ex99_1.htm

Capital City Bank Group, Inc.

Reports Third Quarter Earnings of $7.2 Million,

Or $0.41 per Diluted Share

Tallahassee, FL. -- Capital City Bank Group, Inc. (NASDAQ: CCBG) today reported net income for the third quarter of 2007 totaling $7.2 million ($0.41 per diluted share) compared to $8.7 million ($0.47 per diluted share) in the third quarter of 2006, a decline of 17.4% (12.8% on a per-share basis). Earnings per share reflect the company’s repurchasing of 250,553 common shares during the third quarter of 2007 and the repurchase of a total of 980,816 common shares since September 30, 2006.

The decrease in net income compared to third quarter 2006 was attributable to a reduction in net interest income of $2.3 million and a $0.8 million increase in the loan loss provision, partially offset by an increase in noninterest income of $0.3 million, a decrease in noninterest expense of $0.5 million, and a reduction in income taxes of $0.8 million. The decrease in net interest income reflects a 31 basis point increase in funding costs. The higher loan loss provision is reflective of a higher level of required reserves for impaired loans. The 2.0% increase in noninterest income is due to increases in retail brokerage fees and interchange fees. The 1.7% decline in noninterest expense primarily reflects lower compensation and advertising expense.

The Return on Average Assets was 1.15% and the Return on Average Equity was 9.44%, compared to 1.35% and 10.83%, respectively, for the comparable period in 2006.

“Our net interest margin contracted during the third quarter as our funding costs rose. We added about twice as much to our provision for loan losses during the third quarter than in the third quarter of 2006. Consistent with trends across the community banking industry, these two factors were the primary drivers of our recent financial performance,” said William G. Smith, Jr. Chairman, President, & CEO of Capital City Bank Group. “While these third-quarter results are clearly not where we want them to be, our net interest margin continues to compare very favorably with peer statistics, as do our level of reserve coverage of nonperforming loans (145%) and our ratio of charge-offs to total loans (.21%). We continued to be a consistent repurchaser of our own stock, as we believe this is a prudent deployment of capital and a rational strategy for creating additional shareowner value given the nature of the current operating environment.”

“As we move through the balance of the year, we see the local economic forces remaining essentially unchanged. While the geographic markets in which we are located are clearly not experiencing real estate related slowdowns of the depth and intensity found across southern Florida, we do anticipate our real estate loan portfolios to be impacted by the overall slowdown in the real estate markets. We believe our overall approach to credit quality is sound and, given the current economic environment, our losses will remain at manageable levels.”

Tax equivalent net interest income in the third quarter decreased $2.2 million, or 7.2%, compared to the third quarter of 2006, due to an increase in funding costs driven by a higher average rate paid on certificates of deposit and an unfavorable shift in our deposit mix. The net interest margin decreased 18 basis points from the third quarter of 2006 to a level of 5.27%. The earning asset yield improved by 13 basis points, but was more than offset by a 31 basis point increase in the cost of funds.

The provision for loan losses of $1.6 million for the quarter was $841,000 higher than the third quarter of 2006 primarily attributable to a higher level of required reserves for impaired loans. Net charge-offs totaled $1.0 million, or .21%, of average loans for the quarter compared to $664,000, or .13%, for the third quarter of 2006. At quarter-end, the allowance for loan losses was .95% of outstanding loans (net of overdrafts) and provided coverage of 145% of nonperforming loans.

Noninterest income increased $287,000, or 2.0%, from the third quarter of 2006 primarily due to higher retail brokerage fees and interchange fees. The increase in retail brokerage fees was due to higher activity by clients and improvement in the internal referral system for this service. Interchange fees was driven higher primarily due to an increase in debit card activity.

Noninterest expense decreased by $503,000, or 1.7% compared to the third quarter of 2006. Lower expense for compensation ($182,000) and advertising ($236,000) were the primary reasons for the decrease. The decline in compensation reflects a lower level of incentive plan expense. The decline in advertising is reflective of steps taken by management to improve expense management controls.

Average earning assets for the third quarter decreased $96.4 million, or 4.3%, from the third quarter of 2006 due primarily to a decline in funding sources and share repurchase activity which approximated $8.0 million for the third quarter of 2007. Average loans decreased $117.9 million, or 5.8% during the same period reflective of a high level of principal pay-downs and loan pay-offs, including the pay-off of several larger commercial loans, and a general slowing of lending activity.

Nonperforming assets of $14.1 million increased from year-end by $5.3 million. The increase in the level of nonperforming assets is due to a $4.3 million increase in non-accrual loans and a $1.0 million increase in other real estate owned. Nonperforming assets represented .74% of loans and other real estate at the end of the third quarter compared to .44% at year-end 2006.

Average total deposits decreased $69.4 million, or 3.4%, from the third quarter of 2006 driven primarily by declines in demand deposit ($59.0 million), savings ($15.0 million), and time deposits ($32.3 million). Increases in NOW ($14.5 million) and money market accounts ($22.3 million), respectively, partially offset the aforementioned declines in demand deposit, savings, and time deposits. The change in deposit mix between the demand deposit/savings and NOW/money market categories primarily reflects the migration of clients toward higher rate nonmaturity deposit products. The decline in time deposit balances reflects management’s unwillingness to retain higher cost funding in the face of a declining loan portfolio.

The Company had approximately $31.9 million in average net overnight funds sold for the third quarter of 2007 as compared to $9.8 million in average net overnight funds sold in the third quarter of 2006. The increase is due to the aforementioned reduction in the loan portfolio.

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 $2.4 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 71 banking offices, three mortgage lending offices, and 79 ATMs in Florida, Georgia and Alabama. In 2006, Mergent, Inc., a leading provider of information on publicly traded companies, named the Company as a Dividend Achiever. To be named a Dividend Achiever, a public company must have increased its regular cash dividends for at least 10 consecutive years. Of all publicly traded U.S. companies that pay dividends, less than three percent made this list. Capital City Bank Group, Inc. was also named to this list in 2005. 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 our future results to differ materially. The following factors, among others, could cause our actual results to differ: our ability to integrate acquisitions; the strength of the U.S. economy and the local economies where we conduct 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; changes in consumer spending and savings habits; our growth and profitability; changes in accounting; and our ability to manage the risks involved in the foregoing. Additional factors can be found in our Annual Report on Form 10-K for the fiscal year ended December 31, 2006, and our 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 we assume no obligation to update forward-looking statements or the reasons why actual results could differ.

EARNINGS HIGHLIGHTS
	Three Months Ended							Nine Months Ended
	Sept 30,			June 30,		Sept 30,		Sept 30,		Sept 30,
(Dollars in thousands, except per share data)	2007			2007		2006		2007		2006
EARNINGS
Net Income	$	7,171			7,891		8,680		22,019		24,416
Diluted Earnings Per Common Share		0.41			0.43		0.47		1.22		1.31
PERFORMANCE
Return on Average Equity		9.44	%		10.23		10.83		9.53		10.36
Return on Average Assets		1.15			1.26		1.35		1.18		1.26
Net Interest Margin		5.27			5.33		5.45		5.30		5.36
Noninterest Income as % of Operating Revenue		34.08			34.64		31.88		33.92		31.51
Efficiency Ratio		66.27			64.44		64.35		66.18		65.90
CAPITAL ADEQUACY
Tier 1 Capital Ratio		13.74	%		13.67		13.76		13.74		13.76
Total Capital Ratio		14.76			14.66		14.72		14.76		14.72
Leverage Ratio		11.49			11.14		11.26		11.49		11.26
Equity to Assets		12.26			11.91		12.47		12.26		12.47
ASSET QUALITY
Allowance as % of Non-Performing Loans		145.49	%		193.69		269.35		145.49		269.35
Allowance as a % of Loans		0.95			0.91		0.86		0.95		0.86
Net Charge-Offs as % of Average Loans		0.21			0.27		0.13		0.25		0.10
Nonperforming Assets as % of Loans and ORE		0.74			0.52		0.34		0.74		0.34
STOCK PERFORMANCE
High	$	36.40			33.69		33.25		36.40		37.97
Low		27.69			29.12		29.87		27.69		29.51
Close		31.20			31.34		31.10		31.20		31.10
Average Daily Trading Volume		40,247			40,051		19,185		35,017		20,653

CAPITAL CITY BANK GROUP, INC. CONSOLIDATED STATEMENT OF INCOME *Unaudited*
	2007						2006				Nine Months Ended
	Third		Second		First		Fourth		Third		September 30
(Dollars in thousands, except per share data)	Quarter		Quarter		Quarter		Quarter		Quarter		2007		2006

INTEREST INCOME
Interest and Fees on Loans	$	38,692		39,092		39,053		40,096		40,260		116,837		116,570
Investment Securities		1,968		1,943		1,940		1,928		1,914		5,851		5,260
Funds Sold		639		689		521		576		338		1,849		1,463
Total Interest Income		41,299		41,724		41,514		42,600		42,512		124,537		123,293

INTEREST EXPENSE
Deposits		11,266		11,098		11,000		10,830		9,985		33,364		26,423
Short-Term Borrowings		734		737		761		722		753		2,232		2,353
Subordinated Notes Payable		936		932		926		936		936		2,794		2,789
Other Long-Term Borrowings		453		496		502		515		615		1,451		2,189
Total Interest Expense		13,389		13,263		13,189		13,003		12,289		39,841		33,754
Net Interest Income		27,910		28,461		28,325		29,597		30,223		84,696		89,539
Provision for Loan Losses		1,552		1,675		1,237		460		711		4,464		1,499
Net Interest Income after Provision for Loan Losses		26,358		26,786		27,088		29,137		29,512		80,232		88,040

NONINTEREST INCOME
Service Charges on Deposit Accounts		6,387		6,442		6,045		6,394		6,450		18,874		18,226
Data Processing		775		790		715		709		674		2,280		2,014
Asset Management Fees		1,200		1,175		1,225		1,180		1,215		3,600		3,420
Retail Brokerage Fees		625		804		462		586		520		1,891		1,505
Gain on Sale of Investment Securities		-		-		7		-		-		7		(4	)
Mortgage Banking Revenues		642		850		679		787		824		2,171		2,448
Merchant Fees		1,686		1,892		1,936		1,694		1,766		5,514		5,284
Interchange Fees		934		951		910		845		797		2,795		2,260
ATM/Debit Card Fees		685		661		641		658		635		1,987		1,861
Other		1,497		1,519		1,342		1,532		1,263		4,358		4,178
Total Noninterest Income		14,431		15,084		13,962		14,385		14,144		43,477		41,192

NONINTEREST EXPENSE
Salaries and Associate Benefits		15,096		14,992		15,719		14,943		15,278		45,807		45,912
Occupancy, Net		2,409		2,324		2,236		2,460		2,354		6,969		6,935
Furniture and Equipment		2,513		2,494		2,349		2,259		2,491		7,356		7,652
Intangible Amortization		1,459		1,458		1,459		1,484		1,536		4,376		4,601
Other		8,442		8,629		8,799		8,838		8,763		25,870		26,484
Total Noninterest Expense		29,919		29,897		30,562		29,984		30,422		90,378		91,584

OPERATING PROFIT		10,870		11,973		10,488		13,538		13,234		33,331		37,648
Provision for Income Taxes		3,699		4,082		3,531		4,688		4,554		11,312		13,232
NET INCOME	$	7,171		7,891		6,957		8,850		8,680		22,019		24,416

PER SHARE DATA
Basic Earnings	$	0.41		0.43		0.38		0.48		0.47		1.22		1.31
Diluted Earnings		0.41		0.43		0.38		0.48		0.47		1.22		1.31
Cash Dividends		0.175		0.175		0.175		0.175		0.163		0.525		0.489
AVERAGE SHARES
Basic		17,709		18,089		18,409		18,525		18,530		18,066		18,604
Diluted		17,719		18,089		18,420		18,569		18,565		18,077		18,627

CAPITAL CITY BANK GROUP, INC. CONSOLIDATED STATEMENT OF FINANCIAL CONDITION *Unaudited*
	2007									2006
	Third			Second			First			Fourth			Third
(Dollars in thousands, except per share data)	Quarter			Quarter			Quarter			Quarter			Quarter

ASSETS
Cash and Due From Banks	$	91,378			95,573			92,233			98,769			100,781
Funds Sold and Interest Bearing Deposits		19,599			77,297			93,832			78,795			35,631
Total Cash and Cash Equivalents		110,977			172,870			186,065			177,564			136,412

Investment Securities, Available-for-Sale		184,609			189,680			191,446			191,894			190,617

Loans, Net of Unearned Interest
Commercial, Financial, & Agricultural		205,628			203,555			205,048			229,327			218,442
Real Estate - Construction		145,343			159,751			180,549			179,072			183,238
Real Estate - Commercial		631,418			640,172			643,272			643,885			647,302
Real Estate - Residential		480,488			493,783			509,040			524,301			529,087
Real Estate - Home Equity		183,620			175,781			172,283			173,597			174,577
Consumer		246,137			240,110			235,175			234,596			237,069
Credit Card		-			-			-			-			-
Other Loans		8,739			14,715			14,899			11,837			14,521
Overdrafts		2,515			2,844			5,575			3,106			5,223
Total Loans, Net of Unearned Interest		1,903,888			1,930,711			1,965,841			1,999,721			2,009,459
Allowance for Loan Losses		(18,001	)		(17,469	)		(17,108	)		(17,217	)		(17,311	)
Loans, Net		1,885,887			1,913,242			1,948,733			1,982,504			1,992,148

Premises and Equipment, Net		95,816			92,656			88,812			86,538			84,915
Intangible Assets		100,026			101,485			102,944			104,402			105,886
Other Assets		62,611			60,815			60,117			55,008			48,895
Total Other Assets		258,453			254,956			251,873			245,948			239,696

Total Assets	$	2,439,926			2,530,748			2,578,117			2,597,910			2,558,873

LIABILITIES
Deposits:
Noninterest Bearing Deposits	$	419,242			456,986			467,875			490,014			506,331
NOW Accounts		530,619			559,050			575,740			599,433			533,549
Money Market Accounts		399,578			401,415			396,150			384,568			387,906
Regular Savings Accounts		115,955			119,585			124,970			125,500			129,884
Certificates of Deposit		472,019			472,554			477,327			482,139			491,569
Total Deposits		1,937,413			2,009,590			2,042,062			2,081,654			2,049,239

Short-Term Borrowings		63,817			74,307			77,936			65,023			54,171
Subordinated Notes Payable		62,887			62,887			62,887			62,887			62,887
Other Long-Term Borrowings		29,725			41,276			42,879			43,083			43,701
Other Liabilities		47,031			41,251			41,841			29,493			29,833

Total Liabilities		2,140,873			2,229,311			2,267,605			2,282,140			2,239,831

SHAREOWNERS' EQUITY
Common Stock		176			179			183			185			185
Additional Paid-In Capital		50,789			58,001			71,366			80,654			80,938
Retained Earnings		255,876			251,838			246,959			243,242			238,870
Accumulated Other Comprehensive Loss, Net of Tax		(7,788	)		(8,581	)		(7,996	)		(8,311	)		(951	)

Total Shareowners' Equity		299,053			301,437			310,512			315,770			319,042

Total Liabilities and Shareowners' Equity	$	2,439,926			2,530,748			2,578,117			2,597,910			2,558,873

OTHER BALANCE SHEET DATA
Earning Assets	$	2,108,096			2,197,688			2,251,119			2,270,410			2,235,707
Intangible Assets
Goodwill		84,811			84,811			84,811			84,811			84,811
Deposit Base		13,988			15,399			16,810			18,221			19,632
Other		1,227			1,275			1,323			1,370			1,443
Interest Bearing Liabilities		1,674,600			1,731,074			1,757,889			1,762,633			1,703,667

Book Value Per Diluted Share	$	16.95			16.87			16.97			17.01			17.18
Tangible Book Value Per Diluted Share		11.28			11.19			11.34			11.39			11.48

Actual Basic Shares Outstanding		17,628			17,869			18,287			18,518			18,532
Actual Diluted Shares Outstanding		17,639			17,869			18,297			18,562			18,567

CAPITAL CITY BANK GROUP, INC. ALLOWANCE FOR LOAN LOSSES AND NONPERFORMING ASSETS *Unaudited*
	2007							2006
	Third			Second		First		Fourth		Third
(Dollars in thousands)	Quarter			Quarter		Quarter		Quarter		Quarter

ALLOWANCE FOR LOAN LOSSES
Balance at Beginning of Period	$	17,469			17,108		17,217		17,311		17,264
Provision for Loan Losses		1,552			1,675		1,237		460		711
Net Charge-Offs		1,020			1,314		1,346		554		664

Balance at End of Period	$	18,001			17,469		17,108		17,217		17,311
As a % of Loans		0.95	%		0.91		0.87		0.86		0.86
As a % of Nonperforming Loans		145.49			193.69		207.67		214.09		269.35
As a % of Nonperforming Assets		128.05			172.60		181.23		197.19		253.79

CHARGE-OFFS
Commercial, Financial and Agricultural	$	279			253		560		81		294
Real Estate - Construction		-			-		108		-		-
Real Estate - Commercial		245			5		326		54		-
Real Estate - Residential		161			992		67		154		81
Consumer		854			534		761		787		690

Total Charge-Offs	$	1,539			1,784		1,822		1,076		1,065

RECOVERIES
Commercial, Financial and Agricultural	$	44			47		36		77		43
Real Estate - Construction		-			-		-		-		-
Real Estate - Commercial		2			5		5		9		4
Real Estate - Residential		2			26		3		1		2
Consumer		471			392		432		435		352

Total Recoveries	$	519			470		476		522		401

NET CHARGE-OFFS	$	1,020			1,314		1,346		554		664

Net Charge-Offs as a % of Average Loans ⁽¹⁾		0.21	%		0.27		0.28		0.11		0.13

RISK ELEMENT ASSETS
Nonaccruing Loans	$	12,373			9,019		8,238		8,042		6,427
Restructured		-			-		-		-		-
Total Nonperforming Loans		12,373			9,019		8,238		8,042		6,427
Other Real Estate		1,685			1,102		1,202		689		394
Total Nonperforming Assets	$	14,058			10,121		9,440		8,731		6,821

Past Due Loans 90 Days or More	$	874			332		860		135		300

Nonperforming Loans as a % of Loans		0.65	%		0.47		0.42		0.40		0.32
Nonperforming Assets as a % of
Loans and Other Real Estate		0.74			0.52		0.48		0.44		0.34
Nonperforming Assets as a % of Capital ⁽²⁾		4.43			3.17		2.88		2.62		2.03

(1) Annualized

(2) Capital includes allowance for loan losses.

AVERAGE BALANCE AND INTEREST RATES ⁽¹⁾
*Unaudited*

		Third Quarter 2007					Second Quarter 2007			First Quarter 2007				Fourth Quarter 2006					Third Quarter 2006				Nine Months Ended September 2007					Nine Months Ended September 2006
		Average			Average		Average		Average	Average		Average					Average		Average		Average					Average		Average		Average
(Dollars in thousands)		Balance		Interest	Rate		Balance	Interest	Rate	Balance	Interest	Rate		Balance		Interest	Rate		Balance	Interest	Rate		Balance		Interest	Rate		Balance	Interest	Rate

ASSETS:
Loans, Net of Unearned Interest	$	1,907,235	$	38,901	8.09	%	1,944,969	39,300	8.10	1,980,224	39,264	8.04	$	2,003,719	$	40,296	7.98	%	2,025,112	40,433	7.92	$	1,943,874	$	117,465	8.08	%	2,038,050	116,931	7.67

Investment Securities
Taxable Investment Securities		102,618		1,224	4.75		105,425	1,236	4.68	108,377	1,263	4.67		108,041		1,263	4.66		109,097	1,264	4.60		105,453		3,723	4.70		113,859	3,588	4.19
Tax-Exempt Investment Securities		85,446		1,142	5.35		83,907	1,088	5.19	82,627	1,039	5.03		82,568		1,020	4.94		81,409	999	4.90		84,003		3,269	5.19		71,960	2,568	4.76

Total Investment Securities		188,064		2,366	5.02		189,332	2,324	4.91	191,004	2,302	4.82		190,609		2,283	4.78		190,506	2,263	4.73		189,456		6,992	4.92		185,819	6,156	4.41

Funds Sold		49,438		639	5.06		52,935	689	5.15	40,332	521	5.17		43,738		576	5.15		25,540	338	5.19		47,602		1,849	5.12		41,219	1,463	4.69

Total Earning Assets		2,144,737	$	41,906	7.75	%	2,187,236	42,313	7.76	2,211,560	42,087	7.71		2,238,066	$	43,155	7.65	%	2,241,158	43,034	7.62		2,180,932	$	126,306	7.74	%	2,265,088	124,550	7.35

Cash and Due From Banks		84,477					88,075			88,679				94,449					96,969				87,062					102,188
Allowance For Loan Losses		(17,664)					(17,263)			(17,073)				(17,503)					(17,420)				(17,336)					(17,481)
Other Assets		256,153					253,204			247,624				242,345					239,448				252,359					239,277

Total Assets	$	2,467,703					2,511,252			2,530,790			$	2,557,357					2,560,155			$	2,503,017					2,589,072

LIABILITIES:
Interest Bearing Deposits
NOW Accounts	$	525,795	$	2,531	1.91	%	541,525	2,611	1.93	552,303	2,626	1.93	$	542,751	$	2,522	1.84	%	511,299	2,026	1.57		539,777	$	7,768	1.92	%	510,556	5,136	1.34
Money Market Accounts		403,957		3,565	3.50		393,403	3,458	3.53	386,736	3,427	3.59		391,346		3,488	3.54		381,628	3,259	3.39		394,762		10,450	3.54		363,150	8,199	3.02
Savings Accounts		117,451		70	0.24		122,560	74	0.24	125,419	78	0.25		128,027		76	0.24		132,421	73	0.22		121,781		222	0.24		136,058	202	0.20
Time Deposits		471,868		5,100	4.29		474,761	4,955	4.19	480,964	4,869	4.11		484,807		4,744	3.88		504,121	4,627	3.64		475,831		14,924	4.19		514,857	12,886	3.35
Total Interest Bearing Deposits		1,519,071		11,266	2.94		1,532,249	11,098	2.91	1,545,422	11,000	2.89		1,546,931		10,830	2.78		1,529,469	9,985	2.59		1,532,151		33,364	2.91		1,524,621	26,423	2.32

Short-Term Borrowings		65,130		734	4.45		66,764	737	4.41	68,911	761	4.46		65,385		722	4.36		73,078	753	4.07		66,921		2,232	4.44		83,187	2,353	3.77
Subordinated Notes Payable		62,887		936	5.91		62,887	932	5.94	62,887	926	5.97		62,887		936	5.91		62,887	936	5.91		62,887		2,794	5.94		62,887	2,789	5.93
Other Long-Term Borrowings		38,269		453	4.70		42,284	496	4.71	43,137	502	4.72		43,453		515	4.71		52,367	615	4.66		41,212		1,451	4.71		61,912	2,189	4.73

Total Interest Bearing Liabilities		1,685,357	$	13,389	3.15	%	1,704,184	13,263	3.12	1,720,357	13,189	3.11		1,718,656	$	13,003	3.00	%	1,717,801	12,289	2.84		1,703,171	$	39,841	3.13	%	1,732,607	33,754	2.60

Noninterest Bearing Deposits		435,089					455,169			458,304				481,522					494,054				449,436					512,493
Other Liabilities		45,721					42,547			35,645				33,276					30,259				41,341					28,849

Total Liabilities		2,166,167					2,201,900			2,214,306				2,233,454					2,242,114				2,193,948					2,273,949

SHAREOWNERS' EQUITY:	$	301,536					309,352			316,484			$	323,903					318,041			$	309,069					315,123

Total Liabilities and Shareowners' Equity	$	2,467,703					2,511,252			2,530,790			$	2,557,357					2,560,155			$	2,503,017					2,589,072

Interest Rate Spread			$	28,517	4.60	%		29,050	4.64		28,898	4.60			$	30,152	4.65	%		30,745	4.78			$	86,465	4.61	%		90,796	4.75

Interest Income and Rate Earned ⁽²⁾			$	41,906	7.75			42,313	7.76		42,087	7.71			$	43,155	7.65			43,034	7.62			$	126,306	7.74			124,550	7.35
Interest Expense and Rate Paid ⁽²⁾				13,389	2.48			13,263	2.43		13,189	2.42				13,003	2.30			12,289	2.17				39,841	2.44			33,754	1.99

Net Interest Margin			$	28,517	5.27	%		29,050	5.33		28,898	5.29			$	30,152	5.35	%		30,745	5.45			$	86,465	5.30	%		90,796	5.36

(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.