Subordinated Notes Payable  62,887  62,887  62,887  62,887  62,887
Other Long-Term Borrowings  50,050  50,101  46,456  55,605  50,679
Other Liabilities  56,582  53,142  50,383  48,885  37,738
           
Total Liabilities 2,403,216 2,363,034 2,319,307 2,389,064 2,453,144
           
SHAREOWNERS' EQUITY          
Common Stock  171  171  171  171  171
Additional Paid-In Capital  37,548  36,920  36,864  36,633  36,816
Retained Earnings  237,276  237,679  237,471  238,779  239,755
Accumulated Other Comprehensive Loss, Net of Tax  (15,717)  (15,751)  (13,817)  (13,903)  (14,783)
           
Total Shareowners' Equity  259,278  259,019  260,689  261,680  261,959
           
Total Liabilities and Shareowners' Equity  $ 2,662,494  $ 2,622,053  $ 2,579,996  $ 2,650,744  $ 2,715,103
           
OTHER BALANCE SHEET DATA          
Earning Assets  $ 2,297,525  $ 2,269,185  $ 2,225,955  $ 2,291,075  $ 2,362,640
Intangible Assets          
Goodwill  84,811  84,811  84,811  84,811  84,811
Core Deposits  437  742  1,248  1,910  2,572
Other  558  606  653  700  748
Interest Bearing Liabilities  1,806,450  1,763,635  1,789,037  1,880,011  1,968,551
           
Book Value Per Diluted Share  $ 15.13  $ 15.15  $ 15.25  $ 15.32  $ 15.34
Tangible Book Value Per Diluted Share  10.13  10.11  10.18  10.21  10.18
           
Actual Basic Shares Outstanding  17,127  17,100  17,095  17,067  17,063
Actual Diluted Shares Outstanding  17,136  17,101  17,096  17,078  17,076
           
CAPITAL CITY BANK GROUP, INC.          
ALLOWANCE FOR LOAN LOSSES           
AND NONPERFORMING ASSETS          
Unaudited
  2011 2010 2010 2010 2010
(Dollars in thousands) First Quarter Fourth Quarter Third Quarter Second Quarter First Quarter
           
ALLOWANCE FOR LOAN LOSSES          
Balance at Beginning of Period  $ 35,436  $ 37,720  $ 38,442  $ 41,199  $ 43,999
Provision for Loan Losses  4,133  3,783  5,668  3,633  10,740
Net Charge-Offs  5,696  6,067  6,390  6,390  13,540
           
Balance at End of Period  $ 33,873  $ 35,436  $ 37,720  $ 38,442  $ 41,199
As a % of Loans 1.98% 2.01% 2.10% 2.11% 2.23%
As a % of Nonperforming Loans 34.57% 40.57% 39.94% 37.80% 38.42%
As a % of Nonperforming Assets 22.09% 24.39% 25.90% 25.66% 26.81%
           
CHARGE-OFFS          
Commercial, Financial and Agricultural  $ 721  $ 629  $ 242  $ 405  $ 842
Real Estate - Construction  --  234  701  1,220  3,722
Real Estate - Commercial  430  1,469  1,741  920  4,631
Real Estate - Residential  4,445  3,629  3,175  4,725  3,727
Consumer  620  582  1,057  360  1,507
           
Total Charge-Offs  $ 6,216  $ 6,543  $ 6,916  $ 7,630  $ 14,429
           
RECOVERIES          
Commercial, Financial and Agricultural  $ 63  $ 48  $ 65  $ 181  $ 77
Real Estate - Construction  9  --  --  8  --
Real Estate - Commercial  12  55  6  43  157
Real Estate - Residential  96  7  181  638  114
Consumer  340  366  274  370  541
           
Total Recoveries  $ 520  $ 476  $ 526  $ 1,240  $ 889
           
NET CHARGE-OFFS  $ 5,696  $ 6,067  $ 6,390  $ 6,390  $ 13,540
           
Net Charge-Offs as a % of Average Loans(1) 1.33% 1.35% 1.40% 1.39% 2.91%
           
RISK ELEMENT ASSETS          
Nonaccruing Loans  $ 73,954  $ 65,700  $ 74,168  $ 74,504  $ 76,382
Restructured Loans  24,028  21,649  20,267  27,200  30,843
Total Nonperforming Loans  97,982  87,349  94,435  101,704  107,225
Other Real Estate  55,364  57,937  51,208  48,110  46,444
Total Nonperforming Assets  $ 153,346  $ 145,286  $ 145,643  $ 149,814  $ 153,669
           
Past Due Loans 30-89 Days   $ 19,391  $ 24,193  $ 24,904  $ 21,192  $ 18,768
Past Due Loans 90 Days or More  $ --  $ 159  $ --  $ --  $ --
           
Nonperforming Loans as a % of Loans 5.71% 4.97% 5.24% 5.58% 5.79%
Nonperforming Assets as a % of          
Loans and Other Real Estate 8.66% 8.00% 7.86% 8.01% 8.10%
Nonperforming Assets as a % of Capital(2) 52.31% 49.34% 48.81% 49.92% 50.69%
Nonperforming Assets as a % of Total Assets 5.76% 5.54% 5.65% 5.65% 5.66%
           
(1) Annualized          
(2) Capital includes allowance for loan losses.           
           
           
AVERAGE BALANCE AND INTEREST RATES(1)                  
Unaudited                  
 
                   
  First Quarter 2011 Fourth Quarter 2010 Third Quarter 2010
(Dollars in thousands) Average

Balance
Interest Average

Rate
Average

Balance
Interest Average

Rate
Average

Balance
Interest Average

Rate
                   
ASSETS:                  
Loans, Net of Unearned Interest  $1,730,330  24,101 5.65%  $1,782,916  25,799 5.74%  $1,807,483  26,568 5.83%
                   
Investment Securities                  
Taxable Investment Securities  231,153  851 1.48%  178,926  799 1.78%  124,625  674 2.15%
Tax-Exempt Investment Securities  74,226  337 1.81%  83,469  434 2.08%  88,656  521 2.35%
                   
Total Investment Securities  305,379  1,188 1.56%  262,395  1,233 1.87%  213,281  1,195 2.23%
                   
Funds Sold  242,893  171 0.28%  172,738  95 0.24%  252,434  144 0.22%
                   
Total Earning Assets  2,278,602  $25,460 4.53%  2,218,049  $27,127 4.85%  2,273,198  $27,907 4.87%
                   
Cash and Due From Banks  50,942      51,030      50,942    
Allowance for Loan Losses  (34,822)      (37,713)      (39,584)    
Other Assets  348,295      345,427      342,202    
                   
Total Assets  $2,643,017      $2,576,793      $2,626,758    
                   
LIABILITIES:                  
Interest Bearing Deposits                  
NOW Accounts  $786,939  $261 0.13%  $837,625  $296 0.14%  $871,158  $326 0.15%
Money Market Accounts  278,562  131 0.19%  282,887  134 0.19%  293,424  145 0.20%
Savings Accounts  144,623  18 0.05%  136,276  16 0.05%  133,690  17 0.05%
Time Deposits  360,575  848 0.95%  382,870  1,078 1.12%  402,880  1,332 1.31%
Total Interest Bearing Deposits  1,570,699  1,258 0.32%  1,639,658  1,524 0.37%  1,701,152  1,820 0.42%
                   
Short-Term Borrowings  87,267  111 0.52%  34,706  99 1.14%  23,388  31 0.54%
Subordinated Notes Payable  62,887  340 2.16%  62,887  342 2.13%  62,887  376 2.34%
Other Long-Term Borrowings  50,345  494 3.98%  50,097  508 4.02%  54,258  565 4.13%
                   
Total Interest Bearing Liabilities  1,771,198  $2,203 0.50%  1,787,348  $2,473 0.55%  1,841,685  $2,792 0.60%
                   
Noninterest Bearing Deposits  554,680      476,209      471,013    
Other Liabilities  55,536      50,614      50,318    
                   
Total Liabilities  2,381,414      2,314,171      2,363,016    
                   
SHAREOWNERS' EQUITY:  $261,603      $262,622      $263,742    
                   
Total Liabilities and Shareowners' Equity  $2,643,017      $2,576,793      $2,626,758    
                   
Interest Rate Spread   $23,257 4.03%   $24,654 4.30%   $25,115 4.27%
                   
Interest Income and Rate Earned(1)    $25,460 4.53%    $27,127 4.85%    $27,907 4.87%
Interest Expense and Rate Paid(2)    2,203 0.39%    2,473 0.44%    2,792 0.49%
                   
Net Interest Margin    $23,257 4.14%    $24,654 4.41%    $25,115 4.38%
                   
                   
(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.                
                   
AVERAGE BALANCE AND INTEREST RATES(1)            
Unaudited            
 
             
  Second Quarter 2010 First Quarter 2010
(Dollars in thousands) 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%
             
Investment Securities            
Taxable Investment Securities  128,268  708 2.21%  71,325  500 2.81%
Tax-Exempt Investment Securities  92,140  624 2.71%  97,316  753 3.10%
             
Total Investment Securities  220,408  1,332 2.42%  168,641  1,253 2.98%
             
Funds Sold  267,578  176 0.26%  303,280  172 0.23%
             
Total Earning Assets  2,329,365  $28,303 4.87%  2,358,288  $28,605 4.92%
             
Cash and Due From Banks  50,739      54,873    
Allowance for Loan Losses  (41,074)      (44,584)    
Other Assets  339,458      329,842    
             
Total Assets  $2,678,488      $2,698,419    
             
LIABILITIES:            
Interest Bearing Deposits            
NOW Accounts  $879,329  $400 0.18%  $867,004  $384 0.18%
Money Market Accounts  333,976  331 0.40%  374,161  689 0.75%
Savings Accounts  131,333  17 0.05%  126,352  15 0.05%
Time Deposits  430,571  1,615 1.50%  438,112  1,850 1.71%
Total Interest Bearing Deposits  1,775,209  2,363 0.53%  1,805,629  2,938 0.66%
             
Short-Term Borrowings  22,694  12 0.20%  30,673  17 0.22%
Subordinated Notes Payable  62,887  639 4.02%  62,887  651 4.14%
Other Long-Term Borrowings  52,704  551 4.20%  49,981  526 4.27%
             
Total Interest Bearing Liabilities  1,913,494  $3,565 0.75%  1,949,170  $4,132 0.86%
             
Noninterest Bearing Deposits  458,969      443,131    
Other Liabilities  42,152      37,563    
             
Total Liabilities  2,414,615      2,429,864    
             
SHAREOWNERS' EQUITY:  $263,873      $268,555    
             
Total Liabilities and Shareowners' Equity  $2,678,488      $2,698,419    
             
Interest Rate Spread   $24,738 4.12%   $24,473 4.06%
             
Interest Income and Rate Earned(1)    $28,303 4.87%    $28,605 4.92%
Interest Expense and Rate Paid(2)    3,565 0.61%    4,132 0.71%
             
Net Interest Margin    $24,738 4.26%    $24,473 4.21%
             
             
(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.          
             
CONTACT: J. Kimbrough Davis
         Executive Vice President and Chief Financial Officer
         850.402.7820

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