----

----

**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**WASHINGTON,      D.C.  20549**

**FORM      10-Q**

| **x** | **QUARTERLY                REPORT PURSUANT TO                SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF                1934** |
|-------|------------------------------------------------------------------------------------------------------------------------------------------|

**For      the Quarterly Period Ended September 30, 2007**

**OR**

| **o** | **TRANSITION                REPORT PURSUANT TO                SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF                1934** |
|-------|-------------------------------------------------------------------------------------------------------------------------------------------|

**For      the transition period from ____________ to ____________**

**Commission      File Number: 0-13358**

| **CAPITAL                CITY BANK GROUP, INC.**                                     |
|--------------------------------------------------------------------------------------|
| (Exact                name of registrant as specified in its                charter) |

| **Florida**                                                                   |   | **59-2273542**                                      |
|-------------------------------------------------------------------------------|--------|-----------------------------------------------------|
| (State                or other jurisdiction of incorporation or organization) |   | (I.R.S.                Employer Identification No.) |

| **217                North Monroe Street, Tallahassee, Florida** |   | **32301**                 |
|------------------------------------------------------------------|--------|---------------------------|
| (Address                of principal executive office)           |   | (Zip                Code) |

| **(850)                671-0300**                                                  |
|------------------------------------------------------------------------------------|
| (Registrant's                telephone number, including area                code) |

| Large                accelerated filer o | Accelerated                filer x | Non-accelerated                filer o |
|------------------------------------------|------------------------------------|----------------------------------------|

----

**CAPITAL      CITY BANK GROUP, INC.**

**QUARTERLY      REPORT ON FORM 10-Q**

**FOR      THE PERIOD ENDED SEPTEMBER 30, 2007**

**TABLE      OF CONTENTS**

| **PART                I – Financial Information** |                                                                                                                                                | **Page** |
|---------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------|----------|
|                                                    |
| Item                1.                                  | Consolidated                Financial Statements (Unaudited)                                                                                        |     |
|                                                    | Consolidated                Statements of Income – Three and Nine Months Ended September 30, 2007 and                2006                     | 4        |
|                                                    | Consolidated                Balance Sheets – September 30, 2007, December 31, 2006, and September 30,                2006                     | 5        |
|                                                    | Consolidated                Statements of Changes in Shareowners’ Equity – Nine Months Ended September                30, 2007 and 2006 | 6        |
|                                                    | Consolidated                Statements of Cash Flow – Nine Months Ended September 30, 2007 and                2006                            | 7        |
|                                                    | Notes                to Consolidated Financial Statements                                                                                           | 8        |
|                                                    |                                                                                                                                                |     |
| Item                2.                                  | Management's                Discussion and Analysis of Financial Condition and Results of                Operations                                 | 15       |
|                                                    |                                                                                                                                                |     |
| Item                3.                                  | Quantitative                and Qualitative Disclosure About Market Risk                                                                            | 29       |
|                                                    |                                                                                                                                                |     |
| Item                4.                                  | Controls                and Procedures                                                                                                              | 31       |
|                                                    |                                                                                                                                                |     |
| **PART                II – Other Information**    |                                                                                                                                                |     |
|                                                    |
| Item                1.                                  | Legal                Proceedings                                                                                                                    | 31       |
|                                                    |                                                                                                                                                |     |
| Item                1.A.                                | Risk                Factors                                                                                                                         | 31       |
|                                                    |                                                                                                                                                |     |
| Item                2.                                  | Unregistered                Sales of Equity Securities and Use of Proceeds                                                                          | 31       |
|                                                    |                                                                                                                                                |     |
| Item                3.                                  | Defaults                Upon Senior Securities                                                                                                      | 32       |
|                                                    |                                                                                                                                                |     |
| Item                5.                                  | Other                Information                                                                                                                    | 32       |
|                                                    |                                                                                                                                                |     |
| Item                6.                                  | Exhibits                                                                                                                                            | 32       |
|                                                    |                                                                                                                                                |     |
| **Signatures**                                          |                                                                                                                                                | 33       |

----

**INTRODUCTORY      NOTE**

**Caution      Concerning Forward-Looking Statements**

| §   | our                ability to integrate the business and operations of companies and                banks                that we have acquired, and those we may acquire in the                future; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | our                need and our ability to incur additional debt or equity                financing; |
|--------------------|------------------------------------------------------------------------------------------------------|

| §   | the                strength of the United States economy in general and the strength                of the                local economies in which we conduct                operations; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | the                accuracy of our financial statement estimates and                assumptions; |
|--------------------|--------------------------------------------------------------------------------------------------|

| §   | the                effects of harsh weather conditions, including                hurricanes; |
|--------------------|----------------------------------------------------------------------------------------------|

| §   | inflation,                interest rate, market and monetary                fluctuations; |
|--------------------|-------------------------------------------------------------------------------------------|

| §   | the                effects of our lack of a diversified loan portfolio, including the                risks                of geographic and industry                concentrations; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | the                frequency and magnitude of foreclosure of our                loans; |
|--------------------|----------------------------------------------------------------------------------------|

| §   | effect                of changes in the real estate market, stock market and other capital                markets; |
|--------------------|--------------------------------------------------------------------------------------------------------------------|

| §   | legislative                or regulatory changes; |
|--------------------|---------------------------------------------------|

| §   | our                ability to comply with the extensive laws and regulations to which                we are                subject; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------|

| §   | the                willingness of clients to accept third-party products and services                rather                than our products and services and vice                versa; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | increased                competition and its effect on                pricing; |
|--------------------|--------------------------------------------------------------------------------|

| §   | technological                changes; |
|--------------------|---------------------------------------|

| §   | changes                in monetary and fiscal policies of the U.S.                Government; |
|--------------------|-----------------------------------------------------------------------------------------------|

| §   | the                effects of security breaches and computer viruses that may affect                our                computer systems; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------|

| §   | changes                in consumer spending and saving                habits; |
|--------------------|-------------------------------------------------------------------------------|

| §   | growth                and profitability of our noninterest                income; |
|--------------------|-----------------------------------------------------------------------------------|

| §   | changes                in accounting principles, policies, practices or                guidelines; |
|--------------------|----------------------------------------------------------------------------------------------------|

| §   | the                limited trading activity of our common                stock; |
|--------------------|---------------------------------------------------------------------------------|

| §   | the                concentration of ownership of our common                stock; |
|--------------------|-----------------------------------------------------------------------------------|

| §   | anti-takeover                provisions under federal and state law as well as our Articles of                Incorporation and our bylaws; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------|

| §   | other                risks described from time to time in our filings with the Securities                and                Exchange Commission; and |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | our                ability to manage the risks involved in the                foregoing. |
|--------------------|------------------------------------------------------------------------------------------|

----

**PART      I.**
**FINANCIAL INFORMATION**

| **Item                1.** | **CONSOLIDATED                FINANCIAL STATEMENTS                (Unaudited)** |
|----------------------------|---------------------------------------------------------------------------------|

**CAPITAL      CITY BANK GROUP, INC.**

**CONSOLIDATED      STATEMENTS OF INCOME**

**FOR      THE PERIODS ENDED SEPTEMBER 30**

**(Unaudited)**

|                                                                    |   | **Three                Months Ended** |              |   | **Nine                Months Ended** |   |                                                        |
|-------------------------------------------------------------------------|--------|---------------------------------------|-------------------|--------|--------------------------------------|--------|-------------------------------------------------------------|
| *(Dollars                in Thousands, Except Per Share Data)*          |   | **2007**                              |              |   | **2006**                             |   |                                                        | **2007** |   |   | **2006** |   |
| **INTEREST                INCOME**                                      |   |                                  |              |   |                                 |   |                                                        |   |   |   |   |   |
| Interest                and Fees on Loans                               |   | $                                     | 38,692            |   |                                 | $      | 40,260                                                      |   |   | $ | 116,838 |   |   | $ | 116,570 |   |
| Investment                Securities:                                   |   |                                  |              |   |                                 |   |                                                        |   |   |   |   |   |   |   |   |   |
| U.S.                Treasury                                            |   |                                  | 143               |   |                                 |   | 132                                                         |   |   |   | 425 |   |   |   | 310 |   |
| U.S.                Govt. Agencies                                      |   |                                  | 906               |   |                                 |   | 929                                                         |   |   |   | 2,762 |   |   |   | 2,672 |   |
| States                and Political Subdivisions                        |   |                                  | 743               |   |                                 |   | 650                                                         |   |   |   | 2,127 |   |   |   | 1,672 |   |
| Other                Securities                                         |   |                                  | 176               |   |                                 |   | 203                                                         |   |   |   | 536 |   |   |   | 606 |   |
| Funds                Sold                                               |   |                                  | 639               |   |                                 |   | 338                                                         |   |   |   | 1,849 |   |   |   | 1,463 |   |
| Total                Interest Income                                    |   |                                  | 41,299            |   |                                 |   | 42,512                                                      |   |   |   | 124,537 |   |   |   | 123,293 |   |
|                                                                    |   |                                  |              |   |                                 |   |                                                        |   |   |   |   |   |   |   |   |   |
| **INTEREST                EXPENSE**                                     |   |                                  |              |   |                                 |   |                                                        |   |   |   |   |   |   |   |   |   |
| Deposits                                                                |   |                                  | 11,266            |   |                                 |   | 9,985                                                       |   |   |   | 33,364 |   |   |   | 26,423 |   |
| Short-Term                Borrowings                                    |   |                                  | 734               |   |                                 |   | 753                                                         |   |   |   | 2,232 |   |   |   | 2,352 |   |
| Subordinated                Notes Payable                               |   |                                  | 936               |   |                                 |   | 936                                                         |   |   |   | 2,794 |   |   |   | 2,789 |   |
| Other                Long-Term Borrowings                               |   |                                  | 453               |   |                                 |   | 615                                                         |   |   |   | 1,451 |   |   |   | 2,189 |   |
| Total                Interest Expense                                   |   |                                  | 13,389            |   |                                 |   | 12,289                                                      |   |   |   | 39,841 |   |   |   | 33,753 |   |
|                                                                    |   |                                  |              |   |                                 |   |                                                        |   |   |   |   |   |   |   |   |   |
| **NET                INTEREST INCOME**                                  |   |                                  | 27,910            |   |                                 |   | 30,223                                                      |   |   |   | 84,696 |   |   |   | 89,540 |   |
| Provision                for Loan Losses                                |   |                                  | 1,552             |   |                                 |   | 711                                                         |   |   |   | 4,464 |   |   |   | 1,499 |   |
| Net                Interest Income After Provision For Loan Losses |   |                                  | 26,358            |   |                                 |   | 29,512                                                      |   |   |   | 80,232 |   |   |   | 88,041 |   |
|                                                                    |   |                                  |              |   |                                 |   |                                                        |   |   |   |   |   |   |   |   |   |
| **NONINTEREST                INCOME**                                   |   |                                  |              |   |                                 |   |                                                        |   |   |   |   |   |   |   |   |   |
| Service                Charges on Deposit Accounts                      |   |                                  | 6,387             |   |                                 |   | 6,450                                                       |   |   |   | 18,874 |   |   |   | 18,226 |   |
| Data                Processing                                          |   |                                  | 775               |   |                                 |   | 673                                                         |   |   |   | 2,280 |   |   |   | 2,014 |   |
| Asset                Management Fees                                    |   |                                  | 1,200             |   |                                 |   | 1,215                                                       |   |   |   | 3,600 |   |   |   | 3,420 |   |
| Securities                Transactions                                  |   |                                  | -                 |   |                                 |   | -                                                           |   |   |   | 7 |   |   |   | (4) |   |
| Mortgage                Banking Revenues                                |   |                                  | 642               |   |                                 |   | 824                                                         |   |   |   | 2,171 |   |   |   | 2,448 |   |
| Other                                                                   |   |                                  | 5,427             |   |                                 |   | 4,982                                                       |   |   |   | 16,545 |   |   |   | 15,089 |   |
| Total                Noninterest Income                                 |   |                                  | 14,431            |   |                                 |   | 14,144                                                      |   |   |   | 43,477 |   |   |   | 41,193 |   |
|                                                                    |   |                                  |              |   |                                 |   |                                                        |   |   |   |   |   |   |   |   |   |
| **NONINTEREST                EXPENSE**                                  |   |                                  |              |   |                                 |   |                                                        |   |   |   |   |   |   |   |   |   |
| Salaries                and Associate Benefits                          |   |                                  | 15,096            |   |                                 |   | 15,277                                                      |   |   |   | 45,807 |   |   |   | 45,912 |   |
| Occupancy,                Net                                           |   |                                  | 2,409             |   |                                 |   | 2,354                                                       |   |   |   | 6,969 |   |   |   | 6,935 |   |
| Furniture                and Equipment                                  |   |                                  | 2,513             |   |                                 |   | 2,492                                                       |   |   |   | 7,356 |   |   |   | 7,652 |   |
| Intangible                Amortization                                  |   |                                  | 1,459             |   |                                 |   | 1,536                                                       |   |   |   | 4,376 |   |   |   | 4,601 |   |
| Other                                                                   |   |                                  | 8,442             |   |                                 |   | 8,763                                                       |   |   |   | 25,870 |   |   |   | 26,484 |   |
| Total                Noninterest Expense                                |   |                                  | 29,919            |   |                                 |   | 30,422                                                      |   |   |   | 90,378 |   |   |   | 91,584 |   |
|                                                                    |   |                                  |              |   |                                 |   |                                                        |   |   |   |   |   |   |   |   |   |
| **INCOME                BEFORE INCOME TAXES**                           |   |                                  | 10,870            |   |                                 |   | 13,234                                                      |   |   |   | 33,331 |   |   |   | 37,650 |   |
| Income                Taxes                                             |   |                                  | 3,699             |   |                                 |   | 4,554                                                       |   |   |   | 11,312 |   |   |   | 13,234 |   |
|                                                                    |   |                                  |              |   |                                 |   |                                                        |   |   |   |   |   |   |   |   |   |
| NET                INCOME                                               |   | $                                     |   7,171 |   |                                 | $      |          8,680 |   |   | $ |        22,019 |   |   | $ |        24,416 |   |
|                                                                    |   |                                  |              |   |                                 |   |                                                        |   |   |   |   |   |   |   |   |   |
| Basic                Net Income Per Share                               |   | $                                     | .41               |   |                                 | $      | .47                                                         |   |   | $ | 1.22 |   |   | $ | 1.31 |   |
| Diluted                Net Income Per Share                             |   | $                                     | .41               |   |                                 | $      | .47                                                         |   |   | $ | 1.22 |   |   | $ | 1.31 |   |
|                                                                    |   |                                  |              |   |                                 |   |                                                        |   |   |   |   |   |   |   |   |   |
| Average                Basic Shares Outstanding                         |   |                                  |  17,709,119  |   |                                 |   | 18,529,926                                                  |   |   |   | 18,066,393 |   |   |   | 18,604,488 |   |
| Average                Diluted Share Outstanding                        |   |                                  | 17,719,436        |   |                                 |   | 18,564,932                                                  |   |   |   | 18,076,916 |   |   |   | 18,627,167 |   |

*The      accompanying Notes to Consolidated Financial Statements are an integral part      of      these statements*

----

**CAPITAL      CITY BANK GROUP, INC.**

**CONSOLIDATED      STATEMENTS OF FINANCIAL CONDITION**

**AS      OF SEPTEMBER 30, 2007, DECEMBER 31, 2006, AND SEPTEMBER 30,      2006**

**(Unaudited)**

| *(Dollars                In Thousands, Except Share Data)*                                                                                                                                                                                                                                 |   | **September                30, 2007** |      |   | **December                31, 2006** |   |      | **September                30, 2006** |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------|-----------|--------|--------------------------------------|--------|-----------|---------------------------------------|--------|
| **ASSETS**                                                                                                                                                                                                                                                                                 |   |                                  |      |   |                                 |   |      |                                  |   |
| Cash                and Due From Banks                                                                                                                                                                                                                                                     |   | $                                     | 91,378    |   |                                 | $      | 98,769    |                                  |   | $ | 100,781 |   |
| Funds                Sold and Interest Bearing Deposits                                                                                                                                                                                                                                    |   |                                  | 19,599    |   |                                 |   | 78,795    |                                  |   |   | 35,631 |   |
| Total                Cash and Cash Equivalents                                                                                                                                                                                                                                             |   |                                  | 110,977   |   |                                 |   | 177,564   |                                  |   |   | 136,412 |   |
|                                                                                                                                                                                                                                                                                       |   |                                  |      |   |                                 |   |      |                                  |   |   |   |   |
| Investment                Securities, Available-for-Sale                                                                                                                                                                                                                                   |   |                                  | 184,609   |   |                                 |   | 191,894   |                                  |   |   | 190,617 |   |
|                                                                                                                                                                                                                                                                                       |   |                                  |      |   |                                 |   |      |                                  |   |   |   |   |
| Loans,                Net of Unearned Interest                                                                                                                                                                                                                                             |   |                                  | 1,903,888 |   |                                 |   | 1,999,721 |                                  |   |   | 2,009,459 |   |
| Allowance                for Loan Losses                                                                                                                                                                                                                                                   |   |                                  | (18,001   | )      |                                 |   | (17,217   | )                                     |   |   | (17,311 | ) |
| Loans,                Net                                                                                                                                                                                                                                                                  |   |                                  | 1,885,887 |   |                                 |   | 1,982,504 |                                  |   |   | 1,992,148 |   |
|                                                                                                                                                                                                                                                                                       |   |                                  |      |   |                                 |   |      |                                  |   |   |   |   |
| Premises                and Equipment, Net                                                                                                                                                                                                                                                 |   |                                  | 95,816    |   |                                 |   | 86,538    |                                  |   |   | 84,915 |   |
| Goodwill                                                                                                                                                                                                                                                                                   |   |                                  | 84,811    |   |                                 |   | 84,811    |                                  |   |   | 84,810 |   |
| Other                Intangible Assets                                                                                                                                                                                                                                                     |   |                                  | 15,215    |   |                                 |   | 19,591    |                                  |   |   | 21,076 |   |
| Other                Assets                                                                                                                                                                                                                                                                |   |                                  | 62,611    |   |                                 |   | 55,008    |                                  |   |   | 48,895 |   |
| Total                Assets                                                                                                                                                                                                                                                                |   | $                                     | 2,439,926 |   |                                 | $      | 2,597,910 |                                  |   | $ | 2,558,873 |   |
|                                                                                                                                                                                                                                                                                       |   |                                  |      |   |                                 |   |      |                                  |   |   |   |   |
| **LIABILITIES**                                                                                                                                                                                                                                                                            |   |                                  |      |   |                                 |   |      |                                  |   |   |   |   |
| Deposits:                                                                                                                                                                                                                                                                                  |   |                                  |      |   |                                 |   |      |                                  |   |   |   |   |
| Noninterest                Bearing Deposits                                                                                                                                                                                                                                                |   | $                                     | 419,242   |   |                                 | $      | 490,014   |                                  |   | $ | 506,331 |   |
| Interest                Bearing Deposits                                                                                                                                                                                                                                                   |   |                                  | 1,518,171 |   |                                 |   | 1,591,640 |                                  |   |   | 1,542,908 |   |
| Total                Deposits                                                                                                                                                                                                                                                              |   |                                  | 1,937,413 |   |                                 |   | 2,081,654 |                                  |   |   | 2,049,239 |   |
|                                                                                                                                                                                                                                                                                       |   |                                  |      |   |                                 |   |      |                                  |   |   |   |   |
| Short-Term                Borrowings                                                                                                                                                                                                                                                       |   |                                  | 63,817    |   |                                 |   | 65,023    |                                  |   |   | 54,171 |   |
| Subordinated                Notes Payable                                                                                                                                                                                                                                                  |   |                                  | 62,887    |   |                                 |   | 62,887    |                                  |   |   | 62,887 |   |
| Other                Long-Term Borrowings                                                                                                                                                                                                                                                  |   |                                  | 29,725    |   |                                 |   | 43,083    |                                  |   |   | 43,701 |   |
| Other                Liabilities                                                                                                                                                                                                                                                           |   |                                  | 47,031    |   |                                 |   | 29,493    |                                  |   |   | 29,833 |   |
| Total                Liabilities                                                                                                                                                                                                                                                           |   |                                  | 2,140,873 |   |                                 |   | 2,282,140 |                                  |   |   | 2,239,831 |   |
|                                                                                                                                                                                                                                                                                       |   |                                  |      |   |                                 |   |      |                                  |   |   |   |   |
| **SHAREOWNERS'                EQUITY**                                                                                                                                                                                                                                                     |   |                                  |      |   |                                 |   |      |                                  |   |   |   |   |
| Preferred                Stock, $.01 par value, 3,000,000 shares authorized;no                shares outstanding                                                                                                                                                                           |   |                                  | -         |   |                                 |   | -         |                                  |   |   | - |   |
| Common                Stock, $.01 par value, 90,000,000 shares authorized; 17,628,499,                18,518,398, and 18,532,104 shares issued and outstanding at September                30,                2007, December 31, 2006, and September 30, 2006,                respectively |   |                                  | 176       |   |                                 |   | 185       |                                  |   |   | 185 |   |
| Additional                Paid-In Capital                                                                                                                                                                                                                                                  |   |                                  | 50,789    |   |                                 |   | 80,654    |                                  |   |   | 80,938 |   |
| Retained                Earnings                                                                                                                                                                                                                                                           |   |                                  | 255,876   |   |                                 |   | 243,242   |                                  |   |   | 238,870 |   |
| Accumulated                Other Comprehensive Loss, Net of Tax                                                                                                                                                                                                                            |   |                                  | (7,788    | )      |                                 |   | (8,311    | )                                     |   |   | (951 | ) |
| Total                Shareowners' Equity                                                                                                                                                                                                                                                   |   |                                  | 299,053   |   |                                 |   | 315,770   |                                  |   |   | 319,042 |   |
| Total                Liabilities and Shareowners' Equity                                                                                                                                                                                                                                   |   | $                                     | 2,439,926 |   |                                 | $      | 2,597,910 |                                  |   | $ | 2,558,873 |   |

*The      accompanying Notes to Consolidated Financial Statements are an integral part      of      these statements.*

----

**CAPITAL      CITY BANK GROUP, INC. (Unaudited)**

**CONSOLIDATED      STATEMENTS OF CHANGES IN SHAREOWNERS' EQUITY**

*(Dollars      in Thousands, Except Per Share Data)*

|                                                                                                                       |   | Common                Stock |   |   | AdditionalPaid-In                Capital |   |    | Retained                Earnings |   |   | Accumulated                Other Comprehensive Loss, Net of Taxes |   |   | Total  |    |
|----------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|--------|--------|------------------------------------------|--------|---------|----------------------------------|--------|--------|-------------------------------------------------------------------|--------|--------|--------|---------|
|                                                                                                                       |   |                        |   |   |                                     |   |    |                             |   |   |                                                              |   |   |   |    |
| **Balance,                January 1, 2006**                                                                                |   | $                           | 186    |   |                                     | $      | 83,304  |                             |   | $      | 223,532                                                           |   |   | $      | (1,246) |   |   | $ | 305,776 |   |
| Comprehensive                Income:                                                                                       |   |                        |   |   |                                     |   |    |                             |   |   |                                                              |   |   |   |    |   |   |   |   |   |
| Net                Income                                                                                                  |   |                        | -      |   |                                     |   | -       |                             |   |   | 24,416                                                            |   |   |   | -       |   |   |   |   |   |
| Net                Change in Unrealized Loss On   Available-for-Sale                Securities (net of tax) |   |                        | -      |   |                                     |   | -       |                             |   |   | -                                                                 |   |   |   | 295     |   |   |   |   |   |
| Total                Comprehensive Income                                                                                  |   |                        | -      |   |                                     |   | -       |                             |   |   | -                                                                 |   |   |   | -       |   |   |   | 24,711 |   |
| Cash                Dividends ($.3250 per share)                                                                           |   |                        | -      |   |                                     |   | -       |                             |   |   | (9,078)                                                           |   |   |   | -       |   |   |   | (9,078) |   |
| Stock                Performance Plan Compensation                                                                         |   |                        | -      |   |                                     |   | 1,504   |                             |   |   | -                                                                 |   |   |   | -       |   |   |   | 1,504 |   |
| Issuance                of Common Stock                                                                                    |   |                        | 1      |   |                                     |   | 969     |                             |   |   | -                                                                 |   |   |   | -       |   |   |   | 970 |   |
| Repurchase                of Common Stock                                                                                  |   |                        | (2)    |   |                                     |   | (4,839) |                             |   |   | -                                                                 |   |   |   | -       |   |   |   | (4,841) |   |
|                                                                                                                       |   |                        |   |   |                                     |   |    |                             |   |   |                                                              |   |   |   |    |   |   |   |   |   |
| **Balance,                September 30, 2006**                                                                             |   | $                           | 185    |   |                                     | $      | 80,938  |                             |   | $      | 238,870                                                           |   |   | $      | (951)   |   |   | $ | 319,042 |   |

|                                                                                                                       |   |   |   |   |   |   |     |   |   |   |    |   |   |   |    |
|----------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|----------|--------|--------|--------|---------|--------|--------|--------|---------|
| **Balance,                January 1, 2007**                                                                                |   | $      | 185    |   |   | $      | 80,654   |   |   | $      | 243,242 |   |   | $      | (8,311) |   |   | $ | 315,770 |   |
| Comprehensive                Income:                                                                                       |   |   |   |   |   |   |     |   |   |   |    |   |   |   |    |   |   |   |   |   |
| Net                Income                                                                                                  |   |   | -      |   |   |   | -        |   |   |   | 22,019  |   |   |   | -       |   |   |   |   |   |
| Net                Change in Unrealized Loss On   Available-for-Sale                Securities (net of tax) |   |   | -      |   |   |   | -        |   |   |   | -       |   |   |   | 523     |   |   |   |   |   |
| Total                Comprehensive Income                                                                                  |   |   | -      |   |   |   | -        |   |   |   | -       |   |   |   | -       |   |   |   | 22,542 |   |
| Cash                Dividends ($.5250 per share)                                                                           |   |   | -      |   |   |   | -        |   |   |   | (9,608) |   |   |   | -       |   |   |   | (9,608) |   |
| Miscellaneous                - Other                                                                                       |   |   | -      |   |   |   | -        |   |   |   | 223     |   |   |   | -       |   |   |   | 223 |   |
| Stock                Performance Plan Compensation                                                                         |   |   | -      |   |   |   | 135      |   |   |   | -       |   |   |   | -       |   |   |   | 135 |   |
| Issuance                of Common Stock                                                                                    |   |   | 1      |   |   |   | 544      |   |   |   | -       |   |   |   | -       |   |   |   | 545 |   |
| Repurchase                of Common Stock                                                                                  |   |   | (10)   |   |   |   | (30,544) |   |   |   | -       |   |   |   | -       |   |   |   | (30,554) |   |
|                                                                                                                       |   |   |   |   |   |   |     |   |   |   |    |   |   |   |    |   |   |   |   |   |
| **Balance,                September 30, 2007**                                                                             |   | $      | 176    |   |   | $      | 50,789   |   |   | $      | 255,876 |   |   | $      | (7,788) |   |   | $ | 299,053 |   |

*The      accompanying Notes to Consolidated Financial Statements are an integral part      of      these statements.*

----

**CAPITAL      CITY BANK GROUP, INC.**

**CONSOLIDATED      STATEMENTS OF CASH FLOWS**

**FOR      THE NINE MONTHS ENDED SEPTEMBER 30**

**(Unaudited)**

| *(Dollars                in Thousands)*                                                                    |   | **2007** |     |    | **2006** |   |
|------------------------------------------------------------------------------------------------------------|--------|----------|----------|---------|----------|--------|
| **CASH                FLOWS FROM OPERATING ACTIVITIES**                                                    |   |     |     |    |     |   |
| Net                Income                                                                                  |   | $        | 22,019   |    |     | $      | 24,416 |   |
| Adjustments                to Reconcile Net Income toCash                Provided by Operating Activities: |   |     |     |    |     |   |   |   |
| Provision                for Loan Losses                                                                   |   |     | 4,464    |    |     |   | 1,499 |   |
| Depreciation                                                                                               |   |     | 4,673    |    |     |   | 5,251 |   |
| Net                Securities Amortization                                                                 |   |     | 226      |    |     |   | 480 |   |
| Amortization                of Intangible Assets                                                           |   |     | 4,376    |    |     |   | 4,601 |   |
| Securities                Transactions                                                                     |   |     | (7       | )       |     |   | 4 |   |
| Origination                of Loans Held-for-Sale                                                          |   |     | (132,961 | )       |     |   | (144,719 | ) |
| Proceeds                From Sales of Loans Held-for-Sale                                                  |   |     | 136,973  |    |     |   | 148,330 |   |
| Net                Gain From Sales of Loans Held-for-Sale                                                  |   |     | (2,171   | )       |     |   | (2,448 | ) |
| Non-Cash                Compensation                                                                       |   |     | 135      |    |     |   | 1,504 |   |
| Deferred                Income Taxes                                                                       |   |     | 549      |    |     |   | 3,704 |   |
| Net                (Increase) Decrease in Other Assets                                                     |   |     | (5,443   | )       |     |   | 4,225 |   |
| Net                Increase in Other Liabilities                                                           |   |     | 16,854   |    |     |   | 2,359 |   |
| Net                Cash Provided By Operating Activities                                                   |   |     | 49,687   |    |     |   | 49,206 |   |
|                                                                                                       |   |     |     |    |     |   |   |   |
| **CASH                FLOWS FROM INVESTING ACTIVITIES**                                                    |   |     |     |    |     |   |   |   |
| Securities                Available-for-Sale:                                                              |   |     |     |    |     |   |   |   |
| Purchases                                                                                                  |   |     | (35,405  | )       |     |   | (95,807 | ) |
| Sales                                                                                                      |   |     | -        |    |     |   | 283 |   |
| Payments,                Maturities, and Calls                                                             |   |     | 43,292   |    |     |   | 75,872 |   |
| Net                Decrease in Loans                                                                       |   |     | 88,212   |    |     |   | 54,636 |   |
| Purchase                of Premises & Equipment                                                        |   |     | (14,394  | )       |     |   | (16,634 | ) |
| Proceeds                From Sales of Premises & Equipment                                             |   |     | 443      |    |     |   | 286 |   |
| Net                Cash Provided By Investing Activities                                                   |   |     | 82,148   |    |     |   | 18,636 |   |
|                                                                                                       |   |     |     |    |     |   |   |   |
| **CASH                FLOWS FROM FINANCING ACTIVITIES**                                                    |   |     |     |    |     |   |   |   |
| Net                Decrease in Deposits                                                                    |   |     | (144,241 | )       |     |   | (30,108 | ) |
| Net                Decrease in Short-Term Borrowings                                                  |   |     | (1,580   | )       |     |   | (29,209 | ) |
| Decrease                in Other Long-Term Borrowings                                                      |   |     | (8,499   | )  |     |   | (9,811 | ) |
| Repayment                of Other Long-Term Borrowings                                                     |   |     | (4,485   | )       |     |   | (15,711 | )  |
| Dividends                Paid                                                                              |   |     | (9,608   | )       |     |   | (9,078 | ) |
| Repurchase                of Common Stock                                                                  |   |     | (30,554  | )       |     |   | (4,841 | ) |
| Issuance                of Common Stock                                                                    |   |     | 545      |    |     |   | 969 |   |
| Net                Cash Used In Provided By Financing Activities                                           |   |     | (198,422 | )       |     |   | (97,789 | ) |
|                                                                                                       |   |     |     |    |     |   |   |   |
| **NET                CHANGE IN CASH AND CASH EQUIVALENTS**                                                 |   |     | (66,587  | )       |     |   | (29,947 | ) |
|                                                                                                       |   |     |     |    |     |   |   |   |
| Cash                and Cash Equivalents at Beginning of Period                                            |   |     | 177,564  |    |     |   | 166,359 |   |
| Cash                and Cash Equivalents at End of Period                                                  |   | $        | 110,977  |    |     | $      | 136,412 |   |
|                                                                                                       |   |     |     |    |     |   |   |   |
| Supplemental                Disclosure:                                                                    |   |     |     |    |     |   |   |   |
| Interest                Paid on Deposits                                                                   |   | $        | 33,222   |    |     | $      | 26,051 |   |
| Interest                Paid on Debt                                                                       |   | $        | 6,540    |    |     | $      | 7,523 |   |
| Taxes                Paid                                                                                  |   | $        | 8,643    |    |     | $      | 11,530 |   |
| Loans                Transferred to Other Real Estate                                                      |   | $        | 2,828    |    |     | $      | 638 |   |
| Issuance                of Common Stock as Non-Cash Compensation                                           |   | $        | 1,159    |    |     | $      | 1,504 |   |
| Transfer                of Current Portion of Long-Term Borrowingsto                Short-Term Borrowings  |   | $        | 10,199   |    |     | $      | 13,061 |   |

*The      accompanying Notes to Consolidated Financial Statements are an integral part      of      these statements.*

----

**CAPITAL      CITY BANK GROUP, INC.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE      1 -**

**MANAGEMENT'S      OPINION AND      ACCOUNTING POLICIES**

**Basis      of Presentation**

**NOTE        2 - INVESTMENT SECURITIES**

|                                             |   | **September                30, 2007** |    |
|--------------------------------------------------|--------|---------------------------------------|---------|
| *(Dollars                in Thousands)*          |   | Amortized                Cost         |    |   | Unrealized                Gains |   |   | Unrealized                Losses |   |   | Market                Value |   |
| U.S.                Treasury                     |   | $                                     | 12,146  |   |   | $ | 48 |   |   | $ | - |   |   | $ | 12,194 |   |
| U.S.                Government Agencies          |   |                                  | 53,124  |   |   |   | 147 |   |   |   | 185 |   |   |   | 53,086 |   |
| States                and Political Subdivisions |   |                                  | 86,183  |   |   |   | 9 |   |   |   | 329 |   |   |   | 85,863 |   |
| Mortgage-Backed                Securities        |   |                                  | 21,364  |   |   |   | 55 |   |   |   | 297 |   |   |   | 21,122 |   |
| Other                Securities(1)               |   |                                  | 12,307  |   |   |   | 37 |   |   |   | - |   |   |   | 12,344 |   |
| Total                Investment Securities       |   | $                                     | 185,124 |   |   | $ | 296 |   |   | $ | 811 |   |   | $ | 184,609 |   |

|                                             |   | **December                31, 2006** |    |
|--------------------------------------------------|--------|--------------------------------------|---------|
| *(Dollars                in Thousands)*          |   | Amortized                Cost        |    |   | Unrealized                Gains |   |   | Unrealized                Losses |   |   | Market                Value |   |
| U.S.                Treasury                     |   | $                                    | 12,098  |   |   | $ | 16 |   |   | $ | 49 |   |   | $ | 12,065 |   |
| U.S.                Government Agencies          |   |                                 | 61,619  |   |   |   | 37 |   |   |   | 593 |   |   |   | 61,063 |   |
| States                and Political Subdivisions |   |                                 | 83,621  |   |   |   | 16 |   |   |   | 415 |   |   |   | 83,222 |   |
| Mortgage-Backed                Securities        |   |                                 | 23,244  |   |   |   | 23 |   |   |   | 371 |   |   |   | 22,896 |   |
| Other                Securities(1)               |   |                                 | 12,648  |   |   |   | - |   |   |   | - |   |   |   | 12,648 |   |
| Total                Investment Securities       |   | $                                    | 193,230 |   |   | $ | 92 |   |   | $ | 1,428 |   |   | $ | 191,894 |   |

|  (1) | *F**ederal**H**ome**L**oan**B**ank**and F**ederal**R**eserve**B**ank**stock recorded                at cost.* |
|-----------|---------------------------------------------------------------------------------------------------------------|

----

**NOTE        3 - LOANS**

| *(Dollars                in Thousands)*               |   | **September                30, 2007** |      |   | **December                31, 2006** |   |
|-------------------------------------------------------|--------|---------------------------------------|-----------|--------|--------------------------------------|--------|
| Commercial,                Financial and Agricultural |   | $                                     | 205,628   |   |                                 | $      | 229,327 |   |
| Real                Estate-Construction               |   |                                  | 145,343   |   |                                 |   | 179,072 |   |
| Real                Estate-Commercial                 |   |                                  | 631,418   |   |                                 |   | 643,885 |   |
| Real                Estate-Residential                |   |                                  | 485,612   |   |                                 |   | 531,968 |   |
| Real                Estate-Home Equity                |   |                                  | 183,620   |   |                                 |   | 173,597 |   |
| Real                Estate-Loans Held-for-Sale        |   |                                  | 3,615     |   |                                 |   | 4,170 |   |
| Consumer                                              |   |                                  | 248,652   |   |                                 |   | 237,702 |   |
| Loans,                Net of Unearned Interest        |   | $                                     | 1,903,888 |   |                                 | $      | 1,999,721 |   |

**NOTE      4 - ALLOWANCE FOR LOAN LOSSES**

| *(Dollars                in Thousands)*                   |   | **2007** |    |   | **2006** |   |
|-----------------------------------------------------------|--------|----------|---------|--------|----------|--------|
| Balance,                Beginning of Period               |   | $        | 17,217  |   |     | $      | $                17,410 |   |
| Provision                for Loan Losses                  |   |     | 4,464   |   |     |   | 1,499 |   |
| Recoveries                on Loans Previously Charged-Off |   |     | 1,465   |   |     |   | 1,309 |   |
| Loans                Charged-Off                          |   |     | (5,145) |   |     |   | (2,907) |   |
| Balance,                End of Period                     |   | $        | 18,001  |   |     | $      | $                17,311 |   |

*Impaired      Loans*

|                                               |   | **September                30, 2007** |   |   | **December                31, 2006** |   |
|----------------------------------------------------|--------|---------------------------------------|--------|--------|--------------------------------------|--------|
|  *(Dollars                in Thousands)*      |   | Balance                               |   |   | Valuation                Allowance   |   |   | Balance |   |   | Valuation                Allowance |   |
| Impaired                Loans:                     |   |                                  |   |   |                                 |   |   |   |   |   |   |   |
| With                Related Valuation Allowance    |   | $                                     | 17,595 |   |                                 | $      | 3,375 |   |   | $ | 6,085 |   |   | $ | 2,255 |   |
| Without                Related Valuation Allowance |   |                                  | 5,558  |   |                                 |   | - |   |   |   | 4,574 |   |   |   | - |   |

**NOTE        5 - INTANGIBLE ASSETS**

|                                            |   | **September                30, 2007** |    |   | **December                31, 2006** |   |
|-------------------------------------------------|--------|---------------------------------------|---------|--------|--------------------------------------|--------|
|  *(Dollars                in Thousands)*   |   | GrossAmount                           |    |   | AccumulatedAmortization              |   |   | GrossAmount |   |   | AccumulatedAmortization |   |
| Core                Deposit Intangibles         |   | $                                     | 47,176  |   |                                 | $      | 33,188 |   |   | $ | 47,176 |   |   | $ | 28,955 |   |
| Goodwill                                        |   |                                  | 84,811  |   |                                 |   | - |   |   |   | 84,811 |   |   |   | - |   |
| Customer                Relationship Intangible |   |                                  | 1,867   |   |                                 |   | 640 |   |   |   | 1,867 |   |   |   | 497 |   |
| Total                Intangible Assets          |   | $                                     | 133,854 |   |                                 | $      | 33,828 |   |   | $ | 133,854 |   |   | $ | 29,452 |   |

----

*Net      Core Deposit Intangibles:  *

*Goodwill*

*Other*

**NOTE      6 - DEPOSITS**

| *(Dollars                in Thousands)*        |   | **September                30, 2007** |      |   | **December                31, 2006** |   |
|------------------------------------------------|--------|---------------------------------------|-----------|--------|--------------------------------------|--------|
| NOW                Accounts                    |   | $                                     | 530,619   |   |                                 | $      | 599,433 |   |
| Money                Market Accounts           |   |                                  | 399,578   |   |                                 |   | 384,568 |   |
| Savings                Deposits                |   |                                  | 115,955   |   |                                 |   | 125,500 |   |
| Other                Time Deposits             |   |                                  | 472,019   |   |                                 |   | 482,139 |   |
| Total                Interest Bearing Deposits |   | $                                     | 1,518,171 |   |                                 | $      | 1,591,640 |   |

**NOTE        7 – INCOME TAXES**

----

**NOTE        8 - STOCK-BASED COMPENSATION**

*AIP.*

*Executive      Stock Option Agreement.  *

| Options                                          |   | Shares |   |   | Weighted-Average                Exercise Price |   |   | Weighted-Average                Remaining Term |   |   | Aggregate                Intrinsic Value |   |
|--------------------------------------------------|--------|--------|--------|--------|------------------------------------------------|--------|--------|------------------------------------------------|--------|--------|------------------------------------------|--------|
| Outstanding                at January 1, 2007    |   |   | 60,384 |   |                                           | $      | 32.79  |                                           |   | $      | 8.3                                      |   |   | $ | 151,355 |   |
| Granted                                          |   |   | -      |   |                                           |   | -      |                                           |   |   | -                                        |   |   |   | - |   |
| Exercised                                        |   |   | -      |   |                                           |   | -      |                                           |   |   | -                                        |   |   |   | - |   |
| Forfeited                or expired              |   |   | -      |   |                                           |   | -      |                                           |   |   | -                                        |   |   |   | - |   |
| Outstanding                at September 30, 2007 |   |   | 60,384 |   |                                           | $      | 32.79  |                                           |   | $      | 3.09                                     |   |   | $ | (96,219 | ) |
| Exercisable                at September 30, 2007 |   |   | 47,720 |   |                                           | $      | 32.79  |                                           |   | $      | 3.09                                     |   |   | $ | (77,351 | ) |

----

*DSPP.  *

*ASPP.  *

|                                    |   | **Nine                Months Ended September 30,** |   |
|-----------------------------------------|--------|----------------------------------------------------|--------|
|                                    |   | **2007**                                           |   |   | **2006** |   |
| Dividend                yield           |   |                                               | 2.2    | % |   |   | 1.95 | % |
| Expected                volatility      |   |                                               | 27.0   | % |   |   | 23.5 | % |
| Risk-free                interest rate  |   |                                               | 4.7    | % |   |   | 4.5 | % |
| Expected                life (in years) |   |                                               | 0.5    |   |   |   | 0.5 |   |

**NOTE      9 - EMPLOYEE BENEFIT PLANS**

|                                              |   | **Three                Months Ended September 30,** |   |   | **Nine                Months Ended September 30,** |   |
|---------------------------------------------------|--------|----------------------------------------------------------|--------|--------|----------------------------------------------------|--------|
| *(Dollars                in Thousands)*           |   | **2007**                                                 |   |   | **2006**                                           |   |   | **2007** |   |   | **2006** |   |
|                                              |   |                                                     |   |   |                                               |   |   |   |   |   |   |   |
| Discount                Rate                      |   |                                                     | 6.00   | %      |                                               |   | 5.75 | % |   |   | 6.00 | % |   |   | 5.75 | % |
| Long-Term                Rate of Return on Assets |   |                                                     | 8.00   | %      |                                               |   | 8.00 | % |   |   | 8.00 | % |   |   | 8.00 | % |
|                                              |   |                                                     |   |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| Service                Cost                       |   | $                                                        | 1,350  |   |                                               | $      | 1,250 |   |   | $ | 4,050 |   |   | $ | 3,750 |   |
| Interest                Cost                      |   |                                                     | 1,025  |   |                                               |   | 875 |   |   |   | 3,075 |   |   |   | 2,625 |   |
| Expected                Return on Plan Assets     |   |                                                     | (1,300 | )      |                                               |   | (975 | ) |   |   | (3,900 | ) |   |   | (2,925 | ) |
| Prior                Service Cost Amortization    |   |                                                     | 100    |   |                                               |   | 50 |   |   |   | 300 |   |   |   | 150 |   |
| Net                Loss Amortization              |   |                                                     | 250    |   |                                               |   | 375 |   |   |   | 750 |   |   |   | 1,125 |   |
| Net                Periodic Benefit Cost          |   | $                                                        | 1,425  |   |                                               | $      | 1,575 |   |   | $ | 4,275 |   |   | $ | 4,725 |   |

----

|                                           |   | **Three                Months Ended September 30,** |   |   | **Nine                Months Ended September 30,** |   |
|------------------------------------------------|--------|----------------------------------------------------------|--------|--------|----------------------------------------------------|--------|
| *(Dollars                in Thousands)*        |   | **2007**                                                 |   |   | **2006**                                           |   |   | **2007** |   |   | **2006** |   |
|                                           |   |                                                     |   |   |                                               |   |   |   |   |   |   |   |
| Discount                Rate                   |   |                                                     | 6.00   | %      |                                               |   | 5.75 | % |   |   | 6.00 | % |   |   | 5.75 | % |
|                                           |   |                                                     |   |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| Service                Cost                    |   | $                                                        | 25     |   |                                               | $      | 30 |   |   | $ | 75 |   |   | $ | 90 |   |
| Interest                Cost                   |   |                                                     | 63     |   |                                               |   | 56 |   |   |   | 189 |   |   |   | 168 |   |
| Prior                Service Cost Amortization |   |                                                     | 3      |   |                                               |   | 15 |   |   |   | 9 |   |   |   | 45 |   |
| Net                Loss Amortization           |   |                                                     | 18     |   |                                               |   | 19 |   |   |   | 54 |   |   |   | 57 |   |
| Net                Periodic Benefit Cost       |   | $                                                        | 109    |   |                                               | $      | 120 |   |   | $ | 327 |   |   | $ | 360 |   |

**NOTE        10 - COMMITMENTS AND CONTINGENCIES**

*Lending      Commitments*

| *(Dollars                in Millions)*         |   | **Amount** |   |
|------------------------------------------------|--------|------------|--------|
| Commitments                to Extend Credit(1) |   | $          | 425    |   |
| Standby                Letters of Credit       |   | $          | 17     |   |

| (1) | *Commitments                include unfunded loans, revolving lines of credit, and other unused                commitments.* |
|-----|------------------------------------------------------------------------------------------------------------------------------|

*Contingencies*

**NOTE      11 - COMPREHENSIVE INCOME**

----

**QUARTERLY      FINANCIAL DATA (UNAUDITED)**

|                                                                             |   | **2007** |      |   | **2006** |   |      | **2005** |   |
|----------------------------------------------------------------------------------|--------|----------|-----------|--------|----------|--------|-----------|----------|--------|
| *(Dollars                in Thousands, Except Per Share Data)*                   |   | Third    |      |   | Second   |   |      | First    |   |   | Fourth |   |   | Third |   |   | Second |   |   | First |   |   | Fourth |   |
| Summary                of Operations:                                            |   |     |      |   |     |   |      |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                Income                                                   |   | $        | 41,299    |   |     | $      | 41,724    |     |   | $ | 41,514 |   |   | $ | 42,600 |   |   | $ | 42,512 |   |   | $ | 41,369 |   |   | $ | 39,412 |   |   | $ | 38,780 |   |
| Interest                Expense                                                  |   |     | 13,389    |   |     |   | 13,263    |     |   |   | 13,189 |   |   |   | 13,003 |   |   |   | 12,289 |   |   |   | 11,182 |   |   |   | 10,282 |   |   |   | 9,470 |   |
| Net                Interest Income                                               |   |     | 27,910    |   |     |   | 28,461    |     |   |   | 28,325 |   |   |   | 29,597 |   |   |   | 30,223 |   |   |   | 30,187 |   |   |   | 29,130 |   |   |   | 29,310 |   |
| Provision                for Loan Losses                                         |   |     | 1,552     |   |     |   | 1,675     |     |   |   | 1,237 |   |   |   | 460 |   |   |   | 711 |   |   |   | 121 |   |   |   | 667 |   |   |   | 1,333 |   |
| Net                Interest Income AfterProvision                for Loan Losses |   |     | 26,358    |   |     |   | 26,786    |     |   |   | 27,088 |   |   |   | 29,137 |   |   |   | 29,512 |   |   |   | 30,066 |   |   |   | 28,463 |   |   |   | 27,977 |   |
| Noninterest                Income                                                |   |     | 14,431    |   |     |   | 15,084    |     |   |   | 13,962 |   |   |   | 14,385 |   |   |   | 14,144 |   |   |   | 14,003 |   |   |   | 13,045 |   |   |   | 12,974 |   |
| Merger                Expense                                                    |   |     | -         |   |     |   | -         |     |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 24 |   |
| Noninterest                Expense                                               |   |     | 29,919    |   |     |   | 29,897    |     |   |   | 30,562 |   |   |   | 29,984 |   |   |   | 30,422 |   |   |   | 31,070 |   |   |   | 30,092 |   |   |   | 29,318 |   |
| Income                Before Provision for Income Taxes                          |   |     | 10,870    |   |     |   | 11,973    |     |   |   | 10,488 |   |   |   | 13,538 |   |   |   | 13,234 |   |   |   | 12,999 |   |   |   | 11,416 |   |   |   | 11,609 |   |
| Provision                for Income Taxes                                        |   |     | 3,699     |   |     |   | 4,082     |     |   |   | 3,531 |   |   |   | 4,688 |   |   |   | 4,554 |   |   |   | 4,684 |   |   |   | 3,995 |   |   |   | 4,150 |   |
| Net                Income                                                        |   | $        | 7,171     |   |     | $      | 7,891     |     |   | $ | 6,957 |   |   | $ | 8,850 |   |   | $ | 8,680 |   |   | $ | 8,315 |   |   | $ | 7,421 |   |   | $ | 7,459 |   |
| Net                Interest Income (FTE)                                         |   | $        | 28,517    |   |     | $      | 29,049    |     |   | $ | 28,898 |   |   | $ | 30,152 |   |   | $ | 30,745 |   |   | $ | 30,591 |   |   | $ | 29,461 |   |   | $ | 29,652 |   |
|                                                                             |   |     |      |   |     |   |      |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Per                Common Share:                                                 |   |     |      |   |     |   |      |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                Income Basic                                                  |   | $        | .41       |   |     | $      | .43       |     |   | $ | .38 |   |   | $ | .48 |   |   | $ | .47 |   |   | $ | .44 |   |   | $ | .40 |   |   | $ | .40 |   |
| Net                Income Diluted                                                |   |     | .41       |   |     |   | .43       |     |   |   | .38 |   |   |   | .48 |   |   |   | .47 |   |   |   | .44 |   |   |   | .40 |   |   |   | .40 |   |
| Dividends                Declared                                                |   |     | .175      |   |     |   | .175      |     |   |   | .175 |   |   |   | .175 |   |   |   | .163 |   |   |   | .163 |   |   |   | .163 |   |   |   | .163 |   |
| Diluted                Book Value                                                |   |     | 16.95     |   |     |   | 16.87     |     |   |   | 16.97 |   |   |   | 17.01 |   |   |   | 17.18 |   |   |   | 16.81 |   |   |   | 16.65 |   |   |   | 16.39 |   |
| Market                Price:                                                     |   |     |      |   |     |   |      |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| High                                                                             |   |     | 36.40     |   |     |   | 33.69     |     |   |   | 35.91 |   |   |   | 35.98 |   |   |   | 33.25 |   |   |   | 35.39 |   |   |   | 37.97 |   |   |   | 39.33 |   |
| Low                                                                              |   |     | 27.69     |   |     |   | 29.12     |     |   |   | 29.79 |   |   |   | 30.14 |   |   |   | 29.87 |   |   |   | 29.51 |   |   |   | 33.79 |   |   |   | 33.21 |   |
| Close                                                                            |   |     | 31.20     |   |     |   | 31.34     |     |   |   | 33.30 |   |   |   | 35.30 |   |   |   | 31.10 |   |   |   | 30.20 |   |   |   | 35.55 |   |   |   | 34.29 |   |
|                                                                             |   |     |      |   |     |   |      |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Selected                Average                                                  |   |     |      |   |     |   |      |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balances:                                                                        |   |     |      |   |     |   |      |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans                                                                            |   | $        | 1,907,235 |   |     | $      | 1,944,969 |     |   | $ | 1,980,224 |   |   | $ | 2,003,719 |   |   | $ | 2,025,112 |   |   | $ | 2,040,656 |   |   | $ | 2,048,642 |   |   | $ | 2,062,775 |   |
| Earning                Assets                                                    |   |     | 2,144,737 |   |     |   | 2,187,236 |     |   |   | 2,211,560 |   |   |   | 2,238,066 |   |   |   | 2,241,158 |   |   |   | 2,278,817 |   |   |   | 2,275,667 |   |   |   | 2,279,010 |   |
| Assets                                                                           |   |     | 2,467,703 |   |     |   | 2,511,252 |     |   |   | 2,530,790 |   |   |   | 2,557,357 |   |   |   | 2,560,155 |   |   |   | 2,603,090 |   |   |   | 2,604,458 |   |   |   | 2,607,597 |   |
| Deposits                                                                         |   |     | 1,954,160 |   |     |   | 1,987,418 |     |   |   | 2,003,726 |   |   |   | 2,028,453 |   |   |   | 2,023,523 |   |   |   | 2,047,755 |   |   |   | 2,040,248 |   |   |   | 2,027,017 |   |
| Shareowners’                Equity                                         |   |     | 301,536   |   |     |   | 309,352   |     |   |   | 316,484 |   |   |   | 323,903 |   |   |   | 318,041 |   |   |   | 315,794 |   |   |   | 311,461 |   |   |   | 306,208 |   |
| Common                Equivalent Shares:                                         |   |     |      |   |     |   |      |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                            |   |     | 17,709    |   |     |   | 18,089    |     |   |   | 18,409 |   |   |   | 18,525 |   |   |   | 18,530 |   |   |   | 18,633 |   |   |   | 18,652 |   |   |   | 18,624 |   |
| Diluted                                                                          |   |     | 17,719    |   |     |   | 18,089    |     |   |   | 18,420 |   |   |   | 18,569 |   |   |   | 18,565 |   |   |   | 18,653 |   |   |   | 18,665 |   |   |   | 18,654 |   |
|                                                                             |   |     |      |   |     |   |      |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ratios:                                                                          |   |     |      |   |     |   |      |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| ROA                                                                              |   |     | 1.15      | %      |     |   | 1.26      | %        |   |   | 1.11 | % |   |   | 1.37 | % |   |   | 1.35 | % |   |   | 1.28 | % |   |   | 1.16 | % |   |   | 1.14 | % |
| ROE                                                                              |   |     | 9.44      | %      |     |   | 10.23     | %        |   |   | 8.91 | % |   |   | 10.84 | % |   |   | 10.83 | % |   |   | 10.56 | % |   |   | 9.66 | % |   |   | 9.67 | % |
| Net                Interest Margin (FTE)                                         |   |     | 5.27      | %      |     |   | 5.33      | %        |   |   | 5.29 | % |   |   | 5.35 | % |   |   | 5.45 | % |   |   | 5.38 | % |   |   | 5.25 | % |   |   | 5.16 | % |
| Efficiency                Ratio                                                  |   |     | 66.27     | %      |     |   | 64.44     | %        |   |   | 67.90 | % |   |   | 63.99 | % |   |   | 64.35 | % |   |   | 66.23 | % |   |   | 67.20 | % |   |   | 65.22 | % |

----

| **Item                2.** | **MANAGEMENT'S                DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF                OPERATIONS** |
|----------------------------|-------------------------------------------------------------------------------------------------------------------------|

|                                                     |   | **Nine                Months Ended September 30,** |   |
|----------------------------------------------------------|--------|----------------------------------------------------|--------|
|                                                     |   | **2007**                                           |   |   | **2006** |   |
| Efficiency                ratio                          |   |                                               | 69.55  | % |   |   | 69.39 | % |
| Effect                of intangible amortization expense |   |                                               | (3.28  | )% |   |   | (3.49 | )% |
| Operating                efficiency ratio                |   |                                               | 66.27  | % |   |   | 65.90 | % |

|                                                                            |   | **Nine                Months Ended September 30,** |   |
|---------------------------------------------------------------------------------|--------|----------------------------------------------------|--------|
|                                                                            |   | **2007**                                           |   |   | **2006** |   |
| Net                noninterest expense as a percent of average assets           |   |                                               | 2.51   | % |   |   | 2.60 | % |
| Effect                of intangible amortization expense                        |   |                                               | (0.24  | )% |   |   | (0.24 | )% |
| Operating                net noninterest expense as a percent of average assets |   |                                               | 2.27   | % |   |   | 2.36 | % |

----

**CAUTION      CONCERNING FORWARD-LOOKING STATEMENTS**

**BUSINESS      OVERVIEW**

----

**FINANCIAL      OVERVIEW**

*2007      Financial Performance Highlights –*

|   | Ÿ | Earnings                of $7.2 million and $22.0 million were down 17.4% and 9.8%, respectively,                for the three and nine months ended September 30, 2007 as compared                to the                same periods in 2006. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Ÿ | Diluted                earnings per share of $.41 for the third quarter of 2007 compared                to $.47                for the comparable period in 2006, a decrease of                12.8%.  Earnings per diluted share for the nine months ended                September 30, 2007 of $1.22 compared to $1.31 for the same period                in 2006,                a decrease of 6.9%. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Ÿ | Decline                in earnings for the three and nine month periods reflects lower net                interest income and higher credit costs partially offset by stronger                noninterest income and lower operating                expenses. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Ÿ | Taxable                equivalent net interest income declined 2.6% and 1.4% for the three                and                nine month periods, respectively, due to higher funding                costs. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Ÿ | Loan                loss provision increased $841,000 and $3.0 million for the three                and nine                month periods, respectively, reflecting a higher level of required                reserves for impaired loans attributable to a slowdown in housing                and real                estate markets. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Ÿ | Noninterest                  income grew 2.0% and 5.5% for the three and nine month periods,                  respectively, due primarily to higher retail brokerage fees and                  card                  processing fees.  Higher deposit service charge fees were also a                  major contributor to the increase for the nine month                  period. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Ÿ | Noninterest                    expense declined 1.7% and 1.3% for the three and nine month periods,                    respectively, due primarily to a reduction in incentive compensation                    and                    our continued focus on expense control and implementation of                    cost savings                    strategies. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Ÿ | We                remain well-capitalized with a risk based capital ratio of                14.76%. |
|--------|--------|-----------------------------------------------------------------------------------------------------|

----

**RESULTS      OF OPERATIONS**

**Net      Income**

|                                               |   | **Three                Months Ended September 30,** |     |   | **Nine                Months Ended September 30,** |   |
|----------------------------------------------------|--------|-----------------------------------------------------|----------|--------|----------------------------------------------------|--------|
| *(Dollars                in Thousands)*            |   | **2007**                                            |     |   | **2006**                                           |   |   | **2007** |   |   | **2006** |   |
| Interest                Income                     |   | $                                                   | 41,299   |   |                                               | $      | 42,512 |   |   | $ | 124,537 |   |   | $ | 123,293 |   |
| Taxable                Equivalent Adjustment(1)    |   |                                                | 607      |   |                                               |   | 522 |   |   |   | 1,769 |   |   |   | 1,256 |   |
| Interest                Income (FTE)               |   |                                                | 41,906   |   |                                               |   | 43,034 |   |   |   | 126,306 |   |   |   | 124,549 |   |
| Interest                Expense                    |   |                                                | (13,389) |   |                                               |   | (12,289) |   |   |   | (39,841) |   |   |   | (33,753) |   |
| Net                Interest Income (FTE)           |   |                                                | 28,517   |   |                                               |   | 30,745 |   |   |   | 86,465 |   |   |   | 90,796 |   |
| Provision                for Loan Losses           |   |                                                | (1,552)  |   |                                               |   | (711) |   |   |   | (4,464) |   |   |   | (1,499) |   |
| Taxable                Equivalent Adjustment       |   |                                                | (607)    |   |                                               |   | (522) |   |   |   | (1,769) |   |   |   | (1,256) |   |
| Net                Interest Income After Provision |   |                                                | 26,358   |   |                                               |   | 29,512 |   |   |   | 80,232 |   |   |   | 88,041 |   |
| Noninterest                Income                  |   |                                                | 14,431   |   |                                               |   | 14,144 |   |   |   | 43,477 |   |   |   | 41,193 |   |
| Noninterest                Expense                 |   |                                                | (29,919) |   |                                               |   | (30,422) |   |   |   | (90,378) |   |   |   | (91,584) |   |
| Income                Before Income Taxes          |   |                                                | 10,870   |   |                                               |   | 13,234 |   |   |   | 33,331 |   |   |   | 37,650 |   |
| Income                Taxes                        |   |                                                | (3,699)  |   |                                               |   | (4,554) |   |   |   | (11,312) |   |   |   | (13,234) |   |
| Net                Income                          |   | $                                                   | 7,171    |   |                                               | $      | 8,680 |   |   | $ | 22,019 |   |   | $ | 24,416 |   |
|                                               |   |                                                |     |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| Return                on Average Assets(2)         |   |                                                | 1.15     | %      |                                               |   | 1.35 | % |   |   | 1.18 | % |   |   | 1.26 | % |
| Return                on Average Equity(2)         |   |                                                | 9.44     | %      |                                               |   | 10.83 | % |   |   | 9.53 | % |   |   | 10.36 | % |

| (1) | *Computed                using a statutory tax rate of                35%* |
|-----|----------------------------------------------------------------------------|

| (2) | *Annualized* |
|-----|--------------|

----

**Net      Interest Income**

**Provision      for Loan Losses**

----

|                                                  |   | **Three                Months Ended September 30,** |   |   | **Nine                Months Ended September 30,** |   |
|-------------------------------------------------------|--------|-----------------------------------------------------|--------|--------|----------------------------------------------------|--------|
| *(Dollars                in Thousands)*               |   | **2007**                                            |   |   | **2006**                                           |   |   | **2007** |   |   | **2006** |   |
| CHARGE-OFFS                                           |   |                                                |   |   |                                               |   |   |   |   |   |   |   |
| Commercial,                Financial and Agricultural |   | $                                                   | 279    |   |                                               | $      | 294 |   |   | $ | 1,092 |   |   | $ | 760 |   |
| Real                Estate – Construction       |   |                                                | -      |   |                                               |   | - |   |   |   | 108 |   |   |   | - |   |
| Real                Estate – Commercial         |   |                                                | 245    |   |                                               |   | - |   |   |   | 576 |   |   |   | 291 |   |
| Real                Estate – Residential        |   |                                                | 161    |   |                                               |   | 81 |   |   |   | 1,220 |   |   |   | 127 |   |
| Consumer                                              |   |                                                | 854    |   |                                               |   | 690 |   |   |   | 2,149 |   |   |   | 1,729 |   |
| Total                Charge-offs                      |   |                                                | 1,539  |   |                                               |   | 1,065 |   |   |   | 5,145 |   |   |   | 2,907 |   |
|                                                  |   |                                                |   |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| RECOVERIES                                            |   |                                                |   |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| Commercial,                Financial and Agricultural |   |                                                | 44     |   |                                               |   | 43 |   |   |   | 127 |   |   |   | 168 |   |
| Real                Estate – Construction       |   |                                                | -      |   |                                               |   | - |   |   |   | - |   |   |   | - |   |
| Real                Estate – Commercial         |   |                                                | 2      |   |                                               |   | 4 |   |   |   | 12 |   |   |   | 9 |   |
| Real                Estate – Residential        |   |                                                | 2      |   |                                               |   | 2 |   |   |   | 29 |   |   |   | 11 |   |
| Consumer                                              |   |                                                | 471    |   |                                               |   | 352 |   |   |   | 1,297 |   |   |   | 1,121 |   |
| Total                Recoveries                       |   |                                                | 519    |   |                                               |   | 401 |   |   |   | 1,465 |   |   |   | 1,309 |   |
|                                                  |   |                                                |   |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| Net                Charge-offs                        |   | $                                                   | 1,020  |   |                                               | $      | 664 |   |   | $ | 3,680 |   |   | $ | 1,598 |   |
|                                                  |   |                                                |   |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| Net                Charge-offs (Annualized) as a      |   |                                                |   |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| Percent                of Average Loans Outstanding,  |   |                                                |   |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| Net                of Unearned Interest               |   |                                                | .21    | %      |                                               |   | .13 | % |   |   | .25 | % |   |   | .10 | % |

**Noninterest      Income**

|                                               |   | **Three                Months Ended September 30,** |   |   | **Nine                Months Ended September 30,** |   |
|----------------------------------------------------|--------|-----------------------------------------------------|--------|--------|----------------------------------------------------|--------|
| *(Dollars                in Thousands)*            |   | **2007**                                            |   |   | **2006**                                           |   |   | **2007** |   |   | **2006** |   |
| Noninterest                Income:                 |   |                                                |   |   |                                               |   |   |   |   |   |   |   |
| Service                Charges on Deposit Accounts |   | $                                                   | 6,387  |   |                                               | $      | 6,450 |   |   | $ | 18,873 |   |   | $ | 18,226 |   |
| Data                Processing                     |   |                                                | 775    |   |                                               |   | 674 |   |   |   | 2,280 |   |   |   | 2,014 |   |
| Fees                for Trust Services             |   |                                                | 1,200  |   |                                               |   | 1,215 |   |   |   | 3,600 |   |   |   | 3,420 |   |
| Retail                Brokerage Fees               |   |                                                | 625    |   |                                               |   | 520 |   |   |   | 1,892 |   |   |   | 1,505 |   |
| Investment                Security Gain (Loss)     |   |                                                | -      |   |                                               |   | - |   |   |   | 7 |   |   |   | (4) |   |
| Mortgage                Banking Revenues           |   |                                                | 642    |   |                                               |   | 824 |   |   |   | 2,171 |   |   |   | 2,448 |   |
| Merchant                Service Fees               |   |                                                | 1,686  |   |                                               |   | 1,766 |   |   |   | 5,514 |   |   |   | 5,284 |   |
| Interchange                Fees                    |   |                                                | 934    |   |                                               |   | 797 |   |   |   | 2,795 |   |   |   | 2,261 |   |
| ATM/Debit                Card Fees                 |   |                                                | 685    |   |                                               |   | 635 |   |   |   | 1,987 |   |   |   | 1,861 |   |
| Other                                              |   |                                                | 1,497  |   |                                               |   | 1,263 |   |   |   | 4,358 |   |   |   | 4,178 |   |
|                                               |   |                                                |   |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| Total                Noninterest Income            |   | $                                                   | 14,431 |   |                                               | $      | 14,144 |   |   | $ | 43,477 |   |   | $ | 41,193 |   |

----

*Service      Charges on Deposit Accounts*

*Asset      Management Fees*

*Retail      Brokerage Fees*

*Mortgage      Banking Revenues*

*Card      Fees*

**Noninterest      Expense**

|                                     |   | **Three                Months Ended September 30,** |   |   | **Nine                Months Ended September 30,** |   |
|------------------------------------------|--------|-----------------------------------------------------|--------|--------|----------------------------------------------------|--------|
| *(Dollars                in Thousands)*  |   | **2007**                                            |   |   | **2006**                                           |   |   | **2007** |   |   | **2006** |   |
| Noninterest                Expense:      |   |                                                |   |   |                                               |   |   |   |   |   |   |   |
| Salaries                                 |   | $                                                   | 11,935 |   |                                               | $      | 11,709 |   |   | $ | 36,563 |   |   | $ | 34,868 |   |
| Associate                Benefits        |   |                                                | 3,161  |   |                                               |   | 3,568 |   |   |   | 9,244 |   |   |   | 11,044 |   |
| Total                Compensation        |   |                                                | 15,096 |   |                                               |   | 15,277 |   |   |   | 45,807 |   |   |   | 45,912 |   |
|                                     |   |                                                |   |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| Premises                                 |   |                                                | 2,409  |   |                                               |   | 2,354 |   |   |   | 6,969 |   |   |   | 6,935 |   |
| Equipment                                |   |                                                | 2,513  |   |                                               |   | 2,492 |   |   |   | 7,356 |   |   |   | 7,652 |   |
| Total                Occupancy           |   |                                                | 4,922  |   |                                               |   | 4,846 |   |   |   | 14,325 |   |   |   | 14,587 |   |
|                                     |   |                                                |   |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| Legal                Fees                |   |                                                | 383    |   |                                               |   | 323 |   |   |   | 1,318 |   |   |   | 1,285 |   |
| Professional                Fees         |   |                                                | 963    |   |                                               |   | 851 |   |   |   | 2,826 |   |   |   | 2,470 |   |
| Processing                Services       |   |                                                | 444    |   |                                               |   | 490 |   |   |   | 1,447 |   |   |   | 1,344 |   |
| Advertising                              |   |                                                | 799    |   |                                               |   | 1,036 |   |   |   | 2,667 |   |   |   | 3,288 |   |
| Travel                and Entertainment  |   |                                                | 338    |   |                                               |   | 413 |   |   |   | 1,083 |   |   |   | 1,284 |   |
| Printing                and Supplies     |   |                                                | 459    |   |                                               |   | 601 |   |   |   | 1,557 |   |   |   | 1,878 |   |
| Telephone                                |   |                                                | 594    |   |                                               |   | 559 |   |   |   | 1,677 |   |   |   | 1,769 |   |
| Postage                                  |   |                                                | 476    |   |                                               |   | 257 |   |   |   | 1,125 |   |   |   | 859 |   |
| Intangible                Amortization   |   |                                                | 1,459  |   |                                               |   | 1,536 |   |   |   | 4,376 |   |   |   | 4,601 |   |
| Interchange                Fees          |   |                                                | 1,424  |   |                                               |   | 1,531 |   |   |   | 4,665 |   |   |   | 4,571 |   |
| Courier                Service           |   |                                                | 47     |   |                                               |   | 327 |   |   |   | 571 |   |   |   | 985 |   |
| Miscellaneous                            |   |                                                | 2,515  |   |                                               |   | 2,375 |   |   |   | 6,934 |   |   |   | 6,751 |   |
|                                     |   |                                                |   |   |                                               |   |   |   |   |   |   |   |   |   |   |   |
| Total                Noninterest Expense |   | $                                                   | 29,919 |   |                                               | $      | 30,422 |   |   | $ | 90,378 |   |   | $ | 91,584 |   |

----

*Compensation*

*Occupancy.  *

*Other*

**Income      Taxes**

----

**FINANCIAL      CONDITION**

**Funds      Sold**

**Investment      Securities**

**Loans**

**Nonperforming      Assets**

**Allowance      for Loan Losses**

**.  **

----

**Deposits**

**LIQUIDITY      AND CAPITAL RESOURCES**

**Liquidity**

*General*

*Borrowings*

----

*Contractual      Cash Obligations.*

|                                              |   | **Payments                Due By Period** |   |
|---------------------------------------------------|--------|-------------------------------------------|--------|
| *(Dollars                in Thousands)*           |   | **1                Year or Less**         |   |   | **1                – 3 Years** |   |   | **4                – 5 Years** |   |   | **After                5 Years** |   |   | **Total** |   |
| Federal                Home Loan Bank Advances    |   | $                                         | 656    |   |   | $ | 17,074 |   |   | $ | 5,364 |   |   | $ | 16,500 |   |   | $ | 39,594 |   |
| Subordinated                Notes Payable         |   |                                      | -      |   |   |   | - |   |   |   | - |   |   |   | 62,887 |   |   |   | 62,887 |   |
| Operating                Lease Obligations        |   |                                      | 374    |   |   |   | 2,643 |   |   |   | 2,071 |   |   |   | 6,071 |   |   |   | 11,159 |   |
| Total                Contractual Cash Obligations |   | $                                         | 1,030  |   |   | $ | 19,717 |   |   | $ | 7,435 |   |   | $ | 85,458 |   |   | $ | 113,640 |   |

**Capital**

**OFF-BALANCE      SHEET ARRANGEMENTS**

----

**ACCOUNTING      POLICIES**

**Critical      Accounting Policies**

*Allowance      for Loan Losses*

*Intangible      Assets*

*Pension      Assumptions*
** **

----

**Recent      Accounting Pronouncements**

*Statement      of Financial Accounting Standards*

*Financial      Accounting Standards Board Interpretations*

*Emerging      Issues Task Force*

----

**TABLE      I**

**AVERAGE      BALANCES & INTEREST RATES**

*(Taxable      Equivalent Basis - Dollars in Thousands)*

|                                                 |   | **Three                Months Ended September 30,** |      |   | **Nine                Months Ended September 30,** |   |
|------------------------------------------------------|--------|-----------------------------------------------------|-----------|--------|----------------------------------------------------|--------|
|                                                 |   | **2007**                                            |      |   | **2006**                                           |   |   | **2007** |   |   | **2006** |   |
|                                                 |   | Balance                                             |      |   | Interest                                           |   |   | Rate |   |   | Balance |   |   | Interest |   |   | Rate |   |   | Balance |   |   | Interest |   |   | Rate |   |   | Balance |   |   | Interest |   |   | Rate |   |
| **ASSETS**                                           |   |                                                |      |   |                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans,                Net of Unearned Interest(1)(2) |   | $                                                   | 1,907,235 |   |                                               | $      | 38,901 |   |   |   | 8.09 | % |   | $ | 2,025,112 |   |   | $ | 40,433 |   |   |   | 7.92 | % |   | $ | 1,943,874 |   |   | $ | 117,465 |   |   |   | 8.08 | % |   | $ | 2,038,050 |   |   | $ | 116,931 |   |   |   | 7.67 | % |
| Taxable                Investment Securities         |   |                                                | 102,618   |   |                                               |   | 1,224 |   |   |   | 4.75 |   |   |   | 109,097 |   |   |   | 1,264 |   |   |   | 4.62 |   |   |   | 105,453 |   |   |   | 3,723 |   |   |   | 4.70 |   |   |   | 113,859 |   |   |   | 3,588 |   |   |   | 4.19 |   |
| Tax-Exempt                Investment Securities(2)   |   |                                                | 85,446    |   |                                               |   | 1,142 |   |   |   | 5.35 |   |   |   | 81,409 |   |   |   | 998 |   |   |   | 4.90 |   |   |   | 84,003 |   |   |   | 3,269 |   |   |   | 5.19 |   |   |   | 71,960 |   |   |   | 2,568 |   |   |   | 4.76 |   |
| Funds                Sold                            |   |                                                | 49,438    |   |                                               |   | 639 |   |   |   | 5.06 |   |   |   | 25,540 |   |   |   | 339 |   |   |   | 5.19 |   |   |   | 47,602 |   |   |   | 1,849 |   |   |   | 5.12 |   |   |   | 41,219 |   |   |   | 1,463 |   |   |   | 4.72 |   |
| Total                Earning Assets                  |   |                                                | 2,144,737 |   |                                               |   | 41,906 |   |   |   | 7.75 |   |   |   | 2,241,158 |   |   |   | 43,034 |   |   |   | 7.62 |   |   |   | 2,180,932 |   |   |   | 126,306 |   |   |   | 7.74 |   |   |   | 2,265,088 |   |   |   | 124,550 |   |   |   | 7.35 |   |
| Cash                & Due From Banks             |   |                                                | 84,477    |   |                                               |   |   |   |   |   |   |   |   |   | 96,969 |   |   |   |   |   |   |   |   |   |   |   | 87,062 |   |   |   |   |   |   |   |   |   |   |   | 102,188 |   |   |   |   |   |   |   |   |   |
| Allowance                for Loan Losses             |   |                                                | (17,664   | )      |                                               |   |   |   |   |   |   |   |   |   | (17,420 | ) |   |   |   |   |   |   |   |   |   |   | (17,336 | ) |   |   |   |   |   |   |   |   |   |   | (17,481 | ) |   |   |   |   |   |   |   |   |
| Other                Assets                          |   |                                                | 256,153   |   |                                               |   |   |   |   |   |   |   |   |   | 239,448 |   |   |   |   |   |   |   |   |   |   |   | 252,359 |   |   |   |   |   |   |   |   |   |   |   | 239,277 |   |   |   |   |   |   |   |   |   |
| TOTAL                ASSETS                          |   | $                                                   | 2,467,703 |   |                                               |   |   |   |   |   |   |   |   | $ | 2,560,155 |   |   |   |   |   |   |   |   |   |   | $ | 2,503,017 |   |   |   |   |   |   |   |   |   |   | $ | 2,589,072 |   |   |   |   |   |   |   |   |   |
|                                                 |   |                                                |      |   |                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **LIABILITIES**                                      |   |                                                |      |   |                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NOW                Accounts                          |   | $                                                   | 525,795   |   |                                               | $      | 2,531 |   |   |   | 1.91 | % |   | $ | 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 |   |   |   | 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 |   |   |   | 132,421 |   |   |   | 72 |   |   |   | 0.22 |   |   |   | 121,781 |   |   |   | 222 |   |   |   | 0.24 |   |   |   | 136,058 |   |   |   | 202 |   |   |   | 0.20 |   |
| Other                Time Deposits                   |   |                                                | 471,868   |   |                                               |   | 5,100 |   |   |   | 4.29 |   |   |   | 504,121 |   |   |   | 4,627 |   |   |   | 3.64 |   |   |   | 475,831 |   |   |   | 14,924 |   |   |   | 4.19 |   |   |   | 514,857 |   |   |   | 12,886 |   |   |   | 3.35 |   |
| Total                Int. Bearing Deposits           |   |                                                | 1,519,071 |   |                                               |   | 11,266 |   |   |   | 2.94 |   |   |   | 1,529,469 |   |   |   | 9,984 |   |   |   | 2.59 |   |   |   | 1,532,151 |   |   |   | 33,364 |   |   |   | 2.91 |   |   |   | 1,524,621 |   |   |   | 26,423 |   |   |   | 2.32 |   |
| Short-Term                Borrowings                 |   |                                                | 65,130    |   |                                               |   | 734 |   |   |   | 4.45 |   |   |   | 73,078 |   |   |   | 753 |   |   |   | 4.07 |   |   |   | 66,921 |   |   |   | 2,232 |   |   |   | 4.44 |   |   |   | 83,187 |   |   |   | 2,352 |   |   |   | 3.77 |   |
| Subordinated                Notes Payable            |   |                                                | 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 |   |   |   | 52,367 |   |   |   | 615 |   |   |   | 4.66 |   |   |   | 41,212 |   |   |   | 1,451 |   |   |   | 4.71 |   |   |   | 61,912 |   |   |   | 2,189 |   |   |   | 4.73 |   |
| Total                Int. Bearing Liabilities        |   |                                                | 1,685,357 |   |                                               |   | 13,389 |   |   |   | 3.15 |   |   |   | 1,717,801 |   |   |   | 12,288 |   |   |   | 2.84 |   |   |   | 1,703,171 |   |   |   | 39,841 |   |   |   | 3.13 |   |   |   | 1,732,607 |   |   |   | 33,753 |   |   |   | 2.60 |   |
| Noninterest                Bearing Deposits          |   |                                                | 435,089   |   |                                               |   |   |   |   |   |   |   |   |   | 494,054 |   |   |   |   |   |   |   |   |   |   |   | 449,436 |   |   |   |   |   |   |   |   |   |   |   | 512,493 |   |   |   |   |   |   |   |   |   |
| Other                Liabilities                     |   |                                                | 45,721    |   |                                               |   |   |   |   |   |   |   |   |   | 30,259 |   |   |   |   |   |   |   |   |   |   |   | 41,341 |   |   |   |   |   |   |   |   |   |   |   | 28,849 |   |   |   |   |   |   |   |   |   |
| TOTAL                LIABILITIES                     |   |                                                | 2,166,167 |   |                                               |   |   |   |   |   |   |   |   |   | 2,242,114 |   |   |   |   |   |   |   |   |   |   |   | 2,193,948 |   |   |   |   |   |   |   |   |   |   |   | 2,273,949 |   |   |   |   |   |   |   |   |   |
|                                                 |   |                                                |      |   |                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **SHAREOWNERS'                EQUITY**               |   |                                                |      |   |                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL                SHAREOWNERS' EQUITY             |   |                                                | 301,536   |   |                                               |   |   |   |   |   |   |   |   |   | 318,041 |   |   |   |   |   |   |   |   |   |   |   | 309,069 |   |   |   |   |   |   |   |   |   |   |   | 315,123 |   |   |   |   |   |   |   |   |   |
|                                                 |   |                                                |      |   |                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL                LIABILITIES & EQUITY        |   | $                                                   | 2,467,703 |   |                                               |   |   |   |   |   |   |   |   | $ | 2,560,155 |   |   |   |   |   |   |   |   |   |   | $ | 2,503,017 |   |   |   |   |   |   |   |   |   |   | $ | 2,589,072 |   |   |   |   |   |   |   |   |   |
|                                                 |   |                                                |      |   |                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                Rate Spread                  |   |                                                |      |   |                                               |   |   |   |   |   | 4.60 | % |   |   |   |   |   |   |   |   |   |   | 4.78 | % |   |   |   |   |   |   |   |   |   |   | 4.61 | % |   |   |   |   |   |   |   |   |   |   | 4.75 | % |
| Net                Interest Income                   |   |                                                |      |   |                                               | $      | 28,517 |   |   |   |   |   |   |   |   |   |   | $ | 30,746 |   |   |   |   |   |   |   |   |   |   | $ | 86,465 |   |   |   |   |   |   |   |   |   |   | $ | 90,797 |   |   |   |   |   |
| Net                Interest Margin(3)                |   |                                                |      |   |                                               |   |   |   |   |   | 5.27 | % |   |   |   |   |   |   |   |   |   |   | 5.45 | % |   |   |   |   |   |   |   |   |   |   | 5.30 | % |   |   |   |   |   |   |   |   |   |   | 5.36 | % |

| (1) | *Average                balances include                nonaccrual loans.  Interest income includes fees on loans of                $**665**,000                and $**2**.**2**million, for the three and                nine months ended September 30, 2007, versus $979,000 and $2.9 million                for                the comparable periods ended September 30,                2006.* |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | *Interest                income includes the                effects of taxable equivalent adjustments using a 35% tax                rate.* |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | *Taxable                equivalent net interest income divided by average earning                assets.* |
|-----|-----------------------------------------------------------------------------------------------------------|

----

| **Item                3.** | **QUANTITATIVE                AND QUALITATIVE DISCLOSURES ABOUT MARKET                RISK** |
|----------------------------|----------------------------------------------------------------------------------------------|

**Overview**

**Interest      Rate Risk Management**

**Inflation**

----

**Table      II**

**FINANCIAL      ASSETS AND LIABILITIES MARKET RISK ANALYSIS**

|                                       |   | **As                of September 30, 2007** |      |   |                      |   |
|--------------------------------------------|--------|---------------------------------------------|-----------|--------|---------------------------|--------|
| *(Dollars                in Thousands)*    |   | **Year                1**                   |      |   | **Year                2** |   |   | **Year                3** |   |   | **Year                4** |   |   | **Year                5** |   |   | **Beyond** |   |   | **Total** |   |   | **Fair                Value** |   |
| Loans                                      |   |                                        |      |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fixed                Rate                  |   | $                                           | 279,095   |   |                      | $      | 160,188 |   |   | $ | 106,838 |   |   | $ | 42,941 |   |   | $ | 22,526 |   |   | $ | 22,382 |   |   | $ | 633,970 |   |   | $ | 655,812 |   |
| Average                Interest Rate       |   |                                        | 6.70      | %      |                      |   | 8.12 | % |   |   | 7.99 | % |   |   | 8.15 | % |   |   | 8.62 | % |   |   | 6.68 | % |   |   | 7.44 | % |   |   |   |   |
| Floating                Rate(2)            |   |                                        | 1,023,444 |   |                      |   | 146,032 |   |   |   | 70,109 |   |   |   | 8,929 |   |   |   | 6,340 |   |   |   | 15,064 |   |   |   | 1,269,918 |   |   |   | 1,313,669 |   |
| Average                Interest Rate       |   |                                        | 6.89      | %      |                      |   | 7.59 | % |   |   | 7.78 | % |   |   | 7.89 | % |   |   | 8.12 | % |   |   | 8.18 | % |   |   | 7.05 | % |   |   |   |   |
| Investment                Securities(3)    |   |                                        |      |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fixed                Rate                  |   |                                        | 79,988    |   |                      |   | 61,523 |   |   |   | 33,377 |   |   |   | 4,302 |   |   |   | 2,444 |   |   |   | 2,040 |   |   |   | 183,674 |   |   |   | 183,674 |   |
| Average                Interest Rate       |   |                                        | 3.65      | %      |                      |   | 4.07 | % |   |   | 3.84 | % |   |   | 4.63 | % |   |   | 4.90 | % |   |   | 5.20 | % |   |   | 3.88 | % |   |   |   |   |
| Floating                Rate               |   |                                        | 935       |   |                      |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 935 |   |   |   | 935 |   |
| Average                Interest Rate       |   |                                        | 5.19      | %      |                      |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 5.19 | % |   |   |   |   |
| Other                Earning Assets        |   |                                        |      |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Floating                Rate               |   |                                        | 19,599    |   |                      |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 19,599 |   |   |   | 19,599 |   |
| Average                Interest Rate       |   |                                        | 5.01      | %      |                      |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 5.01 | % |   |   |   |   |
| Total                Financial Assets      |   | $                                           | 1,403,061 |   |                      | $      | 367,743 |   |   | $ | 210,324 |   |   | $ | 56,172 |   |   | $ | 31,310 |   |   | $ | 39,486 |   |   | $ | 2,108,096 |   |   | $ | 2,173,699 |   |
| Average                Interest Rate       |   |                                        | 6.64      | %      |                      |   | 7.23 | % |   |   | 7.26 | % |   |   | 7.84 | % |   |   | 8.23 | % |   |   | 7.17 | % |   |   | 6.87 | % |   |   |   |   |
|                                       |   |                                        |      |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits(4)                                |   |                                        |      |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fixed                Rate Deposits         |   | $                                           | 403,837   |   |                      | $      | 49,829 |   |   | $ | 13,996 |   |   | $ | 3,184 |   |   | $ | 1,716 |   |   | $ | 257 |   |   | $ | 472,819 |   |   | $ | 418,189 |   |
| Average                Interest Rate       |   |                                        | 4.32      | %      |                      |   | 4.42 | % |   |   | 4.17 | % |   |   | 4.08 | % |   |   | 3.97 | % |   |   | 4.93 | % |   |   | 4.32 | % |   |   |   |   |
| Floating                Rate Deposits      |   |                                        | 1,045,352 |   |                      |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 1,045,352 |   |   |   | 1,045,352 |   |
| Average                Interest Rate       |   |                                        | 2.31      | %      |                      |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 2.31 | % |   |   |   |   |
| Other                Interest Bearing      |   |                                        |      |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities                                |   |                                        |      |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fixed                Rate Debt             |   |                                        | 4,753     |   |                      |   | 3,662 |   |   |   | 3,075 |   |   |   | 3,092 |   |   |   | 3,185 |   |   |   | 11,958 |   |   |   | 29,725 |   |   |   | 30,370 |   |
| Average                Interest Rate       |   |                                        | 4.55      | %      |                      |   | 4.76 | % |   |   | 4.89 | % |   |   | 4.95 | % |   |   | 4.97 | % |   |   | 4.91 | % |   |   | 4.85 | % |   |   |   |   |
| Floating                Rate Debt          |   |                                        | 63,817    |   |                      |   | - |   |   |   | 62,887 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 126,704 |   |   |   | 126,564 |   |
| Average                Interest Rate       |   |                                        | 4.23      | %      |                      |   | - |   |   |   | 5.89 |  % |   |   | - | % |   |   | - | % |   |   | - |   |   |   | 5.06 | % |   |   |   |   |
| Total                Financial Liabilities |   | $                                           | 1,517,759 |   |                      | $      | 53,491 |   |   | $ | 79,958 |   |   | $ | 6,276 |   |   | $ | 4,901 |   |   | $ | 12,215 |   |   | $ | 1,674,600 |   |   | $ | 1,620,475 |   |
| Average                interest Rate       |   |                                        | 2.93      | %      |                      |   | 4.45 | % |   |   | 5.55 | % |   |   | 4.51 | % |   |   | 4.62 | % |   |   | 4.91 | % |   |   | 3.13 | % |   |   |   |   |

| (1) | *Based                upon expected                cash** **flows,                unless otherwise                indicated.* |
|-----|------------------------------------------------------------------------------------------------------------------------------------|

| (2) | *Based                upon a combination of                expected maturities and repricing                opportunities.* |
|-----|-----------------------------------------------------------------------------------------------------------------------------|

| (3) | *Based                upon contractual                maturity, except for callable and floating rate securities, which                are                based on expected maturity and weighted average life,                respectively.* |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | *Savings,                NOW and money market                accounts can be repriced at any time, therefore, all such balances                are                included as floating rate deposits in Year 1. Other time deposit                balances                are classified according to                maturity.* |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| **Item                4.** | **CONTROLS                AND PROCEDURES** |
|----------------------------|--------------------------------------------|

**Evaluation      of Disclosure Controls and Procedures**

**Changes      in Internal Control over Financial Reporting**

| **PART                II.** | **OTHER                INFORMATION** |
|-----------------------------|--------------------------------------|

| **Item                1.** | **Legal                Proceedings** |
|----------------------------|--------------------------------------|

| **Item                1.A.** | **Risk                Factors** |
|------------------------------|---------------------------------|

| **Item                2.** | **Unregistered                Sales of Equity Securities and Use of                Proceeds** |
|----------------------------|-----------------------------------------------------------------------------------------------|

| **Period**                                                           |   | **Total                number****of                shares****purchased** |    |   | **Average****price                paid****per                share** |   |   | **Total                number of****shares                purchased as****part                of our share****repurchase                program**(1) |   |   | **Maximum                Number****of                shares that****may                yet be purchased****under                our share****repurchase                program** |   |
|----------------------------------------------------------------------|--------|--------------------------------------------------------------------------|---------|--------|----------------------------------------------------------------------|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                 |   |                                                                     |    |   |                                                                 |   |   |                                                                                                                                                 |   |   |                                                                                                                                                                             |   |
| July                1, 2007 toJuly                31, 2007           |   |                                                                     | 190,882 |   |                                                                 | $      | 30.09  |                                                                                                                                                 |   |   | 1,785,262                                                                                                                                                                        |   |   |   | 386,613 |   |
| August                1, 2007 toAugust                31, 2007       |   |                                                                     | 25,220  |   |                                                                 |   | 30.85  |                                                                                                                                                 |   |   | 1,810,482                                                                                                                                                                        |   |   |   | 361,393 |   |
| September                1, 2007 toSeptember                30, 2007 |   |                                                                     | 34,451  |   |                                                                 |   | 30.82  |                                                                                                                                                 |   |   | 1.844,933                                                                                                                                                                        |   |   |   | 326,942 |   |
| Total                                                                |   |                                                                     | 250,533 |   |                                                                 | $      | 30.26  |                                                                                                                                                 |   |   | 1,844,933                                                                                                                                                                        |   |   |   | 326,942 |   |
|                                                                 |   |                                                                     |    |   |                                                                 |   |   |                                                                                                                                                 |   |   |                                                                                                                                                                             |   |   |   |   |   |

| (1) | This                balance represents the number of shares that were repurchased through                the                Capital City Bank Group, Inc. Share Repurchase Program (the “Program”),                which was approved on March 30, 2000, and modified by our Board on                January                24, 2002 and March 22, 2007, under which we were authorized to repurchase                up to 2,171,875 shares of our common stock.  The Program is                flexible and shares are acquired from the public markets and other                sources                using free cash flow.  There is no predetermined expiration date                for the Program.  No shares are repurchased outside of the                Program. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| **Item                3.** | **Defaults                Upon Senior Securities** |
|----------------------------|----------------------------------------------------|

| **Item                4.** | **Submission                of Matters to a Vote of Security                Holders** |
|----------------------------|---------------------------------------------------------------------------------------|

| **Item                5.** | **Other                Information** |
|----------------------------|--------------------------------------|

| **Item                6.** | **Exhibits** |
|----------------------------|--------------|

| (A) | Exhibits |
|-----|----------|

| 31.1 | Certification                of William G. Smith, Jr., Chairman, President and Chief Executive                Officer                of Capital City Bank Group, Inc., Pursuant to Rule 13a-14(a) of the                Securities Exchange Act of 1934. |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 31.2 | Certification                of J. Kimbrough Davis, Executive Vice President and Chief Financial                Officer of Capital City Bank Group, Inc., Pursuant to Rule 13a-14(a)                of                the Securities Exchange Act of                1934. |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 32.1 | Certification                of William G. Smith, Jr., Chairman, President and Chief Executive                Officer                of Capital City Bank Group, Inc., Pursuant to 18 U.S.C. Section                1350. |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 32.2   | Certification                of J. Kimbrough Davis, Executive Vice President and Chief Financial                Officer of Capital City Bank Group, Inc., Pursuant to 18 U.S.C. Section                1350. |
|------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**SIGNATURES**

| /s/                  J. Kimbrough Davis                               |   |
|-----------------------------------------------------------------------|--------|
| J.                  Kimbrough Davis                                   |   |
| Executive                  Vice President and Chief Financial Officer |   |
|                                                                  |   |
| Date:  November                  9, 2007                    |   |

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